Volume 2 - ElectricCanadian.com

444 HISTORY OF THE BANKspecie reserve of twenty five per cent., which might fall temporarilyto fifteen per cent. Issues above nine million dollarsmight be made if wholly covered by specie. Provision wasmade, as in the Act of 1868, for the issue and redemption ofDominion notes either through branch offices of the Receiver-General's Department, or through banks, at Montreal,Toronto, Halifax and St. John. Monthly statements were tobe published in the Canada Gazette showing the amount ofDominion notes outstanding on the last day of each month,and the specie and debentures held for their redemption.The termination, at its expiry, of the special arrangement withthe Bank of Montreal appointing it the exclusive agent ofthe Government for the issue and redemption of the provincialnotes gave general satisfaction to the other banks, whichwere now rendered eligible for a share of the governmentbusiness.The second measure, "An Act respecting Banks and Banking,"1chartered until 1881 the banks which might come underits provisions, and laid down certain general principles andregulations that were to apply to all new banks and to be incorporatedin all existing charters, when amended. The regulationsdealing with the capital stock placed the minimum for anew bank at $200,000 bona fide paid up before commencingbusiness, and required at least twenty per cent, of the subscribedcapital to be paid up in each year thereafter. As a result ofthe Dominion note legislation the minimum denomination ofbank-notes was increased from $1 to $4, thus giving to theDominion Government a monopoly of $1 and $2 notes.Another clause due to the same influence specified that asnearly as possible one-half, but never less than one-third, ofthe cash reserves of a bank should be held in Dominion notes.Sir Francis Hincks argued very convincingly and successfullyagainst the futility of fixing a minimum for the reserves to beheld by the banks. In consideration of the provisions favouringits own note issue, the Government exempted the banks working!S8 Viet., 1870, c. xi.