THE new Bank was soon at loggerheads with its eider local competitor, over the question of the redemption of notes on the part of the latter. The Halifax Banking Company in fact for two days in August, 1832, avoided payment of their notes in any form, and on their being presented the fourth time by Mr. Forman, Mr. Cogswell, the President, threw out veiled threats of legal prosecution and otherwise tried to browbeat the new concern. The letters on this subject, passed between the heads of the two institutions, abound with the keenest sarcasm, veiled in the polite phraseology of the time. This affair ended in the Company redeeming their notes in Province Paper, with which, though not coavertible, the Bank was forced to be content. It will be noticed that the Bank had to pay gold or silver for its notes. However, on the 15th October in the same year we find a resolution passed by the Directors to the effect “That it is expedient to bring to an immediate decision the liability of the Halifax Banking Company to pay their paper in gold, and that measures be adopted by the President for that purpose.” The dispute was temporarily settled by an Act passed 20th April, 1833, making it lawful for the Bank of Nova Scotia, or other bankers, to issue notes payable either in gold, silver or Treasury notes, at their option. The unwisdom of granting this legislation, which seems to have been an attempt to place Treasury notes on a par with gold and silver, so soon became apparent that it was repealed the following year; the repealing Act making bank notes, or notes purporting to be such, redeemable only in specie. It is stated in error, in several of the historical sketches concerning early monetary legislation in Nova Scotia, that bank notes of a less denomination than ,£5 were first prohibited by the Statute of 31st March, 1834, but this law merely continued such a prohibitory clause embodied in the Act of April, 1833, above mentioned ; the issuing of such notes being declared, by the former Act, illegal after December 31st, 1833.

A dividend was first declared on 31st July, 1833—at the rate of three per cent—payable on the nth of September following. On December 12th of that year a call of 12½ per cent, was made on the subscribers, increasing the paid-in capital to £62,500.

At the annual meeting of the Stockholders on 2nd March, 1836, it was resolved “That the petition to the Legislature praying permission to issue notes of a less denomination than Five Pounds be published. The petition did not become law—another evidence of the discrimination against Bank notes on the part of the Treasury note enthusiasts.

In March, 1837, the following notice was published in the Acadian Recorder:

“William Lawson, Esquire, having resigned, Mather B. Almon, Esquire, has been elected President of the Bank of Nova Scotia.”

By the resignation of William Lawson, the bank lost an able President. The copies of the letters written by him in that capacity show marked ability. His unselfish devotion to the Bank’s interests was exhibited in many ways.

In the year 1837 the Bank commenced its Branch system by appointing, on November 20th, James D. Fraser and Harry King joint agents at Windsor.

Up to 1837 the Bank of Nova Scotia was the only one holding a charter: in that year the Bank of British North America opened an agency in Halifax, and in the following year was given the right to sue and be sued in the name of a local officer. The effect of this competition was soon shown in the dividends of the local Bank; as we find that in the first ten years the Bank divided profits at the average rate of 8.9 per cent, per annum, while after that they rarely exceeded 6 per cent. Another reason for the decline of the profits was the statute of 1833 which prohibited the issue of notes for sums less than £5.

The Treasury Notes were long the stumbling block in Nova Scotia finance. They were first issued in 1812 to the extent of £12,000, and increased at different times, and when the indebtedness of the Province was assumed by the Dominion of Canada in 1867 there were $605,859.12 outstanding. The notes of 1812 bore interest at 6 per cent., and were receivable at the Treasury for public dues, and not re-issuable. During the year 1813 these were withdrawn and a new issue of £20,000 took their place, non-interest bearing and re-issuable, and not redeemable in specie for three years. In 1820 the circulation was limited to £70,000; in 1828 to £40,000, and in 1832 to £80,000. In 1833 an Act was passed requiring customs duties to be paid in gold and silver alone, and the Treasurer was instructed to pay Treasury notes in sums of £10 on presentation. The next year the notes were declared legal tender in payment of customs duties at the rate of sixteen shillings per Pound Sterling. When notes in sums of £100 or over were presented, interest-bearing certificates were issued if gold was lacking. Thus it will be seen that the Provincial Treasury notes were practically irredeemable, and every ruse short of discounting them, which would have invited inimical legislation, was resorted to by the Banks to prevent their accumulation. Bills would be discounted on the agreement that proceeds were to be taken in Treasury notes; and when customers deposited them they were expected to take them back when drawing. Customers’ accounts were judged valuable not so much by the balances at credit as by the amount of specie and Halifax Banking Company notes they brought in. The following notice posted up in the Bank on 8th February, 1833, may serve to show the state of the question at that time:

