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FINANCIAL MEASURES   121

should, as respects the Dominion notes issued to the banks against such securities, be deemed to be the security required by the Dominion Notes Act—i.e., gold.

In its effect on the Treasury the new enactment had the result of increasing the amount of its outstanding note indebtedness without a corresponding increase in the amount of gold held for its redemption, and there was another problem which also required immediate action on the part of the Government. The war had not been in progress a week before it was found both by Great Britain and Canada that foreign debtors were refusing to make payment in gold, and that neutral countries, particularly the United States (which then owed immense sums to Great Britain in obligations continually falling due), were doing their utmost to keep all their gold within their own borders. Following Great Britain's example, the Minister of Finance on the 10th of August secured an Order-in-Council sus-pending the redemption in specie of Dominion notes. This Order-in-Council was also confirmed by the Finance Act of the 22nd of August, and the whole matter was dealt with in the Dominion Notes Act (5 George V, Chap. 4), passed on the same day as the Finance Act. The Dominion note circulation had always been kept within very conservative limits, and there was therefore plenty of room for concessions to the emergency of the times, without any serious risk of danger to the national credit. The law as it stood prior to the war required the Treasury to hold dollar for dollar in gold against all Dominion notes outstanding with the exception of the first $30,000,000, on which only twenty-five per cent. of cover was required. The amount of uncovered notes was therefore limited to $22,500,000—a very small sum considering the resources and credit of the Dominion and the wealth and currency-employing power of its population. By the new Dominion Notes Act the volume of notes issue upon which a twenty-five per


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