Volume 2 - ElectricCanadian.com

DEVELOPMENT OF CANADIAN BANKING 435the Maritime Provinces, where the fluctuating credit of theprovincial note issues had provided an instructive lesson.The national currency experiments in the United States andthe success, from a purely financial point of view, whichattended the establishment of the National Bank system onthe foundation of the voluminous issues of governmentsecurities during the Civil War, naturally affected Canadianpublic opinion very strongly, and divided even the bankersinto opposing camps over the proposal to adopt a similarsystem in Canada. It was during the critical period from1866 to 1871 that this question elicited the greatest differenceof opinion.In 1866 the proposal for a government note issue wasrevived by the Canadian Minister of Finance, the Hon. A.T.Gait, in presenting the last provincial budget before Confederation.In his budget speech, Mr. Gait frankly admittedthat this currency measure was entirely the outcome offinancial situation of the country.theFloating debts to the extentof over $5,000,000 were to mature during the year, and owingto the disturbed condition of Europe and the state of theLondon money market it would be impossible to raise thenecessary funds there. He was therefore thrown back uponthe resources of the province, where he found the note issuesof the banks to be at once the most adequate and the mostreadily available source from which to supply the needsof the Government. He proposed to ask from Parliament thepower to issue notes, redeemable in specie on presentation inMontreal, or Toronto, to the extent of $5,000,000. Anybank surrendering its right to issue its own notes would beallowed, until the expiry of its charter, interest at five per cent,per annum on the average amount of itsWhen the details of the measure were submitted to theexisting circulation.bankers, it was evident that Gait aimed at replacing thewhole of the bank-note issues by government notes, as underthe American plan. In the discussions of the matter, menversed in banking and finance tended to divide into three