Volume 2 - ElectricCanadian.com

DEVELOPMENT OF CANADIAN BANKING 4393. To take any rate of interest or discount not exceedingseven per cent, per annum, without being subjectto the statutory penalties for usury. No higher ratethan seven per cent, per annum was recoverable.A bank might also allow any rate of interest whateveron money deposited with it.4. To charge, in addition to the nominal rate ofdiscount, certain rates of premium for the cost ofcollection on bills discounted payable elsewhere thanat the place of discount. Specific provision for thiswas rendered necessary by the limitation of the rateof discount set out in the foregoing paragraph.The effect of this Act was, in substance, to extend to allbanks then operating in the Dominion of Canada the powersgranted to banks under the laws of the late province of Canada.The duration of the Act was until the end of the first session ofParliament held after January, 1870, but it was subsequentlyextended for two years by the general banking Act of 1870 1and was repealed by the Bank Act of 1871. 2In the meantime the Canadian banks were passing throughthe period of unusual strain which followed the speculationof the early "sixties." Two of the oldest and at one timestrongest banks in Canada, the Bank of Upper Canada andthe Commercial Bank, had gone down, while others had barelybeen saved from a similar fate. The Bank of Montreal itselfconfessed to the loss of over a million dollars in connectionwith its business in western Canada. Naturally these conditionshad the effect of causing much misgiving in the publicmind as to the alleged efficiency and safety of the Canadianbanking system, and afforded a strong basis for the argumentsof those who once more resumed the agitation for the completerecasting of Canadian banking on the model of the newAmerican system. Mr. King, the general manager of theBank of Montreal, now came out very decidedly in favourS3 Viet.. 1870, c. ri.S4 Viet.. 1871. c. v.