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History of the Bank of Nova Scotia 1832-1900
The Struggle for Incorporation

THE Halifax banking company made their influence felt against the measure. There were two or three strong men in the House, at this time, who viewed the establishment of another bank in Halifax, with anything but favor; but, on the other hand, there were two or three others, equally strong, who were full of encouragement for the proposed institution. Stephen Deblois, the colleague of the promoter of the bill, was a zealous friend of the old bank, and he resolutely stood in the way of the progress of the measure. But, at each step, he was adroitly pushed aside by Alex. Stewart who, at the outset, declared that the bill was of great importance to the province, and even to the very existence of the house as a free legislative body. He had no hesitation in saying that there was a despotic influence being exercised over the country, and that the sooner the bill was adopted the better. To avoid all appearance of interest biasing his judgment, Mr. Stewart informed the house that he had withdrawn his name from the subscription list, where it had been down to the extent of £1,000; he had therefore nothing to do with the speculation and intended to keep out of it. He threw out a challenge to John Young to declare his views more explicitly on the subject. Mr. Young, at flrst, had occupied a somewhat uncertain position in respect to this measure, but he soon made it apparent that, while he was not under the influence of the other banking concern, he had no intention of letting the promoters of the new bank have all their own way. He was not against the principle of incorporation if proper guards were applied to save the province from evils which had been experienced in other countries—in the United States, for example, where in 1826, sixteen banks were unable to pay any dividend, a circumstance attributable to an excessive issue of paper, and by the not securing capital for demands which should have been expected. In 1827, disgraceful transactions connected with these chartered companies had been brought to light in which members of the legislature and individuals of scheming character were found to be implicated. The Scotch banks lent a portion of their money on mortgages and kept a portion to support the circulation. They opened cash accounts, by which a person having credit could draw as he required cash, and might pay as he -was able, and thus have the use of a larger sum at a very small interest. In this manner the money of these banks was productive, and was free from hazard, and by such means they stood firm amidst surrounding failures. Mr. Young was not opposed to the incorporation of the new bank, but there were features of irresponsibility in connection with the measure that the public should be protected against, and he was determined that the necessary guards should be provided, and that they should be so plain that those who run could not fail to see them.

The most strenuous opponent of the measure was Jotham Blanchard. He subscribed to the view that government should not grant charters except where the large capitals of the companies made such privileges nominal, and perfectly secured the public. He had not found any authority in favor of granting irresponsibility to a company whose security was not many degrees greater than the proposed association. The very fact of the new banking company seeking a charter was an acknowledgment that they anticipated difficulties. He believed that the new bank would run great risks and he doubted that it would be in existence three months from its commencement. The chartered banks of Scotland possessed great capitals. They were not so much for issuing paper as for receiving and loaning money; the difference of interest being their profit. Instead of issuing three times the capital as the new bank proposed to do at six per cent, they did not issue paper to the amount of their capital, and were satisfied with about four per cent. There, means were at hand to supply accidental demands, here, such exigencies could not be met, and although the property of the bank should be safe the coffers might be completely exhausted. Then there was the danger which banks incurred from robbers. Every year, almost, gave evidence of such risks. And he did not think it an extreme case to suppose that the new bank would be in danger from similar causes. He had little doubt that a gang of twelve London marauders would 'be able to carry away half the property of Halifax. Charters had not been lately granted in Scotland and there such business was well understood.

