Document Information

Date: 1866-08-09
By: Province of Canada (Parliament)
Citation: Province of Canada, Parliament, Scrapbook Debates, 8th Parl, 5th Sess, 1866 at 82-83.
Other formats: Click here to view the original document (PDF).
Note: All endnotes come from our recent publication, Charles Dumais & Michael Scott (ed.), The Confederation Debates in the Province of Canada (CCF, 2022).

Click here to view the rest of the Province of Canada’s Confederation Debates for 1866.

LEGISLATIVE ASSEMBLY

THURSDAY, August 9, 1866

Alexander Galt [Sherbrooke, Minister of Finance] moved

The reception of the report of the Committee of the Whole on certain resolutions respecting the currency.

Richard Cartwright [Lennox & Addington] desired to ask the government certain questions.

1st. Will Government pledge themselves positively that they will not use the power of using legal tender notes if they can obtain five millions ($5,000,000,) or so much thereof as may be requisite by sale of their Debentures?

2nd. Will Government consent not to enter into any definite arrangement with the Bank of Montreal, as to issue of legal tender notes, till the first of September?

3rd. In the event of the other Banks jointly or severally engaging to provide Government with £400,000 sterling, in exchange for Debentures, on or before the first of October, will Government agree to wait till the first of December before proceeding further with the scheme?

4th. Will Government pledge themselves to use power of induing eight millions ($8,000,000) legal tenders only in proportion to amount required, e.g. if they can realize 2 ½  millions by the sale of Debentures, only issue four millions of legal tenders and so in pro rata?

5th. Are the 7 per cent Debentures prepared and ready for issues and if not will Government state when they will be ready?

Alexander Galt [Sherbrooke, Minister of Finance] said as the Government had received no notice of the questions, he hoped his hon. friend would wait for an answer until the second sitting of the House.

Luther Holton [Chateauguay] suggested that the questions be printed forthwith.

The report was then received. 

Walter Shanly [Grenville South] then reported several Resolutions, which were read, as follow:—[1]

1. It shall be lawful for the Governor in Council to authorize the issue of Provincial notes payable on demand, of such denominations as may be determined upon, to an amount not exceeding Five millions of dollars, and to re-issue the same. Such notes shall be a legal tender, and shall be redeemable in specie on presentation at Offices to be established at Montreal and Toronto, according as the said notes may be made payable.

2. It shall be lawful for the Governor in Council to enter into arrangements with any or all of the Chartered Banks of this Province, for the surrender of their power to issue notes, on or before 1st January, 1868; and in compensation for such surrender, an annual sum not exceeding five per cent. upon the amount of their circulation, as established by the monthly return upon the 30th April last, shall be payable to each Bank so surrendering its power, and redeeming its circulation, until the expiration of its Charter. And the Receiver General shall exchange the Provincial Debentures now held by such Banks in accordance with the provisions of their respective Charters, for Provincial notes. The Receiver General shall, moreover, pay to such Banks the half of the estimated cost of their un-issued notes.

3. It shall be lawful for the Governor in Council, in entering into any such arrangement with any such Bank, to provide either for the immediate or gradual surrender of its’ power to issue notes, extending in the latter case, over a period not exceeding twelve months. But in case of such gradual surrender the exchange of Provincial notes for Provincial Debentures, held under its existing Charter, shall be made to such Bank only in equal proportion to the amount of notes actually redeemed, as shewn by the monthly returns.

4. From the date of any such agreement with any Bank, it shall not be required to hold any Provincial Debentures as now provided by law.

5. Every Bank surrendering its power to issue notes, shall make a weekly return of its notes redeemed and of those still outstanding. The compensation above authorized shall be paid half yearly upon the amount redeemed, computing the same from the average of the weekly returns for the half-year, until the amount so redeemed shall equal 9-10ths of its circulation as at 30th April last, when it shall be entitled to receive compensation upon the full amount.

6. It shall be lawful for the Governor in Council, over and above the five millions hereinbefore authorized, and the amount necessary to redeem the Debentures held by the Banks surrendering their circulation, to cause Provincial notes to be issued to the amount of their notes withdrawn from circulation, and also to make a further issue to any Chartered Bank in this Province, from time to time, upon its requisition, and upon payment for the same. Provided that the total amount issued does not exceed Eight Millions.