"The difficulty experienced by the public in the present depreciated state of the currency to obtain specie for payments at this Bank compels the Directors most reluctantly to limit that accommodation in their discount which under other circumstances they would cheerfully grant.”

The effect of the disastrous panic of 1837 was felt in Halifax to such an extent that it was feared that the specie of the Province would be withdrawn. The following is the Board minute of the 27th of May, relative thereto:

“An interview was requested by Mr. Stephen Binney, Mr. David Allison, Edward Starr and Mr. Fairbanks, who stated that they had been deputised at a public meeting just held, to read to the Bank certain resolutions which had there passed, the purport of which was: to request the two Banks to suspend all specie payments, and thus adopt a measure which having commenced in the United States, had been followed by the Banks in Canada and New Brunswick. That it was the opinion of the meeting that unless this precautionary measure were at once adopted, the Province would be drained of its specie, and its trade greatly embarrassed. The resolutions also comprised the wish that the Banks would afford all the accommodation to the public by discounts which prudence should dictate. The Directors expressed their readiness to co-operate in any measures with the Halifax Banking Company which the urgency of the present case should demand.”

The suspension of specie payments lasted for two or three months.

In February, 1837, the Bank extended its transactions to St. John, New Brunswick, by operating through A. W. Whipple, Agent. The business at St. John appears to have been limited to dealing in exchange and specie.

About that time the General Mining Association, for years the principal client, commenced business with the Bank, continuing a customer until the sale of its property a few months before the publication of this volume.

The rates of interest on deposits ranged from three to five per cent, in those days, and the discount rates were very little higher than now obtain—but commissions for collecting bills and on transactions generally were much higher.

A granite building was built in the Fall of the same year on a part of the space now occupied by the present building on Hollis street, in fact, part of the original building stands as rear walls in the present one.

In 1839 the balance of the subscribed capital stock of One Hundred Thousand Pounds was called up, twenty-five per cent, to be paid on the 15th March, and twelve and one-half on 1st May. The Bank at this time was paying dividends of nine and ten per cent. At a special meeting of Shareholders on 7th December, the increase of the capital stock to £200,000, as provided for in the Charter, was decided on—to be sold in lots from time to time as the Directors thought fit. £25,000 was issued on 13th January following, and £15,000 at some time between January and August, 1841, and the capital remained at the figure thus reached— £140,000—until nth October, 1871—when it had to be reduced to meet a defalcation on the part of James Forman, for thirty-eight years Cashier of the Bank.

During 1839 ^our Agencies were opened: one at Pictou on 14th February under the management of Mr. James Primrose; one at Yarmouth in the same month; one at Annapolis in April, and another at Liverpool in May. The Bank thus had five agencies, of which three were subsequently closed: Windsor, in 1851; Liverpool, in 1852, and Annapolis, in 1853; the last two being re-opened, in 1879 and 1876 respectively. An active trade with St. John sprung up, the Commercial Bank of New Brunswick, which failed November 10th, 1868, acting as correspondents. Running accounts were opened with the Bank of Montreal at Montreal and Quebec.