Of the six members of the house of assembly for the county and town of Halifax, four were in favor of the incorporation of the proposed Bank of Nova Scotia, and two were strongly opposed to the measure. William Lawson was one of the leading promotors of the institution, and rumor had early set him down for its first president. Stephen Deblois was, as has been already stated, a zealous advocate of the interests of the Halifax banking company, and looked with much disfavor upon the entrance of any competitor in the field of its banking. It was Mr. Lawson’s opinion that, with very few exceptions, the inhabitants of Halifax were close behind the movement for a second banking institution. Banking matters in the town had hitherto been carried on all in the dark which could easily occasion sudden and extensive evil. Within a very short time of the meeting of the legislature the bank had stopped discounting, perhaps from very sufficient motives, but the public was not in a position to judge as it had no method of being informed on a subject in which it was much interested. In the contemplated bank all was to be open to public inspection and to the investigation of the legislature of the province. W. B. Bliss—afterwards Judge Bliss—the member for Hants, took a very prominent part in the debate—he seemed to be more so than any other supporter of the measure, the mouthpiece of the new bank. He averred that members who supported the bill and had taken stock to a large amount, gave the best pledge of their sincerity; stated the caution with which the introduction of six bankers out of eight of a private establishment into a branch of the legislature should be viewed; and denied that the commencement of the business of a chartered company would occasion more confusion than a second private bank. There was nothing in the objection that the capital of the new bank was to be reduced to £35,000. The capital was to be £100,000, and the bill provided that half the capital subscribed for must be paid before the ist of June, 1833, and that deposits must amount to £35,000 before business commenced. The sum of £50,000 could be paid at the time, but the smaller sum was mentioned as one of more certainty. It was not a reduction of capital, as Mr. Deblois had pretended to believe it was, but an ensuring an early commencement, and an endeavor to avoid unnecessary loss on unemployed capital. He did not see the probability of the danger spoken of respecting an exhaustion of the funds of the new bank. The directors would not be obliged to discount indiscriminately, neither would they be called on to do so simultaneously. These things were merely brought forward to alarm the timorous. The friends of the new bank wished that the institution should go into operation early, to relieve the public from the mercy of the old bank; but if the deposits were found insufficient a further instalment could be called for which would be payable in 40 days.

The clause which empowered the company to go into operation when £35,000 were paid in met with a strenuous opposition from Jotham Blanchard. In his opinion if operations were commenced with £35,000 there would be less at stake than with ,£50,000, and so less caution might be expected and greater loss. He thought the sum too small on various accounts. The Halifax banking company was filled with paper as far as it would discount belonging to persons who had signed the subscription list for the new bank. The case was put that if the dealings of the old bank amounted to £150,000, and they limited their discounts, persons would be necessitated to apply to the new bank for means to settle with the old. The moment the latter establishment got £35,000 of the new paper, they might demand payment in gold and silver, and so exhaust the entire stock of the chartered bank. The private purses of persons in the new bank would not support the general credit, as the purses of private bankers supported establishments in which they were all responsible for the whole amount of their property. Mr. Blanchard felt bound to suppose that the capital of the new bank would be drawn out in one week after its commencement and that it would soon come to a stand for want of means. A public bank could not stop without carrying confusion through every department of business. Every day’s experience proved that. The bank of England had been distressed for specie, the bank of Scotland had to send waggons to London at a great expense for means to meet demands on it; but where could a bank in Halifax procure specie at an important crisis? It was said that the bank would not issue paper without getting something in return, but those returns would not be available for some months, and even then some persons might not be able to answer demands on them. The bank might stop payments, and create immense confusion without actually failing. It was also said that £50,000 would be as easily exhausted as £35,000, but that was not according to common reasoning or fact. It might as well be said that the smaller sum was not necessary, or that a rich man could be as easily run down for means as a poor man. The house had been asked to suppose many things against the security of the Halifax banking company, but these were mere chimeras. Was there, Mr. Blanchard asked, anything so unlikely as that the eight bankers who comprised the company should lose the fortunes which they were in possession of? They followed different pursuits, and so could not be simultaneously affected by changes in trade. Their habits were known to the community, and everything contributed to create security and confidence. For instance, what could dissipate Martin G. Black’s store and property to the winds? What could destroy Hezekiah Cogswell’s fortune? And the remark could safely be ventured that good care had been taken in the Halifax banking company to secure the general stock in case of individual failures. Mr. Blanchard held it impossible that that bank could be destroyed.

Mr. Deblois spoke strongly against the bank being allowed to go into operation when ,£35,000 had been paid in. A stock of £35,000 might get into the hands of a few individuals who would then have all the privileges of a chartered bank; the larger sum would be less liable to be so taken up. He admitted that he had large dealings with the Halifax banking company and was anxious to know how those proceedings would affect its conduct. He was also anxious that those who traded with him should be protected in their commerce with the new bank. Marry rich men whom he much respected were parties in founding the proposed enterprise, but he should get leave to have his own opinion on the subject.