7. The sum in specie to be held for the redemption of the Provincial notes shall be twenty per cent. upon the amount outstanding, so long as the whole amount in circulation does not exceed Five millions. For any additional amount of notes in circulation beyond Five millions, twenty-five per cent. shall be held in specie ; and for any excess over Ten millions, but not exceeding Fifteen millions, thirty-three and one-third per cent.; and for any excess over Fifteen millions, fifty per cent. on such excess, shall be held in specie. But Provincial Debentures shall be issued against the Provincial notes, to the full extent by which the specie held in reserve fails to cover the whole amount of notes in circulation.

8. A return of the whole amount of Provincial notes in circulation, and of the specie held for their redemption, shall be made to the Audit office on each alternate Wednesday, which shall be published by the Auditor, in the Canada Gazette.

9. It shall be lawful for the Governor General to establish branches for the Receiver General’s Department in Montreal and Toronto, for the issue and redemption of the Provincial notes; or he may make arrangements with any Chartered Bank or Banks for the issue and redemption of the notes, allowing a commission not exceeding one quarter per cent. upon the average circulation of every three months.

10. It shall be lawful for any Bank which may have surrendered its power to issue notes, to resume the same, according to the provisions of its charter, upon giving not less than three months’ notice in writing to the Receiver General, and publishing such notice in the Official Gazette. Provided always, that such Bank, so resuming its power to issue notes, shall cease, from the expiration of such notice, to receive compensation, and shall be bound to repay to the Receiver General the Provincial notes received by it in exchange for Provincial Debentures; such Debentures to be again delivered to and held by such Bank, as provided in its charter, before it shall be lawful for such Bank to resume the issue of notes.

11. The proceeds of the said Provincial notes shall form part of the Consolidated Fund of this Province, and the expenses lawfully incurred under the foregoing provisions shall be charged upon and paid out of the said fund.[2]

The said Resolutions, being read a second time, were agreed to.[3]

Alexander Galt [Sherbrooke, Minister of Finance] moved

The first reading of the bill founded thereon.

—Carried. […][4]

Alexander Galt [Sherbrooke, Minister of Finance] moved

The second reading of the bill to provide for the issue of Provincial notes.

Alexander Galt [Sherbrooke, Minister of Finance] replied to Mr. Cartwright’s questions published above. To the first,—

Will Government pledge themselves positively that they will not use the power of using legal tender notes if they can obtain five millions ($5,000,000,) or so much thereof as may be requisite by sale of their Debentures?[5]

—he repeated the declaration which the Government had already made, that if the debentures realized the amount required to meet the demands upon the country, the issue of notes would not be resorted to.

To the second question,—

Will Government consent not to enter into any definite arrangement with the Bank of Montreal, as to issue of legal tender notes, till the first of September?[6]

—he replied that the Government must decline to enter into any specific agreement of the kind. They reserved to themselves the right to determine the period when these arrangements be carried out, but very likely it might not be before the time mentioned.

To the third question,—

In the event of the other Banks jointly or severally engaging to provide Government with £400,000 sterling, in exchange for Debentures, on or before the first of October, will Government agree to wait till the first of December before proceeding further with the scheme?[7]

—he said no such proposal had been made by the banks to the Government, and in any case, the Government could not enter into any such agreement.

To the fourth question,—

Will Government pledge themselves to use power of induing eight millions ($8,000,000) legal tenders only in proportion to amount required, e.g. if they can realize 2 ½  millions by the sale of Debentures, only issue four millions of legal tenders and so in pro rata?[8]

—he replied that the Government could not undertake to enter into arrangements of that kind without abdicating their responsibility as a Government. It was not consistent with the public interest that the Government should give any pledges of the kind.

To the 5th question,—

Are the 7 per cent Debentures prepared and ready for issues and if not will Government state when they will be ready?[9]

—he answered that the Government were preparing, and, he presumed, would issue to-morrow their proposals for the Debentures; and these will provide that parties may make deposits for the purchase of Debentures at any of the agencies of the Bank of Montreal. These were the

• (p. 83)

answers which the Government had instructed him to give, and he could not make any more explicity declarations upon the point. It would be the duty of the House to rely upon the Government, using their best judgment in the carrying out of these measures.

