Evening star., 1932-12-18
CANADA GOES NINE YEARS
WITHOUT A BANK FAILURE
Decentralized System Grows Up Grad.
ually-Branches Insure Fairly Uni
form Rates Over Wide Area.

! balances in banks outside of Canada
call and short loans in New York and
readily marketable securities.
Banks may extend their note circula-
,i,l by depositing dollar for dollar in
gold or Dominion notes in the central
gold reserves. During period Of crop
movements. war or panic, banks may
extend their note issues Is per cent
of the combined capital and reserve
funds, paying the government interest
on the excess amount at 5 per cent.
To further guard against bank fall
ures and the loss of money to deposit
tors and note holders. the Canadian
banks pay into bank circulation re-
demption fund on the basis Of per
cent OF their average circulation not
covered in gold or Dominion notes in
the central gold reserves established in
1918, making this sum available for the
redemption of notes Of failed banks.
In addition, the Canadian Bankers
Association was formed in 1900 to act
under the authority of the Dominion
Treasury Board. Through this organi-
Zation cooperation of individual banks
is facilitated and encouraged. The as
sociation supervises clearing house
transactions appoints curators to super
wise the affairs Of banks which have
suspended business and oversees the
printing and issue of notes TO its mem
bers.
The Oldest Of the present banks is the
Bank of Montreal, which began blIsi-
ness in 1917. A number Of banks fol-
lowed but of these none now remains
except the Bank of Nova Scotia, found
ed in 1882. OF the other present day
banks. the Bank of Toronto received its
charter in 1855. the Banque Provinciale
du Canada. which began as the Banque
jacques Cartier, in 1862; the Canadian
Bank Of Commerce, which today has its
head Office in the talleSt building in the
British Empire, at Toronto. started in
1867; two years later the present Royal
Bank OF Canada was founded at Hall
fax; then came the Dominion Bank
and the other FTench-Canadian bank,
the Banque Canadienne Rationale: in
1875 the Imperial Bank of Canada was
formed, and the next bank TO be
granted charter and still doing bust
ness was BARCLAYS Bank CCanaGat. a
branch OF the well known English house
of that name, which came to Canada
in 1929.
In recent years the banks Of Canada
have extended their business outside OF
the country and at the beginning OF
1892 had among them 176 branches in
foreign countries. namely in NeWfound-
Central and South America, as we'll as
in the financial centers Of the world,
London, Paris and New York. TIE
Bank of Nova Scotia and the Royal
Bank of Canada are the leaders in this
movement of canadian banks to extend
their services beyond the Dominion Is
Canadian foreign trade increased to
these countries.
Branches in Remote Areas.
Branch banks are to be found in the
most remote parts Of the Dominion.
varying in architecture from small Md
els of pretentious head Offices in the
larger cities to log cabins in the new
mining towns which spring up constantly
in the Canadian Northland. But each
bank, whether ornate or merely in the
bush, can paint on its windows the sum
OF its capitalization and reserve in mil
lions of dollars, since each is part OF
10 vast systems spreading from coast to
coast. The miner in the bush and the
largest manufacturer, both dealing with
the same bank, though they may be
thousands of miles apart, are both
backed by the full resources of their
bank. This feeling Of confidence and
strength in the Canadian banks has
been largely responsible for the lack OF
runs on banks when Canadian news
papers reported tne 1alIure Oh large
banks in the United States during the
last two years.
Canadian banks have to be capital
lied at upward Of S500,000 and half
that amount deposited with the govern
ment before a charter is issued by the
Dominion government. The largest fig
ure on bank capitalization shows close
to S150,000,000 as the sum for the 10
banks. Stockholders in Canadian banks
are liable to double the amount of the
stock in case the bank fails. All bank
employees and officers must be bonded.
No bank in Canada may make loans
with real estate as security, thus keep
ing bank resources in an easily accesSi-
BILE condition. Reports must be made
to the Dominion government at frequent
periods during the year
In addition to the 10 chartered banks,
there are number of loan and trust
companies operating throughout the
Dominion under provincial and federal
legislation. Some of these chartered
companies also maintain savings de-
posit departments. Besides these. there
are Dominion government and provin-
cial government savings Offices, but
these are not commercial banks.