Forbade it from engaging in any other trade or

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forbade it from engaging in any other trade or business, and prevented the extension of credit for the purchase of real property. One feature that was absent was the double liability clause. The provision originated with the bank of New Brunswick, which copied the Massachusetts banks. The purpose of the clause was to encourage prudent behaviour by the directors and shareholders in issuing bank notes. In the event of failure, the shareholders of the bank were required to take up an amount of stock equal to what they already owned.
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Another feature of the second bank’s charter was the limit of 6% charge on advances to borrowers. BMO could not establish branches, a power that the first bank of the U.S enjoyed The Bank of Upper Canada BMO opened branches in york and Kingston in 1818. This alarmed the merchant community of upper Canada as BMO was subject to French civil code of lower Canada, more generally it would increase dependence on Montreal Apart from New York, Montreal was the sea-port and financial centre for all trade to its west. It was this little town of York that obtained the first upper Canadian bank of charter in 1822. The bank of Upper Canada obtained royal assent after a bizarre political battle with Kingston, not least because none of the bank’s fifteen directors were also members of Upper Canada’s executive council. The constraints on the bank notes were not observed, so that the note circulation exceeded the legal requirement. BMO took the bank notes of Upper Canada and dumped them without warning and requiring payment in specie. Upper Canada responded by prolonging a ‘specie war’ At first, the bank of Upper Canada made its notes redeemable at its Montreal branch office. But this only made it convenient for the BMO to redeem its rival’s notes on the spot. The bank of Upper Canada then resorted to making its notes redeemable only at the head office in York. Forced other to face the expense and risk of transporting specie The government of York passed an act preventing out-of-province banks from operating in Upper Canada unless their notes were redeemable at York. This effectively barred the BMO from operating in Upper Cana from 1824 until the union of Upper & Lower Canada in 1840
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  • Spring '09
  • Danny
  • BMO, Upper Canada

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