Volume 2 - ElectricCanadian.com

DEVELOPMENT OF CANADIAN BANKING 413was to assist the finances of the province. It had, however,some important effects upon the future trend of Canadianbanking and currency. The general principles and mainfeatures of the measure were imported from the United States,where they afterwards became the permanent basis of theNational Bank system of that country, and thus effected apermanent divergence between the American and Canadianbanking systems. To clear the ground for the operation of thenew system in Canada, the new Act repealed the special Actsand ordinances introduced during the financial crisis of 1836-40to protect the public from the swarm of private banks whichcame into existence while specie payments were suspended.It also limited the power of issuing bank-notes to the existingchartered banks and to such others as might be authorizedunder its provisions. Any banks which did not possesscharters, but had heretofore been authorized by legislativeenactment to issue notes, and did not choose to come under theconditions of the Act, were allowed twelve months, expiringAugust 10, 1851, afterwards extended to January 1, 1855,to call in their notes. One section of the Act prohibited foreignbanks from maintaining offices of discount or deposit, or forthe circulation of notes, in Canada. In accordance with theAmerican model, each bank formed under this Act was toconduct its business at one place only, thus eliminating branchbanking. Banks might be established byindividuals orpartnerships, or any number of persons, not less than five,might establish for the purpose a joint stock company orassociation, which under the Act was created a body corporate.In the case of such a company the shareholders were subject todouble liability, and the minimum capital was to be 25,000in shares of not less than 10 each. The details of the organizationand operation of the company were to be governed byby-laws approved by the shareholders and duly registered.The notes of the banks were to be obtained from the Inspector-General of the province, or in other words, the Department ofFinance, on the basis of the deposit of certain specified public