New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1894-12-30
CANADA'S BANKING SYSTEM
PROVISIONS EO9 NOTE ISSUE AND RE
ra.r.4 DEMPTION. IAN
A METHOD BY WHICH ELASTICITY is 40.
ToMATIcALLY sECURED-How Sc.
CURITY Is OBTAINED.

A METHOD BY WHICH ELASTICITY is 40.
ToMATIcALLY sECURED-How Sc.
cURIrY IS OBTAINED.
Toronto Ont Dec. q tSpeciaD.-The Canadian
banking system is frequently quoted just now Ia
Congress and elsewhere. In most instances the
;oeakers describe IL as it was. not as 1t is con-
siderable changes having been made by recent
LEGISLATION When Canada was colony OF France
the local rulers finding specie scarce. took to
issuing paper money, convertible in the fall of the
wear into specie drafts on the French Treasury
II was called card money" because the first notes
were playing cards cut in TWO and stamped This
money OF course. deprecated when, owing 10 the
.mbarrassments Of the French Treasury, II became
practically irredeemable. The Freneh-Canadians
proba bly, lost by the depreciation IMAM by the
war of conquest in 1880. and when bank was
started by British capitalists in 1872 they refused
tn take it's notes simply because they were paper.
The first bank to survive was the BANK OF Mon.
trcal founded in 1917. Banking legislation has
been rccast a good many times sihce' the latest
amending act being that OF lsso
Tho CAPITAL stock of bank seeking charter
from Parliament must not be less than $4,000,
.nd half of IL must be paid up Canada has sll-
var nd conner currency, struck at the BRUSH mint
but no gold currency of her own. the brltsh SOW
or.Ign is legal tender for 81 s6s the American gold
eagle for SO Paper currency Is issued Doth ~
tbe. Dominlon Government and by the chartered
one TWO and four dollars; also notes oil "" ana
Z, oo, The banks are not allowed TO issue notes
of 4 smaller denomination than ., ann an their
rotes above s. must be multiples OF hVe' Inc DO
,nInion Government has taken power 20 .ssue w.
ooo ooo of notes about one-half OF when consists
of 500 and 81 900 bills held by the banks as part Of
their cash reserve. To secure the redemption OF
Tho Dominion notes the Finance Minister has to
hll in gold and securities guaranteed by the Brit
lsh Government a sum equal 10 - per cent OF 'he
,rount issued: the remaining - per cent IS covered
nv Dominion debentures; 1t IL further PROVIDED
that If Dominion notes in excess oil s-l'"ov"
! aboud ever be issued-the largest amount thus far
or,od as aeoat at any one time Is Sls,sp,ocS
enc excass shall be covered dollar for dollar, by
gold The distribution OF Dominion notes as wen
as Of specie Is looked after by Government OFFICIALS
al the principal centres
Ranks are not allowed to issue notes IN excess
~ ,b. amount Of their unimpaired working capital
The total pad-up capital In 1873 was >'-"tVOV'
while the note circulation Of the banks was $tv"'
400 ross liza bites sls 10000 against assets OF SSs'
! ON, go No dividend or bonus exceeding per cent
| per annum may be paid unless. ai'er ue4u0''"s "aa
/ and doubtful debts a bank has .eser'e iu"a
cana 10 at least 80 per cent o. us pdiu-up 'dp"-
Forty uer cent OF the reserve must CONSIST VI
/ nouinion notes In case OF insolvency, the notes
+ of q bank are the first charge on It's assets ana
| he,r interest Al the rate o. . per cent TIL re-
deemed To further secure their redemption each
| hank has to pay into special Government lu"u
sum equal to per cent OF its average cIcu'au'"'
which is applied to the payment o. such notes.
! hat IL TO say each bank is to that extent
guarantor of the notes OF all the rest Inc note
/ holder Is therefore amply protected. After him.
tho next 10 rank on assets o. the bank are the
! Dominion Government and Provincial "o'erh-
ments il they have claims. then the depoS"o's'
and last OF all the shareholders All bahhho'eS arc
NOW payable at par throughout the DOMINION
Formerly Ontario and quebec banks shaVed 'he
notes OF the banks IN the maritime provinces ana
/ ,ice versa while all AS nOw. accepted nitei
! states Government notes ar lace 'hlue. ~ &c e,
quested to do so. banks must mang pns ,nsntion
! Thev are not permitted to lend money on their own
/ shay.s or on thu shares OF other banks OF on
raaI estate or merchandise except when these CON
situte collateral security Inc rent IN 4" u
Australian colonies was caused la,Ssy ~ ros
advances on real estate: which Gould no, pe sS'
/ i'm without heavy loss when ihe Doom tD'lhp ,
! iowed 10 nod real estate collateral longer man
seven years. There are no uo.ernens % their
spectors the banks employ hspe.t' "a. covsrn
own and send monthly statements 10 me po own,
ment The doube-iabl,y prr,ePle T nsoIyent bank
is liable twice the amount OF the Stock he'' W
These are the chief features Of the Canadian sys
tenn a. IL exists to-day; since the pIgynl,sSf Nm
/ liabilities OF Sl5OC00o ami assets representa-. -
Oo0e. In every in-ttn'" me noes W. - Ill ~
/ i"wsst proportion paid Was - per cent. mere are
= forty chartered banks. AT or neafy An ' hsio
h
materially to cheaper The rate ~ interest ana na,
tain elasticity IN tn currency \ nlai.'' 80 ' IN .
,oin town transfers t~ deposits % the heai ON
and The head ofice lends them 10 customers III ''e
I meyer ard more active parts OF 'hr COUNT
X also easy for "A bank with twenty "I .i.. -,
ira hes 20 provide adequate supply ol cur
. At rr5u-r1ovng and ofncr busy seasons, il ulas -
+ eab IN fact that an. Canadian odnh cur ,
works automatically. increasing ln Noluh'' MN nc
] renutrsnfnts OF trade ami diminishing aS th' re-
/ nu'r,tn.n.s diminish. The BANKS aic tuie 10 ~
their assets well in hand 10 mte' emeiSrh - W..
the knowledge that their notes are a. So, u $50
even II the particular bank 81 issue shou.i lI' ~.
/ splrss confidence all around. burlHS the i'Sen.
financial storm IN thu United states the ana =.
/ hank. were not affected. except In 50 iar as tnc
storm disturbed the general trade OF m" 'ohthe. :
There are "A few advocates of an fftlr'iiA''
\t-,ona, currency IN canada principally Patrons d
Industry who have imb.Dcl the htresy from Nmeris-
can sources but they 10 not count Tor much in pon
tics More Moderate reformers complain 'htt IN.
banks reap an immense profit from thrif en- lHtt.,n
/ and want thp Dominion Government diOnc ID lssv e
notes but the public Is apparently satsnet VI !,
Things as they are II the banks were not an'"ei
H. issue notes IL + fct that they would nave no n
terest IN seeing that the supply OF monry VIZ
ever, where equal to the demand; that the - 'Neih-
ment could rot manage that important part al mo
business well as they manage H. -,
Whether the Canadian system Wou.i Mp!h Nvl
In vast field ike tn United states Is dehitto.
qi, ,tlon Ii certainly suits Canada with her snaII
popua ton IL should not he oyerl ookei thtt ne.
least, 10 the fact that she has no silver question
and that her people have never countenancei repd'
daton in any other form.