The Bank of the People, 1835-1840: Law and Money in Upper Canada

Authors

Dan Rohde, Harvard Law School

Document Type

Article

Abstract

In Upper Canada, money and banking were viscerally political issues, considered central to the broader legal order. Faced with a chronic shortage of coin, the British flooded the colony with publicly issued bills to fund the War of 1812. By the 1830s, this monetary issue was fully redeemed and replaced with notes issued by the colony’s first three chartered banks. Upper Canada’s Reformers saw those banks as public agents, playing a public role, but without democratic accountability. After several failed attempts to modify that system, they turned to establishing their own institution, named the Bank of the People. In doing so, they saw themselves not as merely engaging in private commerce, but as directly contesting this fundamental public provision. This article provides a legal-political history of that early contest over Canadian money and sovereignty, and explores how the Reformers put forth a critique of bank-issued money that remains relevant today.

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This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.

Citation Information

Rohde, Dan. "The Bank of the People, 1835-1840: Law and Money in Upper Canada." Osgoode Hall Law Journal 61.1 (2024) : 223-272.
DOI: https://doi.org/10.60082/2817-5069.3981
https://digitalcommons.osgoode.yorku.ca/ohlj/vol61/iss1/5

References

1. SJD, Harvard Law School. I owe a tremendous debt to Elisha Muskat, Christine Desan, Corinne Blalock, Adam Toobin, Kenneth Mack, Jim Phillips, Jeff McNairn, Suzanne Chiodo, Lev Menand, Catherine Desbarats, and Ann M Daly, as well as all members of the Early American Money Workshop and the Osgoode Society Legal History Workshop for helpful readings, comments and discussions. Further thanks goes to the excellent feedback provided by three anonymous reviewers and the student editors of the Osgoode Hall Law Journal. Thanks as well to Joshua R Greenberg for consulting on the iconography of on the Bank of the People’s notes, Brian Gettler for general conversations on colonial Canadian money, and John Turley-Ewart for helping to parse the Bank of the People’s sole surviving ledger. None of this would have been possible without the expert aid of the Toronto Star Newspaper Room, the Special Collections at the Toronto Reference Library, the BMO Financial Group Corporate Archives, Mark Pellegrino at the University of Toronto’s Thomas Fisher Rare Book Library, as well as Blythe Koreen and the staff of the Archives of Ontario. This research was enabled by funding from the Canada Program of the Weatherhead Center for International Affairs at Harvard University. Any errors or omissions are, of course, my own.
2. See generally John Charles Dent, The Story of the Upper Canadian Rebellion - Volume II (C. Blackett Robinson, 1885) at 93-97; William Kilbourn, The Firebrand: William Lyon Mackenzie and the rebellion in Upper Canada (Clarke, Irwin, 1956) at 193-95; Charles G Roland, “Dictionary of Canadian Biography” (University of Toronto/Université Laval, 2003) vol 7 sub verbo “Horne, Robert Charles,” online: [perma.cc/Q2EM-72Z4].
3. See William Lyon Mackenzie, “To the People of Upper Canada,” The Correspondent and Advocate (July 30, 1835) at 3.
4. I have capitalized the words “Reformer” and “Conservative” when used as nouns to communicate that these groups were akin to political parties—though, as detailed below, they were not formally organized as such.
5. See Upper Canada, House of Assembly, First Report by the Committee of Finance, Appendix to the Journal of Assembly (March 8, 1829).
6. Translation my own. See “The Case of Mixed Money in Ireland, Trin. 2 James I, A.D. 1605,” reprinted in A Complete Collection of State Trials and Proceedings for High Treason and Other Crimes and Misdemeanors from the Earliest Period to the Year 1783: With Notes and Other Illustrations (TC Hansard, 1816).
7. Thomas Hobbes, Hobbes’s Leviathan: reprinted from the edition of 1651, (Oxford University Press, 1929) at 193.
8. See Legal Tender Cases, 79 US 457 (1870) at 564.
9. Pronounced in this regard is Modern Monetary Theory. For an introduction, see L Randall Wray, Modern Money Theory: A Primer on Macroeconomics for Sovereign Monetary Systems, 1st ed (Palgrave Macmillan UK, 2012). For other examples from heterodox economics, see Jamee K Moudud, “Analyzing the Constitutional Theory of Money: Governance, Power, and Instability” (2018) 31 Leiden J Intl L 289 at 289–313, DOI: ; Perry Mehrling, “Financialization and its discontents” (2017) 2 Finance & Society 138–50, DOI: .
10. See generally David MP Freund, “State Building for a Free Market: The Great Depression and the Rise of Monetary Orthodoxy” in Brent Cebul, Lily Geismer & Mason B Williams, eds, Shaped by the state: toward a new political history of the twentieth century (The University of Chicago Press, 2018); Ann Marsh Daly, “Every Dollar Brought from the Earth: Money, Slavery, and Southern Gold Mining” (2021) 41 J Early Republic 553 at 553–85, DOI: ; Rebecca L Spang, Stuff and Money in the Time of the French Revolution (Harvard University Press, 2015), DOI: . For two excellent recent Canadian works foregrounding the political importance of money, see also Catherine Desbarats, “On Being Surprised: by New France’s Card Money, for Example” (2021) 102 Can Historical Rev 125 at 125–51, DOI: ; Brian Gettler, Colonialism’s currency: money, state, and First Nations in Canada, 1820-1950, (McGill-Queen’s University Press, 2020), DOI: .
11. This is the mode in which I see the present work. In particular, see Christine Desan, Making Money: Coin, Currency, and the Coming of Capitalism (Oxford University Press, 2014), DOI: [Desan, Making Money]; Mehrsa Baradaran, “Banking on Democracy” (2020) 98 Washington U L Rev 353; Robert Hockett & Saule Omarova, “The Finance Franchise” (2017) 102 Cornell L Rev 1143, DOI: ; Morgan Ricks, “Money As Infrastructure” (2018) 3 Columbia Bus L Rev 757, DOI: ; Lev Menand, “Why Supervise Banks? The Foundations of the American Monetary Settlement” (2019) 74 Vanderbilt L Rev 951.
