A History of the
Canadian Bank of Commerce, with an account of the other banks which now
form part of its organization. By Victor Ross. Volume I. Toronto: Oxford
University Press. ]92fl. Pp. xviii, 515. Professor Freeman’s definition
of history as past politics was inadequate. Much of what is vital to man
does not touch the field of politics. Rut it is true that a wide range
of interests touches politics, and among them is banking. Finance lies
in the background of mrny, perhaps most, of our social problems. What a
tale of politics would a frank history of the Bank of England tell, of
Whig support and Tory antagonism, of anti-Jacobite resolves that the
Stuart should not come back to the English throne, since, if he did, the
bank founded by Whig money would be in danger Banks have forbidden,
perhaps also they have made, wars. German finance was bribed into
supporting the recent war because it was promised new fields to exploit.
During the war it was to the banks that governments looked to steady
public credit. The history of a great bank is in large measure the story
of the conditions in the society where it operates.
The Canadian Rank of
Commerce, founded just after the federation of Canada in 1867, has
published in a handsome form the first volume of its history. The chief
author is Mr. Victor Ross, a Toronto journalist. Three of the six
chapters, however, have been written by Professor Skelton of Queen’s
University,—those dealing with the days before banks and with early
banking in Upper and Lower Canada, and with the history of the Merchants
Bank of Prince Edward Island, and the Bank of British Columbia. Dr. C.
W. Colby, late of McGill University, has written the chapter on the
Eastern Townships Bank. Mr. Ross himself has written the chapter on the
Halifax Banking Company and the Gore Bank. Of the banks thus described
those in Nova Scotia, Ontario, and British Columbia are the oldest in
these provinces, and all five have been absorbed by the Bank of
Commerce. The arrangement of the book leaves us rather in the air in
respect to the Bank of Commerce itself. Its history is reserved for the
second volume. In these pages it stands rather mysteriously in the
background. It is younger than any of the five which it drew to itself.
Nearly one-third of the book is given to a valuable appendix which is :n
large measure a history of the various aspects of Canadian currency.
There are also statistics showing the dividends of the banks. In only a
few years were they unable to pay dividends.
The book has been
prepared very carefully. The secretary of the Bank, Mr. Trigge, has
sifted the facts. Though sometimes we have “to loan” for "to lend”, the
English style is good and on a high plane. Apart from the intrinsic,
interest of the story, the most striking feature of the book is the
illustrations. These, with the text, constitute a history of currency in
Canada. They include also many portraits of bank officers, and scenes in
the history of the bank such as those of the Cariboo trail in British
Columbia. There are reproductions of the card money of the French
period, the first paper currency in North America, which in the last
days of the French regime became so fertile an engine of the frauds of
the intendant Bigot. Issues of currency by private companies,
governments, and banks are given. At one time even individuals issued
their own currency; one of the quaintest things in the book is an
account (p. 128) of currency printed on leather by a shoemaker of Prince
Edward Island. Currency in Canada has a bewildering history. The list
(p. 62) of gold and silver coins held by the Halifax Banking Co. in 1831
makes our own difficult problems of currency and exchange seem almost
simple. It was only a few years before the federation of Canada in 1867
that the dollar standard of the United States was adopted. The movement
associated with the railway era which began in Canada about 1850 had
made a common unit of currency a necessity. Spanish doubloons, patriot
doubloons, half eagles, the pound sterling, York shillings, pistareens,
were only some of the varieties of the coinage in circulation. We see
one of the subtle forces working for Canadian union when we find Nova
Scotia and what are now Ontario and Quebec adopting the dollar currency
before they, confronted political union.
Banks began in Canada
only a century ago. . To-day they are so vital a factor in commercial
life that it is not easy to picture a society in which they did not
exist. How, without banks, could matters of exchange be adjusted, could
credits and debits pass from one country to another, could reserves of
money be held securely, could needed loans be effected.'1 The answer is
that governments and individuals discharged the functions of banks. One
of the interesting things in this volume is the account of the Army
bills issued in pre-banking days by the military command during the war
of 1812 in denominations as low as one dollar. These were issued in
payment for supplies and also, no doubt, for the pay of the soldiers,
and they were used as currency. Private merchants took deposits from
their customers and issued due bills circulated locally. In British
Columbia, in the early days of the gold seekers, there was no bank to
take charge of the precious metal. For security misers buried their own
gold dust, in itself an invitation to the robber. The bank came as a
relief from anxiety for the individual.