And so the debate went on; but the remarks of Alex. Stewart, William B. Bliss, and James B. Uniacke — practical in their character and marked by the dictates of common sense—were worthy of being handed down in connection with the all important matter of the affording of banking accommodation in the town of Halifax.


The two leading members of the house of assembly—the most experienced parliamentarians at least—Alexander Stewart and John Young, sparred, one with the other, very dexterously over the bill to grant a charter to the Bank of Nova Scotia. The latter, however, was somewhat provoking in his movements—so much so in fact that Mr. Stewart was tempted almost to go outside the severely legitimate practice of the assembly, in meeting the peculiar method of attack that, in the treatment of this matter, characterized his opponent’s conduct. Mr. Young, whose policy of silence at the outset had called forth a satirical remark from Mr. Stewart, took the ground that the outline marked by the bill was an unsafe course to pursue. The track of the English and Scotch banks was, in his opinion, the only safe one to follow, and in alluding to the Scotch banks he declared that in case of mismanagement of directors the stockholders were liable to pay. In consequence of the many failures of banks in the United States between 1820 and 1826, the plan of the Scotch banks had been, in a great measure, adopted in that country. The house, it was evident, was being impressed to a considerable extent by this ingenious suggestion of a safeguard that carried with it so much of security to the depositor, and the advisability of its adoption, in respect to the proposed charter, was considered not unreasonable in view of the fact that a painful experience elsewhere had made it necessary that the liability of the shareholder should be so exhaustive. The fact was that Mr. Young had caught the ear of the house, and it was plain to the advocates of the measure that if the strong feature he had so adroitly introduced was permitted to be embodied into the charter, the Bank of Nova Scotia would have to postpone its opening until a more convenient season. Private banks — Mr. Young drove home his safeguard suggestion by declaring—were bound to make good all loss, no matter from what cause, so far as their property extended, but according to the bill to incorporate the new bank the directors and shareholders were, to a great extent, irresponsible. Its principle in that respect differed from any other bank of the kind.

The member for Cumberland, and the member for Sydney had, up to this time, usually worked together in the house in the promotion of those measures that had, within them, the elements of reform—of progression—but in the matter of the new bank, they evidently viewed matters from different standpoints. Mr. Stewart said that Mr. Young, in his opposition, seemed to be directly against the principle of charters although he declared that he was not hostile to them. He seemed to entertain the view that the measure differed from all others respecting irresponsibility, while the fact was that the New Brunswick bank was precisely of a similar character. It was a matter greatly to be desired that the opposition of Mr. Young could be clearly understood. He seemed to be bent on keeping the house in the dark. The friends of the new bank could easily understand the open opposers of the measure and the advocates of the Halifax banking company, but they could not understand the intentions of the honorable member for Sydney. Mr. Young replied with much warmth to the incisive observations of his quondam friend. He had never thought of opposing the principle of incorporation. It was good if properly guarded. The case of the New Brunswick bill might or might not be as had been stated, but were there, he asked, no other clauses in it which checked and guarded mismanagement ? Mr. Young then referred to a pamphlet for a bill regulating a bank in the state of New York, which stated that shareholders should be responsible for loss occasioned by directors, and, in his judgment, it was only fair that they should, for they had the sole choice of them. This reference—now made for the second time—to the extent of the liability of the shareholders of the chartered banks of other countries, gave Mr. Stewart the opportunity that he had been eagerly waiting for. He rose in his place and then—to quote from our reporter’s notes— the debate took this turn :

Mr. Stewart: I consider it my duty both to oppose and expose fallacious arguments. Public characters belong to the public, and by severe tests alone are men tried. I now call on the member for Sydney to read the whole of the passage which alludes to the New York bank.

Mr. Young proceeded to read the passage: “the holders of stock at the time of mismanagement shall make good any loss.”

Mr. Stewart—Read on.

Mr. Young (reading) “provided that no one shall pay more than the amount of stock held by him at the time.” (Much laughter.)

Mr. Stewart: the house has now had the satisfaction of having heard the whole of the article on this point. As first read, it appeared that stockholders were held liable to the extent of their property, whereas what followed showed that they were only liable to the amount of shares held.

