“Allowing,” he says, “for the necessary changes required to adapt the American charter to Canadian conditions, the bill reproduces in a very literal manner every essential feature of the American Act.” The bank provided for in the bill was naturally on a smaller scale than that of the United States. Then he gives in parallel columns the full number of articles, sixteen in each case, applying to the Canadian bank and the American bank. On perusing them it is quite easy to see that the idea or plan was taken bodily from the United States and changed only so much as to make it applicable to Canada’s position.
This new banking scheme formed the subject of much discussion, in the Legislature and outside of it, for several years. The big merchants of Montreal and Quebec had not abandoned their plan, and were no doubt working for its accomplishment when in 1812 war broke out between the United States and Great Britain. The war served to put an end for the time to the projects for a new bank. The various writers dealing with this stage of Canada’s history appear to agree in their statements that the maintenance of considerable bodies of British troops in Canada served to make business prosperous for the producers and merchants. The troops consumed large quantities of produce, which was purchased by the Home Government at famine prices. Consequently, exports of produce tended to decline. One authority says that about the only exports passing down the St. Lawrence at this time were bills of exchange.
During the war the currency troubles were largely removed, too, through the issue of the army bills. These bills were issued at first in denominations of $25 and upwards bearing interest and in the denomination of $4 not bearing interest. Afterwards bills of the denominations of one, two, three, five, eight, ten, twelve, sixteen and twenty dollars were added to the non-interest bearing issues. The large interest-bearing bills could be converted into small bills not bearing interest; and the small bills could be converted into large bills subject to interest. The rate of interest was 4 pence per £100 per day. Bills were redeemed at the option of the commander in cash or bills on London at thirty days’ sight at the current rate of exchange.
While these army bills were in circulation there was plenty of currency available for carrying on the country’s business. The total outstanding on March 27th, 1815, was £1,249,996. After the close of the war, the issues were rapidly redeemed. A year later, in April, the outstandings had been reduced to £197,974. At the end of 1820, all bills had been retired. Their cancellation brought back the currency troubles in an aggravated form; and the merchants and citizens redoubled their efforts to secure authorization of a bank which would transact, deposit exchange, and discount business, and issue notes to serve as circulating medium.
Even before the army bills were withdrawn and cancelled, the agitation for a bank was renewed. Early in 1815 a motion was introduced in the Lower Canada Legislature to resolve the House into a committee of the whole to consider the establishment of a bank. This came to nothing. At the next session sundry Montreal merchants petitioned for incorporation as a bank. The dissolution of the House on 28th February, 1816, put an end to the bill which was framed to give effect to this plan. It was put in again when the new House assembled; but before it could be passed the House was prorogued. Then, to quote Professor Shortt, “The merchants of Montreal, who had been chiefly interested in the attempts to get a bank charter, feeling, no doubt, that the sympathy of the business community was with them, and that it would be a pity to lose another year with no more certainty of success, * * * decided to start the bank without a charter. Accordingly, on May 19, 1817, the articles of association of the Montreal Bank were adopted, and the corporation proceeded to organize.”
The founders of the bank had their articles of association published in The Montreal Herald, May 22, 1817. Our authority states that he was not able to discover any copy of The Herald for that date. But he found that the Quebec Gazette, exactly one week later, on May 29th, copied from The Herald an editorial item commenting on the new enterprise thus:
“In the first page of this paper the articles of the Montreal Bank Association are laid before the public. Such an establishment has always been a favorite with this journal, and we cannot but congratulate the community on the prospect of a wonderful change for the better in the agricultural and mercantile pursuits of this province. The articles of this most laudable association, so far as we are enabled to judge from practical experience in our younger years, and from much reading, are drawn up with great judgment and wisdom, and seem extremely well calculated for our local position. We forbear making any remarks on the subject for the present, further than that we wish the establishment the utmost success in all its bearings.”
These original articles of the Montreal Bank, according to evidence collected by Professor Shortt, were without doubt adapted from the proposed charter for the Canada Bank, drawn up in 1808; and as we have already seen, the articles of the Canada Bank were almost literally copied from the charter of the first Bank of the United States. Just a few months before the Montreal Bank articles were signed—in January, 1817—the second Bank of the United States was organized. If more evidence is required to demonstrate that our banking system was originally founded on the United States model as then existing, it is supplied in the statement that one of the officers of the newly created Montreal Bank was sent to New York to study the methods of the American institution, and that one of the first officers of the Montreal Bank was an American experienced in United States banking.
The names of the first officers are given as follows: President, John Gray; cashier, Robert Griffin; accountant, H. Dupuy; first teller, Mr. Stone.