[mayor] a chapter of CANADIAN ECONOMIC HISTORY 27 



further appears to have been done until 1808, when a Bill was intro- 

 duced in the Lower Canada legislature providing for the incorporation 

 of a bank in that province.^"^ The capital stock of the bank was to be 

 £250,000 in addition to any subscription made by the provincial 

 government, which subscription was not to exceed £50,000. No 

 shareholder not a resident of the province could be elected a director. 

 In the event of the subscription by the provincial government of not 

 less than £25,000, two directors might be appointed by it — -one for 

 Montreal and one for Quebec. The Bill failed to pass and the question 

 of the foundation of a chartered bank remained in abeyance for 

 several years. Meanwhile, the needs of the commercial community 

 brought about the formation of four private banks whose business 

 was carried on without any charter. The first of these was the Bank 

 of Montreal, which began as an unchartered bank in 1817. The 

 others were the Quebec Bank, the Bank of Canada at Montreal, and 

 the Bank of Upper Canada at Kingston. ^^ An anonymous 

 pamphleteer of 1820,^^ in a rather verbose paper attacked the private 

 banking system, alleging that the competition of numerous banks 

 resulted in undue expansion of credit with consequent inflation of 

 trade and temporary advance of prices. That there was ground 

 for these criticisms there can be little doubt. After the banks were 

 chartered their loans and discounts considerably exceeded the capital 

 plus the deposits .^^ 



The first Upper Canada Bank Act, chartering a bank of that 

 name, was passed in 1817, but was reserved. Assent was eventually 

 given in 1821;^^ but the Act had had to be introduced and passed 

 again as the period during which assent might be given had expired. 

 The second Bill was, however, not quite the same as the first. The 

 Act as eventually passed contained a new provision which was ob- 

 viously taken from the Quebec Bill of 1808, permitting the provincial 

 government to hold stock in the bank. The passing of the Act was 

 accompanied by a dispute between merchants of Kiingston, who were 

 themselves promoters of a Bill for the establishment of a bank there, 



^^A Bill introduced in the House of Assembly of the Province of Lower Canada to 

 incorporate a Bank in Loiver Canada, Quebec, 1808. 



'^The Articles of Association of these private banks are in general similar to the 

 provisions of the Bill, 1808, cited above. Prof. Shortt says that they are really 

 copies from the first charter of the Bank of the United States (Shortt, op. cit., p. 18). 



^^An Inquiry into the origin and present system of Colonial Banks and their 

 dangerous effects, with a proposition for a National Bank, Quebec, 1820. 



^^See e.g.. Journals of the House of Assembly of Upper Canada, Sess. 1837; 

 Toronto, 1837. Bank return in the Report of the Select Committee {on the) Monetary 

 System of the Province. 



3559 Geo. Ill, c. 24 (U.C. Statute). 



