^w?
M^
i-i^ ^^*v
E CURRENCY AND
H EMBANKING
THE
t<«
THE
CURRENCY AND THE BANKING LAW
OF THE DOMINION OF CANADA
CONSIDERED WITH REFERENCE TO CURRENCY
REFORM IN THE UNITED STATES
WILLIAM C. CORNWELL
, ^i>.
iV''
■y
G. P. PUTNAM'S SONS
^^^^' ^•*"^»^ LONDON
.7 WEST TVVENTV.TH.HU STMW »* HEt KOKU ™«T, STKANU
f ht linithtrbochir Prrii
-tlMii
Copyright, i3o4
BV
WILLIAM C. CORNWELL
tfcc Tfmtchcrbcckcr pvccf, t{i\v Uotk
O. P. PifTNAM's Sons
If
NOTE.
"-THE substance of the matter included under the head of
1 the -Canadian Banking System-Its Growth and
Present Operation " in the following pages was embodied in
an address delivered at the American Bankers' Convention
New Orleans, on November 12, ,89,. The situation in the
United States, then portrayed, still continues, except that
the repeal of the purchase clause has since been accom-
plished. The forecast of danger, made at that time, was
realized during ,893. The attention of the whole country
IS now centred upon the struggle for currency reform.
The Banking Act of Canada is given entire in the
second part of the book. The clauses and sections of
especial interest, in view of reforms proposed, are printed
in heavy.faced type.
)U
CONTENTS.
PAGE
The Canadian Banking System-Its Growth and Operations
Conditions in the United States before Repeal of the
Silver-Purchase Clause
American Experience with Bank Notes
Growth of the Canadian System
Canadian Bank Act of To-Day
Branch Banking .
Security .
Elasticity . .
3
4
6
II
21
The Banking Act of the Dominion of Canada, 1891 . ' .0
Application of Act
^ ••••♦, » -
Incorporation and Organization of Banks
Internal Regulations . ♦ .
Capital Stock . .
Shares and Calls . -
Transfer and Transmission of Shares
Annual Statement and Inspection
Dividends . ^ ^
Reserves , -^
Note Issue .
Business and Powers of the Bank 1
Returns hy the Bank *
Insolvency . . .
* * * • • • • • . 74
If
31
33
36
41
43
45
VI
CONTENTS.
Offences and Penalties .
PvBLic Notices
Dominion Government Cheques
COxMMENCEMENT OF ACT AND RiiPEAL
Schedules . . ,
Memoranda . . .
PAGE
77
78
78
78
79
85
'*
THE CANADIAN BANKING SYSTEM-ITS GROWTH
AND PRESENT OPERATION.
THE CANADIAN BANKING SYSTEM— ITS GROWTH
AND PRESENT OPERATION.
INTRODUCTION, WRITTEN IN IS91-CONDITIONS IN THE UNITED STATES BEFORE
REPEAL OF THE SILVER-PURCHASE CLAUSE.
THIS country is practically at sea on the currency ques-
tion. We are pounding along like a great ship on the
ocean, with the engines at their utmost, politics at the
wheel, iornorant of our bearino^s, and liable at any ^„^ „.k,„.
«-> o • THE PANIC
moment to collision and disaster ; for, what with predicted.
an unpliable, inelastic circulating medium, much of it base
in value and ground out mechanically and without scientific
control, at the rate of four and a half millions per month,
no one can say what the outcome will be.
At such times wise men t^lance abroad and backward to
get, if possible, some light upon the dark waters from the
past and present experiences of other nations, looking for
I desire in this paper to call the attention of
such men to the experiences of our sister nation, Canada,
on the grounds that, while being nearest to us geographi-
cally and physically, her conditions are the most closely
allied to our own of any community that we know of.
4 THE CURRENCY AND THE
Canada has, for many years, existed under a banking
law which, with additions and improvements from time to
CANADA'S time, has given her a circulating medium fully
ADEQUATE 4.* 11 «.U * 4. f
BANKING meetmg all the requirements oi every season,
both as to elasticity and safety, and to-day, with
the improvement brought about by the amended law going
into effect last July, she has, I believe, for her needs, the
most perfect currency system of any nation in the world,
except, perhaps, that of Scotland, after whose system her's
is closely mv.delled. In fact, the Canadian partakes, in its
character, of the sterling qualities of the Scotch system, just
as the Canadians themselves possess many of the admirable
characteristics of that grand people from whom they are
largely descended or made up.
AMEriCAN EXPKRIENCn: WITH r.ANK NOTES.
Before entering upon the subject proper, it may be well
to refer to the period of bank-note issues in the United
States previous to the inauguration of our
A PREIUDICE. . , 1 1- f 1 •
national system, as the disasters oi that time
and the wild and (!xciting incidents attending the progress,
explosions, and final suppression of the State-bank issues
seem t(^ have i)lanted a prejudice in the; mintls of Americans
against any kind of individual bank issues without dis-
crimination, notwithstanding that in several of the States
the business was ccmducted with the utmost honor and com-
BANKIXG LA W OF CANADA. 5
plete success. I may say that the prejudice was planted
even farther back in the history of America by the burnt-
child experience with the old Continental notes which were
a dead loss to the enormous amount at that time of
$196,000,000.
This was along- in the latter part of the last century.
Just before the final collapse, a desperate effort was made
to hold up the currency, but notwithstanding- all that the
Government, aided by the leading men of that period, could
do, a dozen eggs sold for $5000 in Continental paper
money, and a silk hat of the period, which continental
would be worth about $7.00, cost $140,000
in Continental currencv The word was burned into the
language, and then, as now, utter worthlessness of a thing
was conveyed by the expression, " it is not worth a con-
tinental."
To many of you, the older members of this association,
the fiery destruction of the State Bank-note era. in the
South and West, the Wild-Cat period, as It is
. WILD-CAT.
called, is still vivid. Those were times when
the contents of a man's pocket-book would slowly burn to
ashes through the failure of a dozen banks of issue in an
hour, or, when the farther one went from home, the greater
became tlu! discount on the notes he carried with him, par-
ented, as they were, by i)anks of no reputation beyond the
town lin«' where they liapp(;ned to In.' situated.
Even in those uncertain days the humor of the American
6 THE CURRENCY AXD THE
gave rise to that venerable story of the man who had started
NO BILLS ^^ ^ journey, and after he had proceeded about
AT ALL. three miles, heard that a bank near by had
failed. He ran all the way home to see if he had any bills
on that bank, and when he got there found that he had n't
any bills on that bank, or on any other bank.
This was the time of the " Red Dog" bills, as they were
called. Banks w^ould locate temporarily In a place and Issue
bills. Then, when they had exhausted the re-
RED DOG.
sources of that community, would move over-
ni<iht to a distant town and there, Instead of havino- new bills
printed, w^ould use the old ones, simply stamping the name
of the new locality on the old bills in red ink. Hence the
name Red Dog.
No wonder that after experiences of this kind, a nation
should come to regard the very principle of State issue with
THE OTHER holy liorror, and should embrace the opposite ex-
treme of a national and over-s(jcured currencv as
an unalloyed blessing, refusing to consider anything else
even at this late period, when the private.' profit and impor-
tant public benefits of the system, as far as circulation is
concerned, have as completely disappeared as tlie life from
the leaves of winter.
{;kt)wrii OK THE Canadian svstkm.
1 propose now to sketch brietly the growth of the Cana-
dian system, to show how it ileveloped gradually out of
BAXKIJVG LA \V OF CANADA. 7
experience, guided by wisdom, avoiding the growth of
. THE CANA-
dangerous tungus growths always ready to spring dian system.
up in the hot earth of financial legislation, and has come to
be a sturdy and fruitful tree.
In the old Province of Canada, before the formation of the
Dominion, banking was done in a cautious and tentative way,
and the skeleton structure for the present system was erected.
For a long time previous to 1866, banks under royal
charter issued their own notes, to the amount of their paid-
up capital, but these were fully secured by a deposit of pub-
lic or government securitfes. This, you will perceive, is
what is called specially secured circulation, and specially
SECURED
is the principle of our National Bank-note issue, circulation.
It is well to observe that this experiment was tried by Canada
long ago and formed a step toward the better plan of general
security.
In 1 866 a national currency was inaugurated and an at-
tempt made to provide for a surrender by the banks of their
right to issue, fortunately, this did not succeed. national
CURRENCY
National currency was issued, $8,000,000 at first, demanded.
running uj) to $20,000,000 In 1880, secured by a 25 % re-
serve, but the banks not only held on to their rights, but
procured an extension of them.
They were allowed to issue notes to the amount of their
iinim[)aired paid-up capital, loilhoiit deposit of securities. The
tax on circulation, which had been one per cent.,
PROGRESS.
was removed. Other wise provisions were made,
8 THE CURRENCY AND THE
and, as they still exist, I shall speak of them later on. Stock-
holders were held doubly liable. '
In the year 1880 it became necessary to act upon the
question of the renewal, or not, of bank charters which ex-
pired in iSSi. It was a year which, in Canadian politics,
AN AMERICAN Hiore nearly resembled an American situation
than any which that country has perhaps ever
experienced. The fanatical element was partially unleashed,
and was baying at the moon in that wild and deep-toned
howl that we are so familiar with in this country. Tariff'
reform had won a victory, and the excitement of the contest
extended into an agitation for a national currency.
The agitation grew, and developed fmally into a furor
for " rag money," and a stampede against bank privileges.
If this is not an American situation, it will be hard to
fmd one. Nevertheless, the very exigencies of the contest
brought to the front the very best in the opposition, and the
bankers and heading financial minds of the Dominion wrested
from the fiery struggle a still more perfect bank act, which
renewed charters for ten years more.
The crowning achievement at this time was the formula-
tion of that clause in the act which, for the first time, made
^^j, bank notes a prior lien on the assets of the
\cHn^:vE^° bank — a first charge before all others. This was
MENT. ^1^^ ringing stroke, which drove home, once for
all, the question of security, and made it sure. Some minor
changes were made at this time.
BANKING LA W OF CANADA. 9
This was the Bank Act of 1880. Ten years later charters
were to expire and a new act would be necessary. You will
see how, step by step, the system was being im-
STEP BY STEP
proved. There was no wild rush from one new
scheme to another. Beginning on a sure foundation, with
deliberation, determination, and aided by the best and most
thoroughly trained ability, the structure was growing steadily
and solidly. And now the year 1890 once more reopened
the question. This time there was no such outburst of the
fanatical spirit manifested by the opposition ten years before.
Some dangerous measures, to be sure, were proposed by the
Government, but upon full explanation by the bankers of
what the outcome would be these were al)andoned. I quote
now from the able address of Mr. Georij^e Haijue, General
Manaofer of the Merchants Bank of Canada, at the annual
meeting of that institution last year, soon after the passage
of the act. He says, in speaking of the conference between
the Government and the bankers :
" The representations of the banks were received with
all possible consideration b\ the Government, courtesies
and their recommendations were <renerally by the
y ^ \ o J GOVERNMENT.
adopted.
" The Government, however, had views of their own
upon several matters which they cc>urteously communicated
for consideration. Some of these were con- dangerous
sidered so objectionable that we felt constrained proposals.
to oppose them, not only in your interest, but in the public
interest.
wm THE CURRENCY AND THE
'* The proposal tc compel the holding of a fixed reserve
of money in pro[ ^rtion to their liabilities was demurred to
FIXED RE- by a large majority. It was pointed out that to
SERVE insist upon the banks keepino- locked up in their
UNWISE. r / 11 ^- C \ C 11
sates at all tunes any nxed sum or money would
interfere with the rights Ci creditors, to meet whose demands
all the banker's cash is held. It was show^n that such a
measure had never been tried in practice except in the
United States, and that there, when banks attempted to
keep the law, violent fluctuations in the rate of interest
ensued. And, further, that circumstances occurred nearly
every year that compelled them to disregard the law
altogrether.
" The proposal was withdrawn. . . .
" Durintr the procrress of the bill throuofh the House a
POLITICAL remarkable absence of political feeling was mani-
FEELiNG fest. Members of both parties o^^ve themselves
BURIED • •
to the work of considering how to make the act
as nearly perfect a^ possible."
I refer fully to these matters to show how differently
financial legislation is conducted in Canada. It does seem
TRUE MKTH- as tliougli this idea of legislation was the proper
ODS OF LAW
MAKING. one — that is, to call in for advisement, when a
subject is under consideration, the very highest authorities
on that subject — in other words, the men whose experience,
day by day for years, and whose thorough training entitles
them to speak for this or that industry or profession. How
different, perhaps, in the United States would be the condi-
tion of our own currency, if during past years the leading
financiers and economists of the nation had had a prevailing
voice in the matter.
BAl.'KING LAW OF CANADA. ii
CANADIAN BANK ACT OF TO-DAY.
I come now to the Canadian Bank Act as it stands. It
is a comprehensive piece of legislation, containing over one
hundred clauses. Under its provisions, the the bank act
11. r /^ 1 • • . 1 • OF TO-DAY,
bankmg or Canada is gomg on to-day m an
even, effective manner, and the full requirements of business
in the way of currency are met. I shall mention only the lead-
ing features, some of which have already been referred to.
F"irst of all, banks of issue, the joint stock banks, and
these are the only ones of which we are treating (there are,
of course, in Canada, private banks and savin^^s
^ ^ CAPITAL.
banks), must obtain their charters from Parlia-
ment, and must have a subscribed capital of $500,000, with
at least $250,000 paid up.
The shareholders in these banks are doubly liable. That
is, they can be called upon, in case of failure and double
y r ' t ^ • 1 T^- 1 .. 1 ^ LIABILITY.
dehcit, tor an amount in addition, equal to what
they have already invested in the shares fully paid up.
No dividend is allowed which will impair the capital of
the bank, and no dividend higher than 8 per rj^stricted
cent, per annum, until a surplus or rest has been dividends.
built up of at least 30 per cent.
Monthly statements giving full particulars are to be fur-
nished to the Government, anel these are pubhshed in the
daily papers, and, I need not say, scrutinized
J ^ ^ ^ STATEMENTS.
with much intelligence and interest by share-
holders, depositors, and Canadian business men generally.
ULJ^-4 J-J
ms THE CURRENCY AND THE
An annual statement is furnished, with full details of
profit and loss, to the yearly meeting of shareholders, and
at these meetings the general manager usually delivers an
address, and there is a common interchange of views.
In the interest of the Government, and in order to keep
the Dominion notes in use, 40 per cent, of the reserve held by
DOMINION the banks is required to be so held in Dominion
notes ; and any bank making a payment up to
$100 must, if so requested, pay in Dominion notes. (No
torn or defaced noles of any kind, either Govenmicnt or bank,
are allowed to be paid Old. ^
There are wise restrictions as to loans on real estate,
etc., and regulations as to boards of directors. A bank has
prior lien on warehouse merchandise, and on stocks and
bonds, etc., and is given other privileges. Employees are
PENSION not forgotten, authority being given to establish
guarantee and pension funds out of the bank's
holdings, for faithful servants.
Examinations are not conducted by the Government,
but under the branch system each bank has its Inspector
General, who is a man of marked ability and skill, a thor-
ough banker by education, advanced from the lowest round,
a man who ranks next to the General Manager, and fully
EXAMiNA- competent to take the latter's place. With ex-
aminations conducted by such men, the Canadian
bank shareholders and depositors may well feel assured. I
fear our National and State bank examinations would suffer
by comparison.
BANKiNG LA IF OF CANADA. 13
And now we come to the important provisions regarding
note issues.
The amount of notes to be issued must never exceed
the amount of unimpaired paid-up capital. note issues.
\ They are a first Hen upon the assets of the bank, taking
precedence even of Government claims.
The double liability of stockholders is a last resort to
the bank itself in case all the other assets are not sufficient
to pay the note holders.
But a new and additional security for notes was intro-
duced in 1890, known as " The Bank Circulation Redemp-
tion Fund." This fund is made up of a contri-
^ ■ c r 1 111 1 SECURITY.
bution of five per cent, by each bank on the
amount of its own notes in circulation for the twelve months
previous to July first of each year (adjusted annually).
The fund is deposited with the Government (which
allows upon it to the banks three per cent, per annum in-
terest), and is for the special purpose of redeeming the
notes of any suspended bank.
In case of suspension, notes of the suspended bank
begin at once to draw interest at six per cent, until redeemed
bv the receiver of the failed bank. If not re- suspended
' .... , NOTES DRAW
deemed m two months in this way, the notes, interest.
with interest, are paid out of the redemption fund, which is
reimbursed by the failed bank as soon as possible. In case
of depletion of the fund it is to be made up again by con-
tributions yearly of one per cent, of its past year's circula-
tion by each bank. This interest bearing quality after
■i
$4 THE CURRENCY AND THE
suspension, imparts an investment value to the notes of
broken banks, as, being absolutely secure, they v/ouid be
eagerly cashed by banks desiring to earn the six per cent.
Such notes might bear a premium, but they could not possi-
bly fall to a discount.
There is no tax upon circulation.
Each bank is required to appoint agencies for the re-
demption of its notes in the principal cities of Canada,
REDEMPTION coverlug all territory from one end of the Do-
agencies. . . . - T-1 • 1 -11
mmion to the other. 1 his does away with the
old condition which forced notes of far-off banks to a dis-
count, making the currency National — a brilliant quality of
our own national bank notes, imparted, however, in a dif-
ferent manner.
I have thus briefly enumerated the main features of this
admirable system of banking and note Issues. In order to
fully appreciate its workings It must be understood that the
branch system Is a very necessary part of its operations, and
that the notes of all the banks are sent in and redeemed
daily, like checks.
The branch system of banking has received little atten-
tion in the United States. Its effective operation in Canada
BRANCH is worthy of attention. And the conditions are
so similar to our own that the study becomes an
important one.
The great advantages of the system are now universally
recognized among the people.
