Plentywood herald. [volume] (Plentywood, Mont.) 1908-current, 1933-05-04

Act preAlaes for the severe punish
ment OF directors or their bank direc-
tors making false or misleading
statements If a banks condition.
Canadian banks. established under
the Bank Act, are called chartered
banks Firy are authorized to open
branches and agencies; to deal in,
TO Discount and to lend money on the
security Of bills of exchange and
other negotiable securities. and on
the stocks. bonds and d~ebentures of
municipal and other corporations. and
ON Dominion. Provincial and other
public securities, and to carry on
generally the business of banking.
Canadian System Found Flexible
They are prohibited. however.
from looming money upon the secur-
ity of shares in the capital stock of
curity Of real estate
The object of these prohibitions is
TO give reality to the .faia-Hp eaff-
tall of the banks as a whole. and TO
keep their resources liquid by pre-
venting them being locked up In
immovahle property. In other words,
the object is the security of the de-
p%ositor.
Outside Of restrictions i'm The in
~terests Of safety, the Canadian
banking system is a most flexible one
The banks hold perfect control of the
credit situation. this by virtue of the
fact that here are but ten chartered
banks in the Dominion. the ten hay
ing over 1000 branches scattered
over Canada and Newfoundland.
Permitted to Issue Own Currency
In other words, banking and ere
dit are under the supervision of Il few
! large. powerful and well-managed
institutions headed by trained bank.
ers. Through the branch system
they are enabled to keep in touch
with every part of the country. to
obtain accurate information regard
Ing the status of any industry,
whether local or national. or Of any
borrower.
Canadian banks, according to the
claims of banking experts. are able
to extend much wider credits than
~ III tit1t "
other systems of banking. The rea-
son given for this is that in Canada
a borrower cannot seek credit indis-
criminately. By custom he mus
deal with one bank. or at most. in
exceptional cases, with two ar three
and then only By the banks consent
the lending bank in this way beeom-
ing closely in touch with the bust
ness Of the borrower.
A Canadian bank may make loans
to farmers for the purchase of seef
grains. with the loans secured upor
the resultant crops. may also make
loans upon the security of livestock
Under the Bank Act, however, TIL.
bank becomes practically the owner
of the duly pledged goods of sucf
borrowers. The farmer retains TIL,
right to buy and sell. but in case o.
necessity tle bank may take immcd
late possession of the pledged goods
This principle. In fact, applies II
the case of most loans which ths
banks make to private borrowers
whether to farmers. merchants o.
II ift't - - = 1900
that a large part Of the commercial
paper taken by the banks from Dor
rowers is secured by what is prac
tically title to the goods on farms
in warehouses, factories. or othel
places. These goods are actually the
first security to the loan. the secnr
ity supplemented by the general ere.
dit of the borrower.
Under the Bank Act Canadian
banks may issue currency of theil
own up to the amount of their paid.
up capital. plus their deposits in the
central reserves of the Dominion
deposits to be in Dominion currency
or in gOld). Above this amount they
are required TO put into the reserve
dollar for dollar in gold.
Voluntary Redemption Fund
Contributed
In order TO guarantee against loss
to holders of this currency, the
=, - 49,. 49, 49,