July 1, 1867.
The Confederation of Canada was greeted jubilantly by financial markets, with 372 shares changing hands between members of the Toronto Stock Exchange in a day of furious trading, and new record highs for such companies as Dominion Monocle and Amalgamated Spats (Canada) Inc.
Upon a sober second reading of the British North America Act, the newly created federal government realized to its dismay that the provinces of Ontario, Quebec, New Brunswick and Nova Scotia have been granted the powers to create their own offices to regulate the securities business. Even Prince Edward Island, should it come to its senses and join Canada, would have the right to regulate the business of stocks and bonds.
In response, the government of Prime Minister John A. Macdonald is expected to shortly launch a blue-ribbon panel on a national securities regulator. The hope is to complete the review before the creation of a full-fledged Supreme Court, when the justices will be in a position to tell the government to back off.
When Mr. Macdonald famously said three years ago that "there may be obstructions, local differences may intervene, disputes may occur, local jealousies may intervene, but it matters not – the wheel is now revolving, and we are only the fly on the wheel, we cannot delay it," he was clearly not talking about securities regulation.
Finance Minister Alexander Galt has sharpened his quill pen and dashed off an angry letter to Canada's lenders, complaining that profits are too high while mortgage rates are too low. There is concern in Ottawa that while the country is only one day old, Canada is already experiencing the beginnings of a housing bubble.
Just the other day, a renovated shack on the outskirts of Toronto, a nine-minute hansom cab ride from downtown in fair weather, sold for $11. (To be fair, the newly renovated residence featured countertops and a freshly painted privy with upgraded duckboards through the garden for those rainy days. No Muddy York for this lucky homeowner!)
Meantime, the plucky upstarts at the Merchants Bank of Halifax expect to one day be Canada's largest bank, managers there told The Globe. The claim elicited faint chuckles up the street in the august head offices of the Bank of Nova Scotia. The notion was met with utter indifference on the banks of the St. Lawrence, home of the country's dominant financial institution, Bank of Montreal. The newly formed Canadian Bank of Commerce, which opened for business in Toronto just six weeks ago, had no comment.
In the six years that the Toronto Stock Exchange has been up and running, the stunning advances in technology are creating tensions.
Some investors are angry over what they call "front-running" after rivals spent dozens of dollars to upgrade their telegraph connections to the exchange, and to buy the latest and fastest model of abacus. In response, the upset investors are considering opening their own market, where all telegraph operators will have to use their weak hands when signalling orders.
The purchase of Upper Canada Rendering and Tallow, the nation's leading maker of sausage casings, by a U.S. conglomerate has raised concern about the hollowing out of Canada's economy. The Macdonald government is expected to review the transaction, with sources in the capital suggesting the government may apply a "net benefit" test. The sources said the government would clarify what "net benefit" means in due course.
Two prospectors in the bush of Northern Ontario discovered huge reserves of a metal called nickel. Over drinks by the fire, they talked about pooling their resources to create one of the world's great mining companies. However, one insulted the other's taste in overalls, and sources say they have not spoken since and probably never will.
At the Toronto Club, over drams of malt, some of the city's richest tycoons talked of a day when gleaming cities would rise in the vast, unexplored western plains, perhaps rivalling the Dominion's eastern centres in economic importance. The businessmen agreed it would never happen, before retiring to the dining room to decant the claret and sample a succulent joint of mutton.
Disclosure: I own shares in Dominion Monocle.