^\^ 
 
 ■.% 
 
 ►> ^ -1.. ^w^ 
 
 %^. 
 
 
 .^^^ 
 
 # 
 
 IMAGE EVALUATION 
 TEST TARGET (MT-S) 
 
 ,<i,^ 
 
 ^ 
 
 ;^. 
 
 
 m^ 
 
 «/5 
 
 L 
 
 1.0 
 
 I.I 
 
 
 L25 1 1.4 
 
 1.6 
 
 
 Photographic 
 
 Sciences 
 Corporation 
 
 23 WEST ma:n street 
 
 WEBSTSii, NY. 14580 
 (716) 873-4503 
 

 '"'^O 
 
 11 
 
 CIHM/ICMH 
 Microfiche 
 
 CIHIVI/ICMH 
 Collection de 
 microfiches. 
 
 Car.adian Institute for Historical Microreproductions / Institut Canadian de microreproductions histcriques 
 
 1981 
 
Tftchnicai and Bibliographic Notes/Notes techniques et bibliographiques 
 
 The Institute has attempted to obtain the best 
 original copy available for filming. Features of this 
 copy which may be bibliographically unique, 
 which may alter any of ihe im.^ges in the 
 reproduction, or which may significantly change 
 the usual method of filming, are checked below. 
 
 L'Institut a microfilm^ le meilleur exemplaire 
 qu'il lui a 6ti possible de se procurer. Les details 
 de cet exemplaire qui sont peut-dtre uniques du 
 point de vue bibliographique, qui peuvent modifier 
 une image reproduce, ou qui peuvent exiger une 
 modification dans la mdthode normale de filma'^e 
 sent indiquis ci-dessous. 
 
 a Coloured covers/ 
 Couverture de couleur 
 
 □ Colourec2 pages/ 
 Pages de couleur 
 
 □ Covers damaged/ 
 Couverture endommagde 
 
 □ Pages damaged/ 
 Pages endommagdas 
 
 D 
 D 
 
 Cover? restored and/or laminated/ 
 Couverture restaurie et/ou pelliculie 
 
 Cover title missing/ 
 
 Le titre de couverture manque 
 
 □ Pages restored and/cr faminated/ 
 Pages restaurdes et/ou pellicul6es 
 
 I V Pages discoloured, stained or foxed/ 
 LJ_] Pages ddcolor^es, tachetdes ou piqu6es 
 
 □ Coloured maps/ 
 Cartes g^ographiques en couleur 
 
 □ Pages detached/ 
 Pages d^tach^es 
 
 I I En 
 
 Coloured ink (i.e. other than blue or black)/ 
 
 ere de couleur (i.e. autre que bleue ou noire) 
 
 □ Showthrough/ 
 Transparence 
 
 □ Coloured plates and/or illustrations/ 
 Planches et/ou illustrations en couleur 
 
 □ Quality of print varies/ 
 Quality in6ga!e de I'impression 
 
 n 
 
 Bound with othor material/ 
 Reli6 avec d'autres documents 
 
 D 
 
 Includes supplementary material/ 
 Comprend du materiel supplementaire 
 
 □ 
 
 □ 
 
 Tight binding may cause shadows or distortion 
 along interior margin/ 
 
 La reliure serree peut causer de I'ombre ou de la 
 distortion le long de la marge int^rieure 
 
 Blank leaves added during restoration may 
 appear within the text. Whenever possible, these 
 have been omitted from filming/ 
 II se peut que certaines pages blanches ajoutdes 
 lors d'une restauration apparaissent dans le texte, 
 mais, lorsque cela dtait possible, ces pages n'ont 
 pas 6t6 filmdes. 
 
 D 
 D 
 
 Only edition available/ 
 Seule tuition disponible 
 
 Pages wholly or partially obscured by ertata 
 slips, tissues, etc., have been refilmed to 
 ensure the best possible image/ 
 Les pages totalement ou partiellement 
 obscitrcies par un feuillet d'errata, une pelure, 
 etc., ont 6t6 film^es A nouveau de facon & 
 obtenir la meilleure image possible. 
 
 D 
 
 Additional comments:/ 
 Commentaires suppldmentaires; 
 
 This item is filmed at the reduction ratio checked below/ 
 
 Ce document est filmd au taux de reduction indiquA ci-dessous. 
 
 10X 
 
 
 
 
 14X 
 
 
 
 18X 
 
 
 
 
 22X 
 
 
 
 
 26X 
 
 
 
 
 30X 
 
 
 
 
 
 
 
 
 
 
 
 y 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 12X 
 
 
 
 
 16X 
 
 
 
 20X 
 
 
 
 
 24X 
 
 
 
 
 28X 
 
 
 
 
 32X 
 
The copy filmed here has been reproduced thanks 
 to the generosity of: 
 
 National Library of Canada 
 
 L'e;;emplaire fllm6 fut reproduit grfice d la 
 g6n6rosit6 de: 
 
 Bibliothdque nationale du Canada 
 
 The images appearing here are the best quality 
 possible considering the condition and legibility 
 of the original copy and in keeping with the 
 filming contract spacifications. 
 
