Volume 2 - ElectricCanadian.com

436 HISTORY OF THE BANKgroups. The first rejected the scheme in toto. The second,while strongly objecting to any measure depriving the banksof their normal note issues, saw no special objection to theissue of about $5,000,000 in government notes redeemable inspecie; these notes could be held by the banks instead of thegovernment securities then obligatory, and could be employedfor settling clearing-house balances, and for other such purposes.The third approved of both aspects of Gait's plan,and heartily endorsed the proposed change from the olderCanadian to the new American system, as affording uniformityin the currency and unquestioned security for its redemption.Gait's plan affected the banks in Upper Canada, now Ontario,very severely, as they depended much on their note circulation,whereas the banks in Lower Canada, or Quebec, depended lesson note circulation and more upon exchange. Thus most ofthe western banks and commercial interests opposed themeasure, while a number of the eastern banks were inclined tofavour it. The Bank of Montreal, under the distinguishedleadership of Mr. E. H. King, strongly supported the governmentmeasure and naturally brought upon itself very sharpcriticism from western Canada, where people were not slowto point out the financial advantages which that bank wouldenjoy as the government agent through whom the proposedchanges would be effected.Gait met western criticism by asking how he was otherwiseto provide for the pressing financial needs of the Government.The banks suggested a temporary loan, to which they wouldcontribute, but the Minister of Finance was seeking relief fromtemporary loans and desired something more permanent.Those opposed to the scheme found their strongest argumentin the fact that his proposal would destroy the elasticity ofthe currency under the existing system, so essential to the sea-like Canada. On the other handsonal commerce of a countrythey experienced the greatest difficulty in meeting the popularargument that the plan would give both uniformity and stabilityto the currency, which at that period was much impaired by the