Volume 2 - ElectricCanadian.com

DEVELOPMENT OF CANADIAN BANKING 397set out the special arrangements whereby the Government ofUpper Canada was authorized to subscribe for two thousandshares, or one-fourth of the whole stock of the bank. The provisionsof this section had very important political andeconomic consequences, alike for the Government and for thebank, but they remained a peculiarity of the charter of theBank of Upper Canada, and so contributed nothing to theCanadian banking system. Indirectly, of course, the factthat the management of the bank was in the hands of theso-called Family Compact, 1which controlled both Legislativeand. Executive Councils and strenuously opposed all democraticmovements, led to the dragging of banking questions into thefront line of the struggle for responsible government whichfilled the political history of the province for the next twentyyears. A temporary financial crisis led to the collapse of theprivate Bank of Upper Canada at Kingston, and preventedthe Bank of Kingston from going into operation within thelimit fixed by its charter. The Bank of Upper Canada atYork thus obtained a monopoly of banking in the province,and this the directors of the bank frankly proposed to maintainby virtue of their control of the Legislative Council. In thisthey would undoubtedly have succeeded, at least until thepolitical crisis of 1837, had they not found it necessary toseek from the legislature: first, a reduction of the minimumamount to be paid in before the bank could commence business;2secondly, a reduction of the capital to one-half the amountoriginally fixed, the Government, apparently in considerationof paying for the two thousand shares reserved for it underthe charter, being given the right to appoint four out of thefifteen directors; 3 and thirdly, when prosperity returned, anincrease of the capital to its original amount. 4 The third ofthese requests was not granted until 1832, and for this purposeit was necessary to secure the consent of the Assembly, in1See Vol. I, pp. 18 and 167.82 Geo. IV (2nd session), 1822. c. vii.4 Geo. IV, 1823. c. xi.*2 Wm. IV (2nd session), 1832, c. x.