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 M^ 
 
 i-i^ ^^*v 
 
 E CURRENCY AND 
 H EMBANKING 
 THE 
 
 
t<« 
 
 THE 
 
 CURRENCY AND THE BANKING LAW 
 
 OF THE DOMINION OF CANADA 
 
 CONSIDERED WITH REFERENCE TO CURRENCY 
 REFORM IN THE UNITED STATES 
 
 WILLIAM C. CORNWELL 
 
 
 , ^i>. 
 
 iV'' 
 
 
 ■y 
 
 G. P. PUTNAM'S SONS 
 
 ^^^^' ^•*"^»^ LONDON 
 
 .7 WEST TVVENTV.TH.HU STMW »* HEt KOKU ™«T, STKANU 
 
 f ht linithtrbochir Prrii 
 
-tlMii 
 
 Copyright, i3o4 
 
 BV 
 
 WILLIAM C. CORNWELL 
 
 tfcc Tfmtchcrbcckcr pvccf, t{i\v Uotk 
 O. P. PifTNAM's Sons 
 
 If 
 
NOTE. 
 
 "-THE substance of the matter included under the head of 
 1 the -Canadian Banking System-Its Growth and 
 Present Operation " in the following pages was embodied in 
 an address delivered at the American Bankers' Convention 
 New Orleans, on November 12, ,89,. The situation in the 
 United States, then portrayed, still continues, except that 
 the repeal of the purchase clause has since been accom- 
 plished. The forecast of danger, made at that time, was 
 realized during ,893. The attention of the whole country 
 IS now centred upon the struggle for currency reform. 
 
 The Banking Act of Canada is given entire in the 
 second part of the book. The clauses and sections of 
 especial interest, in view of reforms proposed, are printed 
 in heavy.faced type. 
 
 )U 
 

CONTENTS. 
 
 PAGE 
 
 The Canadian Banking System-Its Growth and Operations 
 Conditions in the United States before Repeal of the 
 
 Silver-Purchase Clause 
 American Experience with Bank Notes 
 Growth of the Canadian System 
 Canadian Bank Act of To-Day 
 Branch Banking . 
 Security . 
 Elasticity . . 
 
 3 
 
 4 
 6 
 
 II 
 
 21 
 
 The Banking Act of the Dominion of Canada, 1891 . ' .0 
 
 Application of Act 
 
 ^ ••••♦, » - 
 
 Incorporation and Organization of Banks 
 
 Internal Regulations . ♦ . 
 
 Capital Stock . . 
 
 Shares and Calls . - 
 
 Transfer and Transmission of Shares 
 
 Annual Statement and Inspection 
 
 Dividends . ^ ^ 
 
 Reserves , -^ 
 
 Note Issue . 
 
 Business and Powers of the Bank 1 
 
 Returns hy the Bank * 
 
 Insolvency . . . 
 
 * * * • • • • • . 74 
 
 If 
 
 31 
 33 
 36 
 41 
 43 
 45 
 
VI 
 
 CONTENTS. 
 
 Offences and Penalties . 
 
 PvBLic Notices 
 
 Dominion Government Cheques 
 
 COxMMENCEMENT OF ACT AND RiiPEAL 
 
 Schedules . . , 
 Memoranda . . . 
 
 PAGE 
 
 77 
 78 
 
 78 
 
 78 
 
 79 
 
 85 
 
'* 
 
 THE CANADIAN BANKING SYSTEM-ITS GROWTH 
 AND PRESENT OPERATION. 
 
THE CANADIAN BANKING SYSTEM— ITS GROWTH 
 AND PRESENT OPERATION. 
 
 INTRODUCTION, WRITTEN IN IS91-CONDITIONS IN THE UNITED STATES BEFORE 
 
 REPEAL OF THE SILVER-PURCHASE CLAUSE. 
 
 THIS country is practically at sea on the currency ques- 
 tion. We are pounding along like a great ship on the 
 ocean, with the engines at their utmost, politics at the 
 wheel, iornorant of our bearino^s, and liable at any ^„^ „.k,„. 
 
 «-> o • THE PANIC 
 
 moment to collision and disaster ; for, what with predicted. 
 an unpliable, inelastic circulating medium, much of it base 
 in value and ground out mechanically and without scientific 
 control, at the rate of four and a half millions per month, 
 no one can say what the outcome will be. 
 
 At such times wise men t^lance abroad and backward to 
 get, if possible, some light upon the dark waters from the 
 past and present experiences of other nations, looking for 
 I desire in this paper to call the attention of 
 such men to the experiences of our sister nation, Canada, 
 on the grounds that, while being nearest to us geographi- 
 cally and physically, her conditions are the most closely 
 allied to our own of any community that we know of. 
 
4 THE CURRENCY AND THE 
 
 Canada has, for many years, existed under a banking 
 law which, with additions and improvements from time to 
 CANADA'S time, has given her a circulating medium fully 
 
 ADEQUATE 4.* 11 «.U * 4. f 
 
 BANKING meetmg all the requirements oi every season, 
 both as to elasticity and safety, and to-day, with 
 the improvement brought about by the amended law going 
 into effect last July, she has, I believe, for her needs, the 
 most perfect currency system of any nation in the world, 
 except, perhaps, that of Scotland, after whose system her's 
 is closely mv.delled. In fact, the Canadian partakes, in its 
 character, of the sterling qualities of the Scotch system, just 
 as the Canadians themselves possess many of the admirable 
 characteristics of that grand people from whom they are 
 largely descended or made up. 
 
 AMEriCAN EXPKRIENCn: WITH r.ANK NOTES. 
 
 Before entering upon the subject proper, it may be well 
 
 to refer to the period of bank-note issues in the United 
 
 States previous to the inauguration of our 
 
 A PREIUDICE. . , 1 1- f 1 • 
 
 national system, as the disasters oi that time 
 and the wild and (!xciting incidents attending the progress, 
 explosions, and final suppression of the State-bank issues 
 seem t(^ have i)lanted a prejudice in the; mintls of Americans 
 against any kind of individual bank issues without dis- 
 crimination, notwithstanding that in several of the States 
 the business was ccmducted with the utmost honor and com- 
 
BANKIXG LA W OF CANADA. 5 
 
 plete success. I may say that the prejudice was planted 
 even farther back in the history of America by the burnt- 
 child experience with the old Continental notes which were 
 a dead loss to the enormous amount at that time of 
 $196,000,000. 
 
 This was along- in the latter part of the last century. 
 Just before the final collapse, a desperate effort was made 
 to hold up the currency, but notwithstanding- all that the 
 Government, aided by the leading men of that period, could 
 do, a dozen eggs sold for $5000 in Continental paper 
 money, and a silk hat of the period, which continental 
 would be worth about $7.00, cost $140,000 
 in Continental currencv The word was burned into the 
 language, and then, as now, utter worthlessness of a thing 
 was conveyed by the expression, " it is not worth a con- 
 tinental." 
 
 To many of you, the older members of this association, 
 the fiery destruction of the State Bank-note era. in the 
 South and West, the Wild-Cat period, as It is 
 
 . WILD-CAT. 
 
 called, is still vivid. Those were times when 
 the contents of a man's pocket-book would slowly burn to 
 ashes through the failure of a dozen banks of issue in an 
 hour, or, when the farther one went from home, the greater 
 became tlu! discount on the notes he carried with him, par- 
 ented, as they were, by i)anks of no reputation beyond the 
 town lin«' where they liapp(;ned to In.' situated. 
 
 Even in those uncertain days the humor of the American 
 
6 THE CURRENCY AXD THE 
 
 gave rise to that venerable story of the man who had started 
 NO BILLS ^^ ^ journey, and after he had proceeded about 
 AT ALL. three miles, heard that a bank near by had 
 
 failed. He ran all the way home to see if he had any bills 
 on that bank, and when he got there found that he had n't 
 any bills on that bank, or on any other bank. 
 
 This was the time of the " Red Dog" bills, as they were 
 
 called. Banks w^ould locate temporarily In a place and Issue 
 
 bills. Then, when they had exhausted the re- 
 
 RED DOG. 
 
 sources of that community, would move over- 
 ni<iht to a distant town and there, Instead of havino- new bills 
 printed, w^ould use the old ones, simply stamping the name 
 of the new locality on the old bills in red ink. Hence the 
 name Red Dog. 
 
 No wonder that after experiences of this kind, a nation 
 should come to regard the very principle of State issue with 
 THE OTHER holy liorror, and should embrace the opposite ex- 
 treme of a national and over-s(jcured currencv as 
 an unalloyed blessing, refusing to consider anything else 
 even at this late period, when the private.' profit and impor- 
 tant public benefits of the system, as far as circulation is 
 concerned, have as completely disappeared as tlie life from 
 the leaves of winter. 
 
 {;kt)wrii OK THE Canadian svstkm. 
 
 1 propose now to sketch brietly the growth of the Cana- 
 dian system, to show how it ileveloped gradually out of 
 
BAXKIJVG LA \V OF CANADA. 7 
 
 experience, guided by wisdom, avoiding the growth of 
 
 . THE CANA- 
 
 dangerous tungus growths always ready to spring dian system. 
 up in the hot earth of financial legislation, and has come to 
 be a sturdy and fruitful tree. 
 
 In the old Province of Canada, before the formation of the 
 Dominion, banking was done in a cautious and tentative way, 
 and the skeleton structure for the present system was erected. 
 
 For a long time previous to 1866, banks under royal 
 charter issued their own notes, to the amount of their paid- 
 up capital, but these were fully secured by a deposit of pub- 
 lic or government securitfes. This, you will perceive, is 
 what is called specially secured circulation, and specially 
 
 SECURED 
 
 is the principle of our National Bank-note issue, circulation. 
 It is well to observe that this experiment was tried by Canada 
 long ago and formed a step toward the better plan of general 
 security. 
 
 In 1 866 a national currency was inaugurated and an at- 
 tempt made to provide for a surrender by the banks of their 
 right to issue, fortunately, this did not succeed. national 
 
 CURRENCY 
 
 National currency was issued, $8,000,000 at first, demanded. 
 running uj) to $20,000,000 In 1880, secured by a 25 % re- 
 serve, but the banks not only held on to their rights, but 
 procured an extension of them. 
 
 They were allowed to issue notes to the amount of their 
 iinim[)aired paid-up capital, loilhoiit deposit of securities. The 
 tax on circulation, which had been one per cent., 
 
 PROGRESS. 
 
 was removed. Other wise provisions were made, 
 
8 THE CURRENCY AND THE 
 
 and, as they still exist, I shall speak of them later on. Stock- 
 holders were held doubly liable. ' 
 
 In the year 1880 it became necessary to act upon the 
 question of the renewal, or not, of bank charters which ex- 
 pired in iSSi. It was a year which, in Canadian politics, 
 AN AMERICAN Hiore nearly resembled an American situation 
 than any which that country has perhaps ever 
 experienced. The fanatical element was partially unleashed, 
 and was baying at the moon in that wild and deep-toned 
 howl that we are so familiar with in this country. Tariff' 
 reform had won a victory, and the excitement of the contest 
 extended into an agitation for a national currency. 
 
 The agitation grew, and developed fmally into a furor 
 for " rag money," and a stampede against bank privileges. 
 
 If this is not an American situation, it will be hard to 
 fmd one. Nevertheless, the very exigencies of the contest 
 brought to the front the very best in the opposition, and the 
 bankers and heading financial minds of the Dominion wrested 
 from the fiery struggle a still more perfect bank act, which 
 renewed charters for ten years more. 
 
 The crowning achievement at this time was the formula- 
 tion of that clause in the act which, for the first time, made 
 ^^j, bank notes a prior lien on the assets of the 
 
 \cHn^:vE^° bank — a first charge before all others. This was 
 MENT. ^1^^ ringing stroke, which drove home, once for 
 
 all, the question of security, and made it sure. Some minor 
 changes were made at this time. 
 
BANKING LA W OF CANADA. 9 
 
 This was the Bank Act of 1880. Ten years later charters 
 were to expire and a new act would be necessary. You will 
 see how, step by step, the system was being im- 
 
 STEP BY STEP 
 
 proved. There was no wild rush from one new 
 scheme to another. Beginning on a sure foundation, with 
 deliberation, determination, and aided by the best and most 
 thoroughly trained ability, the structure was growing steadily 
 and solidly. And now the year 1890 once more reopened 
 the question. This time there was no such outburst of the 
 fanatical spirit manifested by the opposition ten years before. 
 Some dangerous measures, to be sure, were proposed by the 
 Government, but upon full explanation by the bankers of 
 what the outcome would be these were al)andoned. I quote 
 now from the able address of Mr. Georij^e Haijue, General 
 Manaofer of the Merchants Bank of Canada, at the annual 
 meeting of that institution last year, soon after the passage 
 of the act. He says, in speaking of the conference between 
 the Government and the bankers : 
 
 " The representations of the banks were received with 
 all possible consideration b\ the Government, courtesies 
 and their recommendations were <renerally by the 
 
 y ^ \ o J GOVERNMENT. 
 
 adopted. 
 
 " The Government, however, had views of their own 
 upon several matters which they cc>urteously communicated 
 for consideration. Some of these were con- dangerous 
 sidered so objectionable that we felt constrained proposals. 
 to oppose them, not only in your interest, but in the public 
 interest. 
 
wm THE CURRENCY AND THE 
 
 '* The proposal tc compel the holding of a fixed reserve 
 of money in pro[ ^rtion to their liabilities was demurred to 
 FIXED RE- by a large majority. It was pointed out that to 
 SERVE insist upon the banks keepino- locked up in their 
 
 UNWISE. r / 11 ^- C \ C 11 
 
 sates at all tunes any nxed sum or money would 
 interfere with the rights Ci creditors, to meet whose demands 
 all the banker's cash is held. It was show^n that such a 
 measure had never been tried in practice except in the 
 United States, and that there, when banks attempted to 
 keep the law, violent fluctuations in the rate of interest 
 ensued. And, further, that circumstances occurred nearly 
 every year that compelled them to disregard the law 
 altogrether. 
 
 " The proposal was withdrawn. . . . 
 
 " Durintr the procrress of the bill throuofh the House a 
 POLITICAL remarkable absence of political feeling was mani- 
 FEELiNG fest. Members of both parties o^^ve themselves 
 
 BURIED • • 
 
 to the work of considering how to make the act 
 as nearly perfect a^ possible." 
 
 I refer fully to these matters to show how differently 
 financial legislation is conducted in Canada. It does seem 
 TRUE MKTH- as tliougli this idea of legislation was the proper 
 
 ODS OF LAW 
 
 MAKING. one — that is, to call in for advisement, when a 
 subject is under consideration, the very highest authorities 
 on that subject — in other words, the men whose experience, 
 day by day for years, and whose thorough training entitles 
 them to speak for this or that industry or profession. How 
 different, perhaps, in the United States would be the condi- 
 tion of our own currency, if during past years the leading 
 financiers and economists of the nation had had a prevailing 
 voice in the matter. 
 
BAl.'KING LAW OF CANADA. ii 
 
 CANADIAN BANK ACT OF TO-DAY. 
 
 I come now to the Canadian Bank Act as it stands. It 
 is a comprehensive piece of legislation, containing over one 
 hundred clauses. Under its provisions, the the bank act 
 
 11. r /^ 1 • • . 1 • OF TO-DAY, 
 
 bankmg or Canada is gomg on to-day m an 
 even, effective manner, and the full requirements of business 
 in the way of currency are met. I shall mention only the lead- 
 ing features, some of which have already been referred to. 
 
 F"irst of all, banks of issue, the joint stock banks, and 
 these are the only ones of which we are treating (there are, 
 of course, in Canada, private banks and savin^^s 
 
 ^ ^ CAPITAL. 
 
 banks), must obtain their charters from Parlia- 
 ment, and must have a subscribed capital of $500,000, with 
 at least $250,000 paid up. 
 
 The shareholders in these banks are doubly liable. That 
 is, they can be called upon, in case of failure and double 
 
 y r ' t ^ • 1 T^- 1 .. 1 ^ LIABILITY. 
 
 dehcit, tor an amount in addition, equal to what 
 they have already invested in the shares fully paid up. 
 
 No dividend is allowed which will impair the capital of 
 the bank, and no dividend higher than 8 per rj^stricted 
 cent, per annum, until a surplus or rest has been dividends. 
 built up of at least 30 per cent. 
 
 Monthly statements giving full particulars are to be fur- 
 nished to the Government, anel these are pubhshed in the 
 daily papers, and, I need not say, scrutinized 
 
 J ^ ^ ^ STATEMENTS. 
 
 with much intelligence and interest by share- 
 holders, depositors, and Canadian business men generally. 
 
ULJ^-4 J-J 
 
 ms THE CURRENCY AND THE 
 
 An annual statement is furnished, with full details of 
 profit and loss, to the yearly meeting of shareholders, and 
 at these meetings the general manager usually delivers an 
 address, and there is a common interchange of views. 
 
 In the interest of the Government, and in order to keep 
 the Dominion notes in use, 40 per cent, of the reserve held by 
 DOMINION the banks is required to be so held in Dominion 
 notes ; and any bank making a payment up to 
 $100 must, if so requested, pay in Dominion notes. (No 
 torn or defaced noles of any kind, either Govenmicnt or bank, 
 are allowed to be paid Old. ^ 
 
 There are wise restrictions as to loans on real estate, 
 etc., and regulations as to boards of directors. A bank has 
 prior lien on warehouse merchandise, and on stocks and 
 bonds, etc., and is given other privileges. Employees are 
 PENSION not forgotten, authority being given to establish 
 
 guarantee and pension funds out of the bank's 
 holdings, for faithful servants. 
 
 Examinations are not conducted by the Government, 
 but under the branch system each bank has its Inspector 
 General, who is a man of marked ability and skill, a thor- 
 ough banker by education, advanced from the lowest round, 
 a man who ranks next to the General Manager, and fully 
 EXAMiNA- competent to take the latter's place. With ex- 
 aminations conducted by such men, the Canadian 
 bank shareholders and depositors may well feel assured. I 
 fear our National and State bank examinations would suffer 
 by comparison. 
 
BANKiNG LA IF OF CANADA. 13 
 
 And now we come to the important provisions regarding 
 note issues. 
 
 The amount of notes to be issued must never exceed 
 the amount of unimpaired paid-up capital. note issues. 
 
 \ They are a first Hen upon the assets of the bank, taking 
 
 precedence even of Government claims. 
 
 The double liability of stockholders is a last resort to 
 the bank itself in case all the other assets are not sufficient 
 to pay the note holders. 
 
 But a new and additional security for notes was intro- 
 duced in 1890, known as " The Bank Circulation Redemp- 
 tion Fund." This fund is made up of a contri- 
 
 ^ ■ c r 1 111 1 SECURITY. 
 
 bution of five per cent, by each bank on the 
 
 amount of its own notes in circulation for the twelve months 
 
 previous to July first of each year (adjusted annually). 
 
 The fund is deposited with the Government (which 
 allows upon it to the banks three per cent, per annum in- 
 terest), and is for the special purpose of redeeming the 
 notes of any suspended bank. 
 
 In case of suspension, notes of the suspended bank 
 begin at once to draw interest at six per cent, until redeemed 
 bv the receiver of the failed bank. If not re- suspended 
 
 ' .... , NOTES DRAW 
 
 deemed m two months in this way, the notes, interest. 
 with interest, are paid out of the redemption fund, which is 
 reimbursed by the failed bank as soon as possible. In case 
 of depletion of the fund it is to be made up again by con- 
 tributions yearly of one per cent, of its past year's circula- 
 tion by each bank. This interest bearing quality after 
 
 ■i 
 
$4 THE CURRENCY AND THE 
 
 suspension, imparts an investment value to the notes of 
 broken banks, as, being absolutely secure, they v/ouid be 
 eagerly cashed by banks desiring to earn the six per cent. 
 Such notes might bear a premium, but they could not possi- 
 bly fall to a discount. 
 
 There is no tax upon circulation. 
 
 Each bank is required to appoint agencies for the re- 
 demption of its notes in the principal cities of Canada, 
 
 REDEMPTION coverlug all territory from one end of the Do- 
 agencies. . . . - T-1 • 1 -11 
 mmion to the other. 1 his does away with the 
 
 old condition which forced notes of far-off banks to a dis- 
 count, making the currency National — a brilliant quality of 
 our own national bank notes, imparted, however, in a dif- 
 ferent manner. 
 
 I have thus briefly enumerated the main features of this 
 admirable system of banking and note Issues. In order to 
 fully appreciate its workings It must be understood that the 
 branch system Is a very necessary part of its operations, and 
 that the notes of all the banks are sent in and redeemed 
 daily, like checks. 
 
