30 THE ROYAL SOCIETY OF CANADA 



Mackenzie hurried to England, laid his complaint before the Colonial 

 Office, and secured the disallowance of the measures.*^ 



In 1834 a Select Committee was appointed to report on the 

 expediency of establishing a provincial bank. This committee 

 reported in 1835,'*^ advising that the province was much under- 

 supplied with banking capital as compared with the state of New 

 York. From the evidence brought before the committee it was 

 clear that Canadian external trade was being carried on under great 

 disadvantages. The rate of exchange was enormous. The Bank 

 of Upper Canada was importing both gold and silver; but these were 

 steadily drawn away. This phenomenon was attributed to the under- 

 valuation of the coins. In other words, the paper of the banks was 

 depreciated, and this fact was not recognized. Mr. Ridout, of the 

 Bank of Upper Canada, suggested that the sovereign should be 

 reckoned at £1.4.3, and the crown at 6s.'*^ 



Mackenzie appears at this time to have had in his mind the 

 establishment of a national bank either on the plan of the National 

 Bank of the United States, which was actually in existence, or on 

 the plan of Ricardo published in 1824, after the death of the author. ^^ 

 Mackenzie cannot be supposed to have been fully aware of what was 

 going on in the financial world; but his insistence upon sound banking 

 was as strenuous as if he had been fully informed. In 1836, owing 

 to the first railway mania in Great Britain and other causes, there 

 was great financial stringency, and in 1837 there was a commercial 

 crisis in the United States arising from undue expansion of credit. 

 These occurrences cut olï the supply of capital which, small though 

 their operations were, the Canadian banks urgently required. No 

 banking system is proof against widespread panic; but the extent to 

 which the Canadian banks had extended their credit rendered them 

 peculiarly vulnerable. Oblivious of the external and internal financial 

 situation, the Upper Canada Government proposed, in 1836-37, a 

 series of measures involving an expenditure very large relatively to 

 the resources of the province at that time. 



Sir Francis Bond Head, who was then Lieutenant-Governor, felt 

 himself obliged to summon the Provincial Parliament for an extra- 

 ordinary session, and in his Speech from the Throne on 20th June, 



^Cf. Lindsey, Charles, The Life and Times of Wm. Lyon Mackenzie . . ., 

 Toronto, C.W., 1862, vol. i, p. 243. 



"Report of Select Committee on the expediency of establishing a Provincial 

 Bank within this Province (Upper Canada), 13th February, 1835. 



^^Evidence of Ridout in Report of Committee on Finance, 8th March, 1829. 



*^Plan for the establishment of a National Bank, London, 1824 (pp. 499-512 in 

 McCulloch's Edition of Ricardo's Works, London, 1881). 



