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Tous les eutres exemplalres originaux sont f iim^s en commenpant par la pramlAre page qui comporte une empreinte d'impression ou d'illustration et en termlnant par la darnlAre pege qui comporte une telle emprelnte. Un des symboles suivants apparattra sur la dernlAre image de cheque microfiche, seCon le cas: le symbols — ► signifie "A 8UIVRE ", le symbols ▼ signifie "FIN". Les cartes, planches, tableeux, etc., peuvent Atre fiimAs i dss taux de reduction diffArents. Lorsque le document est trop grsnd pour Atre reproduit en un soul cllchA, 11 est filmA A partir de I'angle supArieur gauche, de gauche A droite. et de haut en bas, en prenent le nombr« d'Imeges nAcessaira. lies diagrammes suSvants iiiustrent la mAthode. ita lure. 1 ZX 1 2 3 1 2 3 4 S e 154 Journal of the Canadian Bankers' Association Founders of Canadian Banking The Hon. Wm. Allan, Merchant and Banker Adam Shortt, D.C.L., Ottawa, Ont. A CLOSE observer of net results has contributed the observation that the English had employed the Irish to conquer India for the benefit of the Scotch. In view of the early ascendancy gained by the Scotch in com- mercial and executive political affairs in the Canadas, a somewhat similar observation might be made as to net re- sults here, although the instrumentalities may not have been quite the same. The subject of this sketch is but a typical example of a successful Scot in the earlier days of Upper Canada. William Allan was not a U. E. Loyalist. He was bom in Scotland in 1770. Young Allan appears to have been in touch with some of his successful fellow countrymen who had settled in Montreal. At any rate we find him leaving for that city in 1787, in his seventeenth year. There he entered, as a junior clerk, the establishment of Forsyth, Richardson & Co., where he received a thorough business training and an ideal introduction into the larger phaseo of Canadian mer- cantile and financial life. There too, he established connec- tions which were very serviceable to him in later enterprises. His natural qualities admirably fitted him to profit from his exceptional opportunities. He had too much of the na- tional canniness to be either notably brilliant in public life or over-speculative in business ventures. He was, however, sufficiently alert and enterprising to perceive advantageous opportunities and to take prompt advantage of them, as also to follow up promising leads with exceptional industry and perseverance. When he had served his apprenticeship with the parent firm of Forsyth, Richardson & Co., he made his first venture into the outside business world, establishing a connection with another member of the numerous Forsyth family, George Forsyth to wit, a merchant at Niagara. Recognizing the possibilities of trade and other economic ventures at the new seat of Government at York, Allan parted with For- syth, on friendly terms, and established himself at "Xork, in partnership with another young Scot, Alexander Wood, also destined to play an important part in the economic and other affairs of the province. This partnership, however, did not Founders of Canadian Banking 155 the frish Mew :!om- \s, a re- )een last long, each one setting up for himself at York. For a number of years Allan conducted a steadily-developing busi- ness on his own responsibility. He was for a time, from about 1812 to 1822, in partnership with his brother-in-law, John W. Gamble, one of the numerous family of Dr. John Gamble, a prominent Scotch loyalist coming to Upper Can- ada by way of New York State and the St. John river in New Brunswick. Like the Hon. John McGill, Dr. Gamble was attracted to the Upper Province through his former associa- tions with Simcoe and the Queen's Rangers, with which he served in the capacity of assistant surgeon. Allan married his daughter, Leah Tyrer. Other marriages of the numerous Gamble family at York did much to give color to the term "Family Compact" as applied to the York group of political and economic associates. Allan's personal character and sound methods of con- ducting his business naturally inspired confidence, in a situ- ation where much was fluid and uncertain. He soon gained an extended reputation for strict business integrity, his word being as good as his bond and both scrupulously observed. The certainty with which he could be relied upon to fulfil a contract or to discharge a public duty naturally attracted those responsible for the conduct of the executive govern- ment. In this field it was not necessary for him to do more than meet opportunity half way. He therefore soon en- joyed a position of much influence in executive quarters. The same was true, as we have seen, of that other Scot, John McGill, and these with a few others, came to he recognized as having the ear of several of the early governors and ad- ministrators. They were therefore the objects of special at- tack on the part of