Southern standard. (McMinnville, Tenn.) 1879-current, 1881-03-12
The Funding Bin Vetoed.
N N wAsmNaroN, D. 9, March 3.

Tothe House OF Representatives:
Having considered tho bill entitled San act
TO facilitate the funding OF the National debit"
am constrained TO retiirn 1t to the Hoiiso Of i
Representatives, in which 1t originated, with
the following statement of my objections to
its passage; The imperative necessity for
prompt action, and the prelsnre Of public
duties In this, the closing week of my term of
office, compel me to refrain from any attempt
to make any fully satisfactory presentationof
my objections to the bill. Tue Importance of
the passage at the present session of Com J
gress of q suitable measure for refunding the
National debt which is about TO mature is
generally recognized. 1t has been urged upon
the attention of Congress by the Secretary of
the Treasury, and IN my last annual fiicssag6.
II successfully aceomplshed it will seizure
large dccreasein the annual interest payments
OF the Nation, and earnpslly recomrfend that
II the bill before me shall fail, another
measure for this purpose he adopted before
the present Congress adjourns. While, in my
/ opinion, 1t would be wise to authorize the
Secretary Of the Treasury, in his discretion, to
ofer TO the public bonds bearing 3h per cent
interest in aid of refunding, should not
deem 1t my duty to interpose my Constitu-
tonal objection to the passage of the present
bill If it did not contain in its fifth sec
tion provisions which, In my Judgment,
seriously Impair the value and tend TO the de-
struction OF the present National Banking
system of the country. This system has now
been in operation almost twenty years. No
safer nor more beneficial banking system was
ever established. Its advantages as business
are free to all who have the necessary capital.
II furnishes currency to the public which,
for convenience and security OF the bill
holder, has probably never been eQualed by
that of any other banking system. It's notes
are secured by deposit with the Government
Of interest-bearing bonds of the United
States. The section of the bill before me which
relates TO the National Banking system, and
to which 6blect on is made, is not an essential
part of a rcfunding measure. 1t is rs follows,
"SEcTION 5. From aud after the first day
of July, 1881, the three-per-cent. bonds au.
thorlzed by the first section of this act
shall be the only bonds receivable as security
for National Bank circulation, or as security
for the safe keeping and prompt payment Of
the public money deposited with such banks,
but when any such bonds, deposited for the
purpose aforesaid, shall be designated for
purchase or redemption by the Secretary Of
the Treasury, the banking association de-
stitute other issues of the bonds Of the
United States in lieu thereof; prouded that no
bond upon which interest has ceased shall
he accepted or continued on deposit as sccu-
rity for circulation or for the safe keeping OF
the public money, and i'm case the
bonds so deposited shall not be withdrawn, as
provided by law, within thirty days after inter.
est has ceased thereon, the banking associa-
dppnEitntr N chaiI ha r,thia 4o
liabilities and proceedings on the part of the
Comptroller provided for in Section 5,24 OF
the Revised Statutes of the United States; and
provided further, that Sections of the act Of
June 20, 1874, entitled An act liking the
amount of United States notes and providing
for the redistribution of National Bank cur
rency and for other purposes, be and the
same is hereby repealed, and Sections 8, l59 and
5,l60 of the Revi ed Statutes be and the sam
are hereby re-enacted.'
Under this section it is obvious that no addi-
tional banks will hereafter be organized, e1-
: cept possibly in few cities or localities where
the prevailing rates OF interest in ordinary
business are extremely low. No new banks
can be organized and no increase of the capi-
al Of exist ig banks can lie obtained, except
by the purchase and deposit of three per cent.
Onds. No other bonds of the United States can
oe used for that purpose. The one thousand
millions of other bonds recently issued by the
United States and bearing higher rate Of in
terest than three per cent, and, thereto Q, {
better security for the bi-holder cam t.
after the lst of July next, be received as secu-
rity for bank circulation This IS q radical
change in the Banking law. 1t takes from the
banks the right they have heretofore had un-
: der the law topurchase and deposit as securi-
ty for their circulation any of the bonds issued
by the United States, and deprives the bill
holder of the best security which the banks are
able to give by requiring them 10 deposit
onds having the least value of any bonds
= issued by the Government. The average
8 ate of taxation of capital employed in bank
o ing Is more than double the rate of taxation
upon capital employed in other legitimate
business. Under these circumstances, tC
amend the Banking law so as to deprive the
" banks Of the advantage of securing their notes
by the most valuable bonds issued by the
4. Government will, it is believed, in a large
part of the country C practical prohibition
Z. of the organizing of new banks, and preven
existing banks from enlarging their capital
y The National Banking system, II con
tinued at all, will be monopoly
u in the hands of those already engaged
in 1t, who may purchase Government
, bonds bearing more favorable interest thar
the three-per-cent bonds, prior to next July
TO prevent the further organization of banks
r is to put in jeopardy the whole system by tax
d ing from il that feature that makes IL, as il nov
o. is, banking system free, upon the sam,
: terms, to all who wish to engage in 1t. Ever
4 the existing banks will be in danger of beinI
: driven from business by the additional disad
: vantages to which they will be subjected b,
IL this bill.
In short, cannot but regard the fifth sec
It tion of the bill as step in the direction o
n the destruction Of the National Banking sys
|. tenn of our country, which, after long pc
q riod of business depression, has just entere
- upon a career of unexampled prosperity
The withdrawal of currency from circulation
Il by the National Banks and the enforced wind
% ing up Of tho banks in consequence, woul
10 Inevitably bring serious embsrrast
70 ments and disaster to the business of th
50 country. Banks of issue are essential instru
l. ments of modern commerce. If the presen
a efficient and admirable system of banking
:. broken down, it will inevitably be followed b
. recurrence to other and inferior methods G
- =. banking. Any measure looking to such
70 result will be disturbing element In ou
'' financial system. 1t will destroy conhdenc
l. and surely check the growing prosperity {
RS the country.
l. Believing that the measure for refundin
a the National debt is not necessarily connecte
n. with the National Banking law, and that an
rs Refunding act will defeat ITS own object If
imperiled the National Banking system or s.
riously impaired its usefulness, and convince
?, that section 8 of the bill before me woul,
is IL it should become law, work great harm
L, herewith return the bill to the House OF Rel
DR. resentatives, for that further considerable
4 which is provided for in the Constitution.