This section of the book is from the "Canadian Banking Practice" book, by John T. P. Knight.
Question 226.— Is the currency of Canada a convertible or an inconvertible one?
Can I take $1,000 in legal tender notes to the Receiver-General and demand gold?
Can I demand gold or legal tenders for bank notes if I present them at place of issue?
If I present them at a country branch, can I still insist on being paid in gold or legals?
Section 57 of the Bank Act provides for payment of $100 in legals when demanded, but I cannot find answers to the above in the Act.
Answer.—The currency of Canada is convertible. The Government will pay gold for legal tender notes when presented to the proper officer, and the banks are bound to pay gold or legal tenders for their notes when presented at the place of payment. Whether or not the bank is bound to redeem its notes in gold or legal tender at any country branch depends upon the terms of the note itself. In practice they are usually made payable at the head office only, and while the bank is bound to receive them in payment of debts at any office, it is only bound to redeem them at the place or places where they are made payable. There is a further provision as to the redemption agencies.
Section 57 of the Act does not touch this question. Its effect would appear to be merely to impose on banks the duty of paying up to $100 in legal tenders, and so far to deprive them of the right to meet their obligations in gold.