Richmond dispatch. [volume] (Richmond, Va.) 1884-1903, 1899-08-06

/ Thougn it Is not new 10 those WIZ
have studied the operations OF the Cana
dian banking system. the suspension az
two OF the banking institutions Of Mon
treal and their branches has brought
prominently 90 the front a feature OF that
system which honest banking and cur
rency reformers generally in TINS
country might do worse than care
protection or the notehoider. so
far as can be learned. 1T is stated.
none OF the noteholders OF the
! suspended institutions-"save occasional
ignorant persons"-have asked for re-
demption Of their clalms And the reason
Is not far to seek. Under the Canadian
banking law nOteholders have priority
Of claim against the assets OF defaulting
institutions. including the liability OF the
shareholders for double the amount. not
( merely of their paid-up. but also OF their
subscribed, stock. Moreover, the holder or
a note of a failed bank is entitled to
draw interest at per cent. upon his
claim from the date of suspension until
presentation Is called for by the liquida-
tor of the bank or by the Minister Of
Finance The latter in the event the
| liquidator does not pay the note within
sixty days from the date Of failure, ar
ranges to pay it out Of the Bank Circuia-
ton Redemption Fund-a fund in the
governments custody. equal 10 per cent.
OF the circulation of all the banks,
contributed pro rata by all the banks.
and which each solvent bank Is obliged 70
make good, in case of depletion, by con-
tributions not exceeding in any one year
per cent. of the circulation of each.
Now, we respectfully submit that this
presentation would appear to dispose,
enectually, Of the main argument the adj
vocatos Of the United states national
banking system advance against banking
and currency reform, and in support OF
the present irrational, antiquated, made
quate. and peculation-stimulating re-
CINE. When driven from every other
position. the champions Ct the national
banks. as they stand, invariably raise the
cry that no matter what may be the de-
fects Of their fetch these are com
pensated for by the protection afforded
the noteholder. The Canadian banking |
system. however, not only adequately
protects the notehoder, but is free from
the restrictions, not to say iniGuities,
OF the national banking law, which pre-
vent the latter from meeting the legiu- |
mate demands Of trade and the necessi- |
ties Of the masses. IN short, the Cana |
dian system is based upon business prln- |
c!pies. And while we are not prepared |
to say that in all respects it Is what Is
required IN this country, we think 1t I'M
questionable that it has many features
which practical fnanciers and sincere
refornlers ought 10 be able to combine
with others to the end of so changing |
existing laws that the true object OF
banking may be attained. Indeed, this
much was virtually conceded in the last
annual report of Secretary-o he-Trea-
sury Gage. who, as We said when that
report appeared, seems TO be honestly in
favor Of banking and currency reform.
And Just here IL should be stated that
the suspension of the two Montreal in
stitutions in nowise affects the contention
that the Canadian system is based upon
business principles. The trouble resulted
from weakness of management, and
not from weakness Of the principle Of
the system as embodied in the law. The
directors did not direct properly.
That is the story Of the embarrassment,
as 1t is the story Of the wreck of many
Il national bank in the United States. Be
sides. the two Canadian banks in ques-
ton. La Banque Vile Marie and La
Banque Jacques Cartier. have never been
the strongest enterprises Of the
sort in the Dominion of Canada.
They belong, the New York Journal Of
Commerce explains, to group which is
known collectively as the French banks.
none of which but La Banque d Hoche-
laga and La Banque Rationale has more
than 100000 capital paid up, while three
Of the remaining four have less than that.
Yet, as emphasizing the fact that bad
and not defects in the sys-
tenn caused the suspensions, 1t may be
mentioned that intermiXed as are the
members of the group. confidence was
luickly restored. la Banque d'Hoche-
aga and La Banque Rationale promptly
met runs induced by the suspensions, la
Banque d'Hochelaga even refusing help
in the shape of cash offered it by the
Bank OF Montreal.