The Natural Law of Money by William Brough

Author:William Brough [Brough, William]
Language: eng
Format: epub
Tags: Wirtschaft
Publisher: Jazzybee Verlag
Published: 2017-08-10T22:00:00+00:00

CHAPTER V.: THE MONETARY SYSTEM OF CANADA AS CONTRASTED WITH THAT OF THE UNITED STATES.

CANADA to-day, with a gold basis of about thirteen million dollars, supplies all her monetary needs with great efficiency; she is not only able to supply all her own legitimate wants, but has for many years rendered substantial aid to our western people in the movement of crops in the autumn; this was notably the case in regard to the heavy crops of 1891.

Canada's total authorized banking capital is something over seventy-five million dollars, and the paidup capital a little less than sixty-two million dollars. The banks are permitted to issue notes equal to the amount of their unimpaired capital; the average circulation of bank-notes is about thirty-five million dollars, and the till-money is about fifteen million dollars, leaving twelve million dollars in reserve for extraordinary contingent demands. The demand for money during the harvest months is increased about twenty-five per cent., and the large bank-note reserve enables the banks to meet this special call for money without adding a fraction to the rate of interest; for when these notes are not in service, they are lying in the vaults of the banks without cost to the banks or to their customers.

There is no bond security for the bills; the only security is a first lien on the assets of the bank and on the double liability of the stockholders, the total amount of which security averages four or five times the total possible circulation, and seven times the average circulation. There is, besides, a note-redemption fund, contributed by the banks and held by the government for the immediate redemption of the notes of insolvent banks. This fund amounts to five per cent. of the total sum of notes in circulation during the previous year, each bank being required to keep its proportion good. The holder of a failed-bank bill has, besides, the guaranty of every solvent bank for the payment of his bill; the result is that every Canadian has a sense of complete security in the money of the country.

There has been no bank failure in Canada during the term of the present or of the preceding Banking Act (which latter dates from 1880), in which the assets of the insolvent bank were not sufficient to pay all the bill-holders. So far as can be ascertained, there has been no general suspension of specie payment in Canada within the past forty years; there was certainly no suspension there in 1857, when the banks of the United States suspended, nor has there been any since that time.

In submitting Canada's monetary system to the test of fundamental principles, the only defects we find are those which arise from legislative interference: her government has reserved to itself the right to issue legal-tender paper-money; the limit of such issue, as at present fixed by statute, is twenty million dollars, and of this total about nineteen million dollars has been put out. The government has also established a number

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