 The branch system of banking has received little atten- 
 tion in the United States. Its effective operation in Canada 
 BRANCH is worthy of attention. And the conditions are 
 
 so similar to our own that the study becomes an 
 important one. 
 
 The great advantages of the system are now universally 
 recognized among the people. 
 
BANKING LA W OF CANADA. 15 
 
 ** There was a time In Canada, about tv^enty years ago," 
 says Mr. B. E. Walker, General Manager of the Canadian 
 Bank of Commerce, '* when some people thought that in 
 every town a bank, no matter how small, provided it had no 
 branches and had its owners resident in the ,^^ r^^r^,^,^^ 
 
 ITS GROWTH. 
 
 neighborhood, was a greater help to the town 
 than the branch of a large and powerful bank. In those 
 days, perhaps, the great banks were too autocratic, and had 
 not been taught by competition to respect fully the wants of 
 each community. If this feeling ever existed to any ex- 
 tent, it has passed away. I do not know any country in the 
 world so well supplied with banking facilities as Canada. 
 The branch system not only enables every town of one thou- 
 sand or twelve hundred people to have a joint stock bank, 
 but to have a bank with a power behind it generally twenty 
 to fiity times greater than a small bank would have." 
 
 It is true that here is an element of dancrer — the dano^er 
 of more credit to a small community than it can stand, and 
 consequent ruin. Rare wisdom and firmness, 
 
 ^ ^ ^ DANGERS. 
 
 and especially thorough training in the profes- 
 sion, are required to counteract this danger. 
 
 But so convinced of the superior value of the branch 
 system are the Canadians, that there are only seven banks 
 which have no branches. The other 38 control about 400 
 bank offices. 
 
 These great banks cf Canada each, with from ten to 
 fifty branches, gather up the money lying idle in one locality 
 and transmit it automatically to another locality 
 
 . ,' . , ADVANTAGES. 
 
 which has enterprise enough to use it. It must 
 
 be admitted that this is what the banks in our own country 
 
1 6 THE CURRENCY AND THE 
 
 do not do. There is no systematic distribution of money here. 
 The consequence is that rates of interest may be four to six 
 percent, in the extreme East, and twelve to twenty per cent, 
 in the West. This is not so in Canada. From one end of 
 their broad domain to the other, from Quebec, Montreal, 
 Toronto, Halifax to far Manitoba, the extreme variation in 
 rates is not over two per cent. 
 
 On this part of the subject Mr. Walker says : 
 
 "In Canada we see the deposits of the saving classes 
 applied directly to the country's new enterprises in a man- 
 ner nearly perfect. The Bank of Montreal borrows money 
 from depositors at Halifax and many points in the Maritime 
 Provinces, where the savings largely exceed the new enter- 
 prises, and it lends money in Vancouver or in the North- 
 west, where the new enterprises far exceed the people's 
 ^,c^r,.,.-,. «., savings. In what other country is such a splen- 
 
 DISTRIBUTION, ^ ^ *■ 
 
 ' did development of banking to be seen as that 
 involved in transferring the idle money of tlie Atlantic 
 towns and cities to the new centres of enterprise on the 
 Pacific. My own bank in the same manner gathers deposits 
 in the quiet, unenterprising parts of Ontario, and lends the 
 money in the enterprising localities, the whole result being 
 that thirty-eight business centres, in no case having an exact 
 equilibrium of deposits and loans, are able to balance the 
 excess or deficiency of capital, economizing every dollar, 
 the depositor obtaining a large rate of interest, antl the 
 
 borrower obtaininix money at a lower rate; than 
 
 LOW RATES. 1 . 7 4.1 1 • f r- *. IJ •. • 
 
 borrowers in any ot the colonies oi Cireat lintain, 
 and a lower rate than in the United States, except in the 
 very great cities in the East. 
 
 " In Canada capital marchcts automatically across the con- 
 tinent to find the borrower, and the extra interest obtained 
 
'** 
 
 BANKING LAW OF CANADA. 17 
 
 scarcely pays the loss of time it would take to send it so far, 
 were the machinery not so perfect." 
 
 In this way the interests of one part of the community 
 are interwoven with those of another far away. The bank 
 fulfils its proper function of carefully conserving the credit 
 of the whole country and distributing it to the most worthy 
 in the most economical manner possible. The national 
 
 ^ CHARACTER 
 
 interests of the bank are not local, but wide- imparted. 
 spread. Its character becomes essentially and truly National. 
 The system resembles a great centralizing reservoir, con- 
 densing the moisture from the vast areas where it exists in 
 redundant (quantities and dispersing it gently like summer 
 rain over the arid plains. This is the fulfilment of one of 
 the great fundamental ideas of modern banking. What was 
 begun to be done away back in the seventeenth century by 
 the goldsmiths of London is perfected in the branch system 
 of hanking in Canada to-day. 
 
 We come now in our investi<jation of the workinirs of 
 the Canadian bank-note system to the important relation 
 between the branch system and the note issues. branches 
 The Canadian banks have a right to issue bank note issue. 
 notes, as we have seen, to the extent of their unimpaired 
 paid-up capital ; but this right would be of little value if 
 these notes could not be gotten into general circulation. 
 And if each bank had but its one head office, little headway 
 could be made in this direction, as the notes are subject to 
 daily redemption, and, in ordrr to keep alloat as much as 
 
l8 THE CURRENCY AND THE 
 
 possible of its own issue, each bank sends in daily, for re- 
 demption, ail the notes of other banks which come into it. 
 But, under the branch system, the head office supplies its 
 branches with all the till or teller's money they 
 
 TILL MONEY. ' ^ 
 
 may need — money for the payment of local 
 checks, pay-rolls, etc., etc. — by sending out to it notes of its 
 own issue. The adyantage of all this is that the till money, 
 the cash reserye of the branches costs no interest, and is a 
 source of large profit to the bank of issue. And here is the 
 inducement for the formation of branches, and without 
 which the growth of the branch system would be much 
 stunted. You will see at once that all this is rendered pos- 
 sible by the fact that the bank-note issue is secured by the 
 general assets of the bank, and costs no interest. Whereas, 
 GENERAL VER- if Specially secured, as are our own national 
 
 SUS SPECIAL . , 1 , 1-11 
 
 SECURITY. bank notes, it would take actual capita) to l)uy 
 the securities, and at the present low rate of goyernments 
 would be unprofitable. 
 
 This point is so important that I desire to make it yery 
 clear. A correspondent in Canada writes : 
 
 "In the United States it |)robably does not occur to the 
 
 banker to make any distinction between the money in the 
 
 teller's drawers or tills and \\\k\ money kept in rcst.'rye in the 
 
 safes, or, as we call them, treasuric^s. In this country there 
 
 is the i/rcjatest possible difference. All of the 
 
 A SAVING OF 1 11 1 1 • ♦!, 1 ' •* 1 C..^*- « .*« 
 
 iNTtRKST. cash used by a l)ank in tlie I nited htates is 
 
 really money to the bank — that is, it costs the 
 
 loss of interest to carry it idle. So far as this idle cash is 
 
1 
 
 BAXKIXG LA IV OF CANADA. 
 
 19 
 
 necessarv as a reserve the loss of interest should be borne, 
 but to the extent that it is necessary only as machinery for 
 paying cheques or other change-makincr purposes, it is, in 
 our opinion, a wasteful and unscientific system. If you look 
 at the hi^aires of cash held by the Canadian banks, the 
 amount appears wretchedly small in proportion to the lia- 
 bilities. But, as a matter of fact, the cash there shown is 
 only the gold and legal-tender reserves in the treasuries and 
 the trilling amount of gold and legal tenders kept in the 
 tills for the convenience of customers. The main business 
 of making payments in money is done by the note issues of 
 the bank. I notice that it takt.'s from about 
 
 ,K a. >h f . ^ 1 USEFULNESS 
 
 $1,500,000 to $2,000,000 ot our notes to keep ofthenote 
 the tills of all the branch offices filled with cash, issues at the 
 
 BRANCHPS 
 
 This has the advantage of costing; no interest, 
 and, inasmuch as it does not represent a liability of the bank 
 until actually issued, it does not show in our published 
 statements. If it were a specially secured currency, we 
 would at the moment appear as having issued about the 
 $4,000,000 we are entitled to under law, and as holding 
 $1,500,000 to $2,000,000 of this same money in cash in 
 our tills." 
 
 SECURITY. 
 
 I desire now to dwell for a moment, and in conclusion, 
 upon the two most important featun.'S of any currency, 
 namely: tlu; features of Security and of Klas- twoimpor- 
 
 TANT FKAT» 
 
 ticity ; and to see how far and how perfectly ures. 
 
 they exist in the Canadian system. Wc^ have found tiiat for 
 security the Canadian bank note has, first, the entire amount 
 of the assets of the bank ; second, the double liability of tlu! 
 stockholder; and, third, the I'ank Circulation Rt;demption 
 
20 THE CURRENCY AND THE 
 
 Fund. This redemption fund will average something be- 
 tween a million and a half and two million dollars. It is 
 sufficient to say that in no failure which Canada 
 
 SECURITY. "* 
 
 has ever had under the present system, would 
 one dollar of this fund have been touched. 
 
 In a letter to me on this subject, Mr. George Hague 
 whites : 
 
 " The provision making notes a preferential claim 
 against all assets came into force some years ago, and it has 
 ]3roved itself capable of standing the strongest strain that 
 has been put upon it. The test of a measure like this is, 
 of course, to be found when a bank which has been ex- 
 ceptionally badly managed stops payment. Now, we have 
 had three instances of the kind during the last 
 AND TESTS. ^^'^ years. In each of these there had been 
 the most scandalous mismanagement conceiva- 
 ble, with not a little of the element of fraud. Yet, in every 
 instance, the notes had been redeemed in full. The only 
 loss being the holding of them for a shorter or longer time. 
 In two instances the not(is were redeemed within one or 
 two months. In the other instance, which was by far the 
 worst of the three, a longer delay took place. 
 
 "In amending the Bank Act recently, the banks volun- 
 tarily proposed, in order to meet any possible objection, 
 and to make assurance doubly sure, to provide* a safety fund 
 to be contributed to by all the banks and held l/y the Govern- 
 t,t.-r.t.,u,oT-,r,K, nient, to apply to the redemption of notes. The 
 
 RLDLMPTION r i i i • r • i i 
 
 FUND NOT greater part oi the banknig fraternity considered 
 NECESSARY, tliis entirely unnecessary. That is my own view. 
 But we were willing to go as far as possible, to meet any 
 possible! objection to the continuance of our circulation on 
 its present basis." 
 
•j? 
 
 BANKING LA \V OF CANADA. 
 
 21 
 
 And going back into the other security — the Assets ; 
 on the 30th of September of this year, when the latest 
 returns of the Canadian Chartered Banks was published, 
 the latter had assets with the double liability added of 
 $334,384,438 to take care of $34,083,051 circulation, which 
 means an average of $9.80 for every dollar of ^ startling 
 circulation, or taking the case of the lowest fact. 
 
 individual percentage, of assets to circulation, $5.00 back of 
 every one dollar in notes. 
 
 Let this be written in laro^e letters : EVERY DOLLAR 
 IN CANADLAN BANK NOTES HAS OVER NINE 
 DOLLARS (on the average) IN SECURITY BACK 
 OF IT TO MAKE IT GOOD. 
 
 And yet along the border, two or three years ago, an 
 over-zealous revenue origan ization succeeded in twistin*/ the 
 ten per cent, penalty of the National Bank Act against 
 these same Canadian notes, ^ivin^ a meaning to the law 
 which it has been conclusively proved it never was intended 
 to have by the broad and intelligent framers of that act, 
 practically banishing the Canadian bills from the useful 
 position which they had occupied as furnishing a convenient 
 and absolutely saf(^ medium of exchange at the border 
 between two friendly nations. 
 
 Kl. A STIC I TV. 
 
 I think we have thoroughly settled the question of 
 SECURITY. But let a currency hv. ever so secure, if it 
 does not meet the requirements of trade, if it has no elasticity, 
 
22 THE CURRENCY AND THE 
 
 it is a comparatively dead factor. That, unfortunately, is the 
 NATIONAL condition to-day of our own national bank cur- 
 A WAR rency. Its issue was a war measure, adopted 
 
 MEASURE. r ^v c \ ' r^ ^1 
 
 tor the purpose ot placing Government loans, 
 which were badly needed, and paid for at high interest. It 
 did certainly once for all wipe out the wide-spread evil of 
 the wild-cat issue ; but it was a war measure, born out 
 of the smoke of battle, and birth-marked by the abnormal 
 pressure of the times. It fought well, it did its duty 
 grandly, but what wonder that when the smoke cleared 
 away and the piping times of peace came again and we 
 looked at it with calm, deliberate eye, it turned out to be a 
 dwarfed and twisted creature, unfit for any work but that of 
 
 war, and shrinkinoj- away into uselessness in the 
 
 SHRINKAGE, ^ c-* j 
 
 sunlierht of the eternal fitness of things. The 
 national bank currency was absolutely secure. It was profit- 
 able to the banks with Government bonds at a high rate of 
 interest. But it had no elasticity. Its tendency, because 
 of the great profit in it, and because the country was off the 
 specie payment basis, and there was no pressure to redeem, 
 was towards inflation, and a limit had to be put upon it. 
 Then came the decrease in Government interest rates, and 
 currency issue became unprofitable. Shrinkage followed. 
 From the highest point of $360,000,000, towards which it 
 ranged, it has shrunken down now in the last ten years to 
 $120,000,000, and l(;ft a great gap which has, in turn, 
 opened the way to a great danger. 
 
BANKING LA W OF CANADA. 23 
 
 How has the great gap left by the shrinkage of the 
 National Currency in the last ten years from $360,000,000 
 to $120,000,000 been filled ? How has this great shrinkage 
 been met when the currency requirement*^ of trade have 
 yearly been growing greater ? Not by bringing 
 
 HOW MET. 
 
 to bear upon the question the greatest wisdom 
 and skill of trained financiers, not with a deliberate con- 
 sideration of how to promote the best interests of commerce 
 on a scientific basis. It has been met by Politics and not 
 by Science. It has been met with an eye to thepoliti 
 votes and the spoils and much indifference as to^^^^^^'^J"^ 
 
 *■ SILVER 
 
 what miorht be the (jreatest ixood to the orreatest miner. 
 
 number. It has been met by the Silver Miner, who has 
 hoisted his pickaxe upon his shoulder and marched to 
 Wan^Mugton with a great and uproarious following of rag- 
 money shouters and currency doctors and misguided western 
 farmers, and many honest people besides, who, knowing 
 that the country needed currency, and with half-formed 
 ideas of bi-metallism, have with the others and 
 altogether between them plunged the country ^' 
 in the last few years into a wretched slough of silver — a 
 morass of three hundred and fifty millions of tokens worth 
 seventy-five cents on the dollar ; and they are still clamor- 
 ing for free coinage, and after that they will want free 
 money. 
 
 And so nobody claims that the National Bank currency 
 possesses or ever did possess the feature of elasticity. It 
 
 A palpable 
 
 fference. 
 
24 THE CURRENCY AND THE 
 
 was an expedient, brilliant, but not intended to be scientific, 
 hastening towards inflation at one time, excited by a relish 
 for profit, and only controlled by an arbitrary act of Con- 
 gress, and then, with the profit struck out of it. it shrank away 
 steadily without any reference to trade requirements at all. 
 
 We have left a splendid organization under efficient con- 
 trol, ready for a NEW SYSTEM. 
 
 On the other hand, let us turn to our calm friends, the 
 
 Canadians, and see how the test of ela' ticity is met by their 
 
 note-issues. The scientific basis of elasticity is 
 
 ELASTICITY. 
 
 this : There nmst be some inducement or force for 
 issue zvhich ivill operate zvhen trade requires the bank notes, 
 and ceasing to operate ijhen the trade requirement ceases^ will 
 extinguish the notes. In the Canadian system the inducing 
 force is the profit on notes issued, and the extinguishing 
 power is the desire of each bank to float its own issues. 
 Here let me once more refer to Mr. Walker's arcrument for 
 a concise statement of the conditions in his country. He says : 
 
 ** In Canada, bank notes are secured by a first lien upon 
 the entire assets in the bank, including the double liability, 
 the security being general and not special, not by the deposit 
 of Government bonds, for instance. Therefore, it is clear 
 that it will always pay Canadian banks to issue currency 
 when trade demands it. Because bank notes in Canada are 
 issued against the general estate of the bank, they are sub- 
 ject to daily, actual redemption ; and no bank dares to issue 
 EBB AND notes without reference to its power to redeem, 
 FLOW. anv more than a solvent nuTchant dares to orive 
 
 promissory notes without reference to his ability to pay. 
 

 BANKING LA W OF CANADA. 25 
 
 The presentation for actual redemption of every note not 
 required for purposes of trade, is assured by the fact that 
 every bank seeks, by the activity of its own business, to 
 keep out its own notes and, therefore, sends back daily for 
 redemption the notes of all other banks. This great feature 
 in our system is generally overlooked, but it is daily 
 
 because of this daily actual redemption that we redemption. 
 have never had any serious inflation of our currency, if 
 indeed there ever has been any inflation at all. Trade, of 
 course, becomes inflated, and the currency will follow trade, 
 but that is a very different thing from the existence in a 
 country of a great volume of paper money not required by 
 trade. . . . In Canada it is not enouo^h that the volume 
 of currency should rise and fall from year to year ; it must 
 also, for about eight months in each year, keep at a mini- 
 mum (excluding the legal tenders) of about $30,000,000, 
 and for about two months of the remaining four sudden 
 
 reach $36,000,000 or $37,000,000, a sudden ^^I-^^^^^JJ^^j^^^Jq 
 vance of 20 per cent., followed after a few weeks be met. 
 
 by as sudden a decline." 
 
 And quoting again from Mr. Hague's letter on the sub- 
 ject of whether in Canada the currency is always sufficient 
 to care for the Autumnal Drain, he writes : 
 
 ** With regard to the matter of our Canadian circulation, 
 experience has proven that the feature of elasticity is com- 
 pletely provided for and that our currency during past years 
 has shown itself capable of expansion sufficient for the 
 largest demands that could be made upon it. The capital 
 of some of the banks is so large that they have never circu- 
 lated to anything near the amount that they were authorized 
 by law. The reserve of circulation power in the banks 
 unitedly is, therefore, considerably in excess of any demand 
 made upon it. For example : 
 
26 THE CURRENCY AND THE 
 
 The total capital of the banks is $60,740,000 
 
 The highest circulation ever reached was .... 38,000,000 
 
 The highest expansion during any fall season was . . . 7,000,000 
 
 So you will see it has never been necessary to issue more 
 than about 60 per cent, of the amount of bank notes author- 
 THE AUTUMN ized by law. Panics for fear of stringency are 
 SQUEEZE. thus unknown. The Canadians never know 
 what it is to go through an American money-squeeze in the 
 autumn. 
 
 So much for the feature of ELASTICITY. 
 
 I have endeavored to show how scientific, how com- 
 pletely filling all the requirements of the community in 
 which it exists and flourishes, is the Canadian bank and note 
 system, and now, naturally, you ask me whether I advocate 
 the adoption of this system in the United States. I have 
 simply to say in reply that I am not here to advocate any 
 system. Every thinkinp- banker who has paid any 
 
 CONCLUSION. ^ ^ . 
 
 attention to the subject, knows that our present 
 system of currency is inadequate, and our condition in this 
 regard very unsatisfactory, uncomfortable, and I think I may 
 say dangerous. I believe it to be a time for reconstruction, 
 not by politicians, but by the most skilled economic wisdom 
 which we can call to our aid. In such a time, a deliberate 
 consideration of the better systems in operation should do 
 some good. I think I have shown that such a system, and 
 one of the best in the world, is in successful operation very 
 near us, under conditions very nearly resembling our own, 
 
BANKING LA W OF CANADA. 
 
 27 
 
 its arteries stretching over a vast country and carrying the 
 life blood of commerce to hamlet and town and metropolis, 
 building up worthy enterprises, and furthering and sustain- 
 ing a healthy prosperity among the sturdy people of our 
 sister nation, Canada. 
 
THE BANKING ACT OF 
 THE DOMINION OP CANADA, 1891. 
 
 29 
 
THE BANKING ACT 
 
 OF 
 
 THE DOMINION OF CANADA. 
 
 1 891. 
 
 53 VICTORIA. 
 
 CHAP. 31. 
 
 An Act respecting Banks and Banking. 
 