 Les images suivantes ont 6t6 reproduites avec le 
 plus grand soin, compte tenu de Ea condition et 
 de la nettetd de I'exemplaiie fiim6, et en 
 conformity avac les conditions du contrat d£ 
 filmage. 
 
 Original copies in printed paper covers are filmed 
 beginning w^th the front cover and ending on 
 the last page with a printed or illustrated impres- 
 sion, or the back cover when appropriate. All 
 other original copies are filmed beginning on the 
 first page with a printed or illustrated impres- 
 sion, and ending on the last page wtth a printed 
 or illustrated impression. 
 
 The list recordei frame on each microfiche 
 shall contain the symbol — *- (meaning "CON- 
 TINUED"), or the symbol V (meahing "END"), 
 whichever applies. 
 
 Maps, plates, charts, etc., may be filmed at 
 different reduction ratios. Those too large to be 
 entirely included in one exposure are filmed 
 beginning in the upper left hand cor.ier, left to 
 right and top to bottom, as many frames as 
 required. The following diagrams illustrate the 
 method: 
 
 Las exemplaires originaux dont la couverture en 
 papier est imprim^e sont film6s en commengant 
 par (9 premier plat et en terminant soit par la 
 dernidre page qui comporte une empreinte 
 d'impression ou d'illustration, soit par le second 
 plat, selon le cas. Tous les autres exemplaires 
 originaux sont film6s en commengant par la 
 premidre page qui comporte une empreinte 
 d'impression ou d'illustration et en terminant par 
 la dernidre page qui comporte une telle 
 empreinte. 
 
 Un des symboles suivants apparaitra sur la 
 dernidre image de cheque microfiche, selon le 
 cas: is symbole —^' signifie "A SUIVRE", le 
 symbole V signifie "FIN". 
 
 Les cartes, planches, tableaux, etc., peuvent dtre 
 filmds d des taux de reduction diffdrents. 
 Lorsque le document est trop grand pour dtre 
 reproduit en un seul clich6, il est film6 d partir 
 de Tangle supdrieur gauche, de qauche d droite, 
 et de haut en bas, en prenant le nombre 
 d'images ndcessaire. Les diagrammes suivants 
 illustrent la mdthode. 
 
 1 
 
 2 
 
 3 
 
 1 
 
 2 
 
 3 
 
 4 
 
 5 
 
 6 
 

 ■C ^lt x ' Tu1»i »j: ~- - yr ^ 
 
 rtf^^ 
 
 ?»"'\J v 
 
 '^'9' 
 
 -«i~?-5u 
 
 WHY CANADA 
 
 IS 
 
 AGAINST BIMETALLISM 
 
 Being a Paper published as Pamphlet No. 26 of the Gold 
 
 Standard Defence Association, and republished with 
 
 a supplementary note in the Journal 
 
 of the Canadian Bankers' 
 
 Association 
 
 BY 
 
 B. E. WALKER, 
 
 (iKNERAL MANf.OER OF ThE CANADIAN BanK OF COMMKRCK 
 
 TORONTO: 
 
 Journal of the Canadian Bankers' Association 
 
 1898 
 
 /6 
 
 
WHY CANADA 
 
 IS 
 
 AGAINST BIMETALLISM 
 
 Being a Paper published as Pamphlet No. 26 of the Gold 
 
 Standard Defence Association, and republished with 
 
 a supplementary note in the Journal 
 
 of the Canadian Bankers' 
 
 Association 
 
 BY 
 
 B. E. WALKER, 
 
 General Manager of The Canadian Bank of Com 
 
 MKRCE 
 
 TORONTO: 
 
 Journal of the Canadian Bankers' Association 
 
 1898 
 
WHY CANADA IS AGAINST BIMETALLISM^^ 
 
 "THE southern boundary of Canada and the northern boun- 
 dary of the United States run together from the Atlantic 
 to the Pacific Ocean for about 3,850 miles. Elsewhere, except 
 in the north, where it meets Alaska, Canada is bounded only 
 by oceans. It is the source from which the United States must 
 procure many of the products of nature, especially those which 
 grow only, or grow I est, in a northern climate. On the other 
 hand, because of the greater development of manufactures in 
 the United States, and because they grow certain products 
 which cannot be produced in Canada, the latter country must 
 always buy largely from them. Although Canada, in common 
 with almost all other countries, settles the final balance of its 
 trading and financial operations in London, the more immediate 
 clearing city for such operations in the case of both Canada 
 and the United States is New York. If Canada requires to 
 pay London in excess of the bills which are being created by 
 Canadian shipments to Great Britain, or to other countries 
 which settle through London, it buys the bills for such excess 
 in New York. If Canada has more exchange on London than 
 is required by her importers, the surplus is sold in New York. 
 Gold coin is occasionally shipped back and forth between 
 Canada and New York ; but this is a less frequent method of 
 settlement than by bills on London. Some of the Canadian 
 banks have branches in New York, Chicago and other cities of 
 the United States, and both the grain crops of the wes^ and the 
 cotton crops of the south depend largely on these banks for 
 money with which to buy and transport them, while the foreign 
 exchange market of New York would lose one of its most im- 
 portant features were the Canadian banks to withdraw their 
 agencies from that city. Such being the intimate trading and 
 
