In the 1850s the bank was heavily committed

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In the 1850’s the bank was heavily committed financially to the Grand Trunk Railway, whose president John Rose, sat on its board. BMO took control over the Grand Trunk. In 1866 bank of Upper Canada failed. But it was now subject to the double liability clause, this was embarrassment to our government before confederation, and nothing has yet been done to enforce payment by the shareholders The Struggle among Banks for Market Share At confederation we had thirty-eight banks and the BMO alone accounted for about 25% of all the assets Mr. Rose and Mr Edwin king propose that we adopt the American Free banking system and that we accede to the transfer of the note-issuing power to the Dominion Free banking it was called, anyone with enough capital could open a local bank with no branches. People seek opportunity and we had many bank failures. A flood of fraudulent paper money appeared, some of which has drifted over the border to the Dominion. The U.S. experience makes it clears how important it is to have one national issuer of the circulating currency, both coin and paper.
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Union of upper and lower Canada, introduced the legislature of “free banking act of 1850” which allowed founding of local banks without branches. Zimmerman bank in Niagara, came into existence Read pg 34-35 The rise of Canadian Dollar Establishment of a self-governing Dominion of Canada, no longer require royal assent from London. Battles we fought in the years of 1851-1854 to keep provincial accounts in dollars instead of sterling. Trading relationship with US became the essence for adopting the currecy system of the U.S. this was done in 1858 These recommendation by abbot report was part of the first Bank Act in 1871 Establish a uniform federal act, replacing all provincial charters, and including the following specific features: A minimum capital fo 500,00, of which 10% to be paid Power to ussue notes in denominations of $4 or more, not to exceed paid-up capital and secured by gold or Dominion notes Double liability on shareholders, to be paid beofer realizing on the assets of a failed bank Total bank liabilities not to exceed three times capital Mandatory decennial revision by parliament One vote per share Prohibition against extending credit on real property Maintain 6% interest ceiling
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  • Spring '09
  • Danny
  • BMO, Upper Canada

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