La Banque du Peuple

According to contemporaneous rumors, funds from La Banque du Peuple were used to finance the Lower Canada Rebellion in 1837.[4] At least one historian has suggested that the founding of the bank was designed to forestall rebellion,[5] and the means to peacefully advance the political and economic progress for French-Canadians.[6] Many of the prominent men involved in the founding and early operation of the bank took an active part in the rebellion,[7] and Louis-Michel Vigor was a cousin of the leader of the reformist Patriote movement, Louis-Joseph Papineau. Thomas Storrow Brown, an early director of the bank who would go on to participate directly in the rebellion, resigned his position in the bank when external political events rebellion were coming to a head. It has been suggested that Brown was asked to resign so that the bank could disassociate itself from any suspicions as to where its political sympathies lay.[8] The bank vigorously defended itself from these accusations, publishing a statement on behalf of its directors (referenced as "Deponents" below) in the Montreal Gazette on November 25, 1837 that included the following statement:

That the said Deponents perceiving that it has been falsely insinuated and spread in the public, that this Bank had lent or supplied funds for the purpose of purchasing arms, in order to destroy and subvert Her Majesty's Government in this Province, deem it their duty solemnly to affirm that such insinuations are wholly and altogether false and calumnious; the Deponents solemnly denying that this Bank ever did lend or supply any finds for that object, or for any criminal or illegal object whatsoever; and further the Deponents say not, and have signed.[9]

Regardless, many of prominent figures associated with the bank including Louis-Michel Vigor, Côme-Séraphin Cherrier, Édouard-Raymond Fabre, Joseph Roy, and John Donegani were all arrested after the rebellion, though significantly none of them were ever tried.[10]

In 1895, the bank suspended its activities and closed its doors soon after cashier J. S. Bousquet abruptly resigned,[11] and shortly afterward it was discovered that he made a large number of large, unsecured loans.[12] In total, the value of these credits was over $1,500,000,[13] the equivalent of one hundred million or more in today's dollars. Immediately after a public report came out in early 1896 with evidence that Bousquet was guilty of carrying out an unsafe lending policy, he fled to the United States with a large sum of money.[14] The directors of the bank also came under criticism for not properly overseeing the actions of the cashier and preventing Bousquet from doing what he did.[15] While the bank was able to improve its financial situation in the year after its closing its public operations, its directors were subject to unlimited liability, which reduced its ability to gain further outside investment, as the directors were subject to any debts incurred by the bank.[16] The bank managed to pay those who held the paper notes it issued in full, and in a compromise with its creditors to release them from full liability, the bank's directors were able to repay 75% of the money owed to its depositors.[17] Following the bank's closure in 1895, several French-Canadian companies were drawn into its downfall. Long legal and political battles followed.