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STATEMENT 
 
 OF THE 
 
 HONORABLE A. T. GALT, 
 
 IN aEFERENCE TO THE 
 
 FAILURE OF THE COMMERCIAL BANK 
 
 CDtt 
 
 ttiua 
 
 PRINTED BY HUNTER, ROSE & COMPANY 
 
 1867. 
 
STA^TEMEIS^T 
 
 OF TBB 
 
 HONORABLE A. T; GALT, 
 
 IN aEFSaCNCB TO THB 
 
 FAILURE OF THB COMMERCIAL BANK. 
 
 HOUSE OF COMMONS, 
 
 Thursday, Dec. 13, 1867. 
 
 The Orders of the Day having beeu called, 
 Hon. A. T. Galt rose and said: Mr. 
 Speaker, before the Orders of the Day are 
 proceeded with, I propose to make a statc- 
 luent with reference to the events which pre- 
 ceded and followed the failure of the Com- 
 mercial Bank of Canada ; and, to put myaelf 
 in order, I propose to follow what is the usual 
 practice of the House of Commons in Eng- 
 land, by making a pro forma motion of ad- 
 journment. I may perhaps be asked why I 
 did not take an earlier opportunity of making 
 the statement I am now about to submit. My 
 reason for not having done so is simply this 
 — that the statement will disclose that in the 
 courpe of the events I am about to refer to, 
 certain diflferenccs of opinion happened un- 
 fortunately to arise between myself and my 
 late colleagues, and I thought that, in the 
 public interest it would be better that no 
 •subject should be introduced at the first meet- 
 ing of this Parliament, which could by pos- 
 sibility, in the then excited state of public 
 opinion, lead to any angry discussion or angry 
 feeling in this House. I felt that it would 
 be better for me to remain subject for a time 
 to a certain amount of misapprehension and 
 misconstruction, than to run the risk of put- 
 ting any obstacle in the way of my honor- 
 able friends in the Government, whose policy 
 I intend to support, and to whom posiibly 
 the result of those events might cause some 
 partial embarrassment. But I am now brought 
 to the conclusion, that it is my duty, for my 
 own defence as a public man, to make the 
 .statement I am about to lay before the House. 
 This has to a large extent arisen from the 
 circumstance that, in another place a Com- 
 mittee has been granted in reference to the 
 late crisis in Canada West. I am, of course, 
 
 quite ignorant of tho course that Committee 
 may take. It was applied for — you will per- 
 mit me to say — entirely without my know- 
 ledge or concurrence, and, in fact, during my 
 absence from this city. And though it was 
 applied for, undoubtedly, by a personal friend 
 of my own, still as I knew they could not be 
 in possession of the facts relating to the course 
 which 1 myself took in regard to the Com- 
 mercial Bank, and during the subsequent 
 crisis, I did not feel myself at liberty to run 
 the risk of that Committee presenting a re- 
 port which might pos.sibly for all future time 
 leave me responsible in the eyes of the public 
 for events which I deplored in common with 
 everybody else. I have, therefore, felt that I 
 could not let Parliament rise, without apply- 
 ing, through my honorable friend at the head 
 of the Government, for the permission of His 
 Excellency the Governor General, to make 
 such a statement as might be necessary with 
 regard to my own course in reference to those 
 unfortunate events. I made that application 
 the day before yesterday to my honorable 
 friend at the head of the Government, and he 
 at once obtained for me the permission I 
 sought, from His Excellency, and I am bound 
 to say that that permission which has been 
 given me to-day, would as readily have been 
 accorded to me by my honorable friend, if I 
 had applied for it at an earlier period of tho 
 Session. I propose now to refer to the vari- 
 •is events which led up to the failure of the 
 jimercial Bank, and, subsequently, to the 
 crisis which followed. The first intimation 
 which I received, in reference to the Com- 
 mercial Bank being in danger, was from my 
 honorable friend, Mr. Holton. I was, at the 
 time, on a visit, on public business, to the 
 Treasurer of Quebec. On my return home 
 to Sherbrooke, I found a telegram from Mr. 
 Holton, informing me that he desired par- 
 ticularly to see mc on public business, 
 
Failure of the Commercial Bank. 
 
 [l»i Sest. 
 
 \«t 
 
 and wifiliiDfr to know where he miyht 
 do so. It did not happen to bo convenient 
 to me to vipiit Montreal next day. So 
 I replied, that I wished him to come to 
 Sherbrooke, which he did by the first train. 
 lie then informed mc that the bu.sincss on 
 which he desired to see me related to the 
 Commercial Bank, which, owing to a partial 
 but continuous withdrawal of deposits was, 
 ia the opinion of the Directors, getting into 
 a position of serious danger — and that ho was 
 desirous of submitting the case to mc, that I 
 might, if I thought proper, biing the matter 
 before the Government, and obtain a deposit 
 of public moneys, iu ordw to give the Bank 
 an additional reserve, as a security for their 
 meeting their engagements. At the request 
 of my honorable triend, I accompanied him 
 the following day to Montreal. At the same 
 time, Mr. Ilolton telegraphed to the officers 
 of the Bank at Kingston, requesting that, if 
 possible, the presence of Sir John A. Macdon- 
 ald, one of the Directors of the Bank, should 
 be obtained at Montreal. It was found im- 
 possible, however, as the elections were pro- 
 ceeding, for Sir John A. Macdonald to attend 
 the meeting which took ph ce at Montreal. 
 It was there submitted to me by the Direc- 
 tors, that the position of the Bank was such, 
 that they were apprehensive it might be 
 brought into a condition which would re- 
 quire it to suspend payments, unless assistance 
 could be obtained for it from the Govern- 
 ment. I informed these gentlemen that 
 there were, in my opinion, serious diflSculties 
 in the way of the Government rendering 
 such assistance : That, in the first place, the 
 Government did not possess, in a formal way, 
 the approval of Parliament — that they had 
 no authority — and that they would be obliged, 
 if they gave assistance, to seek indemnity for 
 their course from Parliament — and that to 
 obtain that indemnity would require such a 
 disclosure of the affairs of the Bank, as might 
 possibly do them more harm, than the momen- 
 tary assistance would do them good. I also 
 said that I thought there were objections on 
 the ground of its constituting a precedent — 
 that it was diflScult for the Government to 
 come to the assistance of any one 
 Bank, unless they were prepared to come 
 to the assistance of all — and that it ap- 
 peared to mo that it was only in circumstances 
 where a great public disaster might bo im- 
 pending, that the Government could be justi- 
 fied in interfering. But I informed them at 
 the same time that I would take the oppor- 
 tunity of consulting my honorable friend, Mr. 
 Cartier, who was then in Montreal, as I had 
 
 not the advantage of seeing Sir John A. Mac- 
 donald. I accordingly saw Mr. Cartier, and 
 found that his views on the points I have re- 
 ferred to, were, if anything, stronger than 
 my own. However, at the desire of the 
 Directors of the Hank, and particularly of its 
 President, Mr. Cartwright, I consented to 
 accompany them to Kingston, for the purpose 
 of myself submitting the case to Sir John 
 A. Macdonald, and ascertaining whether his 
 views would differ in any material respect 
 from those which had been expressed by Mr. 
 Cartier and myself. I went to Kingston, 
 and, having met Sir John, found that ho 
 shared the same opinion — that the Govern- 
 ment, under the circumstances, would not bo 
 justified in interfering on behalf of the Bank. 
 At the same time, we both agecd that the 
 Government might possibly express such a 
 desire to the Bank of Montreal, as would in- 
 duce them to give the assistance that might 
 be required, on such securities as the Com- 
 mercial Bank had it in its power to hand 
 over to that institution. J then had an inter- 
 view with a deputation of the Director;^ at 
 Kingston, and conveyed to them the decision 
 at which wc had arrived. I may here remark 
 that it was impossible to obtain a meeting of 
 the Priry Council at that time, as the mem- 
 bers were necessarily distributed over the 
 whole Dominion, engaged more or less in at- 
 tending to the various elections that 
 were going on, and it would have been 
 very difficult to have assembled more than 
 a nominal quorum at Ottawa. I inti- 
 mated, as T have said, to those gentle- 
 men, the decision at which we had ar- 
 rived, and expressed my belief that the Bank 
 of Montreal would, on their satisfying them 
 as to the security, be prepared to give them 
 assistance to the amount that would be neces- 
 sary — that amount, it was supposed, being 
 somewhere between $300,000 and $500,000. 
 I then went down to Montreal, accompanied 
 by Mr. Cartwright, the President of the 
 Commercial Bank, and the other gentlemen 
 who were then acting on behalf of Jthat insti- 
 tution. I saw jMr. Angus, the Manager of 
 the Bank of Montreal — ]\Ir. King being then 
 in England — and expressed to him the hope 
 and the desire of the Government that that 
 Bank would — so far as was consistent with its 
 own safety, and on the deposit of satisfactory 
 securities — extend such assistance to the Com- 
 mer»ial Bank as would meet the exigencies of 
 the case. Mr. Angus met the desire I ex- 
 pressed, in the most friendly way, and stated 
 that, when the gentlemen representing the 
 Commercial Bank made their application, he 
 
1st &'e88. 
 