 [Asscfitcd to 1 6th May, iSgo.'] 
 
 TT ER Majesty, by and with the advice and consent of the Senate 
 and House of Commons of Canada, enacts as follows : 
 
 SHORT TITLE. 
 
 SHORT TITLE. L This Act may be cited as ** T/ic Bank Act.'' 
 
 INTERPRETATION. 
 
 iNTERPRETA- ^- ^'"^ ^^^'^ ^^^'^' luiless the context otherwise re- 
 TioN. quires, — 
 
 {a.) The expression " the bank " means any bank to which this 
 ''thkb\nk;' Actai)plies; 
 
 (/'.) The expression "Treasury l^oard " means the board pro- 
 "TREASURY vidcd for by section nine of chapter twcnty-eight of 
 BOARD." ti^^. Kt^vi^cd Statutes of Canada, or any Act in amend- 
 
 ment thereof or substitution tlierefor ; 
 
 3u 
 
BANKING LAW OF CANADA. 
 
 31 
 
 'WAREHOUSE 
 RECEIPT." 
 
 (^.) The expression " goods, wares and merchandise " includes, in 
 addition to the things usually understood thereby, tim- "goods, 
 
 ber, deals, boards, stav^es, saw-logs and other lumber, merckan- 
 petroleum, crude oil, and all agricultural produce and dise." 
 
 other articles of commerce ; 
 
 (<:/.) The expression " warehouse receipt " means any receipt 
 given by any person for any goods, wares, or merchandise, in his 
 actual, visible and continued possession, as bailee 
 thereof, in good faith, and not as of his own property, 
 and includes receipts given by any person who is the 
 owner or keeper of a harbor, cove, pond, wharf, yard, warehouse, 
 shed, storehouse or other place for the storage of goods, wares or 
 merchandise, for goods, wares and merchandise delivered to him as 
 bailee and actually in the place, or in one or more of the places 
 owned or kept by him, whether such person is engaged in other 
 business or not ; 
 
 (<-.) The expression "bill of lading" includes all receipts for 
 goods, wares or merchandise, accompanied by an undertaking to 
 transport the same from the place where they were 
 received to some other place, whether by land or 
 water, or partly by land and partly b\' water, and by 
 any mode of carriage whatever ; 
 
 (/.) The word ** manufacturer " includes maltsters, distillers, 
 brewers, refiners and i)roducers of petroleum, tanners, curers, packers, 
 canners of meat, pork, fish, fruit or vegetables, and any manufac 
 person who produces by hand, art, pnu'ess or mechani- turer. 
 
 cal means any goods, wares or merchandise. 
 
 Al'l'LICATION OF ACT. 
 
 3. The provisions of this Act apply to the several banks enu- 
 merated in Schedule A to this Act, and to every bank incorporated 
 after the first day of January, in the year one thousand 
 ei«^ht hundred and ninety, whether this Act is spe- t«»what 
 
 cially mentioned m its Act of incorporation or not, but aim'Lies. 
 
 not to any other bank, except as hereinafter specially 
 provided. 
 
 "DILL OF lad- 
 ing." 
 
 i 
 
32 THE CURRENCY AND THE 
 
 4. The charters or Acts of incorporation, and any Acts in amend- 
 ment thereof, of the several banks enumerated in Schedule A to this 
 
 Act are continued in force, so far as regards the incor- 
 CHARTERSCON.pQj.^l-;Qj-j .^,^j Corporate name, the amount of capital 
 
 TINUKl) TO iST 
 
 JULY, 1901. stock, the amount of each share of such stock and the 
 chief place of business of each bank, until the first day 
 
 of July, in the year one thousand nine hundred and one, subject 
 
 to the right of each bank to increase or reduce its capital stock in the 
 manner hereinafter provided ; and as to all other par- 
 
 DADi-iriM KM^ ticulars this All shall form and be the charter of each 
 
 PART ICL LARS. 
 
 of the said banks until the said first day of July, in the 
 year one thousand nine hundred and one, — subject in the case of 
 Lei Bancpie du Peuple to the provisions liereinafter made in respect 
 
 to that bank : Provided always, that the said charters 
 FORFEITURE ^^ ^\cts of incorporation are hereby continued in force 
 
 only in so far as they, or any of them, are not forfeited 
 or rendered void under the terms thereof, or of this Art, or (jf any 
 other Act passed or to be passed, by reason of the non-i)erformance 
 of the conditions thereof, or by insolvency, or otherwise. 
 
 5. All the provisions of this Act, except those contained in 
 
 sections three, six to seventeen (both inclusive), nine- 
 sioNssHAi L* ^'-'*-'" ^*^ twenty-seven (bi>th inclusive), thirty-three, forty- 
 AiM'LV TO LA five, aud eighty-nine to ninetv-six (both inclusive), 
 
 BANgUEDU 1 4 T u 11) 11) • 1 1 *i i. 1 
 
 PEUPLE. apply to La Jianque du leuple: 1 rovidetl, that wher- 
 
 ever the word " directors " is used in any of the sections 
 which apply to the said bank, it shall be read and construed as 
 PROVISO: AS ro meaning the principal partners or members of the cor- 
 niKKcroKs. poration of the saiil bank; and so much of the Act 
 incorporating the said bank, or of any Act amending or continuing 
 it, as is inconsistent with any section of this Act apply- 
 iNcoNsisTENT j,j{r xq tlic Said baiik, or which makes any provision in 
 
 ENACTMENTS '^ • , r , , • , 
 
 REPEALED. ini\' matter provideu for by such sections other than 
 such as is hereby made, is hereby repealeil : otherwise 
 the said Acts are continued in force, subject to the proviso contained 
 in section four of this Act. 
 
BANKING LA \V OF CANADA. 
 
 II 
 
 6. The provisions contained in sections two, seven, thirty-seven, 
 forty-seven to eiijhty-eight (both inclusive), and ninety- what provi- 
 seven to one hundred and four (both inclusive), apply :^pp'lv^i)',^i\^p 
 to the Bank of British North America aid the Bank of hanks uf 
 
 ■:> V 1 r' 1 I • I.- 1 1 «-! • • BRITISH NOKIH 
 
 i:)ntisn Lolumbia respectively ; and the provisions con- America and 
 tained in the other sections of this Act do not apply to of b. c. 
 
 the said banks. 
 
 7. For the purposps of the several sections of this Act made 
 applicable to the liank of liritish North America and the Jiank of 
 British Columbia, the chief office of the Bank of 15ritish 
 
 X' .1 \ • 1 n 1 .1 cti f .1 1 1 nr CHIKFSKATOF 
 
 North America shall be the oftice of the bank at Mon- busink.ssof 
 treal. in the Province of Quebec, and the chief office of tiiksaid 
 
 BANKS 
 
 the I^ank of British Columbia shall be the office of the 
 bank at Victoria, in the Province o; British Columbia. 
 
 8. The provisions of this Act may be extended to the Mer- 
 chants' Ikmk of Prince Edward Island by the Treasury Bv)ard, upon 
 the ap}:)lication of the directors of the said bank, before 
 
 the expiration of the present charter of the said b.mk ; chants* bxnk 
 and upon publication in the Canada Gazette of the ofi>. f. i.may 
 resolution of the directors applyin*^ iiereunder, and of this act. 
 the minute of the Treasury Board thereon allowing 
 such application, the provisions of this Act shall, from the time 
 named in such minute, or if there is no time named therein, from 
 the date of the publication thereof in the Canada Gazette, appl)' 
 to the said bank ; and its charter and Act of incorp<iration, and 
 any Acts in amendment thereof, shall thereupon be extended 
 for the same time and to the extent as if the name of the said bank 
 had been included in Schedule A to this Act. 
 
 INC'ORroRATlOV AND oKCiANIZATION OF HANKS. 
 
 9. The capital stock of every bank hereafter incorporated, the 
 
 name of the bank, the place where its chief office is MArrKRs ro 
 
 to be situate, and the name of the provisional direc- '"" »K«>vinKi) 
 
 tors shall be declared in the Act <»f incorporation of cial act. 
 
 every such bank : 
 i 
 
34 THE CURRENCY AXD THE 
 
 2. An Act of incorporation of a bank in the form set forth in 
 FORM OF ACT Schcclule 1^ to this Act shall be construed to confer 
 OF INXORPO- upon the bank thereby incorporate^' all the powers. 
 
 RATION. . ., , . .'. J . u- 4. V *. n 
 
 privileges and immunities, and to subject it to all 
 the liabilities and provisions set forth in this Act. 
 
 10. The capital stock of any bank hereafter incorporated 
 CAPITAL shall be not less than five hundred thousand dollars, 
 
 SHARES. and shall be divided into shares of one hundred 
 
 dollars each. 
 
 11. The number of provisional directors shall be not less than 
 PROVISIONAL ^1^'^ i^^r more than ten, and they shall hold office until 
 DIRECTORS, directors are elected by the subscribers to the stock, as 
 hereinafter provided. 
 
 12. For the purpose of organizing' the bank, the provisional 
 directors may cause stock books to be opened, after giving public 
 OPENING OF notice thereof, — upon which stock books shall be re- 
 STOCK. I'.ooKS, corded the subscriptions of such persons as desire to 
 become shareholders in tlie bank ; and such books shall be opened 
 at the place where the chief office of the bank is to be situate, and 
 elsewhere, in the discretion of the provisional directors, and may be 
 kept open for such time as they deem necessary. 
 
 13. So .soon as a sum not less than five hundred thousand doi'ars 
 
 of the capital stock of the bank has been /hfud fide subscribed, 
 
 ami a sum not less than two hundred and fifty th(ni- 
 
 FIRST MEET- ' . . 
 
 INC. OF SUB- sand dollars thereof has been i)aid to the Minister 
 SCRIBERS. ^^^ I'inance and Receiver (leiieral, the provisioi'.al 
 directors may, by public notice, published for at least four weeks, 
 call a meeting of the svdjscribers to the said stock', t«> 
 be held in the place nametl in the Act of inc(»"poratioii 
 as the chief place of business of the bank, at such time and at such 
 place therein as set forth in the said notice ; nt which meeting tlie 
 subscribers shall determine the day upon which the annual general 
 FLECTION OF meeting of the bank is to be held, and shall elect such 
 DIRKCTORS. number of director^, duly (jualified under this Act, 
 
BANKING LAW OF CANADA. 
 
 35 
 
 not less than five nor more than ten, as they think necessary, who 
 shall hold office until tlic annual i^cncral meetiuf^ in the year next 
 succeedin<j their election ; and upon the election of directors as 
 aforesaid the functions of the provisional directors shall cease. 
 
 14. The bank shall not issue notes nor commence the business 
 of banking; until it has obtained from the Treasury l^oard a certifi- 
 cate permittini:^ it to do so, and no application for such conditions 
 certificate shall be made until directors have been i'kf.vious to 
 
 , 1 , , •, . 1 • , COMMKNCING 
 
 elected by the subscribers to the stocK in the manner business by 
 hereinbefore provided ; and every director, provisional '^'^^^ hanks. 
 director, or other person, issuing or authorizing the issue of the 
 notes of such bank or transacting or authorizing the transaction 
 «..f any business in connection with such bank, except such as is 
 hereinbefore provided, before the obtaining of the certificate from 
 the Treasur\* Tioard, shall be '^uiltv of an offence against this Act. 
 
 15. No certificate shall be given by the Treasury Board until it 
 has been shown to the satisfaction of the l^oard, by affidavit or 
 otherwise, that all the requirements of this Act and of „.,„.^, ^,..,-.,... 
 
 ' \V H h. N e h R ] I r - 
 
 the s[K'cial Act of incorporation of the bank, as to the icatf. may 
 payment reipiired to be made to the Minister of ''*-^^'»<^^^ »'»--i>- 
 Finance and Receiver General, the election of directors, deposit for 
 security for note issue, or otherwise, have been complied with, and 
 that the sum so paid was then held by the JMinistor of Finance and 
 Receiver General ; and no certificate as aforesaid shall be given 
 except w ithin one year from the passing of the Act of incorpora- 
 tion of the bank applying for the said certificate. 
 
 16. In the event of the bank not obtaining a certificate from 
 the Treasury Hoard within one year from the time of the passing 
 of its Act of incorporation, all the rights, powers and ifckkiifi- 
 privileges conferred on such bank by its Act of incor- caik n not 
 pi)ration shall thereupon cease and determine and be granikd. 
 of no ff)rce and effect whatever. 
 
 17. Upon the issue of the certificate in mani'.er hereinbefore 
 provided, the Minister of I'inance and Receiver (it-neral shall forth- 
 
36 THE CURRENCY AND THE 
 
 with pay to the bank the amount of money so de- 
 \moun¥de- posited with him as aforesaid, without interest, after 
 POSITED WITH deductini;- tlierefrom the amount required to be de- 
 FiNANCE posited under section fifty-four of this Act ; and in 
 
 case no certificate is issued by the Treasury Board 
 within tlie time Hmited for the issue thereof, the amount so de- 
 posited shall be returned to the person depositing the same ; but in 
 no case shall the Minister of Finance and Receiver General be 
 under any obligation to see to the proper application of the same 
 in anyway. 
 
 INTERNAL REGULATIONS. 
 
 l8. The shareholders of the bank (or, in the case of La l^anque 
 du Peuple, the principal partners or members of the corporation 
 BY-LAWS MAV tlicreof,) may regulate, by by-law, the following matters 
 BE MADE. incident to the management and administration of the 
 
 affairs of the bank, that is to say : The day upon which the annual 
 ♦general meetincf of the shareholders for the election of directors 
 shall be held ; the record to be kept of proxies, and the time, not 
 exceeding thirty days, within which proxies must be produced 
 and recorded prior to a meeting in order to entitle the holder to 
 vote thereon ; the number of the directors, which shall not be less 
 than five and not more than ten, and the quorum thereof, which 
 shall not be less than three ; their (jualification, subject to the pro- 
 visions hereinafter made : the method t)f filling vacancies in the 
 board of directors whenever the same occur during each year, and 
 the time and proceedings for the election of directors, in case of a 
 failure of any election on the day appointed for it ; the remunera- 
 tion of the president, vice-president and other directors; and the 
 amount of discounts or loans which may be made to directors, 
 either jointly or severally, or to any one firm or person, or to any 
 shareholder, or to corporations : 
 
 2. The shareholders may authorize the directors to establish 
 r.uARANrEK guarantee and pension funds for the officers and 
 \M>i'ENsi()N employees of the bank and their families, and to 
 contribute thereto out of the funds of the bank ; 
 
BANKING LAW OF CANADA, 
 
 37 
 
 3. Until it is otherwise prescribed by by-law under this section, 
 the by-laws of the bank on any matter which may be regulated by 
 by-laws under this section shall remain in force, except certain by- 
 as to any provision fixing the qualification of direc- laws cox- 
 tors at an amount less than that prescribed by this 
 
 Act ; and no person shall be elected or continue to be a director 
 unless he holds stock paid up to the amount required by this Act, 
 or such greater amount as is required by any by-law in that behalf : 
 
 4. The foregoing provisions of this section, touching directors, 
 shall not apply to La Banque du Peuple, which shall banque du 
 
 in these matters be t^overned bv the provisions of its peuple ex- 
 
 ^ ' i- cepted. 
 
 charter. 
 
 19. The stock, property, affairs and concerns of the bank shall be 
 managed by a board of directors, who shall be elected board of 
 
 annually in manner hereinafter provided, and shall be directors. 
 eligible for re-election : 
 
 2. Each director shall hold capital stock of the bank as follows : 
 — When the paid-up capital stock is one million dollars or less, each 
 director shall hold stock on which not less than three qualifica- 
 thousand dollars has been paid up ; when the paid-up tion. 
 
 capital stock is over one million dollars and does not exceed three 
 million dollars, each director shall hold stock on which not less than 
 four thousand dollars has been paid up ; ami when the paid-up capi- 
 tal stock exceeds three millitui dollars, each director shall hold stock 
 on which not less than five thousand dollars has been paid up: 
 
 X. A majoritv of the directors shall be natural-born majority to 
 or naturalized subjects of Her Majesty. subjects. 
 
 4. The directors shall be elected by the shareholders on such 
 day in each year as is appointed by the charter or by any by-law 
 of the bank, and such election shall take i)lace at the 
 
 11/-.- r .1 , 1 1 • f .1 1 .1 ELECTION. 
 
 liead oftice of the bank at such time of the day as tlie 
 
 directors appoint ; and public notice thereof shall be given by the 
 
 directors, hx publishinir the same for at least four 
 
 .' , . ., , ,. 11. • NOTICE. 
 
 weeks previous to the time ot hojtling such election, in a 
 
 newspaper published at the place where the said head office is situate : 
 
38 THE CURRENCY AND THE 
 
 5. The persons, to the number authorized to be elected, who 
 WHO SHALL have the jjreatest number of votes at any election, shall 
 
 BE DIREC- ,1- 
 
 TORS. be du'cctors : 
 
 6. If it happens at any election that two or more persons have 
 PROVISION IN ''^" equal number of votes and the election or non-clec- 
 CASE OF tion of one or more of such persons as a director or 
 
 E(JL ALITY OF ,. ^ , , , ,. , , ,. 
 
 VOTES. directors depends on such cqualit}', then the directors 
 
 who have a greater number, or the majority of them, 
 shall determine which of the said persons so having an equal num- 
 ELECTioN OF ^^^ '"^^ votcs sliall be the director or directors, so as to 
 PRESIDENT, complete the full number ; and the said directors, as 
 soon as may be, after the said election, shall proceed 
 to elect, by ballot, two of their number to be president and vice- 
 president respectively : 
 
 7. If a vacancy occurs in the board of directors, such vacancy 
 shall be filled in the manner provided by the by-lav/s; but the non- 
 filling of the vacancy shall not vitiate tlie acts of a 
 
 VACANCIES, " f ., •'• ]• , 1 •£ i.1 
 
 HOW FILLED quoruiTi of the rcmauung directors ; and it the vacancy 
 so created is in the office of the president or vice-presi- 
 dent, the directors shall, from among themselves, elect a president 
 or vice-president, who shall continue in office for the remainder of 
 the year. 
 
 20. If an election of directors is not made on the day ap- 
 
 pointed for that purpose, such election of directors 
 
 PROVLSION IN , , , I- 4. ..1 
 
 CASE OF FAIL- "^^Y take place on any other day, according to the 
 URE OF by-laws matle by the sharehold rs in that behalf : and 
 
 the directors then in office shall remain in office until a 
 new election is made. 
 
 21. A^ all meetings of the directors, the president, or in his ab- 
 
 sence the vice-presitlent, or in the absence of both of 
 DiKFCToRs' them, one of the directors ])resent, chosen to act f^ro 
 
 tempore, shall presitle ; and the president, vice-presi- 
 CASTiNd vorE dent, or president /A? Av//y^>rf' so presiding sh.dl vote as 
 OF pRi.siDiNG a director, and if there is an equal division on any ciues- 
 
 DIKECroR. .,,,,, . ^ * 
 
 tion shall also nave a castinLr vote. 
 
BANKING LA W OF CANADA. 
 
 39 
 
 22. The directors may make by-laws and regulations (not re- 
 pugnant to the provisions of this Act or the laws of Canada) touch- 
 ing the management and disposition of the stock, general 
 property, affairs and concerns of the bank, and touch- power of 
 ing the duties and conduct of the officers, clerks and i>iRE^'i<>KS. 
 servants employed therein, and all such other matters as appertain 
 to the business of a bank: Provided always, that all ^^..^,^a.. .^ 
 
 PROv ISO: AS 
 
 by-laws of the bank heretofore lawfully made and now to p.v-laws 
 in force, in regard to any matter respecting which the *^ ^orce. 
 directors may make by-laws under this section (including any by- 
 laws for establishing guarantee and pension funds for the employees 
 of the bank), shall remain in force until they are repealed or altered 
 by others made under this Act. 
 
 23. The directors may appoint as many officers, clerks and ser- 
 vants for carrying on the business of the bank, and appointment 
 with such salaries and allowances, as they consider of officers, 
 necessary, and they may also appoint a director or ^^^' 
 directors for any branch of the bank : 
 
 2. Before permitting any cashier, officer, clerk or servant of the 
 bank to enter upon the duties of his office, the directors shall re- 
 quire him to give bond, guarantee, or other security to security to 
 the satisfaction of the directors, for the due and faith- i^e given. 
 ful performance of his duties. 
 
