Volume 2 - ElectricCanadian.com

DEVELOPMENT OF CANADIAN BANKING 415principles involved, but all these new features are still importantcharacteristics of the banking system of the country.The Act itself, however, owing to certain defects in thesystem and the strong criticism of the chartered banks, provedineffective and was ultimately repealed by the Bank Act of1880. After another attempt in 1869 to introduce theNational Bank system of the United States, the Canadiansystem was finally allowed to develop along the linesoriginallylaid down, and thus, as already indicated, maintainedthe original principles of Hamilton's plan, while the Americansystem almost entirely abandoned them.Another general Act of 1850 1 extended somewhat thepowers of the banks, both chartered and "free," in connectionwith mortgages. It allowed them to take, hold, and disposeof mortgages upon personal property, as well as on real estate,by way of additional security for debts contracted in theordinary course of business. They might also purchase realestate mortgaged to them, in the same manner as individuals,and hold or dispose of it at pleasure. The following year, 1851,an Act was passed to encourage the chartered banks to comply,as far as possible, with the "free banking" Act, especially inthe matter of using secured bank-notes. 2Any chartered bank,on condition of limiting its old unsecured note circulation tothe amount already outstanding, not only would obtain areduction of one-half in the provincial tax on these notes forthe next three years and complete exemption thereafter, butmight also for any additional requirements issue secured notesto the extent of the specie and public securities held in itsown vaults. The provisions of this Act were extended twoyears later to cover the issue of notes3 in excess of thepaid-up capital or other limitation fixed by the charter ofthe issuing bank, provided they were secured as set out above.In an Act of 1853, 4 authorizing an increase in the capital of'13-14 Viet., 1850, c. xxii.*14-15 Viet., 1851, c. bnc.By 16 Viet., 1853, c. cbrii.4 16 Viet., 1853, c. cxliii.