The bill was then read a second time.

Alexander Galt [Sherbrooke, Minister of Finance] then moved

That the House go into Committee of the Whole on the bill.

George Brown [Oxford South] moved an amendment

That it be an instruction to the Committee  to strike out the clauses providing for the issue of a Provincial Currency, and to provide instead thereof that the government be authorised to borrow the amount of money required by the issue of Debentures for any length of time, and at any rate of interest the government may see fit.[10]

He said not a word was needed to show the propriety of his amendment. It had been made very evident that the government could raise the money required without seizing on the currency of the country, and it was simply to prevent the putting of the bank of issue scheme into force that he moved his amendment. It would be a most dangerous thing to disturb the currency at this juncture, and deprive the country of the means of moving off the produce of the coming harvest.

John A. Macdonald [Kingston, Attorney-General West and Minister of Militia] said after the discussion which had taken place upon this question, he would not now attempt to discuss the motion of the hon. member for South Oxford [George Brown]. He would merely say that it struck at the vital principle of the Government proposal. It was therefore a vote of want of confidence.

Thomas Street [Welland] dissented from the proposition laid down by the Attorney-General West [John A. Macdonald]. He denied that his voting for this motion should be taken as a declaration of his want of confidence in the general policy of the Government. He was opposed to the proposition which the Government had made, and would therefore vote for the motion of the member for South Oxford [George Brown] without meaning to desert his friends.

William McDougall [Lanark North, Provincial Secretary] said his hon. friend must see that if the motion of the hon. member for South Oxford [George Brown] carried, the Government of the country must pass into the hands of hon. gentlemen opposite. The Government had considered the question in all its bearings, and they had deliberately come to the conclusion that the proposition they had submitted was absolutely necessary in the interests of the country. The hon. member for South Oxford [George Brown] knew too much about questions of the kind to believe that the mere placing of a discretionary power, in the hands of the Government, to issue $8,000,000 of Provincial notes, was equivalent to the establishment of a Bank of Issue. The proposition before the House would not bear any such construction.

Christopher Dunkin [Brome] would vote against the amendment, because he entirely disapproved of it. He believed the proposition as now modified, was a very sound one, and the only thing he regretted was that too much effort was to be made to borrow the money on debentures. He preferred altogether the issue of Provincial notes as the most legitimate, and the most advantageous mode of raising the money required He considered it the duty of the Government to be supplied with more money than they might think they really wanted. He should vote with the Government, because he believed in the soundness of the policy, without reference to confidence or non-confidence.

Matthew Cameron [Ontario North] had listened carefully to the whole discussion, and had not yet heard an argument to convince him that the proposition was not a good one, in the present requirements of the country. The opposition appeared to him to come from the banks, and he said it was unfortunate on this occasion that that interest was so largely represented on the floor of this House.

The member for South Oxford [George Brown]  might also, for reasons of his own, desire to place the Government in a false position, but even he had to admit that the Government were offering the country a good security: it was no shinplaster scheme. He regretted that the Finance Minister [Alexander Galt] should have offered to pay seven per cent on the proposed debentures, because he believed that the banks would have been compelled to have taken these debentures at that rate, which he considered a reasonable one. The banks had not always worked to the interest of the trade of the country, as the Bank of Montreal was not the only one which had shut down at unseasonable times, though it had achieved an unenviable notoriety in that respect. He should vote against the amendment, but disapproved of making the vote on of confidence, as some members might have reasons for voting against the Government proposition, without desiring to withdraw their confidence.

Thomas Parker [Wellington North] contended that it was not wise to change the currency of the country at this time. He did not think the case made out that this was the only way to save the credit of the country. He argued that it was a wrong principle to disturb the whole banking system of the country, without first having referred the question to a committee, to be thoroughly and carefully investigated.

William Howland [York West, Postmaster General] replied to the previous speaker, and also to the member for South Oxford [George Brown]; that hon. gentleman had been a prominent member of the Government for some time, and yet, during that time, had never made any proposition to relieve the country of these liabilities.

