Volume 2 - ElectricCanadian.com

4 HISTORY OF THE BANKthat, because of the close proximity of the province to theState of New York, the public mind should be in a measureIn Newinfluenced by the banking systems prevailing there.York "free banking" had already gained acceptance, and ithad in Canada one very staunch advocate in the person ofWilliam Hamilton Merritt 1 of Welland, who in 1850 succeededininducing the legislatureto authorize a trial of thissystem. The main features in which it differed from theexisting system of chartered banks were:1. The permission accorded to any individual or group ofindividuals, on complying with the requirements ofthe Act, to carry on the business of banking,including the issuing of notes, without obtaining aspecial charter from Parliament.2. The provision that notes could be issued only to theextent of the government securities deposited withthe Receiver-General.3. The restriction of a bank to one office.The minimum amount of capital for any joint-stockcompany formed under the Act to conduct a banking businesswas placed at 25,000 currency, and such a company wasobliged to qualify to issue notes to the extent of at least25,000. It was in this way that a market for governmentsecurities was to be created. The limitation of a bank to oneoffice, and the size of even the largest Canadian towns at thisstage of the country's development, of necessity restrictedthe amount of capital which could be employed, and inlWilliam Hamilton Merrill (1793-1862) was one of Ihe mosl public-spirited andmen of his lime in Upper Canada. Born in the State of New York, heto Canada wilh his parents in 1796. He served in the War of 1812, takingpart in several bailies, among Ihem Queenston Heights and Lundy's Lane. Hetook a deep interest in the improvement of the means of transportation in Ihe province,bdng one of Ihe principal promoters of the Welland Canal. In 1836 he advocatedtbe ntahlfahmenl of a provincial bank, in which Ihe Governmenl was to be Ihepredominant partner. He was a strong advocate of reciprocity in trade belweenCanada and the United States. In 1848 he was made President of the Council inthe La Fontaine-Baldwin administration, and in 1850 became Commissioner of PublicWorks.In 1800 he was elected a member of the Legislative Council.