 IH Far."] 
 
 Failure of the Commercial Bank. 
 
 lA.iMac 
 
 tier, and 
 liavo rfi. 
 ;er tlum 
 of tho 
 riyof'iffl 
 en ted )o 
 purpose 
 Mr .John 
 thcr hifi 
 espect 
 1 by Mr. 
 Kingston, 
 that hf! 
 <>ovorn- 
 uot ho 
 ic Bank, 
 that the 
 such a 
 fould in- 
 
 hoped there would be no difficulty in making ^ 
 un arrangement with them. This was un the < 
 16th or 17th of September, a month before 
 the final dii&culty arose which resulted in the 
 fiUspenHiou of payments by the Commercial 
 Hank. I did not, after that, ha7o occa.'^ion to i 
 meet the gentlemen connected with that 
 Bank, further than to tell them that I had 
 Hcen the Manager of the Bank of Montreal ; 
 and hoped, whon they met him, they would 
 be able to make a satisfactory arrangement. 
 1 subsequently heard, the same day or the 
 next day, that nn arrangemcut had been made 
 for an advance of $300,000, on a deposit of 
 ( Commercial paper ; and 1 had reason to hope 
 the crisis in the afl'aira of the Bank had been 
 averted. For some time I heard no more 
 with reference to any difficulty as to the Com- 
 mercial Bank. There seemed to be no alarm 
 cxprescd ^through the public press — I ob- 
 served no disquietude in the public mind; and 
 I was under the impression that everything 
 was going on in a satisfactory manner. But on 
 Tuesday, 15th October, being on that day in 
 Montreal, I was met by Mr. Cartwright and 
 Mr. Holton, who informed me that the posi- 
 tion of the Bank had within a very few days 
 assumed again an alarming oharucter — that 
 the run of depositors, or rather the notices of 
 the withdrawal of deposits, had increased to 
 an extent that would, they were very much 
 afraid, rapidly exhaust the resources of the 
 Bank, and they were desirous that I would 
 again meet the Board of Directors, in order 
 to consider what steps should bo taken. I 
 met on Tuesday, l.^)th October, the Directors 
 who were then in Montreal, Mr. Holton, Mr. 
 Cartwright, Mr. Allan, Mr. Morris, and I 
 think, Mr. Crilderslcevc. We discussed very 
 fully the position and resources of the Bank 
 — considered the fact that its affairs had 
 been subjected to a close scrutiny by three 
 gentlemen whose names were themselves a 
 "ruarantcc for the accuracy of the report they 
 had made — I mean Mr. Holton, J^lr. Hugh 
 Allan and Mr. iMorris — gentlemen who had 
 not been connected with the direction of the 
 Bank, until appointed for the purpose of this 
 enquiry. \ wiis satLslicd in my own mind, 
 (lom the discussion which then took place, 
 that the position of the Bank was one of 
 merely temporary embarrassment, arising 
 Ironi an undue dis(iuietude in the public 
 mind, or in llie minds of the depositors, and 
 that a very short time and a very limited 
 amount of assistance would be sufficient to 
 enable them to overcome the difficulty. But 
 1 stated to the Directors that, inasmuch :u> 
 Mr. King, the Manager of the Bank of Mont- 
 
 real, had arrived from England, and was 
 expected to be in Montreal next morning, 1 
 would prefer postponing any decision as to 
 the course T would recommend the Govern- 
 ment to take, until the following day, and 
 that I wished to have thoir sanction to com- 
 municate to Mr. King the information 
 which hail been conveyed by them to mo. 
 They agreed to this, and I promised to 
 meet them again the following day at 
 three o'clock. I met Mr. King on the 
 Wednesday morning, immediately after his 
 return from England, and we spent a very 
 long interview — extending over two or three 
 hours — in considering very fully the infor- 
 mation with which those gentlemen had sup- 
 plied me, and the poaitiim of the whole mat- 
 ter as it then .stood. We considered, more- 
 over, the effect which would probably be 
 produced on thocouutry, if the failure of the 
 Commercial Bank became a fact. We looked 
 into the condition, so far as the published 
 statements enabled us to do so, of all the vari- 
 ous Banks of the country, compared it with 
 what it had been at previous periods, and 
 considered what effect, according to the best 
 of our Judgment, the failure of the Commer- 
 cial Bank, coming unexpectedly on the coun- 
 try, would have. The conclusion which 
 both Mr. King and 1 arrived at, was that it 
 might be fraught with very serious disasters 
 indeed. Mr. King was d'lulufiil whether 
 any adequate assistance could or would be 
 given by the other Banks. For himself, bo 
 said he had only just arrived in Canada, after 
 an absence of some duration, and ho could 
 not even tell what was the position of the 
 Bank of Montreal, as to its ability to give as- 
 sistance, and he doubted whether aid to a 
 sufficient amount could be obtained by appli- 
 cation to the Banks. After, as I have said, 
 several hours of very serious consideration of 
 these points, I came to the conclusion, and it 
 was acquiesced in by Mr. King, that the best 
 course to take under the circumstances was 
 this — that the Government should take the 
 responsibility of coming to the assistance of 
 the Bank, and that it would be well for me 
 to submit the ease to tic Government, with 
 a recommendation to give assistance to the 
 amount of half a million of dollars. 1 met 
 the Directors of the Bank at three o'clock, and 
 informed them that, under the circumstances, 
 I was prepared to accompany them to Ottawa 
 the same night for the purpose ofconsul ting my 
 colleagues in regard to giving a.ssistanoe to 
 the Bank. I therefore left for Ottawa, and 
 arrived there, with Mr. Cartwright, on Thurs- 
 day, the 17th. I immediately saw Sir John A. 
 
Failure of the Commsroial Bank. 
 
 [l8t S'eta. 
 
 Macdonald, and explained to him the nature 
 of tho busincBH which had brought mc ho un- 
 cxpeotedly to Ottawa. Very naturally, Hir 
 John Hharcd with mc — and at onoc expressed 
 — an anxiety and dosiro to oavo the Commer- 
 cial Bank from disaster ; and at the Hamc 
 time, I am bound to say, agreed with me fully 
 that serious danger might occur to other insti- 
 tutions, and to tho business of the country, 
 if tho failure took place. Sir John directed 
 a meeting of Council to be called, and sug- 
 gested that I should see the Hon. Mr. Gar- 
 tier. I did 80, and found that he still at- 
 tached great weight to tho objections that we 
 all agreed to as existing at tho previous 
 plication They both agreed that by putt, 
 huch pressure as the riovernment might pro- 
 perly employ, upon tho financial institutions 
 of the country, the necessary assistance 
 might be obtained from them instead of our 
 being required ourselves to como to the re- 
 lief of tho Commercial liank. After consul- 
 tation with Sir John, wo came to tho conclu- 
 nion that it was not expedient to submit the 
 case to the Executive Council. I wai very 
 reluctant indeed to accede to that course I 
 had como up to Ottawa for the express pur- 
 pose of submitting the matter to the Execu- 
 tive, and I thought some of juy colleagues 
 mi^ht feel that I was treating them with dis- 
 courtesy if I went away without submitting 
 it to them. However, I agreed in deferring 
 my own views to his, but I requested him to 
 see Mr. (^artwright, the President of the 
 Bank, himself, to ascertain if he did not 
 wish formal application to be laid before the 
 Government, and at the same time Sir John 
 and Mr. Cartior suggested that I should 
 accompany Mr. Cartwright to Montreal, 
 in order that 1 might use my best efforts 
 to obtain assistance for the Bank from the 
 other monetary inbtitutions of the country. 
 With the understandin,!:; that as soon as that i 
 effort cither failed or succeeded, I should at 
 once advise the Government of the result, I | 
 went back with Mr. Cartwright to Montreal. , 
 We arrived there on Friday morning, the 
 18th October. I had a consultation with i 
 .Mr. King, the Manager of the Bank of 
 Montreal, and I will take this opportunity of i 
 reading a letter which he wrote to me on the I 
 day on which I was in Ottawa, addressing it ' 
 to mo there, and which consequently did not I 
 reaoh me till after my return to that city ] 
 on the 27th October, though dated the 17th. i 
 The letter is marked " confidential," but I ! 
 have obtained his permission to read it to the j 
 House, and I will do so now, because it con- 1 
 iains his view of the question as he discussed ' 
 