an equally pronounced English group, including such restless political innovators as John Mills Jackson, Judge Thorpe, Sheriff Willcocks, Surveyor Gen- eral AVyatt, and others, who, in the period before the War of 1812, proved thorns in the sides of peaceful rulers. Natur- ally Mr. Allan and his friends saw no occasion for radical innovation, for when one's own circumstances are fairly sat- isfactory, why encourage changes which may break up the established order of things, to which one has so conveniently adjusted one's personal interests! Moreover, Mr. Allan in particular, as unlike in this respect as others the group re- ferred to, had a great antipathy to mere publicity. Although much interested and, indeed, much engaged in public affairs, he rarely took any prominent part in general public meetings 156 Journal of the Canadian Bankers' Association and never sought the suffrages of his fellow citizens for public honors. On one occasion a rumor had been circulated that he was a possible candidate for a seat in the Assembly, and this suggestion had even found an echo in the general section of the Official Gazette. Allan at once complained to the Executive of the action of the editor in inserting this statement, maintaining that such announcement was a s.er- ious injury to his personal character and financial interests. In the end the editor humbly apologized for his indiscretion. When Allan transferred his interests to York he did not wait for the growth of the capital to increase the value of his investments. He was one of the minority who led in the de- velopment which was to insure the prosperity of the capital. Shortly after his coming, the best wharf on the water front, known as "the merchants' wharf," with a commodious ware- house erected thereon, was provided by the foresight and en- terprise of William Allan. This wharf and warehouse were constructed at the foot of Frederick Street, and thus deter- mined for a considerable time the chief business centre of the town. Commercially this centre was the four corners of King and Frederick Streets. The occupants of the other corners were D'Arcy Boulton, John Baldwin, and Allan's former partner, Alexander Wood. At Allan's wharf alone, for a very considerable period, could the larger vessels from the lake ports find sufficient water to land safely. There, too, they found sufficient accommodation for their goods, and there they took on the cargoes of exportable produce from the gradually growing centre of ''Little York." Under these circumstances, what more natural than that Mr. Allan, eminently reliable and efficient as he had already proved himself to be, should be appointed by the Executive Government to fill the position of Collector of Customs and to provide suitable accommodation for a Customs House:' He was also available as liispector of products for export. His appointment as Collector of Customs Duties and Inspector of pot and pearl ashes and flour was made on the 25th and was gazetted on the J9th August, 1801, Moreover, who so suitable as Mr. Allan to handle the incoming and outgoing mails, and to insure the safe custody, collection, and distri- bution of letters and other postal matter? So Mr. Allan was appointed chief of the York Post Office, under the title of Deputy Post Master, an imperial appointment under the Deputy in Chief, at Quebec, of the British Post Master Gen- eral. But the Post Office, centrally located, of course, at ssoei, intion ^^e capital ;^« deter! ^ ^ ^^iUre of ^ i^e other ^''^^ a/one ;,«^^^^ fro^ 7"' too, '«^«' and '^s and '^'•He t- Bis 'eetor 25ti 3in^ 'tri. vas of ie n- it Founders of Canadian Banking 157 i Mr. Allan's store at the corner of Frederick and King Streets, was naturally the most convenient place at which to make application for marriage licences, that foundation for the courage necessary to tackle primitive nature and compel it to yield a home; the most convenient place, like- wise, for application for licences to produce or sell spiritu- ous liquor, that other solace for many another entrant on the wilderness. Thus it came about, very naturally indeed, that Mr. Allan combined in his own person and on his own premises quite a list of public offices. These were obviously discharged with honesty and efficiency, because we find prac- tically no complaint against him on these grounds. Such com- plaints as arose were due to his success and the confidence reposed in him by the Executive Government. Thus did Wil- liam Allan, like several of his fellow countrymen, find him- self by force of circumstances a prominent member of the famous "Family Compact," the foundations of which were so successfully laid by Governor Simcoe, and the super- structure so successfully erected by its own members to be the political dwelling place and social centre of his succes- sors. It is true that, although Mr. Allan held so many of the early public offices at York, his direct pecuniary