 24. The directors of the bank, or any four of them, — or any 
 number not less than twenty-five of the shareholders of the bank, 
 who are together proprietors of at least one tenth of spectat gen- 
 the paid-up capital stock of the bank, by themselves eral mket- 
 or by their proxies, — may, at any time, call a special 
 
 general meeting of the shareholders, to be held at their usual place 
 of meeting, upon giving six weeks' previous public notice, specify- 
 ing in such notice the object of such meeting: 
 
 2. If the object of any such special general meeting is to con- 
 sider the proposed removal ef tlie president or vice-president, or of 
 a director of the bank, for mal.ulministration or other ,,...,^„,,, ,^. 
 
 KKMOv AI. Ol- 
 
 specified and apparently just cause, and if a majority president, 
 of the votes of the shareholders at such meetin<' is'^'iiKcroR, Etc. 
 
40 THE CURRENCY AND THE 
 
 given for such removal, a director to replace him shall be elected or 
 appointed in the manner provided by the by-laws of the bank, or 
 if there are no by-laws providing therefor, then by the 
 tSx ^^^^" shareholders at such meeting ; and if it is the presi- 
 dent or vice-president who is removed, his oflfice shall 
 be filled by the directors in the manner provided in case of a 
 vacancy occurring in the office of president or vice-president. 
 
 25. Every shareholder shall, on all occasions on which the votes 
 of the shareholders are taken, have one vote for each 
 SHARES * share held by him for at least thirty days before the 
 
 time of meeting ; and in all cases when the votes of the 
 BALLOT. shareholders are taken, the voting shall be by ballot : 
 
 3. All questions proposed for the consideration of the share- 
 holders shall be determined by the majority of the 
 
 MAJORITY TO . /• 4.1 t, 1 l 1 
 
 DETERMINE votcs ot the shareholders present \\\ person or repre- 
 sented by proxy ; and the chairman elected to preside 
 at any such meeting of the shareholders shall vote as a 
 
 YQjg * shareholder only, unless there is a tie, — in which case, 
 
 except as to the election of a director, he shall have 
 
 a casting vote : 
 
 3. If two or more persons are joint holders of shares, any one 
 
 of such joint holders may be empowered, by letter of 
 AS TO JOINT attorney froin the other joint holder or holders, or a 
 
 HOLDERS OF .... ^ , ... , 
 
 SHARES. majority of them, to represent the said shares, and 
 
 vote accordingly : 
 
 4. Shareholders may vote by proxy, but no person other than 
 a shareholder eligible to vote shall be permitted to vote or act 
 
 as such proxy, and no manager, cashier, clerk, or other 
 PROXIES. subordinate officer of the bank shall vote either in per- 
 
 son or by proxy, or hold a proxy for that purpose : 
 
 5. No appointment of a proxy to vote at any meeting of the 
 
 shareholders of the bank shall be valid for that pur- 
 PRoxiTs^ ^^ P'^^^ unless it has been made or renewed in writing 
 
 within the two years next preceding the time of such 
 meeting: 
 
BANKING LA W OF CANADA. 
 
 41 
 
 6. No shareholder shall vote, either in person or by proxy, on 
 any question proposed for the consideration of the 
 
 T ^ ^ TT" 1? T* A T XT 
 
 shareholders of the bank at any meeting of such share- ^'^^fs calls 
 holders, or in any case in which the votes of the share- must be paid 
 holders of the bank are taken, unless he has paid all i>;q" 
 
 calls made by the directors which are then due and 
 
 payable. 
 
 CAPITAL STOCK. 
 
 26. The capital stock of the bank may be increased from time to 
 time, by such percentage or by such amount, as is de- inxrease of 
 termincd upon by by-law passed by the shareholders, at capital. 
 the annual general meeting, or at any special general meeting called for 
 the purpose : Provided always, that no such by-law shall approval of 
 come into operation, or be of any force or effect, unless treasury 
 and until a certificate approving thereof has been issued 
 
 by the Treasury Board. 
 
 2. No such certificate shall be issued by the Treasury Board un- 
 less application therefor is made within three months from the time 
 of the passing of such by-law, nor unless it appears to conditions 
 the satisfaction of the Treasury Board that a copy of tion'^for^ap" 
 such by-law, together with notice of intention to apply proval. 
 
 for such certificate, has been published for at least four weeks in the 
 Canada Gazette, and in one or more newspapers published in the 
 place where the chief ofifice or place of business of the bank is situ- 
 ate ; nothing herein contained, however, shall be construed to pre- 
 vent the Treasury Board from refusing to issue such certificate if it 
 thinks best so to do. 
 
 27. Any of the original unsubscribed capital stock, or of the in- 
 creased stock of the bank, shall, when the directors so determine, be 
 allotted to the then shareholders of the bank/rt? rata, 
 
 . - , , 1- , H''^^^' STOCK 
 
 and at such rate as is fixed by the directors, but no shall he al- 
 fraction of a share shall be so allotted ; provided that lotted. 
 
 in no case shall a rate be fixed bv the directors, which will make the 
 premium (if any) paid or payable on such stock so allotted exceed 
 the percentage which the reserve fund of the bank then bears to the 
 
42 THE CURRENCY AND THE 
 
 paid-up capital stock thereof ; and any of sucli allotted stock which 
 is not taken up by the shareholder to whom such allotment has been 
 made, within six months from the time when notice of the allotment 
 was mailed to his address, or which he declines to accept, may be 
 offered for subscription to the public, in such manner and on such 
 terms as the directors prescribe. 
 
 28. The capital stock of the bank may be reduced by by-law 
 passed by the shareholders at the annual general meeting, or at a 
 CAPITAL special general meeting called for the purpose ; but no 
 
 STOCK MAY BE such by-law shall come into operation or be of force 
 
 Y^ T-» T-\ T • ^ -f-* T^ 
 
 or effect until a certificate approving thereof has been 
 issued by the Treasury Board : 
 
 2. No such certificate shall be issued by the Treasury Board un- 
 less application therefor is macie within three months from the time 
 CERTIFICATE ^^ ^^^^ passiug of the by-law, nor unless it appears to 
 OF TREASURY the Satisfaction of the Board that the shareholders vot- 
 ing for such by-law represent a majority in value of all 
 
 the shares then issued by the bank, and that a copy of the by-law, 
 together with notice of intention to apply to the Treasury Board for 
 the issue of a certificate approving thereof, has been published for 
 at least four weeks in the Canada Gazette, and in one or more news- 
 papers published in the place where the chief office or place of busi- 
 ness of the bank is situate ; nothing herein contained, however, shall 
 be construed to prevent the Treasury Board from refusing to issue 
 such certificate if it thinks best so to do : 
 
 3. In addition to evidence of the passing of the by-law and the pub- 
 lication thereof in the manner above provided, statements showing 
 
 the amount of stock issued and tlie number of share- 
 
 STATEMENTS , , , , , , 
 
 TO RE SUBMIT- lioldcrs. With tlic amouut of stock held by each, repre- 
 "^ ^^* sented at such meeting, and the number of shareholders, 
 
 with the amount of stock held by each, who voted for such by-law, 
 and also full statements of the assets and liabilities of the bank, 
 together with a statement of the reasons and causes why such reduc- 
 tion is sought, shall be laid before the Treasury Board at the time of 
 the application for the issue of a certificate approving such by-law. 
 
BANKING LA }V OF CANADA. 
 
 43 
 
 4. The passing of such by-law, and any reduction of the capital 
 stock of the bank thereunder, shall not, in any way, reduction 
 diminish or interfere with the liability of the sharehold-^'^'^ '^'^ ai fect 
 ersof the bank to the creditors thereof at the time of SHiREHOLD- 
 the issue of the certificate approving such by-lav : ^^^• 
 
 5. If, in any case, legislation is sought to sanction any reduction 
 
 of the capital stock of any bank, a copy of the by-law or resolution 
 
 passed by the shareholders in regard thereto, together if legislation 
 
 with statements similar to those above provided to be ^^ asked to 
 
 ^ sanction re- 
 
 laid before the Treasury Board, shall be filed with the duction. 
 
 Minister of Finance and Receiver General, at least one month prior 
 to the introduction into Parliament of the Bill relating to such re- 
 duction : 
 
 6. The capital shall not be reduced below the amount of two 
 hundred and fifty thousand dollars of paid-up stock, limit to ke. 
 
 ^ ^ DUCTION. 
 
 SHARES AND CAIXS. 
 
 29. The shares o^ the capital stock of the bank shall be personal 
 estate, and shall be assignable and transferable at the chief place of 
 business of the bank, or at such of its branches, or at shares vnd 
 such place or places in the United Kingdom, or in anv transfer 
 
 * T" T-T IT T? T^ f~l T.' 
 
 of the British colonics or possessions, and according to 
 such form, and subject to such rules and regulations, as the directors 
 prescribe; and books of subscription may be opened, books of sub- 
 and the dividends accruincf on anv shares of such stock scription. 
 may be made payable at any of the places aforesaid ; and the di- 
 rectors may appoint such agents in the United Kingdom, or in any 
 of the British colonies or possessions, for the purposes of this sec- 
 tion, as they deem necessary. 
 
 30. The shares of the capital stock shall be paid in by such \\\- 
 stalmicnts and at such times and places as the direc- payment of 
 tors appoint : Provided always, that the directors may shares. 
 cancel any subscription fc^r any share unless a sum equal to ten per 
 cent, at least on the amount subscribed for is actually proviso: ten 
 paid at the time of, or within thirty days after, the *'^;^,^|;;^'^l^: |\j^.|j] 
 time of subscribing ; but such cancellation shall not scription. 
 
44 THE CURRENCY AND THE 
 
 relieve the subscriber from his Hability to creditors in the event of 
 insolvency as hereinafter provided. 
 
 31. The directors may make such calls of money from the sev- 
 CALLSON eral shareholders for the time being, upon the shares 
 SHARES. subscribed for by them respectively, as they find 
 necessary : 
 
 2. Such calls shall be made at intervals of not less than thirty 
 
 TIME OF CALLS days, and upon notice to be given ixX. least thirty days 
 
 prior to the day on which such call shall be payable ; 
 
 LIMITATION, ^j^^^ j-jQ guch Call shall exceed ten per cent, of each share 
 
 subscribed. 
 
 32. The directors may, in ci'se of the non-payment of any call, in 
 RECOVERY OF the Corporate name of the bank, sue for, recover, col- 
 CALLs. \^.^4^ ^j-j(j g^.^ jj^ ^ji such calls, or may cause and declare 
 
 such shares to be forfeited to the bank. 
 
 33. If any sharc;holder refuses or neglects to pay any instalment 
 upon his shares of the capital stock at the time appointed therefor, 
 FORFEITURE such shareholder shall incur a penalty to the use of 
 OF SHARES ^1^^. bank of a sum of money equal to ten per cent, on 
 
 FOR NON-FAY- 
 
 MENT OF the amount of such shares; and if the directors de- 
 
 CALLs. clare any sliares to be forfeited to the bank they shall, 
 
 within six months thereafter, without any previous formality other 
 than thirty days* public notice of their intention so to do, sell at 
 SALE IN SUCH pubUc auctioH the said shares, or so many of the said 
 ^^^^* shares as shall, after deducting the reasonable expenses 
 
 of the sale, yield a sum of money sufficient to pay the unpaid in- 
 stalments due on the remainder of the said shares and the amount 
 of penalties incurred upon the whole ; ^.\\Ci tin- president or vice- 
 ANi) TRANS- president, manager or cashier nf the b.uik shall e.vecute 
 *'^'**- the transfer to the purchaser of the shares so sold ; and 
 
 such transfer shall be as valid and effectual in law as if it had been 
 executed by the original holder of tlie shares thereby transferred; but 
 PROVISO. ^^^^ directors, or the shareholders at a gener.d meeting, 
 
 may, notwithstanding. inything in this section cont<iined, 
 
BANKING LAW GF CANADA. 
 
 45 
 
 remit, either in wliolc or in part, and conditionally or uncondition- 
 ally, any forfeiture or penalty incurred by the non-payment of instal- 
 ments as aforesaid, or the bank may enforce the payment of any 
 call or calls by suit, instead of declaring the shares forfeited. 
 
 34» Ij"i ^ny action brought to recover anv money due on any 
 such call it shall not be necessary to set forth the special matter in 
 the declaration or statement of claim, but it shall be rkcovekv by 
 sufficient to allege that the defendant is holder of one suit. 
 
 share or more, as the case may be, in the capital stock ^vhat only 
 of the bank, and is indebted to the bank for a call or proved. 
 
 calls upon such share or shares, in the sum to which the call or calls 
 amount, as the case may be, stating the amount and number of such 
 calls, whereby an action has accrued to the bank to recover the same 
 from such defendant by virtue of this Act ; and it shall not be neces- 
 sary to prove the appointment of the directors. 
 
 TRANSFER AND TRANSMISSION ()F SIIARLS. 
 
 35. No assignment or transfer of the shares of the capital stock 
 of the bank shall be valitl unless it is made and registered and ac- 
 cepted by the person to whom the transfer is made, /ovmi i.»vs: 
 in a book or books kept for that purpose, nor unless of transfer 
 the person making the same has, if required by the ^^ shares. 
 bank, previously tlischarged all his debts or liabilities to the bank 
 which exceed in amount the remaining stock, if any, belonging to 
 such person, valued at the then current rate : and no fraction of 
 fractional part of a share, or less than a who-!.' share, shakk not 
 
 1111 • 11 r ^ ^ TRANSFER- 
 
 shall be assignable or transferable. ahle. 
 
 36. A list of all transfers of shares registered each day in the 
 books of the bank, showing the parties to such transfers and the 
 number of shares transferred in each case, shall be 
 
 LIST or TRANS- 
 
 made up at the end of each day and kept at the chief feus 10 mk 
 place of business of the bank, for the iiLspection of its kept. 
 
 shareholders. 
 
 37. All sales or transfers of .shares, and all contracts and agree- 
 ments in respect tlKieof, hereafter made or j)urporting to be made, 
 
4C THE CURRENCY A^Vn THE 
 
 TRANSFERRER sluiU bc iiull aiid voicl (saviiig however, as to a pur- 
 OF SHARES chaser not havin<j^ knowlediie of the defect, his ricrh^-s 
 
 MUST r/E RE(;- . ' t. 
 
 iSTERED OWN- and remedies under the contract of sale), unless the per- 
 ^^' son makini^ such sale or transfer, or in whose name or 
 
 on whose behalf the same is made, is at the time thereof the regis- 
 tered owner in the books of the bank of the share or shares so sold or 
 transferred, or intended or purported so to bc, or has the rcLjistered 
 owner's assent to the sale, and the disiin-^uishinif number or num- 
 bcrs of such share or shares, if any, shall be designated in the con- 
 tract or agreement of sale or transfer: and any person, whether 
 principal, broker or agent, who violates tlie provisions of this section 
 bv wilfully sellin'j^ or transferrinix, or attemptinij to sell or transfer, 
 any share or shares by a false number, v)r of which the princi])al is 
 not, at the time of such sale or attempted sale, the registered owner, 
 or actinij with the rei^istered owner's assent to the sale, shall be 
 guilt}' of an offence against this Act. 
 
 38. When any share of the capital stock has been sokl under a 
 writ of execution, the officer by whom tlie writ was executed shall. 
 SALE OF within thirty days after the sale, leave with the bank an 
 m'R*^EXFxu*. iittested copy of the writ, with the certificate of such 
 ii'»N*. ofTicer indorsed thereon, certifying to whom the sale 
 has been matle ; and thereupon (but not until after all debts and 
 liabilities of the holder of the share to the bank, and all liens exist- 
 ing in favor of the bank thereon, liave been discharged, as herein 
 provided I, the presiilent, vice-president, manager or cashier of the 
 bank shall execute the transfer of the share so sold to the purchaser ; 
 and such transfer shall l)e, to all intents and pur[)oses, as valid and ef- 
 fectuai in law as if it had been executed 1)V the holder of the saiil share. 
 
 39. If the interest in any share in the capital slock becomes 
 transmitted in consequence of the death, bankruptcy, or insolvency 
 TRANSMISSION of any shareholder, or in conseipience of the m.irriagr 
 <)THERWisT, ^'^ ^ female shareholder, or by any other lawi"ul means 
 TH \N nv than by a transfer according to the provisions of tln\ 
 now AV riiEN- '^^^^ ^^^^^^ transmission shall be authenticated by a 
 TicATFD. declaration in writing, as hereinafter menti»)ned. or in 
 
BANKING LA W GF CANADA. 
 
 47 
 
 ,1 
 
 ¥ 
 
 such other manner as the directors of the bank require; and every 
 such declaration shall distinctly state the manner in which and the 
 person to whom such shares have been transmitted, and shall be 
 made and signed by such person ; and the person making and sign- 
 ing such declaration shall acknowledge the same before a judge of a 
 court of record, or before the mayor, provost or chief magistrate of 
 a city, town, borough or other place, or before a notary public, where 
 the same is made and signed ; and every declaration so signed and 
 acknowledged shall be left with the cashier, manager or other officer 
 or agent of the bank, who shall thereupon enter the name of the per- 
 son entitled under such transmission in the register of shareholders ; 
 and until such transmission has been so authenticated, no person 
 claiming by virtue of any such transmission shall be entitled to par- 
 ticipate in the profits of the bank, or to vote in respect of any such 
 share of the capital stock : Provided always, that every such declara- 
 tion and instrument as, by this and the next following proviso: as 
 section cf this Act, are reciuired to perfect the trans- i<> i»kclaka. 
 mission of a share in the bcUik which is made m any out ok 
 
 countrv other than Canada, or any other Hritish colonv, panada, i.tc. 
 or the United Kingdom, shall be further authenticated by the clerk 
 of a court of record and under the seal of such court, or b\' the 
 Ihitish consul or vice-consul, or other accretliteil representati\e of 
 the liritish Government in the countr\' where the declaration is 
 made, or shall be made directly before such Ikitish 
 
 , . , ,, ' ,.^ , PROVISO : FUR. 
 
 consul or vice-consul or other accredited represen- nn.R kvi- 
 tative ; and provideil also, that the directors, cashier i>f-N<'H mav 
 
 . ' . f »i I 1 . BK kl-:(,)UIRKI>. 
 
 or other otnccr or agent of the bank may iXMiuire 
 corroborative evidence of any fact alleged in any such declaration. 
 
 40. If the transmission of any share of the capital stock ha; 
 taken place by virtue uf the marriage of a female shareholder, the 
 declaration shall be accompanied by a copy of the rtg-iH wsmission 
 ister of such marriage, or other particulars of the cele- ^'^' ^'^'•<'iIA(;F. 
 bration thereof, and shall ilecl;«re the identity of the sVi \iu:- 
 
 wife with the holder of such share, anil shall be ma<le holdkr. 
 
 and signeil by such female shareholder and her husband ; antl they 
 
48 THE CURRENCY AND THE 
 
 may include therein a declaration to the effect that the share trans- 
 mitted is the separate property and under the sole control of the 
 wife, and that she may receive and grant receipts for the dividends 
 and profits accruing in respect thereof, and dispose of and transfer 
 the share itself, without requiring the consent or authority of lie' 
 husband ; and such declaration shall be binding upon the bank and 
 persons making the same, until the said persons see fit to revoke it 
 by a written notice to that effect to the bank ; but the omission of 
 a statement in any such declaration that the wife making the same 
 is duly authorized by her husband to make the same shall not in- 
 validate the declaration. 
 
 41. If the transmission has taken place by virtue of any testa- 
 mentary instrument, or by intestacy, the probate of the will, or the 
 ^r. .^To>.,c. letters of administration, or act of curatorship or tutor- 
 sioN Hv i)E- ship, or an official extract therefrom, shall, together 
 
 ' ■ with such declaration, be produced and left witli the 
 
 cashier or other officer or agent of the bank, w ho shall, thereupon, 
 enter in the register of shareholders the name of the person entitled 
 under such transmission. 
 
 42. If the transmission of any share of the capital stock has 
 taken place by virtue of the decease t)f any shareholder, the pro- 
 FURTHKR i>K<». duction to the directors and the deposit with them of 
 VISION IN ;i,^ authentic notarial copy of the will of the deceased 
 
 SUCH CASE. , , , , -f , n • • .-If 1- 
 
 shareholder, if sucli will is in notarial form according 
 
 to the law of the Province of Quebec, or of any authenticated copy 
 of the probate of the will of the deceased shareholder, or of letters 
 of administration of his estate, or of letters of verification of heir- 
 ship, or of the act of cu.atorship or tutorshij), granted by any court 
 in Canada having power to grant the same, or by any court or au- 
 th<irity in England, Wales, Irelaiul, or any Ihitish coK)ny, or of an\* 
 testament testamentary of testament d.itive expede in Scotlaml, or, 
 if the deceased shareholder dietl out of ller Majesty's tiominions, 
 the proihiction to and deposit with the directors of any authenti- 
 cated copy of the probate of his will or letters of administration of 
 his property, or other document of like import, granted by anyct)urt 
 
BANKING LAW OF CANADA. 
 