12. This literature is truly massive and cannot be fully summarized here. For the works relied on primarily for this paper, see Gerald M Craig, Upper Canada: The Formative Years, 1784-1841 (McClelland & Stewart, 2016) [Craig, The Formative Years]; Gerald M Craig, “The 1830s” in JMS Careless, ed, Colonists & Canadiens: 1760-1867 (Macmillan of Canada, 1971) 173 [Craig, “The 1830s”]; Jeffrey L McNairn, The Capacity to Judge: Public Opinion and Deliberative Democracy in Upper Canada, 1791-1854 (University of Toronto Press, 2000), DOI: < https://doi.org/10.3138/9781442680623> [McNairn, The Capacity to Judge]; Allan Greer, “1837–38: Rebellion Reconsidered” (1995) 76 Can Historical Rev 1 at 1-18, DOI: ; Colin Read and Ronald Stagg, The Rebellions of 1837 in Upper Canada: A Collection of Documents (Carleton University Press, 1985), DOI: < https://doi.org/10.1515/9780773584068>; Colin Read, The Rising in Western Upper Canada, 1837-8: The Duncombe Revolt and After (University of Toronto Press, 1982), DOI: .
13. On judicial independence, see Jim Phillips, “Judicial Independence in British North America, 1825–67: Constitutional Principles, Colonial Finances, and the Perils of Democracy” (2016) 34 L & History Rev 689 at 689–742, DOI: . On the introduction of equity into the province, see John C Weaver, “While Equity Slumbered: Creditor Advantage, A Capitalist Land Market, and Upper Canada’s Missing Court” (1990) 28 Osgoode Hall LJ (1960) 871, DOI: . On civil court reform, see William NT Wylie, “The “Majestic Equality” of the Law: Conservatism, Radicalism, and Reform of the Civil Courts in Upper Canada, 1841-1853” (2020) 57 Osgoode Hall LJ 381, DOI: < https://doi.org/10.60082/2817-5069.3582>.
14. In his study of Canadian banking, RM Breckenridge describes these efforts are part of a general “banking mania” overtaking the province due to increased immigration and economic development. See Roeliff Breckenridge, The Canadian Banking System 1817-1890 (Macmillan & Company, 1895) at 65-79. For discussion on the “rapid expansion and prosperity of the 1830’s” that inspired considerable “impatience” for new banks, see R Craig McIvor, Canadian Monetary, Banking, and Fiscal Development (Macmillan Company of Canada, 1958) at 36-38. Adam Shortt’s history of Canadian banking is considerably more sensitive to the political dynamics of the period but does not draw much attention to the Reformers’ own understanding of money and its role in governance. See Adam Shortt, “Crisis and Resumption” in Adam Shortt, ed, Adam Shortt’s History of Canadian Currency and Banking, 1600-1880 (The Canadian Bankers’ Association, 1986) [Shortt, History of Canadian Currency]. As a contrast, in the most detailed published account of these events, sociologist Albert Schrauwers describes these banks as experiments in what he terms “joint stock democracy”—“self-governing bodies, whose members had equal standing, having freely consented to join an association that devised its own rules and policies, and elected from among their ranks officers who were to carry out their wishes.” These, he argues, helped acclimatize Canadians to democratic government. See Albert Schrauwers, Union Is Strength: W.L. Mackenzie, the Children of Peace and the Emergence of Joint Stock Democracy in Upper Canada (University of Toronto Press, 2009) at 22. Another major exception here is the work of Lillian F Gates charting William Lyon Mackenzie’s political economy, which devotes considerable attention to his ideas on money and banking. Her work, however, is focused primarily on Mackenzie himself, rather than on the broader Reform movement, pays no attention to the legal mechanics of money creation, and makes Mackenzie come across as a bit more consistent in his thinking on these matters than I do here. See especially “The Decided Policy of William Lyon Mackenzie” (1959) 40 Can Historical Rev 185. Allan Greer also discusses the Reformers’ position on banks in his study of the roots of Canadian democracy, though he regards it as primarily a part of their general opposition to corporate privilege. See Allan Greer, “Historical Roots of Canadian Democracy” (1999) 34 J Can Studies 7 at 7–26.
15. See Mackenzie, “To the People of Upper Canada,” supra note 3.
16. To be clear, I’m not alleging that the reformers were attempting to overthrow or replace the existing state apparatus (though some clearly were). Rather, by “contest” here I mean they were “vying for” state power—that, in the absence of sufficient inclusion in the governance process, they were directly competing with it by establishing their own independent money-issuing body.
17. It is worth noting here that political opposition to the introduction of commercial banks was not at all unique to Upper Canada. Some American examples will be discussed below.
18. Canada, Library of Parliament, How the Bank of Canada Creates Money for the Federal Government: Operational and Legal Aspects, by Penny Becklumb & Mathieu Frigon, Publication No 2015-51-E (Library of Parliament Hill Studies, 10 August 2015). While it varies, private banks in Canada have historically issued about 75 per cent of the liabilities that serve as our medium of exchange. See specifically Statistics Canada, National Balance Sheet Accounts (Statistics Canada, 14 June 2023) online: [perma.cc/LL4L-BWWW].
19. For the constitutive role of law in history of this kind, see Roy Kreitner, “Legal History of Money” (2012) 8 Annual Rev L & Soc Science 416 at 416–431, DOI: .
20. James Tobin, The New Palgrave Dictionary of Economics (Palgrave Macmillan UK, 2008) sub verbo “money.” See also Guy David, “Money in Canadian Law” (1986) 65 Can Bar Rev 192 at 202-210.
21. For example, see An Act to Repeal and amend certain acts of the province in relation to Gold and Silver Coin, Statutes of Upper Canada 1836, c XXVII [Currency Act].
22. The Halifax Rating was first adopted, in part, by the colony in 1796. This adoption was then expanded in 1821, and any use of the earlier York Rating was sanctioned. Nonetheless, there are reports of the earlier York rating still being used, up until unification of the Canadas in 1841. See AB McCullough, Money and exchange in Canada to 1900 (Dundurn Press in co-operation with Parks Canada and the Canadian Government Publication Centre, Supply and Services Canada, 1984) at 91-93; Robert Chalmers, A History of Currency in the British Colonies (Eyre and Spottiswoode, 1893) at 175-88.