returns from them were for a number of years very modest; indeed altogether inadequate to the time and atteuition required by them. It is also to be observed that most of these posi- tions had been given up to others by the time they came to be of much pecuniary advantage. The Customs and Postal posi- tions were resigned in 1828. The fact, however, that he held these offices, and the satisfactory manner in which he dis- charged them, naturally redounded to his personal credit and gained him economic advantages in other directions, espec- ially in his general comrnorcial business and later in certain government contracts. Like a number »f other Scotchmen in the earlier days of Montreal and York, though having strong religious senti- ments, he was not of unalterable sectarian attachment. Henco, in the absence of any provision for a Presbyterian establishment, Allan, after the manner of his brother Scot John Strachan, accepted the constitutional provisions made for a Protestant church, and made the best of them. At a meeting to raise funds for St. James Church at York, on January 8th, 1803, the Hon. Chief Justice Elmsley being in the chair, Messrs. William Allan and D. Cameron were appointed treasurers for the fund, which meant that the 158 Journal of the Canadian Bankers' Association greater part of the work of collecting subscriptions, paying the contractors, workmen, etc., fell upon them. Their ad- vertisements for men, materials, etc., are found in the papers of the day. When, under the administration of Archdeacon Strachan, the church was repaired and extended in 1818, Mr. Allan was still chief custodian of the funds. Although refus- ing to become a candidate at elections, he sometimes officiat- ed as returning officer, the first occasion being apparently in 1801. He acted also in 1804, and was again returning of- ficer at the celebrated election of 1806, which resulted in the return of Judge Thorpe, who succeeded his radical friend Weeks, killed in a duel arising from the personal animosities incident to the political controversies of the day. He took an active interest in the organization of the militia, where we first find him in the public notices as Cap- tain of the Town Company of York. At the outbreak of the American War he held the rank of Major, and, under instruc- tions from General Brock, led a detachment of the York Vol- unteers to the head of the Lake, July, 1812. This force was with Brock at the battle of Quoenston Heights. He was at York also when the capital was taken by Dearborn and Chauncey and, as Major Allan, signed, with Lt.-Col. Chewett, the articles of capitulation, on the 22nd April, 1813. He was afterwards raised to the rank of Colonel. In 1804 he was one of the commissioners appointed under Statute for the construction of the Lake Shore Road from York, running to the head of Burlington Bay, Being person- ally interested as a merchant in improving the highways of the district, we find him taking a prominent part in the open- ing of Yonge Street to the north, in 1801. For a number of years Yonge Street entered the town of York via the Rose- dale ravine, and the Don Valley. Even within the town limits Yonge Street was not originally an important thoroughfare. As first laid out it did not extend below King Street, hav- ing no access to the water front. The intervening land be- tween King Street and the water was ownied by Wm. Allan, R. Ferguson, and J. Macaulay. To reach the water, traffic coming down Yonge Street passed along King to Toronto Street, and down it to the Bay. An arrangement was made by which the above parties allowed Yonge Street to be opened through their properties, on condition of receiving in ex- change that portion of Toronto Street between King and the water front. In 1805 they petitioned that this arrangement g,VvovvV ail c< \- J fon i Paying Founders of Canadian Banking 159 P^S- of. I should be completed by the transfer to them of that section of Toronto Street, For a long time Mr. Allan's home was at the southeast corner of Frederick and Front Streets. He afterwards pur- chased the park lot, originally obtained by the Surveyor- General, D. W. Smith, in 1794, and known as Moss Park. There he built a fine residence on the west side of Sherbourne Street, where he lived at the time of his death. This exten- sive property, lying between those of the Hon. John McGill and S. P. Jarvis, blocked, until 1833 at least, the extension of Queen Street beyond Yonge to the east. The city park known a a Allan Gardens constituted a portion of this estate. The larger merchants in the earlier days of the country simplified exchange conditions by conducting all manner of commercial business, wholesale and retail, within their own management. They also dealt in all forms of exportable produce as well as those suitable for domestic trade. Those who, like Allan, had extensive connections with the more im- portant Montreal houses, such