DOMINION OF CANADA. 



261 



out serious defects, is admitted to have been 

 upon the whole well suited to the needs of the 

 -country. Thirty-five or forty banks, with about 

 four hundred and twenty branches scattered 

 throughout the Dominion, had supplied the 

 trading community with money at rates of in- 

 terest remarkably uniform, irrespective of lo- 

 cality. While people in some of the Western 

 States were paying 1 or 2 per cent, a month 

 for money, people in the Canadian Northwest 

 were borrowing at 6 or 7 per cent, per annu,m. 

 The most noteworthy defects of the Canadian 

 banking system, as contrasted with that of the 

 United States, were in connection with the issue 

 of bank notes. There being no Government 

 guarantee of the currency issued by the Cana- 

 dian banks, note holders have suffered severely in 

 the cases where Canadian banks have become in- 

 solvent. For the same reason the notes of the 

 smaller banks were not always accepted as freely 

 .as a national currency would be, and, what was 

 probably the most serious drawback of all, notes 

 issued in one part of the Dominion were sub- 

 jected to discount in other parts. As a matter 

 of fact, the losses of note holders, except in a 

 few instances, were not heavy, because in case of 

 ^, bank's insolvency the claims of the note hold- 

 ers formed a first lien upon the entire assets of 

 the bank, and this class of creditors was further 

 protected by the liability of the share holders to 

 the extent of twice the amount of their share 

 capital. The class who suffered most were poor 

 people, the holders of small amounts in the notes 

 of insolvent banks, who were not able to wait 

 until the tedious process of liquidation would 

 give them a hundred cents on the dollar for 

 their notes. Brokers and speculators would buy 

 these notes at very low prices, and obtain their 

 par value from the banks in the course of a few 

 months. There is a practical limit to the pos- 

 sibilities of bank-note issue independent of stat- 

 utory provisions, and while the banks had the 

 legal right to issue notes to the extent in the 

 aggregate of about $60,000,000, the issue actu- 

 ally ranged from $30,000,000 to $36,000,000. In- 

 dependent of this issue of chartered bank cur- 

 rency, there is a Dominion note circulation issued 

 by the Government of Canada. One of the most 

 important provisions of the new Banks and 

 Banking act is the establishment of a guarantee 

 redemption fund, by which the banks become 

 practically mutual insurers of one another's cir- 

 culation. With one or two exceptions, every 

 bank is called upon to deposit with the Minister 

 of Finance a sum equal to 2^- per cent, of the 

 average amount of its notes in circulation during 

 the twelve months preceding the date of the act 

 going into force. By July 15, 1892, this amount 

 must be made up to 5 per cent, of the amount 

 of note circulation for the twelve months then 

 completed. The fund so formed is to be held 

 for the sole purpose of meeting the notes of any 

 Taank that may become insolvent, and that may 

 not be redeemed. In case the fund should be- 

 come impaired by the payments to redeem the 

 notes of an insolvent bank exceeding the amount 

 of its deposit, the other banks will contribute 

 pro rata to the amount already contributed by 

 them, in order to make up the deficiency, no 

 bank to be called upon to contribute more than 

 1 per cent., on the average, of its note circula- 



tion for the year. The banks are also required to 

 make arrangements for the redemption of their 

 circulation at par in any and every part of Can- 

 ada, and to that end are all required to have 

 agencies for that purpose in Halifax, St. John, 

 Charlottetown, Montreal, Toronto, Winnipeg, 

 and Victoria, and at any other places that may 

 be designated by the -Treasury Board. In fu- 

 ture, no banks are to be incorporated with less 

 than $500,000 capital, and every new bank, no 

 matter what its capital, must, before holding its 

 first meeting of share holders, deposit $250,000 

 with the Government, to be held during the or- 

 ganization of the bank. Directors must be sub- 

 jects of Her Majesty, and the stock upon which 

 they qualify must be fully paid up. The Do- 

 minion Government is 'to have a second lien 

 upon all bank assets (after the note-holders' lien 

 is satisfied), as security for its deposits, and the 

 provincial governments a third lien for their 

 deposits. No dividends are permitted to be paid 

 that would impair the paid-up capital, and any 

 impairment of the paid-up capital is to be 

 made good by calls upon the share holders. No 

 dividends or bonuses exceeding together 8 per 

 cent, per annum, unless a bank has a reserve or 

 rest equal to 30 per cent, of its paid-up capital, 

 after allowing for bad and doubtful debts, and 

 40 per cent, of the reserve must be held in Do- 

 minion notes. Banks are permitted to issue 

 notes of the value of five dollars and multiples 

 of five dollars, to the amount of their unim- 

 paired paid-up capital. They are prohibited 

 from hypothecating their notes. All balances 

 remaining unclaimed in banks after five years 

 from the last transaction are to be paid to the 

 Government, to be retained subject to the claims 

 of the rightful owners. 



Debate on the Dual-Language Question. 

 On Feb. 12 Mr. Dalton McCarthy, formerly 

 a member of the Conservative party, now the 

 leader of the Equal Rights party, moved the 

 second reading of his bill to abolish the French 

 language as an official language in the Northwest 

 Territories. Mr. Davin moved in amendment : 



That this bill be now read a second time, but that 

 it be resolved that it is expedient that the Legislative 

 Assembly^ of the Northwest Territories be authorized 

 to deal with the subject of this bill by ordinance or 

 enactment after the next general election for the said 

 Territories. 



In support of his amendment, Mr. Davin ar- 

 gued that it was a question to be settled by the 

 local legislature, and that, although the French 

 population were in a minority in the Northwest, 

 it would be manifestly unfair to repeal the clause 

 without giving them a hearing. He criticised 

 the illogical stand Mr. McCarthy had taken re- 

 garding this question, and denied the proposition 

 laid down by the latter gentleman, that " it is 

 only by language and by the community of lan- 



S.iage that men are formed into nations." Mr. 

 avin accused Mr. McCarthy of inaugurating 

 a crusade against the Roman Catholic Church 

 rather than endeavoring to do away with the 

 French language. Comparing the governments 

 of Canada and Switzerland, Mr. Davin pointed 

 out that in the latter country they had three 

 official languages, notwithstanding which that 

 country had continued to prosper during the 

 past six centuries, and he maintained that there 