 it when it was thought desirable by both of 
 us that the Government should oomc to the 
 assistance of the Bank. The letter is as 
 follows : — 
 
 ♦* (Confidential.) Bank ok Montreal, 
 " Montreal, 17th Oct., 1867. 
 
 " My Dkah Sir, — Referring to the conver- 
 sation between us yesterday, upon the unsa- 
 tisfactory position of the Commercial Bank, 
 it may be well that 1 should put in writing 
 tho opinion expressed to you verbally respect- 
 ing the probable eflfect of a refusal upon the 
 part of the Government to afford that Bank 
 the temporary assistance it has applied for to 
 enable it to meet the increaaing demand.^ 
 upon its decreasing resources, arising from 
 the want of confidence felt in its stability by 
 the depositors and noteholders. 
 
 " After considering the position of the 
 Bank, as set forth in the statements to the 12th 
 October, in your posse3;;ion, and with the in- 
 I'ormation 1 have tfoui other sources of the 
 drain upon the Bank by both its depositors and 
 noteholders, I am satisfied that the Bank must 
 suspend payment within a few days, unless it 
 obtains assistance cither from the Govern- 
 ment or some other quarter. I believe that 
 the difficulty of the Bank has been rendered 
 more imminent by an unwise expansion of 
 its discounts within the last few weeks, upon 
 the unsatisfactory pica of rendering assistance 
 to others, when its own life was in danfjer. 
 
 " I think it extremely improbable that the 
 Bank can obtain assistance from any other 
 quarter than the Government, as T should 
 most strongly advise my Directors not to lii- 
 ercasc the amount this Bank has already 
 advanced to the (Commercial Bank with the 
 knowledge of the Government, for the reason 
 that 1 believe all assistance will be in vain, 
 if th«c is nut a peremptory cuntraction of 
 their loans. 
 
 " With regard to the effect, of a !<uspenyion 
 upon the other chartered Banks, you are aware 
 that tho position of some ot the Banks is not 
 in my opinion by any means safe, and I think 
 that they would be compelled to apply for 
 assistance. I do not think, however, that 
 any other Bank is so weak as to be unabh; to 
 furnish satisfactory Bills Keceivable for any 
 reasonable advance they might require, and 
 which this Bank might bo in a jiosition to 
 afford, with the consent of the Government, 
 as regards tho temporary use of Provincial 
 notes. 
 
 " At the same time 1 cannot conceal from 
 myself that the suspension of the Commercial 
 Bank might create such wide-spread distrMst 
 
[lat Sets. 
 
 Ut Par.] 
 
 Failure of the Commercial Bank. 
 
 by both of 
 
 3onje to the 
 
 '«tter is m 
 
 »TREAL, 
 
 3t., 1867. 
 
 the coQver- 
 1 the UDsa- 
 rcial Ban k, 
 in writing 
 illy respect^ 
 ^1 upon tho 
 that Bank 
 >licd for to 
 : dcmandf. 
 sing from 
 •ability by 
 
 1 of the 
 otho 12th 
 ;h the in- 
 * of the 
 sitors and 
 ank njust 
 unless it 
 nrovern - 
 ieve that 
 eudercd 
 Dsion of 
 'S, upon 
 
 istancc 
 n/i;er. 
 hat the 
 f othor 
 Hhould 
 
 to lil- 
 Ircady 
 th tho 
 reason 
 
 vain, 
 
 on of 
 
 n.siiin 
 I warp 
 « not 
 hink 
 V tor 
 
 that 
 
 •: to 
 
 any 
 
 and 
 n til 
 
 nf, 
 <'ial 
 
 oui 
 ?ial 
 
 UPt, 
 
 that my opiaion would prove incorrect, and 
 that other Bank.'! would also be compelled to 
 -juspend. 
 
 '* There \^ no quustiou that it i.i a matter of 
 very great importance that the (/'ommcrcial 
 Bank should be Navcd from the necc8>iity of 
 suspen.sion at the present moment,[and it will be 
 a great relief to me to hear that the Government 
 a-aumc the reaponsibibity of affording assist- 
 ance. I trust, however, that if thin i.s done, 
 tho Government will insi-st upon tho adoption 
 of immediate measures for bringing tho busi- 
 ncsB of the Bank within such a compas.i as will 
 enable it to meet its obligations ; and if it were 
 possible, I should still further wish tho Gov- 
 ernment and this Bank to combine in ex- 
 erting such a pressure upon tho weak Bank:i 
 throughout tho Dominion as would compel 
 them to abandon their present vicious system 
 of czpanpion without proper reserves, and 
 which will sooner or later bring disaster upon 
 themselves and their confiding creditors. 
 " Yours truly, 
 (Sij^ned,) " K. II. King, 
 
 " General Manager. 
 " Hon. A. T. Galt, 
 Ottawa." 
 
 Now, Sir, I have .stated that on my return 
 with Mr. Cartwright from Ottawa, on the 
 morning of Friday, the 18th October, wo met 
 3Ir. King, and after consultation with that 
 gentleman, it was thought advisable that the 
 representatives of the western Banks .should 
 be invited to attend a meeting in Montreal. 
 Telegrams were accordinj^ly .sent to the head 
 officers of those Banks, requesting that they 
 would as soon as possible send representatives 
 to Montreal, for the purpose of attending the 
 meeting. That meeting took place on Mon- 
 day, the 21st October. 1 do not propose to 
 enter into any detailed statement of the 
 events of that day, because statements of all 
 the proceedings have been so fully put forth 
 by the gentlemen on both side;) who attended, 
 that it is unnecessary for me to do so. I 
 think, however, that no gentleman who was 
 present will refuse me the credit of saying 
 that all my efforts were directed to promote 
 harmony, and to bring about a measure of 
 real relief. I will say further, that during the 
 greater portion of the day, from about twelve 
 o'clock, the understanding was come to, 
 which, in my opinion, and also in the opi- 
 nion of all the gentlemen who were at the 
 meeting, we believed would have produced 
 the necessary assistance to the Commercial 
 Bask. It was necessary, however, that the 
 plan should be communicated for approval to 
 the head officiers of the several Bauks^ and 
 
