Bank of Upper Canada

The Bank of Upper Canada was established in 1821 under a Charter granted by the legislature of Upper Canada in 1819 to a group of Kingston merchants. This charter was "stolen" by the more influential Executive Councillors to the Lt. Governor, the Rev. John Strachan and William Allan and moved to Toronto. The bank was closely associated with the group that came to be known as the Family Compact, and formed a large part of their wealth. This association with the Family Compact and underhanded practices made Reformers, including Mackenzie, regard the Bank of Upper Canada as a prop of the Government. Complaints about the bank were a staple of Reform agitation in the 1830s due to its monopoly and aggressive legal actions against debtors.

The first Bank of Upper Canada was located on the south-east corners of King and Frederick street in Toronto. Toronto at the time was too small for a bank and its promoters were unable to raise even the minimal 10% of the £200,000 authorized capital required for start-up. The bank succeeded only because its promoters had the political influence to have this minimum reduced by half, and because the provincial government subscribed for two thousand of its eight thousand shares. The Lt. Governor appointed four of the bank’s fifteen directors making for a tight bond between the nominally private company and the state. Despite these tight bonds, the Receiver General, the reform leaning John Henry Dunn, refused to use the bank for government business.

The bank’s principle promoters were the Rev. John Strachan, and William Allan. William Allan, who became president, was also an Executive and Legislative Councillor. He, like the Rev. John Strachan, played a key role in solidifying the Family Compact, and ensuring its influence within the colonial state. Forty-four men served as bank directors during the 1830s; eleven of them were executive councilors, fifteen of them were legislative councilors, and thirteen were magistrates in Toronto. More importantly, all 11 men who had ever sat on the Executive Council also sat on the board of the Bank at one time or another. 10 of these men also sat on the Legislative Council. The overlapping membership on the boards of the Bank of Upper Canada and on the Executive and Legislative Councils served to integrate the economic and political activities of church, state, and the “financial sector.” These overlapping memberships reinforced the oligarchic nature of power in the colony and allowed the administration to operate without any effective elective check. Henry John Boulton, the solicitor general, author of the bank incorporation bill, and the Bank's lawyer, admitted the bank was a “terrible engine in the hands of the provincial administration.”

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