which depended nearly altogether on the trade of that canal, would suffer. It was quite true that the leases of the mill owners did not legally bind the Government to supply the mills with more than the surplus water, but the Government were morally bound to furnish them with as good a supply as possible. Then why was this work delayed? It would cost as much ten years hence as now. Though a large amount of money had been expended to furnish water, none of it had been spent to get it from Lake Erie. The whole ontlay was to procure it from the Grand River, where an increased supply could not be had. Three years ago, as one of a delegation, he brought this matter under the notice of the Government, but no steps had been taken to make the improvement desired. He spoke not in favor of the mill owner or of any private individuals but the country at large.

Hon. Mr. MACKENZIE said the terms of the leases to the mill owners

were very explicit indeed. They were

entitled to the surplus water and more mills had been built than this surplus water could supply. When the canal was built the supply of water from natural drainage was greater than at present, and extended over the whole year. The rapid elearing of the country had almost dried

the marshes in the woods which form

DOMINION NOTE COLLATION. Mr. WILKES moved the appointment of a select committee to report on the question of the Dominion note circulation generally, and as to whether the continuthe public interest; such committee to ance of such currency in circulation is in have power to send for persons, papers and records. and records. He said this motion was based on a statement brought down last session, showing the amount of Dominion and Provincial notes issued on the 1st January, and the 1st of July, in each year from 1868, with the amount of such notes at each period held by the chartered banks by the Receiver General at each period as reserve, and the amount of specie held also the circulation and paid up capital of the chartered banks at each period; also the estimated cost of the Dominion note circulation in connection with the Receiver General's Department, together with an estimate of the nett gain to the revenue by the Dominion note circulation. the period covering six years, given by 30th, 1868, when the circulation was periods of half-years, commencing June. it was $12,095,086, the amount varied, a $3,795,000 to December 31st, 1873, when large increase taking place in 1871. The average circulation of the total period of

banks in lieu

For

in

six years was $8,133,870; the specie erly filtered through the soil and kept up during the same period was $2,011,128. reserve held by the Receiver General a constant supply of water. Until the This reserve also varied from year to year, Lake Erie level was obtained it would be the largest amount being held in Decemquite impossible to supply the mills-on the ber, 1871. The first return showing that upper levels at all events with all the Dominion notes were held by chartered water required. The Government had done all they could for the mill owners by December, 1871, when the amount was of specie was exacting a merely nominal rent. More $6,719,418. It increased to $8,582,638 than that could not possibly be done. He in December, 1873. The return brought regretted exceedingly their unfortunate down last session also gave the estimated position, but it was quite impossible that profit resulting from this circulation, prethe Government could pay them compen-mising that the money was worth five per sation or purchase their mills. Some of them were quite unreasonable. One man who had paid no rent for eight or ten years, resisted its collection on the ground that he was prevented from building a mill for two years by the failure of the Gov-ment, $209,434, showing a profit of ernment to furnish a sufficient supply of $54,883, upon a circulation of seven millions of dollars. water, and he considered the consequential In 1870-71, the interest was estimated at $283,075; cost of mandamages covered the rent. What the Government could fairly do would be done. agement, $273,511, showing a profit of $9,564. In 1871-2, the interest was He would see the engineer with reference to the line of the Lake Erie feeder. $369,727; cost of management, $183,707. In 1872-3, interest $434,361; cost of The motion was carried. Mr. Norris.

cent. to the country. The amount of such interest in 1868-9, was $188,580; cost of interest was $264,317; cost of managemanagement, $204,857. In 1869-70, the