 we had therefore to await their reply. Con- 
 sequently the time ibetween twelve or one 
 o'clock and five in the evening, was .spent iu 
 communicating between the agents at Mon- 
 treal aud their superiors, and in awaiting the 
 final issue. At half-past five o'clock the de- 
 cision came, which was to the effect that the 
 plan suggested could not be carried out. (Jp 
 to that moment I had been sanguine that the 
 crisis might be averted. JJpon learning that 
 assistance could not be obtained in the way in 
 which I hoped it could, the Directors of the 
 Commercial Bank called a meeting, at which 
 Mr. Cartwright invited me to be present. 
 He then stated, that as all hope of assistance 
 seemed to have failed, he could only make 
 one suggestion, and that was that he should 
 be authorized to place tho affairs of the 
 Bank in the hands of the Bank of Mon- 
 treal, il" that institution would undertake 
 to protect the interests of the creditois of 
 the Commercial. That proposition was as- 
 sented to, and I promised such moral sup- 
 port as I could afford to overcome tlie diffi- 
 eulticH of the position. Mr. King, however, 
 upon hearing a statement from Mr. Cart- 
 wright, .said that he feared it was impossible 
 for the Bank of Montreal to incur the re- 
 sponsibility of assuming the control of the 
 affairs of the Commercial Bank in the ;itale 
 in which they then were, especially when it 
 was certain that more or less discredit would 
 I attach to that institution from the known 
 I events of the day. For my own part, I felt that 
 1 I could not urge Mr. King, beyond a certain 
 point, to come to any different conclusion from 
 that at which he had arrived, and for this rea- 
 son, that the Government themselves had been 
 obliged to borrow largely from the Bank 
 of Montreal. We owed the Bank about 
 two and a half millions of dollars, and I wa.s 
 mj'self, as Finance Minister, perfectly aware, 
 and so was Mr. King, that with the provision 
 to be made for the January interest, the Gov- 
 ernment would require to continue that loan ; 
 and therefore I felt that if the assumption of 
 the liabilities of the Bank by tho Bank of 
 Montreal was likely to cripple the resources 
 of that institution, it might interfere with 
 the arrangements of the Government itself. 
 The opinion of Mr. King was confirmed in 
 the course of a few minutes by Mr. Ryan, 
 one of his Directors, who stated that if Mr. 
 King made the recommendation, the Directors 
 would not feel them.sclves justified in assum- 
 ing the management of the affairs of the 
 Commercial Bank. I then told Mr. King 
 that now that the matter had come to the 
 point that assistance could not be obtained 
 
8 
 
 Failure of the Commercial Bank. 
 
 {lit Sets. 
 
 from the other banking institutions of the 
 country, I must immediately telegraph to 
 the Government of the unfortunate failure 
 of our eflPorts. I went to the telegraph offce 
 within three quarters of an liour of the un- 
 successful termination of our negotiations, 
 and telegraphed to tSir John A. Macdonald to 
 the effect, that the attempts to obtain aid 
 from the other Banks had failed ; that the 
 suspension of the (yomraercial Bank had 
 been determined upon by the Directors ; and 
 that I wished him to call a meeting of the 
 Executive Council immediately, and to inlbrm 
 me of the course to be taken. At the name 
 time I took steps to have the telegraph offices 
 kept open all over the country during that 
 night. I saw Mr. King subsequently, and in- 
 formed him that the telegram had gone. I 
 then asked him whether in the event of 
 of the Government authorizing me to inter- 
 fere on behalf of the Commercial Bank, I 
 could rely upon the resources of the Bank of 
 Montreal, if necessary. Ho at once replied 
 that the whole resources of tlic Bank would 
 be at the di.'iposal of the Government if re- 
 quired. I then said to him, I now think it 
 necessary that we should make arrangements 
 at the earliest hour in the morning ; and 
 therefore I must request you to remain 
 with me to-night until a iinal answer is 
 received from thi; Uovernmont. ! made 
 this request with a view, if our efforts 
 should prove successful, of transmitting the 
 necessary instructians to the various agencies 
 throughout the country, before the doors 
 were opened the next morning. He assent- 
 ed to my proposal, and we remained together 
 until half-past eleven o'clock in the evening, 
 when 1 received a message I'rom Sir John A. 
 Macdonald, to the effect, that he had been un- 
 able to obtain the attendance of two leadinp, 
 members of the Government, and he desired 
 if passible, that the crisis should be delayed 
 until the next lay. I immediately replied 
 that it was impossible to do that, as all the 
 Banks throughout the country had been tele- 
 graphed that the doors of the Commercial 
 would not be opened the next morning, and 
 therefore I repeated my request that he would 
 call his colleagues together to obtain their as- 
 sent, and inform me before 8, a.m. I then 
 told Mr. King that it would not be necessary 
 ior him to remain with me any lo^ !;er, but 
 that I would instruct the telegiaph otfices to 
 £eud the answer to me, and to be prepared 
 to receive our instructions at any honr 
 during the night. I further stated that 
 if I received the reply which I hoped to re- 
 ceive, he would have to allow me to see him 
 
 at any time in the course of the night or in 
 the morning before eight o'clock, to which 
 he assented. At half-past two o'clock in the 
 morning, [ received a teleg»'am, which I now 
 propose to read to the House : — 
 
 "Ottawa, 'J 1st Oct., 18G7. 
 '<To Hon. A. T. Galt,— 
 
 "Private. — Council met and considered yuur 
 telegrams. Information as to condition of 
 Bank, character of security offered, and rea- 
 sons why other Banks declined to help, 
 insufficient to warrant any action by Govern- 
 ment. 
 
 (Signed,) ''J.vo. A. Macdonald," 
 
 When I received that message it produced 
 a very painful feeling of disappointment in 
 my mind. My first enquiry was whether the 
 telegraph offices were still open, to which the 
 messenger replied that the agent at Montreal, 
 on receipt of this message, had not consider- 
 ed it necessary to keep open the offices in the 
 West, and therefore there was no means at 
 my disposal to communicate with my col- 
 leagues. It became necessary for me then 
 to face the failure of the Bank, and the pos- 
 sible consequences. I felt the delicacy of 
 the position in which t was placed by the 
 telegrams which were .sent through the coun- 
 try, and it appeared to me, as I shall presently 
 have occasion to point out, that I had not 
 been treated with the courtesy or fairness 
 which, as Finance Minister, I had a right to 
 expect. I thought that the Government had 
 placed the failure of the Bank in such a posi- 
 tion that the matter would necessarily come 
 before Parliament and tlie country in such a 
 way as to make that event appear to be attri- 
 butable to me, for not having giveu the 
 Government full information, and that the 
 whole responsibility of not having obtained 
 assistance, and of not averting any disaster 
 that might occur, would fall upon my shoul- 
 ders. The disappointment which I experi- 
 enced was also increased by the feeling that 
 I was placed in the painful position of being 
 betrayed by my friends. Moreover, as Fi- 
 nance Minister, I had believed that I posses- 
 sed the confidence of my coUeages, and that 
 they would not have deserted me under such 
 circumstances. I had not recommended in 
 my telegrams to Sir John that any as- 
 sistance should be given to the Bank, 
 because he was aware that I had been in 
 Ottawa lor the express purpose of recom- 
 mending that assistance should be given. 
 Therefore, I felt that I had been deserted*by 
 my friends, and that, as Finance Minister, 
 looked to by the country for the maintenance 
 
1st Par.] 
 
 Failure of the Commercial Bank. 
 
 9 
 
 whole case to 
 express desire 
 
 of its credit and the averting of disaster, I 
 was in the position of being supposed to have 
 had power while I was impotent to save. 
 Under these circumstances I felt that there 
 was only one course for me to pursue, name- 
 ly, to place my resignation in his Excellen- 
 cy's hands. I thought it necessary to ad- 
 dress this answer to Sir John : — 
 
 '< Montreal, 22nd Oct., 1867. 
 
 " Mv Dear Sir John, — At two a.m. I 
 received the following telegram from you. 
 
 ' Private. — Council met and considered 
 your telegrams — information as to condition 
 of Bank^ character of security oflFered, and 
 reasons why other banks declined to help, 
 insufficient to warrant any action by Govern- 
 ment.' 
 
 " The grounds stated for the refusal of the 
 Government to act appear to me to imply 
 both censure and want of confidence. As 
 regards the alleged want of information, I 
 must remind you that I went to Ottawa with 
 Mr. Cartwright, the President of the Com- 
 mercial Bank, on Thursday last, for the 
 purpose of submitting the 
 Council, and only at your 
 abstained from doing so. The whole state of 
 facts were thus known to you, and also to other 
 members of the Government. If you sup- 
 posed any change had taken place, you could 
 have sought and obtained this information by 
 telegraph last night, before adopting the 
 resolution you have communicated to me. 
 
 " Had the Government seen fit to rest their 
 decision upon the want of proper authority, 
 or the inconvenience of establishing a prece- 
 dent, I might have consented to share the 
 responsibility of this action; but I must 
 decline to do so upon the grounds statod in 
 your telegram. 
 