 •Pamph)el No. 26 of the Gold titMda'rd o/feUce Asso'cudlnn: " ' " - 
 
It'f/y CAXADA IS AGAINST niMETALUSM 
 
 financial relations between the United States and Canada, I 
 wish to explain why Canada maintains so easily its position as 
 a gold-standard country, and why its great and wealthy neigh- 
 bor, the United States, also a gold-standard country, has been 
 repeatedly threatened with the degradation of its standard from 
 gold to silver. 
 
 When the provinces of British North America entered into 
 the Confederation known as the Dominion of Canada, they re- 
 signed their powers in the matters of banking and currency, 
 and these were assumed by the Federal government. There 
 is, therefore, no conflict of authority on these subjects between 
 the Federal and Provincial governments. When the Confed- 
 eration known as the United States was formed, the original 
 States were anxious to retain as far as possible their sovereign 
 powers. They therefore conferred upon the Federal jurisdic- 
 tion certain defined powers only, including the power to stamp 
 metal as money. All powers not thus specially conferred on the 
 Federal jurisdiction remained with the States, and under this 
 balance of power the States have the right to create banks. 
 The Federal government also has power to create a bank as it 
 has to create any business corporation ; but, with the exception 
 of the two semi-state institutions, called in each case the 
 " Bank of the United States," the Federal government did not 
 attempt to exercise this power until driven to do so by the exi- 
 gencies of the war. In the United States since the war both 
 Federal and State governments have continued to create banks, 
 and neither is likely to surrender this power. 
 
 «-' 
 
 BANKING AND CURRENCY IN THE UNITED STATES 
 
 The first bank charters granted in the old province of 
 Canada about 1820, were copied largely from that of the Bank 
 of the United States, and until 1832 the banking systems in the 
 two countries did not differ materially. Neither government 
 had yet issued notes as money, and both left the creation of 
 paper money to the banks, who were of course supposed to re- 
 deem in gold. In both countries banks were developing sys- 
 'te^njs.qf .branches, although, the granting of charters by the 
 gpyetal' States instc^ajd'. qf by: thfe Federal government tended 
 
 • • • . 
 
 • - » • • • , 
 » • • • 4 • , 
 •••#•• • • I 
 
 * • < • • a 
 
IVJ/y CANADA IS AGAINST BIMETALLISM 
 
 5 
 
 to make the banks of the United States local in character 
 instead of national, and the majority of these banks had 
 no branches. There was, however, in the United States 
 one bank, the semi-state institution, called the Bank of 
 the United States, which transcended in importance all 
 others. Its relations to the government on the one hand 
 and to the mercantile community on the other, were not 
 very different from those of the Bank of England or the Bank 
 of France. It issued notes, had branches in the chief 
 cities through which it effected a reasonably satisfactory dis- 
 tribution of loanable capital, dealt largely in foreign exchange, 
 borrowed money abroad when necessary to increase its loans at 
 home, and acted as hanker for the government. These were 
 days when the commerce and land settlement of the country 
 were fraught with unusual financial risks. Instead, however, 
 of patiently studying the difficulties and gradually improving 
 the system, the Bank of the United States became a political 
 issue, and in 1832 President Jackson refused to renew its 
 charter. The Bank of the United States continued to exist for 
 some years under a State charter, but the Federal government, 
 in pursuance of its policy, transferred its banking business, 
 then very considerable in consequence of payments for land, to 
 various State banks. The government, however, found before 
 many years that these State banks, individually weak as to 
 capital, were not satisfactory as bankers, and the idea of the 
 government becoming its own banker, as far as possible, took 
 shape in the present Treasury system. For many years after 
 this period such banks, working under State laws, as en- 
 deavored to establish systems of branches, were met with great 
 animosity by the politicians who rellected the popular feeling 
 that large banks were dangerous to the public welfare. Natur- 
 ally the branch system did not thrive, and when the war broke 
 out the inland banking business of the country was being done 
 by a vast array of State banks individually weak as to capital, 
 and having little power to cohere for any large financial trans- 
 action, while the foreign banking business was mainly carried 
 on by private bankers. 
 