The effect of this little episode in the house was the relaxing of the stringency with which the majority of the members were evidently disposed to treat the clauses of the proposed charter, but not, however, to the extent of allowing the measure to go through as it was originally introduced. The chief promoter of the new bank in the house—Mr. Bliss—proposed that a clause be added which would provide that stockholders should be liable to loss occasioned by the mismanagement of directors to the amount of stock held by them at the time. This was a forced concession to the preponderating sentiment of the house, but the matter had not, as yet, been made satisfactory to Mr. Young. The clause could t?e read to mean that shareholders would be liable in cases of mismanagement only in the amount of stock which they held, and perhaps had paid in. If they had three times their capital out, as the bill allowed them to have, they would be only liable for one third of their share of the entire stock. Then again the clause could be interpreted as meaning that in case of mismanagement the stockholders would be liable to pay a further sum equal to the stock which they held, so that a stockholder to the amount of £1,000 would be liable to the amount of £2,000. It was only when Speaker Archibald, who had been appealed to as the Attorney-General for an opinion, explained that the clauses suggested by the friends of the new bank were sufficiently plain, that Mr. Young reluctantly withdrew his opposition. Mr. Archibald elucidated the matter in this wise: suppose the stock to be £50,000, and the issue of paper £150,000, and that by mismanagement of directors a loss of 20 per cent were occasioned, then every stockholder would be called on to pay in 20 per cent, over and above to make the deficiency good. In accepting this explanation Mr. Young hoped that it would be well understood that if loss were experienced by mismanagement to the amount of the entire £50,000, then the stockholders would be bound to advance another £50,000 from their private property. Several amendments were offered to the bill but they were all voted down. One motion was to the effect that the proper authorities should have power to suspend the operations of the bank whenever it should appear that the new bank was producing injurious consequences to the province paper. The absurdity of this suggestion was so completely shown that the patriotic mover asked leave to withdraw it. The bill finally passed by 26 to 10.

The new bank had yet to pass through a more trying ordeal. It had to face His Majesty’s Council. It had to go before a board which James B. Uniacke said, in the course of the debate in the assembly, differed little except in the column or form of their table from the Halifax banking board. Supported, however, by a very substantial majority of the lower house, it was sent up to the Council, but when it came out of that chamber it bore the marks of a somewhat severe handling. It was not permitted to anybody to know by whose particular hands the bill had— in the eyes of the promoters — been disfigured, because no stranger was allowed behind the screens except Joseph, the messenger, who put the coals on the grate to keep the “old women,” as Sam Slick irreverently called the Council of Twelve, warm. The house was informed simply that His Majesty’s Council had passed the Nova Scotia bank bill with amendments. The house, of course, got its “dander up” at once, and as it was more than suspected that “the cute man,” Hezekiah Cogswell, the president of the Halifax banking company, had been the skilled artisan that had undertaken to give the bill another shape from that in which it had been moulded by the house, it was moved that a committee be appointed to search the journals of His Majesty’s Council for the purpose of finding out some particulars in regard to the treatment of the bill. Mr. Bliss was entrusted with this mission, and he went to “beard the lion” with apparent alacrity.


He returned to the house with the bland-like announcement that it appeared that perfect unanimity prevailed on the subject of the bank bill in His Majesty’s Council, and that there had been a full attendance of members, and no division had taken place on any of the amendments: He said nothing more. But Mr. Young and Mr. Stewart were not — viewing their own personal interests — quite so discreet. They both “pitched in” without any circumlocution. Mr. Young remarked on the evil tendency of His Majesty’s Council deliberating with closed doors. He thought the time was near at hand when the doors of that chamber would be thrown open by the force of righteous public opinion. Mr. Stewart stated as his opinion that the acts of that body relative to the Bank bill would tend to quickly hasten the alteration which was wanted in the constitution of that branch. He expressed himself warmly on the seemingly interested influence which was exercised by the bankers in His Majesty’s Council against the measure that had been adopted by the house after so much careful consideration. Mr. Bliss still kept a quiet tongue. And before the term of the parliament had expired, the honorable gentleman was snugly seated on the Bench of the Supreme Court; and he left Mr. Young and Mr. Stewart on the red benches to hammer away at the doors of the old council chamber.