as the McGills, Forsyth-Rich- ardson, the Gillespies, etc., acted as agents and forwarders between these houses and the local traders in the other cen- ters springing up in the west. They also conducted moat of the business afterwards taken over by the banks, in the nego- tiation of bills of exchange, promissory notes, and other early forms of commercial paper, and a number of them also issued their own private notes, or hons. At the time of the struggle with France, owing to the uncertainties of trade with the northern powers of B^urope, the British Government was offering bounties to British North America on the produc- tion of timber and the growth of hemp. The Hon. James Baby was a commissioner for the purchase of hemp in the Western District ; and we find that when hemp was delivered to him, in 1813, he paid for it i>y drafts on William Allan at York. Allan was himself a commissioner under the Act of 1804 and would be paid in bills of exchange on London, which he might sell at a premium in Montreal, or he might receive cash or army bills through the military chest at York. Owing to his intimate connection with Forsyth, Richardson & Co., a very considerable portion of the exchange business at York and the western portions of the province fell into Allan's hands. Moreover, he was for a number of years treasurer of the Home District. It appears also from the reminiscences of Mr. Dupuy, the first accountant of the Bank of Montreal, that Mr. Allan acted for a time as agent for the Bank in Yoik. 160 Journal of the Canadian Bankers' Association In the early days of the Province most of its commer- cial busmess centred at Kingston, but the greater part of the Government business, and consequently a growing part of the commercial and exchange business as well, centred at S J'he nitroduction of the Army Bills, themselves sug- gested by the local circulation of traders' bons, familiarized the people of Upper Canada with a very convenient, far- reaching, and perfectly safe paper money. Their gradual redemption and disappearance after the war left a gap in the circulating medium, difficult to fill. Moreover, the with- drawal of the Army Bills, after the war, coincided with the reaction m business following the subsidence of the specul- ative fexer which invariably accompanies the first two or three years of peace. It appeared to manv that the recur- rence of commercial stringency was very largelv due to the withdrawal of an abundant circulating medium.' Hence the proposals for the establishment of public banks met with con- siderable popular favor. In this connection, there emerged V?J7 ""^ interests between Kingston and York as to which should be the provincial banking centre. Kingston, however, was first in the field, in 1817, with its petition for a legisla- tive bank charter. This was dated 20th Januarv, and was presented to the Legislature early in 1817. Afterwards a petition for a bank at York, dated 17th March, 1817 was presented by John Strachan, Alex. Wood and others'. In response to the Kingston petition an Act was dulv passed chartering the Bank of Upper Canada. It was, however re- served for the consideration of the Home Government. But the decision of the Home Government was delayed so long that, though It was ultimately sanctioned, the announcement did not arrive within the time limit prescribed. The charter was therefore forfeited for non-user, but would require, as the Lieutenant-Governor stated, onlv the form of re-enact- ment to render it available. mile the ^ate of the bill was in doubt, a number of the «fT.'t?v^^' bank at Kingston had become impatient at the delay. Hence, following the example of Montreal thev organized at Kingston, in 1818, a private bank under the name of the -Bank of Upper Canada," hoping for a charter later This institution, however, lacking in financial strength and being badly managed, was unprepared to meet the com- mercial reaction which followed, and was forced to suspend In the meantime, the efforts to obtain a chartered bank contmued, and, when the Home Government was found to I 1p''"io„ li «^ Part nf ^o7^ the L "' «^ 3Sod n^ f2i i I •M Founders of Canadian Banking 161 be favorable, on petitioii of the Kingston merchantai and others, a new bill was introduced. A little later a petition from the people of York, headed by Wm. Allan and others, was presented. Then by a few strokes of clever political manipulation, in which the artistic hand of Attorney-General J. B. Robinson was conspicuous, with the activities of Arch- deacon Strachan in the background, the people of Kingston were juggled out of their charter for the Bank of Upper Canada. On amendments proposed by the Legislative Coun- cil, the names of the Kingston promoters were removed from the Bill and those of the York petitioners substituted. The location of the bank was also changed from Kingston to "the seat of government," and, most important of all, the