23. Issued by Order in Council in March of that year. For the Canadian implementation of this policy in British North America, see Shortt, History of Canadian Currency, supra note 14 at 219-40. See also Adam Shortt, Canada and Its Provinces A History of the Canadian People and Their Institutions, vol 4 (T&A Constable at the Edinburgh University Press for the Publishers Association of Canada, University of Toronto Press, 1914) at 224 [Shortt, Canada and its Provinces].
24. It is important to note that there was a lower limit on the quality of coinage that the law allowed to act as legal tender. See e.g. Currency Act, supra note 21.
25. See Shortt, Canada and its Provinces, supra note 23 at 226-27. Angela Redish argues that the colonists’ near constant complaints about a deficit of specie is contradicted by modern economic theories of specie flows, and that the colonists must therefore instead have been referring to lack of quality coin, rather than a lack of coin generally. As I read the sources, the colonists were almost certainly directing their complaints at both. See Angela Redish, “Why Was Specie Scarce in Colonial Economies? An Analysis of the Canadian Currency, 1796–1830” (1984) 44 J Econ History 713 at 713–28, DOI: .
26. The quality of copper coins in the colony became so poor in the 1830s, that even illegal token copper half-pennies began to be imported and used as currency. See McCullough, supra note 22 at 101-102.
27. See Shortt, History of Canadian Currency, supra note 14 at 234.
28. Similar initiatives had earlier taken place in the American colonies. See E James Ferguson, “Currency Finance: An Interpretation of Colonial Monetary Practices” (1953) 10 William & Mary Q 153 at 154–80, DOI: .
29. See McCullough, supra note 22 at 83. They were also receivable at a government office for either cash or bills of exchange callable upon London, at the option of the Commander of the Forces. It seems that, legally, the bills were a cooperative effort between the colonies and the imperial military authority. See Duncan McArthur, “History of Public Finance, 1763-1840” in Shortt, ed, Canada and its Provinces, supra note 23 at 504-506.
30. McCullough, supra note 22 at 115-17.
31. Ibid.
32. See Craig, The Formative Years, supra note 12 at 161. Commercial banking, of course, well predated this time. For two excellent accounts of its development in England, see Benjamin Geva, The Payment Order of Antiquity and the Middle Ages: A Legal History (Hart Publishing, 2011) at ch 10; LS Pressnell, Country Banking in the Industrial Revolution (Oxford University Press, 1956).
33. Several of these banks began as partnerships, before seeking legislative charters soon after. See James Powell, A History of the Canadian Dollar (Bank of Canada, 2005) at 17-18.
34. The Bank of Upper Canada, discussed in detail in the next section, was the outlier here, being the only Bank in the Canadian colonies in the 1820s to issue notes denominated in both dollars and shillings.
35. It is worth noting here that this was generally the case for incorporated businesses in Upper Canada. See Philip Girard, Jim Phillips & R Blake Brown, A History of Law in Canada, Volume One: Beginnings to 1866 (University of Toronto Press, 2018) at 628-36. While it was not the case at this time, in the union period, double liability would become the norm for banking incorporations.
36. For example, see Mackenzie’s complaint in Upper Canada, House of Assembly, “Report of the Select Committee on Currency,” Appendix to the Journal of Assembly (11 February 1831) at 202.
37. There is a heated contemporary debate on the nature of commercial banking, between those who understand commercial banks primarily as financial intermediaries and those who understand them primarily as money creators. See Morgan Ricks et al, “Banking: Intermediation or Money Creation” (2020), online: Just Money [perma.cc/2VG4-WPVE]. While it goes beyond the scope of this article to engage directly with that debate, it is clear to me from the sources referenced in this paper, that commercial banks were introduced into Upper Canada explicitly so that they could act as money creators, and not simply to provide financial intermediation. This was, in fact, the main purpose behind their introduction.
38. See Breckenridge, supra note 14 at ch 2; Shortt, History of Canadian Currency, supra note 14 at 83–84; Merrill Denison, Canada’s First Bank: A History of the Bank of Montreal, vol 1 (McClelland & Stewart, 1966) at Appendix E; James Stephenson, “The Canadian Banking Company” in EP Neufeld, ed, Money and Banking in Canada (McClelland and Stewart Limited, 1964).
39. This field is filled with technical terms that are used in multiple, often confusing ways. “Discounting” is a primary example. Discounting, in the sense, refers to a simple act of lending against a promise of repayment, and is not to be confused with the act of “discounting” bills of exchange payable in the future (which is dealt with a bit below) or exchanging banknotes “at a discount,” which were both related but distinct processes.
40. See McCullough, supra note 22 at 86-87.
41. See Shortt, History of Canadian Currency, supra note 14 at 241-42.
42. See McCullough, supra note 22 at 88-89.
43. JB Robinson to Wilmot on 28 January 1823, as quoted in McCullough. Ibid at 88.
44. The Bank of Montreal has the claim of being Canada’s first bank, as it was established in 1817, but it did not receive its legislative charted until 1822, one year after the Bank of Upper Canada.
45. This section is based primarily on the work of Craig and McNairn. See Craig, “The 1830s,” supra note 12; McNairn, The Capacity to Judge, supra note 12.
46. The overview of Upper Canada’s constitutional structure here is drawn by Girard, Phillips & Brown. See supra note 35 at 495-507.
47. Ibid at 500, 504.
48. See John Garner, The Franchise and Politics in British North America, 1755-1867 (University of Toronto Press, 1969) at ch 6, DOI: .
49. Ibid. See also Philip Girard, “Rearguard or Vanguard: A New Look at Canada’s Constitution Act 1791” (2021) 50 J Imperial & Commonwealth History 1 at 17, DOI: .
50. Interestingly, the colony’s public debt was managed by a receiver general appointed by the British Treasury Department, who operated independently of the lieutenant governor. See Peter A Baskerville, The Bank of Upper Canada: A Collection of Documents (Champlain Society in cooperation with the Ontario Heritage Foundation and Carleton University Press, 1987), at lxii.