BANKING LA W OF CANADA. 15
** There was a time In Canada, about tv^enty years ago,"
says Mr. B. E. Walker, General Manager of the Canadian
Bank of Commerce, '* when some people thought that in
every town a bank, no matter how small, provided it had no
branches and had its owners resident in the ,^^ r^^r^,^,^^
ITS GROWTH.
neighborhood, was a greater help to the town
than the branch of a large and powerful bank. In those
days, perhaps, the great banks were too autocratic, and had
not been taught by competition to respect fully the wants of
each community. If this feeling ever existed to any ex-
tent, it has passed away. I do not know any country in the
world so well supplied with banking facilities as Canada.
The branch system not only enables every town of one thou-
sand or twelve hundred people to have a joint stock bank,
but to have a bank with a power behind it generally twenty
to fiity times greater than a small bank would have."
It is true that here is an element of dancrer — the dano^er
of more credit to a small community than it can stand, and
consequent ruin. Rare wisdom and firmness,
^ ^ ^ DANGERS.
and especially thorough training in the profes-
sion, are required to counteract this danger.
But so convinced of the superior value of the branch
system are the Canadians, that there are only seven banks
which have no branches. The other 38 control about 400
bank offices.
These great banks cf Canada each, with from ten to
fifty branches, gather up the money lying idle in one locality
and transmit it automatically to another locality
. ,' . , ADVANTAGES.
which has enterprise enough to use it. It must
be admitted that this is what the banks in our own country
1 6 THE CURRENCY AND THE
do not do. There is no systematic distribution of money here.
The consequence is that rates of interest may be four to six
percent, in the extreme East, and twelve to twenty per cent,
in the West. This is not so in Canada. From one end of
their broad domain to the other, from Quebec, Montreal,
Toronto, Halifax to far Manitoba, the extreme variation in
rates is not over two per cent.
On this part of the subject Mr. Walker says :
"In Canada we see the deposits of the saving classes
applied directly to the country's new enterprises in a man-
ner nearly perfect. The Bank of Montreal borrows money
from depositors at Halifax and many points in the Maritime
Provinces, where the savings largely exceed the new enter-
prises, and it lends money in Vancouver or in the North-
west, where the new enterprises far exceed the people's
^,c^r,.,.-,. «., savings. In what other country is such a splen-
DISTRIBUTION, ^ ^ *■
' did development of banking to be seen as that
involved in transferring the idle money of tlie Atlantic
towns and cities to the new centres of enterprise on the
Pacific. My own bank in the same manner gathers deposits
in the quiet, unenterprising parts of Ontario, and lends the
money in the enterprising localities, the whole result being
that thirty-eight business centres, in no case having an exact
equilibrium of deposits and loans, are able to balance the
excess or deficiency of capital, economizing every dollar,
the depositor obtaining a large rate of interest, antl the
borrower obtaininix money at a lower rate; than
LOW RATES. 1 . 7 4.1 1 • f r- *. IJ •. •
borrowers in any ot the colonies oi Cireat lintain,
and a lower rate than in the United States, except in the
very great cities in the East.
" In Canada capital marchcts automatically across the con-
tinent to find the borrower, and the extra interest obtained
'**
BANKING LAW OF CANADA. 17
scarcely pays the loss of time it would take to send it so far,
were the machinery not so perfect."
In this way the interests of one part of the community
are interwoven with those of another far away. The bank
fulfils its proper function of carefully conserving the credit
of the whole country and distributing it to the most worthy
in the most economical manner possible. The national
^ CHARACTER
interests of the bank are not local, but wide- imparted.
spread. Its character becomes essentially and truly National.
The system resembles a great centralizing reservoir, con-
densing the moisture from the vast areas where it exists in
redundant (quantities and dispersing it gently like summer
rain over the arid plains. This is the fulfilment of one of
the great fundamental ideas of modern banking. What was
begun to be done away back in the seventeenth century by
the goldsmiths of London is perfected in the branch system
of hanking in Canada to-day.
We come now in our investi<jation of the workinirs of
the Canadian bank-note system to the important relation
between the branch system and the note issues. branches
The Canadian banks have a right to issue bank note issue.
notes, as we have seen, to the extent of their unimpaired
paid-up capital ; but this right would be of little value if
these notes could not be gotten into general circulation.
And if each bank had but its one head office, little headway
could be made in this direction, as the notes are subject to
daily redemption, and, in ordrr to keep alloat as much as
l8 THE CURRENCY AND THE
possible of its own issue, each bank sends in daily, for re-
demption, ail the notes of other banks which come into it.
But, under the branch system, the head office supplies its
branches with all the till or teller's money they
TILL MONEY. ' ^
may need — money for the payment of local
checks, pay-rolls, etc., etc. — by sending out to it notes of its
own issue. The adyantage of all this is that the till money,
the cash reserye of the branches costs no interest, and is a
source of large profit to the bank of issue. And here is the
inducement for the formation of branches, and without
which the growth of the branch system would be much
stunted. You will see at once that all this is rendered pos-
sible by the fact that the bank-note issue is secured by the
general assets of the bank, and costs no interest. Whereas,
GENERAL VER- if Specially secured, as are our own national
SUS SPECIAL . , 1 , 1-11
SECURITY. bank notes, it would take actual capita) to l)uy
the securities, and at the present low rate of goyernments
would be unprofitable.
This point is so important that I desire to make it yery
clear. A correspondent in Canada writes :
"In the United States it |)robably does not occur to the
banker to make any distinction between the money in the
teller's drawers or tills and \\\k\ money kept in rcst.'rye in the
safes, or, as we call them, treasuric^s. In this country there
is the i/rcjatest possible difference. All of the
A SAVING OF 1 11 1 1 • ♦!, 1 ' •* 1 C..^*- « .*«
iNTtRKST. cash used by a l)ank in tlie I nited htates is
really money to the bank — that is, it costs the
loss of interest to carry it idle. So far as this idle cash is
1
BAXKIXG LA IV OF CANADA.
19
necessarv as a reserve the loss of interest should be borne,
but to the extent that it is necessary only as machinery for
paying cheques or other change-makincr purposes, it is, in
our opinion, a wasteful and unscientific system. If you look
at the hi^aires of cash held by the Canadian banks, the
amount appears wretchedly small in proportion to the lia-
bilities. But, as a matter of fact, the cash there shown is
only the gold and legal-tender reserves in the treasuries and
the trilling amount of gold and legal tenders kept in the
tills for the convenience of customers. The main business
of making payments in money is done by the note issues of
the bank. I notice that it takt.'s from about
,K a. >h f . ^ 1 USEFULNESS
$1,500,000 to $2,000,000 ot our notes to keep ofthenote
the tills of all the branch offices filled with cash, issues at the
BRANCHPS
This has the advantage of costing; no interest,
and, inasmuch as it does not represent a liability of the bank
until actually issued, it does not show in our published
statements. If it were a specially secured currency, we
would at the moment appear as having issued about the
$4,000,000 we are entitled to under law, and as holding
$1,500,000 to $2,000,000 of this same money in cash in
our tills."
SECURITY.
I desire now to dwell for a moment, and in conclusion,
upon the two most important featun.'S of any currency,
namely: tlu; features of Security and of Klas- twoimpor-
TANT FKAT»
ticity ; and to see how far and how perfectly ures.
they exist in the Canadian system. Wc^ have found tiiat for
security the Canadian bank note has, first, the entire amount
of the assets of the bank ; second, the double liability of tlu!
stockholder; and, third, the I'ank Circulation Rt;demption
20 THE CURRENCY AND THE
Fund. This redemption fund will average something be-
tween a million and a half and two million dollars. It is
sufficient to say that in no failure which Canada
SECURITY. "*
has ever had under the present system, would
one dollar of this fund have been touched.
In a letter to me on this subject, Mr. George Hague
whites :
" The provision making notes a preferential claim
against all assets came into force some years ago, and it has
]3roved itself capable of standing the strongest strain that
has been put upon it. The test of a measure like this is,
of course, to be found when a bank which has been ex-
ceptionally badly managed stops payment. Now, we have
had three instances of the kind during the last
AND TESTS. ^^'^ years. In each of these there had been
the most scandalous mismanagement conceiva-
ble, with not a little of the element of fraud. Yet, in every
instance, the notes had been redeemed in full. The only
loss being the holding of them for a shorter or longer time.
In two instances the not(is were redeemed within one or
two months. In the other instance, which was by far the
worst of the three, a longer delay took place.
"In amending the Bank Act recently, the banks volun-
tarily proposed, in order to meet any possible objection,
and to make assurance doubly sure, to provide* a safety fund
to be contributed to by all the banks and held l/y the Govern-
t,t.-r.t.,u,oT-,r,K, nient, to apply to the redemption of notes. The
RLDLMPTION r i i i • r • i i
FUND NOT greater part oi the banknig fraternity considered
NECESSARY, tliis entirely unnecessary. That is my own view.
But we were willing to go as far as possible, to meet any
possible! objection to the continuance of our circulation on
its present basis."
•j?
BANKING LA \V OF CANADA.
21
And going back into the other security — the Assets ;
on the 30th of September of this year, when the latest
returns of the Canadian Chartered Banks was published,
the latter had assets with the double liability added of
$334,384,438 to take care of $34,083,051 circulation, which
means an average of $9.80 for every dollar of ^ startling
circulation, or taking the case of the lowest fact.
individual percentage, of assets to circulation, $5.00 back of
every one dollar in notes.
Let this be written in laro^e letters : EVERY DOLLAR
IN CANADLAN BANK NOTES HAS OVER NINE
DOLLARS (on the average) IN SECURITY BACK
OF IT TO MAKE IT GOOD.
And yet along the border, two or three years ago, an
over-zealous revenue origan ization succeeded in twistin*/ the
ten per cent, penalty of the National Bank Act against
these same Canadian notes, ^ivin^ a meaning to the law
which it has been conclusively proved it never was intended
to have by the broad and intelligent framers of that act,
practically banishing the Canadian bills from the useful
position which they had occupied as furnishing a convenient
and absolutely saf(^ medium of exchange at the border
between two friendly nations.
Kl. A STIC I TV.
I think we have thoroughly settled the question of
SECURITY. But let a currency hv. ever so secure, if it
does not meet the requirements of trade, if it has no elasticity,
22 THE CURRENCY AND THE
it is a comparatively dead factor. That, unfortunately, is the
NATIONAL condition to-day of our own national bank cur-
A WAR rency. Its issue was a war measure, adopted
MEASURE. r ^v c \ ' r^ ^1
tor the purpose ot placing Government loans,
which were badly needed, and paid for at high interest. It
did certainly once for all wipe out the wide-spread evil of
the wild-cat issue ; but it was a war measure, born out
of the smoke of battle, and birth-marked by the abnormal
pressure of the times. It fought well, it did its duty
grandly, but what wonder that when the smoke cleared
away and the piping times of peace came again and we
looked at it with calm, deliberate eye, it turned out to be a
dwarfed and twisted creature, unfit for any work but that of
war, and shrinkinoj- away into uselessness in the
SHRINKAGE, ^ c-* j
sunlierht of the eternal fitness of things. The
national bank currency was absolutely secure. It was profit-
able to the banks with Government bonds at a high rate of
interest. But it had no elasticity. Its tendency, because
of the great profit in it, and because the country was off the
specie payment basis, and there was no pressure to redeem,
was towards inflation, and a limit had to be put upon it.
Then came the decrease in Government interest rates, and
currency issue became unprofitable. Shrinkage followed.
From the highest point of $360,000,000, towards which it
ranged, it has shrunken down now in the last ten years to
$120,000,000, and l(;ft a great gap which has, in turn,
opened the way to a great danger.
BANKING LA W OF CANADA. 23
How has the great gap left by the shrinkage of the
National Currency in the last ten years from $360,000,000
to $120,000,000 been filled ? How has this great shrinkage
been met when the currency requirement*^ of trade have
yearly been growing greater ? Not by bringing
HOW MET.
to bear upon the question the greatest wisdom
and skill of trained financiers, not with a deliberate con-
sideration of how to promote the best interests of commerce
on a scientific basis. It has been met by Politics and not
by Science. It has been met with an eye to thepoliti
votes and the spoils and much indifference as to^^^^^^'^J"^
*■ SILVER
what miorht be the (jreatest ixood to the orreatest miner.
number. It has been met by the Silver Miner, who has
hoisted his pickaxe upon his shoulder and marched to
Wan^Mugton with a great and uproarious following of rag-
money shouters and currency doctors and misguided western
farmers, and many honest people besides, who, knowing
that the country needed currency, and with half-formed
ideas of bi-metallism, have with the others and
altogether between them plunged the country ^'
in the last few years into a wretched slough of silver — a
morass of three hundred and fifty millions of tokens worth
seventy-five cents on the dollar ; and they are still clamor-
ing for free coinage, and after that they will want free
money.
And so nobody claims that the National Bank currency
possesses or ever did possess the feature of elasticity. It
A palpable
fference.
24 THE CURRENCY AND THE
was an expedient, brilliant, but not intended to be scientific,
hastening towards inflation at one time, excited by a relish
for profit, and only controlled by an arbitrary act of Con-
gress, and then, with the profit struck out of it. it shrank away
steadily without any reference to trade requirements at all.
We have left a splendid organization under efficient con-
trol, ready for a NEW SYSTEM.
On the other hand, let us turn to our calm friends, the
Canadians, and see how the test of ela' ticity is met by their
note-issues. The scientific basis of elasticity is
ELASTICITY.
this : There nmst be some inducement or force for
issue zvhich ivill operate zvhen trade requires the bank notes,
and ceasing to operate ijhen the trade requirement ceases^ will
extinguish the notes. In the Canadian system the inducing
force is the profit on notes issued, and the extinguishing
power is the desire of each bank to float its own issues.
Here let me once more refer to Mr. Walker's arcrument for
a concise statement of the conditions in his country. He says :
** In Canada, bank notes are secured by a first lien upon
the entire assets in the bank, including the double liability,
the security being general and not special, not by the deposit
of Government bonds, for instance. Therefore, it is clear
that it will always pay Canadian banks to issue currency
when trade demands it. Because bank notes in Canada are
issued against the general estate of the bank, they are sub-
ject to daily, actual redemption ; and no bank dares to issue
EBB AND notes without reference to its power to redeem,
FLOW. anv more than a solvent nuTchant dares to orive
promissory notes without reference to his ability to pay.
BANKING LA W OF CANADA. 25
The presentation for actual redemption of every note not
required for purposes of trade, is assured by the fact that
every bank seeks, by the activity of its own business, to
keep out its own notes and, therefore, sends back daily for
redemption the notes of all other banks. This great feature
in our system is generally overlooked, but it is daily
because of this daily actual redemption that we redemption.
have never had any serious inflation of our currency, if
indeed there ever has been any inflation at all. Trade, of
course, becomes inflated, and the currency will follow trade,
but that is a very different thing from the existence in a
country of a great volume of paper money not required by
trade. . . . In Canada it is not enouo^h that the volume
of currency should rise and fall from year to year ; it must
also, for about eight months in each year, keep at a mini-
mum (excluding the legal tenders) of about $30,000,000,
and for about two months of the remaining four sudden
reach $36,000,000 or $37,000,000, a sudden ^^I-^^^^^JJ^^j^^^Jq
vance of 20 per cent., followed after a few weeks be met.
by as sudden a decline."
And quoting again from Mr. Hague's letter on the sub-
ject of whether in Canada the currency is always sufficient
to care for the Autumnal Drain, he writes :
** With regard to the matter of our Canadian circulation,
experience has proven that the feature of elasticity is com-
pletely provided for and that our currency during past years
has shown itself capable of expansion sufficient for the
largest demands that could be made upon it. The capital
of some of the banks is so large that they have never circu-
lated to anything near the amount that they were authorized
by law. The reserve of circulation power in the banks
unitedly is, therefore, considerably in excess of any demand
made upon it. For example :
26 THE CURRENCY AND THE
The total capital of the banks is $60,740,000
The highest circulation ever reached was .... 38,000,000
The highest expansion during any fall season was . . . 7,000,000
So you will see it has never been necessary to issue more
than about 60 per cent, of the amount of bank notes author-
THE AUTUMN ized by law. Panics for fear of stringency are
SQUEEZE. thus unknown. The Canadians never know
what it is to go through an American money-squeeze in the
autumn.
So much for the feature of ELASTICITY.
I have endeavored to show how scientific, how com-
pletely filling all the requirements of the community in
which it exists and flourishes, is the Canadian bank and note
system, and now, naturally, you ask me whether I advocate
the adoption of this system in the United States. I have
simply to say in reply that I am not here to advocate any
system. Every thinkinp- banker who has paid any
CONCLUSION. ^ ^ .
attention to the subject, knows that our present
system of currency is inadequate, and our condition in this
regard very unsatisfactory, uncomfortable, and I think I may
say dangerous. I believe it to be a time for reconstruction,
not by politicians, but by the most skilled economic wisdom
which we can call to our aid. In such a time, a deliberate
consideration of the better systems in operation should do
some good. I think I have shown that such a system, and
one of the best in the world, is in successful operation very
near us, under conditions very nearly resembling our own,
BANKING LA W OF CANADA.
27
its arteries stretching over a vast country and carrying the
life blood of commerce to hamlet and town and metropolis,
building up worthy enterprises, and furthering and sustain-
ing a healthy prosperity among the sturdy people of our
sister nation, Canada.
THE BANKING ACT OF
THE DOMINION OP CANADA, 1891.
29
THE BANKING ACT
OF
THE DOMINION OF CANADA.
1 891.
53 VICTORIA.
CHAP. 31.
An Act respecting Banks and Banking.
[Asscfitcd to 1 6th May, iSgo.']
TT ER Majesty, by and with the advice and consent of the Senate
and House of Commons of Canada, enacts as follows :
SHORT TITLE.
SHORT TITLE. L This Act may be cited as ** T/ic Bank Act.''
