New-York tribune., 1909-05-27
CANADIAN BANKING
An Expert to Report on the Do
miniOn's System.

B. perhaps
known that an expert from the South has been in
Canada for some weeks making careful study Of
the Canadian banking system. However that is
what Is going on, and when he has gathered sufi-
cient information this expert will make elabo-
rate report, which, Judging from what he has seen
will be very hatterinG to Canada and extremely
gratifying to the bankers of the Dominion.
Once every ten years the Canadian banking
is up for revision. That is to say, AZ the end Of
each decade the law may lie changed Nineteen
hundred and ten is the next revision year, and
consequently the press Canada is just print
ing long and labored articles for and against the
Canadian banking system This has been going
for years. and often the year rolls round the
powers that rule decide let the thing go IT
stands on the books. Critics of the system
which obtains here declare that the laws good
for the bankers only. but the fact that the bant.s
stable and strong is certainly good for the de
positor. Canadian banks interdependent-they
lean another The strong banks support
the weaker 4 shareholder in Canadian
hank is personally liable to the creditors or dc
positors W double the fun amount of his hold
ings. That makes him careful.
Every banking day in the year each and every
bank Of issue must parade its poverty before the
Canadian Clearing House. show Itself TO the fnan-
cisl world and demonstrate its ability to make
good and redeem its notes Of issue. prominent
banker put Il very terseIy the other day when
asked state. plainly the difference between gov
eminent inspection and government supervision and
the system OF inspection conducted by the members
the Canadian Bankers Association
The former" said he reports disaster. the lat
ter prevents IT, BY constant. careful prodding We
find the weak points and apply the necessary
ounce of prevention"
To open bank in the United States man or
group of must deposit with the United States
government so.oo. which is locked up and passes
out Of circulation. That much is dead capital To
establish a bank OF issue in Canada the promoters
must show a subscription of half million, with
quarter Of a million dollars in cash. which Is paid
II the Minister OF Finance and Receiver General
When the new bank has obtained from the Treas
ury board certificate authorizing the bank to
issue notes ia a total amount not exceeding lis
paid up capital, II begin tc do business I'M
medistey after the issue Of this ceruhcate the
Minister of Finance and Receiver General pays
back 10 the bank the amount Of money deposited
less an amount equal 21z per cent thereof Ihls
amount so held IS placed TO the credit or the
Bank Circulation Redemption Fund In the iol-
lowing year further subscription TO this fuhd IS
demanded sufficient make the total amount de
posted therein by the bank equal 90 per cent OF
its average note circulation during the preceding
year. and from year TO year each bank must keep
its contribution up this average OF per cent o.
its note circulation. 1t is also provided In the
banking scheme that the notes issued shall con-
stitute the first lien the assets Of bank
These Two safeguards together With the double
Liability of the shareholders, form a sufficient
guarantee make the Canadian bank absolutely
safe Here alone is great advantage over the
security-does not become dead capital hut is LETT
in circulation. The banks become Co-guarantoFs
Of the note circulation Bank failures IN Canada
are rema rkably nfrequent, and when a hank sus-
pends II is more disastrous TO the fank. as q Fuie
the depositors.
Less than year ago important tank failed
al the close OF the business day. The business
world did know this, but the Bankers AsSo-
citation did and the responsible for the credit
. Of the Canadian banking system assembled IN To-
ronto 10 advise ways and means Immediately 10
: restore confidence the moment The news = ent out
on the following day. At dusk the news OF the
disaster was flashed in cipher messages 40 the
various banks, but It was not until early dawn
that ARA ngernents were completed to save the
situation and relieve the distress OF the emoar-
rassed bank During the night the news had got
into the papers and the telegraph had taken IL
from town 10 town. and the morning papers pa
redad the poverty of the bank in trouble al the
breakfast table Of the people whose little savings
might be swept away by the banks failure
However, when the anxious creditors crowded up
10 the main entrance they found the good shinEle
Of one OF the best banks the continent nailed
over the financially battered door Of the defunct
. institution and when after what 'cemed an age
10 the waiting crowd the doors swung wide and
the depositors came neryously TO the wicket they
were asked, each as he came, DO you wish 10
withdraw YOUR money The depOstor hesitated,
when the paying teller would add, II rot your
account is transferred 10 the Bank e --, and
he named the bank which had shingled the door
as above stated. sad sequel 10 this story is that
the shareholders Of the defunct bank are now dis
putting In court the claim of the bank which saved
/ them 10 a right 10 be reimbursed -
In addition fact that the Canadian system
Is "a fe and sound there is another story, another
feature OF banking. but, beng auolAeI s,.nE. l.
shall hold il for another letter. Whth shaii u!
I 10 tell you OF tne 01"N o. q CY wARMAN.