 49 
 
 or authority having the requisite power in such matters, shall be 
 sufficient justification and authority to the directors for paying any 
 dividend, or for transferring or authorizing the transfer of any share, 
 in pursuance of and in conformity to such probate, letters of admin- 
 istration, or other such document as aforesaid. 
 
 43. The bank shall not be bound to see to the execution of any 
 trust, whether express, implied or co'istructive, to which any share 
 <^f its stock is subject ; and the receipt of the person da vk v ^t 
 in whose name any such share stands in the books of bovnu iosfe 
 the bank, or, if it stands in the name of more persons ^^^ tkusis. 
 than one, the receipt of one of such persons shall be a sufficient dis- 
 charge to the bank for any dividend or any other sum of numey 
 payable in respect of such share, unless express notice to the con- 
 trary has been given to the bank ; and the bank shall not be bound to 
 see to the application of the money paid upon such receipt, whether 
 given by one of such persons or all of them. 
 
 44. No person holding stock in the bank as executor, admin- 
 
 istnitor, guardian or trustee, of or for any person named in the books 
 
 of the bank as being so represented by him, shall be f.xixutors 
 
 personally subject to any liability as a shareholder, but-^^'^' • *<l>>tei:s 
 
 Not pfrsox- 
 the estate and funds in his hands shall be liable in like ally liahlk. 
 
 manner and to the same extent as the test.itor, intestate, ward or 
 person interested in such trust fund would be, if living and compe- 
 tent to hold the stock in his own name; and if the trust is for a 
 living person, such person shall also himself be liable as a share- 
 holder : but if such testator, intestate, ward or person so represented 
 is not so n;imed in the books of the l).ink,the executor, 
 administrator, gu.irdian or trustee shall be person.:dly 
 liable in respect of such stock as if he held it in his (»wn name as 
 owner thereof. 
 
 ANNUM, STATKMKNT AND INSPECTION. 
 
 45. At every annual meeting of the shareholder' for the election 
 of tlircctors, the out-going directors shall submit a clearsiA rFMF.NTTo 
 anil full statement of th'; affairs of the bank, contain- '" ' '^"* '*•■• 
 
 FORK ANNUAL 
 
 nig on the one part.- - mff.ti.no. 
 
 4 
 
 fcXCKFTION. 
 
^mm 
 
 50 T///^ CURRENCY AND THE 
 
 The amount of the capital stock paid in, the amount of notes 
 of the bank in circulation, the net profits made, the 
 
 LIABILITIES. , , , , , , ,11, • , • 
 
 balances due to other banks, and the cash deposited m 
 the bank, distinguishing deposits bearing interest from those not 
 bearing interest ; and on the other part, — 
 
 The amount of the current coin, the gold and silver bullion, and 
 the Dominion notes held by the bank, the balances due to the bank 
 
 from other banks, the value of the real and other prop- 
 
 ASSFTS 
 
 erty of the bank, and the amount of debts owing to 
 the bank, including and particularizing the amounts so owing upon 
 bills of exchange, discounted notes, mortgages and other securi- 
 ties, — 
 
 Exhibiting, on the one hand, the liabilities of, or the debts due 
 by the bank, and on the other hand the assets and resources there- 
 wHATSTATK- of ; and the said statement shall also exhibit the rate 
 MENT SHALL ^j-jj amouut of the last dividend declared by the di- 
 rectors, the amount of reserved profits at the date of 
 such statement, and the amount of debts due to the bank, over-due 
 and not paid, with an estimate of the loss which will probably ac- 
 crue thereon. 
 
 46. The books, correspondence and funds of the bank shall, at 
 INSPECTION OF 'ill times, be subject to the inspection of the directors ; 
 BOOKS, Etc. ^^yj- no pci'sou, wlio is iiot a director, sliall be allowed 
 to inspect the account of any person dealing with the bank. 
 
 DIVIDENDS. 
 
 47. The directors of the bank shall, subject to the provisions of 
 this Act, tlcclare quarterly or half yearly dividends of so much of 
 
 the profits of the bank as to the maj(jrity of them 
 
 DIVIDENDS. ^ ^ ^ 
 
 seems advisable ; and they shall give at least thirty 
 days* public notice of the payment of such dividends previously to 
 tht: date fixed for such payment; and they may close the transfer 
 books during a certain time, not exceeding fifteen days, before the 
 f)avment of each divitlend. 
 
BANKIXG LAW OF CANADA. 
 
 48. Xo dividend or bonus shall ever be tleclared so as to impair 
 the paid-up capital; and if any dividend or bonus is so declared or 
 made payable, the directors who knowingly and ^vil- 
 fully concur therein shall be jointly and severally liable to impair 
 for the amount thereof as a debt due by them to the capiial. 
 
 bank: and if any part of the paid-up capital is lost, the directors 
 shall, if all the subscribed stock is not paid up, forthwith make calls 
 upon the shareholders to an amount equivalent to such c^puAi lost 
 loss; and such loss and the calls, if any, shall be men- to be mauf. 
 tioned in the next return made by the bank to the 
 Minister of Finance and Receiver General : Provided that, in any 
 case in which the capital has been impaired as afore- 
 said, all net profits shall be applied to make good such 
 loss. 
 
 PROVISO. 
 
 49. No division of profits, either by way of dividends or 
 bonus, or both combined, or in any other way, exceeding the 
 rate of eight per cent, per annum, shall be made by dividend 
 the bank, unless, after making the same, it has a lf'ss thfkf is 
 rest or reserve fund equal to at least thirty per acekiain rk- 
 cent. of its paid-up capital ; and ail bad and doubt- serve. 
 ful debts shall be deducted before the amount of such rest is 
 calculated. 
 
 KKSKKVKS. 
 
 50. The bank shall hold not less than forty per cent, of 
 its cash reserves in Dominion notes; and every pAkroFkE- 
 bank holding at any time a less amount of its cash 
 reserves in Dominion notes than is prescribed by 
 this section shall incur a penalty of five hundred 
 dollars for each and every violation of the pro- 
 visions of this section : 
 
 2. The Minister of Finance and Receiver General shall 
 make such arrangements as are necessary for insuring the de- 
 livery of Dominion notes to any bank, in exchange supply of 
 for an equivalent amount of specie, at the several ^"'^'.'^"!^ 
 offices at which Dominion notes are redeemable, in noies. 
 
 the cities of Toronto, Montreal, Halifax, St. John, N. B., Winni- 
 
 SKkVK TO HE 
 
 IN DOMINION 
 
 NOTES. 
 
 PENALTY F«)k 
 NON-COM- 
 PLIANCE. 
 
52 THE CURRENCY AND THE 
 
 peg, Charlottetown and Victoria, respectively ; and such notes 
 shall be redeemable at the ofifice for redemption of Dominion 
 notes in the place where such specie is given in exchange. 
 
 NOTE ISSUE. 
 
 51. The bank may issue and re-issue notes payable to 
 bearer on demand and intended for circulation ; but no such 
 AMOUNT AND "ote shall be for a sum less than five dollars, or for 
 •DENOMiNA- any sum which is not a multiple of five dollars, and 
 NOTEs!^ ^^^^ the total amount of such notes, in circulation at any 
 time, shall not exceed the amount of the unimpaired 
 paid-up capital of the bank : 
 
 2. Notwithstanding anythin<j contained in the next preceding 
 sub-section, the total amount of such notes in circulation at any 
 ^.r.n,r^ ^^,^„^ ,,^, time of La Banque du Peuple and the Bank of British 
 
 NOTE ISSUE Or * _ ^ 
 
 BAXQUE DU North America respectively shall not exceed seventy- 
 
 PEUPLE AND r *. r 4.1 • ' 1 • 1 ' t. \ C ' \ 
 
 BANK OF HKiT- ^^^ per ccut. of the unimpau'ed paid-up capital ot such 
 isH NORTH banks respectively, but each of such banks may issue 
 such notes in excess of the said seventy-five per cent, 
 upon depositing, with respect to such excess, with the Minister of 
 Finance and Receiver General, in cash or bonds of the Dominion of 
 Canada, an amount equal to the excess ; provided always that in no 
 case shall the total amount of the notes of either of the said banks 
 in circulation at any time exceed the unimpaired paid-up capital of 
 such bank ; and the cash or bonds so deposited shall be available 
 by the Minister of Finance and Receiver General for the redemption 
 of notes issued in excess as aforesaid, in the event of the suspension 
 of the said banks respectively : 
 
 3. If the total amount of the notes of the bank in circulation 
 at any time exceeds the amount authorized by this section, 
 PENALTIES ^^c bank shall incur penalties as follows : If the 
 FOR EXCESS amount of such excess is not over one thousand 
 TioN*.*^^^^^ dollars, a penalty equal to the amount of such ex- 
 cess ; if the amount of such excess is over one thou- 
 sand dollars and is not over twenty thousand dollars, a penalty 
 of one thousand dollars ; if the amount of such excess is 
 
BANKING LAW OF CANADA. 53 
 
 over twenty thousand dollars and is not over one hundred thou- 
 sand dollars, a penalty of ten thousand dollars ; if the amount 
 of such excess is over one hundred thousand dollars and is not 
 over two hundred thousand dollars, a penalty of fifty thousand 
 dollars ; and if the amount of such excess is over two hundred 
 thousand dollars, a penalty of one hundred thousand dollars : 
 
 4. All notes hcretotore issued or re-issued by the bank, and now 
 in circulation, which are for a sum less than five dollars, j^-q-jes under 
 or for a sum which is not a multiple of five dollars, $5 to be 
 
 shall be called in and cancelled as soon as practicable. 
 
 52. The bank shall not pledge, assign, or hypothecate its 
 notes ; and no advance or loan made on the security pledging of 
 of the notes of a bank shall be recoverable from the notes fro- 
 bank or its assets : hipited. 
 
 2. Every person who, being the president, vice-president, 
 director, principal partner en t'ouunaiulite, general manager, 
 manager, cashier, or other officer of the bank, penalty for 
 pledges, assigns, or hypothecates, or authorizes, or pledging. 
 is concerned in the pledge, assignment or hypothecation of the 
 notes of the bank, and every person who accepts, receives or 
 takes, or authorizes or is concerned in the acceptance or receipt 
 or taking of such notes as a pledge, assignment or hypotheca- 
 tion, shall be liable to a fine of not less than four hundred dollars 
 and not more than two thousand dollars, or to imprisonment for 
 not more than two years, or to both : 
 
 3. Every person who, being the president, vice-president, 
 director, principal partner 4 n vomnHuuIitr^ general manager, 
 manager, cashier, or other officer of a bank, with penalty for 
 intent to defraud, issues 01 delivers, or authorizes improper 
 or is concerned in the issue or delivery of notes of Jng of notes 
 the bank intended for circulation and not then in 
 circulation,— and every person who, with knowledge of such 
 intent, accepts, receives or takes, or authorizes or is concerned 
 in the acceptance, receipt or taking of such notes,— shall be 
 guilty of a misdemeanor, and liable to imprisonment for a term 
 not exceeding seven years, or to a fine not exceeding two 
 thousand dollars, or to both. 
 
54 
 
 THE CURREXCY AND THE 
 
 53. The payment of the notes issued or re-issued by the 
 bank and intended for circulation, and then in circulation, to- 
 NOTESTo BE gather with any interest paid or payable thereon as 
 FIRST CHARGE hereinafter provided, shall be the first charge upon 
 ON ASSETS. ^j^g assets of the bank in case of its insolvency; 
 and the payment of any amount due to the Government of 
 Canada, in trust or otherwise, shall be the second charge upon 
 such assets ; and the payment of any amount due to the gov- 
 ernment of any of the Provinces, in trust or otherwise, shall 
 be the third charge upon such assets : 
 
 2. The amount of any penalties for which the bank is liable 
 LIABILITY FOR shall not form a charge upon the assets of such 
 cASEOFiNsoL-^^^*^* ^^ case of its insolvency, until all other liabil- 
 VENCY. ities are paid. 
 
 54. Every bank to which this Act applies, and which is 
 carrying on its business at the time when this Act comes into 
 
 force, shall, within fifteen days thereafter, pay to 
 
 FXISTIXr" 1 K^ ni 
 
 BANKS 10 the Minister of Finance and Receiver General, a 
 MAKE DEPOSIT sum of money equal to two and one -half percent, of 
 TER OF the average amount of its notes in circulation dur- 
 
 FiNANCE ing the twelve months next preceding the date of 
 
 FIVE PER CENT.^^^ coming into Torce of this Act, or if such bank 
 OF NOTE ciR- has not be';in in operation for twelve months, a sum 
 ci LAnoN. q|. jjiQugy equal to two and one-half per cent, of the 
 average amount of its notes in circulation during the time it 
 has been in operacion ; and each bank shall, within fifteen days 
 from and after the first day of July, in the year one thousand 
 eight hundred and ninety-two, pay to the Minister of Finance 
 and Receiver General such further sum of money as is neces- 
 sary to r;rke the total amount so paid by each bank to be a 
 sum er.ual to five per cent, of the average amount of its notes in 
 circulation during the twelve months next preceding the date 
 last nentioned,— which sum shall be adjusted annually as here- 
 inafter provided : 
 
 r. The Merchants' Bank of Prince Edwaiu Island shall, on or 
 befMr'j the day upon which it becomes subject to the provisions of 
 th's Act, jKiy to the Minister of Finance and Receiver General such 
 
1 
 
 BANKING LAW OF CANADA. 55 
 
 sum as appears to the satisfaction of the Treasury Board to be equal 
 to two and one-half per cent, of the average amount of its notes in 
 circulation during the then preceding twelve months ; ^g ^^ mer- 
 and shall further pay to the Minister of Finance and chants' bank 
 Receiver General, within fifteen days from and after 
 the first day of July in the year then next following, such further 
 sum as is necessary to make the total sum paid by the said bank to 
 be a sum equal to five per cent, of the average amount of its notes 
 I in circulation from the time the said bank became subject to the 
 
 I provisions of this Act to the said first day of July, — which sum 
 
 shall be adjusted annually as hereinafter provided : 
 
 3. The Minister of Finance and Receiver General shall, 
 upon the issue of a certificate under this Act authorizing a bank 
 to issue notes and commence the business of bank- as tp new 
 ing, retain out of any moneys of such bank then in banks. 
 his possession the sum of five thousand dollars,— which sum 
 shall be held for the purposes of this section, until the annual 
 adjustment hereunder takes place in the year then next follow- 
 ing, at which time the amount at the credit of the bank shall be 
 adjusted by payment to or by the bank of such sum as is neces- 
 sary to make the amount at the credit of the bank to be a sum 
 of money equal to five per cent, of the average amount of its 
 notes in circulation from the time it commenced business to the 
 time of such adjustment, — which sum shall be adjusted annually 
 as hereinafter provided : 
 
 4. The amounts so paid, retained, and kept on deposit as 
 aforesaid shall form a fund to be known as " The Bank Circula- 
 tion Redemption Fund,"— which fund shall be held formation 
 for the following purpose, and for no other, namely : of circula- 
 In the event of the suspension by the bank of pay- '"'hon fund! 
 ment in specie or Dominion notes of any of its liabil- 
 ities as they accrue, for the payment of the notes then issued or 
 reissued by such bank, and intended for circulation, and then in 
 circulation, and intei 'st thereon ; and the Minister of Finance 
 and Receiver General shall, with respect to all notes paid out 
 of the said fund, have the same rights as any other holder of 
 the notes of the bank : 
 
56 THE CURRENCY AND THE 
 
 5. The fund shall bear interest at the rate of three per cent, 
 per annum, and it shall be adjusted, as soon as possible after 
 FUND TO ^^^ thirtieth day of June in each year, in such a way 
 BEAR INTER- as to make the amount at the credit of each bank 
 ^^^' contributing thereto, unless herein otherwise spe- 
 cially provided, equal to five per cent, of the average note circula- 
 tion of such bank during the then next preceding twelve months : 
 
 6. The average note circulation of a bank during any period 
 shall be determined from the average of the amount of its notes 
 NOTE ciRcu- ^" circulation, as shown by the monthly returns for 
 LATioN, HOW such period made by the bank to the Minister of 
 DETERMINED, pjuancc aud Receiver General ; and where, in any 
 return, the greatest amount of notes in circulation at any time 
 during the month is given, such amount shall, for the purposes of 
 this section, be taken to be the amount of the notes of the bank 
 in circulation during the month to which such return relates : 
 
 7. In the event of the suspension by the bank of payment in 
 specie or Dominion notes of any of its liabilities as they accrue, 
 
 the notes of such bank, issued or reissued and in- 
 NOTEs OF tended for circulation, and then in circulation, shall 
 PENDING PAY- bear interest at the rate of six per cent, per annum, 
 MENT TO BEAR ffom the day of such suspension to such day as is 
 TiLRE-^^^ ^^ named by the directors, or by the liquidator, re- 
 DEEMED. ceiver, assignee or other proper official, for the pay- 
 
 ment thereof, — of which day notice shall be given by 
 advertisement for at least three days in a newspaper pubhshed 
 in the place in which the head office of the bank is situate ; but 
 in case any notes presented for payment on or after any day 
 named for payment thereof are not paid, all notes then unpaid 
 and in circulation shall continue to bear interest to such further 
 day as is named for payment thereof, — of which day notice shall 
 be given in manner above provided : Provided al- 
 DEEMED TO ways, that in case of failure on the part of the direc- 
 BE PAID OUT tors of the bank, or of the liquidator, receiver, 
 
 OF FUND. . i.u £C • 1 i. \ 
 
 assignee or other proper official, to make arrange- 
 ments within two months from the day of suspension of payment 
 by the bank as aforesaid for the payment of all of its notes and 
 interest thereon, the Minister of Finance and Receiver General 
 
BANKING LA W OF CANADA. 57 
 
 may thereupon make arrangements for the payment of the notes 
 remaining unpaid, and all interest thereon, out of the said fund, 
 and shall give such notice of such payment as he thinks expedi- 
 ent, and on the day named by him for such payment all interest 
 on such notes shall cease, anything herein contained to the con- 
 trary notwithstanding ; but nothing herein con- 
 tained shall be construed to impose any liability on proviso. 
 the Government of Canada or on the Minister of Finance and 
 Receiver General beyond the amount available from time to time 
 out of the said fund : 
 
 8. All payments made from the said fund shall be without 
 regard to the amount contributed thereto by the bank in respect 
 of whose notes the payments are made ; and in case 
 
 the payments from the fund exceed the amount trJ:^J?l^,^J^ 
 contributed by such bank to the fund, and all to be with- 
 interest due or accruing due to such bank thereon, ^^^ regard 
 the other banks shall, on demand, make good to contributed. 
 the fund the amount of such excess, pro rata to 
 the amount which each bank has at that time contributed to the 
 fund ; and all amounts recovered and received by the Minister 
 of Finance and Receiver General from the bank on whose ac- 
 count such payments were made shall, after the amount of such 
 excess has been made good as aforesaid, be distributed among 
 the banks contributing to make good such excess ^>/»o rata to 
 the amount contributed by each : Provided always, 
 I that each of such other banks shall only be called 
 
 f upon to make good to the said fund its share of such excess, in 
 
 I payments not exceeding in any one year one per cent, of the 
 
 I average amount of its notes in circulation,— such circulation to 
 
 be ascertained in such manner as the Minister of Finance and 
 Receiver General decides ; and his decision shall be final : 
 
 9. In the event of the winding up of the business of a bank 
 by reason of insolvency or otherwise, the Treasury Board may, 
 on the application of the directors, or of the liquida- „^„.,,„^^.^ 
 
 . . , /.>. . 4 1 REPAiMEIsT 
 
 tor, receiver, assignee or other proper official, and on of amount w 
 being satisfied that proper arrangements have been ^^^v. is 
 
 made for the payment of the notes of the bank and 
 any interest thereon, pay over to such directors, liquidator, re- 
 
58 THE CURRENCY AND THE 
 
 ceiver, assignee or other proper official, the amount at the credit 
 of the bank, or such portion thereof as it thinks expedient : 
 
 10. The Treasury Board may make all such rules and regula- 
 tions as it thinks expedient with reference to the payment of 
 
 any moneys out of the said fund, and the manner, 
 BOARD>iAY place and time of such payments, the collection of 
 REGULATE all amounts due to the said fund, all accounts to be 
 OF fuSd!*^^^ kept in connection therewith, and generally the 
 
 management of the said fund and all matters relat- 
 ing thereto : 
 
 11. The Minister of Finance and Receiver General may, in 
 ENFORCE- ^^^ official name, by action in the Exchequer Court 
 MENT OF PAY- of Canada enforce payment (with costs of action) 
 MENT. q£ ^j^y gyj^ ^^^ ^^^ payable by any bank under the 
 
 provisions of this section. 
 