 " I have therefore only to place my resigna- 
 tion in your hands, and to request that you 
 will submit the same to Elis Excellency the 
 Governor General. 
 
 "Believe me, &o., &., 
 (Signed,) '^ A. T. Galt. 
 
 >' Hon. Sir J. A. Macdonald, K.C.B." 
 
 That letter was written on the 22nd Octo- 
 ber, the day in fact of the suspension of the 
 Commercial Bank. I did not receive an 
 answer until Wednesday morning, when Sir 
 John telegraphed me that I had entirely 
 misunderstood the action of the Council ; 
 explanations were due between us, and that 
 he wished me to como up to Ottawa. I still 
 felt, under the feeling of very severe dis- 
 appointment, not to use a stronger term, 
 which I then entertained, that I could not 
 2 
 
 accede to his request. I therefore replied 
 that I must decline his proposition, and stated 
 that any explanations must be in writing. — 
 Sir John then did me the favor, and I must 
 thank him lor the consideration which he 
 displayed towards me, of telegraphing to say 
 that- he had engaged a special train and 
 would como down to Montreal. On Thurs- 
 day, the 24th, we met, not until two o'clock, 
 the train on which he was having been de- 
 layed. He stated to me that I quite mis- 
 understood the intention of the Govern- 
 ment ; that they had no wish to throw 
 any undue responsibility upon me; and added 
 that I was entirely mistaken in supposing 
 that either himself or Mr. Cartier, or any 
 of the other members of the Government, 
 had any lack of confidence in me, or any 
 intention of withholding their support from 
 me. We had considerable discussion to- 
 gether, but I still remained under the im- 
 pression that I should be obliged to adhere 
 to my first resolution. However, I had an 
 appointment with Mr. King at the Bank ot 
 ftlontreal, at five o'clock — because I was still 
 anxiously watching the efiFect of the failure 
 on the Banks of Western Canada — and my 
 honorable friend the Premier had also an ap- 
 pointment with the present Finance Minister 
 at the same hour. I therefore left him and 
 went to see Mr. King, who met me with the 
 statement that the crisis had commenced in 
 the Province of Ontario, and he read to me 
 a message in cyphbr, which said that a run 
 had commenced on the Royal Canadian Bank, 
 and threatened to extend to the other Banks 
 in Western Canada, and might assume a gen- 
 eral character on the next morning. He urged 
 me most strongly to withdraw my resigna- 
 tion, and not to leave the charge of the 
 finances of the country at the moment when 
 a crisis had come upon us. There was the 
 more force in the demand which he made 
 upon me at that time, because in view of the 
 possible crisis which might arise, he had with 
 my knowledge and full concurrence, but cer- 
 tainly at the risk of some inconvenience to 
 the Bank, provided himself with a large 
 amount of specie from New York, both sent 
 to Toronto and to Montreal. Consequently 
 he had made all possible provision for the 
 crisis if it did occur, and for extending aid 
 if necessary. Therefore Mr. King was war- 
 ranted under the circumstances in asking me 
 not to insist upon retiring from the Govern- 
 ment on this particuler question, and at a 
 time when if my retirement had been known it 
 might have caused much public embarrass- 
 ment. Finally I made up my mind, under 
 
10 
 
 Failure of the Commercial Bank. 
 
 \\&t Seas. 
 
 the exceptional circumstances, to retain uiy 
 office. 1 returned to Sir John and stated to 
 him that I would accept frankly the expla- 
 nations which ho had given, but that I must 
 have them in writing, because the telegram 
 which he had sent me was on record. The 
 question then arose as to the best means to 
 meet the difficulty which had come upon us. 
 Sir John left for Ottawa, assuring me that 
 Government would give me any support that 
 I might desire while I remained in Montreal. 
 The next day, Friday, the 25th October, 
 passed without any material change in the 
 position of affairs. We got information that 
 the Banks had, as was supposed, suffered to 
 some extent, but it was believed that the 
 efforts which were being made by the 
 various banks to sustain themselves would 
 be successful, and no event of any 
 importance occurred. Saturday, the 2Gth 
 came, and with regard to that day, I 
 shall be obliged to trouble the House, by 
 residing several telegrams which passed be- 
 tween myself and members of the Govern- 
 ment. It was really the important day of the 
 crisis. I first received a telegram from Sir 
 John A. Macdonald, in which he suggested 
 that it might bo desirable that I should pro- 
 ceed by special train to Ottawa. To that I 
 replied, that I did not think it necessary for 
 me to go up, and that I could avail myself of 
 the following day, Sunday, for communica- 
 tion, if necessary. He answered, that I was 
 quite right in remaining in Montreal. I re- 
 ceived at 2. p.m., 
 from Mr. Rowland 
 
 the following telegram 
 
 "Ottawa, 6th Oct., 1867. 
 "To Hon. A. T. Gait, 
 
 . "Confidential. — Public officers telegraph 
 that Bank of Montreal refuses bills of all 
 Upper Canada Banks, except on collection. 
 Anxious to hear from you. Carticr has left 
 lor Montreal. 
 
 (Signed,) " W. P. Rowland." 
 
 To that I replied at 3:25, as follows : — 
 
 "MoNTiiEAL, Oct. 26th, 1867. 
 
 "Hon. VV. P. Rowland, Ottawa. 
 
 ? ^"Private. — Message received. Have seen 
 King. 
 
 His 
 
 Kingston 
 
 mistook 
 instructions. Has been advised of his 
 mistake. Bank does not refuse Royal Cana- 
 dian notes so far, but instructed ^agents 
 to have understanding with parties de- 
 positing. Nothing with regard* to other 
 Banks. 'We cannot interfere with dis- 
 cretion of Bank without giving *^our own 
 
 guarantee. Do you lliink public interest 
 would justify ? Answer. 
 
 (Signed,) "A. T. Galt." 
 
 A few minutes afterwards I received fur- 
 ther information, which induced me to send 
 the following message to Mr. Rowland : — 
 
 " 3:45 P. M., 
 " Montreal, 26th Oct., 1867. 
 
 P. Rowland, Ottawa : 
 
 telegraphing have heard more 
 news i'rom West. Fear distrust 
 
 " Hon. W 
 
 " Since 
 alarmin^; 
 
 becoming general. Will be better able to 
 judge after business hours. Think Mon- 
 day will be a critical day. Bank of Montreal 
 has done nothing except what her own inter- 
 ests demanded. 
 
 (Signed,) « A. T. Galt." 
 
 I may state in reference to the first tele- 
 gram, that Mr. King informed me that 
 he had learned before twelve o'clock that his 
 Kingston manager was acting as stated, 
 refusing the bills of all Upper Canada Bank.s, 
 and that he at occe sent instructions to him. 
 I then sent to Mr. Rowland the telegram 
 which I have just read, and received the 
 following reply : — 
 
 " Montreal, Oct. 26, 1867. 
 " To Hon. A. T. Galt, 
 
 " Confidential. — Message received. Order 
 given. Does not determine policy. All 
 desire that you should come up to-night, 
 
 " W. P. Rowland." 
 
 And also the ibllowing : — 
 
 " Montreal, Oct. 26, 1867. 
 " To Hon. xV. T. Galt, 
 
 " Confidential — Have seen your message 
 to Rowland. We have authorized public 
 officers to receive notes of all chartered banks^ 
 except Commercial and Upper Canada. 
 Council thoroughly converted to our opinion 
 as to support of banks. 
 
 " John A. Macdonald." 
 
 I had no doubt that the stops taken by the 
 Government would go far to allay the distrust 
 existing in the public mind. I therefore 
 telegraphed to Sir John, as follows : — 
 
 " Montreal, Oct. 26, 1867- 
 " To Sir John A, Macdonald. 
 
 " My information does not lead me to 
 believe things so serious. Kin<T has telegra- 
 phed to receive all notes on Monday morning. 
 Believe I had better wait here. No justifi- 
 cation yet for measure proposed. 
 
 "A. T. Galt." 
 
 Sir John answered to the following 
 effect: — 
 
Id J'ar.] 
 