Gov- ernment itself was made the chief financial partner in the institution, although not having the management of it. The Council then tossed to the petitioners of Kingston a local sub- stitute bill bearing the name of that town only. A i hough the substituted Kingston charter was the one assented to by the Governor, while the captured one was reserved, yet the pre- vailing commercial depression coupled with unfortunate de- velopments in connection with the private bank already es- tablished, effectively prevented Kingston from taking ad- vantage of even its local act before it expired for non-user, 1st January, 1821. The Kingston charter having lapsed and the captured charter for the Bank of Upper Canada being in limbo, a movement, originating in Prince Edward County in 1821, was begun for the establishment of a Provincial Bank, in the hope, apparently, of uniting the rival inter '*3 of the province. The petition, on reference to a committee of the Assembly, resulted in the framing of a bill for the Pro- vincial Bank of Upper Canada. This bill was passed through its various stages with little opposition, and was duly sanc- tioned by the Lieutenant-Governor at the close of the session, 14th April, 1821. It provided for the establishment of a branch of this bank at Kingston on certain conditions. To the general astonishment, however, during the recess, the captured charter for the Bank of Upper Canada was sanction- ed by the Home Government; hence the Provincial Bank Act was not taken up. Owing to the stringency of the financial conditions of the time, the York group found even more difficulty in raising the minimum paid-up capital for launching their bank, than did the Kingston merchants. This difficulty was not alto- gether removed by the amendment of their charter reducing \ 162 Journal of the Canadian Bankers' Association the capital stock from £200,000 to £100,000, ami the minimum to be raised by the private stockholders to £5,000, the like amount to be paid in by the po^'prnment. In the end they appear to have Kot together about £3,000, and with the aid of the Military Chest and the contribution oi' the ji:overnment brought the bank into operation in July, 1822. His active promotion of the new bank, his Montreal connections, and personal financial experience and personal integrity, natur- ally led to the selection of Mr. Allan as the first President of the Bank of Upper Canada, a position which he occupied until 1835, when he retired at his own request. The other directors were the Hon. John McGill, Rev. Dr. Strachan, T. Ridout, C. Widmer, Jas. Crooks, Wm. Proudfoot, Hon. J. H. Dunn, H. J. Boulton, Hon. Jas. Baby, Geo. Munro, Geo. Ridout, Hon. Geo. Crookshank, and the Hon. D. Cameron. More than one half of the number of directors belonged to the Scotch group at York, while nearly all of them were either then or later members of the "Family Compact." These facts will account for the exceptional animosity with which the ultra-radicals of the Mackenzie group assailed the Bank, in season and out of season, as the great bulwark of the official Tory element in the government of the province. The efficiency and commercial integrity of the management of the Bank were not directly called in question, while its financial success was not only admitted but emphasized as one of the chirf grounds of attack. In point of fact, Mr. Allan was probably the least interested in the political and party controversies of the day, while the Cashier or General Manager, Thos. Ridout, was actually associated with the more constitutional wing of the reform or responsible government party. Allan and his fellow directors s.trenuously denied that the business policy of the bank was influenced by poli- tical considerations. Wealthy radicals, like Cawthra and the Baldwins, had as little difficulty in getting good treatment from the bank as well-to-do members of the Compact itself. At the same time, it must be observed that the majority of the men of wealth at York, or in the provincial centres to which the agencies of the bank were afterwards extended, were mainly of a conservative type, financially at least. Hence the services of the bank were undoubtedly employed very much more to the advantage of the conservative than of the radical element in the province. Once the bank was established, the President and Direc- tors naturally sought to make it the custodian of the provin- 7 \ >vouUl mcini not the \ fouij '] cecf cvall Foi Bal uoj Avi of Founders of Canadian Banking 163 mmum M they aid of ' active and fiatur. pt of ' other ^ehai], Ho«; unro, d to ^ere ct." lied vark nee. its as nd "ai re It d J? ■a ciul funds and the aponcy through which government exchange would be negotiated, and to have its bank notes received and paid out in the collection and disbursement of the prov- incial revenue. Here, however, we come upon one of those not infrequent instances in which the consolidated unity