 55. The bank shall make such arrangements as are neces- 
 sary to ensure the circulation at par in any and every part of 
 
 Canada of all notes issued or reissued by it and 
 hankV(Tbe intended for circulation ; and towards this purpose 
 PAYABLE AT the bank shall establish agencies for the redemption 
 OUT cInada" *^"^ payment of its notes at the cities of Halifax, St. 
 
 John, Charlottetown, Montreal, Toronto, Winnipeg 
 and Victoria, and at such other places as are, from time to time, 
 designated by the Treasury Board. 
 
 56. The bank shall always receive in payment 
 REDEMPTION j^g q^^ notes at par at any of its offices, and 
 
 OF NOTES. . ,. .. , ... 
 
 whether they are made payable there or not : 
 PAYAi'.i F \T 2- '^^^ chief place of business of the bank shall 
 
 CHIEF iLACE always be one of the places at which its notes arc 
 oFBUifiNEss. made payable. 
 
 57. The bank, when making any payment, shall, on the 
 
 request of the p'^rson to whom the payment is to be made, pay 
 
 the same, or such part thereof, not exceeding one 
 
 PAYMENTS IN u J 4 1 11 t. *. • r\ • 
 
 DOMINION hundred dollars, as such person requests, m Domin- 
 NuTEs. ion notes for one, two, or four dollars each, at the 
 
BANKING LA W OF CANADA. 
 
 59 
 
 option of such person : Provided always, that no 
 payment, whether in Dominion notes or bank notes, ^"[^^^ 2!^^.^^" 
 shall be made in bills that are torn or partially de- 
 faced by excessive handling. 
 
 FACED NOTES. 
 
 58. The bonds, obligations and bills, obligatory or of credit, of 
 the bank under its corporate seal, and signed by the president or 
 vice-president, and countersigned by a cashier or assist- 
 
 , " , . , . , , ui 4- BONDS, NOTES, 
 
 ant cashier, which are made payable to any person, ^.^^ j^^^^. ^^^^ 
 shall be assignable by indorsement thereon ; and bills by whom to 
 or notes of the bank signed by the president, vice- 
 president, cashier or other officer appointed by the directors of the 
 bank to sign the same, promising the payment of money to any 
 person or to his order, or to the bearer, though not under the cor- 
 porate seal of the bank, shall be binding and obligatory on it in like 
 manner and with the like force and effect as they would be upon 
 any private person, if issued by him in his private or natural capac- 
 ity, and shall be assignable in like manner as if they were so issued 
 by a private person in his natural ca|>acity: Provided 
 ahvays, that the directors of the bank may, from time i-owfr^mTv 
 to time, authorize, or depute any cashier, assistant hk dki-utf.d 
 
 1 • cc r 4.1 u 1 1- i. 4-1 TO OFFICER. 
 
 cashier, or otncer of the bank, or any director other 
 than tlie president or vice-president, or any cashier, manager or 
 local director of any branch or office of discount and deposit of th.c 
 bank, to sign the notes of the bank intended for circulation. 
 
 59. All bank notes and bills of the bank whereon the name of 
 any person intrusted or authorized to sign such notes or bills on 
 behalf of the bank is impressed bv machinerv provided ^,,,,.^,, ,,.,. .,^ 
 
 * • ' * NOTES M\\ llF. 
 
 for that purpose, by or with the authority of the bank, sk.m n hy 
 shall be good and vah'd to all intents and j)urp(>ses •'^^'^^ '»'^*'<Y. 
 as if such notes and hills had been subscribed in the proper hand- 
 writing of the person intrusted or authorized by the bank to sign 
 the same respectivelv, and shall be bank notes anil bills ,,.... ^,,... . 
 
 * ' ON K Si(»NA- 
 
 within the meaning of all laws and statutes whatever, ti'Rk must iik 
 and may be described as bank notes or bills in all in- ^'^'hkn. 
 dictments and civil or criminal proceedings whatsoever: Trovided 
 
6o THE CURRENCY AND THE 
 
 always, that at least one signature to each note or bill must be in the 
 actual handwriting of a person authorized to sign such note or bill. 
 
 60. Every person, except a bank to which this Act applies, who 
 issues or reissues, makes, draws, or endorses any bill, bond, note, 
 
 cheque or other instrument, intended to circulate as 
 u\\LTH()Riz- ii'^<^^J"'^T' ^^ ^^ t)e used as a substitute for money, for 
 ED ISSUE OF any amount whatsoever, shall incur a penalty of four 
 CIRCULATION, hundred dollars, which shall be recoverable with costs, 
 
 in any court of competent jurisdiction, by any person 
 who sues for the same ; and a moiety of such penalty shall belong 
 to the ])erson suing for the same, and the other moiety to Her 
 Majesty for the public uses of Canada: 
 
 2. The intention to pass any such instrument as money shall be 
 presumed, if it is made for the payment of a less sum than twenty 
 
 dollars, and is payable either in form or in fact to the 
 WHAT SHALL bearer thereof, or at si<;ht, or on demand, or at less 
 
 BE DEEMED , . 
 
 SUCH NOTES, than thirty days thereafter, or is overdue, or is 111 any 
 way calculated or designed for circulation, or as a sub- 
 stitute for money ; unless such instrument is a cheque on some char- 
 tered bank paid by the maker directly to his immediate creditor, or 
 a promissory note, bill of exchange, bond or other undertaking for 
 the payment of money, paid or delivered by the maker thereof to 
 his immediate crt.-ditor, and is not designed to circulate as money or 
 as a substitute for monev. 
 
 61. Every person who in any way defaces any Dominion or 
 Provincial note, or bank note, whether by writing, 
 
 OF N^vrrs^^^ printing, drawing or stamping thereon, or by at- 
 taching or affixing thereto, anything in the nature 
 
 PENALTY. or form of an advertisement, shall be liable to a 
 penalty not exceeding twenty dollars. 
 
 62. Kvory officer charged with the receipt or disbursement of 
 COUNTERKEir public moneys, and every ofTRcer of any bank, and 
 
 AND FRAUDU. . i i i i , 
 
 LENT NOTES tvcry person acting as or employed by any banker, 
 TO ^^ shall stamp or write in i)l.iin letters tiie word *' counter- 
 
 STAMTED AS * t. •» n • > •• i • •• 
 
 SUCH. fcit, " altered, or *' worihlcss, upon every counter- 
 
BANKIXG LAJV OF CANADA. 
 
 6\ 
 
 fcit or fraudulent note issued in the form of a Dominion or bank 
 note, and intended to circulate as money, which is presented to 
 him at his place of business ; and if such officer or person wrong- 
 fully stamps any genuine note he shall, upon presentation, redeem 
 it at the face value thereof. 
 
 63. Kvery person who designs, engraves, prints or in any man- 
 ner makes, executes, utters, issues, distributes, circulates or uses 
 any business or professional card, notice, placard, cir- 
 cular, hand-bill or advertisement in the likeness or\,,,.„p ,, \,' 
 
 ' MKN I , Etc., 1 ( ) 
 
 similitude of any Dominion or bank note, or any ob- he issui d in 
 
 ,. ^- -^ [ r- 1. r u 1 THEFORMOFA 
 
 ligation or security of any Government, or of any bank, note. 
 
 is liable to a penalty of one hundred dollars or to three 
 months' imprisonment, or to both. 
 
 BUSINESS AND IHJWKRS OF THE BANK. 
 
 64. The bank may open branches, agencies and offices, 
 and may engage in and carry on business as a dealer in gold 
 and silver coin and bullion, and it may deal in, dis- 
 count, and lend money and make advances upon hranches 
 
 . - , . , ,. . , •. AND AGENCIES. 
 
 the security of, and may take as collateral security 
 
 for any loan made by it, bills of exchange, promis- general pow- 
 
 F RS OF BANK. 
 
 sory notes and other negotiable securities, or the 
 stock, bonds, debentures and obligations of municipal and 
 other corporations, whether secured by mortgage or otherwise, 
 or Dominion, Provincial, British, foreign and other public se- 
 curities, and it may engage in and carry on such business gen- 
 erally as appertains to the business of banking; but, except 
 as authorized by this Act, it shall not, either di- certain nusi- 
 rectly or indirectly, deal in the buying, or selling, ^^%p'Vk vN.i 
 or bartering of goods, wares and merchandise, or actkd bv Vme 
 engage or be engaged in any trade or business bank. 
 
 whatsoever ; and it shall not, either directly or indirectly, pur- 
 chase, or deal in, or lend money, or make advances upon the 
 security or pledge of any share of its own capital stock, or of 
 the capital stock of any bank ; and it shall not, either directly 
 or indirectly, lend money or make advances upon the security, 
 mortgage, or hypothecation of any land, tenements, or iinmov- 
 
62 THE CURRENCY AND THE 
 
 able property, or of any ships or other vessels, or upon the 
 security of any goods, wares and merchandise. 
 
 65. The bank shall have a privileged lien, for any debt or liabil- 
 
 ity for any debt to the bank, on the shares of its own 
 BANK TO HAVE capital stock and on any unpaid dividends of the debtor 
 
 LIEN ONDEPT- ,. , , , , ,- 
 
 OR's SHARES, or persoH liable, and may dechne to allow any transfer 
 of the shares of such debtor or person until such debt 
 
 is paid ; and the bank shall, within twelve months after such debt 
 has accrued and become i)avable, sell such shares, and 
 
 SALE OF SUCH . , ,, , . , 1 , , 1 r r 1 • 
 
 SHAKES. notice shall be given to the holder thereof of the in- 
 
 tention of the bank t(3 sell the same, by mailincf such 
 notice in the post office to the last known address of 
 
 such holder, at least thirty days prior to such sale ; and upon such 
 sale being made the president, vice-president, manager 
 
 i-vci* '/..- d'c or cashier shall execute a transfer of such shares to the 
 
 CAbL 01* SALE, 
 
 purchaser thereof in the usual transfer book of the 
 bank, which transfer shall vest in such purchaser all the rights 'n or 
 to such shares which were possessed by the holder thereof, with the 
 same obligation of warranty on his part as if he were the vendor 
 thereof, but without any warranty from the bank or by the officer 
 of the bank executing such transfer. 
 
 66. The stock, bonds, debentures or securities, acquired and held 
 by the bank as collateral security, may, in case of default to pay the 
 COLLATFKAL ^^^-'^-^^ f^*'' securiug which they were so accpiired and 
 
 SECURITIES held, be dealt with, sold and conveyed either in like 
 MAY r.E SEMI- , 1 • 4. . 41 , • .• 
 
 LAki.YDEALr niaiiiier and subject to the same restrictions as arc 
 
 WITH. herein provided in respect of stock of the bank on 
 
 which it has acquired a lien under this Act, or in like manner as 
 
 and subject to the restrictions under which a i)rivatc individual 
 
 might in like circumstances deal with, sell and convey the same, but 
 
 without obligation to sell the same within twelve montlis : 
 
 2. The right so to deal with and dispose of such stock, bonds, 
 debentures or securities in manner aforesaid may be waived or 
 Rir.HTTODO varied by any agreement between the bank and the 
 waived' owner of such stock, bonds, debentures or securities, 
 
BANKING LA W OF CANADA. (,i 
 
 made at the time at which such debt was incurred, or if the time 
 of payment of such debt has been extended, then by an agreement 
 made at the time of such extension. 
 
 67. The bank may acquire and hold real and immovable 
 property for its actual use and occupation and the rfalfstate 
 management of its business, and may sell or dis- foroccupa- 
 pose of the same, and acquire other property in its tion. 
 stead for the same purpose. 
 
 68. The bank may take, hold and dispose of mortgages 
 and hijiiothequesupoti real or personal, immovable or movable 
 property, by way of additional security for debts mortgages 
 contracted to the bank in the course of its busi- asaddi- 
 ness ; and the rights, powers and privileges which tional se- 
 the bank is by this Act declared to have or to have 
 had in respect of real or immovable property mortgaged to it, 
 shall be held and possessed by it in respect of any personal or 
 movable property which is mortgaged or hypothecated to it. 
 
 69. The bank may purchase any lands or real or immovable prop- 
 erty offered for sale under execution, or in insolvency, or under the 
 
 order or decree of a court, as bclon^intr to any debtor 
 
 purchase of 
 I to the bank, or offered for sale by a mortgagee or other land under 
 
 encumbrancer having priority over a mortgage or execution. 
 other encumbrance lield by the bank or offered for 
 sale by the bank under a power of sale given to it for that pur- 
 pose, in cases in which, under simihir circumstances, an individual 
 could so purchase, without any restriction as to the value of the 
 property which it may so purchase, and may acquire a title thereto 
 as any individual purchasing at sheriff's sale, or under a power of 
 sale, in like circumstances, could do, and may take, have, hold and 
 dispose of the same at pleasure. 
 
 70. The bank may acquire and hold an absolute title in or 
 to real or immovable property mortgaged to it as security for a 
 debt due or owing to it, either by obtaining a re- absolute 
 lease of the equity of redemption in the mortgaged title may ue 
 property, or by procuring a foreclosure, or by other acquired. 
 means whereby, as between individuals, an equity of redemp- 
 
64 THE CURRENCY AXD THE 
 
 tion can, by law, be barred, and may purchase and acquire any 
 prior mortgage or charge on such properly : Provided always, 
 PROVISO • SALE ^^^^ "^ bank shall hold any real or immovable 
 OF PROPERTY property, howsoever acquired, except such as is 
 so ACQUIRED, required for its own use, for any period exceeding 
 seven years from the date of the acquisition thereof. 
 
 71. Nothing in any charter, Act or law shall be construed as 
 ever having prevented or as preventing the bank from acquiring 
 TITLE TO and holding an absolute title to and in any such mort- 
 
 Ycoum^i-T^ g^S^^ ^^'"^ ^^^ immovable property, whatever the value 
 POWER OF thereof is, or from exercising or acting upon any power 
 SALE, Etc, ^£ ^^j^ Contained in any mortgage given to it or held 
 
 by it, authorizing or enabling it to sell or convey away any property 
 so mortgaged. 
 
 72. Every bank advancing money in aid of the building of any 
 ship or vessel shall have the same right of acquiring and holding 
 »o-T^^ .r.,r.xT security upon such ship or vessel, while buildinfr and 
 
 AS ro ADVAN- . 
 
 CES FOR BuiLD-when completed, either by way of mortgage, hypothiqiie, 
 ING SHIPS. hypothecation, privilege, or lien thereon, or purchase 
 or transfer thereof, as individuals have in the Province wherein such 
 ship or vessel is being built, and for that purpose may avail itself 
 of all such rights and means of obtaining and enforcing such se- 
 curity, and shall be subject to all such obligations, limitations and 
 conditions as are, by the law of such Province, conferred or im- 
 posed upon individuals making such advances. 
 
 73. The bank may acquire and hold any warehouse receipt or 
 bill of hilling as collateral security for the payment of any debt in- 
 WARKHousF, currctl in its favor in the course of its banking busi- 
 RKCF.UTSMAY ,^^.j,j. . ^^j^^^^ ^|^^^ w.'irehouso receipt or bill of lading so 
 
 lU', TAKEN AS ' _ * /» 
 
 COLLATERAL actjuircd shall vest in the bank, from the date of the 
 SECURITY. acipiisition thereof, all the right and title of the previ- 
 ous holder or owner thereof, or of the person fn^m whom such goods, 
 wares and merchandise were received or acquired by the bank, if the 
 warehouse receipt or bill of lading is made dirjctly in favor of the 
 
BANKING LAW OF CANADA. 65 
 
 bank, instead of to the previous holder or owner of such goods, 
 wares and merchandise : 
 
 2. If the previous holder of such warehouse receipt or bill of 
 lading is the agent of the owner of the goods, wares and mer- 
 chandise mentioned therein, the bank shall be vested when previ- 
 with all the right and title of the owner thereof, sub- ous holder 
 ject to his right to have the same re-transferred to him, 
 
 if the debt, as security for which they are held by the bank, is paid : 
 
 3. In this section the expression " agent " means any person in- 
 trusted with the possession of goods, wares and merchandise, or to 
 whom the same are consigned, or who is possessed of i^terprfta- 
 any bill of lading, receipt, order, or other document tionof 
 used in the course of business as proof of the posses- 
 sion or control of goods, wares and merchandise, or authorizing 
 or purporting to authorize, either by indorsement or by delivery, 
 the possessor of such document to transfer or receive the goods, 
 wares and merchandise thereby represented ; and such person shall 
 be deemed the possessor of such goods, wares and merchandise, bill 
 of lading, receipt, order, or other document as aforesaid, as well if 
 the same are held by any person for him or subject to his control 
 as if he is in actual possession thereof. 
 
 74. The bank may lend money to any person engaged in busi- 
 ness as a wholesale manufacturer of any goods, wares loans to 
 and merchandise, upon the security of the goods, wares ^^mamtac- 
 and merchandise manufactured by him or procured for turers. 
 
 such manufacture : 
 
 2. The bank may also lend money to any wholesale purchaser or 
 shipper of products of agriculture, the forest and mine, 
 
 . LOANS TO CER- 
 
 or the sea, lakes and rivers, or to any wholesale i)ur- tainwhole^ 
 chaser or shii)i)er of live stock or dead stock, and the salkpir- 
 
 , , , • t ^ . CHASERS OR 
 
 products tliereot, upon the security of such products, shippers. 
 or of such live stock or de.ul stock, and the products 
 thereof : 
 
 3. Such security may be given l)y the owner and may be taken 
 
66 THE CURRENCY AND THE 
 
 in the form set forth in Schedule C to this Act, or to the like effect ; 
 FORM OF and by virtue of such security, the bank shall acquire 
 
 SECURITY. ^i^g same rights and powers in respect to the goods, 
 wares and merchandise, stock or products covered thereby, as if it 
 had acquired the same by virtue of a warehouse receipt. 
 
 75. The bank shall not acquire or hold any warehouse receipt or 
 bill of lading or security under the next preceding section to secure 
 WHEN SUCH ^^^^ payment of any bill, note or debt, unless such bill, 
 SECURITY MAY notc or dcbt is negotiated or contracted at the time of 
 ■ the acquisition thereof by the bank, or upon the written 
 promise or agreement that such warehouse receipt or bill of lad- 
 ing or security would be given to the bank ; but such bill, note or 
 debt may be renewed, or the time for the payment thereof extended, 
 without affecting any such security : 
 
 2. The bank may, on shipment of any goods, vrares and mer- 
 chandise for which it holds a warehouse receipt, or security as afore- 
 ExcHANGE OF s^*^' Surrender such receipt or security and receive a 
 WAREHOUSE bill of lading in exchange therefor, or, on the receint 
 
 RECEIPT FOR /■ , , 1 i- r i • 1 •. 1 ij 
 
 BILL OF LAD- ^^ '^^^X t^^ods, warcs and merchandise for which it holds 
 iNG AND r/Vf a bill of lading or security, as aforesaid, it may sur- 
 render such bill of lading or security, store such goods, 
 wares and merchandise, and take a wa-ehouse receipt therefor, 
 or may ship them, or part of them, an'] taKe another bill of lading 
 therefor: 
 
 3. Every one is guilty of a misdemeanor and liable to imprison- 
 PENALTV FOR ""^^'"^ for a tcrm not exceeding two years who wiifulh* 
 MAKiNG FALSE makes any false statement in any warehouse receipt, 
 
 STATEMENT. , .,, t \ \' U t -J 
 
 bill of lading or security, as aforesaid. 
 
 4. Every one is guilty of a misdemeanor and liable to imprison- 
 ment for a term not exceeding two years, whd, having possession or 
 
 control of any roods, wares aiul merchandise covered 
 
 PENALTY FOR 
 
 ALiENAriNc; by any warehouse receipt, bill of lading or securit)- as 
 GOODS SO aforesaid, and having knowledge of such receipt, bill of 
 
 SECURED. . , 
 
 lading or security, and without consent of the bank, in 
 writing and before the advance, bill, note or debt thereby secured 
 
BANKING LAW OF CANADA, 
 
 67 
 
 has been fully paid, wilfully alienates or parts with any such goods, 
 wares, or merchandise, or wilfully withholds from the bank posses- 
 sion thereof upon demand after default in payment of such advance, 
 bill, note or debt. 
 