 Failure of the Commercial Bank. 
 
 11 
 
 « Ottawa, Oct. 26, 1867. 
 " To Hon. A. T. Galt. 
 
 " Come up by all means. Bring Tilley 
 with you. 
 
 (Signed), <'JonN A. MACDONALit." 
 
 I saw Mr. Tilley that evening, and also 
 Mr. Kenney, the lleceivcr General, both of 
 them happening to bo in Montreal. I ex- 
 plained the position of matters to them, and 
 they agreed with me as to the course that 
 should be taken. As to going to Ottawa, 
 Mr. Tilly did not choose to make the journey 
 at that time. He had only just arrived in 
 iu Montreal after a tedious and long voyage 
 from New Brunswick, which, aside from the 
 weariness incident to travelling, was made 
 under circumstances that, I trust, rendered 
 it ii happy one. (Ilcift-, hear, and laughter.) 
 lie therefore did not consent to accompany 
 me, nor did Mr. Kenney, but we all agreed 
 as to what course should be taken. Mr. 
 Howland also tcUgraphcd me to this effect : — 
 
 " Ottawa, Oct. 26, 1867. 
 "ToA. T. Galt. 
 
 " Confidential. — Mcs.sagc received. Hope 
 that you will come up to-night. Have tele- 
 graphed Government officers Government will 
 receive notes of all chartered banks except 
 Commercial of Kingston and Bank of Upper 
 Canada. Officers asked instructions, and have 
 given this reply by advice of Council. 
 
 (Signed), " W. P. Howl.'VNT)." 
 
 Sir John again telegraphed mo : — 
 
 " Ottawa, Oct. 26, 1867. 
 «' To Hon. A. T. Galt. 
 
 " Confidential. — Council agree fliat you hud 
 better run up to-night. Carticr left at one thirty 
 (1:30) to-day for Montreal. Brini him back. 
 Telegraph Detlor for special train Prescott. 
 (Signed), "Jno. A. .Macdonald." 
 
 Of course, after receiving these telegrams 
 from Sir John, I at once waived uiy own 
 opinion as to the necc.'rsity of going to 
 Ottawa, and went. I am bound to .say lierc. 
 Sir, that I was disappointed at the telegram 
 having been sent to the public officers 
 throughout the country under the signature 
 of any other member of the Government 
 than myself. The fact that it w:is signed 
 by Sir John instead of myself might, I 
 feared, lead to a conviction iu the public 
 mind that in regard to the panic and 
 the mode of dealing with the JJanks there, 
 was a distinct policy on the part of the Gov- 
 ernment which differed from my own. 
 I was afraid such a misconception would be 
 formed in the public mind, ond I would 
 therefore have preferred him to have put my 
 
 name to the telegram or put mo in posRession 
 of the announcement before he sent it to the , 
 officers of the Government. I now come to 
 the events of Sunday the 27th. I left Mon- 
 treal by the evening train and arrived at Ot- 
 tawa on Sunday morning at ten or eleven 
 o'clock. I will take this opportunity of re- 
 ferring to what some of our writers in this 
 country, who prefer so mnch the letter to the 
 spirit of the Bible, liave said in regard to 
 Mr. Cartier and my.4elf for having, on 
 that particular Sunday, devoted them- 
 selvet;, as members of the Government, 
 to the fask of trying to save the coun- 
 try from disaster. I have as much re- 
 spect for the Sabbath as any one, and have 
 always abstained from the practice of violating 
 it ; but, I would never hesitate to act in a 
 case of necessity, even although it was on the 
 Sabbath ; and if there ever was a pressing 
 necessity it was that on that Sunday the Go- 
 vernment should devote itself to the christian 
 duty of saving the country, (Hear, hear.) 
 We met in Council on Sunday, and the first 
 question that came up for discussion was what 
 policy the Government should adopt with 
 reference to the crisis that then actually pre- 
 vailed iu the Province. I stated to my col- 
 leagues what the point was that required to bo 
 settled — would or would not the Govern- 
 ment interfere w. i all the power at its 
 command to prevent the impending dis- 
 aster, and the proposition met the unanimous 
 approval of the members of the Government 
 who were present, that they would, if neces- 
 sary, come to the a»!slstance of the Banks, on 
 Monday morning. I informed the Council that 
 the most effective arrangements that could be 
 made to meet the apprehended danger, had been 
 already doue, namely, largely to increase the 
 stock of specie held at Montreal and Toronto, 
 and to forward Provincial notes to different 
 points of danger, where they might be ready 
 to be paid out, in case of a continued run ; so 
 that the only thin'^ that would be required 
 would bo to telegraph instructions on Monday 
 morning, in order to put the crisis at an end. 
 The question then was, whether the Govern- 
 ment was called upon to do this. No applica- 
 tion had been made by the Banks for aid ; 
 but fooling that the Banks were in great dan- 
 ger, and that, perhaps, they thought an aplica- 
 tion to the Government would be useless, we sent 
 this telegram to the Managers of the Banks. 
 Before reading it, I may mention that on tiiat, 
 particular Suiidiiy, the telegraph offices all 
 over the country were kept open. We had 
 it therefore iu our power to communicate at 
 onco with any point where danger was threat- 
 ened. This message was sent : — 
 
12 
 
 Failure of the Commercial Bank. 
 
 \l8t iSesa. 
 
 " Crown Law Department, 
 
 " Ottawa, 27th Oct., 1867. 
 ^ To Bank Managers at Toronto, Mannger of 
 Goro iiank and lion. Mr. Simpson. 
 "Will you ascertain, for information of 
 Government now in Council, what are the 
 views of the Western Banks in regard to pro- 
 gress of panic and ability to meet it. 
 
 (Signed), " A. T. Galt." 
 
 To this telegram wc received a reply in 
 each case. 1 will not trouble the House by 
 reading all these replies, for they are of the 
 same tenor throughout, but I may say that I 
 will hand theui to the reporters for the Press 
 in order that they may appear afterwards in 
 extenso. 1 will read one of them, the first 
 that comes to hand. It is from Mr. Smith, 
 the President of the Royal Bank, Toronto : 
 
 "Toronto, 27th Oct.. 1867. 
 " To lion. A. T. Galt. 
 
 " The Bank of Montreal having yesterday, 
 at several points, refused the bills of other 
 Banks, will have the effect of increasing (he 
 panic which was subsiding. Should another 
 Bank suspend all must follow, and universal 
 bankruptcy ensue Think all the Banks can 
 redeem unless the panic is intensified. Mean- 
 time all discounts are stopped and business 
 suffering. Wheat has dcclipcd twenty (20) 
 cents. 
 
 (Signed), " A. M. Smith, 
 
 " President." 
 
 I: 1 
 
 The following replies were also received 
 but were not read by Mr. Galt. 
 
 "Toronto, 27th Oct. 1807. 
 " To Hon. A. T. Galt, 
 
 " Run subsiding — gold arriving freely from 
 New York. Royal Canadian niiiy want help 
 if King continue his course. 
 
 (Signed), " Jas. G. Worts."' 
 
 " Bowmanville, 27th Oct., 1867. 
 "To Hon. A. T. Galt, 
 
 " Finance Minister. 
 " Little or no excitement here — good deal 
 Toronto and westward — think will spread. 
 By sacrificing material interests our Bank 
 can stand hard run ; can't speak for others. — 
 Think steps should be taken to redeem Com- 
 mercial notes at par ; Government giving no- 
 tice that notes of all chartered banks received 
 at par in payment public dues — this would 
 stop panic. Will be Toronto to-morrow. 
 
 (Signed), " John Simpson." 
 
 " Toronto, 27th Oct., 1867. 
 « To Hon. A. T. Galt : 
 
 " Telegraph received. Have just come to 
 
 town to see the different parties, and will 
 communicate result the earliest moment pos- 
 sible. Council had better not adjourn until 
 they hear i'rom me again. 
 
 (Signed), " W. McMaster." 
 