51. An exception to this was the minority Reform leadership of Marshall Bidwell, who “by playing one group off against another…was often able to get its way.” See Craig, “The 1830s,” supra note 12 at 188.
52. Both Rolph and Bidwell would later be founding board members of the Bank of the People.
53. See McNairn, supra note 12 at 23; Greer, supra note 14.
54. See Craig, “The 1830s,” supra note 12 at 188.
55. In a letter instructing one of his followers, John Strachan emphasized that the Bank ought to be “as much Provincial” as possible, John Strachan to John Macaulay, York, 26 July 1819. Baskerville, supra note 50 at 6.
56. See Shortt, History of Canadian Currency, supra note 14 at 103.
57. Baskerville, however, offers some important caveats regarding his assertion here, observing that, while there was certainly “an important connection” between the bank and the government, “government was a multilevelled and often discordant apparatus. The bank and parts of the government intersected at various times, but rarely ever completely merged.” See Baskerville, supra note 50 at xl, cli.
58. Ibid.
59. Ibid at xxxvii-xli. This location requirement was placed in the Bank’s charter, An Act to incorporate sundry Persons under the style and title of the PRESIDENT, DIRECTORS and COMPANY of the BANK of UPPER CANADA, Statutes of Upper Canada 1819, c XXIV.
60. This description of Toronto is largely drawn largely from William Kilbourn. See Kilbourn, supra note 2 at ch 1.
61. Much of this growth was driven by mass dispossession of Indigenous peoples. See Girard, Phillips & Brown, supra note 35 at 490.
62. See Baskerville, supra note 50 at li.
63. Ibid at p. xxxviii.
64. Ibid at lxiv-lxviii.
65. Ibid at lxxxiii.
66. The former clearly inspired by the longstanding use of Britannia to represent the Bank of England.
67. See First Report by the Committee of Finance, supra note 5.
68. “Dictionary of Canadian Biography” (University of Toronto/Université Laval, 2003) vol 8 sub verbo “Allan, William,” online: [perma.cc/4GKR-WQN7].
69. See William Lyon Mackenzie, Sketches of Canada and the United States (Applewood Books, 2007) at 455-60 [Mackenzie, Sketches of Canada]. It is worth noting that there is no actual evidence this took place.
70. See McIvor, supra note 14 at 37.
71. The establishment of the Commercial Bank, in particular, was the result of a split among the conservatives between those who wanted the Bank of Upper Canada to maintain its monopoly by establishing a Kingston branch, which it did do, and those distrustful of the power associated with a single provincial bank of issue. Nevertheless, the first president of the Commercial Bank, John Solomon Cartwright, was a disciple of Archdeacon Strachan and an explicit member of the Family Compact. The Gore Bank also, while not directly in the hands of the Family Compact, was without question a politically conservative institution. See Shortt, History of Canadian Currency, supra note 14 at 281-93, 307-308.
72. House of Assembly, Upper Canada, Seventh Report from the Select Committee of the House of Assembly of Upper Canada on Grievances (M Prynolds, 1835) (Chair: William Lyon Mackenzie) at vi.
73. Patrick Swift, A New Almanack for the Canadian True Blues for the Millenial and prophetical year of the Grand General Election for Upper Canada and the total and everlasting downfall of Toryism in the British Empire (Colonial Advocate Press, 1834) at 5 [sic]. Patrick Swift was actually William Lyon Mackenzie publishing under a pseudonym. See Frederick H Armstrong & Ronald J Stagg, “Dictionary of Canadian Biography” (University of Toronto/Université Laval, 2003) vol 9 sub verbo “Mackenzie, William Lyon,” online: [perma.cc/TG9Y-PUAN].
74. Jeffrey L McNairn, “‘The common sympathies of our nature’: Moral Sentiments, Emotional Economies, and Imprisonment for Debt in Upper Canada” (2016) 49 Histoire sociale 49 at 49–71, DOI: .
75. John Rolph, “Mr. John Rolph’s Argument in Favour of the Abolition of Imprisonment for Debt,” as partially printed in the Colonial Advocate (22 January 1829) at 1.
76. See Girard, Phillips & Brown, supra note 35, at 649-51.
77. Ibid at ch 32.
78. See Mackenzie, supra note 3.
79. See Swift, supra note 73 at 5.
80. See Mackenzie, supra note 3 [sic].
81. For a treatment of Gouge’s popularity and influence, see Benjamin G Rader, “William M. Gouge Jacksonian Economic Theorist” (1963) 30 Pennsylvania Hist: J Mid-Atlantic Studies 443 at 443–53.
82. William M Gouge, A short history of paper money and banking in the United States (TW Ustick, 1833) [Gouge, Short History].
83. Ibid at 9.
84. Ibid at 13. Gouge’s approach has some resonances with the monetary theory of antiquity. See Geva, supra note 32 at ch 2. It also has some resonances with more modern writing in the Austrian school of economics. See Murray N Rothbard, Economic Depressions: Their Cause & Cure (Ludvig von Mises Institute, 2009).
85. Gouge, Short History, supra note 82 at 16.
86. Ibid at 32, 41-42.
87. See Robert Richard, “Bank War in Lower Canada” in Maxime Dagenais & Julien Mauduit, eds, Revolutions across Borders: Jacksonian America and the Canadian Rebellion, Rethinking Canada in the World 3 (McGill-Queen’s University Press, 2019) at 74, DOI: .
88. Ibid at 75.
89. Ibid at 78.
90. Swift, supra note 73 at 5.
91. See Upper Canada, House of Assembly, “Report of the Select Committee on Currency,” Appendix to the Journal of the House of Assembly (1830) at 201 [Upper Canada, House of Assembly, “Second Report on the Currency”].
92. Ibid at 202.
93. See Mackenzie, Sketches of Canada, supra note 69 at 455-60.
94. Ibid at 460.
95. The address was passed nearly unanimously in the Assembly. See Upper Canada, Journal of the House of Assembly, 11-4 (1 March 1834) at 140; Upper Canada, Journal of the House of Assembly, 12-1 (13 February 1835) at 136.