 76. If goods, wares and merchandise are manufactured or pro- 
 duced from the goods, wares and merchandise, or any of them, in- 
 cluded in or covered by any warehouse receipt, or ^^ ^o goods 
 security ^aven under section seventy-four of this Act, manufac- 
 
 r 1 ' R F D F R O \f 
 
 while SO covered, the bank holding such warehouse re- articles 
 ceipt or security shall hold or continue to hold such pledged. 
 
 goods, wares and merchandise, during the process and after the com- 
 pletion of such manufacture or production, with the same right and 
 title and for the same purposes and upon the same conditions as it 
 held or could have held the original goods, wares and merchandise. 
 
 77« All advances made on the security of any bill of lading or 
 warehouse receipt, or security given under section seventy-four of 
 this Act, shall give to the bank making such advances prior claim 
 a claim for the repayment of such adv'ances on the ?,t3,!^fTv!^D\^iti 
 
 ^ ^ OVER UNPAID 
 
 goods, wares and merchandise therein mentioned, or vendor. 
 
 into which they have been converted, prior to and by preference 
 over the claim of any unpaid vendor ; but such preference shall not 
 be given over the claim of any unpaid vendor who had a lien upon 
 such goods, wares and merchandise at the time of the acquisition 
 by the bank of such warehouse receipt, bill of lading, or securit}', 
 unless the same was acquired without knowledge on the part of the 
 bank of such lien. 
 
 78. In the event of the non-payment at maturity ot any debt 
 secured bv a warehouse receipt or bill of lading, or security given 
 under .section seventv-four of this Act, the bank mav^., ,, ^, .,„.,,,, ^^ 
 
 ' SALE OP GOODS 
 
 sell the goods, wares and merchantlise mentioned on non-pay-* 
 
 4.U • 1 *.u f -W CC 4. , MENTOF DEBT. 
 
 therem, or so much thereof as will sumce to pay such 
 debt with interest and expenses, returning the overi)lus, if any, to 
 the person frori whom such warehouse receipt, or bill of lading, or 
 security, or the goods, wares and merchandise mentioned therein. 
 
68 THE CURRENCY AND THE 
 
 as the case may be, were acquired ; but such power of sale shall be 
 subject to the following provisions, namely : 
 
 2. No sale without the consent in writing of the owner of any 
 timber, boards, deals, staves, saw4ogs or other lumber, shall be 
 
 made under this Act until notice of the time and place 
 
 NOTICE TO BE - , , . , . , . , , ., , 
 
 GIVEN BEFORE of such salc uas been given by a registered letter, mailed 
 SALE OF GOODSjj^ ^|^^ V)Os\. office to the last known address of the pledger 
 
 PLEDGED. r 1 1 1 r 
 
 thereof, at least thirty days prior to the sale thereof ; 
 and no goods, wares and merchandise, other than timber, boards, 
 deals, staves, saw-logs or other lumber, shall be sold by the bank 
 under this Act without the consent of the owner, until notice of the 
 time and place of sale has been given by a registered letter, mailed 
 in the post office to the last known address of the pledger thereof, 
 at least ten days prior to the sale thereof : 
 
 3. Every such sale of any article mentioned in this section, 
 without the consent of the owner, shall be made by public auction, 
 CATP nv ATT/- after a notice thereof by advertisement, stating the 
 TioN AFTER time and place thereof, in at least two newspapers pub- 
 
 IVT C\ T* T /"* \^ 
 
 lislied in or nearest to the place where the sale is to be 
 made ; and if such sale is in the Province of Quebec, then at least 
 one of such newspapers shall be a newspaper published in the Eng- 
 lish language, and one other such newspaper shall be a newspaper 
 published in the French language. 
 
 79. Every bank which violates any provision contained in any of 
 «T^xT»T ^^^ ^,W3 the sections numbered sixtv-four to seventv-eight (both 
 
 PENALT* FOR ' * o 
 
 CONTRAVEN- inclusivc) shall incur for each violation thereof a pen- 
 ^^^^* altv not exceedinij five hundred dollars. 
 
 80. The bank shall not be liable to incur any penalty or for- 
 feiture for usury, and may stipulate for, take, reserve or exact 
 NO PENALTY any rate of interest or discount not exceeding seven 
 FOR USURY, pgj. cent, per annum, and may receive and take in 
 advance any such rate, but no higher rate of interest shall be 
 WHAT INTER- Tccoverable by the bank ; and the bank may allow 
 EST MAY BE any rate of interest whatever upon money deposited 
 
 ALLOWED. ^itj^ i^^ 
 
BANKING LAW OF CANADA, 
 
 69 
 
 NO INSTRU- 
 MENT TO P.E 
 VOID ON 
 GROUND OF 
 USURY. 
 
 81. No promissory note, bill of exchange or other negoti- 
 able b'^curity, discounted by or indorsed or otherwise assigned 
 to the bank, shall be held to be void, usurious or 
 tainted by usury, as regards such bank, or any 
 maker, drawer, acceptor, indorser, or indorsee 
 thereof, or other party thereto, or bond fiiJe holder 
 thereof, nor shall any party thereto be subject to 
 any penalty or forfeiture by reason of any rate of interest taken, 
 stipulated or received by such bank, on or with respect to such 
 promissory note, bill of exchange, or other negotiable security, 
 or paid or allowed by any party thereto to another in compen- 
 sation for, or in consideration of the rate of interest taken or to 
 be taken thereon by such bank ; but no party thereto, other than 
 the bank, shall be entitled to recover or liable to pay more than 
 the lawful rate of interest in the Province where the suit is 
 brought, nor shall the bank be entitled to recover a higher rate 
 than seven per cent, per annum ; and no innocent holder of or 
 party to any promissory note, bill of exchange or ^g .^^ inno- 
 other negotiable security, shall, in any case be de- cent hold- 
 prived of any remedy against any party thereto, or ^^^* 
 
 liable to any penalty or forfeiture, by reason of any usury or of- 
 fence against the laws of any such Province, respecting interest, 
 committed in respect of such note, bill or negotiable security, 
 without the complicity or consent of such innocent holder or 
 party. 
 
 82. The bank may, in discounting at any of its places of busi- 
 ness, branches, agencies or ofifices of discount and deposit, any 
 note, bill or other negotiable security or paper payable collection 
 at any other of its own places or seats of business, fees. 
 
 branches, agencies or offices of discount and deposit in Canada, 
 receive or retain, in addition to the discount, any amount not ex- 
 ceeding the following rates per cent, according to the time it has 
 to run, on the amount of such note, bill or other negotiable secur- 
 ity or paper, to defray the expenses attending the collection thereof, 
 that is to say : under thirty days, one-eighth of one per cent. ; thirty 
 days or over, but under sixty days, one-fourth of one per cent. ; 
 
70 THE CURRENCY AND THE 
 
 sixty days and over, but under ninety days, three-eights of one per 
 cent. ; ninety days and over, one-half of one per cent. 
 
 83. The bank may, in discounting any note, bill or other negoti- 
 able security or paper, bona fide payable at any place in Canada 
 .^^,,^,. ^^^^ different from that at which it is discounted, and other 
 
 AGE^^Cv FEES. 
 
 than one of its own places or seats of business, 
 branches, agencies or ofiflccs of discount and deposit in Canada, re- 
 ceive and retain, in addition to the discount thereon, a sum not ex- 
 ceeding one-half of one per cent, on the amount thereof, to defray 
 the expenses of agency and charges in collecting the same. 
 
 84. The bank may receive deposits from any person whomso- 
 ever, whatever his age, status or condition in life, and whether such 
 
 person is qualified by law to enter into ordinary con- 
 
 T^ T!* ^5 f\ c T T* C! H T \ \T 
 
 BE RECEIVED ^^^^ts or not ; and, from time to time, may repay any 
 FROM PERSONS or all of the principal thereof, and may pay the whole 
 
 UNABLE TO ,. r ^t • *. 4. i.u i. 1 
 
 CONTRACT ^"^ ^^'^y P^*'^ ^^ ^"^ mterest thereon to such person, 
 without the authority, aid, assistance or intervention 
 of any person or official being required, unless before such repay- 
 ment the money so deposited in and repaid by the baiik is lawfully 
 claimed as the property of some other person, in which case it may 
 be paid to the depositor with the consent of the claimant, or to the 
 claimant with the consent of the depositor : Provided always, that if 
 the person making any such deposit could not, under 
 PROVISO: tiie law of the Province where the deposit is made, 
 
 AMOUNT LIM- , . , . , , • , r , , • 1 
 
 iTED. deposit and withdraw money in and trom a bank with- 
 
 out this section, the total amount to be received from 
 
 such person on deposit shall not, at any cime, exceed the sum of 
 
 five hundred dollars: 
 
 2. The bank shall not be bound to see to the execution of any 
 
 trust, whether expressed, implied or constructive, to which any 
 deposit made under the authority of this section is 
 
 BOUND TO SEE ^^^jcct ; and except only in the case of a lawful claim, 
 
 TO TRUSTS IN bv somc other person before repavmcnt, the receipt of 
 
 RELATION TO ,,' . , ' i 1 -4. *. 1 
 
 SUCH DEPOSITS ^"^ pcrson in whose name any such deposit stands, or 
 if it stands in the name of two persons the receipt of 
 
BANKING LA W OF CANADA. 
 
 71 
 
 one, or if in the names of more than two persons the receipt of a 
 majority of such persons, shall be a sufficient discharge to all con- 
 cerned for the payment of an}^ money payable in respect of such 
 deposit, notwithstanding any trust to which such deposit is then 
 subject, and whether or not the bank sought to be charged with 
 such trust (and with whom the deposit has been made) had 
 notice thereof ; and the bank shall not be bound to see to the 
 application of the money paid upon such receipt. 
 
 RETURNS BY THE BANK. 
 
 85. Monthly returns shall be made by the bank to the 
 Minister of Finance and Receiver General in the form set forth 
 in Schedule D to this Act, and shall be made up 
 
 and sent in within the first fifteen days of each ^^^^ij™^"^^^^" 
 month, and shall exhibit the condition of the bank ernment. 
 on the last juridical day of the month next preced- 
 ing; and such monthly returns shall be signed by the chief 
 accountant and by the president, or vice-president, or the direc- 
 tor or principal partner then acting as president, and by the 
 manager, cashier or other principal officer of the bank at its 
 chief place of business : 
 
 2. Every bank which neglects to make up and send in, as 
 aforesaid, any monthly return required by this section within 
 the time hereby limited, shall incur a penalty of 
 fifty dollars for each and every day after the expira- 
 tion of such time during which the bank neglects so 
 to make up and send in such return ; and the date 
 upon which it appears by the post office stamp or 
 mark upon the envelope or wrapper enclosing such return for 
 transmissioi: to the Minister of Finance and Receiver General, 
 that the same was deposited in the post office, shall be taken 
 prnna faciei for the purposes of this section, to be the date 
 upon which such return was made up and sent in. 
 
 86. The Minister of Finance and Receiver General may 
 also call for special returns from any bank, when- speciai re- 
 ever, in his judgment, they are necessary to afford tukns may i5e 
 a full and complete knowledge of its condition : 
 
 penalty for 
 
 not making 
 
 up monthly 
 
 returns in 
 
 DUE TIME. 
 
 CALLED FOR. 
 
72 THE CURRENCY AND THE 
 
 2. Such special returns shall be made and signed in the man- 
 ner and by the persons specified in the next preceding section, 
 PFNAiTY F^»R ^^^ cvery bank which neglects to make and send 
 NOT MAKiNd in any such special return within thirty days from 
 ?v Vnl-xVv^!?^ the date of the demand therefor by the Minister of 
 Finance and Receiver General shall incur a penalty 
 of five hundred dollars for each and every day such neglect con- 
 tinues ; and the provisions contained in the last preceding sec- 
 tion as to the /n'hua fitvU' evidence of the date upon which 
 returns are made up and sent in thereunder, shall apply to 
 returns made under this section : Provided always, that the 
 Minister of Finance and Receiver General may extend the time 
 for sending in such special returns for such further period, not 
 exceeding thirty days, as he thinks expedient. 
 
 87. The bank shall, within tw enty days after tlic close of each 
 
 calendar year, transmit or deliver to the Minister of 
 
 TRANSV! ISSK )N 
 
 oicKR I iKiKi) finance and Receiver General, to be by him laid before 
 '•'^'^'"'" Parliament, a certified list showinj^ the names of the 
 
 SHARK- 111 f 1 t 1 11 1 r 1 
 
 Koi.DKRs TO shareh»)lders of the bank on tlie last (.lay of sucii calen- 
 MiNisiKR<JK jI^p year, witli their additions and residences, the num- 
 
 FINANCE. 
 
 ber of siiares then held by them re-.i)ectively, and the 
 value at par of such shares : 
 
 2. Such list shall be delivered at the Department of Finance, or 
 MODKoF sl-.ill be sent by reijistered letter posted at such time 
 TRANSMissioN^jj^j}^ ,,^ ^jj^. ,,r(lin.ary course of post, it maybe delivered 
 at the said Dcp .rtment within the time above limited : 
 
 3. Iwery bank which neglects to transmit such list in manner 
 PKNAi/rv FOR aforesaid within the time aforesaid sli.dl incur a penalty 
 TRANSMIT "' "'^y tioilars tor each and every day durm^ which 
 bUCH LISTS. such uc^lcct contiiiucs. 
 
 88. The bank shall, within twenty days after the close of e.ich 
 calendar year, transmit or deliver to the Minister of l''inance and 
 .V,..,.,.. Receiver Gener.d,to be by him laid before Parliament, 
 
 ANNUAL ' 
 
 srAiFMKNroKa return of all dividends which have remaitu'd unpaid 
 MAi.s'iNr.*^ 'for m«trc th.ui five )'ears, and .ilso of all .unounts ur 
 UNi'Aio, Lit. b»ilances in respect to which no transactions have 
 
BANKING LAW OF CANADA. 
 
 id 
 
 taken place or iii)on which no interest has been paid during the 
 five years prior to the date of such return ; Provided ahvays, 
 tliat in case of moneys deposited for a fixed period, tlie period of 
 five years above referred to shall be reckoned from the I'Rcjviso. 
 
 date of the termination of sucli fixed peri(Kl : 
 
 2. Such return sliall be sij^^ied in the manner recpiired for the 
 montb.ly returns under section ei<^dity-five of tliis Act, and shall set 
 forth the name of each sliareholder or creditor, liis last dkiaii.sof 
 known address, the amount due, the agency of the kkiukn. 
 bank at which the last transaction took place, and the d.ite thereof; 
 and if such shareholder (jr creditor is known to the bank KUKiJiFR dk- 
 to be dead, such return shall show the names and ad- iails. 
 dresses of his legal niiresentatives, s(j far as known to the bank : 
 
 3. Every bank which neglects to transmit <:)r deliver to the Min- 
 ister of Finance and Receiver General the return above referred to, 
 within the time hereinbefore limited, shall incur a pen- im.nai.tv for 
 alty of fifty dollars for each and every day during anniai rf' 
 which such neglect continues: turn. 
 
 4. If, in the event of the winding up of the Vjusiness of the bank 
 in ii (jlvency.or under any general winding-up Act, or otherwise, any 
 moneys payable by the licpiidcitor, either to shareholders or deposit- 
 ors, remain unclaimed for the perioil (»f three years disimisai of 
 from the date of suspension of payment by the bank, unci. aim id 
 or from the commencement of the wmdmg r.p of sucii 
 
 business, or until the final winding up of such business, if such 
 takes place before the ex])iration of the said three years, such 
 moneys and all interest thereon shall, notwithstanding anystatr*e of 
 limitations or other Act nlating to prescription, be paid to the Min- 
 ister of I'inance and Receiver (ieneral, to lie held by him subject to 
 all rightful claims on brhalf of any persoti other than the l)ank ; and 
 in case a claim to any moneys so paid as aforrs.iid is thereafter estab- 
 lished to the satisfaction of the Treasury lioard, the (iovernor in 
 Council shall, on the report of the Treasury lioard, direct payment 
 thereof to lie matle to tin* person eutitkd thereto, together with in- 
 terest on tile principal sum thereof at the rate uf three per cent, per 
 
74 THE CURRENCY AND THE 
 
 annum for a period not exceeding six years from the date of pay- 
 ment thereof to the said Minister of Finance and Receiver General 
 as aforesaid : Provided however, that no such interest 
 shall be paid or payable on such principal sum, unless 
 interest thereon was payable by the bank paying the same to the 
 said Minister of Finance and Receiver General : Provided also, that 
 on payment to the Minister of Finance and Receiver 
 
 PROVISO. 
 
 General as herein provided, the bank and its assets shall 
 be held to be discharged from further liability for the amounts so 
 •)aid. 
 
 5. Upon the winding up of a bank in insolvency or under any 
 general winding-up Act, or otherwise, the assignees, liquidators, 
 REQUIRE- directors or other officials in charge of such winding up, 
 
 MENTSASTo shall, before the final distribution of the assets, or 
 
 OUTSTANDING ..1 • ., t 4.\ i. r «-! 
 
 NOTES IN CASE ^^'>thin three years from the commencement of the 
 OFiNSOLVENCY.suspension of payment by the bank, whichever shall 
 first happen, pay over to the Minister of Finance and Receiver 
 General a sum out of the assets of the bank equal to the amount 
 then outstanding of the notes intended for circulation issued by the 
 bank; and, upon such payment being made, the bank and its assets 
 shall be relieved from all further liability in respect of such outstand- 
 ing notes. The sum so paid shall be held by the Minister of Finance 
 and Receiver General and applieil for the purpose of redeeming, 
 whenever presented, such outstanding notes, without interest. 
 
 INSOLVENCY. 
 
 89. In the event of the property and assets of the bank beings 
 TiAtu! rrvoK insufficient to pay its debts and liabilities, each share- 
 ersI'ncase OF holder of the bank shall be liable for the deficiency 
 INSUFFICIENCY to an amount equal to the par value of the shares 
 OF ASSETS. jjpIjj |jy }[i\vci^ in addition to any amount not paid up 
 
 on such shares. 
 
 90. As a condition of the rights and privileges conferred by this 
 Act or by any Act in amendment llieieof, the following provision 
 
BANKING LA W OF CANADA. 
 
 75 
 
 shall have effect : — The HabiHty of the bank under any provision \s 
 law, custom, or agreement to repay moneys deposited toprescrip- 
 with it and interest (if any) and to pay dividends de- sTAiurF of 
 clared and payable on its capital stock, shall continue LiMiTAiioNs. 
 notwithstandincT any statute of limitations or any enactment or law 
 relating to prescription : 
 
 2. This section applies to moneys heretofore or hereafter deposited, 
 and to dividends heretofore or hereafter declared. retroaction. 
 
 91. Any suspension by the bank of payment of any of its liabili- 
 ties as they accrue, in specie or Dominion notes, shall, if it continues 
 for ninety days, consecutively, or at intervals within 
 
 SUSPENSION 
 
 twelve consecutive months, constitute the bank insolv- forooDavsto 
 ent and operate a forfeiture of its charter or Act of constiiute 
 
 .• f 1 11 f .1 K 1 • INSOLVENCY. 
 
 mcorporation, so far as regards all further banknig 
 operations ; and the charter or Act of incorporation shall remain in 
 force only for the purpose of enabling the directors or other lawful 
 authority to make and enforce the calls mentioned in the next fol- 
 lowing sections of this Act and to wind up its business. 
 
 92. If any suspensio'i of payment i.i full in specie or Dominion 
 notes of all or any of the notes or other liabilities of the bank con- 
 tinues f«)r three months after the expiration of the time calls in such 
 which, under the preceding section, would constitute cases. 
 the bank insolvent, and if no proceedings are taken under any gen- 
 eral or special Act for the winding up of the bank, the directors shall 
 make calls on the shareholders thereof, to the amount they deem 
 necessary to pay all the debts and liabilities of the bank, w ithout wait- 
 ing for the collection of any debts due to it or the sale of any of its 
 assets or property : 
 
 2. Such calls shall be made at intervals of thirty days, and upon 
 notice to be given thirty days at least prior to the day on wliich such 
 call shall be payable, and any number of such calls may howsuch 
 be made bv one resolution ; any such call shall not cx-^^/ ',^,^"vn Jl- 
 coed twenty per cent, on each share; and payment <»f kukuk.d. 
 
 such calls may be enforced in like niann-jr as payment of calls on 
 
76 THE CURRENCY AKD THE 
 
 unpaid stock may be enforced ; and the first of such calls may be 
 made within ten days after the expiration of the said three months : 
 3. Every director who refuses to make or enforce, or to concur 
 REFUSAL TO ^^^ making or enforcing any call under this section, is 
 MAKE CALLS guilty of a misdemeanor, and liable to imprisonment 
 
 UNDER THIS e . , j- ^ l 1 11 r 
 
 SECTION A MIS- ^^^ any tcrm not exceednig two years, and snail tur- 
 DEMEANOR. thcr bc personally responsible for any damages suffered 
 by such default. 
 