INTERPRETATION.
iNTERPRETA- ^- ^'"^ ^^^'^ ^^^'^' luiless the context otherwise re-
TioN. quires, —
{a.) The expression " the bank " means any bank to which this
''thkb\nk;' Actai)plies;
(/'.) The expression "Treasury l^oard " means the board pro-
"TREASURY vidcd for by section nine of chapter twcnty-eight of
BOARD." ti^^. Kt^vi^cd Statutes of Canada, or any Act in amend-
ment thereof or substitution tlierefor ;
3u
BANKING LAW OF CANADA.
31
'WAREHOUSE
RECEIPT."
(^.) The expression " goods, wares and merchandise " includes, in
addition to the things usually understood thereby, tim- "goods,
ber, deals, boards, stav^es, saw-logs and other lumber, merckan-
petroleum, crude oil, and all agricultural produce and dise."
other articles of commerce ;
(<:/.) The expression " warehouse receipt " means any receipt
given by any person for any goods, wares, or merchandise, in his
actual, visible and continued possession, as bailee
thereof, in good faith, and not as of his own property,
and includes receipts given by any person who is the
owner or keeper of a harbor, cove, pond, wharf, yard, warehouse,
shed, storehouse or other place for the storage of goods, wares or
merchandise, for goods, wares and merchandise delivered to him as
bailee and actually in the place, or in one or more of the places
owned or kept by him, whether such person is engaged in other
business or not ;
(<-.) The expression "bill of lading" includes all receipts for
goods, wares or merchandise, accompanied by an undertaking to
transport the same from the place where they were
received to some other place, whether by land or
water, or partly by land and partly b\' water, and by
any mode of carriage whatever ;
(/.) The word ** manufacturer " includes maltsters, distillers,
brewers, refiners and i)roducers of petroleum, tanners, curers, packers,
canners of meat, pork, fish, fruit or vegetables, and any manufac
person who produces by hand, art, pnu'ess or mechani- turer.
cal means any goods, wares or merchandise.
Al'l'LICATION OF ACT.
3. The provisions of this Act apply to the several banks enu-
merated in Schedule A to this Act, and to every bank incorporated
after the first day of January, in the year one thousand
ei«^ht hundred and ninety, whether this Act is spe- t«»what
cially mentioned m its Act of incorporation or not, but aim'Lies.
not to any other bank, except as hereinafter specially
provided.
"DILL OF lad-
ing."
i
32 THE CURRENCY AND THE
4. The charters or Acts of incorporation, and any Acts in amend-
ment thereof, of the several banks enumerated in Schedule A to this
Act are continued in force, so far as regards the incor-
CHARTERSCON.pQj.^l-;Qj-j .^,^j Corporate name, the amount of capital
TINUKl) TO iST
JULY, 1901. stock, the amount of each share of such stock and the
chief place of business of each bank, until the first day
of July, in the year one thousand nine hundred and one, subject
to the right of each bank to increase or reduce its capital stock in the
manner hereinafter provided ; and as to all other par-
DADi-iriM KM^ ticulars this All shall form and be the charter of each
PART ICL LARS.
of the said banks until the said first day of July, in the
year one thousand nine hundred and one, — subject in the case of
Lei Bancpie du Peuple to the provisions liereinafter made in respect
to that bank : Provided always, that the said charters
FORFEITURE ^^ ^\cts of incorporation are hereby continued in force
only in so far as they, or any of them, are not forfeited
or rendered void under the terms thereof, or of this Art, or (jf any
other Act passed or to be passed, by reason of the non-i)erformance
of the conditions thereof, or by insolvency, or otherwise.
5. All the provisions of this Act, except those contained in
sections three, six to seventeen (both inclusive), nine-
sioNssHAi L* ^'-'*-'" ^*^ twenty-seven (bi>th inclusive), thirty-three, forty-
AiM'LV TO LA five, aud eighty-nine to ninetv-six (both inclusive),
BANgUEDU 1 4 T u 11) 11) • 1 1 *i i. 1
PEUPLE. apply to La Jianque du leuple: 1 rovidetl, that wher-
ever the word " directors " is used in any of the sections
which apply to the said bank, it shall be read and construed as
PROVISO: AS ro meaning the principal partners or members of the cor-
niKKcroKs. poration of the saiil bank; and so much of the Act
incorporating the said bank, or of any Act amending or continuing
it, as is inconsistent with any section of this Act apply-
iNcoNsisTENT j,j{r xq tlic Said baiik, or which makes any provision in
ENACTMENTS '^ • , r , , • ,
REPEALED. ini\' matter provideu for by such sections other than
such as is hereby made, is hereby repealeil : otherwise
the said Acts are continued in force, subject to the proviso contained
in section four of this Act.
BANKING LA \V OF CANADA.
II
6. The provisions contained in sections two, seven, thirty-seven,
forty-seven to eiijhty-eight (both inclusive), and ninety- what provi-
seven to one hundred and four (both inclusive), apply :^pp'lv^i)',^i\^p
to the Bank of British North America aid the Bank of hanks uf
■:> V 1 r' 1 I • I.- 1 1 «-! • • BRITISH NOKIH
i:)ntisn Lolumbia respectively ; and the provisions con- America and
tained in the other sections of this Act do not apply to of b. c.
the said banks.
7. For the purposps of the several sections of this Act made
applicable to the liank of liritish North America and the Jiank of
British Columbia, the chief office of the Bank of 15ritish
X' .1 \ • 1 n 1 .1 cti f .1 1 1 nr CHIKFSKATOF
North America shall be the oftice of the bank at Mon- busink.ssof
treal. in the Province of Quebec, and the chief office of tiiksaid
BANKS
the I^ank of British Columbia shall be the office of the
bank at Victoria, in the Province o; British Columbia.
8. The provisions of this Act may be extended to the Mer-
chants' Ikmk of Prince Edward Island by the Treasury Bv)ard, upon
the ap}:)lication of the directors of the said bank, before
the expiration of the present charter of the said b.mk ; chants* bxnk
and upon publication in the Canada Gazette of the ofi>. f. i.may
resolution of the directors applyin*^ iiereunder, and of this act.
the minute of the Treasury Board thereon allowing
such application, the provisions of this Act shall, from the time
named in such minute, or if there is no time named therein, from
the date of the publication thereof in the Canada Gazette, appl)'
to the said bank ; and its charter and Act of incorp<iration, and
any Acts in amendment thereof, shall thereupon be extended
for the same time and to the extent as if the name of the said bank
had been included in Schedule A to this Act.
INC'ORroRATlOV AND oKCiANIZATION OF HANKS.
9. The capital stock of every bank hereafter incorporated, the
name of the bank, the place where its chief office is MArrKRs ro
to be situate, and the name of the provisional direc- '"" »K«>vinKi)
tors shall be declared in the Act <»f incorporation of cial act.
every such bank :
i
34 THE CURRENCY AXD THE
2. An Act of incorporation of a bank in the form set forth in
FORM OF ACT Schcclule 1^ to this Act shall be construed to confer
OF INXORPO- upon the bank thereby incorporate^' all the powers.
RATION. . ., , . .'. J . u- 4. V *. n
privileges and immunities, and to subject it to all
the liabilities and provisions set forth in this Act.
10. The capital stock of any bank hereafter incorporated
CAPITAL shall be not less than five hundred thousand dollars,
SHARES. and shall be divided into shares of one hundred
dollars each.
11. The number of provisional directors shall be not less than
PROVISIONAL ^1^'^ i^^r more than ten, and they shall hold office until
DIRECTORS, directors are elected by the subscribers to the stock, as
hereinafter provided.
12. For the purpose of organizing' the bank, the provisional
directors may cause stock books to be opened, after giving public
OPENING OF notice thereof, — upon which stock books shall be re-
STOCK. I'.ooKS, corded the subscriptions of such persons as desire to
become shareholders in tlie bank ; and such books shall be opened
at the place where the chief office of the bank is to be situate, and
elsewhere, in the discretion of the provisional directors, and may be
kept open for such time as they deem necessary.
13. So .soon as a sum not less than five hundred thousand doi'ars
of the capital stock of the bank has been /hfud fide subscribed,
ami a sum not less than two hundred and fifty th(ni-
FIRST MEET- ' . .
INC. OF SUB- sand dollars thereof has been i)aid to the Minister
SCRIBERS. ^^^ I'inance and Receiver (leiieral, the provisioi'.al
directors may, by public notice, published for at least four weeks,
call a meeting of the svdjscribers to the said stock', t«>
be held in the place nametl in the Act of inc(»"poratioii
as the chief place of business of the bank, at such time and at such
place therein as set forth in the said notice ; nt which meeting tlie
subscribers shall determine the day upon which the annual general
FLECTION OF meeting of the bank is to be held, and shall elect such
DIRKCTORS. number of director^, duly (jualified under this Act,
BANKING LAW OF CANADA.
35
not less than five nor more than ten, as they think necessary, who
shall hold office until tlic annual i^cncral meetiuf^ in the year next
succeedin<j their election ; and upon the election of directors as
aforesaid the functions of the provisional directors shall cease.
14. The bank shall not issue notes nor commence the business
of banking; until it has obtained from the Treasury l^oard a certifi-
cate permittini:^ it to do so, and no application for such conditions
certificate shall be made until directors have been i'kf.vious to
, 1 , , •, . 1 • , COMMKNCING
elected by the subscribers to the stocK in the manner business by
hereinbefore provided ; and every director, provisional '^'^^^ hanks.
director, or other person, issuing or authorizing the issue of the
notes of such bank or transacting or authorizing the transaction
«..f any business in connection with such bank, except such as is
hereinbefore provided, before the obtaining of the certificate from
the Treasur\* Tioard, shall be '^uiltv of an offence against this Act.
15. No certificate shall be given by the Treasury Board until it
has been shown to the satisfaction of the l^oard, by affidavit or
otherwise, that all the requirements of this Act and of „.,„.^, ^,..,-.,...
' \V H h. N e h R ] I r -
the s[K'cial Act of incorporation of the bank, as to the icatf. may
payment reipiired to be made to the Minister of ''*-^^'»<^^^ »'»--i>-
Finance and Receiver General, the election of directors, deposit for
security for note issue, or otherwise, have been complied with, and
that the sum so paid was then held by the JMinistor of Finance and
Receiver General ; and no certificate as aforesaid shall be given
except w ithin one year from the passing of the Act of incorpora-
tion of the bank applying for the said certificate.
16. In the event of the bank not obtaining a certificate from
the Treasury Hoard within one year from the time of the passing
of its Act of incorporation, all the rights, powers and ifckkiifi-
privileges conferred on such bank by its Act of incor- caik n not
pi)ration shall thereupon cease and determine and be granikd.
of no ff)rce and effect whatever.
17. Upon the issue of the certificate in mani'.er hereinbefore
provided, the Minister of I'inance and Receiver (it-neral shall forth-
36 THE CURRENCY AND THE
with pay to the bank the amount of money so de-
\moun¥de- posited with him as aforesaid, without interest, after
POSITED WITH deductini;- tlierefrom the amount required to be de-
FiNANCE posited under section fifty-four of this Act ; and in
case no certificate is issued by the Treasury Board
within tlie time Hmited for the issue thereof, the amount so de-
posited shall be returned to the person depositing the same ; but in
no case shall the Minister of Finance and Receiver General be
under any obligation to see to the proper application of the same
in anyway.
INTERNAL REGULATIONS.
l8. The shareholders of the bank (or, in the case of La l^anque
du Peuple, the principal partners or members of the corporation
BY-LAWS MAV tlicreof,) may regulate, by by-law, the following matters
BE MADE. incident to the management and administration of the
affairs of the bank, that is to say : The day upon which the annual
♦general meetincf of the shareholders for the election of directors
shall be held ; the record to be kept of proxies, and the time, not
exceeding thirty days, within which proxies must be produced
and recorded prior to a meeting in order to entitle the holder to
vote thereon ; the number of the directors, which shall not be less
than five and not more than ten, and the quorum thereof, which
shall not be less than three ; their (jualification, subject to the pro-
visions hereinafter made : the method t)f filling vacancies in the
board of directors whenever the same occur during each year, and
the time and proceedings for the election of directors, in case of a
failure of any election on the day appointed for it ; the remunera-
tion of the president, vice-president and other directors; and the
amount of discounts or loans which may be made to directors,
either jointly or severally, or to any one firm or person, or to any
shareholder, or to corporations :
2. The shareholders may authorize the directors to establish
r.uARANrEK guarantee and pension funds for the officers and
\M>i'ENsi()N employees of the bank and their families, and to
contribute thereto out of the funds of the bank ;
BANKING LAW OF CANADA,
37
3. Until it is otherwise prescribed by by-law under this section,
the by-laws of the bank on any matter which may be regulated by
by-laws under this section shall remain in force, except certain by-
as to any provision fixing the qualification of direc- laws cox-
tors at an amount less than that prescribed by this
Act ; and no person shall be elected or continue to be a director
unless he holds stock paid up to the amount required by this Act,
or such greater amount as is required by any by-law in that behalf :
4. The foregoing provisions of this section, touching directors,
shall not apply to La Banque du Peuple, which shall banque du
in these matters be t^overned bv the provisions of its peuple ex-
^ ' i- cepted.
charter.
19. The stock, property, affairs and concerns of the bank shall be
managed by a board of directors, who shall be elected board of
annually in manner hereinafter provided, and shall be directors.
eligible for re-election :
2. Each director shall hold capital stock of the bank as follows :
— When the paid-up capital stock is one million dollars or less, each
director shall hold stock on which not less than three qualifica-
thousand dollars has been paid up ; when the paid-up tion.
capital stock is over one million dollars and does not exceed three
million dollars, each director shall hold stock on which not less than
four thousand dollars has been paid up ; ami when the paid-up capi-
tal stock exceeds three millitui dollars, each director shall hold stock
on which not less than five thousand dollars has been paid up:
X. A majoritv of the directors shall be natural-born majority to
or naturalized subjects of Her Majesty. subjects.
4. The directors shall be elected by the shareholders on such
day in each year as is appointed by the charter or by any by-law
of the bank, and such election shall take i)lace at the
11/-.- r .1 , 1 1 • f .1 1 .1 ELECTION.
liead oftice of the bank at such time of the day as tlie
directors appoint ; and public notice thereof shall be given by the
directors, hx publishinir the same for at least four
.' , . ., , ,. 11. • NOTICE.
weeks previous to the time ot hojtling such election, in a
newspaper published at the place where the said head office is situate :
38 THE CURRENCY AND THE
5. The persons, to the number authorized to be elected, who
WHO SHALL have the jjreatest number of votes at any election, shall
BE DIREC- ,1-
TORS. be du'cctors :
6. If it happens at any election that two or more persons have
PROVISION IN ''^" equal number of votes and the election or non-clec-
CASE OF tion of one or more of such persons as a director or
E(JL ALITY OF ,. ^ , , , ,. , , ,.
VOTES. directors depends on such cqualit}', then the directors
who have a greater number, or the majority of them,
shall determine which of the said persons so having an equal num-
ELECTioN OF ^^^ '"^^ votcs sliall be the director or directors, so as to
PRESIDENT, complete the full number ; and the said directors, as
soon as may be, after the said election, shall proceed
to elect, by ballot, two of their number to be president and vice-
president respectively :
7. If a vacancy occurs in the board of directors, such vacancy
shall be filled in the manner provided by the by-lav/s; but the non-
filling of the vacancy shall not vitiate tlie acts of a
VACANCIES, " f ., •'• ]• , 1 •£ i.1
HOW FILLED quoruiTi of the rcmauung directors ; and it the vacancy
so created is in the office of the president or vice-presi-
dent, the directors shall, from among themselves, elect a president
or vice-president, who shall continue in office for the remainder of
the year.
20. If an election of directors is not made on the day ap-
pointed for that purpose, such election of directors
PROVLSION IN , , , I- 4. ..1
CASE OF FAIL- "^^Y take place on any other day, according to the
URE OF by-laws matle by the sharehold rs in that behalf : and
the directors then in office shall remain in office until a
new election is made.
21. A^ all meetings of the directors, the president, or in his ab-
sence the vice-presitlent, or in the absence of both of
DiKFCToRs' them, one of the directors ])resent, chosen to act f^ro
tempore, shall presitle ; and the president, vice-presi-
CASTiNd vorE dent, or president /A? Av//y^>rf' so presiding sh.dl vote as
OF pRi.siDiNG a director, and if there is an equal division on any ciues-
DIKECroR. .,,,,, . ^ *
tion shall also nave a castinLr vote.
BANKING LA W OF CANADA.
39
22. The directors may make by-laws and regulations (not re-
pugnant to the provisions of this Act or the laws of Canada) touch-
ing the management and disposition of the stock, general
property, affairs and concerns of the bank, and touch- power of
ing the duties and conduct of the officers, clerks and i>iRE^'i<>KS.
servants employed therein, and all such other matters as appertain
to the business of a bank: Provided always, that all ^^..^,^a.. .^
PROv ISO: AS
by-laws of the bank heretofore lawfully made and now to p.v-laws
in force, in regard to any matter respecting which the *^ ^orce.
directors may make by-laws under this section (including any by-
laws for establishing guarantee and pension funds for the employees
of the bank), shall remain in force until they are repealed or altered
by others made under this Act.
23. The directors may appoint as many officers, clerks and ser-
vants for carrying on the business of the bank, and appointment
with such salaries and allowances, as they consider of officers,
necessary, and they may also appoint a director or ^^^'
directors for any branch of the bank :
2. Before permitting any cashier, officer, clerk or servant of the
bank to enter upon the duties of his office, the directors shall re-
quire him to give bond, guarantee, or other security to security to
the satisfaction of the directors, for the due and faith- i^e given.
ful performance of his duties.
24. The directors of the bank, or any four of them, — or any
number not less than twenty-five of the shareholders of the bank,
who are together proprietors of at least one tenth of spectat gen-
the paid-up capital stock of the bank, by themselves eral mket-
or by their proxies, — may, at any time, call a special
general meeting of the shareholders, to be held at their usual place
of meeting, upon giving six weeks' previous public notice, specify-
ing in such notice the object of such meeting:
2. If the object of any such special general meeting is to con-
sider the proposed removal ef tlie president or vice-president, or of
a director of the bank, for mal.ulministration or other ,,...,^„,,, ,^.