There is no doubt that
the Canadian banking system is based in large measure on what was done
by Alexander Hamilton in the United States. The Bank of Montreal, the
first Canadian Bank, began in 1817, but it was not until 1822 that the
principle was established that hanks should receive charters,
conferring, no doubt, privileges but creating also obligations. In the
United States, Hamilton, in founding the National Bank, which existed
for only twenty years, had to meet the objection that banking was no
affair of government and least of all of the federal rather than of the
state government. To create the bank he had to accept severe
restrictions. In Canada these were expressed in limitations upon the
debts which the bank might incur in proportion to its capital and in
government supervision. In a new country it was wise to follow
Hamilton’s example and to restrict the banks in respect to loans upon
real estate. Probably Canada would have been saved from some desolating
“booms” if this principle had always been carried out in the spirit as
well as in the letter. But the restriction has not been thought
necessary in England, and in Canada to-day it involves a serious
handicap in respect to securing capital for the needed supply of houses.
Nova Scotia was not under the same law as the older Canada. So chaotic,
indeed, was colonial banking that iri 1833 the British government laid
down rules which should apply to all colonial banks. They must redeem
their notes in .specie, they must limit discounts to directors, they
must not lend money on the security of their own stock, they must lend
only on securities easily realizable, and the shareholders must be
liable for double the amount subscribed for their shares.
It is impossible here
even to outline the growth of banking unity in Canada as it kept pace
with political unity. United with the Canadian Bank of Commerce of
to-day are five other banks which bad their beginnings in as many
Canadian provinces. The story of each of these institutions has its own
distinct interest. The Halifax Banking Co. was the creation of the first
great Canadian capitalist. Enos Collins was one of the more than twenty
children of his father, and he died worth from six to nine million
dollars, a vast fortune even now. He and four of the eight: partners in
the bank sat in the council of twelve which was the second chamber and
also the executive government of Nova Scotia. Naturally this was
attacked by a reformer, such as Joseph Howe, and banking played a
leading part in the political issues of Nova Scotia before 1840.
The Merchants Bank of
Prince Edward Island sprang, too, out of local needs. In Upper Canada
William Lyon Mackenzie assailed the Gore Bank at Hamilton in which his
rival, the Tory leader, Sir Allan MacNab, was a conspicuous figure; and
banking and the Family Compact worked in alliance. We find another
interesting type of local conditions in the creation of the Eastern
Townships Bank in Lower Canada. The people of the Townships spoke
English and insisted on having English, not French, land laws. Before
the railway, they were remote from Montreal, and so they created a bank
of their own. In remote British Columbia another type of bank was
created. About 1860 capital was superabundant in England. It then took
four months for goods to reach British Columbia and the shortest route
for passengers was across the Isthmus of Panama and from there by San
Francisco to Victoria. Yet, persuaded by fortune-seekers in British
Columbia, London capitalists founded the Bank of British Columbia. They
retained control in London, but it is amusing and sometimes tragic to
see how futile were their efforts to check in their agents the
speculative spirit inevitable in a new and rich country.
In his introduction,
Sir Edmund Walker mentions the humours of banking, and some of them are
noted here. The old days were more easy-going than ours. There were many
holidays. The death of King Charles the Martyr, the Restoration of
Charles II, and the Gunpowder Plot were observed, together with other
incidents forgotten now. The system of inspection, rigorous to-day, but
even so still fallible, was loose; the Bank of British Columbia was, it
was said, a "gentleman’s bark'’, and it was not regarded as gentlemanly
for an official to arrive without notice and take charge of an office.
Invariably, as the banks were united, more rigorous methods were
adopted, and all to the advantage of financial stability. It is quite
clear that the path of the banker was thorny and that, even with a
discount rate as high as thirty-six per cent, in the far west, profits
were by no means assured. The union of the local banks in a larger whole
followed naturally the political union of the country which offered
wider opportunity. This helped to equalize profits. There might be a
good year in Nova Scotia when there was a bad one in British Columbia.
There are the facts
here for a philosophy of banking based on the need of a stable basis for
public confidence and credit and the circulation and exchange of values
and the reaction of these things on political unity. The story in this
book is that of the transition from primitive barter to the highly
organized systems of to-day which few people really understand. The
mysteries of exchange are still almost beyond analysis. This book is a
notable record of the achievements of the banker. It is more than a
record of the past in which intelligence and energy made capital
available for social service. It is a forecast of a future, clouded and
difficult beyond anything ever known before. In the small communities of
earlier days the felt need brought to the front natural leaders. To-day
the vast mechanism of the banks may foster the coming to the front by
mere routine of men who are bankers and only bankers. In England and in
Canada the complaint is now often made that many leading bankers are not
adequately educated for their great tasks. It is for the banks to find a
policy which will correct his fault. They command vast resources, and
the public will support them in offering adequate rewards to adequate
education. By this story of its past the Canadian Bank of Commerce has
shown its desire to link banking with the wider aspects of society and
has added a vital chapter to the economic history of Canada.
George M. Wrong
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