 93. In the event of proceedings being taken under ariy general 
 or special winding-up Act, in consequence of the in- 
 
 CALLS UNDER '^ fc. 1: ' n 
 
 WINDING-UP solvx'ncy of the bank, the said calls shall be made in 
 ^^^' the manner prescribed for the making of such calls in 
 
 such general or special winding-up Act. 
 
 94. Any failure on the part of any shareholder liable to any 
 
 such call to pay the same when due, shall operate 
 
 IT / ^ O IT C* T ^^ T T D XT 
 
 FOR NON-PAY- ^ forfeiturc by such shareholder of all claim in or to 
 MENT. any part of the assets of the bank,— such call and 
 
 any further call thereafter being nevertheless re- 
 coverable from him as if no such forfeiture had been incurred. 
 
 95. Notliing in the six sections next preceding contained shall be 
 iiAniLiTY OF construed t') alter or diminish the additional liabilities 
 
 DIRECTORS 
 
 N« » r DiMiN- of the directors as hereinbefore mentioned and declared. 
 
 ISHED. 
 
 96. Persons who, having been shareholders of the bank, 
 have only transferred their shares, or any of them, to others, 
 
 or registered the transfer thereof within sixty days 
 SHAREH(H.i)-'^ before the commencement of the suspension of pay- 
 FRswHo HAVE ment by the bank, and persons whose subscriptions 
 
 iHEnrsTocK' ^^ ^^^ ^^^^^ ^^ ^^^ ^^"^ ^^^^ ^^^" cancelled in 
 manner hereinbefore provided within the said pe- 
 riod of sixty days before the commencement of the suspension 
 of payment by the bank, shall be liable to all calls on the shares 
 held or subscribed for by them, as if they held such shares at 
 the time of such suspension of payment, saving their recourse 
 ?»orainst those by whom such shares were then actually held. 
 
BANKIXG LA W OF CANADA. 
 
 77 
 
 OFFENCES AND PENALTIES. 
 
 97. Every one is guilty of a misdemeanor and liable to imprison- 
 ment for a term not exceeding two years who, being the president, 
 vice-president, director, principal partner en commandite, 
 
 TJ ■^ ■¥-» c« T -|-^ T."* V* 'T^ 
 
 manager, cashier or other officer of the bank, wilfully p^.^ giving 
 gives or concurs in giving any creditor of the bank any undue pref- 
 fraudulent, undue or unfair preference over other^j^y creditor 
 
 creditors, by Gfiviner security to such creditor or bv ouietvofa 
 , . , . . . . . . . . "^misdemeanor. 
 
 changing the nature of his claim or otherwise howso- 
 ever, and shall further be responsible for all damages sustained by 
 any person in consequence of such preference. 
 
 98. The amount of all penalties imposed upon a bank for any 
 violation of this Act shall be recoverable and enforceable with costs, 
 at the suit of Her Majesty, instituted bv the Attorney t.t^^,.,.t.t, .. 
 
 •' "' ' • RECOv ERv 
 
 General of Canada, or the Minister of Finance and and disposal 
 Receiver General, and such penalties shall belong to ^^ ^^^^^'^'^^^• 
 the Crown for the public uses of Canada; but the Governor in 
 Council, on the report of the Treasury Hoard, may direct that any 
 portion of any penalty be remitted or paid to any person, or applied 
 in any manner deemed best adapted to attain the objects of this 
 Act and to secure the due administration thereof. 
 
 99. The making of any wilfully false or deceptive statement in 
 any account, statement, return, report or other document respecting 
 the affairs of the bank, is, unless it amounts to a higher making false 
 offence, a misdemeanor punishable by imprisonment statement 
 
 IN RF rt'KNS 
 
 for a term not e.xceeding five years ; and every prcsl- En: amisde^ 
 dent, vice-president, director, primip.il partner en mf-anor, etc. 
 commandite, auditor, manager, cashier or other officer of the bank, 
 who prepares, signs, approves or concurs in such statement, return, 
 report or document, or uses tlie same with intent to deceive or mis- 
 lead any ])erson, shall be held to have wilfully made such false state- 
 ment, ami shall further be responsible for all damages sustained by 
 any person in conscijuence thereof. 
 
i J JI MMt 
 
 78 THE CURRENCY AND THE 
 
 »» 
 
 100. Every person assuming or using the title of ** bank, 
 UNAUTHOR- "banking company," ''banking house," ''banking 
 izED USE OF association," or "banking institution," without be- 
 TiTLE "BANK,"jjjg authorized SO to do by this Act, or by some 
 other Act in force in that behalf, is guilty of an of- 
 fence against this Act. 
 
 loi. Every person, committing an offence declared to be an 
 PENALTY FOR ^^'^"^^ against this Act, shall be liable to a fine not 
 OFFENCE exceeding one thousand dollars, or to imprisonment 
 AGAINST THIS for a term not exceeding five years, or to both, in 
 the discretion of the court before which the con- 
 viction is had. 
 
 PUBLIC NOTICES. 
 
 102. The several public notices by this Act required to be 
 
 given shall, unless otherwise specified, be given by 
 
 HOW NOTICES advertisement in one or more newspapers published 
 
 GIVEN. at the place where the head office of the bank is 
 
 situate, and in the Canada Gazette, 
 
 DOMINION GOVERNMENT CHEQUES. 
 
 103. The bank shall not charge any discount or 
 cHEQUFs^To^ commission for cashing any official cheque of the 
 HE PAID AT Government of Canada, or of any department 
 ^'^^' thereof, whether drawn on itself or on another bank. 
 
 COMMENCEMENT UK ACT AND KErEAL. 
 
 X04. This Act shall come into force on the first tlay of July, in 
 the year one thousand eij^ht hundred and ninety-one; and from 
 coMM»^NCE. ^^^^^ ^'^y chapter one hundred and twenty of the Re- 
 MENToFTHis viscd Statutes of Canada, intituled ''An Act rcspcctittif 
 Jujitks ON(l /Hi/ii'if/i,'-," the Act passed in the fifty-first 
 REPEAL OF year of Her Majesty's rei^n, chapter twenty-seven, in 
 AND (ip^'s' v., c. intendment thereof, the Act passed in the session held 
 a; AND 50-51 v., jn thc thlrty-third year of Ilcr Majesty's reign, chapter 
 *'■*'■ twelve, intituled '\ln Act to remove certain restric- 
 
 tions with respect to the issue of bank notes in Nova Scotia," thc 
 
BANKING LAW OF CANADA. 
 
 79 
 
 Act passed in the session held in the fiftieth and fifty-first years 
 of Her Majesty's reign, chapter forty-seven, intituled '*■ An Act 
 respecting the defacing of counterfeit notes, mid the use of imitations 
 of jiotes^' and chapter one hundred and twenty of the Revised 
 Statutes of New Brunswick, " Of Banking^' and the Act passed by 
 the Legislature of the Province of New Brunswick in the nineteenth 
 year of Her Majesty's reign, chapter forty-seven, intituled *' An Act 
 to explain chapter 120, Title XXXI, of the Revised Statutes, ' Of 
 Banking,' " shall be repealed, except as to rights there- saving 
 
 tofore acquired or liabilities incurred in regard to any clause. 
 
 matter or thing done or contract or agreement made or entered 
 into or offences committed under the said chapters or Acts, and 
 nothing in this Act shall effect any action or proceedings then 
 pending under the said chapter or Act*? then repealed, but the same 
 shall be decided as if such chapters and Acts had not been repealed. 
 
 SCHEDULE A. 
 
 BANKS WHOSE CHARTERS ARE CONTINUED BY THIS ACT. 
 
 i. The Bank of Montreal. 
 
 2. The Quebec Bank. 
 
 3. La Ikmquc du Peuple. 
 
 4. The Molsons Bank. 
 
 5. The Bank of Toronto. 
 
 6. The Ontario Bank. 
 
 7. The Eastern Townships Bank, 
 
 8. La BaiKjue Nationalc. 
 
 9. La l)antjue Jacques Carticr. 
 
 10. The Merchants' Bank of Canada. 
 
 11. The Union l^ank of Canada. 
 
 12. The Canadian Bank of Commerce. 
 
 13. The Dominion Bank. 
 
 14. The Merchants' Bank of Halifax. 
 
So 
 
 THE CURRENCY AND THE 
 
 15. 
 16. 
 
 17- 
 18. 
 
 19. 
 
 20. 
 
 21. 
 
 23. 
 
 24. 
 
 25- 
 26. 
 
 27. 
 28. 
 
 29. 
 30. 
 31- 
 32. 
 33- 
 34. 
 35- 
 36. 
 
 The Bank of Nova Scotia.. 
 
 The Bank of Yarmouth. 
 
 La Banque Ville Marie. 
 
 The Standard Bank of Canada. 
 
 The Bank of Hamilton. 
 
 The Halifax Banking Company. 
 
 La Banque d'Hochelaga. 
 
 The Imperial Bank of Canada. 
 
 La Banque de St. Hyacinthe. 
 
 The Bank of Ottawa. 
 
 The Bank of New Brunswick. 
 
 The Exchange Bank of Yarmouth. 
 
 The Union Bank of Halifax. 
 
 The People's Bank of Halifax. 
 
 La Banque de St. Jean. 
 
 The Commercial Bank of Windsor. 
 
 The Western Bank of Canada. 
 
 The Commercial Bank of ALanitoba. 
 
 The Traders' Bank of Canada. 
 
 The People's Bank of New Brunswick. 
 
 The Saint Stephen's l^ank. 
 
 Tiie Summerside Bank. 
 
 SCHEDULE B 
 
 FORM OF ACT OF INCORPOKATION OF A'EW BANKS. 
 An Act to incorporate the Bank. 
 
 Wlicrcas the persons hereinafter named have, by their petition, 
 prayed that an Act be passed for the purpose of establishing a bank 
 in , and it is expedient to grant the prayer of the 
 
 said petition : 
 
 Therefore Her Majesty, by and with the advice and consent of 
 the Senate and House of Commons of Canada, enacts as follows: — 
 
 Z. The persons hereinafter named, together with such others as 
 
BANKING LA W OF CANADA. 
 
 8i 
 
 become shareholders in the corporation by this Act created, are 
 hereby constituted a corporation by the name of 
 hereinafter called *' the Bank." 
 
 2. The capital stock of the bank shall be 
 dollars. 
 
 3. The chief office of the bank shall be at 
 
 4. 
 
 shall be the provisional direc- 
 tors of the bank. 
 
 5. This Act shall, subject to the provisions of section sixteen of 
 "The Bank Act," remain in force until the first day of July, in the 
 year one thousand nine hundred and one. 
 
 SCHEDULE C. 
 
 FORM OF SECURITY UNDER SECTION SEVENTY-FOUR. 
 
 In consideration of an advance of dollars, made 
 
 by the ijuDne of bank) to A. B., for which the said bank holds the 
 following bills or notes {describe fully the notes or bills held, if any}, 
 the goods, wares and merchandise mentioned below are hereby 
 assigned to the said bank as security for the payment, on or before 
 the day of of the said advance, together with in- 
 
 terest thereon at the rate of per cent, per annum from 
 
 the day of {or, of the said bills and notes, or 
 
 renewals thereof, or substitutions therefor, and interest thereon, or 
 as the ease may be). 
 
 This security is given under the provisions of section seventy- 
 four of " The Bank Act," and is subject to all the provisions of the 
 said Act. 
 
 The said goods, wares and merchandise are now owned by 
 and are now in possession, and are free from any mortgage, lien 
 or charge thereon {or as the ease may be), and are in {plaee or plaees 
 where goods are), 2L.v\i\ are the following: {partieular description of 
 goods assigned). 
 
 Dated at 18 . 
 
82 THE CURRENCY AND THE 
 
 SCHEDULE D. 
 
 Return of the liabilities and assets of the bank 
 
 on the day of , A. D. 
 
 Capital authorized .... $ 
 
 Capital subscribed .... $ 
 
 Capital paid up $ 
 
 Amount of rest or reserve fund . $ 
 
 Rate per cent, of last dividend declared. per cent. 
 
 LIABILITIES. 
 
 1. Notes in circulation ... $ 
 
 2. Balance due to Dominion Govern- 
 
 ment, after deducting advances for 
 credits, pay-lists, etc 
 
 3. Balance due to Provincial Gov^ern- 
 
 ments ...... 
 
 4. Deposits by the public, payable on 
 
 demand ...... 
 
 5. Deposits by the public, payable after 
 
 notice or on a fixed day ... 
 
 6. Loans from other banks in Canada, 
 
 secured ...... 
 
 7. Deposits, payable on demand or after 
 
 notice or on a fixed day, made by 
 other banks in Canada ... 
 
 8. Balances due to other banks in Can- 
 
 ada in daily exchanges ... 
 
 9. Balances due to agencies of the bank, 
 
 or to other banks or agencies in for- 
 eign countries ... 
 
 TO. Balances due to agencies of the bank, 
 or to other banks or agencies in 
 the L^nitcd Kingdom . . . 
 
 II. Liabiliti<:.s not included under fore- 
 going heads ..... 
 
BANKING LA W OF CANADA. 
 
 83 
 
 ASSETS. 
 
 1. Specie ...... 
 
 2. Dominion notes . . . . . 
 
 3. Deposits with Dominion Government 
 
 for security of note circulation 
 
 4. Notes of and cheques on other banks. 
 
 5. Loans to other banks in Canada, se- 
 
 cured ...... 
 
 6. Deposits, payable on demand or after 
 
 notice or on a fixed day, made with 
 other banks in Canada . 
 
 7. Balances due from other banks in 
 
 Canada in daily exchanges 
 
 8. Balances due from agencies of the 
 
 bank, or from other banks or agen- 
 cies in foreign countries . 
 
 9. Balances due from agencies of the 
 
 bank, or from other banks or agen- 
 cies in the United Kingdom . 
 
 Dominion Government debentures or 
 stocks ...... 
 
 II. Canadian municipal securities, and 
 British, Provincial, or foreign, or 
 colonial public securities, (other than 
 Dominion) . . . . . 
 
 Canadian British and other railway 
 securities. . . . . . 
 
 Call loans on bonds and stocks . 
 
 14. Current loans . . . . . 
 
 15. Loans to the Government of Canada . 
 
 16. Loans to Provincial Governments 
 
 17. Overdue debts . . . . . 
 
 18. Real estate, the property of the bank 
 
 (^other than the bank premises) 
 
 19. Mortgages on real estate sold by the 
 
 DaiiK. . . ■ . . • 
 
 20. Bank premises . . . . . 
 
 21. Other assets not included under the 
 
 foregoing heads . ♦ • • 
 
 10. 
 
 12. 
 
 13 
 
84 
 
 BANKING LA W OF CANADA. 
 
 Aggregate amount of loans to directors, and firms of which they 
 
 are partners, $ 
 
 Average amount of specie held during the month, % 
 
 Average amount of Dominion notes held during the month, $ 
 
 Greatest amount of notes in circulation at any time during the 
 
 month, $ 
 
 I declare that the above return has been prepared under my 
 
 directions and is correct according to the books of the bank. 
 
 E. F., 
 
 Chief Accountant, 
 
 We declare that the foregoing return is made up from the books 
 of the bank, and that to the best of our knowledge and belief it is cor- 
 rect, and shows truly and clearly the financial position of the bank ; 
 and we further declare that the bank has never, at any time during 
 the perio'^ to which the said return relates, held less than forty per 
 cent, of its cash reserves in Dominion notes. 
 {Place) this day of 
 
 A. H., President. 
 CD., General Manager. 
 
MEMORANDA. 
 
 The currency of Canada is in dollars, cents, and mills, at the rate 
 of 10 mills for a cent and lOO cents for a dollar. The British sover- 
 eign is legal tender for $4.86^. 
 
 Silver coin minted for circulation in Canada by order of Queen 
 Victoria, is legal tender to the amount of ten dollars, and copper 
 coin to the amount of twenty-five cents. The gold eagle of the 
 United States is legal tender for ten dollars. Canada has no gold 
 coinage of her own. 
 
 Tl'.e Government of Canada and the chartered banks only are 
 authorized to issue paper money. The Government currency is 
 issued in denominations of four dollars, two dollars, one dollar, 
 and twenty-five cents ; no bank being permitted to issue notes for 
 less sum than five dollars, or for any sum not a multiple of five 
 dollars. The Dominion note issue is limited to $21,000,000. 
 
 $1 1,000,000 of the Dominion note circulation are in notes of $500 
 and $1,000, and are principally held by the banks as part of their 
 cash reserve. 
 
 In order to secure the redemption of Dominion Government 
 notes, the Minister of Finance is required to hold in gold and 
 securities guaranteed by the Imperial Government, a sum c(|u;il to 
 25 per cent, of the amount issued, of which 15 per cent, must be iit 
 gold and 10 per cent, in guaranteed securities^ — the lemaining 75 per 
 cent, to be covered by Dominion debentures, issued by authority of 
 Parliament. 
 
 The development of banking business in Canada is seen from the 
 following statement : 
 
 If 
 
86 
 
 BANKING LA W OF CANADA. 
 
 1871 
 1881 
 iSqi 
 
 Capital Paid 
 Up, Per Head 
 of Population. 
 
 $10.30 
 13-76 
 12.56 
 
 Circulation 
 
 Per 
 
 Head. 
 
 $5.75 
 6.60 
 
 6.54 
 
 People's De- 
 posits Per 
 Head. 
 
 $15-48 
 21.81 
 30.70 
 
 People's Dis- 
 counts Per 
 Head. 
 
 $23.33 
 27.04 
 
 35.40 
 
 Liabilities. 
 
 Assets. 
 
 $22.07 
 29.40 
 
 38.75 
 
 I34.46 
 46.38 
 
 55-72 
 
 In addition to the capital paid up in 1891, the reserve fund of 
 the hanks in that year amounted to $4.72 per head of population. 
 
 The first chartered bank to suspend business since Confederation 
 (1867) was the Commercial Bank of New Brunswick. The Bank of 
 Acadia (Liverpool, N. S.), suspended in 1873 : the Metropolitan Bank 
 of Montreal in 1877; the Mechanics' Bank of Montreal, the Consoli- 
 dated Bank of Montreal, the Bank of Liverpool, N. S., and the 
 Stadacona Bank of QueDec, in 1879 ; the Exchange Bank of 
 Canada, in 1883; ^^e Maritime Bank, of St. John, N. B., the Pictou 
 Bank, the Bank of London, Ont.. and the Central Bank of Canada 
 retired from business in 1887, and the Federal Bank in 1888; the 
 Commercial Bank of Manitoba closed its doors in 1893. In all, 
 fourteen banks have suspended, representing assets of over $22,000,- 
 000, and liabilities of over $15,000,000. 
 
 The Commercial Bank of Manitoba failed in July, 1893. The 
 notes of the bank were all paid in full soon after the failure. 
 
 The following table gives average paid up capital, assets, liabilities, 
 and other particulars of the various banks in operation in the years 
 1870, 18S0, 1890, and 1893, since Confederation, according to the 
 returns made to the Government as required by the Bank Act. 
 
 Year. 
 
 1870 
 1880 
 1890 
 1893 
 
 C.ipitnl Paid 
 Up. 
 
 •33.031. »49 
 60,058,117 
 59.974.9<J2 
 62,009.346 
 
 Notet in 
 Circulation. 
 
 $15,149,031 
 33,539,623 
 
 32.834.5>> 
 33,811.931; 
 
 Total on De- 
 posit, 
 
 Total of Dft* 
 
 countK to the 
 Pwpl*. 
 
 $48.763.305 ' $^.6,376,961 
 
 85.303.8'4 ! 103.166,115 
 I35.54«.7"4 153.301.335 
 174.776,722 1 305,623,042 
 
 Liabllitiei. 
 
 $65,685,870 
 
 ill.838.(>4i 
 173.207,587 
 
 ai7.i95.975 
 
 Amett. 
 
 $103,197,103 
 184,376,100 
 
 254. 546.339 
 303,696.715 
 
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