96. See Breckenridge, supra note 14 at 67-73.
97. Upper Canada, House of Assembly, Report of Select Committee to which was referred the subject of the Currency (M Reynolds, 1835) at 3 [Report on Banking].
98. See Mackenzie, “To the People of Upper Canada,” supra note 3.
99. Ibid.
100. William Lyon Mackenzie “What can wealth do for us?,” Correspondent & Advocate (6 August 1835) [Mackenzie, “What can wealth do for us?”].
101. Breckenridge, supra note 14 at 73.
102. Upper Canada, House of Assembly, “Second Report on the Currency,” supra note 91.
103. Ibid.
104. See Mackenzie, “What can wealth do for us?,” supra note 100.
105. Ibid.
106. Shortt, History of Canadian Currency, supra note 14 at 282.
107. Upper Canada, House of Assembly, “Report of the Select Committee Appointed to Examine and Report on the Expediency of establishing a Provincial Bank” Appendix to the Journal of the House of Assembly (1835) at No. III.
108. See Shortt, History of Canadian Currency, supra note 14 at 309-310. This fear was not at all unfounded, as the Bank of Upper Canada had long sought to take on such a role. See also Baskerville, supra note 50 at lxx-lxxi.
109. Report on Banking, supra note 97.
110. Journal of the House of Assembly, 12-1 (13 February 1835) at 136.
111. Ibid.
112. See Theodore Thayer, “The Land-Bank System in the American Colonies” (1953) 13 J Econ History 145, DOI: .
113. See “First Report from the Select Committee on Trade and Commerce,” Appendix to the Journal of the House of Assembly, No. 11 (6 March 1835).
114. Report on Banking, supra note 97 at 7. Another legal obstacle, a general prohibition on issuing small notes and inland bills of exchange, was declared of no force in Upper Canada in 1821. See Breckenridge, supra note 14 at 73-74. Albert Schrauwers places this report, and the subsequent growth of joint-stock banks in Upper Canada within the context of what he describes as a “corporate revolution” affecting English banking law and corporate law generally, following the repeal of the Bubble Act in 1825. See Schrauwers, supra note 14, at 154-55; Albert Schrauwers, “‘A Terrible Engine in the Hands of Provincial Administration’: The Corporate Franchise State and Joint-Stock Democracy in the Last of the Atlantic Revolutions” in Julien Mauduit & Jennifer Tunniclifee, eds, Constant Struggle: Histories of Canadian Democratization (McGill-Queen’s University Press, 2021) 116, DOI: . But see Girard, Phillips & Brown, supra note 35 at 629. Girard, Phillips, and Brown assert that, long before its repeal, the Bubble Act had been increasingly ignored in both Britain and the colonies.
115. This paragraph is principally drawn from the Dictionary of Canadian Biography. See “Dictionary of Canadian Biography” (University of Toronto/Université Laval, 2003) vol 8 sub verbo “Truscott, George,” online: [https://perma.cc/3F5R-R6K3]. See also Shortt, History of Canadian Currency, supra note 14 at 311-13, 830-41. Truscott’s banking venture seems to have been formed as a partnership, not a joint-stock company.
116. See JMS Careless, “Dictionary of Canadian Biography” (University of Toronto/Université Laval, 2003) vol 11 sub verbo “Lesslie, James,” online: [perma.cc/ZF8W-LBP6]; Lillian F Gates, “Dictionary of Canadian Biography” (University of Toronto/Université Laval, 2003) vol 11 sub verbo “Price, James Hervey,” online: [perma.cc/UT98-CD8Z].
117. Shortt, History of Canadian Currency, supra note 14 at 312.
118. In its attempts to undermine the Agricultural Bank, the Bank of Upper Canada went so far as to send agents to the countryside to purchase its notes, which it then attempted to cash in large amounts in order to force the Agricultural Bank to suspend payments. Ibid at 834-835.
119. See Shortt, History of Canadian Currency, supra note 14 at 313-14.
120. See Breckenridge, supra note 14 at 74. See also William Lyon Mackenzie, Correspondent and Advocate, (27 August 1835); Francis Hincks, Reminiscences of his Public Life (William Drysdale & Co, 1884) at 11 [Hincks, Reminiscences].
121. For Shrauwers, these joint stock companies represented “mini-parliament[s]” that inculcated “notions of ‘responsible government’ through its separation of ownership and management.” The joint stock company, on his view, allowed the colonists to practice democratic forms outside the direct purview of the state, and was thereby an “incubator of stakeholder democracy.” See Shrauwers, supra note 14 at 22-23, 171-72.
122. As mentioned above, fellow Reformers in Lower Canada had succeeded in establishing the Banque du Peuple in Montreal just before. For more on that project, see e.g. Ronald Rudin, “Beginnings: 1835-1875” in Banking en français: the French banks of Quebec, 1835-1925 (University of Toronto Press, 1985) 21; Robert S. Greenfield, La Banque du Peuple, 1835-1871, and its Failure, 1895 (MA Thesis, McGill University Department of History, 1968) [unpublished].
123. Letter from James Lesslie and J. H. Price on Behalf of the Bank of the People (4 August 1835), Thomas Fisher Rare Book Library, University of Toronto (Rare Book Collection T-10 00064 no 5).
124. The full list of the Bank’s first board was published in Mackenzie’s Correspondent and Advocate newspaper through the month of November 1835. It includes, in the order listed there: “John Rolph, M.S. Bidwell, James Lesslie, T.D. Morrison, David Gibson, George Barclay, James Beaty, John Harper, John Montgomery, John Doel, Thomas Elliot, and James Hervey Price.” See “The Stockholders of the Bank of the People,” Correspondent and Advocate (November 1835).
125. It is clear that both the Bank’s organizational structure and the specific reputation of its directors were key aspects of its identity as a Reform institution. As William Lyon Mackenzie stated in his newspaper: “The Bank of Upper Canada still lingers but is hastening its end….Not so the People’s Bank, it is open early and late, and two persons seldom meet each other asking for specie within its walls. If it were unable to pay gold and silver, after the Bank of Upper Canada become bankrupt, the people know that each Director is liable in his last dollar, as well as each Shareholder, for every note out, and they also know that Messrs. Lesslie, Doel, Rolph, Beatty, Morrison, Gibson, Hincks, Price, Elliott, Leys, John Montgomery, Barclay, and a few others its stockholders and managers are men of strict integrity and worth thrice the amount of the notes they have in circulation.” “The Old Lady,” The Constitution (24 May 1837).
