ment, these pertained almost exclusively to the trust features of their business and permitted the performance of banking functions either entirely without regulation or under regulations quite different from and, usually, more liberal than those imposed upon banking institutions. The result was unequal competition between them and banks, friction, and agitation for the modification of the laws permitting such injustice. In consequence, in recent years. especially, state legislatures have busied themselves with the problem of harmonizing their banking and trust company laws. The tendency now seems to be in the direction of making suitable regulations for each branch of business carried on by both classes of institutions and of requiring compliance with those regulations by any institution, however named, which transacts that kind of business.

Concentration, which has been so prominent a feature of recent banking history in European countries, has also appeared in the United States, although the prohibition of branch banking by our national banking act and by many of our states has been an obstacle of no slight proportions. The movement, so far as it has been realized here, has occasionally taken the form of amalgamations, but more often of concentration of stockownership of institutions remaining independent in form or of the establishment of community of interests between previously competing institutions or between those that naturally supplement each other. The concentration of ownership of state and national banks and trust companies located in the same town is a phenomena of frequent occurrence in every part of the country. In New York City this movement has extended farthest, most of the state and national banks and trust companies of that city being really controlled by a few groups of financiers who are also the controlling forces in the railroads and the trusts of the country.

REFERENCES

The most elaborate treatises on the history of banking in the United States are Knox, A History of Banking in the United States, and Sumner, A History of Banking in the United States, the latter published as v. 1 of the History of Banking in all the leading Nations. A good brief account is given in White, 2d. ed. chs. iv. to xiv.

Special periods, phases and institutions are treated in Barnett, State Banking in the United States since the passage of the National Banking Act, J. H. U. Studies, Feb. and March, 1902; Conant, Modern Banks of Issue, chs. xiii, xiv and xv; Dunbar, History and Theory of banking, ch. ix; Gouge, Short History of Paper Money and Banking in the United States; Elliott, Funding System, Ex. Docs. 1 Sess. 28th Cong., No. 15; Gallatin, Considerations of the Currency and Banking Systems of the United States; Report of the Comptroller of the Currency for 1876; Catterall, The Second Bank of the United States; Holdsworth and Dewey, The First and Second Banks of the United States; and Kinley, The Independent Treasury.

In Sound Currency published a few years ago by the Reform Club appeared the following monographs worthy of note: in v. II, White, National and State Banks; and Root, New York Bank Currency, New England Bank Currency and States as Bankers; in v. Iv, Root, The First United States Bank and The Second United States Bank; in v. v, Garnett, Banks of Issue in Illinois; Harding, The State Bank of Indiana; and Root, Early Banks of Issue in Wisconsin; in v. vII, Stackpole, State Banking in Maine; and in v. x, Millsaps, History of Banking in Mississippi. See also Merritt, The Early History of Banking in Iowa, and Hadden, History of the State Banks and Early Banking in Wisconsin.

Convenient summaries of laws pertaining to banking in the United States are: Dunbar, Laws of the United States relating to Currency, Finance and Banking from 1789 to 1891, and Weldon, Digest of State Banking Statutes published by the National Monetary Commission.

On Trust Companies and their development see Kirkbride and Sterritt, The Modern Trust Company; Cator, Trust Companies in the United States, J. H. U. Studies, xx, p. 269; Herrick, Trust Companies, Bankers' Magazine for 1904 and 1905; and Noyes, The Trust Company, Pol. Sci. Quart, v. XVI, p. 250.

See also references at the close of ch. xv.

CHAPTER XI

BANKING IN CANADA

Inasmuch as the history of banking in Canada has been influenced by the general political history of the country, it will be necessary to preface our account with a brief statement of the grand divisions of Canadian history.

