Mexico weekly ledger., 1898-01-13

it will be necessary to at least recall
some of the experiments and give a
general outline of the growth of the
system, which resulted in the act of
1890.
To this end it will be necessary, in
the first place, to fix in our minds three
or four dates which mark off the nat
ural periods OF growth through which
this system has passed.
The first period is embraced be-
tween 1917, the date Of the beginning
of joint stock banks In Canada, and
1s41, the date of the union of Upper
and Lower Canada into the Province
of Canada. The second period ex-
tends to 1867, the date of the union Of
all of the provinces OF British North
America into what is now called the
Dominion of Canada. The third
period brings US up to 1890, when the
law now in operation was enacted.
FIRST PERIOD.
In 1917 six joint stock association
three in Lower Canada and one each
in Upper Canada, New Brunswick and
Nova scotia-made application to
their respective governments for
charters granting them special priv
ileges in the business of banking. The
bank of Montreal, which has survived
until the present time, and is now the
most pretentious financial institution
in North America, having a capital
and surplus of over eighteen million
dollars, took the lead. The charter Of
this bank, whose provisions were fol-
lowed in the charter of the other
banks, gave the institution charter
powers until June 1, 1881. In organi.
cation and management it adhered
closely to Scotch methods.
The principle of limited liability was
applied to the shareholders without
any obligation beyond the amount of
their subscription stock, but the di-
rectors were liable to the stockholders
as well as to the holders of bank
notes, In ase the debts of the corpor-
ton should exceed treble the amount
of the capital stock actually paid in
exclusive of the deposits. There was
no limit upon the volume of note issue
except the general liability Of the
directors for the aggregate indebted
ness. The chief characteristics of the
system thus adopted were conserv-
atism on the part of the management
of the bank, and noninterference on
the part of the government. As q
result OF the operation OF these two
principles, banking, during the first
half of the first period, was q marked
success, but the latter half Of the
period witnessed the abandonment Of
sound banking principles.
In 1884 and 1885 a clamor arose for
more banks and more money. 1t will
be remembered that this was q period
when speculation was ripe throughout
the western world. The people in
Canada were specializing in land,
making public improvements on an
ambitious scale and trading generally
much beyond their financial capacity.
They conceived the notion that money
should be more plentiful and should
be had upon easier terms, and conse-
quentiy began to demand an increase
OF banks on q more progressive and
elaborate plan. This clamor took the
shape of attempted legislation and
during the ten years prior to 1s41,
bills were introduced in
Upper Canada alone on the subject Of
banking and currency, some of which
were adopted. Many unsound cur
rency laws were passed In the differ
emit provinces, but most of them failed
to receive royal sanction.
SECOND PERIOD.
The union OF Upper and Lower
Canada was accomplished on Feb. 8,
1S41.
The first Governor General Of the
new province was Lord Sydenham,
who held the same currency views a.
Lord Overstone, the great champion
Of the currency principle in England,
and endeavored to engraft upon
finances the separation Of
The functions Of note issue and bank
which were imposed on the Bank
-
Of England by the act Of 1874. The