Date Published:
January 2005

L’Encyclopédie de l’histoire du Québec / The Quebec History Encyclopedia

Bank of Montreal

The Bank of Montreal represents the bold enterprise of nine old-time merchants of Mon­treal, who on June 23, 1817, signed articles of association for the organization of the bank, and who, in founding this institution, not only established the first permanent bank in Canada, but by inaugurating under its auspices the first domestic currency that Canada had known, were responsible for the transition of Canada's domestic trade from the primitive system of barter to the modern system of finance.

The territory which came within the purview of these early merchants con­sisted only of the provinces of Upper and Lower Canada, and within this territory were very few urban communities of any size. The largest was Montreal, with a population of less than 20,000; the city of Quebec, then a port to which plied wooden sailing ships, dealing mostly in lumber and furs; and Kingston, important as a garrison town under the British occupation. York, now Toronto, was but a settlement in thickly forested Indian country, held as an outpost for lumbering and the fur-trade. Where Ottawa now stands was an un­cleared wilderness, without even the beginnings of the Rideau canal, which later was to be the immediate cause of the foundation of that community.

Not a single steamship had ever crossed the ocean; there were no rail­ways, no telegraphs, no electricity, no gas, no street lighting, and no police force, even in Montreal, the largest centre.

Limited indeed was the outlook and primitive the conditions when these nine merchants .came together to pool their financial resources and combine their several talents for the purpose of giving the benefits of a banking system to the scattered population of Lower and Upper Canada.

In matters of broad policy the bank they founded followed the Scottish system of banking. One of the outstanding features of this system, and later of English banking, was the maintenance of numerous branches by a few banks of large capital.

Immediately after the Bank of Montreal had opened its first modest estab­lishment in the city from which it took its name, and had made the requisite arrangements for the issuing of paper and metallic currency to replace the varied assortment of foreign coins of varying exchange values which then were legal currency in Canada, it took steps to introduce the branch bank feature. Within a few months an agency, that later developed into a full-fledged branch, was opened in the city of Quebec and another in the town of Kingston .

Here, then, were the beginnings of Canadian branch banking, an element which, as it is generally regarded, has contributed in marked degree to the stability and elasticity of the Canadian banking system.

Having adopted the branch bank idea, the Bank of Montreal never wavered in its course. Branches followed in other places. For instance, within eight months after the bank itself was founded, it had an agency in York, now Toronto, and the continuity of its representation in the community of which York was the original nucleus has never been broken.

It is interesting to note the difficulties encountered and mastered in keeping in touch with these outposts of the bank. Only in the year previous to the establishment of the Bank of Montreal had the first stage-coach service between Montreal and Kingston been inaugurated, while the opening of the bank's agency in York was the first commercial development of importance that followed the establishment of a stage-coach service between Kingston and York, in 1817. The stage-coaches left Montreal every Monday and Thursday, and arrived in Kingston every Wednesday and Saturday. Between Montreal and York , the journey occupied at least a week, and a sidelight upon its nature is furnished by the old minute books of the bank, which frequently refer to the despatch of money between the two places "at the first safe opportunity".

The journey by stage-coach between Montreal and Quebec occupied three days, and chronicles of the times refer to it as being "fatiguing from the nature of the vehicle and inconvenient both for lodging and nutriment."

Apart from providing organized finance for domestic trade, the bank from the outset provided facilities for the disposition of the funds of the governmental authorities of the day, establishing official connections which have continued ever since. It also lent its resources from the very first to the organization and development of import and export trade, its outside representation in this respect resulting, as far back as 1859, in the establishment in New York of the first of its offices in the United States, while the establishment in London of the first of its overseas offices took place in 1870.

The later development of the Bank of Montreal is a matter of more or less common knowledge. The fiftieth anniversary of its foundation, which occurred in the year of Confederation, found it enjoying not only a substantial measure of success, but also a remarkable prestige. It was the government's depository and fiscal agent and enjoyed peculiar advantages as the sole issuer of provincial notes. It had nearly a fourth of the total paid-up banking capital in Ontario and Quebec, and more than a fourth of the banking assets, proportions, by the way, which still obtain to-day in regard to the entire banking structure of the Dominion.

When the gigantic project for the building of the Canadian Pacific Railway from Montreal to the Pacific coast was taken up, the Bank of Montreal gave the project its moral and financial support, and subsequent events have completely justified the bank's directors in supporting an undertaking which has contributed more than any other to the settlement and development of Canada's vast western areas.

With the birth of the Dominion of Canada, banking passed under the juris­diction of the federal parliament, and the Bank of Montreal immediately ex­tended its scope to the provinces of Nova Scotia and New Brunswick. Later, as the boundaries of the Dominion were enlarged, to include ultimately the whole of the northern half of the continent, the bank extended its branch system until its operations were continent-wide.

Within the scope of its operations it has always included every class of the community. Thus, at any time in its history, it could be found giving domestic and foreign banking service over the whole settled territory in which it could legally operate, with branches situated alike in business centres and in resi­dential districts, in agricultural com­munities and lumbering and mining camps. It has, too, been associated with the establishment and upbuilding of innumerable pioneer enterprises, and through it all it has held the unshaken confidence of successive generations.

To-day the Bank of Montreal ranks among the largest and most successful banks in the British Empire ; indeed, it takes high rank among the great banks of the world.

See The centenary of the Bank of Montreal, 1817-1917 (Montreal, 1917).

Source: C. H. CRONYN, "Bank of Montreal", in W. Stewart WALLACE, ed., The Encyclopedia of Canada, Vol. I, Toronto, University Associates of Canada, 1948, 398p., pp. 165-167.