management, $71,076. For convenience showed the average note issue over specie sake he had made an average of these reserve to be $8,493,000; average interest, figures for the five years from 1868 to $424,000; average expenses, $99,000, 1873. The average total issue amounted showing a profit of $325,000, or 3.80 per to $8,133,000; average note issue over cent. Now, by putting the two together specie reserve, $6,122,000; average specie and giving the average for the eight years reserve, held by the Receiver General, ending with 1874, the profit upon the $2,011,000, or 243 per cent.; average whole issue of Dominion notes amounted interest at five per cent. on the circulation to 1.77 per cent. It would now be asked, over the specie reserve, $306,000, and was this profit made in the latter period beaverage expenses, $188,000, showing a tween 1872-4 any actual gain to the country. nett profit of $199,475, or a profit upon It had been the custom of the Government the actual note circulation in excess of the of this country for a number of years to specie held, of 1.95 per cent. He repeated deposit in most of the chartered banks. that the profit for five years, on the total In 1870 the amount so deposited in the circulation of the country, was less than chartered banks was on 30th June two per cent., supposing the money was $2,387,000, and it continued in varying worth to the Government the full amount sums up to 30th June 1873 when it of five per cent., and there were no amounted to $5,500,000; in 1874 it stood secondary considerations diminishing at $5,125,000, and on 31st December last that amount. The average Dominion notes it was $4,110,000; making during those held by the banks amounted to 15 per five years an average deposit of $3,958,000 cent. of their capital over the same period in the hands of the banks without any of five years. The average circulation of interest being paid thereon. That amount the banks to their paid up capital was 45 was distributed among twenty-nine per cent. during the same period. The chartered banks in sums varying from average Dominion notes in actual circula- $50,000 to several millions. Taking the tion, that was to say, in the hands of the average amount stated, almost four public, deducting the amount held by the millions-the interest, at 5 per cent would banks, was $3,442,881 or less than three amount to $197,900 on which he would and a half millions. The average propor- make the following comparison › The tion of Dominion note circulation to average profit from Dominion note circuthe bank - note circulation was one-lation between 1868 and 1873 was $119,eight, or 123 per cent. It might be argued that this return did not fairly state the position of the Dominion note circulation and the benefits arising from it. He had, therefore, compiled a second statement which he had obtained from the Auditor General, giving the figures in another arrangement, and to a later period. It would be remembered that during a portion of the period between 1867 and 1871 the Bank of Montreal had controlled the Dominion note circulation or was the only bank that came into the terms of the circulation act. During the period from 1867 to 1871, the average note issue over the specie reserve was $4,152,000; average interest at five per cent., $207,000; average expenses, $205,000, or a sum of $2,292 as the total profit resulting per annum from the circulation during the period referred to up to 1871, or .55 per cent. -a little over a half of one per cent. This he designated as the weakest period of the Dominion note circulation. The return for the further period from 1872 to 1874 Mr. Wilkes.

000, the interest at 5 per cent on the average amount of Government money on deposit in the chartered banks without bearing interest, was $197,900 thus showing an absolute loss of $78,000 per annum. For the period of 1872-73-74 the average profit on note circulation was $325,000, against which, if interest at 5 per cent on the amount of Government money in the chartered bonks is deducted, there remained $127,516 as the total profit of

on

the Dominion note circulation twelve million dollars. He did not propose to debate the question as to whether that was a profitable operation or not; if any hon. member thought it was, he was entitled to his opinion, but he (Mr. WILKES) has taken the liberty of submitting to the House a statement of the facts. It could not be shown that the profit to the country from the Dominion note circulation had been anything more than a bagatelle. The point he wished to establish, and it was established by his figures, that about one and three-quarters per cent.

was the total benefit per annum reverting note circulation did not give a currency at all. to the country from the Dominion note He would not now discuss that question, circulation, supposing the money to be but should it ever be introduced into Parworth five per cent.; and when from that liament it was one worthy of debate. sum was deducted the amount belong- But it had not been tried by this country ing to the Government, not bearing and he thought he might risk the opinion interest, held by the chartered that it was likely to remain a long time banks, there was an absolute loss untried. That policy was not the one entailed by the system. Of course, introduced, but the hon. gentleman who it might be said that the Government then had charge of the finances stated deposits were not made in respect of Dom- what his views were, and therefore, he inion note circulation. He was aware (Mr. WILKES) might reasonably conclude that Sir FRANCIS HINCKS proposed in his that Sir FRANCIS HINCKS regarded his Bill of 1870 to hold about one million and measure as the entering wedge of a Gova half in special deposit in order to sup- ernment bank issue, and that in the plement the 35 per cent. of gold reserve meantime the profits would go into the which he proposed to hold for all the cir- pockets of the people. In this matter the culation exceeding nine millions; but Government of to-day were not responsithat deposit was never authorized by law, ble for the action of their predecessors, and although it appeared in the public but they must take the responsibility of returns, it was purely nominal, because it dealing with the question. In the debate was an ordinary Government deposit. But on Sir FRANCIS HINCKS' measure, Mr. he took the simple fact that the Govern- MACKENZIE, the present Premier stated: ment as the custodian of the public money "He thought that both (Sir A. T. GALT of this country, has habitually deposited "and Sir F. HINCKS) were wrong; that money in the chartered banks without "the country regarded as a failure the interest, that, at the same time, 'policy of that time, and any new bankthe Government were enjoying the advan- "ing scheme looking that way would be a tage of the amount of circulation "failure." Mr. CARTWRIGHT, the present which the banks held on the Government Finance Minister stated: "The Finance behalf, and also the amount of Govern- "Minister (Sir F. HINCKS) had laid down ment notes in circulation in the hands of "positions which he (Mr. CARTWRIGHT) the people, which was a very small pro- "must controvert. The first was that it portion of the whole. A careful estimate was expedient that the Government showed that only three millions of Domin- "should assume control of the circulation." ion notes were in actual circulation, the "The second was that the State had an balance being held by the banks. The inherent right to the profits arising from system at present in operation was, how- "circulation.' "If the Government took ever, not the creation of the present Gov- "the circulation into their hands it would ernment. On turning to the debates of "terminate in an irredeemable currency 1870, he found that Sir FRANCIS HINCKS "with all its evils." "As to the question in the debate which occurred at the time" of the practical monopoly of small notes, when the Dominion note circulation was "he need not say that he was utterly being introduced, expressed his opinion" opposed to it as a matter of principle.' strongly in favor of the theory that the "He was greatly opposed to Government best system was a government bank of "interference in banking, as proposed, issue, the profits of which should go to the as he would be to appointing the Governpublic. The question of a government "ment to exercise judicial functions." bank issue was one open to debate, and if Giving it clearly as his opinion Sir FRANCIS HINCKS had introduced a that he was opposed to the introduction of measure to establish a government bank the scheme which SIR FRANCIS HINCKS issue, he (Mr. WILKES) could understand had stated was in the direction of a Govthe course Sir FRANCIS had pursued. His ernment bank of issue, Mr. MACKENZIE issue, all told, only amounted to one-eighth also stated further: "In Ontario the of the total circulation of the country, and "scheme was opposed on popular reasons. two-thirds remained in the hands of the "It was regarded there as a scheme to chartered banks; therefore so far as supply- "obtain more money, and as a plan on the ing a currency to the people, the Dominion "part of the Government to force them

