The Washington herald., 1913-07-08
The New Canada Bank Act.


across the border as well as here, and
the principal new feature of the new
Canada Bank act is that which estab-
fishes central gold reserve. The pro-
visions for emergency currency by this
law which went into effect last Satur-
day are that any bank may deposit with
the trustees current gold, or Dominion
notes, at any time and receive in cur
rency an amount not in excess of the
deposit Il is left optional with the
banks whether the currency shall be
returned and the deposits Withdrawn,
though if, in the opinion of the trus-
tees, there is danger of overcirculation
they can recall the circulating medium
and refund the deposits.
Now, as before, Dominion banks may
issue circulation to the full extent OF
their unimpaired capital, and during the
crop-moving season, or between the
first of September or the last of the
February following, they may also issue
emergency currency TO the extent of
IS per cent of their reserve, which cor
responds to the undivided profits and
surplus of American banks. The con-
troll of the central gold reserve, how
ever, is of interest in connection with
what has been contemplated in the
United States. 1t is vested in board
of four trustees, three of whom are
appointed by the Canadian Bankers
Association, subject to the approval OF
the minister of finance, while the fourth
is appointed directly by him. This is
the exact opposite of what has been
proposed in this country, but which
seems to conform to the natural order
of things.
Another feature tending to strength
en- general conditions is the greater
publicity required with respect 10 bank
ing operations. An annual audit has
been provided for, the auditors being
appointed by the shareholders from
lists made by the general managers of
the banks and approved by the minister
of finance. They are TO be given full
power of access to all the books, &C
counts, and securities of the banks, and
must make an annual report to the
shareholders, but the finance minister
also may call upon the auditor of a
bank, or any other auditor whom he may
select, to give him a special report at
any time upon the condition of any of
these financial institutions.
This act, now in effect. serves as the
charter of all Dominion banks, though
every ten years they will be required
to seek an extension as condition for
doing business. 1t is said that in its
present form it is not wholly salts
factory to all bankers or all the poll
ticians. Very few measures of such
Importance command the unanimous
assent of the public or the parties
most directly interested. One objection
is that no provision has been made for
keeping the banks reserves within the
Dominion. 1t is now customary for
the larger Canadian banks to place
their reserves in New York, London,
and Paris, on the theory that they are
thus at all times liquid and can be
promptly called in. Different conditions
require different methods; but there are
certain fundamental dictates of COM
mon sense that should prevail every
where. One is that the function of
controlling banking operations should
be placed in the hands of men who
have practical knowledge of the bust
ness. That has apparently been self
evident in Canada and it should seem
SO here.