 Had the legislators of the United States carefully matured 
 the system with which they began, there would have been in 
 
6 iyH y CA NAD A IS A GA fJVS T BlAfE TA LUSM 
 
 existence at the outbreak of the war in 1861 great banks of 
 international importance able to procure loans abroad and 
 otherwise serve the government hnancially. But because there 
 were no banks adequate to the situation, and because of the 
 peculiar treasury system, the government, for the first time in 
 its history, resorted to the issue of promissory notes intended 
 to circulate as money. The first issue of these notes was pay- 
 able on demand in coin, and was so redeemed, but suspension 
 of specie payments followed within a few months, and the 
 government began a series of experiments in paper money of 
 which the existing residuum is that body of notes sometimes 
 called "war legal-tenders" or " greenbacks," and amounting 
 to about $346,000,000. 
 
 In order to aid in floating its bonds the Federal govern- 
 ment in 1863 and 1864 passed Acts creating the national bank- 
 ing system, notwithstanding the strong opposition of the banks 
 working under State laws; and in 1865, in order to make the 
 new Acts effective for the purpose of the Federal government, 
 a tax of 10 per cent, was levied upon the circulation of any 
 bank no^ss other than National Bank notes — that is, upon the 
 notes of banks working ur.der State laws. Under this system 
 any national bank, upon depositing United S'ates government 
 bonds with the .Treasury, may issue notes, nominally the pro- 
 mises to pay of the bank, but of uniform design, guaranteed 
 by the governmert, and possessing such qualities as currency 
 that redemption by the particular bank of issue is practically 
 not required. Thus the circulation of notes by the State banks 
 was bi ought to an end, and there were practically no bank note 
 issues left in the United States, the so-called " bank notes " of 
 the National Banks being merely an enlargement of the paper 
 issue of the Federal government. In this manner a nation at 
 one time accepting the sound principle that the function of 
 the government regarding currency was merely to certify to 
 the weight and fineness of gold, silver, and other coined money, 
 and that all credit instruments intended to pass as money should 
 be issued by banks who would, by the circumstances of their 
 business, be always able to issue enough, and yet, by the fact 
 of daily redemjilion, he unable to keep in circulation too much, 
 had now passed to the most dangerous of all theories regarding 
 
lV//y CAXADA IS AGAINST BIMETALLISM 7 
 
 currency. Thus the United States had accepted the theory 
 that it was a proper exercise of power by a government to en- 
 force by law the passage of any instrument as money, and 
 while some only sought to excuse such action by the necessities 
 of the war, others were ready to argue that the power to issue 
 paper money should be enjoyed only by the government.* 
 
 PRESENT RESPONSIBILITIES OF THE UNITED STATES TREASURY 
 
 By following the incorrect principles above stated the 
 United States treasury now stands deeply involved. The 
 issues for the redemption of which in gold the government is 
 directly or indirectly responsible were at ist December, 1896, 
 as follows : — 
 
 Legal tenders authorized during the war $346,681,016 
 
 Silver certificates issued under the Bland Act, 
 which are legal tender for payments to tne 
 government 367,903,504 
 
 Legal tender notes issued for silver purchased 
 
 under the Sherman Act 121,077,280 
 
 United States National Bank notes 235,398,890 
 
 Total , $1,071,660,690 
 
 *NoTE by the author on the subsequent course of events : 
 
 At the end of the war it was found that the debt of the Federal govern- 
 ment exceeded $2,800,000, jOO, of which only about $1,100,000,000 was 
 funded, while of the remaining $1,700,000,000 as much as $1,540,000,000 was 
 in treasury notes, and of these $684,000,000 were a legal tender. In this 
 year, 1865, Secretary McCulloch ami the House of Representatives both 
 expressed the view that the issue of legal tender notes was a measure only 
 justified by war, and that the currency should be contracted " with a view to 
 "as early a redemption of specie payments as the business interests of the 
 "country will permit." Some contraction followed, but in 1868 this course 
 was arrested owjng presumably to opposite views. 
 
 In 1869 (March i8th) a bill was passed " to strengthen the public 
 credit." It pledged the public to pay in coin or its equivalent all obligations 
 except where it was stipulated that payments might be made in " lawful 
 money." It did not, however, pass without strong opposition. In the pre- 
 ceding presidential election the Democratic party had pledged itself to the 
 principle of paying all public debts in paper, and in pursuance of this policy 
 Mr. Garrett Davis, seconded by Mr. Bayard, offered the following amend- 
 ment: "That the just and equitable measure of the obligation of the 
 " United States upon their outstanding bonds, is the value at the time in gold 
 •' and silver coin of the paper currency advanced and paid to the government 
 •• on these bonds " 
 
 Again, in the 42nd Congress, which met in December, 1871, it was 
 urged that a government as strong as the United States could issue fiat 
 money enough to stim.ulate every industry, while violent prejudice was ex- 
 pressed to the national banks. The sounder element once more urged the 
 resumption of specie payment at the earliest possible time. 
 
8 
 
 fV//V CANADA IS AGAINST BIMETALLISM 
 
 From this it would be fair to deduct from one hundred to 
 one hundred and fifty millions of dollars for cash held in the 
 treasu'y. 
 