126. Diary of James Lesslie (23 November 1835), Dundas Museum and Archives (Lesslie family fonds F.0008).
127. Ibid. The notice was also printed in Mackenzie’s newspaper. See Correspondent and Advocate (26 November 1835).
128. See Assessment Roll, Toronto, St. David’s ward (1836), City of Toronto Archives (Fonds 200, Series 612, File 15); Assessment Roll, Toronto, St. David’s ward (1837), City of Toronto Archives (Fonds 200, Series 612, File 18); Assessment Roll, Toronto, St. David’s ward (1838), City of Toronto Archives (Fonds 200, Series 612, File 22). See also George Walton, The City of Toronto and the Home District Commercial Directory and Register (T Dalton and WJ Coates, 1837) at 3. Both the assessment rolls and Walton confirm that the bank was located on New Street, though they do not include a specific address.
129. For the reprinted notices, see Correspondent and Advocate (26 November 1835).
130. See Upper Canada, Journal of the House of Assembly, 12-2, No 1 (February 19, 1836) at 185, 197, 199.
131. See Journal of the Legislative Council of Upper Canada, 12-2 (8 April 1836) at 128, 131, 204.
132. An Act to protect the Public against Injury from Private Banks, Statutes of Upper Canada 1837, c XIII. See also Shortt, History of Canadian Currency, supra note 14 at 315.
133. Ibid at s IV.
134. Ronald Stewart Longley, Sir Francis Hincks, a Study of Canadian Politics, Railways, and Finance in the Nineteenth Century (Arno Press, 1981). This section also draws William G Ormsby, “Dictionary of Canadian Biography” (University of Toronto/Université Laval, 2003) vol 11 sub verbo “Hincks, Sir Francis,” online: [perma.cc/HTL5-E79W].
135. Hincks, Reminiscences, supra note 120 at 15.
136. See Upper Canada, House of Assembly, “Report of the Select Committee to which was Referred the Subject of the Monetary System of the Province,” Journal of the House of Assembly of Upper Canada (1837) at iv [“Report on the Monetary System”].
137. It would soon reach its peak note issuance of around £24,000 in 1837. See Upper Canada, House of Assembly, “Report of the Select Committee on the Subject of Banking,” Appendix to the Journal of Assembly of Upper Canada (1837-1838) at 224 [“Second Report on Banking”].
138. McCullough, supra note 22 at 116.
139. See letter of TD Morrison, Mayor of Toronto, to the President and Directors of the Bank of Upper Canada, the Bank of the People, the Commercial Bank, the Farmers' Bank and to Messrs. Truscott, Green & Co (20 February 1836), City of Toronto Archives (Fonds 200, Series 362, File 1, Item 33). The commission to negotiate the loan only recommended the Bank of Upper Canada. See “Report of the Special Committee to negotiate a loan” (7 March 1836), City of Toronto Archives (Fonds 200, Series 1081, Item 213).
140. “Second Report on Banking,” supra note 137 at 223. I have used contemporary language referring to savings accounts. In the language of the time, these were termed deposits “payable [a certain number of days] after sight” in contrast to deposits “payable on demand.”
141. See “Report on the Monetary System,” supra note 136. This is contrary to the account offered by Albert Schrauwers, who argues that, because joint stock banks did not have limited liability, they were forced to “adhere to a hard money policy, never issuing more notes then they could redeem” [sic]. See Schrauwers, supra note 14 at 155. As this report shows, every joint stock bank in the province issued considerably more notes than specie they kept in reserve; indeed, some, like the Farmer’s Bank, at times maintained a lower reserve ratio than the chartered banks that were protected by limited liability.
142. Francis Hincks, The Examiner (22 August 1838). But see Albert Schrauwers, “The Gentlemanly Order & the Politics of Production in the Transition to Capitalism in the Home District, Upper Canada” (2010) 65 Labour/Le Travail 9; Albert Schrauwers, “‘Money bound you—money shall loose you’: Micro-Credit, Social Capital, and the Meaning of Money in Upper Canada” (2011) 53 Comp Study Society & History 314, DOI: .
143. See Baskerville, supra note 50 at li-liii.
144. J Ross Robertson, Robertson’s Landmarks of Toronto (J. Ross Robertson, 1894) at 391.
145. Douglas McCalla, Planting the Province: The Economic History of Upper Canada, 1784-1870 (University of Toronto Press, 1993). Hincks also mentions visiting friends of the Reformers in the “settlements north of Toronto,” which does somewhat corroborate this claim. Hincks, supra note 120 at 22.
146. McCalla asserts that the strong growth following British military expenditures in Upper Canada after the Rebellion indicates that “what happened in 1837 in Upper Canada was a liquidity crisis more than a sign of deep structural flaws in the provincial economy.” Supra note 145 at 192.
147. “City News Room” (19 June 1837), published in The Constitution No 57, 2 August 1837.
148. Baskerville, supra note 50 at 139. See William Lyon Mackenzie, “Failure of Phelps, Dodge & Co.,” The Constitution (17 May 1837) [Mackenzie, “Failure of Phelps, Dodge & Co.”].
149. “Report on the Monetary System,” supra note 136 at 18 (Testimony of Francis Hincks).
150. These notes were endorsed by Price and, it seems, the loan went unpaid until considerably later. See Letter of William Lyon Mackenzie to James Lesslie, Esq (15 May 1846), Toronto, Archives of Ontario (Lesslie Family Fonds, F37).
151. See Longley, supra note 134 at 26. For the importance of voluntary associations to Upper Canada’s public life, see McNairn, The Capacity to Judge, supra note 12 at ch 2.
152. “Report on the Monetary System,” supra note 136 at 20 (Testimony of Francis Hincks).