 " Toronto, 27th Oct., 1867. 
 " To Hon. A. T. Galt, 
 
 " Panic which appeared to bo subsiding a 
 little, is likely to be greatly intensified by the 
 Bank of Montreal having refu.sed Royal 
 (,'ana'liaii bill.s at some of its branches. In 
 the event of this being the case the conse- 
 quences must be very serious, and the Go- 
 vernment should do something in order to 
 avert the calamitous results that must follow 
 in Western Canada. I shall wait a reply in 
 order to see managers as requested. 
 
 (Signed), " Wm. McMaster." 
 
 "ToRON-o, 27th Oct., 1867." 
 "To the Hon. A. T. Galt: 
 
 " If your Government in Council can suffi- 
 cently control your Bank to continue publicly 
 usual courtesies to Wei-tern Banks, think the 
 panic will subside, and that they will be pre- 
 pared to meet the demands of public. Want 
 of confidence by it in any oao of them at 
 present time might prove disasterous to the 
 whole. 
 
 (Signed), " A. FisiiER, 
 
 " Manager Ontario Bank." 
 
 The Government then sent this message to 
 the?e gentlemen : — 
 
 " Ottawa, 27ih Oct., 1867. 
 
 " A. Fisher, Esq., 
 
 " Ontario Bank, Toronto. 
 " Government have already instructed their 
 officers aud Bank of Montreal to receive pub- 
 lie dues in notes of Banks. We cannot 
 instruct Bank of Montreal beyond this point, 
 without assuming res;:onsibility of all their 
 business, which form of aid could not be 
 adopted. Have requested King to go as far 
 as consistent with safety, without our actual 
 guarantee. He informs us refui^al arose from 
 mistake of instruction.^ at Kingston, and wo 
 understand all current notes will be taken by 
 Montreal Bank to-morrow. Keep us ad- 
 vised. 
 
 (Signed), " A. T. Galt." 
 
 There was no reply to this message, and 
 the Banks, as I have said, did not make ap- 
 plication for aid. Coincident with this wc 
 sent two messages to 
 read thus: 
 
 Mr. King — the first 
 
1st Par.] 
 
 Failure of the Commercial Bank. 
 
 18 
 
 "Ottawa, 27th Oct., 1867. 
 "E. H. Kins, Esq., 
 
 "Bank of Montreal, 
 
 "Montreal, 
 
 "Government arc informed by Ontario and 
 Toronto managers, that they believe panic 
 will subside, if Bank of Montreal continue 
 usual courtesies. Government trust you will be 
 able to do so, consistently with your own safe- 
 ty, but we do not guarantee your collections 
 beyond thosa paid in by public officers. We 
 have sent the following telegram to Toronto : 
 'Keep mo advised.' 
 
 (Signed,) "A. T. G." 
 
 The second reads as follows : 
 
 '• Montreal, 27th Feb , 1807. 
 " E. H. Kino, Esq., 
 
 "Private.— Government wish you to increase 
 our specie reserve at Toronto by transfer of 
 gild from Montreal; also, to send up 
 supply of notes payable in Montreal. Small 
 denominations likely to be most useful. This 
 is precautionary. I shall remain here. Have 
 written you. 
 
 (Signed,) "A. T. Galt." 
 
 This last telegram was sent with a view of 
 our being in a position, as I have said, to 
 meet any possible application that might be 
 made to us. In reply we received this mes- 
 sage from Mr. King : — 
 
 " MONTREAI., 27th Oct., 1807. 
 " To Hon. A. T. Galt, 
 
 " Message received. We have already given 
 instructions to receive all Hank notes except 
 Commercial and Bank of Upper Canada. 
 Our wishes are those of the Government, 
 and in this emergency we regret to receiving 
 no encouragement to look beyond our own 
 .safety. — The Bank holds specie at Montreal 
 and Toronto in excess uf Government reserve, 
 which is quite at your service. We tele- 
 graphed last night offering assistance to Bank 
 most in danger. 
 
 (Signed,) " E. H. King." 
 
 I again telegraphed on this same day to 
 Mr. King : 
 
 " Ottawa, 27th Oct., 1807. 
 "ToE. H. Kino: 
 
 " Message recei:ed. Let me know your ad- 
 vices from West to-morrow. It run continues 
 and extends it will probably be necessary for 
 you to accompauy me to Toronto. 
 
 (Signed,) " A. T. G." 
 
 The letter to which I referred in this mes 
 sago I shall read to the House. It was sub- 
 mitted to and approved by the Privy Council : 
 
 " Ottawa, 27th Oct., 1807. 
 " (Confidential.) 
 
 " Mv DEAR Kino, — Government will 
 come to aid of Western Banks if they ask it ; 
 but thus far in reply to us they allege their 
 ability to stand, if the Bank of Montreal 
 does not discredit them. 
 
 " We cannot sec our way to desire you to 
 take their notes, except for our own collec- 
 tions, though we should be happy if you can 
 do so. But we feel that to go beyond that la 
 in reality endorsing them without limit, and 
 without conditions. 
 
 " Mr. Simpson, of the Ontario, thinks 
 panic will spread, and suggests we should 
 take all notes, incliidiny Commercidl, at par 
 for public dues. 
 
 " I would request, on the part of the 
 Government, that yon will strengthen our 
 specie reserves at Toronto, by transfer of 
 gold from Montreal, and that you also for- 
 ward to your Branch there as many notes, 
 pai/abk in Montreal^ as you mny think likely 
 to be wanted in case of need. I presume 
 small denominations will be most useful. Of 
 course they can be reinforced day by day if 
 required. 
 
 " Yours faithfully, 
 (Signed,) " A. T. Galt." 
 
 I may state that the reason for desiring 
 these notes to be made payable in Montreal 
 was that in case of a continued demand for 
 specie the Government would have at least 
 twenty-four hours to prepare for its with- 
 drawal by holders of the notes. I may take 
 this opportunity of saying that the panic had 
 not shown any inclination of extending to 
 Provincial notes, and I am informed by the 
 Manager of the Bank of Montreal that only 
 two thousand dollars of them were presented 
 for redemption during the three days in which 
 the panic prevailed. On the Monday Mr. 
 King addressed the following letter to me, 
 which I have his permission to read to the 
 House : 
 
 " Bank of Montreal, 
 " Montreal, 28th Oct., 1867. 
 
 " (Private.) 
 
 " Mt dear Galt, — " Your note by Mn 
 Cartier reached me this morning. I think it 
 right to say that I fully understood the effect 
 of the advertisement which appeared in this 
 morning's papers, that the Government 'would 
 receive the notes of Chartered Banks, &c.' 
 
 "It placed this Bank whioh has no circula- 
 tion, and which is the agent of the Govern- 
 ment, in the unenviable position of electing to 
 take a very heavy risk by receiving the notes of 
 
14 
 
 Failure of the Commercial Bunk. 
 
 [lut Sent. 
 
 other Banks iodiscriminately, or of incurring 
 the great unpopularity of derending itself, as 
 it has a perfect right to do, by reiuciing any 
 bank note. If the ineusuro taken by the 
 Government was of itself suflicient to restore 
 confidence, I would not have thought bo 
 much of it, but I well know, and so do the 
 Banks themselves, that the Govcrun:ent ad- 
 vcrtiscmcut would not have been sufficient if 
 wo had discredited them to-day, and it is for 
 thatreaeoQ I feel that the Government threw 
 nil the responsibility upon the Bank — its 
 own agent — without consultation or asking 
 our co-operation, until the telegrams had 
 been sent over the country. I do not of 
 course mean to say that the Government 
 would not be prepared to take any responsi- 
 bility that the exigency of the public in- 
 terests might demand, but I think it will be 
 admitted on reflection, that the course that 
 was taken was not of itself sufficient, and 
 placed U3 in an invidious position, such as 
 wc hardly deserved. It is true that the 
 Government could not bo expected to endorse 
 all the Banks at such a moment. But if 
 they could not, could we ? At least the 
 Government might have stood by us for one 
 day. If the Bank had joined in the adver- 
 tisement, the panic was at an end. If the 
 Bank had discredited the other Banks, who 
 can tell which of them would have stood ? 
 It was a serious responsibility [This refers to 
 Mr. King having agreed to accept all notes] 
 and I took it in the best interests of the 
 country ; but I would not be frank if I did 
 not let you see that I feel that the Bank 
 hardly received that consideration which 
 it might have expected at this critical 
 period. I am of course aware that the 
 telegrams were dispatched by the Council 
 before you left the city, and there is no 
 doubt on my mind that tlie full bearing of 
 the measures that were taken, and the effect 
 of your telegrams last night, that we must 
 consult our own safety, were not fully apparent. 
 