He (Mr. Howland) also held that the Attorney-General West [John A. Macdonald] had placed the question fairly before the House. It could not be otherwise than a question of confidence, because, if this House should now say to the Government that it would not place in their hands the means which they had deemed to be necessary for carrying on the Government, it was clearly a declaration that the Government had lost the confidence of this House.

Thomas Gibbs [Ontario South] said it was very evident that the government had fully determined upon issuing their Provincial notes, for they had put forward that scheme in a way which was calculated to defeat the sale of Debentures. He exceedingly regretted that the Attorney-General West [John A. Macdonald] had made the question one of confidence, but he would on this occasion follow the example of the member for Welland [Thomas Street]. The government had allowed the tariff to be modified in many particulars, and he thought they should have consented to abandon the proposal for the issue of Provincial notes, and raised the money on Debentures, even if they paid 8 per cent interest.

Richard Cartwright [Lennox & Addington] said the Government had proposed to confiscate five-ninths of the circulation of all the banks of the country except the bank of Montreal. They had unfairly discriminated in favor of that institution, and in a particular manner against the banks of Upper Canada, as well as the commercial interest which so largely depended upon the circulation of the banks. He said it was unjust to him and others in a similar position to make the vote one of confidence or non-confidence. He had confidence in the gentlemen composing the government and in their general policy, but he confessed his want of confidence in this scheme, and his intention of voting for the amendment.

William Howland [York West, Postmaster General] said it should be known by this House that the banks held about $29,000,000 of deposits, upon one-half which they did not pay one cent. of interest. They have a circulation of $11,000,000 on which they realized a very large profit, and to meet all that they had only specie to the amount of $6,000,000. It did not become those who represented these institutions to put forward their interests against the interests of the country at large.

Some Hon. Members—Hear, hear.

Alexander Mackenzie [Lambton] regretted the declaration of the Attorney-General West [John A. Macdonald], which would prevent a free expression of opinion on a question which ought to be discussed and voted on with a complete absence of party feeling. He would have great pleasure in voting against the Government scheme, as he considered it a dangerous one to the interests of the country.

Antoine-Aimé Dorion [Hochelaga] spoke in favor of the amendment of the member for South Oxford [George Brown].

George-Étienne Cartier [Montreal East, Attorney-General East] replied to Mr. Dorion.

John Sandfield Macdonald [Cornwall] was determined in as far as his vote would do so, to give the Government the means of paying the floating debt of the country, either by debentures or by the issue of Provincial currency. He was ashamed to hear any one get up to oppose the proposition that we should borrow from ourselves, instead of being compelled to beg our loans from England. He accepted the proposition of the Government because he believed it was for the best interests of the country, and because had no faith in the predictions of hon. gentlemen, who said it was going to bring ruin and disaster.

But what did surprise him was that the member for South Ontario (Gibbs), the member for Welland (Street), and the member for Lennox and Addington (Cartwright) who accused the Government of having brough in a scheme to ruin the country, still desired to continue their confidence in that Government. If these gentlemen were really convinced that the Government were endeavoring to ruin the country surely they ought to withdraw their confidence. But these gentlemen cared more for the interests of the banks than they did for the country; they said that by this scheme the country was to get a large share of the profits, which they now divided among themselves.

He then moved in amendment to the amendment,

That the Committee be instructed to strike out the clause in the bill abolishing the penalty for usury as against the banks.[11]

Luther Holton [Chateauguay] would vote for the amendment of the member for Cornwall [John Sandfield Macdonald], as a protest against the way the Government had taken of disposing of the important question of interest, without consideration and without due notice.

John Sandfield Macdonald [Cornwall]’s amendment—

That the Committee be instructed to strike out the clause in the bill abolishing the penalty for usury as against the banks.[12]

—was lost. Yeas, 34. Nays, 78.

The House divided on the George Brown [Oxford South]’s amendment,—

That it be an instruction to the Committee  to strike out the clauses providing for the issue of a Provincial Currency, and to provide instead thereof that the government be authorised to borrow the amount of money required by the issue of Debentures for any length of time, and at any rate of interest the government may see fit.[13]

—which was lost. Yeas, 39, Nays 70.

