Delaware state journal. [volume] (Wilmington, Del.) 1870-1883, 1881-03-10
HAYES, LAST PETO.


TO the House Of Representatives: Having
considered the bill entitled Gan act to
facilitate the refunding of the National
Debt, am constrained to return it to
the House in which it originated with the
following statement ofmy objections to its
passage; The imperative necessity for
prompt action and the pressure of public
duty in this closing week Of my term OF
office compel Inc to refrain from any
attempt to make a full and satisfactory
presentation of the objections to the bill.
The Importance OF the passage at
the present session OF Congress
of suitable measure for the
refunding of 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
message if successfully accomplished it
will secure large decrease in the annual
interest payment of the Nation and |
earnestly recommend if the bill before
me shall fail that another measure for
this purpose he adopted before the present
Congress adjourns. While in my opinion
it would be wise to authorize the Secre-
tary 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 pas
sage of the present bill if it did not
contain in its 5th section provi-
sions which in my Judgment would
seriously impair the value and
tend to the destruction of the present
national banking system of the country.
This system has now been in operation
for the last 20 years. No better banking
system was ever established. Its advan-
tages as business are free to all who
have the necessary capital. 1t furnishes
circulation to the public which, for con-
venience and the bill holder, has prob
ably never been equaled by that of any
other banking system. Its notes are
secured by the deposit which the Govern
ment of the interest bearing bonds of the
United States. The section of the bill before
one which relates to the National banking
system and to which objections are made
is not an essential part of n refunding
measure. 1t is as follows:
Sec. 3. From and after the first day of
July 18th, 1881, the 3 per cent. bearing
bonds issued by the first section of this
act shall he the only bonds reeeiv-
able as security for National bank circu-
lation or as security for the safe keeping
and prompt payment of the public money
deposited with such bank but
when any such bonds ded-
posted for purposes aforesaid shall be
designated for purchase or redemption by
the Secretary of the Treasury. The
banking association depositing the same
shall have the right to substitute other
money of the bonds Of the United States
III lieu thereof, provided that no bond
upon which interest has ceased shall be
accepted or continued on deposit as
security for circulation or for the safe
Keeping of the public money, and in ease
bonds so deposited shall not be with
drawn as provided by law within 30 days
after interest has ceased thereon the bank
ing association, depositing the same shall
be subject to the liabilities and proceed
ings ON the part of the comptroller pro-
vided for in section 1924 of the Revised
Statutes of the United States and provided
further that section 4 of the act of June
10th, 1874 entitled an act fixing the
amount OF United States notes providing
for redistribution of the National bank
currency and for other purposes be and
the same is hereby repealed and sections
5l59 and $3.50 of the Revised
Statutes be and the same are
hereby enacted" Under this section
it is obvious that no additional banks will
hereafter be organized, except possibly in
few cities where the prevailing rates of
interest in ordinary business are extra
ordinary loans ; new banks can be organ
lied and no increase of the capital of
existing banks can be obtained except by
the purchase and deposit of three per
cent. bonds. No other bonds of the
United States can be used for the purpose.
The one thousand millions of other bonds
recently issued by the United States, and
bearing Il higher rate of interest than
three per cent, and therefore better cur
rency for the bill. The holder cannot
after list of July next be received as
security for bank circulation. This is u
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 circula-
tion 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 to deposit
bonds having the least value of any bonds
issued by the government.
The average rate of taxation of capital
employed in banking is more than double
the rate of taxation upon capital EN-
ployed 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 most valuable bonds issued by
the Government will, it is believed in a
large part of the country, be a practica-
BILE prohibition of the organizing of new
banks, and prevent the existing banks
from enlarging their capital.
The National banking system if con-
tlnuei at all, will be Il monopoly in the
hands of those already engaged in it, who
may purchase Government bonds bearing
Il more favorable rate of interest than the
3 per cent. bond prior To next JULY to
prevent the further organization of banks
is t" put i'll Jeopardy the whole system
by taking from it that feature that marks
it as it now is-a banking system free
upon the same terms To all who wish to
engage in it. The existing banks
will i" in danger of being driven
from business by the additional
disadvantages to which they will he sub
Jected ly this bill. In short | cannot
but regard the fifth section of the bill as a
step in the direction of the destruction of
the National banking SYSTEM Our
country after II long period of business
depression has just entered upon career
of rncNampled prosperity. Withdrawal
of the currency from circulation by the
National banks and the enforced winding
up OF banks in consequence would inevit-
ably bring serious embarrassments and
disasters to the business of the country.
Banks OF issue are especial instruments
"t modern commerce.
If the present efficient and admirable
system of banking is broken down it will
inevitably be followed by a recurrence to
other and inferior modes of banking. ANY
measure looking to such result will be a
disturbing element in our financial system.
1t will destroy confidence and surely
check the growing prosperity OF the coun-
try. Believing that measure for re-
funding the National debt is not neces-
sarily connected with the National bank
ing law and that any refunding bill will
defeat its own object if it imperiled the
National banking system or seriously i'm
paired its usefulness and convinced that
section OF the bill before me would, il
it should become a law, work great harm,
| herewith return the bill to the House OF
Representatives for that further consider
alton which is provided for in the Consti-
tuition. RUTHERFORD B. HAYES.
EXECUTIVE MANSION, March 3, 1881.
-..
Mills Burned at Baltimore.
| BALTIMORE, March 4.-The Pearl HON.