The amendments to the bill to incorporate the Bank of Nova Scotia that had been tacked on by His Majesty’s Council, were taken up by the house of assembly after the storm that had been raised—at the mere suggestion that the council had materially changed the features of the charter — had somewhat subsided. The first change was that treasury notes be substituted for the words “current money.” This was agreed to. Several amendments which altered the words “three newspapers” to the Royal Gazette and two other papers were accepted. The clause which directed that five per cent of the subscribed stock should be paid in before directors were chosen was changed to ten per cent, and the commencing capital was made .£50,000 instead of £35,000. The house made no objection to those alterations. But the house refused to agree to the amendments which declared that the bank should not take real estate in payment or for security of debt; that stockholders in any other bank should not be eligible to be chosen directors in the proposed bank; that directors should not deal in shares by buying or selling the same; that shareholders should be responsible in all cases of loss to double the amount of the shares held by them; that the operations of the bank could be suspended by the proclamation of the lieutenant-governor or commander-in-chief; and that the sheriff could proceed against the persons or goods of stockholders, according to their proportion of stock. The amendment that in case the company refused to pay in gold or silver, their notes should be taxed two and a half per cent., and bear six per cent interest, was amended by leaving out the two and a half and substituting twelve for six. And in that state the bill now stood. James B. Uniacke had stated that he had no more idea that the charter would become law, no matter in what shape it passed the house, any more than he supposed that the man in the moon would come down to give his assent to it, but in that the honorable member was mistaken. The determined attitude that had been assumed by John Young and Alex. Stewart had had a marked effect on His Majesty’s Council. The warning words of the latter had been uttered loud enough to be heard within the walls of the council chamber. And the announcement did not carry much of a surprise that, at the stage which the bill had reached, the Council were prepared to give the house a conference to further consider its contents.

Of the committee of the house that was appointed to confer with a committee of the Council on the bill, Mr. Bliss was appointed chairman. He intimated that he found the Council in a most conciliatory frame of mind. He said that they had agreed to strike out several of the amendments that had not been agreed to by the house. The amendment preventing shareholders in any other bank being directors of the Nova Scotia bank, they agreed to alter to directors of any other bank. The amendment respecting liability of shareholders was explained to mean only as much more as the stock held by each, and to extend to all cases of loss, except occasioned by fire, robbery by persons not in the company’s employ, or invasion. The Council required that the bank should give security to the government to the amount of £25,000 besides their stock. The amendment respecting dissolution by proclamation was altered to providing for dissolution by act of the legislature if at any time it should appear that half of the stock was exhausted. In that contingency, if the legislature was not in session, the lieutenant-governor was to have the power, but not the commander-in-chief. A free conference was held on the subject at a later stage, and subsequently, on Mr. Bliss reporting to the house that matters had been amicably arranged, the honorable gentleman was appointed to take further steps, accordingly, with an amended bill. Then followed a message from the Council that they had concurred in the Bank bill as submitted by the house for the second time; and at the prorogation the lieutenant-governor gave the bill his assent. Then appeared an authorized statement in the press that the promoters of the bill felt much satisfaction with the act of incorporation as it finally passed the legislature. The only material alteration as first contemplated was that the sum to be paid in previous to commencing operations of the bank amounted to £50,000 in place of £35,000, and, from that, delay was not at all likely to occur, as, after one month, stock could be taken to an unlimited amount by individual subscribers.

The provisional trustees, M. B. Almon, Lewis Bliss, John Brown, J. W. Johnston and Alexander Murison, lost no time in issuing a notice to the effect that the assent of the lieutenant-governor had now been given to the act to incorporate a public bank under the title of the Bank of Nova Scotia, and that agreeably to one of the provisions thereof, instead of five per cent, as had been formerly notified, ten per cent, on the amount of shares subscribed for, was required to be paid within fifteen days by all who had not, within that time, withdrawn their names from the subscription book. The amount in question was to be paid at the office of Alexander Murison. It was announced further that a general meeting of the stockholders would be called at an early date for organizing the bank and the choosing of directors. It was promised that in a few days the act, as amended and passed, would be printed and would be on sale at the newspaper offices, but in the meantime any information required respecting its enactments would be readily given by the committee at Mr. Murison’s, where could be seen a corrected copy of the whole bill. At the expiration of one month from the passing of the act —the 30th March, 1832—subscribers were privileged to take of the stock that then remained any amount by them thought proper.

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