October 28, 1867
BANK OF MONTREAL CONTROLS BANKING INDUSTRY
For all intents and purposes, the Bank of Montreal, and specifically its general manager, Edward King, controls the banking industry in this country. This is not hyperbole but is in fact owing to an agreement that exists between the Dominion government and the Bank of Montreal that requires the Bank to approve any aid the Government might wish to provide to banks.
This concession to Mr. King of the control of the banking industry was granted by Hon. William Howland, now the Minister of Inland Revenue, but formerly the Minister of Finance for the Province of Canada as a condition of the Bank of Montreal becoming the issuer Government notes.
In light of this, the refusal of the Government to provide the Commercial with the $500,000 in aid in had first sought and failed to obtain from the Bank of Montreal is suspect.
With respect to the Bank of Montreal proposal that the Ontario banks provide the Commercial with aid, the Globe wonders why the Montreal Bank, which, as the sole government bank is essentially a Government institution, should be putting the onus of aid on private banks.
The Globe answers its own question when it describes the details of the plan, that the Bank of Montreal offered to provide the Ontario banks with the funds it would not provide directly to the Commercial Bank. The reason for this, the paper speculates, is because the Bank of Montreal actually orchestrated the Commercial’s collapse and saw this aid proposal as an opportunity to sink a few more rivals at the same time. It was the recognition of this danger that led the Ontario banks to refuse this proposal.
How did the Bank of Montreal orchestrate the collapse of the Commercial Bank? According to the Globe the first run on that bank in September began when one of the Montreal Bank’s agencies in Ontario, on instruction from the head office, redeemed all of the Commercial paper it held.
The Globe concludes:
The aid (to the Commercial) was refused because the Bank of Montreal has been placed by the Government in a position which causes it to benefit by the sudden downfall of other banks. Every failures increases the resources of the Bank of Montreal. A very large portion of the circulation of the Commercial will be replaced by Government greenbacks, which give the Bank of Montreal a profit. A large portion of the deposits of the Commercial will go to the Montreal Bank; for is it not the Government bank, and how can it fall? Whatever the other banks lose the Montreal bank gains, and it is the Government which has put it in that position.
STATEMENT FROM THE PRIME MINISTER
The following statement was issued two nights ago by the Prime Minister, Sir John A. Macdonald:
The Government will continue to receive notes of all chartered banks, except the Commercial Bank of Kingston, and the Bank of Upper Canada.
The statement is intended to quell rumours that the Government will only accept its own notes and provides a much needed vote of confidence in the Dominion’s banks.
WHAT IS THE CABINET DISCUSSING?
The Minister of Finance, Hon. Alexander Galt, and the Minister of Militia, Hon. George-Étienne Cartier arrived in Ottawa from Montreal yesterday (Sunday) morning by special train. That afternoon the cabinet held a special meeting, the subject matter of which is unknown but the suddenness of the meeting and it’s being held on a Sunday afternoon led many in the city to believe that a Fenian raid had begun, reports the Globe.
REFORM OF MONTREAL CITY FINANCES SOUGHT
A movement is afoot for some new method of managing the finances of the City of Montreal owing to the fact that the city’s revenues now exceed New Brunswick’s and are greater than all of Canada’s prior to the Union. Details on how to reform the finances are not yet on offer.