 Against this mass o^ paper money the treasury is sup- 
 posed to maintain a gold reserve of $100,000,000, hut by 
 repeated experience in recent years it has been seen that it can- 
 not do this conifortably when trade relations make it necessary 
 that the country should ship gold. It is abundantly clear that 
 the currency of the country cannot be placed on a sound jjasis 
 until the government redeems at least a portion of the above 
 paper issues, and until a new banking system is devised which 
 ■.vill permit the issue by the barks of notes against their general 
 estate — that is, not secured by the actual pledge of government 
 or other bonds, and subject to daily redemption, so that the ebb 
 and flow of the aggregate of such notes shall adjust itself aato- 
 maticcJly to the requirements of trade. 
 
 BANKING AND CURRENCY IN CANADA 
 
 When in 1792 the merchants of the chief city in Canada 
 endeavored to establish a bank under legislative authority, 
 
 Then followed the panic of 18/3, and as a consequence when the 43rd 
 Congress met there were more supporters of fiat money than ever. The 
 amount of legal tender notci, outstanding was $356,000,000, and in opposition 
 to the policy of gradual redemption the two Houses agreed upon a bill in- 
 creasing the issue of legal tender? to $400,000,000, and increasing the limit 
 for the aggregate of national bank notes by $56,000 000, so that altogether 
 the paper currency might be increased by $100,000,000. No further reduc- 
 tion of the legal tenders was to be permitted. President Grant in a recent 
 message had gone even further than this in the direction of inflation, bu the 
 now saw reason to change his mind and the bUl was vetoed. This victory 
 for sound money was followed in December, 1874, and in January, 1875, by 
 the passage in both Houses of the " Act for the resumption of specie pay- 
 ments," which resumption was to take place in 1879. 
 
 At the time this seemed to be the end of a long fight between sound 
 money and inflatio'?, but the defeated politicians did noi accept it a; such. 
 In the Presidential election of 1876 the leading issue was again the cui.ency. 
 Much doubt was ercpressed by the Democratic party as to the wisdom of the 
 Resumption Act, while the Republicans reiterated the pledge contained in 
 the Act, " to strengthen the public credit " already referred to, by staling 
 in their platform that this " must be fulfilled by continuous and steady pro- 
 " gress to specie payments." The most important legislation of the 45th 
 Congress was the Act for the coinage of silver dollars. Some proposed tiiat 
 this should be at the ratio of \^)'2 to i ; others that the old parity in use 
 in the United States of 16 to i should be observed. Mr. Boutwell strongly 
 opposed making silver a legal tender, and t nought that the United 
 States should wait until action by European nations in favor of 
 
 vj 
 
\t^ 
 
 IVI/y CANADA /S AGAfNST RIMEFALLISM 9 
 
 they proposed that it should transact the business " usually 
 "done by similar estabhshments " — viz., to receive deposits, 
 issue notes, discount bills, and keep cash accounts with cus- 
 tomers. It was further proposed to open branches *' to extend 
 *' the operations of tiie bank to every part of the two provinces 
 " (now known as Qu-^.bec and Ontario) where an agent may be 
 " judged necessary." Although there was at the time no law pre- 
 venting the issue by private individuals of notes for circulation 
 as money, the legislature refused to grant such powers to an in- 
 corporated bank. No charters were actually granted to joint- 
 stock banks until 1820, but the two principles of (i) a note 
 issue against the general estate of the bank — that is, not spe- 
 cially secured — and (2) systems of branches for the gathering 
 and distributing of loanable capital, were recognized ; and the 
 new joint- stock banks soon opened branches and took their 
 position in the business world as institutions having a national 
 instead of a local character. It has been already stated that 
 much of the detail in these first charters was copied from that of 
 the Bank of the United States, and it is interesting to note that 
 many of these features are retained in the present Act, unaltered 
 
 bimetallism had been secured. Others took an even stronger position, and 
 doubted the possibility of establishing a double standard, urging that silver 
 should be used only as subsidiary money. In his message of the 3rd 
 December, 1877, President Hayes said : " If the United States had the 
 •' undoubted r:ght to pay its bonds in silver coin, the little benefit from that 
 " process would be greatly over-balanced by the injurious effect of such pay- 
 " ments if made or proposed against the honest convictions of the public 
 " creditors." Secretary Sherman, in his annual report, about the same time, 
 wrote as follows : " As the government exactr. in payment for bonds their 
 " full face in coin, it is not anticipated that any future legislation of Congress 
 " 01 any action of any department of the government, will sanction or tolerate 
 " the redemption of the principal of these bonds, or the payment of the inter- 
 " est thereon, in coin of less value than the coin authorized by law at the 
 \")jf " time of their issue, being gold coin." But in opposition to the views of 
 
 President Hayes r»:^H Secretary Sherman, Senator Stanley Matthews moved a 
 concurrent resolution 11. the Senate, declaring that '■ all bonds of the United 
 " States are payable in silver dollars of 412^^ grains, and that to restore such 
 " dollars as a full legal tender for this purpose, is not in violation ot public 
 " faith, or the rights of the creditor." A motion to refer this subject to '■ le 
 Committee of the Judiciary was defeated, and the resolution was passed by 
 both Senate and House of Representatives, and proclaimed 28th January, 
 1878. 
 