153. See Letter of Samuel Street to Jos. Wenham, Cashier, Bank of the People (29 October 1841), Toronto, Archives of Ontario (Samuel Street Fonds, F547); Letter of Samuel Street to Jos. Wenham, Cashier, Bank of the People (4 November 1841), Toronto, Archives of Ontario (Samuel Street Fonds, F547). See also JJ Talman, “Dictionary of Canadian Biography” (University of Toronto/Université Laval, 2003) vol 9 sub verbo “Merritt, William Hamilton (1793-1862),” online: [perma.cc/4U6K-AFX2].
154. Jessica M Lepler provides an excellent overview of the panic and the various evolving prescriptions as to its causes over time. See The Many Panics of 1837: People, Politics, and the Creation of a Transatlantic Financial Crisis (Cambridge University Press, 2013).
155. See Bray Hammond, Banks and Politics in America: from the Revolution to the Civil War (Princeton University Press, 1957) at ch 15.
156. Baskerville, supra note 50 at lxxix.
157. See “Report on the Monetary System,” supra note 136 at ii.
158. See An Act to afford relief to certain Banking Institutions heretofore carrying on business in this Province, by enabling them more conveniently to settle their affairs, and for protecting the interests of persons holding their Notes, Statutes of Upper Canada 1837, c I. This applied to both the chartered and the joint-stock banks. Any bank suspending payments was only permitted to issue notes up to, and not exceeding the amount of its paid-up capital. Originally the lieutenant governor, Sir Francis Bond Head, planned to require that every bank that chose to suspend payments (a) present the government with a full account of its affairs, (b) meet certain reserve requirements, and that (c) the notes of the suspending bank would not be used in government transactions. Though, for the Bank of Upper Canada, this condition was later waived, and the Bank of Upper Canada’s notes were still accepted by government even after its suspension. See Baskerville, supra note 50 at C33, lxxxv (Letter of Sir F. B. Head to Banks of Upper Canada, 19 July 1837).
159. See Denison, supra note 38 at 346. The Bank of Upper Canada perhaps made the largest reduction of all. Its note issuance declined from £202,710 in January 1837 to £80,079 in January 1838. See McCullough, supra note 22 at 116.
160. See Shortt, History of Canadian Currency, supra note 14 at 355. See also “Second Report on Banking,” supra note 137 at 212. Without the Bank’s documents available to us, we can only speculate as to how it remarkably sustained itself in this way. From what evidence we have, the Bank’s success in this regard seems largely to have been the result of able management by Hincks, the fact that it lent within a relatively small and trusted set of customers, and the decision to cut back the Bank’s international business early on in the panic. As early as May 1837, the Bank withdrew its funds from its agent in New York City and had already begun to restrict its lending. See Mackenzie, “Failure of Phelps, Dodge & Co.,” supra note 148.
161. Early on in the crisis, Mackenzie printed in his newspaper American calls for the elimination of paper currency in favour of a complete return to specie. See Charles G Ferris et al, “Great Meeting of the People in the Park Friendly to the Constitutional Currency, Gold and Silver,” The Constitution (17 May 1837).
162. Samuel Young, “Report of a Committee of the Senate of the State of New York,” The Constitution (24 May 1837).
163. William Lyon Mackenzie, “To the People of the County of York,” The Constitution (24 May 1837).
164. William Lyon Mackenzie, “Exchange Your Bank Notes For Gold and Silver,” The Constitution (17 May 1837) [Mackenzie, “Exchange Your Bank Notes”].
165. As printed in The Constitution (15 November 1837), ss 56-57.
166. Mackenzie, “Exchange Your Bank Notes,” supra note 164.
167. Mackenzie, “Failure of Phelps, Dodge & Co.,” supra note 148. Later, in the same issue, Mackenzie declared that “[t]his leads me to say something of the unchartered Banks. If the Gore, U. C. and Commercial Banks break, I do not see how the others can all continue to pay specie. But there is this difference. The firestorm and stockholders are answerable for not more than their undivided funds while any man who holds a Ten Dollar Bill of the People’s or the Farmer’s Bank, may (as I suppose) sue any stockholder or partner in the Court of Requests, and in the case of the People’s Bank the partners are good for ten times the amount they owe, and their concerns are well managed. Still the result of the present run on the chartered Banks will, I think, compel the most firm and secure Bank that could be devised to suspend specie payments, if the chartered Banks sink first (ibid).”
168. A bill of exchange was akin to a post-dated check, though it could be bought and sold, often at a discount (this process was therefore called “discounting,” not to be confused with the discounting of promissory notes). If a bill of exchange promised payment of specie from a certain specific bank (most often a bank in London or New York), it could be purchased in order to acquire that payment, and therefore was a means of directly acquiring new specie reserves. “Report on the Monetary System,” supra note 136 at 18 (Testimony of Francis Hincks).
169. This was a constant complaint of bankers and merchants in government reports on the suspension. See e.g. “The Third Report of the Committee on Banking,” Appendix to the Journal of the House of Assembly of Upper Canada (1839) at 760-85.
170. Ibid at 770.
171. “Report on the Monetary System,” supra note 136 at iii.
172. See Anonymous (Printed for the Author, 1837).
173. Hincks, Reminiscences, supra note 120 at 20-21.
174. After the rebellion, habeas corpus was abridged in favour of a summary prosecutions, leading to the holding of several members for an extended period without charge. See Greer, supra note 12 at 16. Those arrested include Thomas Morrison, James Lesslie, James H. Price, and John Montgomery. Those who fled to the United States include John Rolph, Marshall Bidwell, and David Gibson. George Barclay was terminated from his office running the post office, and Francis Hincks went into hiding. See Victor Loring Russell, “Dictionary of Canadian Biography” (University of Toronto/Université Laval, 2003) vol 8 sub verbo “Morrison, Thomas David,” online: [perma.cc/8SQ3-EY2L]; Careless, supra note 116; Gates, supra note 116; Edwin C Guillet, “Dictionary of Canadian Biography” (University of Toronto/Université Laval, 2003) vol 10 sub verbo “Montgomery, John (d. 1879),” online: [perma.cc/3BCQ-5PE3]; GM Craig, “Dictionary of Canadian Biography” (University of Toronto/Université Laval, 2003) vol 9 sub verbo “Rolph, John,” online: [perma.cc/8PKG-BLGN]; GM Craig, “Dictionary of Canadian Biography” (University of Toronto/Université Laval, 2003) vol 10 sub verbo “Bidwell, Marshall Spring,” online: [perma.cc/6YU6-G3WJ]; Ronald J Stagg, “Dictionary of Canadian Biography” (University of Toronto/Université Laval, 2003) vol 9 sub verbo “Gibson, David,” online: [perma.cc/7JDU-P59G]; Ronald J Stagg, “Dictionary of Canadian Biography” (University of Toronto/Université Laval, 2003) vol 8 sub verbo “Barclay, George,” online: [perma.cc/RD25-PU8J]; Ormsby, supra note 134.
