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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

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.

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

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.

« 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 : —

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.

"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

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\^\ *"\*^ ".