 In November, 1877, at an extra session the House of Representatives 
 passed a bill, offered by Mr. Bland, for the free coinage of silver dollars of 
 412/4 grains, soch silver dollars to be a full legal tender for all debts public 
 and private Thi bill was reported to the Senate in December, when Mr. 
 
lO 
 
 WV/K CANADA IS AGAINST BIMETALLISM 
 
 except as to the phraseology by which they are described. In 
 the early days, owing to the poverty of the country, and to in- 
 experience, banking was subject to many vicissitudes, and the 
 British authorities frequently sought to interfere. Although 
 such suggestions were rarely accepted at the moment, they 
 were often the cause of improved legislation at some later time, 
 but we doubtless owe to the proposals of Lord Sydenham, re- 
 ferred to hereafter, the one serious blemish in our currency 
 system. * 
 
 In 1850, as a result of dissatisfaction in some portions of 
 Western Canada with the facilities extended by the banks, a 
 measure usually called *^he Free Barking Act was passed. 
 Under it a bank might be organized with a very small capital, 
 and might issue notes based upon the security of the bonds cf 
 the Provincial government. This was an imitation of the 
 National Bank system of the State of New York, from which also 
 the banking system of the United States was largely copied. The 
 old banks in Canada were not, however, forced to adopt the 
 new system, and, as it was unsound in principle, it never gained 
 headway, and in a few years came to an end. Lord Sydenham, 
 
 
 Allison proposed an amendment to the effect that the coinage of dollars of 
 412^ grains be authorized to the extent of jiot less ttian $2,000,000, nor 
 more than $4,000,000 per month, the seigniorage on all such coinage to be 
 retained by the treasury. All efforts to increase the number of giains in the 
 silver dollar, or to limit the legal-tender quality of silver as to amount, or 
 otherwise to limit the operation of the bill, were rejected, and the Senate bill 
 was accepted by the House of Representatives. Mr. Bland expressed liis> 
 willingness to await an opportuni:y of passing a measure for free coinage at 
 a later time, indicating the close connection between free silver and unlimited 
 paper money by also saying, " If we cannot do that I am in favor of issuing 
 " papei enough to stuff down the bondholders until vhey are sick." The 
 President vetoed the bill on the 28th February, 1878, but it immediately 
 secured the required vote to oass it over his veto, and thus the well known 
 Bland-Allison Silver Bill became law. 
 
 The result of this unfortunute concession to unsound opinion, made 
 just before the resumption of specie payments, it is unnecessary to enlarge 
 upon here. The Sherman Act was suspended in 1893, under the pressure of 
 a great commercial panic. In the Presidential election of November, 1896, 
 one of the great political parties adopted as a plank in its platform substan- 
 tially what was contained in the resolution which Mr. Bland induced the 
 House of Representatives to pass i 1878, that is, that the United States 
 should coin unlimited quantities of ilver at the ratio of 16 to i, without 
 awaiting the co-operation of any ot r nation. As we have seen, the party 
 advocatmg sounder views has been elected, and there is reason to hope that 
 the agitation for the unlimited coinage of silver in the United States will not 
 again reach srrious proportions. 
 
' 
 
 fV//y CANADA IS AGAINST BIMETALLISM 1 1 
 
 as Governor-General in 1841 of the united provinces of Lower 
 and Upper Canada, had suggested a provincial Bank of Issue, 
 the right to issue notes by the chartered banks to be cancelled, 
 and suitable remuneration to be paid therefor. This was re- 
 jected by the people, and a similar proposal made in i860 met 
 the same fate. In 1866, however, owmg to the pressure of the 
 finances of the Provincial government, an Act was passed 
 
 ERRATUM 
 
 P. 10, 7th and 8th lines of the second paragraph. 
 
 Alter to read : 
 banking system of the State of New York, from which also the 
 National Bank system of the United States was largely copied. 
 
 in gold is from time to time required. The banking legislation 
 in Nova Scotia and New Brunswick previous to confederation 
 offered no difficulty to the adoption in 1870 of a General Bank- 
 ing Act, following the lines of the system in use in Old Canada, 
 Under the new system the charter of each bank is renewed for 
 periods of ten years, all charters expiring at the .same time. 
 The banks all work under the General Banking Act, and at the 
 Parliamentary session immediately before the char.ers expire 
 this Act is re-enacted with such improvement as time has 
 demonstrated to be necessary. 
 
