these do a mortgage and loan business rather than a strictly commercial banking business.

Hence, if anyone seeks to understand the financial or banking situation in Canada, he must devote his attention in the main to the chartered banks. These through their branches furnish the loanable capital necessary for the support of the Dominion's trade and industry and for much of its agricultural enterprise. To them the government turns when funds are needed for internal improvements or when the exchequer faces a deficit. The promoters of street railways, steam railways, steam railroads, and other permanent improvements take counsel with the managers of these chartered banks before they issue their securities. The banks as a rule do not invest their funds in the stocks or bonds of new enterprises, yet their managers are the men most familiar with the world's money markets and their approval, therefore, of any financial undertaking is highly esteemed.

MONETARY SYSTEM.

Canada's monetary system is substantially the same as that of the United States. The unit is the dollar of 23.22 grains of pure gold. The gold coins of the United States So is the British sovereign, Until recently all Canadian

are legal tender in Canada. which is rated at $4.86%. coins were minted in either England or the United States, but in 1908 a branch of the British mint was established in Ottawa.

The paper currency of Canada consists of Dominion notes and bank notes. The former are issued by the government under authority of the "Dominion notes act,"

which permits an unlimited issue, requiring security as follows: That for $30,000,000 of the notes outstanding the minister of finance shall hold in gold and government securities a reserve equal to 25 per cent of the issue, the amount held in gold to be not less than 15 per cent of the amount of notes outstanding; and that against all notes issued in excess of $30,000,000 the minister shall hold an equal amount of gold. The framers of the act evidently had in mind the limitation placed upon the Bank of England's issue of notes by the Peel act of 1844. The Dominion notes, accordingly, are gold certificates rather than credit notes. The minister of finance is required to redeem the notes in gold at branches of his department in several different cities. If need be, the minister may sell bonds to obtain gold for use in the redemption of the notes.

Dominion notes are legal tender and may be issued in any denominations, but experience has proved that they are most needed in bills of large denominations for use in banking reserves and in the form of $1 and $2 bills, the banks not being permitted to issue notes under $5. The average circulation of Dominion notes in 1908 amounted to $68,602,944, of which amount $52,882,708 was in $500, $1,000, and $5,000 bills, and $14,910,365 in $1 and $2 bills. There has been a pretty constant increase in the amount of Dominion notes outstanding. In 1900 the total was only $26,550,465. The bills of large denominations are practically all carried by the banks in their reserves.

Canadian banks are not permitted to issue notes of a denomination less than $5. Of fives and multiples thereof

they may issue an amount equal to their paid-up capital without deposit of security and without payment of tax. As a result the currency in the hands of the people consists almost exclusively of bank notes. The amount in circulation increased from $50,000,000 in 1900 to $81,400,000 in 1909.

RESOURCES AND INDUSTRIES.

The Dominion of Canada contains more territory than the United States with Alaska included. Its area is 3,745,000 square miles, of which about 70,000,000 acres are occupied. Much of the territory lying in the unknown North will probably remain long unoccupied and unexplored. Yet the Dominion contains idle land and unutilized resources sufficient to maintain a population many times larger than it now possesses. The minister of finance in his budget speech in April, 1909, estimated the population of Canada at 7,500,000 people. It would be hard to find a Canadian who does not believe that this country is destined soon to have 100,000,000 people enjoying all the comforts and luxuries of modern civilization, and it is partly because of this confident belief that the Canadian public has lost interest in the question of annexation to the United States.

The leading industries of Canada are agriculture, lumbering, mining, and fisheries. Western Canada has a soil and climate well suited to the culture of wheat and good for the raising of cattle and horses. Dairying is an important industry in Ontario and all the provinces to the eastward. In 1908 Canada produced 115,000,000 bushels of wheat, 267,000,000 bushels of oats, 50,000,000 bushels of

barley, 21,000,000 bushels of corn, and 73,000,000 bushels of potatoes. The Province of Manitoba produced nearly one-half of the wheat crop and Saskatchewan one-third of it.

The foreign trade of Canada has more than doubled in the last ten years. In 1898 the total of imports and exports amounted to $304,000,000, the imports having been $140,000,000 and the exports $164,000,000. In 1908 the total was $651,000,000, the imports having been $371,000,000, and the exports $280,000,000. Since 1902 the imports have uniformly been larger than the exports, the excess of imports doubtless representing in some measure the investments of foreign capital.

CHAPTER II.

ESSENTIALS OF THE CANADIAN BANKING SYSTEM.

A chartered bank in Canada is a bank of branches, not a bank with branches. The parent bank, technically known as the "head office," neither takes deposits nor lends money. All the banking business is done by the branches, each enjoying considerable independence, but all subject to the supervision and control of the head office. The law places no restrictions upon the number or location of branches. Canadian banks, therefore, have branches in foreign countries as well as in Canada.

The general bank act, under the terms of which every bank obtains and holds its charter, is subject to revision every ten years. In its present form it is substantially as passed in 1890. A few unimportant changes were made in 1900, and among both bankers and politicians there is some talk to-day about the modifications of the act that will be proposed in 1910. The bankers themselves would be well satisfied if the present law were reenacted without amendment.

PROCESS OF INCORPORATION.

The provisions of the bank act with respect to the organization of new banks are intended to guard against the entry of unfit or inexperienced persons into the banking business. The minimum required capital of a bank is $500,000, of which all must be subscribed and one-half paid in before a new bank can open. At least five men of integrity and good financial standing must agree to act as