The sun. [volume] (New York [N.Y.]) 1916-1920, 1919-06-17
By EDISON L. PEAsB.
President Of the Conadian Bonkers A.
ISOLATION.

President Of the Canddian Bonkers A.
ISOLATION.
Written expressly for tho Conddfon SEQ
of THE SUN.
Tho year 1913 and the early months
OF 1914 proved a period OF great financial
stringency and trade depression in Can
ada, due to an unprecedented influx OF
foreign capital during the eight preced-
ing years which had led to wild specu-
lation In real estate and overcapitaliza-
ton OF some industrial enterprises. The
elements OF a serious crisis were present
and all the efforts of Canadian bankers
were centred in checking this extrava-
gance and keeping the country on
sound economic basis.
Suddenly war broke out and they were
called upon to cope with an utterly new
and perilous situation. Theirs was the
responsibility OF first serving in the con-
fiict Unlike the Canadian military ma
chine, which had yet to be created. our
financial army was completely prepared :;
ana though made up OF many indepen-
dent units, It was so organized that to
the small branch in the tiniest hamlet
II could in few hours be enlisted in the
service of the nation.
While our political system follows
closely the British model. Canadian insti-
buttons in the main have been based
on those OF the United States, which was
forced by a more rapid development to
an early solution of our common prob
lens. 1t Is an evidence of this prac-
tice OF availing ourselves OF our neigh
boris experience that early in the nine
teenth century we looked across the bor-
der for a system of banking suited to
the needs OF young and growing ma
ton, with a sparse population and a
vast undeveloped territory. At that
time two rival schemes we're the sub
ject of bitter contention in the newly
formed Republic--that devised by Alex
ander Hamilton (who advocated a
strong banking institution under Federal
control, with the Scottish system OF
! branch banks) and that of Thomas JEFF
| ferson (who favored State controD.
Canadians Took Hamilton Plan.
In the formation OF the Bank of the
United States, Hamilton succeeded in
carrying out his theory; but after his
untimely death and the removal of his
wonderful personality the policy OF JEFF
ferson was adopted and the United
States became committed to a system OF
small banks.
The early bankers OF Canada saw the
possibilities of the Hamilton plan. These
farsighted men, mostly OF Scottish ORR
gin, recognized that. in an undeveloped
country, banking facilities should not be
restricted to well-established settle
ments, but that II would be for their
ultimate profit to become pioneers, work.
ing side by side with the advancing set
tier and providing him with the surplus
capital of older communities. They
therefore organized upon Hamilton's
model and adopted a system of branch
| banks, national in scope, which at con-
federation in 1867 naturally passed IN
der Federal control
From the time of the drafting of the
first Dominion banking act, the closest
cooperation characterized the relation
ship of hanks and Governments rela-
tionship which has remained above poll
tics and party interest. The formation,
i in 1890, of the Bankers Association, TO
act as an official medium to express
Canadian banking interests. simpllfied
this intercourse; and though its primary
function was the encouragement of
sound banking, II was through this asso-
| citation that in the time of crisis the
whole financial machine of Canada was
enlisted to avert panic and apply to best
advantage the resources of our country.
The efficiency 81 the close working ar
| rangement between the Government and
banks was never so strikingly demon
strated as at the outbreak of the war.
Within twenty-four hours. measures to
| cope with the crisis had been Formulated,
sanctioned and put into effect. In order
to conserve the Canadian gold supply and
to forestall any domestic demand for the
purpose of boarding, the redemption In
| gold OF Dominion notes was suspended,
and the chartered banks were authorized