of the executive government as popularly represented, was found to be sadly wanting. The Hon. J. H. Dunn had suc- ceeded the Hon. John McGill as Receiver-General or Provin- cial Treasurer, and had entered into arrangements with Forsyth, Richardson & Co., and thus, indirectly, with the Bank of Montreal, to act as his agents in holding his balances, negotiating liis bills, making i)ayments in reap'^nse to his drafts and furnishing what specie or other acceptable media of exchange was necessary to meet his local wants. When necessary, also, these agents would furnish advances in an- ticipation of provincial revenue. In this connection he ac- cepted and paid out Bank of Montreal notes, in lieu of metallic currency, as more convenient to handle and of un- questionable security. It appears from Mr. Allan's correspondence with the Lieutenant-Governor that it was understood, among the pro- moters of the Bank of Upper Canada at least, that, the government itself being the largest shareholder in the bank, the bank would have the privilege of handling the business of the government. However, the Receiver-General, Mr. Dunn, had bluntly Informed Mr. Allan and his Board that he did not propose to change his financial agency, unless directed by the Home Government. Should, however, the Bank of Upper Canada, of which he himself was a director, demon- strate its financial soundness, as had the Bank of Montreal, he would not object to receiving their notes for provincial dues, nor would he object to selling to them his bills of ex- change at as favourable rates as could be obtained elsewhere. This firm stand bv the Provincial Treasurer, the Bank of Upper Canada was unable to alter. There were other depart- ments of the government, however, which handled a good deal of money, and most of these were secured as customers. Once firmly established, the management of the Bank of Upper Canada strenuously objected to the chartering of any other bank in the province. Their chief argument was based on the danger which the granting of another charter would introduce, of filling the country with local banks in every district, thus introducing the American system of many small banks constantly liable to failure owing to inadequate 164 Journal of the Canadian Bankers' Association funds and inefficient or dishonest management. And in^leed it was obvious enough that many parts of the adjoining states were suffering from this evil. The long drawn out series of post-mortems; over the unburied skeleton of the late "Pretended Bank of Upper Canada" at Kingston, and the repeated though apparently only half-hearted efforts of the Legislature to lay the ghost of that institution, conveniently served the friends of the Bank of Upper Canada for a num- ber of years with a warning example as to the probable consequences of establishing another bank in the neighbour- hood of Kingston, whence the new projects usually emanated. With the recurrence of provincial prosperity, however, in the later 20 's the merchants of Kingston, backed by others^ in the eastern districts of the province, persisted in reviving their claims for a bank. On several occasions their bill had passed the Assembly only to be thrown out by the do.ninance of "the Compact"' forces in the Council. The obviously growing need for additional banking accommodation at last forced the Bank of Cpper Canada itself to apply for an increase of its capital stock, together with a renewal of its charter. But the Assembly blocked the Upper Canada bill so long as the Council blocked the Kingston bill. Ultimately a compromise was arrived at and both bills were allowed to pass, despite the strenuous opposition of Mackenzie, whose political power was then at its height. Mackenzie, however, carried the war into Africa. He went to London in 1832 and for a time gained the ear of the Cf)lonial Office. Among other objects in view he sought to have the bank acts disallowed. Tliis he nearly accomplished, as the authorities of the British Treasury were at the time in a reforming mood on the subject of banking, domestic and colonial. As a condition of passing the Upper Canada bank bills they required the introduction of a number of new conditions. Most of these were ultimately adopted in one form or another, but some of them were quite inapplicable to Canadian conditions at that time, while others were virtually secured by more suitable methods. This bolt from the blue brought about an immediate union of the rival banking interests. Remonstrances and protests flowed in from every quarter, puhlic and private. One of the most extensive and closely reasoned documents which Mr. Allan, as President of the Bank of Tapper Canada, ever issued, was sent to the Home Government. July, 183.'}, through the Lieu- tenant-Governor. Incidentally it pictured the ruin which must fall upon the commercial interests of the eastern por- € % % ?fl f^ the f « in Founders of Canadian Bankin