Mexico weekly ledger., 1898-01-13

plan was advanced on the ground of
needed security and uniformity of
note issues. The proposition met with
opposition and only a few Of
the recommendations of Lord Syden-
ham were ever incorporated into law.
The next phenomenon of interest
was the mania for free banking, which
arose in 1850. At this time the COM
mercial relationship between Canada
and the state of New York vas very
close. In Canada the system of large
banks with branches scattered
throughout the country and a circula-
ton not specially secured, was in
operation. In New York there were
small banks with no branches and a
specially secured operation. New
York was more prosperous at this
period than Canada, and 1t is not
strange that the Canadians decided to
try the experiment which apparently
produced good results across the Dor
der. In consequence, the free bank
ing act was passed, having for it's
object the production of small banks
under a general charter with a circu-
lation based upon the securities Of the
province. 1t was hoped that this
would have the effect of creating a
market for such securities. The sys-
tenn met the fate of the "wild cat"
scheme from which it was copied. 1t
was a total failure and left no good
effects on the system it was designed
to supplant.
The next experiment was a revival
of the proposition to establish a gov
eminent bank of issue, and failing in
this, to create an especially secured
circulation of government currency.
This was a revival of Lord Sydenham's
scheme in another form, and was sup
ported by a Mr.. E. H. King, the man
ager of the Bank of Montreal, and Mr..
Rose, the new Minister of Finance.
The plan was Objectionable both to
the bankers and to the people, and
was withdrawn by Mr.. Rose on the
18th of June, 1869. Mr. Rose was sue
ceeded as Minister of Finance by Sir
Francis Kinks, who abandoned the
policy OF ar especially secured circu-
lation and contented himself with
throwing some additional safeguards
around the existing bank note system.
THIRD PERIOD.
During the period from 1867 to 1896
a series of reform movements were
set in operation, some failing and
some resulting in substantial and last
ing benefit.
The browning achievement of this
period was the enactment in 1886 OF
the provision which, for the first time,
made bank notes a prior lien on the
assets of the bank-a first charge
before all others. This step eliminated
from future discussions the question
of security and convertibility.
While the various attempts of the
government to establish an especially
secured currency resulted In failure
for the most part, yet during the last
period the advocates of government
Intervention succeeded in injecting
into the currency a large volume of
Dominion notes. The government at
the present time reserves the right to
issue legal tender paper money. The
limit of such issue is fixed by statute
at twenty millions of dollars-nineteen
millions of which has been put out.
Gold being the only standard of value,
the paper money has for it's basis of
redemption fifteen per cent of that
metal, and for its security ten per
cent in Dominion bonds, guaranteed
by the British government, and
seventy-hve per cent in Dominion
bonds not SO guaranteed.
1t is interesting to note in this con-
nection a fact which throws some
light on the per capita argument,
which in recent years has held such a
prominent place in financial discus
sions. Canada maintains a paper cir
culation of $3.50 per head on a me-
tallic basis of s2.64 per head, while
our paper currency averages $3.50
with a metallic base of s11.36 per head.
These facts not only refute the per
capita argument but serve to illus
trate the comparative merits of the
systems of credits in use in the two
countries.
THE CANADIAN BANK ACT OF TO-DAY.
This brings Us to the act of 1890,
which, in the opinion of financial ex-
perts,is the most consummate piece of
financial legislation that has ever been
enacted. Under its provisions the
banking of Canada is going on in an
even and effective manner and the
full requirements of business in the
way of currency r met. I shall
now undertake to review this system
in its present development, to exam
inc some of the principles of its Or
ganization and consider certain of
its practical workings. The system
may be briefly described as a group of
thirty eight large joint stock corpora
tions chartered by the parliament of
Canada, privately owned and man
aged, but working under a uniform
law, having the power to establish
branches and enjoying the privilege,
exclusive a against individuals and
other corporations, of issuing promis-
sorry notes for circulation as money.
THE PRINCIPLES OF BANK NOTE ISSUE
SECURITY AND CONVENIENTLY.
1t must be noted in the first place
that banking in Canada ia no monopo-
ly. It Is a competitive system of the
most free and active variety. Any
number of persons who will organize
q corporation with a full subscribed
capital OF FIVE hundred thousand dol
lars (this being the minimum limit
and a paid up capital of one-half that
2-.r ohkos. n1n-o. Tho