KKMOv AI. Ol-
specified and apparently just cause, and if a majority president,
of the votes of the shareholders at such meetin<' is'^'iiKcroR, Etc.
40 THE CURRENCY AND THE
given for such removal, a director to replace him shall be elected or
appointed in the manner provided by the by-laws of the bank, or
if there are no by-laws providing therefor, then by the
tSx ^^^^" shareholders at such meeting ; and if it is the presi-
dent or vice-president who is removed, his oflfice shall
be filled by the directors in the manner provided in case of a
vacancy occurring in the office of president or vice-president.
25. Every shareholder shall, on all occasions on which the votes
of the shareholders are taken, have one vote for each
SHARES * share held by him for at least thirty days before the
time of meeting ; and in all cases when the votes of the
BALLOT. shareholders are taken, the voting shall be by ballot :
3. All questions proposed for the consideration of the share-
holders shall be determined by the majority of the
MAJORITY TO . /• 4.1 t, 1 l 1
DETERMINE votcs ot the shareholders present \\\ person or repre-
sented by proxy ; and the chairman elected to preside
at any such meeting of the shareholders shall vote as a
YQjg * shareholder only, unless there is a tie, — in which case,
except as to the election of a director, he shall have
a casting vote :
3. If two or more persons are joint holders of shares, any one
of such joint holders may be empowered, by letter of
AS TO JOINT attorney froin the other joint holder or holders, or a
HOLDERS OF .... ^ , ... ,
SHARES. majority of them, to represent the said shares, and
vote accordingly :
4. Shareholders may vote by proxy, but no person other than
a shareholder eligible to vote shall be permitted to vote or act
as such proxy, and no manager, cashier, clerk, or other
PROXIES. subordinate officer of the bank shall vote either in per-
son or by proxy, or hold a proxy for that purpose :
5. No appointment of a proxy to vote at any meeting of the
shareholders of the bank shall be valid for that pur-
PRoxiTs^ ^^ P'^^^ unless it has been made or renewed in writing
within the two years next preceding the time of such
meeting:
BANKING LA W OF CANADA.
41
6. No shareholder shall vote, either in person or by proxy, on
any question proposed for the consideration of the
T ^ ^ TT" 1? T* A T XT
shareholders of the bank at any meeting of such share- ^'^^fs calls
holders, or in any case in which the votes of the share- must be paid
holders of the bank are taken, unless he has paid all i>;q"
calls made by the directors which are then due and
payable.
CAPITAL STOCK.
26. The capital stock of the bank may be increased from time to
time, by such percentage or by such amount, as is de- inxrease of
termincd upon by by-law passed by the shareholders, at capital.
the annual general meeting, or at any special general meeting called for
the purpose : Provided always, that no such by-law shall approval of
come into operation, or be of any force or effect, unless treasury
and until a certificate approving thereof has been issued
by the Treasury Board.
2. No such certificate shall be issued by the Treasury Board un-
less application therefor is made within three months from the time
of the passing of such by-law, nor unless it appears to conditions
the satisfaction of the Treasury Board that a copy of tion'^for^ap"
such by-law, together with notice of intention to apply proval.
for such certificate, has been published for at least four weeks in the
Canada Gazette, and in one or more newspapers published in the
place where the chief ofifice or place of business of the bank is situ-
ate ; nothing herein contained, however, shall be construed to pre-
vent the Treasury Board from refusing to issue such certificate if it
thinks best so to do.
27. Any of the original unsubscribed capital stock, or of the in-
creased stock of the bank, shall, when the directors so determine, be
allotted to the then shareholders of the bank/rt? rata,
. - , , 1- , H''^^^' STOCK
and at such rate as is fixed by the directors, but no shall he al-
fraction of a share shall be so allotted ; provided that lotted.
in no case shall a rate be fixed bv the directors, which will make the
premium (if any) paid or payable on such stock so allotted exceed
the percentage which the reserve fund of the bank then bears to the
42 THE CURRENCY AND THE
paid-up capital stock thereof ; and any of sucli allotted stock which
is not taken up by the shareholder to whom such allotment has been
made, within six months from the time when notice of the allotment
was mailed to his address, or which he declines to accept, may be
offered for subscription to the public, in such manner and on such
terms as the directors prescribe.
28. The capital stock of the bank may be reduced by by-law
passed by the shareholders at the annual general meeting, or at a
CAPITAL special general meeting called for the purpose ; but no
STOCK MAY BE such by-law shall come into operation or be of force
Y^ T-» T-\ T • ^ -f-* T^
or effect until a certificate approving thereof has been
issued by the Treasury Board :
2. No such certificate shall be issued by the Treasury Board un-
less application therefor is macie within three months from the time
CERTIFICATE ^^ ^^^^ passiug of the by-law, nor unless it appears to
OF TREASURY the Satisfaction of the Board that the shareholders vot-
ing for such by-law represent a majority in value of all
the shares then issued by the bank, and that a copy of the by-law,
together with notice of intention to apply to the Treasury Board for
the issue of a certificate approving thereof, has been published for
at least four weeks in the Canada Gazette, and in one or more news-
papers published in the place where the chief office or place of busi-
ness of the bank is situate ; nothing herein contained, however, shall
be construed to prevent the Treasury Board from refusing to issue
such certificate if it thinks best so to do :
3. In addition to evidence of the passing of the by-law and the pub-
lication thereof in the manner above provided, statements showing
the amount of stock issued and tlie number of share-
STATEMENTS , , , , , ,
TO RE SUBMIT- lioldcrs. With tlic amouut of stock held by each, repre-
"^ ^^* sented at such meeting, and the number of shareholders,
with the amount of stock held by each, who voted for such by-law,
and also full statements of the assets and liabilities of the bank,
together with a statement of the reasons and causes why such reduc-
tion is sought, shall be laid before the Treasury Board at the time of
the application for the issue of a certificate approving such by-law.
BANKING LA }V OF CANADA.
43
4. The passing of such by-law, and any reduction of the capital
stock of the bank thereunder, shall not, in any way, reduction
diminish or interfere with the liability of the sharehold-^'^'^ '^'^ ai fect
ersof the bank to the creditors thereof at the time of SHiREHOLD-
the issue of the certificate approving such by-lav : ^^^•
5. If, in any case, legislation is sought to sanction any reduction
of the capital stock of any bank, a copy of the by-law or resolution
passed by the shareholders in regard thereto, together if legislation
with statements similar to those above provided to be ^^ asked to
^ sanction re-
laid before the Treasury Board, shall be filed with the duction.
Minister of Finance and Receiver General, at least one month prior
to the introduction into Parliament of the Bill relating to such re-
duction :
6. The capital shall not be reduced below the amount of two
hundred and fifty thousand dollars of paid-up stock, limit to ke.
^ ^ DUCTION.
SHARES AND CAIXS.
29. The shares o^ the capital stock of the bank shall be personal
estate, and shall be assignable and transferable at the chief place of
business of the bank, or at such of its branches, or at shares vnd
such place or places in the United Kingdom, or in anv transfer
* T" T-T IT T? T^ f~l T.'
of the British colonics or possessions, and according to
such form, and subject to such rules and regulations, as the directors
prescribe; and books of subscription may be opened, books of sub-
and the dividends accruincf on anv shares of such stock scription.
may be made payable at any of the places aforesaid ; and the di-
rectors may appoint such agents in the United Kingdom, or in any
of the British colonies or possessions, for the purposes of this sec-
tion, as they deem necessary.
30. The shares of the capital stock shall be paid in by such \\\-
stalmicnts and at such times and places as the direc- payment of
tors appoint : Provided always, that the directors may shares.
cancel any subscription fc^r any share unless a sum equal to ten per
cent, at least on the amount subscribed for is actually proviso: ten
paid at the time of, or within thirty days after, the *'^;^,^|;;^'^l^: |\j^.|j]
time of subscribing ; but such cancellation shall not scription.
44 THE CURRENCY AND THE
relieve the subscriber from his Hability to creditors in the event of
insolvency as hereinafter provided.
31. The directors may make such calls of money from the sev-
CALLSON eral shareholders for the time being, upon the shares
SHARES. subscribed for by them respectively, as they find
necessary :
2. Such calls shall be made at intervals of not less than thirty
TIME OF CALLS days, and upon notice to be given ixX. least thirty days
prior to the day on which such call shall be payable ;
LIMITATION, ^j^^^ j-jQ guch Call shall exceed ten per cent, of each share
subscribed.
32. The directors may, in ci'se of the non-payment of any call, in
RECOVERY OF the Corporate name of the bank, sue for, recover, col-
CALLs. \^.^4^ ^j-j(j g^.^ jj^ ^ji such calls, or may cause and declare
such shares to be forfeited to the bank.
33. If any sharc;holder refuses or neglects to pay any instalment
upon his shares of the capital stock at the time appointed therefor,
FORFEITURE such shareholder shall incur a penalty to the use of
OF SHARES ^1^^. bank of a sum of money equal to ten per cent, on
FOR NON-FAY-
MENT OF the amount of such shares; and if the directors de-
CALLs. clare any sliares to be forfeited to the bank they shall,
within six months thereafter, without any previous formality other
than thirty days* public notice of their intention so to do, sell at
SALE IN SUCH pubUc auctioH the said shares, or so many of the said
^^^^* shares as shall, after deducting the reasonable expenses
of the sale, yield a sum of money sufficient to pay the unpaid in-
stalments due on the remainder of the said shares and the amount
of penalties incurred upon the whole ; ^.\\Ci tin- president or vice-
ANi) TRANS- president, manager or cashier nf the b.uik shall e.vecute
*'^'**- the transfer to the purchaser of the shares so sold ; and
such transfer shall be as valid and effectual in law as if it had been
executed by the original holder of tlie shares thereby transferred; but
PROVISO. ^^^^ directors, or the shareholders at a gener.d meeting,
may, notwithstanding. inything in this section cont<iined,
BANKING LAW GF CANADA.
45
remit, either in wliolc or in part, and conditionally or uncondition-
ally, any forfeiture or penalty incurred by the non-payment of instal-
ments as aforesaid, or the bank may enforce the payment of any
call or calls by suit, instead of declaring the shares forfeited.
34» Ij"i ^ny action brought to recover anv money due on any
such call it shall not be necessary to set forth the special matter in
the declaration or statement of claim, but it shall be rkcovekv by
sufficient to allege that the defendant is holder of one suit.
share or more, as the case may be, in the capital stock ^vhat only
of the bank, and is indebted to the bank for a call or proved.
calls upon such share or shares, in the sum to which the call or calls
amount, as the case may be, stating the amount and number of such
calls, whereby an action has accrued to the bank to recover the same
from such defendant by virtue of this Act ; and it shall not be neces-
sary to prove the appointment of the directors.
TRANSFER AND TRANSMISSION ()F SIIARLS.
35. No assignment or transfer of the shares of the capital stock
of the bank shall be valitl unless it is made and registered and ac-
cepted by the person to whom the transfer is made, /ovmi i.»vs:
in a book or books kept for that purpose, nor unless of transfer
the person making the same has, if required by the ^^ shares.
bank, previously tlischarged all his debts or liabilities to the bank
which exceed in amount the remaining stock, if any, belonging to
such person, valued at the then current rate : and no fraction of
fractional part of a share, or less than a who-!.' share, shakk not
1111 • 11 r ^ ^ TRANSFER-
shall be assignable or transferable. ahle.
36. A list of all transfers of shares registered each day in the
books of the bank, showing the parties to such transfers and the
number of shares transferred in each case, shall be
LIST or TRANS-
made up at the end of each day and kept at the chief feus 10 mk
place of business of the bank, for the iiLspection of its kept.
shareholders.
37. All sales or transfers of .shares, and all contracts and agree-
ments in respect tlKieof, hereafter made or j)urporting to be made,
4C THE CURRENCY A^Vn THE
TRANSFERRER sluiU bc iiull aiid voicl (saviiig however, as to a pur-
OF SHARES chaser not havin<j^ knowlediie of the defect, his ricrh^-s
MUST r/E RE(;- . ' t.
iSTERED OWN- and remedies under the contract of sale), unless the per-
^^' son makini^ such sale or transfer, or in whose name or
on whose behalf the same is made, is at the time thereof the regis-
tered owner in the books of the bank of the share or shares so sold or
transferred, or intended or purported so to bc, or has the rcLjistered
owner's assent to the sale, and the disiin-^uishinif number or num-
bcrs of such share or shares, if any, shall be designated in the con-
tract or agreement of sale or transfer: and any person, whether
principal, broker or agent, who violates tlie provisions of this section
bv wilfully sellin'j^ or transferrinix, or attemptinij to sell or transfer,
any share or shares by a false number, v)r of which the princi])al is
not, at the time of such sale or attempted sale, the registered owner,
or actinij with the rei^istered owner's assent to the sale, shall be
guilt}' of an offence against this Act.
38. When any share of the capital stock has been sokl under a
writ of execution, the officer by whom tlie writ was executed shall.
SALE OF within thirty days after the sale, leave with the bank an
m'R*^EXFxu*. iittested copy of the writ, with the certificate of such
ii'»N*. ofTicer indorsed thereon, certifying to whom the sale
has been matle ; and thereupon (but not until after all debts and
liabilities of the holder of the share to the bank, and all liens exist-
ing in favor of the bank thereon, liave been discharged, as herein
provided I, the presiilent, vice-president, manager or cashier of the
bank shall execute the transfer of the share so sold to the purchaser ;
and such transfer shall l)e, to all intents and pur[)oses, as valid and ef-
fectuai in law as if it had been executed 1)V the holder of the saiil share.
39. If the interest in any share in the capital slock becomes
transmitted in consequence of the death, bankruptcy, or insolvency
TRANSMISSION of any shareholder, or in conseipience of the m.irriagr
<)THERWisT, ^'^ ^ female shareholder, or by any other lawi"ul means
TH \N nv than by a transfer according to the provisions of tln\
now AV riiEN- '^^^^ ^^^^^^ transmission shall be authenticated by a
TicATFD. declaration in writing, as hereinafter menti»)ned. or in
BANKING LA W GF CANADA.
47
,1
¥
such other manner as the directors of the bank require; and every
such declaration shall distinctly state the manner in which and the
person to whom such shares have been transmitted, and shall be
made and signed by such person ; and the person making and sign-
ing such declaration shall acknowledge the same before a judge of a
court of record, or before the mayor, provost or chief magistrate of
a city, town, borough or other place, or before a notary public, where
the same is made and signed ; and every declaration so signed and
acknowledged shall be left with the cashier, manager or other officer
or agent of the bank, who shall thereupon enter the name of the per-
son entitled under such transmission in the register of shareholders ;
and until such transmission has been so authenticated, no person
claiming by virtue of any such transmission shall be entitled to par-
ticipate in the profits of the bank, or to vote in respect of any such
share of the capital stock : Provided always, that every such declara-
tion and instrument as, by this and the next following proviso: as
section cf this Act, are reciuired to perfect the trans- i<> i»kclaka.
mission of a share in the bcUik which is made m any out ok
countrv other than Canada, or any other Hritish colonv, panada, i.tc.
or the United Kingdom, shall be further authenticated by the clerk
of a court of record and under the seal of such court, or b\' the
Ihitish consul or vice-consul, or other accretliteil representati\e of
the liritish Government in the countr\' where the declaration is
made, or shall be made directly before such Ikitish
, . , ,, ' ,.^ , PROVISO : FUR.
consul or vice-consul or other accredited represen- nn.R kvi-
tative ; and provideil also, that the directors, cashier i>f-N<'H mav
. ' . f »i I 1 . BK kl-:(,)UIRKI>.
or other otnccr or agent of the bank may iXMiuire
corroborative evidence of any fact alleged in any such declaration.
40. If the transmission of any share of the capital stock ha;
taken place by virtue uf the marriage of a female shareholder, the
declaration shall be accompanied by a copy of the rtg-iH wsmission
ister of such marriage, or other particulars of the cele- ^'^' ^'^'•<'iIA(;F.
bration thereof, and shall ilecl;«re the identity of the sVi \iu:-
wife with the holder of such share, anil shall be ma<le holdkr.
and signeil by such female shareholder and her husband ; antl they
48 THE CURRENCY AND THE
may include therein a declaration to the effect that the share trans-
mitted is the separate property and under the sole control of the
wife, and that she may receive and grant receipts for the dividends
and profits accruing in respect thereof, and dispose of and transfer
the share itself, without requiring the consent or authority of lie'
husband ; and such declaration shall be binding upon the bank and
persons making the same, until the said persons see fit to revoke it
by a written notice to that effect to the bank ; but the omission of
a statement in any such declaration that the wife making the same
is duly authorized by her husband to make the same shall not in-
validate the declaration.
41. If the transmission has taken place by virtue of any testa-
mentary instrument, or by intestacy, the probate of the will, or the
^r. .^To>.,c. letters of administration, or act of curatorship or tutor-
sioN Hv i)E- ship, or an official extract therefrom, shall, together
' ■ with such declaration, be produced and left witli the
cashier or other officer or agent of the bank, w ho shall, thereupon,
enter in the register of shareholders the name of the person entitled
under such transmission.
42. If the transmission of any share of the capital stock has
taken place by virtue of the decease t)f any shareholder, the pro-
FURTHKR i>K<». duction to the directors and the deposit with them of
VISION IN ;i,^ authentic notarial copy of the will of the deceased
SUCH CASE. , , , , -f , n • • .-If 1-
shareholder, if sucli will is in notarial form according
to the law of the Province of Quebec, or of any authenticated copy
of the probate of the will of the deceased shareholder, or of letters
of administration of his estate, or of letters of verification of heir-
ship, or of the act of cu.atorship or tutorshij), granted by any court
in Canada having power to grant the same, or by any court or au-
th<irity in England, Wales, Irelaiul, or any Ihitish coK)ny, or of an\*
testament testamentary of testament d.itive expede in Scotlaml, or,
if the deceased shareholder dietl out of ller Majesty's tiominions,
the proihiction to and deposit with the directors of any authenti-
cated copy of the probate of his will or letters of administration of
his property, or other document of like import, granted by anyct)urt
BANKING LAW OF CANADA.