YEAS:

Messrs.

Bourassa
Brown
Burwell
Caron
Cartwright
Chambers
Dorion (Drummond and Arthabaska)
Dorion, (Hochelaga)
Dufresne (Iberville)
Fortier
Geoffrion
Gibbs
Haultain
Holton
Houde
Laframboise
Lajoie
MacFarlane
Mackenzie (Lambton)
McGiverin
McKellar
Munro
Paquet
Parker
Perrault
Pouliot
Ross (Prince Edward)
Rymal
Smith (Toronto East)
Street
Thompson
Wells—32.

NAYS:

Messrs.

Alleyn
Archambeault
Ault
Bell
Bellerose
Biggar
Blanchet
Bowman
Bown
Brousseau
Cameron, (Peel)
Cameron (North Ontario,)
Carling
Cartier (Attorney-General)
Cauchon
Chapais
Cockburn
Cowan
Currier
De Boucherville
Dickson
Duckett
Dufresne (Montcalm)
Dunkin
Ferguson (Frontenac)
Ferguson (South Simcoe)
Galt
Gaucher
Gaudet
Harwood
Higginson
Howland
Huot
Jones (North Leeds and Grenville)
Jones
(South Leeds)
Langevin
LeBoutillier
Macdonald (Attorney-General)
Macdonald (Cornwall)
Magill
McConkey
McDougall
McGee
McIntyre
McMonies
Morris
Morrison
Oliver
Pinsonneault
Pope
Poulin
Powell
Rankin
Raymond
Robitaille
Rose
Ross (Dundas)
Scatcherd
Scoble
Shanly
Somerville
Stirton
Taschereau
Tremblay
Wallbridge (North Hastings)
Walsh
White
Wright (Ottawa County)
Wright (East York).—70.

The House then went into Committee on the bill. —Walter Shanly [Grenville South] in the Chair.

The Committee rose and reported the bill; report received.

On the motion for the third reading of the bill,

François Bourassa [St. Johns] moved

That the bill be recommitted for the purpose of expunging the 5^th clause, abolishing the penalty against banks for usury.[14]

Lost. Yeas 18; Nays 69.

The bill was then read a third time and passed.

ENDNOTES

[1]      Journals of the Legislative Assembly of the Province of Canada (1866), p. 323. Added for completeness.

[2]      Journals, pp. 323-4. Added for completeness.

[3]      ibid.

[4]      Non-relevant material that had been left out. To view the entire original document, see PrimaryDocuments.ca.

[5]      Reinserted from the beginning of the debate for clarity, p. 82.

[6]      ibid.

[7]      ibid.

[8]      ibid.

[9]      ibid.

[10]    The amendment reads in full, “That it be an Instruction to the said Committee to leave out such clauses of the Bill as authorize the Government to withdraw from circulation the existing Bank Note Currency of the Province, and substitute therefor Government Notes under the control of a Government Department; also, to make provision for the maturing indebtedness of the Province by the issue of Debentures in such form, and payable at such dates, and bearing such rates of interest, as the Executive Government may find necessary.” Journals, p. 330.

[11]    The amendment to Brown’s amendment reads in full, “That all the words after out” to the end of the Question be left out, and the words “the clause in the said Bill which provides that no Bank shall, after the passing of this Act, be liable to any penalty or forfeiture for usury under the ninth section of  chapter fifty-eight of the Consolidated Statutes of Canada, intituled, ‘An Act respecting Interest;’ but the amount of interest or commission which such Bank can recover shall remain as limited by the said chapter,” inserted instead thereof; “ Journals, p. 330.

[12]    Reinserted for clarity.

[13]    ibid.

[14]    The amendment reads in full, “That all the words after “now” to the end of the Question, be left out, and the words “re-committed to a Committee of the Whole House with instructions to leave out the fifth clause, which provides that Bauks shall not hereafter be liable to any penalty or forfeiture for usury under the ninth section of chapter fifty-eight of’ the Consolidated Statutes of Canada” inserted instead thereof.” Journals, p. 332