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The Re-funding Bill

The Re-funding Bill image
Parent Issue
Day
10
Month
March
Year
1881
Copyright
Public Domain
OCR Text

To ttie Houao of Kepreseulntives. Having eousidered the bill euütled "Au cl to facilítate the fuuding of the nat onal debl," [ aiu constrained to return it to the house of representatives, in which itoriginated,with the following statement of my objectious to its passage. The iuiperative necessity for prompt action and the pressure of public duties iu this the closing week of my term of oflice. cnmpets me to refraiu froin any atteinpt to make a full aud satisfactory presentatiou of my objections Lo the bill. The impoiUuice of the passage at the present seesion of congress of r suitaWe messure for refundir? the naúou delit wii cu is about to mature ia gcneraMy recoguized. ít lias been urged npou .'.w attentien „,[ congnss b the secretary of tl s treasury and in my last annual messago. lf successfully accomplished it will secure a large decnase in tiie annual interest paymeut of the natiou, and I earneatlj recommeud, if the bill beforo you shall fail, that another measure for this parpope slmll b adopte! before the present t:ongress adjourus. While in my opinión it wuuld be wise to au thorize the secretary of thu treasury iu lus discretiou to offer to the public bonds hearing 32 percent, interest in aid of rolunding, I sbould njt deern it my duty lo interiiose my consütutional objection to the passage of the present bill, if it did not eoutain, iu its filth section, provisicm which in ny jiirtgment se" riously impair itsvalue, and tond to tlie de; Btruction of the I -reiunt national banking system of tlie country. This system has unw beii in operatiou alinoat 2o years. No safer nor inore ueneficial baukingftystpm was ever estab lieht'cl. It4 adviintagos as a business are free to all who have the neeessary capital. It f nrnishes a currency to the {)ublic which for convuuience and eecurity of tlie blll-holden has probably Deer been eiiuallod liy that of any other banking systeni. lts notes are sucured by a deposit witti the goveruineut of interest hearing United States bonds. Tlie section of t e biil 1,-efore nie which relates to the Matioual banking systein, and Lo which ohjeotion is made, isnot an esseutial part of a refuuding measure. It is as follows: "Sec. 5. From and after the first day of July, 1K81, the 3 per cent. bonds authori.ed by the first section of this act ehall be the only bonds receivable as security for the national bank circulation, or as secui ity for the safe keeping and prompt payment of the pabilo inoney deposited with BUCh banks, but when auy such bonds deposited for the purposes aforesaid hall be drsiíinated for parchase for redemp tion by the secretary of the treasury the banking association d-positing the same símil have the right -.o substitute other isssties of bouds of the United States iu lieu thereof, provkled that no bond on which interest bas ceased shall be accepted or contiuued on deposit as security fcr the circulation or for the safe keeping of public inoney, and iu case the bonds so deposited shall not be withdrawn as provlded by law within 3U daysaflerthe interest has ceased thereon, the banking association depositiug the saine shall be subject to lia!lities and proeodings on the part of the controller provided tor in secüou 5234, revisd statutes United States; and provided furthe: tliat section lof ;he act of June 20, 1874, entitle l an act fixing Lhe auiounts of United States notes, providing for redistrilmtion of the natioual bank curren cy, and for olher purposes, be and the same is hereby repealed, and sections 515Í) and 5150 revised statutes be and the saine are hereby reenacted." Under this section it, is obvious that ro na ioual banks will hereafter be organlzed. except possibly in a few cities or locaiitlewhere the irevailDg rates of interest in orliuary business are extreinely low. No uew bauks can bo orgauized and no increase of the Capital of existiug banks can be obtaiued except by the purchase and deposi'. of :! per cent. bonds. No other bonds of t!e United Slatüs can l.j used forthepurpose. ïiie $1,UUUKJIV'OO i o nel bonds recently issued hy the Jnited ílatea and beri'Og a bigher rate of inuterest tban 3 lier ceut., and therefore a beter security for the bill holder, cannot, after ,he lst of July next, be received as security for ,he bank circulation. Tliis ia a radical change a the banking law. It takes from ttio banks the right they liave heretofore liad uuder the law to purchase and deposit as secuiity for their circulation any of the bonds iasued liy llie L'xited States aixi de prive the bilí holder of the best security wii:. i banks are able to give hy reiiuiring thein to deposit bon'.ls b" iug the least vilue ( any bonds issued tiy ..ie governmeut. 'J he ave .age rate of taxatioj on capital employed iu banking is more tiian doublé the rate of taxaUoa ou capital employeu in otber legitímate buti'uess. Uuder these circumstances, to ameud tho bao ling law so as to deprive the banks of tliu advantage of securing their notes by the most yaluable bonds issued by the governuient will, it is believed, in a large part of the country, be a practical prohibition of orgauizing new banks, and will prevent ex'sting banks from enlarging their capita). The national banking system, il contiuued at all, will bo a monopoly in the hands of tbose already engaged in it who may purchase government lionds bearing a more favorable rate of interest than 3 per cent, bonds prir to next July. ïo prevent fuitber the organization of bauks is to put in jeopardy tlie whole system by taking from it that feature that makes, as it is now, a banking systeui free upon the same terms to all who wish to engage in it. Even the existing banks will be in danger of being drive-n from business by the additional disativant:',. es to which they will 1)9 subjecled by this bil Iu short I cannot hut regard the fifth section of thJ bilí ís a et(p iu the direcüon ol ihe dtstruction o ' the uational banking systeni. üur couutry, after a long perioá of business depression, has just entered upon a career o! ui'exampled prosperity. The withdrawal of the curreney from circulation b.v national bsnks and the enforced wiuding no of banks iu cousequence, would inevitably brlnj eeriíuis embarassuients and disasters 1.1 [te business of the country, lianks of issue ore essential iustruments of modern commerce ir tiie preseat efficiënt and admirable sysíem of tur tina is broken down it will inevitably be followed by a recurrence to other aud inferior methode of banking. Any measure louking to such a result will be a disturbina element in ouv 'inance system. It will destroy confidenca and surely check the growing prosperity of Ihe country. Believing; that the measure for refundiDg the national debt is not necessaily counected withthe r-itioual banking law, aud that 'iy refunding..( l woula defeat its own object ' it Imperlled lue national banking system or seriously inipaired ik usertiluess, aud conviuced that section 5 of . ie üili hefore me would, if it sliould become a luw, work a great hanu, I herewith returu the bill to the house of representativos for that further consideration which is proviited for in the coustitution.

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Subjects
Old News
Ann Arbor Democrat