Omaha daily bee., 1905-07-10
CANADA'S BANKING SYSTEM
Provisions Of Laws Of the Dominion Com
pared with Those Of United States
SECURITY FOR NOTES AND DISPOSITIONS
Stockholders Liable for Double
Amount of Their stock and a Cash
Deposit IL Made with Gov
ernment In Addition.
SECURITY FOR NOTES AND DISPOSITIONS
tErom a star correspondentO

WINNIPEG, Man. July 9.--(special.)-
The agitation which has been going on
for number of years in the United states
looking to a modification or a change in
the national banking laws of our country
is not without warrant, II one takes into
consideration the banking laws Of the Do
minion of Canada. During my visit to
Winnipeg 1 had occasion to talk with the
cashier of the Eastern Township bank, the
headquarters of which are at Sherbrook,
Quebec. and so interesting and instructive
were the facts obtained from him regarding
the banking laws Of Canada that am i'm
pressed to give their operation serious con-
sideration.
So far as elasticity goes and general
safety for noteholders and depositors is
concerned. Canada can well lay claim. in
my judgment. to having the best banking
system on the continent. There are thirty
three banks chartered by the Dominion
government and these have over loo
branches located throughout the whole Do
minon. Some of the larger banks have
from sixty to eighty branches. The Bank
OF Montreal is the strongest, having a
capital of $4,000, 600 and rest or surplus
of $40 665, ,OOO These chartered banks are
all in the provinces Of quebec, ontario and
the maritime provinces. There are none on
the Pacific coast.
Deposit with Government.
Each bank is authorized to issue currency
to the full amount of its unimpaired cap
ital, in bills Of the denomination of s. and
it's multiples. This circulation is guar
anteed by a deposit with the government
derived from per cent of the average cir
culation. Thus a bank with an average
circulation OF $2OOO,OOO keeps on deposit
with the government 5000 on which the
government, having use for the money,
pays per cent interest. Thus a deposit
of per cent of the total bank circulation,
which is estimated at about $5,00O,0OO, forms
a sufficient guarantee to the noteholders
of any bank which may fail. Moreover
the stockholders in all chartered banks are
liable for double the amount of their stock.
When a bank is unable to pay its bills in
gold the fund held by the government is
drawn on until final payment is made, these
bills drawing interest at per cent. 1t thus
often happens that such bills are at a
premium when finally paid. The bills are
also a first charge on all the assets Of
the banks The banks are required by law
to maintain a reserve of not less than 40
per cent of their cash resources in Do
minion bills.
The Dominion currency resembles the
greenbacks of the United States. 1t is
issued in denominations of 81, 81 and 81
for general circulation, the banks issuing
the larger denominations from IS UP for
exchange. The larger denominations are of
two sorts, however-those for general cir
culation and those for settling exchange
between the banks. The latter denomina-
tions are not negotiable in ordinary tran
sactions, and are only payable to char
tered bank. This obviates losses by rob-
berry as the big bills would be absolutely
worthless to the thieves.
Canada does not have a mint. but one Is
shortly to be established. The Dominion
has no gold coins, the English sovereign
and the American IS piece. the latter at the
rate Of S4.S63s, are used In business transac-
tions. The subsidiary coins of the denomi-
nations of 8, 10, Is and so cents are coined
in England. There are no silver dollars
coined and nickel is not used, copper cents
being the only coins except the silver.