Eastern Townships Bank
La Banque Nationale
The next bank appearing on the list with head office in Montreal is the Molsons. This charter was granted in 1855. The original capital was £250,000, authorized, of which £50,000 were to be paid in before the bank should begin business; and the whole amount was to be paid up in five years. The author of “The Canadian Banking System” says the Molsons, the Zimmerman Bank, the Niagara District, and the Eastern Townships came into the field “when the tide of sudden and remarkable prosperity which followed the Reciprocity Treaty of 1854 was beginning.”
The Molsons was one of the few banks to take advantage of the famous “Act to establish Freedom of Banking,” passed in 1850 by the Legislature of the Province of Canada. Banks taking advantage of this act were required to deposit with the receiver general provincial securities for not less than £25,000 currency, par value, as security for the redemption of their notes. The receiver general would then deliver to the bank an amount of registered notes equal to the amount of debenture lodged. The notes were marked “Secured by provincial securities deposited with the Receiver General.” This represented an attempt to introduce to this country the system of bond secured currency which had then been taken up in the United States. The Canadian Government’s action in this matter was prompted in part by the desire to improve the market for its issues of debentures. At that time the Government resorted to various devices for converting the resources of the banks to its own uses.
The Bank of British North America also took advantage of the provisions of the Free Banking Act as regards note issue. It is understood that the British did so in order to obtain the right to issue small notes.
The charter of the Merchants Bank of Canada was obtained in 1861; and it began on 9th May, 1864, with a capital of $100,000, Hugh Allan being the founder and first president. This bank operated as a local Montreal institution for the first four years, and in 1868 it expanded into an important branch bank through acquiring the estate of the Commercial Bank, which failed in 1867, the failure following closely after the closing of the Bank of Upper Canada. The bank thereby acquired a valuable connection in Ontario and placed itself in position to develop with the growth of that great province.
It is interesting to note that between 1867 and 1873 there was strong competition in the matter of increasing paid-up capital among the larger banks. The Bank of Montreal, the Canadian Bank of Commerce (which had recently been organized in Toronto) and the Merchants were particularly active in calling up new stock.
The bank return for 30th June, 1867, at Confederation, showed twenty-eight banks in existence with total assets of $80,772,834. And at the end of June, 1873, there were thirty-three banks, with assets of $168,519,746.
Among the existing at present Montreal institutions the Banque Provinciale ranks next to the Merchants in point of age, taking into account the fact that it is the successor to Banque Jacques Cartier. The Jacques Cartier was chartered in 1861, the same year as the Merchants.