 The features with which we are mainly concerned are the 
 note issue and the branch banking. A Canadian bank is permit- 
 ted to issue notes intended for circulation as money, in denom- 
 inations of five dollars and upwards, to the extent of itc paid-up 
 
lO 
 
 H^HF CANADA IS AGAINST BIMETALLISM 
 
 except as to the phraseology by which they are described. In 
 the early days, owing to the poverty of the country, and to in- 
 experience, banking was subject to many vicissitudes, and the 
 British authorities frequently sought to interfere. Although 
 such suggestions were rarely accepted at the moment, they 
 were often the cause of improved legislation at some later time, 
 ' ' " •*•- *^-- »>i-or%,-kCQlc nf T,nrd Svdenham, re- 
 
 silver dollar, or to limit the legal-tender quality of silver as to amount, or 
 otherwise to limit the operation of the bill, were rejected, and the Senate bill 
 was accepted by the House of Representatives, Mr. Bland expressed his 
 willingness to await an opportunity of passing a measure for free coinage at 
 a later time, indicating the close connection between free silver and unlimited 
 paper money by also saying, " If we cannot do that I am in favor of issuing 
 " paper enough to stuff down the bondholders until they are sick." The 
 President vetoed the bill on the 28th February, 1878, but it immediately 
 secured the required vote to pass it over his veto, and thus the well known 
 Bland-Allison Silver Bill became law. 
 
 The result of this unfortunute concession to unsound opinion, made 
 just before the resumption of specie payments, it is unnecessary to enlarge 
 upon here. The Sherman Act was suspended in 1893, under the pressure of 
 a great commercial panic. In the Presidential election of November, 1896, 
 one of the great political parties adopted as a plank in its platform substan- 
 tially what was contained in the resolution wliich Mr. Bland induced the 
 House of Representatives to pass in 1878, that is, that the United States 
 should coin unlimited quantities of silver at the ratio of 16 to i, without 
 awaiting the co-operation of any other nation. As we have seen, the party 
 advocating sounder views has been elected, and there is reason to hope that 
 the agitation for the unlimited coinage of silver in the United States will not 
 again reach serious proportions. 
 
IVffy CANADA IS AGAINST BIMETALLISM 
 
 II 
 
 as Governor-General in 1841 of the united provinces of Lower 
 and Upper Canada, had suggested a provincial Bank of Issue, 
 the right to issue notes by the chartered banks to be cancelled, 
 and suitable remuneration to be paid therefor. This was re- 
 jected by the people, and a similar proposal made in i860 met 
 the same fate. In 1866, however, owing to the pressure of the 
 finances of the Provincial government, an Act was passed 
 authorizing the issue by the Provincial government of notes 
 payable in specie, and to be a legal tender to an amount not ex- 
 ceeding eight million dollars. 
 
 In 1867 the two provinces comprising Old Canada, together 
 with the provinces of Nova Scotia and New Brunswick, were 
 confederated as the Dominion of Canada. The new Federal 
 government unfortunately did not abandon the issue of legal- 
 tender notes. At the present time the maximum issue per- 
 mitted of notes partially covered by specie is $20,000,000, 
 and for all issues in excess gold must be held. Of the $21,600,000 
 outstanding at 31st October, 1896, $8,200,000 are in the 
 shape of notes of denominations smaller than five dollars, bank 
 issues being forbidden for such denominations. The remainder of 
 the issue is mainly in notes of very large denominations held by 
 the banks. The gold held by the Treasury Department at this 
 date amounted to $10,000,000, nearly 50 per cent, upon the 
 entire issue, or nearly 75 per cent, upon the large issues. The 
 large issues are practically the only notes on which redemption 
 in gold io from time to time required. The banking legislation 
 in Nova Scotia and New Brunswick previous to confederation 
 offered no difficulty to the adoption in 1870 of a General Bank- 
 ing Act, following the lines of the system in use in Oid Canada. 
 Under the new system the charter of each bank is renewed for 
 periods of ten years, all charters expiring at the same time. 
 The banks all work under the General Banking Act, and at the 
 Parliamentary session immediately before the chart— expire 
 this Act is re-enacted with such improvement e has 
 
 demonstrated to be necessary. 
 
 The features with which we are mainly concerned are the 
 note issue and the branch banking. A Canadian bank is permit- 
 ted to issue notes intended for circulation as money, in denom- 
 inations of five dollars and upwards, to the extent of its paid-up 
 
