University of Virginia Library

VETO MESSAGE.

To the Senate of the United States:

Having bestowed on the bill entitled "An act to incorporate
the subscribers to the Bank of the United States of America"
that full consideration which is due to the great importance
of the subject, and dictated by the respect which I feel for
the two Houses of Congress, I am constrained by a deep
and solemn conviction that the bill ought not to become a law
to return it to the Senate, in which it originated, with my
objections to the same.

Waiving the question of the constitutional authority of the
Legislature to establish an incorporated bank as being precluded
in my judgment by repeated recognitions under
varied circumstances of the validity of such an institution in
acts of the legislative, executive, and judicial branches of
the Government, accompanied by indications, in different
modes, of a concurrence of the general will of the nation, the
proposed bank does not appear to be calculated to answer
the purposes of reviving the public credit, of providing a
national medium of circulation, and of aiding the Treasury
by facilitating the indispensable anticipations of the revenue
and by affording to the public more durable loans.

1. The capital of the bank is to be compounded of specie,

of public stock, and of Treasury notes convertible into stock,
with a certain proportion of each of which every subscriber
is to furnish himself.

The amount of the stock to be subscribed will not, it is
believed, be sufficient to produce in favor of the public credit
any considerable or lasting elevation of the market price,
whilst this may be occasionally depressed by the bank itself
if it should carry into the market the allowed proportion of
its capital consisting of public stock in order to procure specie,
which it may find its account in procuring with some sacrifice
on that part of its capital.

Nor will any adequate advantage arise to the public credit
from the subscription of Treasury notes. The actual issue
of these notes nearly equals at present, and will soon exceed,
the amount to be subscribed to the bank. The direct effect
of this operation is simply to convert fifteen millions of
Treasury notes into fifteen millions of 6 per cent stock, with
the collateral effect of promoting an additional demand for
Treasury notes beyond what might otherwise be negotiable.

Public credit might, indeed, be expected to derive advantage
from the establishment of a national bank, without regard to
the formation of its capital, if the full aid and co-operation of
the institution were secured to the Government during the war
and during the period of its fiscal embarrassments. But the
bank proposed will be free from all legal obligation to cooperate
with the public measures, and whatever might be
the patriotic disposition of its directors to contribute to the
removal of those embarrassments, and to invigorate the
prosecution of the war, fidelity to the pecuniary and general
interest of the institution according to their estimate of it
might oblige them to decline a connection of their operations
with those of the National Treasury during the continuance
of the war and the difficulties incident to it. Temporary
sacrifices of interest, though overbalanced by the future and
permanent profits of the charter, not being requirable of
right in behalf of the public, might not be gratuitously made,

and the bank would reap the full benefit of the grant, whilst
the public would lose the equivalent expected from it; for it
must be kept in view that the sole inducement to such a grant
on the part of the public would be the prospect of substantial
aids to its pecuniary means at the present crisis and during
the sequel of the war. It is evident that the stock of the bank
will on the return of peace, if not sooner, rise in the market
to a value which, if the bank were established in a period of
peace, would authorize and obtain for the public a bonus to a
very large amount. In lieu of such a bonus the Government
is fairly entitled to and ought not to relinquish or risk the
needful services of the bank under the pressing circumstances
of war.

2. The bank as proposed to be constituted cannot be
relied on during the war to provide a circulating medium nor
to furnish loans or anticipations of the public revenue.

Without a medium the taxes can not be collected, and in
the absence of specie the medium understood to be the best
substitute is that of notes issued by a national bank. The
proposed bank will commence and conduct its operations
under an obligation to pay its notes in specie, or be subject
to the loss of its charter. Without such an obligation the
notes of the bank, though not exchangeable for specie, yet
resting on good pledges and performing the uses of specie in
the payment of taxes and in other public transactions, would,
as experience has ascertained, qualify the bank to supply
at once a circulating medium and pecuniary aids to the
Government. Under the fetters imposed by the bill it is
manifest that during the actual state of things, and probably
during the war, the period particularly requiring such a
medium and such a resource for loans and advances to the
Government, notes for which the bank would be compellable
to give specie in exchange could not be kept in circulation.
The most the bank could effect, and the most it could be
expected to aim at, would be to keep the institution alive
by limited and local transactions which, with the interest

on the public stock in the bank, might yield a dividend sufficient
for the purpose until a change from war to peace should
enable it, by a flow of specie into its vaults and a removal of
the external demand for it, to derive its contemplated emoluments
from a safe and full extension of its operations.

On the whole, when it is considered that the proposed
establishment will enjoy a monopoly of the profits of a national
bank for a period of twenty years; that the monopolized
profits will be continually growing with the progress of the
national population and wealth; that the nation will during
the same period be dependent on the notes of the bank for
that species of circulating medium whenever the precious
metals may be wanted, and at all times for so much thereof
as may be an eligible substitute for a specie medium, and
that the extensive employment of the notes in the collection
of the augmented taxes will, moreover, enable the bank
greatly to extend its profitable issues of them without the
expense of specie capital to support their circulation, it is as
reasonable as it is requisite that the Government, in return
for these extraordinary concessions to the bank, should have
a greater security for attaining the public objects of the
institution than is presented in the bill, and particularly
for every practicable accommodation, both in the temporary
advances necessary to anticipate the taxes and in those more
durable loans which are equally necessary to diminish the
resort to taxes.

In discharging this painful duty of stating objections to a
measure which has undergone the deliberations and received
the sanction of the two Houses of the National Legislature
I console myself with the reflection that if they have not
the weight which I attach to them they can be constitutionally
overruled, and with a confidence that in a contrary event
the wisdom of Congress will hasten to substitute a more
commensurate and certain provision for the public exigencies.