Volume 2 - ElectricCanadian.com

THE CHARTER 17Government was therefore limited mainly to the amount of thenew provincial notes which the Bank of Montreal was able toprevail upon the other banks to carry for the purpose ofmaking settlements of daily balances. On the other handthe Bank of Montreal benefited very largely by the new plan;it was relieved of the burden of Government debt which ithad been carrying, and its position and consequent prestigewere immensely strengthened; indeed, the elimination of itsmost powerful rival, the Bank of Upper Canada, and thegrowing embarrassment of the Commercial Bank left it masterof the situation. At Confederation the Bank of Montrealpossessed nearly a fourth of the total paid-up banking capitalof Ontario and Quebec, and its assets were more than a fourthof the total assets of all the banks in those provinces. Itsliabilities, in the form of deposits and circulation, were nearlya third of the liabilities of the same banks, which totalled$39,000,000. Nevertheless, success brought in its train notuncommon consequences; the bank became the object ofgeneral popular criticism and even animosity, not alwaysconfined within reasonable limits. But the roots of its unpopularityin Canada West lay still deeper. Breckenridge writes:"The original cause, no doubt, was the restrictive policyfollowed in Canada West, after 1862-3, at the instance of theextraordinarily able man then at the head of the bank, Mr.E. H. King. The western business was regarded as thoroughlyunsound, being based on accommodation paper. Mr. Kinghad no reverence for 'names' upon securities offered fordiscount; he resolved to bring the business down to a solidbasis. And so he did, although at the cost of more than amillion dollars, written off between 1863 and 1866 by theBank of Montreal on account of bad and doubtful debts inUpper Canada. 1Canada West also suffered by the process,and much of its loanable capital, accumulated as deposits inthe Bank of Montreal, was drained away from the producersof the province, either to supply the importing merchants ofaSee footnote on page 2.