 * =i: * * * * * 
 
 (Signed,) " K. 11. Kino." 
 On Monday morning, when the Council met, 
 we were very much gratified to find by intelli- 
 gence which reached us from all quarters of the 
 Province, that the panic had really subsided, 
 and that there was no apparent necessity — at 
 any rate, there was no demand — for the Gov- 
 ernment coming to the assistance of any of the 
 Banks. In the course of the day, we received 
 a telegram from Mr. Cameron, the hon. mem- 
 ber for Peel, stating that the Banks had had 
 a meeting, and desired to send a deputation 
 to Ottawa, to have an interview with the Gov- 
 
 ernment. To that telegram, I replied that we 
 would be glad to see any gentlemen who might 
 come on behalf of the Banksjbutthat wo would 
 ike to know the object sought to bo attained 
 by the visit. Mr. Cameron replied that that 
 would be fully explained when they arrived. 
 The Council mot again on the 29th. At that 
 meeting, I thought tin time had arrived when 
 I should ask my hon. friend at the head of 
 the Government to give mo in writing, the ex- 
 planations which ho gave J^mcjverbally on the 
 lay of the panic. This, my hon. friend, in 
 the kindest and handsomest manner, did, and 
 I will now read to the House his letter. I 
 may premise it by stating that I, as stated, en- 
 tertained a mo.st painful feeling on reading the 
 telegram from my hon. friend, and it, therelbrc, 
 gave mo a corresponding feeling of satisfaction 
 to receive the assurances contained in this 
 letter. It is to the following effect : — 
 
 " Ottawa, 30th October, 1867. 
 " My Dear Galt, — T was not conscious, 
 until I heard your statement in Council tliis 
 afternoon, that you deemed it essential that 
 I should, in writing, respond to your note of 
 the 22nd instant, but I mo.st eiietrfully 
 accede to your wishes, and have pleasure in 
 repeating the assurances which 1 have made 
 to you verbally, that in framing the telegram 
 to which your note refers, no member of the 
 Council (and least or last of all myself) had 
 the most remote idea of geoking to throw 
 upon you the rcspon.sibilily of the failure of 
 the Commercial Bank, or of thi cour.se wlii'^h 
 the Government pursued in not coming to the 
 assistance of that institution. The actual 
 wording of the telegram leaves open, certain- 
 ly, the inference which you have drawn, but 
 we '1 disclaim the supposed intention which 
 ha.s - iven you ofTence ; and you must bear in 
 mind that the message was not meant to 
 indicate the final action, or even a decision, 
 of the Government; it was rather a confiden- 
 tial communication from one section of the 
 Council to another, thrown out by way of 
 consultation, and seeking for a reply. A 
 decided negative to the proposal was over- 
 ruled, because we wished to keep the door 
 open for further negotiation, and for infor- 
 mation as to the reasons which actuated the 
 other Banks in rofusingtouid the Commercial ; 
 but we all recognized the earnest endeavors 
 which you had made for the maintenance of 
 the Bank, and no one had any idea of imput- 
 ing blame to you for not having put tho Gov- 
 ?rnment in full possession of every inforuju- 
 tion as to tho position of the IJank, which 
 you had it in your power to afi"ord. 
 
 " I hope that this explanation will satisfy 
 
Itt Par.] 
 
 Failure of the Commercial Bank. 
 
 1.0 
 
 you, that wliafever was unfortunate in the 
 wording of iho tolegram, nothing could have 
 been furtlier from our thoughts than to have 
 occasioned tho annoyance a;id nuBtrust whluh 
 it gave riso to on your part. 
 
 " Believe use, my dear Gait, 
 
 " Very siccerely yourw, 
 (Signed,) " John A. MACDONAiiU. 
 "The Hon. A. T. Gait, 
 
 " &c., &c., &e." 
 
 I may state, whit I have already said before, 
 that it was impossible to answer tho tele- 
 gram, the substance of it having been so 
 understood by the operator wlio trans- 
 mitted it, that the oflSces had been closed. I 
 now arrive. Sir, at tho conclusion of all I have 
 to say in reforonco to the failure of the Com 
 mercial Bank, the panic having ceased on the 
 day that letter was written. I may add a 
 word in regard to tho extraordinary jpprcs- 
 sion which seems to have prevailed in the 
 public mind, in respect to the causes of that 
 panic — an impression founded on the impu- 
 tation that tho Finance Minister of I he coun- 
 try and the manager of the largest Bank in 
 the country de.«ircd and deliberately attempted 
 to bring about tho ruin of one of the largest 
 and most influential banking institutions in 
 Canada, and to plunge the country into all 
 the misery of a great commercial disaster. 
 As far as the Finance Minister was concrned, 
 I think he would have shown himself a fitting 
 inmate for a lunatic asylum, if, a few days 
 before the meeting of a new Parliament, ho 
 had put himself in the position of trying to 
 bring about a violent disturbance of the 
 financial and commercial relations of the 
 country. To lay such an imputation upon 
 one occupying the responsible position of 
 Finance Minister, is, I think, extraordinary 
 and preposterous — the very acme of absurd- 
 ity. (Hear, hear.) Besides, Sir, to put it 
 even on the low ground of personal interest, 
 it is perhaps known to soma honorable mem- 
 bers that I am a shareholder in the Commer- 
 cial Bank, and for me to have entertained 
 a desire of tiio kind that has been imputed 
 to me was equivalent to a wish deliberately 
 to destroy my own property. So much for 
 myself. With regard to the charge against 
 the Bank of Montreal, I think that tho bank- 
 ing institution whic'- carries on the largest 
 commercial transactions in the country mu?t, 
 
 rxttcrls paribuK, bo tho largest loser in tho 
 event of a panic. Therefore I say that the 
 impression that thu Bank of Montreal and 
 myself, as Finance Minister, entertained 
 that design was the most extraordinary 
 delusion that ever took possession of the 
 public of this or any other country. (Hear, 
 hear.) I hope that the explanations 
 \«hich I have just made will at any rate 
 satisfy tho House and the country, that what- 
 ever misconception may have taken place in 
 regard both to Mr. King and myself, cer- 
 tainly, as far as I was concerned, every eftbrt 
 that could have been made was made willingly 
 by me to sustain the Commercial Bank, and, 
 I'ailing that, to prevent the disaster spreading 
 to the other Banks. (Hear, hear.) I shall 
 say no more upon that point, because it is 
 not my desire, in making these explanations, 
 to say anything that is likely to give offence 
 or raise unnecessary discussion upon a ques- 
 tion that is not properly before the House. 
 I have only now to add. Sir, that on the 
 receipt of the letter of the 80th October, 
 from Sir John A. Macdonald, I waited 
 upon my colleagues in Council and informed 
 them that I accepted, as I had ."wi I would 
 do, the explanations Sir John .ad given me, 
 and thanked them for their f'.isideration and 
 goodness in putting thei: m the shape he 
 did in his letter. Two ''u, * afterwards I re* 
 viewed carefully my own personal position, 
 and came to the conclusions, for tho reasons 
 which I have already conveyed to the House, 
 that it was noces.sary lor me to resign my 
 oflice as Minister of Finance. On the 1st of 
 November I did so, and the responsibility for 
 the subsequent course of events, which I am 
 happy to say, has not been of a character to 
 excite any apprehension or alarm, so far as 
 that responsibility falls upon those who have 
 tho duty of guiding the financial affairs of 
 the country, is a subject npon which I have 
 no observations now to offer. I thank the 
 House for the opportunity it has afforded me 
 of making these explanations. I think that, 
 at all events, they relieve me from the charge 
 of attempting to bring about a great financial 
 disaster, ani also show that I endeavored 
 faithfully to do my duty in tho very anxious 
 and trying pa.sition in which T was plaoo 1 . 
 (Applause.) 
 
 *'^'\y y\^\ *"\*^ ".