1. Business And Powers Of A Bank (Sections 7683)

The first section, 76, is of sufficient importance to give in full. It states that a bank may:

(a) Open branches, agencies and offices;

(b) Engage in and carry on business as a dealer in gold and silver coin and bullion;

(c) Deal in, discount and lend money and make advances upon the security of, and take as collateral security for any loan made by it, bills of exchange, promissory notes and other negotiable securities, or the stock, bonds, debentures and obligations of municipal and other corporations, whether secured by mortgage or otherwise, of Dominion, Provincial, British, foreign, and other public securities; and

(d) Engage in, and carry on, such business generally as appertains to the business of banking.

Except as authorized by this act, the bank shall not, either directly or indirectly:

(a) Deal in the buying or selling or bartering of goods, wares and merchandise, or engage or be engaged in any trade or business whatsoever;

(b) Purchase, or deal in, or lend money, or make advances upon the security or pledge of any share of its own capital stock, or of the capital stock of any bank; or

(c) Lend money or make advances upon the security, mortgage or hypothecation of any lands, tenements or immovable property, or of any ships or other vessels, or upon the security of any goods, wares and merchandise.

The bank shall have a privileged lien on shares of its own stock or on dividends for any debt or liability of a shareholder. In case of default, provision is made for the sale and transfer of such shares within twelve months after the maturity of the debt and after due notice to the debtor.

Provision is made for the sale of collateral security held by the bank in case of default in the payment of the relative debt.

A bank may hold real property for its own use and occupation, and may sell the same and acquire other property in its stead for the same purpose.

A bank may take a mortgage on real estate or personal property by way of additional security for a debt already contracted.

A bank may acquire title to real property on which it has a lien as security by purchasing the equity of redemption or by foreclosure. No bank, however, is allowed to hold property except for its own use and occupation longer than twelve years.

2. Warehouse Receipts As Collateral Security (Sections 84-90)

A bank may lend money upon the security of standing timber and on the rights held by persons to cut or remove such timber.

A bank is empowered to lend money to a receiver or liquidator appointed under the Winding-up Act, and to take security in connection therewith.

Power is given to advance money for building ships and to take such security thereon as is permissible for individuals under the laws of the respective provinces.

Power is given to advance money on warehouse receipts and bills of lading.

The provisions embodied in what is known as "Sec-' tion 88" have proved an important factor in the industrial and agricultural development of Canada. The clause permitting loans to farmers under this section appears for the first time in the Act of 1913. The main text of Section 88 is as follows:

The bank may lend money to any wholesale purchaser, or shipper of, or dealer in, products of agriculture, the forest, quarry and mine, or the sea, lakes and rivers, or to any wholesale purchaser or shipper of or dealer in live stock or dead stock or the products thereof, upon the security of such products, or of such live stock or dead stock or the products thereof.

The bank may lend money to a farmer upon the security of his threshed grain grown upon the farm.

The bank may lend money to any person engaged in business as a wholesale manufacturer of any goods, wares and merchandise, upon the security of the goods, wares and merchandise manufactured by him, or procured for such manufacture.

All advances secured under Sections 86-88 have priority to the claim of an unpaid vendor unless he had a lien, of which the bank was aware, on the goods. The material or goods on which a bank has a lien by warehouse receipt or pledge, under Section 88, may be converted by manufacture without the bank losing its lien thereon. In the case of the non-payment of a debt thus secured, the goods may be sold under certain specified conditions.

A bank cannot acquire or hold any warehouse receipt, bill of lading or pledge of goods to secure any debt unless such debt is negotiated at the time of the acquisition of the security by the bank, or upon the written promise or agreement that such warehouse receipt, bill of lading or security would be given to the bank. Such liability, however, may be renewed from time to time without affecting the condition of the security. A bank may also exchange warehouse receipts for bills of lading, or vice versa, without affecting this security.

3. Rates Of Interest And Exchange (Sections 91-94)

A bank may stipulate for, or exact such rate of interest or discount as may be agreed upon, and may receive in advance any such rate, but no higher rate than seven per cent shall be recoverable by the bank.

A bank may allow any rate of interest whatever upon deposits. The liability of the bank to repay money deposited with it is not affected by any statute of limitations or any law relating to prescription.

A branch bank, when discounting bills payable at another branch, may take commission, in addition to interest, to an amount not to exceed 1/8 of one per cent; minimum, 15 cents.

In discounting bills drawn on places where a bank has no branches this rate may be increased to 1/4 of one per cent; minimum, 25 cents.