49
or authority having the requisite power in such matters, shall be
sufficient justification and authority to the directors for paying any
dividend, or for transferring or authorizing the transfer of any share,
in pursuance of and in conformity to such probate, letters of admin-
istration, or other such document as aforesaid.
43. The bank shall not be bound to see to the execution of any
trust, whether express, implied or co'istructive, to which any share
<^f its stock is subject ; and the receipt of the person da vk v ^t
in whose name any such share stands in the books of bovnu iosfe
the bank, or, if it stands in the name of more persons ^^^ tkusis.
than one, the receipt of one of such persons shall be a sufficient dis-
charge to the bank for any dividend or any other sum of numey
payable in respect of such share, unless express notice to the con-
trary has been given to the bank ; and the bank shall not be bound to
see to the application of the money paid upon such receipt, whether
given by one of such persons or all of them.
44. No person holding stock in the bank as executor, admin-
istnitor, guardian or trustee, of or for any person named in the books
of the bank as being so represented by him, shall be f.xixutors
personally subject to any liability as a shareholder, but-^^'^' • *<l>>tei:s
Not pfrsox-
the estate and funds in his hands shall be liable in like ally liahlk.
manner and to the same extent as the test.itor, intestate, ward or
person interested in such trust fund would be, if living and compe-
tent to hold the stock in his own name; and if the trust is for a
living person, such person shall also himself be liable as a share-
holder : but if such testator, intestate, ward or person so represented
is not so n;imed in the books of the l).ink,the executor,
administrator, gu.irdian or trustee shall be person.:dly
liable in respect of such stock as if he held it in his (»wn name as
owner thereof.
ANNUM, STATKMKNT AND INSPECTION.
45. At every annual meeting of the shareholder' for the election
of tlircctors, the out-going directors shall submit a clearsiA rFMF.NTTo
anil full statement of th'; affairs of the bank, contain- '" ' '^"* '*•■•
FORK ANNUAL
nig on the one part.- - mff.ti.no.
4
fcXCKFTION.
^mm
50 T///^ CURRENCY AND THE
The amount of the capital stock paid in, the amount of notes
of the bank in circulation, the net profits made, the
LIABILITIES. , , , , , , ,11, • , •
balances due to other banks, and the cash deposited m
the bank, distinguishing deposits bearing interest from those not
bearing interest ; and on the other part, —
The amount of the current coin, the gold and silver bullion, and
the Dominion notes held by the bank, the balances due to the bank
from other banks, the value of the real and other prop-
ASSFTS
erty of the bank, and the amount of debts owing to
the bank, including and particularizing the amounts so owing upon
bills of exchange, discounted notes, mortgages and other securi-
ties, —
Exhibiting, on the one hand, the liabilities of, or the debts due
by the bank, and on the other hand the assets and resources there-
wHATSTATK- of ; and the said statement shall also exhibit the rate
MENT SHALL ^j-jj amouut of the last dividend declared by the di-
rectors, the amount of reserved profits at the date of
such statement, and the amount of debts due to the bank, over-due
and not paid, with an estimate of the loss which will probably ac-
crue thereon.
46. The books, correspondence and funds of the bank shall, at
INSPECTION OF 'ill times, be subject to the inspection of the directors ;
BOOKS, Etc. ^^yj- no pci'sou, wlio is iiot a director, sliall be allowed
to inspect the account of any person dealing with the bank.
DIVIDENDS.
47. The directors of the bank shall, subject to the provisions of
this Act, tlcclare quarterly or half yearly dividends of so much of
the profits of the bank as to the maj(jrity of them
DIVIDENDS. ^ ^ ^
seems advisable ; and they shall give at least thirty
days* public notice of the payment of such dividends previously to
tht: date fixed for such payment; and they may close the transfer
books during a certain time, not exceeding fifteen days, before the
f)avment of each divitlend.
BANKIXG LAW OF CANADA.
48. Xo dividend or bonus shall ever be tleclared so as to impair
the paid-up capital; and if any dividend or bonus is so declared or
made payable, the directors who knowingly and ^vil-
fully concur therein shall be jointly and severally liable to impair
for the amount thereof as a debt due by them to the capiial.
bank: and if any part of the paid-up capital is lost, the directors
shall, if all the subscribed stock is not paid up, forthwith make calls
upon the shareholders to an amount equivalent to such c^puAi lost
loss; and such loss and the calls, if any, shall be men- to be mauf.
tioned in the next return made by the bank to the
Minister of Finance and Receiver General : Provided that, in any
case in which the capital has been impaired as afore-
said, all net profits shall be applied to make good such
loss.
PROVISO.
49. No division of profits, either by way of dividends or
bonus, or both combined, or in any other way, exceeding the
rate of eight per cent, per annum, shall be made by dividend
the bank, unless, after making the same, it has a lf'ss thfkf is
rest or reserve fund equal to at least thirty per acekiain rk-
cent. of its paid-up capital ; and ail bad and doubt- serve.
ful debts shall be deducted before the amount of such rest is
calculated.
KKSKKVKS.
50. The bank shall hold not less than forty per cent, of
its cash reserves in Dominion notes; and every pAkroFkE-
bank holding at any time a less amount of its cash
reserves in Dominion notes than is prescribed by
this section shall incur a penalty of five hundred
dollars for each and every violation of the pro-
visions of this section :
2. The Minister of Finance and Receiver General shall
make such arrangements as are necessary for insuring the de-
livery of Dominion notes to any bank, in exchange supply of
for an equivalent amount of specie, at the several ^"'^'.'^"!^
offices at which Dominion notes are redeemable, in noies.
the cities of Toronto, Montreal, Halifax, St. John, N. B., Winni-
SKkVK TO HE
IN DOMINION
NOTES.
PENALTY F«)k
NON-COM-
PLIANCE.
52 THE CURRENCY AND THE
peg, Charlottetown and Victoria, respectively ; and such notes
shall be redeemable at the ofifice for redemption of Dominion
notes in the place where such specie is given in exchange.
NOTE ISSUE.
51. The bank may issue and re-issue notes payable to
bearer on demand and intended for circulation ; but no such
AMOUNT AND "ote shall be for a sum less than five dollars, or for
•DENOMiNA- any sum which is not a multiple of five dollars, and
NOTEs!^ ^^^^ the total amount of such notes, in circulation at any
time, shall not exceed the amount of the unimpaired
paid-up capital of the bank :
2. Notwithstanding anythin<j contained in the next preceding
sub-section, the total amount of such notes in circulation at any
^.r.n,r^ ^^,^„^ ,,^, time of La Banque du Peuple and the Bank of British
NOTE ISSUE Or * _ ^
BAXQUE DU North America respectively shall not exceed seventy-
PEUPLE AND r *. r 4.1 • ' 1 • 1 ' t. \ C ' \
BANK OF HKiT- ^^^ per ccut. of the unimpau'ed paid-up capital ot such
isH NORTH banks respectively, but each of such banks may issue
such notes in excess of the said seventy-five per cent,
upon depositing, with respect to such excess, with the Minister of
Finance and Receiver General, in cash or bonds of the Dominion of
Canada, an amount equal to the excess ; provided always that in no
case shall the total amount of the notes of either of the said banks
in circulation at any time exceed the unimpaired paid-up capital of
such bank ; and the cash or bonds so deposited shall be available
by the Minister of Finance and Receiver General for the redemption
of notes issued in excess as aforesaid, in the event of the suspension
of the said banks respectively :
3. If the total amount of the notes of the bank in circulation
at any time exceeds the amount authorized by this section,
PENALTIES ^^c bank shall incur penalties as follows : If the
FOR EXCESS amount of such excess is not over one thousand
TioN*.*^^^^^ dollars, a penalty equal to the amount of such ex-
cess ; if the amount of such excess is over one thou-
sand dollars and is not over twenty thousand dollars, a penalty
of one thousand dollars ; if the amount of such excess is
BANKING LAW OF CANADA. 53
over twenty thousand dollars and is not over one hundred thou-
sand dollars, a penalty of ten thousand dollars ; if the amount
of such excess is over one hundred thousand dollars and is not
over two hundred thousand dollars, a penalty of fifty thousand
dollars ; and if the amount of such excess is over two hundred
thousand dollars, a penalty of one hundred thousand dollars :
4. All notes hcretotore issued or re-issued by the bank, and now
in circulation, which are for a sum less than five dollars, j^-q-jes under
or for a sum which is not a multiple of five dollars, $5 to be
shall be called in and cancelled as soon as practicable.
52. The bank shall not pledge, assign, or hypothecate its
notes ; and no advance or loan made on the security pledging of
of the notes of a bank shall be recoverable from the notes fro-
bank or its assets : hipited.
2. Every person who, being the president, vice-president,
director, principal partner en t'ouunaiulite, general manager,
manager, cashier, or other officer of the bank, penalty for
pledges, assigns, or hypothecates, or authorizes, or pledging.
is concerned in the pledge, assignment or hypothecation of the
notes of the bank, and every person who accepts, receives or
takes, or authorizes or is concerned in the acceptance or receipt
or taking of such notes as a pledge, assignment or hypotheca-
tion, shall be liable to a fine of not less than four hundred dollars
and not more than two thousand dollars, or to imprisonment for
not more than two years, or to both :
3. Every person who, being the president, vice-president,
director, principal partner 4 n vomnHuuIitr^ general manager,
manager, cashier, or other officer of a bank, with penalty for
intent to defraud, issues 01 delivers, or authorizes improper
or is concerned in the issue or delivery of notes of Jng of notes
the bank intended for circulation and not then in
circulation,— and every person who, with knowledge of such
intent, accepts, receives or takes, or authorizes or is concerned
in the acceptance, receipt or taking of such notes,— shall be
guilty of a misdemeanor, and liable to imprisonment for a term
not exceeding seven years, or to a fine not exceeding two
thousand dollars, or to both.
54
THE CURREXCY AND THE
53. The payment of the notes issued or re-issued by the
bank and intended for circulation, and then in circulation, to-
NOTESTo BE gather with any interest paid or payable thereon as
FIRST CHARGE hereinafter provided, shall be the first charge upon
ON ASSETS. ^j^g assets of the bank in case of its insolvency;
and the payment of any amount due to the Government of
Canada, in trust or otherwise, shall be the second charge upon
such assets ; and the payment of any amount due to the gov-
ernment of any of the Provinces, in trust or otherwise, shall
be the third charge upon such assets :
2. The amount of any penalties for which the bank is liable
LIABILITY FOR shall not form a charge upon the assets of such
cASEOFiNsoL-^^^*^* ^^ case of its insolvency, until all other liabil-
VENCY. ities are paid.
54. Every bank to which this Act applies, and which is
carrying on its business at the time when this Act comes into
force, shall, within fifteen days thereafter, pay to
FXISTIXr" 1 K^ ni
BANKS 10 the Minister of Finance and Receiver General, a
MAKE DEPOSIT sum of money equal to two and one -half percent, of
TER OF the average amount of its notes in circulation dur-
FiNANCE ing the twelve months next preceding the date of
FIVE PER CENT.^^^ coming into Torce of this Act, or if such bank
OF NOTE ciR- has not be';in in operation for twelve months, a sum
ci LAnoN. q|. jjiQugy equal to two and one-half per cent, of the
average amount of its notes in circulation during the time it
has been in operacion ; and each bank shall, within fifteen days
from and after the first day of July, in the year one thousand
eight hundred and ninety-two, pay to the Minister of Finance
and Receiver General such further sum of money as is neces-
sary to r;rke the total amount so paid by each bank to be a
sum er.ual to five per cent, of the average amount of its notes in
circulation during the twelve months next preceding the date
last nentioned,— which sum shall be adjusted annually as here-
inafter provided :
r. The Merchants' Bank of Prince Edwaiu Island shall, on or
befMr'j the day upon which it becomes subject to the provisions of
th's Act, jKiy to the Minister of Finance and Receiver General such
1
BANKING LAW OF CANADA. 55
sum as appears to the satisfaction of the Treasury Board to be equal
to two and one-half per cent, of the average amount of its notes in
circulation during the then preceding twelve months ; ^g ^^ mer-
and shall further pay to the Minister of Finance and chants' bank
Receiver General, within fifteen days from and after
the first day of July in the year then next following, such further
sum as is necessary to make the total sum paid by the said bank to
be a sum equal to five per cent, of the average amount of its notes
I in circulation from the time the said bank became subject to the
I provisions of this Act to the said first day of July, — which sum
shall be adjusted annually as hereinafter provided :
3. The Minister of Finance and Receiver General shall,
upon the issue of a certificate under this Act authorizing a bank
to issue notes and commence the business of bank- as tp new
ing, retain out of any moneys of such bank then in banks.
his possession the sum of five thousand dollars,— which sum
shall be held for the purposes of this section, until the annual
adjustment hereunder takes place in the year then next follow-
ing, at which time the amount at the credit of the bank shall be
adjusted by payment to or by the bank of such sum as is neces-
sary to make the amount at the credit of the bank to be a sum
of money equal to five per cent, of the average amount of its
notes in circulation from the time it commenced business to the
time of such adjustment, — which sum shall be adjusted annually
as hereinafter provided :
4. The amounts so paid, retained, and kept on deposit as
aforesaid shall form a fund to be known as " The Bank Circula-
tion Redemption Fund,"— which fund shall be held formation
for the following purpose, and for no other, namely : of circula-
In the event of the suspension by the bank of pay- '"'hon fund!
ment in specie or Dominion notes of any of its liabil-
ities as they accrue, for the payment of the notes then issued or
reissued by such bank, and intended for circulation, and then in
circulation, and intei 'st thereon ; and the Minister of Finance
and Receiver General shall, with respect to all notes paid out
of the said fund, have the same rights as any other holder of
the notes of the bank :
56 THE CURRENCY AND THE
5. The fund shall bear interest at the rate of three per cent,
per annum, and it shall be adjusted, as soon as possible after
FUND TO ^^^ thirtieth day of June in each year, in such a way
BEAR INTER- as to make the amount at the credit of each bank
^^^' contributing thereto, unless herein otherwise spe-
cially provided, equal to five per cent, of the average note circula-
tion of such bank during the then next preceding twelve months :
6. The average note circulation of a bank during any period
shall be determined from the average of the amount of its notes
NOTE ciRcu- ^" circulation, as shown by the monthly returns for
LATioN, HOW such period made by the bank to the Minister of
DETERMINED, pjuancc aud Receiver General ; and where, in any
return, the greatest amount of notes in circulation at any time
during the month is given, such amount shall, for the purposes of
this section, be taken to be the amount of the notes of the bank
in circulation during the month to which such return relates :
7. In the event of the suspension by the bank of payment in
specie or Dominion notes of any of its liabilities as they accrue,
the notes of such bank, issued or reissued and in-
NOTEs OF tended for circulation, and then in circulation, shall
PENDING PAY- bear interest at the rate of six per cent, per annum,
MENT TO BEAR ffom the day of such suspension to such day as is
TiLRE-^^^ ^^ named by the directors, or by the liquidator, re-
DEEMED. ceiver, assignee or other proper official, for the pay-
ment thereof, — of which day notice shall be given by
advertisement for at least three days in a newspaper pubhshed
in the place in which the head office of the bank is situate ; but
in case any notes presented for payment on or after any day
named for payment thereof are not paid, all notes then unpaid
and in circulation shall continue to bear interest to such further
day as is named for payment thereof, — of which day notice shall
be given in manner above provided : Provided al-
DEEMED TO ways, that in case of failure on the part of the direc-
BE PAID OUT tors of the bank, or of the liquidator, receiver,
OF FUND. . i.u £C • 1 i. \
assignee or other proper official, to make arrange-
ments within two months from the day of suspension of payment
by the bank as aforesaid for the payment of all of its notes and
interest thereon, the Minister of Finance and Receiver General
BANKING LA W OF CANADA. 57
may thereupon make arrangements for the payment of the notes
remaining unpaid, and all interest thereon, out of the said fund,
and shall give such notice of such payment as he thinks expedi-
ent, and on the day named by him for such payment all interest
on such notes shall cease, anything herein contained to the con-
trary notwithstanding ; but nothing herein con-
tained shall be construed to impose any liability on proviso.
the Government of Canada or on the Minister of Finance and
Receiver General beyond the amount available from time to time
out of the said fund :
8. All payments made from the said fund shall be without
regard to the amount contributed thereto by the bank in respect
of whose notes the payments are made ; and in case
the payments from the fund exceed the amount trJ:^J?l^,^J^
contributed by such bank to the fund, and all to be with-
interest due or accruing due to such bank thereon, ^^^ regard
the other banks shall, on demand, make good to contributed.
the fund the amount of such excess, pro rata to
the amount which each bank has at that time contributed to the
fund ; and all amounts recovered and received by the Minister
of Finance and Receiver General from the bank on whose ac-
count such payments were made shall, after the amount of such
excess has been made good as aforesaid, be distributed among
the banks contributing to make good such excess ^>/»o rata to
the amount contributed by each : Provided always,
I that each of such other banks shall only be called
f upon to make good to the said fund its share of such excess, in
I payments not exceeding in any one year one per cent, of the
I average amount of its notes in circulation,— such circulation to
be ascertained in such manner as the Minister of Finance and
Receiver General decides ; and his decision shall be final :
9. In the event of the winding up of the business of a bank
by reason of insolvency or otherwise, the Treasury Board may,
on the application of the directors, or of the liquida- „^„.,,„^^.^
. . , /.>. . 4 1 REPAiMEIsT
tor, receiver, assignee or other proper official, and on of amount w
being satisfied that proper arrangements have been ^^^v. is
made for the payment of the notes of the bank and
any interest thereon, pay over to such directors, liquidator, re-
58 THE CURRENCY AND THE
ceiver, assignee or other proper official, the amount at the credit
of the bank, or such portion thereof as it thinks expedient :
10. The Treasury Board may make all such rules and regula-
tions as it thinks expedient with reference to the payment of
any moneys out of the said fund, and the manner,
BOARD>iAY place and time of such payments, the collection of
REGULATE all amounts due to the said fund, all accounts to be
OF fuSd!*^^^ kept in connection therewith, and generally the
management of the said fund and all matters relat-
ing thereto :
11. The Minister of Finance and Receiver General may, in
ENFORCE- ^^^ official name, by action in the Exchequer Court
MENT OF PAY- of Canada enforce payment (with costs of action)
MENT. q£ ^j^y gyj^ ^^^ ^^^ payable by any bank under the
provisions of this section.
