River Falls journal. [volume] (River Falls, Pierce County, Wis.) 1872-2019, 1881-03-10
o 90
A Veto.


A Veto.
WASHINGTON, March 3.-The follow
ing Is the message of President Hayes
vetoing the funding bill:
TO the House Of Representatives:
Having considered the bill entitled
"An act to facilitate the refunding of
the national debt" / am constrained to
return it to the house of Representatives
in which it originated with the following
statement Of my objections to its pas
sage:
The imperative necessity for prompt
action and the pressure of public duties
in this closing week of my term of
office compels me to refrain from any
attempt to make the fullest and most
satisfactory presentation of my objec-
tons to the bill. The importance of
the passage at the present session of
congress of suitable measure for re-
funding the national debt which is to
mature is generally recognized and has
been urged upon the attention of con-
gress by the secretary of the treasury
and in my last annual
message. If successfully accomp-
llSuSu III VIII StCliIC a. ldISc dt-
crease in the annual interest payment
of the nation, and | earnestly recon-
mend, if this bill shall fail, that anoth-
er measure for this purpose be adopt
ed before the present congress adj
journs. While in my opinion it would
be we'll to authorize the secretary of
the treasury in his discretion to offer TO
the public bonds bearing 81 per cent.
interest in aid of refunding, / should
not deem it my duty to interpose my
constitutional objection to the passage
of the present bill, if it did not contain
in its 9th section provisions which in
my judgment seriously impairs the val
ne, and tends to the destruction of the
present national banking system of the
country. This system has now been
in operation almost 20 years. No safer,
no more beneficial, banking system
was ever established Its advantages
as a business are free to all who
have the necessary capital, of
furnishing currency to the public
which for convenience and security of
bill holders, has probably never been
equaled by that of any other banking
system. Its notes are secured by de-
post with government of interest bear
ing bonds of the United States. The
section of the bill before me which re-
lates to the national banking system
and to which objection is made, is not
an essential part of a refunding meas
ure. 1t is as follows:
Section Five-From and after the first day of
July, 1881, the three per cent. bonds authorized
by the first section of this act shall be the only
bonds receivable as scrip for national bank cir
culatOn, or as security for the safe keeping and
and prompt payment of public money deposited
with such banks, but when any such bond de-
posted for the purposes aforesaid shall be desig
mated for purchase redemption by the sec
rotary of the treasury the banking association
| depositing the same shall have the right to sub
sttute other issues of bonds of the United States
in lieu thereof; provided that no bonds npon
which interest has ceased shall be accepted or con-
| tinued ON deposit security for circulation for
the safe keeping Of pg6Iie money and in ease
| vided by law within so days after the interest
| has ceased thereon the same shall be subject to
liabilities and proceedings on the part of the con-
trOller provided for in section 1921 revised stat
utes of the United States; and, provided further
that section 4 of the act of June, 1874, entitled
fixing the amount of United States notes provid-
ing for redistribution OF national bank currency,
and for other purposes be and the same is hereby
repealed and sections 5159 and $780, revised
Under this section it is believed no
additional banks will hereafter be or
ganized, except, possibly, in a few cities
| or localities where the prevailing rates
af interest on ordinary business is ex-
tremely low. No new banks can be
organized, and no increase of capital
of existing banks can be obtained ex-
cept by the purchase and deposit of 3
per cent. bonds; no other bonds of the
United States can be used for this pur-
pose. The one thousand millions of
other bonds recently issued by the
United States, and bearing a higher
rate of interest than per cent, and
therefore better security for bill hold
ers, cannot, after the first of July next
be received as security for bank circu
lation. This is a radical change in the
banking law. 1t takes from the banks
the right they have heretofore had
under the law to purchase and deposit
as security for their circulation any of
the bonds issued by the United States,
and deprives bill holders of the best Sc
curity which the banks are able to give,
by requiring them to deposit bonds
having the least value of any bond is
sued by the government. The average
rate of taxation of the capital engaged
in!banking is more than double the rate
of taxation upon capital employed in
other legitimate business. Under these
circumstances to amend the banking
law so as to deprive the banks of the
advantage of securing their notes by
the more valuable bonds issued by the
government will, it is believed in
large part of the country, be practical
prohibition to organizing new banks,
and will prevent the existing banks
from enlarging their capital. The ma
tional banking system, if continued at
all, will be a monopoly in the hands of
those all eady engaged in it, who may
have purchased government bonds
bearing a more favorable rate of inter
est than per cent. bonds prior to next
July. To prevent further organization
of the banks is to put in jeopardy the
whole system by taking from them
that feature that makes it now desira-
bic banking system, free upon
the same terms, to all who wish to en-
gage in it. Even the existing banks
will be in danger of being driven from
the business by the additional disad.
vantage to which they will be subject
ed by this bill.
In short l can but regard the fifth
section of the bill in the direction Of
the destruction of the national banking
system of our country. After a long
period, the business of the country has
just entered upon career of unex-
ampied prosperity. The withdrawal of
currency by national banks and the en-
forced winding up of banks in conse-
quence, would inevitably bring serious
embarrassments and disaster to the
business of the country. The banks of
issue are essential instruments Of mod
ern commerce. If the present efficient
and admirable system of banking is
broken down it will inevitably be fol-
lowed by the revival Of other and in
ferior methods of banking Any meas
ure looking to such result will be the
disturbing element in our financial
system. 1t will destroy confidence and
surely check the growing prosperity
of the country. Believing that the
measure of funding the national debt
is not necessarily connected with the
national banking law, and that any
ref1nding at all will defeat its object
if it imperils the national bank
ing system, or seriously impairs
its usefulness and l am convinced
that section 5 of the bill before me
would, if it should become law, work
great harm, l herewith return the
bill to the house of representatives for