In the “forties” the Bank settled down to a commonplace existence; indeed, the annual statements show little or no progress until after 1870. It should be noted that the statements for some years prior to 1870 are incorrect; due to the manipulations of Mr. Forman, which are further and more particularly referred to herein. Of course, the abstraction of about one half the capital is sufficient to account for reduced profits and lack of progress, at a period when opportunities for profitable business must have been excellent.

The unsuitability of the Cash Credit to the needs of Nova Scotia was soon experienced. The Directors decided as early as 1840 that “many of them from not having been granted to mercantile men do not operate, and rest a dead weight on the resources of the Bank. In two instances the gentlemen have overdrawn their accounts by which the rules of the institution are infringed, an amount being loaned to a single name only.” The Board was unanimously of the opinion that an introduction of a better system than that now followed must with all convenient speed be adopted, the indulgence thus granted withdrawn, and the subject till then to be kept in the continued remembrance of the Directors.” As the Cash Credit system is becoming merely a matter of historic interest in Nova Scotia banking, we may state, for the benefit of those who may not know its nature, that it consisted of an overdrawing privilege, covered by a bond given by the person benefitted as the principal party, with two or more individuals as sureties. The system called for much vigilance, as sureties disappeared through death, bankruptcy and other causes.

In a letter to the Cashier, dated 10th February, 1840, the Pictou Agent writes: “Gather all the sterling money you can for me and I will make some person going down with a sled call for it as soon as the sleighing is good. British silver was meant by the sterling money mentioned; it was scarce at the time and difficult to obtain in sufficient quantity to pay the miners at Pictou. The above well illustrates the earlier methods of transferring specie from one point to another. Coin would be sent by schooner, stage, sled or other conveyance, and faith in individual honesty seemed to be a good substitute for the security now afforded by the Express companies—at least, we do not know of a loss to the Bank through any breach of such confidence.

In 1851 Windsor Agency was closed, apparently in bad condition, discouraging for a time the opening of Branches.

In March, 1852, the number of Directors was reduced from thirteen to nine, and they were thereafter paid a fixed amount of remuneration. In 1855 legislation was obtained making stockholders owning ten shares (equal to £500) eligible as Directors.

The Incorporation Bill of the Union Bank of Halifax was passed on 31st March, 1856, the capital to be £250,000.

On 15th April, 1859, the Act to establish the decimal system of accounting was passed ; to go into force 1st January, i860. At that time sovereigns, doubloons, Peruvian, Mexican and old Spanish Dollars, and silver coins of the United Kingdom were the legal tender. The value of Treasury notes of twenty shillings was fixed at four dollars; copper pence and half-pence were called in, and cents and half-cents issued and made legal tender to the extent of twenty-five cents.

The Bank suffered from its first robbery, which happened at Yarmouth Agency, on 12th August, 1861, the office being entered during the noon hour, and a package of Bank and Treasury notes amounting to £1,547 taken from the teller’s drawer, where it had carelessly been left by that officer.

A charter was granted to the Mutual Bank of Nova Scotia on 10th May, 1864, and in 1866 the time for commencing operations was extended for two years, but the charter was allowed to lapse.

The Peoples’ Bank of Halifax was incorporated on 31st March, 1864, with a capital of $400,000, and the Commercial Bank of Windsor on 18th April, 1865, capital $200,000. The Exchange Bank of Yarmouth was incorporated on 7th May, 1867, with a capital of $200,000, and the authorized capital stock of the Peoples’ Bank of Halifax was increased to $800,000. The Merchants Bank of Halifax was chartered in 1869, with an authorized capital of $1,000,000. Thus it will be seen that as early as 1870 Halifax was well supplied with banking capital.

Mr. J. C. Mackintosh, who entered the service of the Bank in the early “fifties,” informs us that at the time of the Fenian excitement in 1866 the Directors shared the general panic to such an extent that kegs were obtained, loaded with the gold from the Bank vaults, and stored in the Citadel for safe keeping. Depositors made a run on the Halifax Savings Bank, which paid out Provincial Treasury notes, but only a slight drain was felt by the Bank of Nova Scotia.