55. The bank shall make such arrangements as are neces-
sary to ensure the circulation at par in any and every part of
Canada of all notes issued or reissued by it and
hankV(Tbe intended for circulation ; and towards this purpose
PAYABLE AT the bank shall establish agencies for the redemption
OUT cInada" *^"^ payment of its notes at the cities of Halifax, St.
John, Charlottetown, Montreal, Toronto, Winnipeg
and Victoria, and at such other places as are, from time to time,
designated by the Treasury Board.
56. The bank shall always receive in payment
REDEMPTION j^g q^^ notes at par at any of its offices, and
OF NOTES. . ,. .. , ...
whether they are made payable there or not :
PAYAi'.i F \T 2- '^^^ chief place of business of the bank shall
CHIEF iLACE always be one of the places at which its notes arc
oFBUifiNEss. made payable.
57. The bank, when making any payment, shall, on the
request of the p'^rson to whom the payment is to be made, pay
the same, or such part thereof, not exceeding one
PAYMENTS IN u J 4 1 11 t. *. • r\ •
DOMINION hundred dollars, as such person requests, m Domin-
NuTEs. ion notes for one, two, or four dollars each, at the
BANKING LA W OF CANADA.
59
option of such person : Provided always, that no
payment, whether in Dominion notes or bank notes, ^"[^^^ 2!^^.^^"
shall be made in bills that are torn or partially de-
faced by excessive handling.
FACED NOTES.
58. The bonds, obligations and bills, obligatory or of credit, of
the bank under its corporate seal, and signed by the president or
vice-president, and countersigned by a cashier or assist-
, " , . , . , , ui 4- BONDS, NOTES,
ant cashier, which are made payable to any person, ^.^^ j^^^^. ^^^^
shall be assignable by indorsement thereon ; and bills by whom to
or notes of the bank signed by the president, vice-
president, cashier or other officer appointed by the directors of the
bank to sign the same, promising the payment of money to any
person or to his order, or to the bearer, though not under the cor-
porate seal of the bank, shall be binding and obligatory on it in like
manner and with the like force and effect as they would be upon
any private person, if issued by him in his private or natural capac-
ity, and shall be assignable in like manner as if they were so issued
by a private person in his natural ca|>acity: Provided
ahvays, that the directors of the bank may, from time i-owfr^mTv
to time, authorize, or depute any cashier, assistant hk dki-utf.d
1 • cc r 4.1 u 1 1- i. 4-1 TO OFFICER.
cashier, or otncer of the bank, or any director other
than tlie president or vice-president, or any cashier, manager or
local director of any branch or office of discount and deposit of th.c
bank, to sign the notes of the bank intended for circulation.
59. All bank notes and bills of the bank whereon the name of
any person intrusted or authorized to sign such notes or bills on
behalf of the bank is impressed bv machinerv provided ^,,,,.^,, ,,.,. .,^
* • ' * NOTES M\\ llF.
for that purpose, by or with the authority of the bank, sk.m n hy
shall be good and vah'd to all intents and j)urp(>ses •'^^'^^ '»'^*'<Y.
as if such notes and hills had been subscribed in the proper hand-
writing of the person intrusted or authorized by the bank to sign
the same respectivelv, and shall be bank notes anil bills ,,.... ^,,... .
* ' ON K Si(»NA-
within the meaning of all laws and statutes whatever, ti'Rk must iik
and may be described as bank notes or bills in all in- ^'^'hkn.
dictments and civil or criminal proceedings whatsoever: Trovided
6o THE CURRENCY AND THE
always, that at least one signature to each note or bill must be in the
actual handwriting of a person authorized to sign such note or bill.
60. Every person, except a bank to which this Act applies, who
issues or reissues, makes, draws, or endorses any bill, bond, note,
cheque or other instrument, intended to circulate as
u\\LTH()Riz- ii'^<^^J"'^T' ^^ ^^ t)e used as a substitute for money, for
ED ISSUE OF any amount whatsoever, shall incur a penalty of four
CIRCULATION, hundred dollars, which shall be recoverable with costs,
in any court of competent jurisdiction, by any person
who sues for the same ; and a moiety of such penalty shall belong
to the ])erson suing for the same, and the other moiety to Her
Majesty for the public uses of Canada:
2. The intention to pass any such instrument as money shall be
presumed, if it is made for the payment of a less sum than twenty
dollars, and is payable either in form or in fact to the
WHAT SHALL bearer thereof, or at si<;ht, or on demand, or at less
BE DEEMED , .
SUCH NOTES, than thirty days thereafter, or is overdue, or is 111 any
way calculated or designed for circulation, or as a sub-
stitute for money ; unless such instrument is a cheque on some char-
tered bank paid by the maker directly to his immediate creditor, or
a promissory note, bill of exchange, bond or other undertaking for
the payment of money, paid or delivered by the maker thereof to
his immediate crt.-ditor, and is not designed to circulate as money or
as a substitute for monev.
61. Every person who in any way defaces any Dominion or
Provincial note, or bank note, whether by writing,
OF N^vrrs^^^ printing, drawing or stamping thereon, or by at-
taching or affixing thereto, anything in the nature
PENALTY. or form of an advertisement, shall be liable to a
penalty not exceeding twenty dollars.
62. Kvory officer charged with the receipt or disbursement of
COUNTERKEir public moneys, and every ofTRcer of any bank, and
AND FRAUDU. . i i i i ,
LENT NOTES tvcry person acting as or employed by any banker,
TO ^^ shall stamp or write in i)l.iin letters tiie word *' counter-
STAMTED AS * t. •» n • > •• i • ••
SUCH. fcit, " altered, or *' worihlcss, upon every counter-
BANKIXG LAJV OF CANADA.
6\
fcit or fraudulent note issued in the form of a Dominion or bank
note, and intended to circulate as money, which is presented to
him at his place of business ; and if such officer or person wrong-
fully stamps any genuine note he shall, upon presentation, redeem
it at the face value thereof.
63. Kvery person who designs, engraves, prints or in any man-
ner makes, executes, utters, issues, distributes, circulates or uses
any business or professional card, notice, placard, cir-
cular, hand-bill or advertisement in the likeness or\,,,.„p ,, \,'
' MKN I , Etc., 1 ( )
similitude of any Dominion or bank note, or any ob- he issui d in
,. ^- -^ [ r- 1. r u 1 THEFORMOFA
ligation or security of any Government, or of any bank, note.
is liable to a penalty of one hundred dollars or to three
months' imprisonment, or to both.
BUSINESS AND IHJWKRS OF THE BANK.
64. The bank may open branches, agencies and offices,
and may engage in and carry on business as a dealer in gold
and silver coin and bullion, and it may deal in, dis-
count, and lend money and make advances upon hranches
. - , . , ,. . , •. AND AGENCIES.
the security of, and may take as collateral security
for any loan made by it, bills of exchange, promis- general pow-
F RS OF BANK.
sory notes and other negotiable securities, or the
stock, bonds, debentures and obligations of municipal and
other corporations, whether secured by mortgage or otherwise,
or Dominion, Provincial, British, foreign and other public se-
curities, and it may engage in and carry on such business gen-
erally as appertains to the business of banking; but, except
as authorized by this Act, it shall not, either di- certain nusi-
rectly or indirectly, deal in the buying, or selling, ^^%p'Vk vN.i
or bartering of goods, wares and merchandise, or actkd bv Vme
engage or be engaged in any trade or business bank.
whatsoever ; and it shall not, either directly or indirectly, pur-
chase, or deal in, or lend money, or make advances upon the
security or pledge of any share of its own capital stock, or of
the capital stock of any bank ; and it shall not, either directly
or indirectly, lend money or make advances upon the security,
mortgage, or hypothecation of any land, tenements, or iinmov-
62 THE CURRENCY AND THE
able property, or of any ships or other vessels, or upon the
security of any goods, wares and merchandise.
65. The bank shall have a privileged lien, for any debt or liabil-
ity for any debt to the bank, on the shares of its own
BANK TO HAVE capital stock and on any unpaid dividends of the debtor
LIEN ONDEPT- ,. , , , , ,-
OR's SHARES, or persoH liable, and may dechne to allow any transfer
of the shares of such debtor or person until such debt
is paid ; and the bank shall, within twelve months after such debt
has accrued and become i)avable, sell such shares, and
SALE OF SUCH . , ,, , . , 1 , , 1 r r 1 •
SHAKES. notice shall be given to the holder thereof of the in-
tention of the bank t(3 sell the same, by mailincf such
notice in the post office to the last known address of
such holder, at least thirty days prior to such sale ; and upon such
sale being made the president, vice-president, manager
i-vci* '/..- d'c or cashier shall execute a transfer of such shares to the
CAbL 01* SALE,
purchaser thereof in the usual transfer book of the
bank, which transfer shall vest in such purchaser all the rights 'n or
to such shares which were possessed by the holder thereof, with the
same obligation of warranty on his part as if he were the vendor
thereof, but without any warranty from the bank or by the officer
of the bank executing such transfer.
66. The stock, bonds, debentures or securities, acquired and held
by the bank as collateral security, may, in case of default to pay the
COLLATFKAL ^^^-'^-^^ f^*'' securiug which they were so accpiired and
SECURITIES held, be dealt with, sold and conveyed either in like
MAY r.E SEMI- , 1 • 4. . 41 , • .•
LAki.YDEALr niaiiiier and subject to the same restrictions as arc
WITH. herein provided in respect of stock of the bank on
which it has acquired a lien under this Act, or in like manner as
and subject to the restrictions under which a i)rivatc individual
might in like circumstances deal with, sell and convey the same, but
without obligation to sell the same within twelve montlis :
2. The right so to deal with and dispose of such stock, bonds,
debentures or securities in manner aforesaid may be waived or
Rir.HTTODO varied by any agreement between the bank and the
waived' owner of such stock, bonds, debentures or securities,
BANKING LA W OF CANADA. (,i
made at the time at which such debt was incurred, or if the time
of payment of such debt has been extended, then by an agreement
made at the time of such extension.
67. The bank may acquire and hold real and immovable
property for its actual use and occupation and the rfalfstate
management of its business, and may sell or dis- foroccupa-
pose of the same, and acquire other property in its tion.
stead for the same purpose.
68. The bank may take, hold and dispose of mortgages
and hijiiothequesupoti real or personal, immovable or movable
property, by way of additional security for debts mortgages
contracted to the bank in the course of its busi- asaddi-
ness ; and the rights, powers and privileges which tional se-
the bank is by this Act declared to have or to have
had in respect of real or immovable property mortgaged to it,
shall be held and possessed by it in respect of any personal or
movable property which is mortgaged or hypothecated to it.
69. The bank may purchase any lands or real or immovable prop-
erty offered for sale under execution, or in insolvency, or under the
order or decree of a court, as bclon^intr to any debtor
purchase of
I to the bank, or offered for sale by a mortgagee or other land under
encumbrancer having priority over a mortgage or execution.
other encumbrance lield by the bank or offered for
sale by the bank under a power of sale given to it for that pur-
pose, in cases in which, under simihir circumstances, an individual
could so purchase, without any restriction as to the value of the
property which it may so purchase, and may acquire a title thereto
as any individual purchasing at sheriff's sale, or under a power of
sale, in like circumstances, could do, and may take, have, hold and
dispose of the same at pleasure.
70. The bank may acquire and hold an absolute title in or
to real or immovable property mortgaged to it as security for a
debt due or owing to it, either by obtaining a re- absolute
lease of the equity of redemption in the mortgaged title may ue
property, or by procuring a foreclosure, or by other acquired.
means whereby, as between individuals, an equity of redemp-
64 THE CURRENCY AXD THE
tion can, by law, be barred, and may purchase and acquire any
prior mortgage or charge on such properly : Provided always,
PROVISO • SALE ^^^^ "^ bank shall hold any real or immovable
OF PROPERTY property, howsoever acquired, except such as is
so ACQUIRED, required for its own use, for any period exceeding
seven years from the date of the acquisition thereof.
71. Nothing in any charter, Act or law shall be construed as
ever having prevented or as preventing the bank from acquiring
TITLE TO and holding an absolute title to and in any such mort-
Ycoum^i-T^ g^S^^ ^^'"^ ^^^ immovable property, whatever the value
POWER OF thereof is, or from exercising or acting upon any power
SALE, Etc, ^£ ^^j^ Contained in any mortgage given to it or held
by it, authorizing or enabling it to sell or convey away any property
so mortgaged.
72. Every bank advancing money in aid of the building of any
ship or vessel shall have the same right of acquiring and holding
»o-T^^ .r.,r.xT security upon such ship or vessel, while buildinfr and
AS ro ADVAN- .
CES FOR BuiLD-when completed, either by way of mortgage, hypothiqiie,
ING SHIPS. hypothecation, privilege, or lien thereon, or purchase
or transfer thereof, as individuals have in the Province wherein such
ship or vessel is being built, and for that purpose may avail itself
of all such rights and means of obtaining and enforcing such se-
curity, and shall be subject to all such obligations, limitations and
conditions as are, by the law of such Province, conferred or im-
posed upon individuals making such advances.
73. The bank may acquire and hold any warehouse receipt or
bill of hilling as collateral security for the payment of any debt in-
WARKHousF, currctl in its favor in the course of its banking busi-
RKCF.UTSMAY ,^^.j,j. . ^^j^^^^ ^|^^^ w.'irehouso receipt or bill of lading so
lU', TAKEN AS ' _ * /»
COLLATERAL actjuircd shall vest in the bank, from the date of the
SECURITY. acipiisition thereof, all the right and title of the previ-
ous holder or owner thereof, or of the person fn^m whom such goods,
wares and merchandise were received or acquired by the bank, if the
warehouse receipt or bill of lading is made dirjctly in favor of the
BANKING LAW OF CANADA. 65
bank, instead of to the previous holder or owner of such goods,
wares and merchandise :
2. If the previous holder of such warehouse receipt or bill of
lading is the agent of the owner of the goods, wares and mer-
chandise mentioned therein, the bank shall be vested when previ-
with all the right and title of the owner thereof, sub- ous holder
ject to his right to have the same re-transferred to him,
if the debt, as security for which they are held by the bank, is paid :
3. In this section the expression " agent " means any person in-
trusted with the possession of goods, wares and merchandise, or to
whom the same are consigned, or who is possessed of i^terprfta-
any bill of lading, receipt, order, or other document tionof
used in the course of business as proof of the posses-
sion or control of goods, wares and merchandise, or authorizing
or purporting to authorize, either by indorsement or by delivery,
the possessor of such document to transfer or receive the goods,
wares and merchandise thereby represented ; and such person shall
be deemed the possessor of such goods, wares and merchandise, bill
of lading, receipt, order, or other document as aforesaid, as well if
the same are held by any person for him or subject to his control
as if he is in actual possession thereof.
74. The bank may lend money to any person engaged in busi-
ness as a wholesale manufacturer of any goods, wares loans to
and merchandise, upon the security of the goods, wares ^^mamtac-
and merchandise manufactured by him or procured for turers.
such manufacture :
2. The bank may also lend money to any wholesale purchaser or
shipper of products of agriculture, the forest and mine,
. LOANS TO CER-
or the sea, lakes and rivers, or to any wholesale i)ur- tainwhole^
chaser or shii)i)er of live stock or dead stock, and the salkpir-
, , , • t ^ . CHASERS OR
products tliereot, upon the security of such products, shippers.
or of such live stock or de.ul stock, and the products
thereof :
3. Such security may be given l)y the owner and may be taken
66 THE CURRENCY AND THE
in the form set forth in Schedule C to this Act, or to the like effect ;
FORM OF and by virtue of such security, the bank shall acquire
SECURITY. ^i^g same rights and powers in respect to the goods,
wares and merchandise, stock or products covered thereby, as if it
had acquired the same by virtue of a warehouse receipt.
75. The bank shall not acquire or hold any warehouse receipt or
bill of lading or security under the next preceding section to secure
WHEN SUCH ^^^^ payment of any bill, note or debt, unless such bill,
SECURITY MAY notc or dcbt is negotiated or contracted at the time of
■ the acquisition thereof by the bank, or upon the written
promise or agreement that such warehouse receipt or bill of lad-
ing or security would be given to the bank ; but such bill, note or
debt may be renewed, or the time for the payment thereof extended,
without affecting any such security :
2. The bank may, on shipment of any goods, vrares and mer-
chandise for which it holds a warehouse receipt, or security as afore-
ExcHANGE OF s^*^' Surrender such receipt or security and receive a
WAREHOUSE bill of lading in exchange therefor, or, on the receint
RECEIPT FOR /■ , , 1 i- r i • 1 •. 1 ij
BILL OF LAD- ^^ '^^^X t^^ods, warcs and merchandise for which it holds
iNG AND r/Vf a bill of lading or security, as aforesaid, it may sur-
render such bill of lading or security, store such goods,
wares and merchandise, and take a wa-ehouse receipt therefor,
or may ship them, or part of them, an'] taKe another bill of lading
therefor:
3. Every one is guilty of a misdemeanor and liable to imprison-
PENALTV FOR ""^^'"^ for a tcrm not exceeding two years who wiifulh*
MAKiNG FALSE makes any false statement in any warehouse receipt,
STATEMENT. , .,, t \ \' U t -J
bill of lading or security, as aforesaid.
