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CIBC (Canadian Imperial Bank of Commerce)

A History of the Canadian Bank of Commerce, with an account of the other banks which now form part of its organization. By Victor Ross. Volume I. Toronto: Oxford University Press. ]92fl. Pp. xviii, 515. Professor Freeman’s definition of history as past politics was inadequate. Much of what is vital to man does not touch the field of politics. Rut it is true that a wide range of interests touches politics, and among them is banking. Finance lies in the background of mrny, perhaps most, of our social problems. What a tale of politics would a frank history of the Bank of England tell, of Whig support and Tory antagonism, of anti-Jacobite resolves that the Stuart should not come back to the English throne, since, if he did, the bank founded by Whig money would be in danger Banks have forbidden, perhaps also they have made, wars. German finance was bribed into supporting the recent war because it was promised new fields to exploit. During the war it was to the banks that governments looked to steady public credit. The history of a great bank is in large measure the story of the conditions in the society where it operates.

The Canadian Rank of Commerce, founded just after the federation of Canada in 1867, has published in a handsome form the first volume of its history. The chief author is Mr. Victor Ross, a Toronto journalist. Three of the six chapters, however, have been written by Professor Skelton of Queen’s University,—those dealing with the days before banks and with early banking in Upper and Lower Canada, and with the history of the Merchants Bank of Prince Edward Island, and the Bank of British Columbia. Dr. C. W. Colby, late of McGill University, has written the chapter on the Eastern Townships Bank. Mr. Ross himself has written the chapter on the Halifax Banking Company and the Gore Bank. Of the banks thus described those in Nova Scotia, Ontario, and British Columbia are the oldest in these provinces, and all five have been absorbed by the Bank of Commerce. The arrangement of the book leaves us rather in the air in respect to the Bank of Commerce itself. Its history is reserved for the second volume. In these pages it stands rather mysteriously in the background. It is younger than any of the five which it drew to itself. Nearly one-third of the book is given to a valuable appendix which is :n large measure a history of the various aspects of Canadian currency. There are also statistics showing the dividends of the banks. In only a few years were they unable to pay dividends.

The book has been prepared very carefully. The secretary of the Bank, Mr. Trigge, has sifted the facts. Though sometimes we have “to loan” for "to lend”, the English style is good and on a high plane. Apart from the intrinsic, interest of the story, the most striking feature of the book is the illustrations. These, with the text, constitute a history of currency in Canada. They include also many portraits of bank officers, and scenes in the history of the bank such as those of the Cariboo trail in British Columbia. There are reproductions of the card money of the French period, the first paper currency in North America, which in the last days of the French regime became so fertile an engine of the frauds of the intendant Bigot. Issues of currency by private companies, governments, and banks are given. At one time even individuals issued their own currency; one of the quaintest things in the book is an account (p. 128) of currency printed on leather by a shoemaker of Prince Edward Island. Currency in Canada has a bewildering history. The list (p. 62) of gold and silver coins held by the Halifax Banking Co. in 1831 makes our own difficult problems of currency and exchange seem almost simple. It was only a few years before the federation of Canada in 1867 that the dollar standard of the United States was adopted. The movement associated with the railway era which began in Canada about 1850 had made a common unit of currency a necessity. Spanish doubloons, patriot doubloons, half eagles, the pound sterling, York shillings, pistareens, were only some of the varieties of the coinage in circulation. We see one of the subtle forces working for Canadian union when we find Nova Scotia and what are now Ontario and Quebec adopting the dollar currency before they, confronted political union.

Banks began in Canada only a century ago. . To-day they are so vital a factor in commercial life that it is not easy to picture a society in which they did not exist. How, without banks, could matters of exchange be adjusted, could credits and debits pass from one country to another, could reserves of money be held securely, could needed loans be effected.'1 The answer is that governments and individuals discharged the functions of banks. One of the interesting things in this volume is the account of the Army bills issued in pre-banking days by the military command during the war of 1812 in denominations as low as one dollar. These were issued in payment for supplies and also, no doubt, for the pay of the soldiers, and they were used as currency. Private merchants took deposits from their customers and issued due bills circulated locally. In British Columbia, in the early days of the gold seekers, there was no bank to take charge of the precious metal. For security misers buried their own gold dust, in itself an invitation to the robber. The bank came as a relief from anxiety for the individual.