175. “Second Report on Banking,” supra note 137 at 212.
176. See Longley, supra note 134 at 32-33. It is possible that this was just an excuse developed after the fact, as at least one source alleges the Bank of Upper Canada had already begun refusing to accept the notes of the joint-stock banks, even before the banking panic that began in the spring of that year. See e.g. Anonymous, supra note 172 at 11.
177. See Shortt, History of Canadian Currency, supra note 14 at 367. The Bank of Montreal was also likely motivated by the breakdown of a tacit agreement with the Bank of Upper Canada not to expand into one another’s colonies, which broke down when the Bank of Upper Canada established an agency in Montreal in September 1838. See Baskerville, supra note 50 at lxxxvi-vii.
178. Journal of the House of Assembly of Upper Canada, 13-4 (18 March 1839) at 56.
179. The Board of the Bank of Montreal entered a deed of settlement with the Bank, signed in Montreal on 19 May 1840, which was announced the next month in Francis Hincks’ newspaper. See Denison, supra note 38 at 364. See also Francis Hincks, “The Bank of the People,” The Examiner (10 June 1840) [Hincks, “The Bank of the People”].
180. Ibid. An anonymous biographical memo found in the James Lesslie family fonds at Archives of Ontario says much the same: “The smallness of its capital and the great risk to which its stockholders were exposed (as seen in the case of the late Glasgow Bank) led its friends to give it up and about the year 1840 after paying all its stockholders principal and interest it was sold to the Bank of Montreal.” Memorandum of the Notes of the Late James Lesslie, (1880), Toronto, Archives of Ontario (Lesslie Family Papers, F 551 - MU 1720) at 7-8.
181. Albert Schrauwers comes to a similar conclusion about the decline of the bank. See supra note 14 at 206.
182. The Examiner (24 June 1840).
183. In his paper, Hincks alleges the Bank’s complete independence from the Bank of Montreal during this period, though the record does not fully bear this out. Ibid.
184. A ledger dating from 1841-42 shows that the Bank maintained accounts for many of the Bank’s original activist founders, including James Leslie, James Hervey Price, James Beaty, and Thomas Morrison. See Ledger of the Bank of the People (1841), Bank of Montreal Corporate Archives.
185. See Hincks, “The Bank of the People,” supra note 179. Benjamin Thorne’s signature as president appears on Bank of the People notes as early as October 9, 1840. Some of these notes, furthermore, no longer include German.
186. The $1 note date discussed above is dated 1836 and signed by both Lesslie and Hincks. Its design differs from other $1 notes undated, and ostensibly uncirculated, in the Bank of Canada Currency Collection, indicating a change of note design at some stage. See Bank of the People, “Bank of the People, 1 dollar: 1841,” online: Bank of Canada [perma.cc/B76U-V4QL].
187. The fact that this note is undated and unsigned suggests that it was never issued, and it differs substantially from the Bank’s previous issues. Once the Bank of Montreal changed the bank to formally become a branch, its notes began to be issued in the Bank of Montreal’s name. While not conclusive, this strongly suggests that this note dates from after the date that the Bank was Purchased by the Bank of Montreal, but before it was made into a formal branch and renamed.
188. This is in contrast to the Bank of Montreal’s notes, which were not printed with French at this time.
189. See the bank notes discussed, supra note 185.
190. Extract from Minutes of Meeting of the Board of the Bank of Montreal (19 July 1842), Bank of Montreal Corporate Archives.
191. See Kilbourn, supra note 2 at 244-52.
192. See Charles Duncombe, Duncombe’s Free Banking: An Essay on Banking, Currency, Finance, Exchanges and Political Economy (August M. Kelley Publishers, 1969). For a more extensive treatment of Duncombe’s views on banking (though one that differs, in part, from the approach taken in this paper), see Albert Schrauwers, “‘The Road Not Taken’ - Duncombe on Republican Currency: Joint Stock Democracy, Civic Republicanism, and Free Banking” in Dagenais & Mauduit, supra note 87.
193. Duncombe, supra note 192 at 9.
194. Ibid at 82.
195. Ibid at 13.
196. See Shortt, History of Canadian Currency, supra note 14 at 883-96.
197. For a detailed discussion of Hinck’s involvement in the Union Period, see Michael J Piva, The Borrowing Process: Public Finance in the Province of Canada, 1840-1867 (University of Ottawa Press, 1992).
198. Shortt, History of Canadian Currency, supra note 14 at 883.
199. See Hincks, Reminiscences, supra note 120 at 11.
200. See Desan, Making Money, supra note 11. For an excellent recent discussion of the money power and its place in political theory, see Stefan Eich, The Currency of Politics: The Political Theory of Money from Aristotle to Keynes (Princeton University Press, 2022), DOI: .
201. As noted above, deposit accounts did exist in Upper Canada at the time of the Bank of the People, though the attention drawn on them was much less than banknotes, given the relatively smaller number of daily transactions that took place by cheque or bill of exchange when compared to notes.
202. See Christine Desan, “How To Spend a Trillion Dollars: Our Monetary Hardwiring, Why It Matters, and What We Should Do About It” (2022), Harvard Public Law, Working Paper No 22-04, online (pdf): [perma.cc/TP8B-RLTY], DOI: .
203. Brian Gettler has charted how monetary expansion, even when led by money-issuing private entities such as banks, was “the vehicle through which the colonial economy grew in terms of both the economic value it generated and the space it occupied.” Gettler, supra note 10 at 39.