4. Every one is guilty of a misdemeanor and liable to imprison-
ment for a term not exceeding two years, whd, having possession or
control of any roods, wares aiul merchandise covered
PENALTY FOR
ALiENAriNc; by any warehouse receipt, bill of lading or securit)- as
GOODS SO aforesaid, and having knowledge of such receipt, bill of
SECURED. . ,
lading or security, and without consent of the bank, in
writing and before the advance, bill, note or debt thereby secured
BANKING LAW OF CANADA,
67
has been fully paid, wilfully alienates or parts with any such goods,
wares, or merchandise, or wilfully withholds from the bank posses-
sion thereof upon demand after default in payment of such advance,
bill, note or debt.
76. If goods, wares and merchandise are manufactured or pro-
duced from the goods, wares and merchandise, or any of them, in-
cluded in or covered by any warehouse receipt, or ^^ ^o goods
security ^aven under section seventy-four of this Act, manufac-
r 1 ' R F D F R O \f
while SO covered, the bank holding such warehouse re- articles
ceipt or security shall hold or continue to hold such pledged.
goods, wares and merchandise, during the process and after the com-
pletion of such manufacture or production, with the same right and
title and for the same purposes and upon the same conditions as it
held or could have held the original goods, wares and merchandise.
77« All advances made on the security of any bill of lading or
warehouse receipt, or security given under section seventy-four of
this Act, shall give to the bank making such advances prior claim
a claim for the repayment of such adv'ances on the ?,t3,!^fTv!^D\^iti
^ ^ OVER UNPAID
goods, wares and merchandise therein mentioned, or vendor.
into which they have been converted, prior to and by preference
over the claim of any unpaid vendor ; but such preference shall not
be given over the claim of any unpaid vendor who had a lien upon
such goods, wares and merchandise at the time of the acquisition
by the bank of such warehouse receipt, bill of lading, or securit}',
unless the same was acquired without knowledge on the part of the
bank of such lien.
78. In the event of the non-payment at maturity ot any debt
secured bv a warehouse receipt or bill of lading, or security given
under .section seventv-four of this Act, the bank mav^., ,, ^, .,„.,,,, ^^
' SALE OP GOODS
sell the goods, wares and merchantlise mentioned on non-pay-*
4.U • 1 *.u f -W CC 4. , MENTOF DEBT.
therem, or so much thereof as will sumce to pay such
debt with interest and expenses, returning the overi)lus, if any, to
the person frori whom such warehouse receipt, or bill of lading, or
security, or the goods, wares and merchandise mentioned therein.
68 THE CURRENCY AND THE
as the case may be, were acquired ; but such power of sale shall be
subject to the following provisions, namely :
2. No sale without the consent in writing of the owner of any
timber, boards, deals, staves, saw4ogs or other lumber, shall be
made under this Act until notice of the time and place
NOTICE TO BE - , , . , . , . , , ., ,
GIVEN BEFORE of such salc uas been given by a registered letter, mailed
SALE OF GOODSjj^ ^|^^ V)Os\. office to the last known address of the pledger
PLEDGED. r 1 1 1 r
thereof, at least thirty days prior to the sale thereof ;
and no goods, wares and merchandise, other than timber, boards,
deals, staves, saw-logs or other lumber, shall be sold by the bank
under this Act without the consent of the owner, until notice of the
time and place of sale has been given by a registered letter, mailed
in the post office to the last known address of the pledger thereof,
at least ten days prior to the sale thereof :
3. Every such sale of any article mentioned in this section,
without the consent of the owner, shall be made by public auction,
CATP nv ATT/- after a notice thereof by advertisement, stating the
TioN AFTER time and place thereof, in at least two newspapers pub-
IVT C\ T* T /"* \^
lislied in or nearest to the place where the sale is to be
made ; and if such sale is in the Province of Quebec, then at least
one of such newspapers shall be a newspaper published in the Eng-
lish language, and one other such newspaper shall be a newspaper
published in the French language.
79. Every bank which violates any provision contained in any of
«T^xT»T ^^^ ^,W3 the sections numbered sixtv-four to seventv-eight (both
PENALT* FOR ' * o
CONTRAVEN- inclusivc) shall incur for each violation thereof a pen-
^^^^* altv not exceedinij five hundred dollars.
80. The bank shall not be liable to incur any penalty or for-
feiture for usury, and may stipulate for, take, reserve or exact
NO PENALTY any rate of interest or discount not exceeding seven
FOR USURY, pgj. cent, per annum, and may receive and take in
advance any such rate, but no higher rate of interest shall be
WHAT INTER- Tccoverable by the bank ; and the bank may allow
EST MAY BE any rate of interest whatever upon money deposited
ALLOWED. ^itj^ i^^
BANKING LAW OF CANADA,
69
NO INSTRU-
MENT TO P.E
VOID ON
GROUND OF
USURY.
81. No promissory note, bill of exchange or other negoti-
able b'^curity, discounted by or indorsed or otherwise assigned
to the bank, shall be held to be void, usurious or
tainted by usury, as regards such bank, or any
maker, drawer, acceptor, indorser, or indorsee
thereof, or other party thereto, or bond fiiJe holder
thereof, nor shall any party thereto be subject to
any penalty or forfeiture by reason of any rate of interest taken,
stipulated or received by such bank, on or with respect to such
promissory note, bill of exchange, or other negotiable security,
or paid or allowed by any party thereto to another in compen-
sation for, or in consideration of the rate of interest taken or to
be taken thereon by such bank ; but no party thereto, other than
the bank, shall be entitled to recover or liable to pay more than
the lawful rate of interest in the Province where the suit is
brought, nor shall the bank be entitled to recover a higher rate
than seven per cent, per annum ; and no innocent holder of or
party to any promissory note, bill of exchange or ^g .^^ inno-
other negotiable security, shall, in any case be de- cent hold-
prived of any remedy against any party thereto, or ^^^*
liable to any penalty or forfeiture, by reason of any usury or of-
fence against the laws of any such Province, respecting interest,
committed in respect of such note, bill or negotiable security,
without the complicity or consent of such innocent holder or
party.
82. The bank may, in discounting at any of its places of busi-
ness, branches, agencies or ofifices of discount and deposit, any
note, bill or other negotiable security or paper payable collection
at any other of its own places or seats of business, fees.
branches, agencies or offices of discount and deposit in Canada,
receive or retain, in addition to the discount, any amount not ex-
ceeding the following rates per cent, according to the time it has
to run, on the amount of such note, bill or other negotiable secur-
ity or paper, to defray the expenses attending the collection thereof,
that is to say : under thirty days, one-eighth of one per cent. ; thirty
days or over, but under sixty days, one-fourth of one per cent. ;
70 THE CURRENCY AND THE
sixty days and over, but under ninety days, three-eights of one per
cent. ; ninety days and over, one-half of one per cent.
83. The bank may, in discounting any note, bill or other negoti-
able security or paper, bona fide payable at any place in Canada
.^^,,^,. ^^^^ different from that at which it is discounted, and other
AGE^^Cv FEES.
than one of its own places or seats of business,
branches, agencies or ofiflccs of discount and deposit in Canada, re-
ceive and retain, in addition to the discount thereon, a sum not ex-
ceeding one-half of one per cent, on the amount thereof, to defray
the expenses of agency and charges in collecting the same.
84. The bank may receive deposits from any person whomso-
ever, whatever his age, status or condition in life, and whether such
person is qualified by law to enter into ordinary con-
T^ T!* ^5 f\ c T T* C! H T \ \T
BE RECEIVED ^^^^ts or not ; and, from time to time, may repay any
FROM PERSONS or all of the principal thereof, and may pay the whole
UNABLE TO ,. r ^t • *. 4. i.u i. 1
CONTRACT ^"^ ^^'^y P^*'^ ^^ ^"^ mterest thereon to such person,
without the authority, aid, assistance or intervention
of any person or official being required, unless before such repay-
ment the money so deposited in and repaid by the baiik is lawfully
claimed as the property of some other person, in which case it may
be paid to the depositor with the consent of the claimant, or to the
claimant with the consent of the depositor : Provided always, that if
the person making any such deposit could not, under
PROVISO: tiie law of the Province where the deposit is made,
AMOUNT LIM- , . , . , , • , r , , • 1
iTED. deposit and withdraw money in and trom a bank with-
out this section, the total amount to be received from
such person on deposit shall not, at any cime, exceed the sum of
five hundred dollars:
2. The bank shall not be bound to see to the execution of any
trust, whether expressed, implied or constructive, to which any
deposit made under the authority of this section is
BOUND TO SEE ^^^jcct ; and except only in the case of a lawful claim,
TO TRUSTS IN bv somc other person before repavmcnt, the receipt of
RELATION TO ,,' . , ' i 1 -4. *. 1
SUCH DEPOSITS ^"^ pcrson in whose name any such deposit stands, or
if it stands in the name of two persons the receipt of
BANKING LA W OF CANADA.
71
one, or if in the names of more than two persons the receipt of a
majority of such persons, shall be a sufficient discharge to all con-
cerned for the payment of an}^ money payable in respect of such
deposit, notwithstanding any trust to which such deposit is then
subject, and whether or not the bank sought to be charged with
such trust (and with whom the deposit has been made) had
notice thereof ; and the bank shall not be bound to see to the
application of the money paid upon such receipt.
RETURNS BY THE BANK.
85. Monthly returns shall be made by the bank to the
Minister of Finance and Receiver General in the form set forth
in Schedule D to this Act, and shall be made up
and sent in within the first fifteen days of each ^^^^ij™^"^^^^"
month, and shall exhibit the condition of the bank ernment.
on the last juridical day of the month next preced-
ing; and such monthly returns shall be signed by the chief
accountant and by the president, or vice-president, or the direc-
tor or principal partner then acting as president, and by the
manager, cashier or other principal officer of the bank at its
chief place of business :
2. Every bank which neglects to make up and send in, as
aforesaid, any monthly return required by this section within
the time hereby limited, shall incur a penalty of
fifty dollars for each and every day after the expira-
tion of such time during which the bank neglects so
to make up and send in such return ; and the date
upon which it appears by the post office stamp or
mark upon the envelope or wrapper enclosing such return for
transmissioi: to the Minister of Finance and Receiver General,
that the same was deposited in the post office, shall be taken
prnna faciei for the purposes of this section, to be the date
upon which such return was made up and sent in.
86. The Minister of Finance and Receiver General may
also call for special returns from any bank, when- speciai re-
ever, in his judgment, they are necessary to afford tukns may i5e
a full and complete knowledge of its condition :
penalty for
not making
up monthly
returns in
DUE TIME.
CALLED FOR.
72 THE CURRENCY AND THE
2. Such special returns shall be made and signed in the man-
ner and by the persons specified in the next preceding section,
PFNAiTY F^»R ^^^ cvery bank which neglects to make and send
NOT MAKiNd in any such special return within thirty days from
?v Vnl-xVv^!?^ the date of the demand therefor by the Minister of
Finance and Receiver General shall incur a penalty
of five hundred dollars for each and every day such neglect con-
tinues ; and the provisions contained in the last preceding sec-
tion as to the /n'hua fitvU' evidence of the date upon which
returns are made up and sent in thereunder, shall apply to
returns made under this section : Provided always, that the
Minister of Finance and Receiver General may extend the time
for sending in such special returns for such further period, not
exceeding thirty days, as he thinks expedient.
87. The bank shall, within tw enty days after tlic close of each
calendar year, transmit or deliver to the Minister of
TRANSV! ISSK )N
oicKR I iKiKi) finance and Receiver General, to be by him laid before
'•'^'^'"'" Parliament, a certified list showinj^ the names of the
SHARK- 111 f 1 t 1 11 1 r 1
Koi.DKRs TO shareh»)lders of the bank on tlie last (.lay of sucii calen-
MiNisiKR<JK jI^p year, witli their additions and residences, the num-
FINANCE.
ber of siiares then held by them re-.i)ectively, and the
value at par of such shares :
2. Such list shall be delivered at the Department of Finance, or
MODKoF sl-.ill be sent by reijistered letter posted at such time
TRANSMissioN^jj^j}^ ,,^ ^jj^. ,,r(lin.ary course of post, it maybe delivered
at the said Dcp .rtment within the time above limited :
3. Iwery bank which neglects to transmit such list in manner
PKNAi/rv FOR aforesaid within the time aforesaid sli.dl incur a penalty
TRANSMIT "' "'^y tioilars tor each and every day durm^ which
bUCH LISTS. such uc^lcct contiiiucs.
88. The bank shall, within twenty days after the close of e.ich
calendar year, transmit or deliver to the Minister of l''inance and
.V,..,.,.. Receiver Gener.d,to be by him laid before Parliament,
ANNUAL '
srAiFMKNroKa return of all dividends which have remaitu'd unpaid
MAi.s'iNr.*^ 'for m«trc th.ui five )'ears, and .ilso of all .unounts ur
UNi'Aio, Lit. b»ilances in respect to which no transactions have
BANKING LAW OF CANADA.
id
taken place or iii)on which no interest has been paid during the
five years prior to the date of such return ; Provided ahvays,
tliat in case of moneys deposited for a fixed period, tlie period of
five years above referred to shall be reckoned from the I'Rcjviso.
date of the termination of sucli fixed peri(Kl :
2. Such return sliall be sij^^ied in the manner recpiired for the
montb.ly returns under section ei<^dity-five of tliis Act, and shall set
forth the name of each sliareholder or creditor, liis last dkiaii.sof
known address, the amount due, the agency of the kkiukn.
bank at which the last transaction took place, and the d.ite thereof;
and if such shareholder (jr creditor is known to the bank KUKiJiFR dk-
to be dead, such return shall show the names and ad- iails.
dresses of his legal niiresentatives, s(j far as known to the bank :
3. Every bank which neglects to transmit <:)r deliver to the Min-
ister of Finance and Receiver General the return above referred to,
within the time hereinbefore limited, shall incur a pen- im.nai.tv for
alty of fifty dollars for each and every day during anniai rf'
which such neglect continues: turn.
4. If, in the event of the winding up of the Vjusiness of the bank
in ii (jlvency.or under any general winding-up Act, or otherwise, any
moneys payable by the licpiidcitor, either to shareholders or deposit-
ors, remain unclaimed for the perioil (»f three years disimisai of
from the date of suspension of payment by the bank, unci. aim id
or from the commencement of the wmdmg r.p of sucii
business, or until the final winding up of such business, if such
takes place before the ex])iration of the said three years, such
moneys and all interest thereon shall, notwithstanding anystatr*e of
limitations or other Act nlating to prescription, be paid to the Min-
ister of I'inance and Receiver (ieneral, to lie held by him subject to
all rightful claims on brhalf of any persoti other than the l)ank ; and
in case a claim to any moneys so paid as aforrs.iid is thereafter estab-
lished to the satisfaction of the Treasury lioard, the (iovernor in
Council shall, on the report of the Treasury lioard, direct payment
thereof to lie matle to tin* person eutitkd thereto, together with in-
terest on tile principal sum thereof at the rate uf three per cent, per
74 THE CURRENCY AND THE
annum for a period not exceeding six years from the date of pay-
ment thereof to the said Minister of Finance and Receiver General
as aforesaid : Provided however, that no such interest
shall be paid or payable on such principal sum, unless
interest thereon was payable by the bank paying the same to the
said Minister of Finance and Receiver General : Provided also, that
on payment to the Minister of Finance and Receiver
PROVISO.
General as herein provided, the bank and its assets shall
be held to be discharged from further liability for the amounts so
•)aid.
5. Upon the winding up of a bank in insolvency or under any
general winding-up Act, or otherwise, the assignees, liquidators,
REQUIRE- directors or other officials in charge of such winding up,
MENTSASTo shall, before the final distribution of the assets, or
OUTSTANDING ..1 • ., t 4.\ i. r «-!
NOTES IN CASE ^^'>thin three years from the commencement of the
OFiNSOLVENCY.suspension of payment by the bank, whichever shall
first happen, pay over to the Minister of Finance and Receiver
General a sum out of the assets of the bank equal to the amount
then outstanding of the notes intended for circulation issued by the
bank; and, upon such payment being made, the bank and its assets
shall be relieved from all further liability in respect of such outstand-
ing notes. The sum so paid shall be held by the Minister of Finance
and Receiver General and applieil for the purpose of redeeming,
whenever presented, such outstanding notes, without interest.
INSOLVENCY.
89. In the event of the property and assets of the bank beings
TiAtu! rrvoK insufficient to pay its debts and liabilities, each share-
ersI'ncase OF holder of the bank shall be liable for the deficiency
INSUFFICIENCY to an amount equal to the par value of the shares
OF ASSETS. jjpIjj |jy }[i\vci^ in addition to any amount not paid up
on such shares.
90. As a condition of the rights and privileges conferred by this
Act or by any Act in amendment llieieof, the following provision
BANKING LA W OF CANADA.
75
shall have effect : — The HabiHty of the bank under any provision \s
law, custom, or agreement to repay moneys deposited toprescrip-
with it and interest (if any) and to pay dividends de- sTAiurF of
clared and payable on its capital stock, shall continue LiMiTAiioNs.
notwithstandincT any statute of limitations or any enactment or law
relating to prescription :
2. This section applies to moneys heretofore or hereafter deposited,
and to dividends heretofore or hereafter declared. retroaction.
91. Any suspension by the bank of payment of any of its liabili-
ties as they accrue, in specie or Dominion notes, shall, if it continues
for ninety days, consecutively, or at intervals within
SUSPENSION
twelve consecutive months, constitute the bank insolv- forooDavsto
ent and operate a forfeiture of its charter or Act of constiiute
.• f 1 11 f .1 K 1 • INSOLVENCY.
mcorporation, so far as regards all further banknig
operations ; and the charter or Act of incorporation shall remain in
force only for the purpose of enabling the directors or other lawful
authority to make and enforce the calls mentioned in the next fol-
lowing sections of this Act and to wind up its business.
