UBC Faculty Research and Publications

Notes on Free Banking in Canada in the 1830s Shearer, Ronald Alexander, 1932-


Adam Shortt referred to the mid to late 1830s as "one of the most exciting and abnormal periods in Canadian political and financial history." (Shortt, 1986, 830). It may also have been decisive in setting the course of Canadian banking policy for decades. There were several important developments: the chartering of new banks and increases in the capital of existing chartered banks; attempts to obtain charters for new banks on different principles than those of the existing institutions; the establishment of non-chartered banks with a substantial presence in the banking system; and deliberate measures taken by the provincial legislatures and the Imperial government to suppress significant banking innovations including non-chartered banks. These notes are an attempt to assemble the historical record on one of these developments. We review and consolidate the available evidence concerning non-chartered banks, including evidence on their quantitative importance. The literature on the non-chartered banks of this period is scanty. The most extensive discussion, largely anecdotal, is by Adam Shortt (Shortt, 1986,295-337). By contrast, Breckenridge's exposition is very brief (Breckenridge, 1910, 36), and they are given but passing mention in the two standard modern histories (McIvor, 37-38; Neufeld, 39-40). Although the non-chartered banks had a short existence, they had quantitative importance and the fact that they represented a plausible alternative form of banking organization that has been much touted in recent years suggests that they merit more careful attention (White, 1984; Selgin, 1988). Unfortunately, there is little evidence; they left more shadows than records.

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