Volume 2 - ElectricCanadian.com

DEVELOPMENT OF CANADIAN BANKING 461and to be fair to those individual banks which, owing to localor other conditions, might be obliged to take over an exceptionalamount of such notes. In the end the bankers carriedtheir point. At this interview only a few of the bankersraised any particular objection to a system of independentaudit, as proposed by the Minister. But when the particularform of audit introduced into the bill came up later for discussion,there developed such general objections to it on theground of its inquisitorial character, on the one hand, and itsfutility for securing the object sought, on the other, that theproposal was abandoned.In spite of the strong arguments of Mr. Walker, supportedby the representatives of almost all the leading banks, exceptthe Bank of Montreal, the Minister still adhered to the requirementof a fixed reserve in specie and Dominion notes to theextent of ten per cent, of the liabilities of each bank. The'attitude of the Bank of Montreal was attributed to two facts :first, that it was the chief agency of the Government in makingand receiving payments and therefore inclined to be complacenttowards the proposals of the Minister of Finance; and secondly,that as the government bank, it held on deposit withoutinterest an average government balance about equal to tenper cent, of its total liabilities, and would therefore be virtuallyunaffected by the proposed legislation. Complaint wasalso made that the Bank of Montreal had held aloof from theconferences of the bankers among themselves and from theirinterviews with the Minister of Finance, and that this hadprevented the other banks from meeting the arguments whichit might offer in defence of its position.Finding that it was impossible to modify the views of theMinister of Finance on the subject of a fixed reserve, thebankers appealed to the Prime Minister and the Cabinet.They were granted a hearing on February 22, when Mr.Walker, supported by Messrs. Hague, of the Merchants Bank ofCanada, and Fyshe, of the Bank of Nova Scotia, reviewed thewhole subject very fully. He demonstrated the futility of a