92. If any suspensio'i of payment i.i full in specie or Dominion
notes of all or any of the notes or other liabilities of the bank con-
tinues f«)r three months after the expiration of the time calls in such
which, under the preceding section, would constitute cases.
the bank insolvent, and if no proceedings are taken under any gen-
eral or special Act for the winding up of the bank, the directors shall
make calls on the shareholders thereof, to the amount they deem
necessary to pay all the debts and liabilities of the bank, w ithout wait-
ing for the collection of any debts due to it or the sale of any of its
assets or property :
2. Such calls shall be made at intervals of thirty days, and upon
notice to be given thirty days at least prior to the day on wliich such
call shall be payable, and any number of such calls may howsuch
be made bv one resolution ; any such call shall not cx-^^/ ',^,^"vn Jl-
coed twenty per cent, on each share; and payment <»f kukuk.d.
such calls may be enforced in like niann-jr as payment of calls on
76 THE CURRENCY AKD THE
unpaid stock may be enforced ; and the first of such calls may be
made within ten days after the expiration of the said three months :
3. Every director who refuses to make or enforce, or to concur
REFUSAL TO ^^^ making or enforcing any call under this section, is
MAKE CALLS guilty of a misdemeanor, and liable to imprisonment
UNDER THIS e . , j- ^ l 1 11 r
SECTION A MIS- ^^^ any tcrm not exceednig two years, and snail tur-
DEMEANOR. thcr bc personally responsible for any damages suffered
by such default.
93. In the event of proceedings being taken under ariy general
or special winding-up Act, in consequence of the in-
CALLS UNDER '^ fc. 1: ' n
WINDING-UP solvx'ncy of the bank, the said calls shall be made in
^^^' the manner prescribed for the making of such calls in
such general or special winding-up Act.
94. Any failure on the part of any shareholder liable to any
such call to pay the same when due, shall operate
IT / ^ O IT C* T ^^ T T D XT
FOR NON-PAY- ^ forfeiturc by such shareholder of all claim in or to
MENT. any part of the assets of the bank,— such call and
any further call thereafter being nevertheless re-
coverable from him as if no such forfeiture had been incurred.
95. Notliing in the six sections next preceding contained shall be
iiAniLiTY OF construed t') alter or diminish the additional liabilities
DIRECTORS
N« » r DiMiN- of the directors as hereinbefore mentioned and declared.
ISHED.
96. Persons who, having been shareholders of the bank,
have only transferred their shares, or any of them, to others,
or registered the transfer thereof within sixty days
SHAREH(H.i)-'^ before the commencement of the suspension of pay-
FRswHo HAVE ment by the bank, and persons whose subscriptions
iHEnrsTocK' ^^ ^^^ ^^^^^ ^^ ^^^ ^^"^ ^^^^ ^^^" cancelled in
manner hereinbefore provided within the said pe-
riod of sixty days before the commencement of the suspension
of payment by the bank, shall be liable to all calls on the shares
held or subscribed for by them, as if they held such shares at
the time of such suspension of payment, saving their recourse
?»orainst those by whom such shares were then actually held.
BANKIXG LA W OF CANADA.
77
OFFENCES AND PENALTIES.
97. Every one is guilty of a misdemeanor and liable to imprison-
ment for a term not exceeding two years who, being the president,
vice-president, director, principal partner en commandite,
TJ ■^ ■¥-» c« T -|-^ T."* V* 'T^
manager, cashier or other officer of the bank, wilfully p^.^ giving
gives or concurs in giving any creditor of the bank any undue pref-
fraudulent, undue or unfair preference over other^j^y creditor
creditors, by Gfiviner security to such creditor or bv ouietvofa
, . , . . . . . . . . "^misdemeanor.
changing the nature of his claim or otherwise howso-
ever, and shall further be responsible for all damages sustained by
any person in consequence of such preference.
98. The amount of all penalties imposed upon a bank for any
violation of this Act shall be recoverable and enforceable with costs,
at the suit of Her Majesty, instituted bv the Attorney t.t^^,.,.t.t, ..
•' "' ' • RECOv ERv
General of Canada, or the Minister of Finance and and disposal
Receiver General, and such penalties shall belong to ^^ ^^^^^'^'^^^•
the Crown for the public uses of Canada; but the Governor in
Council, on the report of the Treasury Hoard, may direct that any
portion of any penalty be remitted or paid to any person, or applied
in any manner deemed best adapted to attain the objects of this
Act and to secure the due administration thereof.
99. The making of any wilfully false or deceptive statement in
any account, statement, return, report or other document respecting
the affairs of the bank, is, unless it amounts to a higher making false
offence, a misdemeanor punishable by imprisonment statement
IN RF rt'KNS
for a term not e.xceeding five years ; and every prcsl- En: amisde^
dent, vice-president, director, primip.il partner en mf-anor, etc.
commandite, auditor, manager, cashier or other officer of the bank,
who prepares, signs, approves or concurs in such statement, return,
report or document, or uses tlie same with intent to deceive or mis-
lead any ])erson, shall be held to have wilfully made such false state-
ment, ami shall further be responsible for all damages sustained by
any person in conscijuence thereof.
i J JI MMt
78 THE CURRENCY AND THE
»»
100. Every person assuming or using the title of ** bank,
UNAUTHOR- "banking company," ''banking house," ''banking
izED USE OF association," or "banking institution," without be-
TiTLE "BANK,"jjjg authorized SO to do by this Act, or by some
other Act in force in that behalf, is guilty of an of-
fence against this Act.
loi. Every person, committing an offence declared to be an
PENALTY FOR ^^'^"^^ against this Act, shall be liable to a fine not
OFFENCE exceeding one thousand dollars, or to imprisonment
AGAINST THIS for a term not exceeding five years, or to both, in
the discretion of the court before which the con-
viction is had.
PUBLIC NOTICES.
102. The several public notices by this Act required to be
given shall, unless otherwise specified, be given by
HOW NOTICES advertisement in one or more newspapers published
GIVEN. at the place where the head office of the bank is
situate, and in the Canada Gazette,
DOMINION GOVERNMENT CHEQUES.
103. The bank shall not charge any discount or
cHEQUFs^To^ commission for cashing any official cheque of the
HE PAID AT Government of Canada, or of any department
^'^^' thereof, whether drawn on itself or on another bank.
COMMENCEMENT UK ACT AND KErEAL.
X04. This Act shall come into force on the first tlay of July, in
the year one thousand eij^ht hundred and ninety-one; and from
coMM»^NCE. ^^^^^ ^'^y chapter one hundred and twenty of the Re-
MENToFTHis viscd Statutes of Canada, intituled ''An Act rcspcctittif
Jujitks ON(l /Hi/ii'if/i,'-," the Act passed in the fifty-first
REPEAL OF year of Her Majesty's rei^n, chapter twenty-seven, in
AND (ip^'s' v., c. intendment thereof, the Act passed in the session held
a; AND 50-51 v., jn thc thlrty-third year of Ilcr Majesty's reign, chapter
*'■*'■ twelve, intituled '\ln Act to remove certain restric-
tions with respect to the issue of bank notes in Nova Scotia," thc
BANKING LAW OF CANADA.
79
Act passed in the session held in the fiftieth and fifty-first years
of Her Majesty's reign, chapter forty-seven, intituled '*■ An Act
respecting the defacing of counterfeit notes, mid the use of imitations
of jiotes^' and chapter one hundred and twenty of the Revised
Statutes of New Brunswick, " Of Banking^' and the Act passed by
the Legislature of the Province of New Brunswick in the nineteenth
year of Her Majesty's reign, chapter forty-seven, intituled *' An Act
to explain chapter 120, Title XXXI, of the Revised Statutes, ' Of
Banking,' " shall be repealed, except as to rights there- saving
tofore acquired or liabilities incurred in regard to any clause.
matter or thing done or contract or agreement made or entered
into or offences committed under the said chapters or Acts, and
nothing in this Act shall effect any action or proceedings then
pending under the said chapter or Act*? then repealed, but the same
shall be decided as if such chapters and Acts had not been repealed.
SCHEDULE A.
BANKS WHOSE CHARTERS ARE CONTINUED BY THIS ACT.
i. The Bank of Montreal.
2. The Quebec Bank.
3. La Ikmquc du Peuple.
4. The Molsons Bank.
5. The Bank of Toronto.
6. The Ontario Bank.
7. The Eastern Townships Bank,
8. La BaiKjue Nationalc.
9. La l)antjue Jacques Carticr.
10. The Merchants' Bank of Canada.
11. The Union l^ank of Canada.
12. The Canadian Bank of Commerce.
13. The Dominion Bank.
14. The Merchants' Bank of Halifax.
So
THE CURRENCY AND THE
15.
16.
17-
18.
19.
20.
21.
23.
24.
25-
26.
27.
28.
29.
30.
31-
32.
33-
34.
35-
36.
The Bank of Nova Scotia..
The Bank of Yarmouth.
La Banque Ville Marie.
The Standard Bank of Canada.
The Bank of Hamilton.
The Halifax Banking Company.
La Banque d'Hochelaga.
The Imperial Bank of Canada.
La Banque de St. Hyacinthe.
The Bank of Ottawa.
The Bank of New Brunswick.
The Exchange Bank of Yarmouth.
The Union Bank of Halifax.
The People's Bank of Halifax.
La Banque de St. Jean.
The Commercial Bank of Windsor.
The Western Bank of Canada.
The Commercial Bank of ALanitoba.
The Traders' Bank of Canada.
The People's Bank of New Brunswick.
The Saint Stephen's l^ank.
Tiie Summerside Bank.
SCHEDULE B
FORM OF ACT OF INCORPOKATION OF A'EW BANKS.
An Act to incorporate the Bank.
Wlicrcas the persons hereinafter named have, by their petition,
prayed that an Act be passed for the purpose of establishing a bank
in , and it is expedient to grant the prayer of the
said petition :
Therefore Her Majesty, by and with the advice and consent of
the Senate and House of Commons of Canada, enacts as follows: —
Z. The persons hereinafter named, together with such others as
BANKING LA W OF CANADA.
8i
become shareholders in the corporation by this Act created, are
hereby constituted a corporation by the name of
hereinafter called *' the Bank."
2. The capital stock of the bank shall be
dollars.
3. The chief office of the bank shall be at
4.
shall be the provisional direc-
tors of the bank.
5. This Act shall, subject to the provisions of section sixteen of
"The Bank Act," remain in force until the first day of July, in the
year one thousand nine hundred and one.
SCHEDULE C.
FORM OF SECURITY UNDER SECTION SEVENTY-FOUR.
In consideration of an advance of dollars, made
by the ijuDne of bank) to A. B., for which the said bank holds the
following bills or notes {describe fully the notes or bills held, if any},
the goods, wares and merchandise mentioned below are hereby
assigned to the said bank as security for the payment, on or before
the day of of the said advance, together with in-
terest thereon at the rate of per cent, per annum from
the day of {or, of the said bills and notes, or
renewals thereof, or substitutions therefor, and interest thereon, or
as the ease may be).
This security is given under the provisions of section seventy-
four of " The Bank Act," and is subject to all the provisions of the
said Act.
The said goods, wares and merchandise are now owned by
and are now in possession, and are free from any mortgage, lien
or charge thereon {or as the ease may be), and are in {plaee or plaees
where goods are), 2L.v\i\ are the following: {partieular description of
goods assigned).
Dated at 18 .
82 THE CURRENCY AND THE
SCHEDULE D.
Return of the liabilities and assets of the bank
on the day of , A. D.
Capital authorized .... $
Capital subscribed .... $
Capital paid up $
Amount of rest or reserve fund . $
Rate per cent, of last dividend declared. per cent.
LIABILITIES.
1. Notes in circulation ... $
2. Balance due to Dominion Govern-
ment, after deducting advances for
credits, pay-lists, etc
3. Balance due to Provincial Gov^ern-
ments ......
4. Deposits by the public, payable on
demand ......
5. Deposits by the public, payable after
notice or on a fixed day ...
6. Loans from other banks in Canada,
secured ......
7. Deposits, payable on demand or after
notice or on a fixed day, made by
other banks in Canada ...
8. Balances due to other banks in Can-
ada in daily exchanges ...
9. Balances due to agencies of the bank,
or to other banks or agencies in for-
eign countries ...
TO. Balances due to agencies of the bank,
or to other banks or agencies in
the L^nitcd Kingdom . . .
II. Liabiliti<:.s not included under fore-
going heads .....
BANKING LA W OF CANADA.
83
ASSETS.
1. Specie ......
2. Dominion notes . . . . .
3. Deposits with Dominion Government
for security of note circulation
4. Notes of and cheques on other banks.
5. Loans to other banks in Canada, se-
cured ......
6. Deposits, payable on demand or after
notice or on a fixed day, made with
other banks in Canada .
7. Balances due from other banks in
Canada in daily exchanges
8. Balances due from agencies of the
bank, or from other banks or agen-
cies in foreign countries .
9. Balances due from agencies of the
bank, or from other banks or agen-
cies in the United Kingdom .
Dominion Government debentures or
stocks ......
II. Canadian municipal securities, and
British, Provincial, or foreign, or
colonial public securities, (other than
Dominion) . . . . .
Canadian British and other railway
securities. . . . . .
Call loans on bonds and stocks .
14. Current loans . . . . .
15. Loans to the Government of Canada .
16. Loans to Provincial Governments
17. Overdue debts . . . . .
18. Real estate, the property of the bank
(^other than the bank premises)
19. Mortgages on real estate sold by the
DaiiK. . . ■ . . •
20. Bank premises . . . . .
21. Other assets not included under the
foregoing heads . ♦ • •
10.
12.
13
84
BANKING LA W OF CANADA.
Aggregate amount of loans to directors, and firms of which they
are partners, $
Average amount of specie held during the month, %
Average amount of Dominion notes held during the month, $
Greatest amount of notes in circulation at any time during the
month, $
I declare that the above return has been prepared under my
directions and is correct according to the books of the bank.
E. F.,
Chief Accountant,
We declare that the foregoing return is made up from the books
of the bank, and that to the best of our knowledge and belief it is cor-
rect, and shows truly and clearly the financial position of the bank ;
and we further declare that the bank has never, at any time during
the perio'^ to which the said return relates, held less than forty per
cent, of its cash reserves in Dominion notes.
{Place) this day of
A. H., President.
CD., General Manager.
MEMORANDA.
The currency of Canada is in dollars, cents, and mills, at the rate
of 10 mills for a cent and lOO cents for a dollar. The British sover-
eign is legal tender for $4.86^.
Silver coin minted for circulation in Canada by order of Queen
Victoria, is legal tender to the amount of ten dollars, and copper
coin to the amount of twenty-five cents. The gold eagle of the
United States is legal tender for ten dollars. Canada has no gold
coinage of her own.
Tl'.e Government of Canada and the chartered banks only are
authorized to issue paper money. The Government currency is
issued in denominations of four dollars, two dollars, one dollar,
and twenty-five cents ; no bank being permitted to issue notes for
less sum than five dollars, or for any sum not a multiple of five
dollars. The Dominion note issue is limited to $21,000,000.
$1 1,000,000 of the Dominion note circulation are in notes of $500
and $1,000, and are principally held by the banks as part of their
cash reserve.
In order to secure the redemption of Dominion Government
notes, the Minister of Finance is required to hold in gold and
securities guaranteed by the Imperial Government, a sum c(|u;il to
25 per cent, of the amount issued, of which 15 per cent, must be iit
gold and 10 per cent, in guaranteed securities^ — the lemaining 75 per
cent, to be covered by Dominion debentures, issued by authority of
Parliament.
The development of banking business in Canada is seen from the
following statement :
If
86
BANKING LA W OF CANADA.
1871
1881
iSqi
Capital Paid
Up, Per Head
of Population.
$10.30
13-76
12.56
Circulation
Per
Head.
$5.75
6.60
6.54
People's De-
posits Per
Head.
$15-48
21.81
30.70
People's Dis-
counts Per
Head.
$23.33
27.04
35.40
Liabilities.
Assets.
$22.07
29.40
38.75
I34.46
46.38
55-72
In addition to the capital paid up in 1891, the reserve fund of
the hanks in that year amounted to $4.72 per head of population.
The first chartered bank to suspend business since Confederation
(1867) was the Commercial Bank of New Brunswick. The Bank of
Acadia (Liverpool, N. S.), suspended in 1873 : the Metropolitan Bank
of Montreal in 1877; the Mechanics' Bank of Montreal, the Consoli-
dated Bank of Montreal, the Bank of Liverpool, N. S., and the
Stadacona Bank of QueDec, in 1879 ; the Exchange Bank of
Canada, in 1883; ^^e Maritime Bank, of St. John, N. B., the Pictou
Bank, the Bank of London, Ont.. and the Central Bank of Canada
retired from business in 1887, and the Federal Bank in 1888; the
Commercial Bank of Manitoba closed its doors in 1893. In all,
fourteen banks have suspended, representing assets of over $22,000,-
000, and liabilities of over $15,000,000.
The Commercial Bank of Manitoba failed in July, 1893. The
notes of the bank were all paid in full soon after the failure.
The following table gives average paid up capital, assets, liabilities,
and other particulars of the various banks in operation in the years
1870, 18S0, 1890, and 1893, since Confederation, according to the
returns made to the Government as required by the Bank Act.
Year.
1870
1880
1890
1893
C.ipitnl Paid
Up.
•33.031. »49
60,058,117
59.974.9<J2
62,009.346
Notet in
Circulation.
$15,149,031
33,539,623
32.834.5>>
33,811.931;
Total on De-
posit,
Total of Dft*
countK to the
Pwpl*.
$48.763.305 ' $^.6,376,961
85.303.8'4 ! 103.166,115
I35.54«.7"4 153.301.335
174.776,722 1 305,623,042
Liabllitiei.
$65,685,870
ill.838.(>4i
173.207,587
ai7.i95.975
Amett.
$103,197,103
184,376,100
254. 546.339
303,696.715
^rtiStr' •
■i »iiiii< M t r<iin" «
17^,
r >J •
* t
,BHr»»-<?
#
i|j
^
%.•
V
i^-