1. Epochs in the history of Canada.-Previous to 1791 the settlements in Canada were governed directly by England through a governor and council. In that year a change was made by the organization of the four provinces of New Brunswick, Nova Scotia, Lower Canada and Upper Canada, and by conferring the power of constitutional government upon each one of these provinces. From that time until 1841 each of these provinces had a legislature of its own and substantial legislative independence, the Governor-General exercising advisory and in some instances veto powers. In 1841 the provinces of Upper and Lower Canada were united into the Province of Canada, so that from this date until 1867 there were three instead of four provinces in what is now the Dominion of Canada. In 1867 was passed the so-called British-North American Act, which provided for the federation of the existing provinces and the formation of new provinces in the future. Under the operation of this act the province of Canada was again sub-divided into the provinces of Quebec and Ontario, and subsequently the new provinces of Prince Edward Island, Manitoba and British Columbia were added and the Northwest territories divided into five districts.

Corresponding with these main divisions are some features of the banking history of Canada. Until 1867 the legislative authorities in regard to banking were those of the in

dividual provinces, the only unifying institution being the English government, operating through the Governor-General. From 1841 to 1867 in the two chief provinces, that of Upper and Lower Canada, there was legislative unity, and as a result unification of banking legislation was accomplished during that period throughout the most important part of what is now the Dominion of Canada. The most prominent features of banking legislation since 1867 have been the passage of a series of general banking acts, the result of which has been the unification of banking regulations throughout the Dominion and the development of a banking system in some respects peculiar to Canada and in all respects interesting and instructive.

2. Early conditions.-The economic and social history of Canada has been very similar to that of the United States. In both cases it began with small communities isolated to a considerable degree and living necessarily under primitive conditions. The early methods of exchange in Canada have been admirably described in the following manner by Professor Shortt, formerly of Queen's University, Kingston:

"Owing to the nature of the physical and geographical conditions of the first settlers in Upper Canada, the means of communication being very imperfect, the settlers had little or no choice as to the places in which they might purchase supplies or dispose of their products. Even though there had been an abundance of circulating medium, their trade would still have been essentially one of barter, an exchange of their surplus products with the nearest merchant for a limited range of goods.

Many functions were united in one person in those days. All kinds of goods were supplied by one merchant; all kinds of surplus products were purchased and exported by the same merchant. Where mills were erected the leading merchants commonly owned them. In many places in Up

per Canada, during this period, a typical trading center consisted of a flour mill, still, saw-mill, general store, tavern and blacksmith shop. In more important places a woollen mill or at least a carding machine were added. Very often all these were owned by one man. Typical representatives of such establishments were the Napanee Mills in the east, and the Albion Mills near Ancaster in the west.

Even in the earliest stages of the settlements the importer was also the exporter, and barter the natural system of trade. Supplies were required by the settlers throughout the year, while their products came in for sale mainly in the autumn; hence to equalize matters it was customary for the merchants, on the one hand, to give credit for supplies, to be paid for in products later on, or on the other hand, in the case of those who brought products in advance, to issue due-bills or bons, to be ultimately redeemed in goods, or partly in goods and partly in cash. These bons were usually made payable on demand, though not necessarily payable in cash. Together with ordinary promissory notes, which enjoyed a considerable local circulation, they supplemented the metallic money in the settlements, and, under the circumstances of the time furnished a fairly effective medium of exchange. All things considered, we cannot but admit that in the early years of the upper province these local media of exchange were much more manageable, if not more secure, than any bank notes could have been.

"The merchants, for their part, in obtaining their goods and disposing of their accumulated products, usually dealt with a few large importers at such places as Queenstown and Kingston. The merchants in these places also acted as bankers and bill brokers for the local merchants, receiving deposits, obtaining from their customers orders drawn upon various persons, and permitting their customers to draw orders upon them. These wholesale merchants sold as much as possible of the produce sent to them to the government agents for the supply of the military and Indian posts, exporting the remainder to Montreal, and importing from Montreal the supplies with which they furnished the local merchants. As the imports were greater than the exports, the balance was met by bills of exchange on London from