Volume 2 - ElectricCanadian.com

1867 TO 1901 67those who thus borrowed gold failed before the panic was over,but as the business of the bank was very closely watched andthe full margin of security allowed by law carefully maintained,in the end little or no loss was incurred. The bank's totallosses in New York during this panic were not large, but werean unwelcome addition to the more serious losses met with inCanada, and it is a great satisfaction to recall that, as oneresult of the crisis, the experience gained by the officers of thebank led them to lay down certain principles upon which thebusiness of the New York agency has ever since been conducted.Since 1873 it has been remarkablyfree from loss.In Canada the summer of 1873 was a very difficultonefor bankers. Many failures occurred, and the air was filledwith rumours affecting the standingof various banks. Theletters which passed between the cashier and the presidentduring the period when the latter was attending to his Parliamentaryduties in Ottawa as a member of the Senate, throw avivid light on the difficulties and dangers of piloting a youngbank through the dark days of panic and financial stringency.Until January 1, 1874, the price of sterling exchange wasquoted hi New York in terms of a premium on the old par ofexchange, $4.44$, which dated back to Colonial days. 1The real or mint par of exchange that is, the intrinsic valueof the gold legally contained in a sovereign, expressedin terms of dollars, namely $4.8666 was expressed as apremium of nine and a half per cent, on the old par. By anAct of Congress passed March 3, 1873, however, it was orderedthat in all payments by or to the Treasury of the United Statesthe sovereign or pound sterling should be valued at $4.8665,and that the same valuation should be the par of exchange'At this valuation ($4.44$ to the pound sterling) the dollar was worth 4s. 6d.According to Robert Chalmers (A History of Currency in the British Colonies, n.d.,p. 6.), "the sterling value generally accepted in the seventeenth century for the pieceof eight was 4s. 6d., the rating subsequently stereotyped by Queen Anne's Proclamationof 1704 and by Sir Isaac Newton's Tables of 1717." Thisappears to have been theorigin of the old par. Sir Isaac Newton was Master of the Royal Mint in 1717."Piece of eight" is the name by which the dollar was known prior to 1728 (Idem, p. 16).