Mr. Wilkes.

"selves into the banking business,”

"He thought that the circulation of bank "notes ought to be in accordance with the public requirements and should not be retarded or restricted by any arbitrary provisions." During the course of that debate it was moved in amendment by Mr. CARTWRIGHT, "That "the Speaker do not now leave the "chair but that it be resolved that it is "not expedient to authorize the issue of legal tender notes in the manner author“ized by the said resolution." The vote on this amendment stood; yeas 29, nays 110, and among the yeas he noticed the names of BLAKE, CARTWRIGHT, DORION, GEOFFRION, HOLTON and MACKENZIE. He would also quote from the remarks made by the hon. member for Chateauguay on that occasion that hon. gentleman said: "The proposition of the Government was "in the nature of a forced loan in the "first instance and therefore objectionable in principle, and might be clearly shown to be fraught with very dangerous practical consequences." "He could well understand the policy of repressing the circulation of the banks "altogether, and superseding that cir"culation by a Government issue." "The chiefly objectionable features of the Bill were the suppression of the small note "circulation of banks; and to invest a "large portion of their reserves (50 per cent.) in the paper money of the Gov"ernment."

46

nearly 25 per cent. had been held, the Act of Sir FRANCIS HINCKS only called for 20 per cent. of gold reserve up to nine millions, and 35 per cent. for any issue beyond that up to 12 millions. The bank deposits on the 31st December last were in the neighborhood of $85,000,000; bank circulation, $28,000,000; and Dominion note circulation $12,000,000, making a total liability to the public of $125,000,000. To meet this liability the Government and the banks were holding a certain amount of reserve. Specie held by banks, say, $7,500,000; specie held by Receiver General, $3,098,000, making in round numbers $10,600,000, or 8 per cent. as against the total liability. What he desired to call the attention of the House to was this, that for all practical purposes the Act of Sir FRANCIS HINCKS had reduced the reserve of the banks; and that the amount of gold held by the banks and by the Receiver General had never been sufficient for what was wise and prudent to keep in this country, and that therefore the tendency of the system was towards a reduction of the specie reserve, as no amount of Government bills held by the banks was sufficient for all the contingencies of banking and trade. "The ing and trade. With the permission of the House he would compare the reserves held in the United States with those held in this country by the Government and the banks. It would be noticed that he did not take recent dates, because it would not be fair to select a time when there was a These enunciations of sound views did not tightness in the money market from excepneed his (Mr. WILKES') endorsement, but tional causes, and therefore he took the it might not be amiss for him to say that figures only down to 31st December of in the west particularly, and he dare say last year. In the United States the in other places, that the Government of the deposits in the national banks amounted day were expected to carry out as far in 1874 to $293,000,000 on the average ; as possible the opinions they had enter- circulation of the national banks, $454,tained while in Opposition. He would 000,000, for which they held in round detain the House to present another, and, numbers, legal tenders, $32,000,000; gold, in his estimation, a very important aspect $2,375,000; in the hands of redemption of the question, namely; how it affected agents, $52,000,000; and redemption bonds, the circulation in the hands of the people, $11,000,000, making in all reserves of one including also the question of reserves. sort or other, $100,000,000, or 133 percent. 1st, the average total circulation of Dominion Putting it in another form the legal tender notes in six years was $8,133,000; specie issue of the United States amounted to reserves held by Government, $2,011,000; $348,000,000; National Bank circulation, or 243 per cent. Now, he was very $454,000,000; National Bank deposits, much pleased to notice that the $293,000,000, making in all $1,096,000,Finance Minister had introduced a 000. The estimated specie held by the Bill authorizing him to increase this Government and the banks in the United reserve from about 25 per cent. to a very States amounted to $166,000,000, or 15 much larger sum. Although practically per cent. of the total liability. Now, if in

Mr. Wilkes.