In 1842, certainly, there was no monopoly of banking investments. Whoever wished might buy. Nor was there other monopoly. The freedom with which charters were afterwards granted shows that the business was opened to more promoters than could provide the capital wherewith legally to qualify to enter it.

The Lower Canada banks and the Bank of the Niagara District had been granted but two years within which to secure the new capital authorized. The other Upper Canada banks got five years, and in 1846 the term was extended to 1850. (9 Vic., caps. 86 and 87.) In 1846 these two, together with the Bank of the Niagara District, were authorized to set aside £150,000 each and £50,000 of stock respectively, to be known as "English stock," the dividends to be made payable in London, and books to be opened in that city for the transfer of shares. (7 Vic., cap. 62.) This is a second indication of the reviving prosperity of the province and the demand for loanable capital, of which one of the first signs is the increase of stock authorized in 1841 and 1842.

$19.-BANK RETURNS FOR 1841; THE BANK OF BRITISH

NORTH AMERICA AND LA BANQUE DU PEUPLE

Altogether there were ten banks that reported to the committee of 1841. One of these, the Bank of the People, in Toronto, had already been sold to the Bank of Montreal, and reported only the amount of its stock. Two others, the Farmers' Joint Stock Banking Company and La Banque du Peuple, were private banks acting under a deed of settlement and

articles of co-partnership, respectively. A fourth, the Bank of British North America, was a company formed in 1836, with a nominal capital of £1,000,000 stg., by British capitalists interested in the prosperity and commerce of the North American colonies.1 £690,000 of the capital were at first paid up and employed from 1836 to 1840 in a banking business extending to both the Canadas, New Brunswick, Nova Scotia and Newfoundland. An act of the Imperial Parliament authorized the bank to sue and be sued in the name of an officer in England, and similar acts were obtained from the provincial legislatures in 1837 and 1838. The Nova Scotia act recites that the company had introduced the system of cash credits and of allowing interest on deposits, usually known as the Scotch system of banking. To obviate the difficulty of acting under many different statutes, the directors applied for a Royal Charter in 1840. They obtained it, one condition being that the capital of a million pounds should be fully paid up, and another, that no notes under the value of £1 currency should be issued. The liability of the stockholders was limited to the amount of their subscriptions.

1 Vide R. M. Martin, "History, Statistics and Geography of Upper and Lower Canada," London, 1838. On p. 277 the author claims for himself and a Wm. Medley, Esq., the credit of first proposing and interesting others in the establishment of the British Bank.

2 Journal of the House of Commons of the Dominion of Canada, 1869, Appendix I, p. 67.

37 Wm. IV, cap. 34, U. C.; 8 Wm. IV, cap. 16, N. B.; 1 Vic. cap. 24, N. S.; 1 Vic., cap. 25, L. C..

The condition of the banks on days near the 1st

July, 1841, was as follows:1

Viger, De Witt et Cie., the French partnership in commendam, were incorporated in 1843 as "La Banque du Peuple." The principal office was to be as formerly in Montreal, and the authorized capital £200,000, the full payment of which was required. within two years from the passing of the act. (7 Vic., cap. 66.) The character of the partnership and the division of powers, profits and liabilities between the two classes of partners have been sufficiently described near the close of chapter ii. This peculiar constitution, a device used in mediæval times to evade the prohibition of usury, was continued by the charter, and the stockholders have obstinately clung to it ever since. The qualification of the principal partners or "members" was the ownership of not less than forty shares each, of a total value of £500.

'Journal, Can., 1841, Appendix O, statement F.

New members might be admitted and old ones withdraw, proper notice being given of the change, but the total number of members was never to be less than seven nor more than fifteen. The corporation as thus constituted was subjected to the same restrictions as to note issue, total liabilities, suspension of redemption of specie, etc., and granted the same powers, as the joint stock banks.

$20.-CORRESPONDENCE WITH RESPECT TO THE DOLLAR

NOTE CIRCULATION

The circular of Sir John Russell contained certain regulations respecting the issue of bank notes under £1 currency, which had been embodied neither in the committee report of 1841, nor in charters passed in that year. But as those acts had been fully considered by the local legislature and the Governor-General, as a disallowance might have caused embarrassment in Canada at the time, and as the power of regulating the note issue in the future was reserved by the charters to the legislature, the Queen was advised to confirm them.' Her Majesty's Government, the Governor-General was informed, attached great importance to the early reduction of that small paper circulation to which the Acts in question give encouragement," and it was hoped that the Canadian Legislature will at an early period revise this part of the system of banking in the province and secure to the people of Canada the benefit of a metallic circulation, which is incompatible with the circulation of paper of this description."

1Journal Can., 1843, p. 49, Despatch no. 103. 2 Journal Can., 1843, p. 49, Despatch no. 103.

A charter was passed in 1846, the effect of which would have been to extend the small note circulation. The imperial authorities felt that the Canadian government had had in four years ample time for considering the tendencies of their system of banking, that the reasons of temporary expediency entertained in 1842 for waiving their objections to five shilling bank notes did not equally apply to the new measure, and that the existence of rights of issue formed no reason for the concession of similar rights to new establishments. Privileges of issue enjoyed by banks in the United Kingdom before the acts of 1844 and 1845, had been withheld from the banks formed after a certain date. They believed that a dollar note circulation was unsound and dangerous. The same reasons which prompted the abolition of £1 notes in England, called, in their opinion, for the restriction and ultimate discontinuance of the dollar notes in Canada. Earl Grey, however, was unwilling that the bill should be abruptly disallowed. Accordingly, he referred it back to Lord Elgin and the Executive Council of the province, with the promise that if they thought a change inexpedient the royal assent would not be withheld. The Canadians favored the retention of their dollar notes and assent to the bill was promulgated in January, 1848.

This was the last noteworthy endeavor of the Lords Commissioners of Her Majesty's Treasury, acting through the Colonial Office, to substitute "a currency founded on a sound and metallic basis" for the dollar notes issued by the Canadian banks.

'Journal, Can., 1847, Appendix W, Despatch respecting the bill of last session incorporating La Banque des Marchands.