There is no doubt that the Canadian banking system is based in large measure on what was done by Alexander Hamilton in the United States. The Bank of Montreal, the first Canadian Bank, began in 1817, but it was not until 1822 that the principle was established that hanks should receive charters, conferring, no doubt, privileges but creating also obligations. In the United States, Hamilton, in founding the National Bank, which existed for only twenty years, had to meet the objection that banking was no affair of government and least of all of the federal rather than of the state government. To create the bank he had to accept severe restrictions. In Canada these were expressed in limitations upon the debts which the bank might incur in proportion to its capital and in government supervision. In a new country it was wise to follow Hamilton’s example and to restrict the banks in respect to loans upon real estate. Probably Canada would have been saved from some desolating “booms” if this principle had always been carried out in the spirit as well as in the letter. But the restriction has not been thought necessary in England, and in Canada to-day it involves a serious handicap in respect to securing capital for the needed supply of houses. Nova Scotia was not under the same law as the older Canada. So chaotic, indeed, was colonial banking that iri 1833 the British government laid down rules which should apply to all colonial banks. They must redeem their notes in .specie, they must limit discounts to directors, they must not lend money on the security of their own stock, they must lend only on securities easily realizable, and the shareholders must be liable for double the amount subscribed for their shares.

It is impossible here even to outline the growth of banking unity in Canada as it kept pace with political unity. United with the Canadian Bank of Commerce of to-day are five other banks which bad their beginnings in as many Canadian provinces. The story of each of these institutions has its own distinct interest. The Halifax Banking Co. was the creation of the first great Canadian capitalist. Enos Collins was one of the more than twenty children of his father, and he died worth from six to nine million dollars, a vast fortune even now. He and four of the eight: partners in the bank sat in the council of twelve which was the second chamber and also the executive government of Nova Scotia. Naturally this was attacked by a reformer, such as Joseph Howe, and banking played a leading part in the political issues of Nova Scotia before 1840.

The Merchants Bank of Prince Edward Island sprang, too, out of local needs. In Upper Canada William Lyon Mackenzie assailed the Gore Bank at Hamilton in which his rival, the Tory leader, Sir Allan MacNab, was a conspicuous figure; and banking and the Family Compact worked in alliance. We find another interesting type of local conditions in the creation of the Eastern Townships Bank in Lower Canada. The people of the Townships spoke English and insisted on having English, not French, land laws. Before the railway, they were remote from Montreal, and so they created a bank of their own. In remote British Columbia another type of bank was created. About 1860 capital was superabundant in England. It then took four months for goods to reach British Columbia and the shortest route for passengers was across the Isthmus of Panama and from there by San Francisco to Victoria. Yet, persuaded by fortune-seekers in British Columbia, London capitalists founded the Bank of British Columbia. They retained control in London, but it is amusing and sometimes tragic to see how futile were their efforts to check in their agents the speculative spirit inevitable in a new and rich country.

In his introduction, Sir Edmund Walker mentions the humours of banking, and some of them are noted here. The old days were more easy-going than ours. There were many holidays. The death of King Charles the Martyr, the Restoration of Charles II, and the Gunpowder Plot were observed, together with other incidents forgotten now. The system of inspection, rigorous to-day, but even so still fallible, was loose; the Bank of British Columbia was, it was said, a "gentleman’s bark'’, and it was not regarded as gentlemanly for an official to arrive without notice and take charge of an office. Invariably, as the banks were united, more rigorous methods were adopted, and all to the advantage of financial stability. It is quite clear that the path of the banker was thorny and that, even with a discount rate as high as thirty-six per cent, in the far west, profits were by no means assured. The union of the local banks in a larger whole followed naturally the political union of the country which offered wider opportunity. This helped to equalize profits. There might be a good year in Nova Scotia when there was a bad one in British Columbia.

There are the facts here for a philosophy of banking based on the need of a stable basis for public confidence and credit and the circulation and exchange of values and the reaction of these things on political unity. The story in this book is that of the transition from primitive barter to the highly organized systems of to-day which few people really understand. The mysteries of exchange are still almost beyond analysis. This book is a notable record of the achievements of the banker. It is more than a record of the past in which intelligence and energy made capital available for social service. It is a forecast of a future, clouded and difficult beyond anything ever known before. In the small communities of earlier days the felt need brought to the front natural leaders. To-day the vast mechanism of the banks may foster the coming to the front by mere routine of men who are bankers and only bankers. In England and in Canada the complaint is now often made that many leading bankers are not adequately educated for their great tasks. It is for the banks to find a policy which will correct his fault. They command vast resources, and the public will support them in offering adequate rewards to adequate education. By this story of its past the Canadian Bank of Commerce has shown its desire to link banking with the wider aspects of society and has added a vital chapter to the economic history of Canada.

George M. Wrong

You can download this 2 volume publication here in pdf format
Volume 1  |  Volume 2

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