12 
 
 IVHV CANADA IS AGAINST BIMETALLISM 
 
 and unimpaired capital. No securities are specially pledged for 
 such issup'^. In the event of the insolvency of a bank each share- 
 holder is liable for the debts of the bank to the extent of a sum 
 equal to the face value of his shares. This is generally called the 
 double liability. The note issues of a bank are a first lien upon 
 all the assets of a bank, including this double liability, and prior 
 to any lien of the Federal or of a provincial government. To 
 avoid a discount on notes in circulation at a point remote from 
 the establishments of the issuing bank, every bank must arrange 
 for the redemption of its notes in certain designated cities of 
 commercial importance throughout Canada. And to avoid dis- 
 count at the moment of a bank's suspension, or thereafter, 
 because of doubt as to the sufficiency of the assets for this par- 
 ticular liability, the banks as a whole maintain in the hands of 
 the government a fund equal to 5 per cent, of the aggregate of 
 notes in circulation, upon which drafts may be made if the 
 assets of the failed bank are insufficient. The notes of a failed 
 bank carry interest at b per cent, per annum from the date of 
 suspension until the receiver advertises his ability to redeem. 
 Had these features always been in force the past history of the 
 country shows that no holder of a Canadian bank note would 
 ever have suffered loss, and the people understand the security 
 afforded so well that the note of a suspended bank passes 
 without difficulty. The aggregate capital of the Canadian 
 banks at present is about $61,700,000: the highest circulation 
 during the past year was $36,300,000, and the lowest 
 $29,400,000. It will therefore be seen that should an unusual 
 expansion of the currency beyond the maximum named be 
 suddenly required — a thing only theoretically possible in 
 Canada — there is a reserve power to issue of about 70 per cent. 
 It will also be observed that about 23 per cent, more notes are 
 required to do the business in the active or crop-moving period 
 of the year as compared with the dullest period. The average 
 circulation for the past year was 50.76 per cent, of the paid-up 
 capital. Not only was the required circulation supplied with 
 perfect ease, but, what is of equal importance, it was forced out 
 of circulation immediately it was not required. 
 
 The emission and redemption of these notes, the absorp- 
 tion of bank deposits and the making of bank advances, is 
 
ll'HV CANADA IS AGAINST BIMETALLISM 
 
 13 
 
 effected in Canada by 37 banks with about 500 branches. There 
 is nothing new in this to the European mind, and it is intro- 
 duced here only to mark the contrast with the United States. 
 The result of the branch system is that the loanable capital is 
 directly gathered where it can be found and directly lent where 
 it is required. The rate to the borrower is neither subject to 
 violent fluctuations because of panic nor to widely varying 
 rates for geographical reasons, and the borrower with good 
 security is able to borrow at fair rates, while the note issues 
 afford a circulation both elastic and secure. 
 
 WHY CANADA IS NOT TROUBLED WITH A BIMETALLIC AGITATION 
 
 In conclusion, T wish to emphasize the following points : 
 
 a. The agitation in the United States in favor of the 
 unlimited coinage of silver is simply the form in which the 
 discontent with existing conditions is expressed by those who 
 do not understand currency and banking problems. They see 
 that something is wrong, and accept the suggested remedy 
 largely because nothing else is proposed. The general fall in 
 prices and the demonetization of silver have been used as 
 arguments for the unlimited coinage of silver ; but had the sug- 
 gested remedy been unlimited fiat paper money, quite as valid 
 arguments would doubtless have been urged. 
 
 b. Existing conditions regarding currency and banking in 
 the United States are wrong, mainly because in the past politi- 
 cians have regarded popular or untrained opinion. Had the 
 legislators of the United States followed the old maxim, ' hold 
 fast that which is good," and as the time passed endeavored 
 to make the good they possessed better, they would now have had 
 a system of banking and currency not essentially different from 
 those of England, France, Germany, Scotland and Canada. 
 But the violent policy of Jackson led to the Treasury system, 
 the ruin of branch banking, and the survival only of the weak 
 State banks; and these conditions caused the issue during the 
 war of non-interest-bearing notes for use as money, which was 
 followed by an agitation for fiat paper money, and later by an 
 agitation lasting for twenty years, for the free coinage of silver. 
 
H 
 
 IV//y CANADA IS AGAINST BIMETALLISM 
 
 c. Had the early banking methods been retained, and im- 
 proved from time to time, there would now exist in the United 
 States many large banking institutions with branches, creating 
 an automatic flow of loanable capital from the points where 
 bank deposits accumulate to the points where loans are most 
 required. There would also exist a paper currency issued only 
 by banks, redeemable in gold, and capable of just the measure 
 of expansion and contraction in the volume necessary for the 
 comfort of trade. With an equitable rate of interest to the 
 borrower, and a suitable and elastic currency, the silver-miners 
 could never have caught the ear of the discontented. 
 
 d. The history of banking in Canada shows that a country 
 may have a paper currency supported by a very slight percent- 
 age of gold, provided the other reasons for its issuance are 
 sound. During the seventy-five years of its existence, except 
 for a few months in a time of rebellion (1837), the bank-note 
 currency of Canada has always been redeemable in gold. With 
 a sound and elastic currency, and a banking system which en- 
 sures an equitable rate for borrowed money, Canada naturally 
 has practically no public discussion on the question of bimetal- 
 lism except in the ase of the few who imagine that they find 
 a connection between the general fall in prices and the so-called 
 demonetization of silver. 
 
 B. E. Walker