Wide Distribution Of Control

Besides the differences in the form of the banks in the two countries there are some sharp contrasts in the manner of their operation and control. A noticeable feature about present-day United States banking in the large centres, is the tendency towards concentration of stock control. Rich and powerful capitalists obtain control of certain banks, and seek gradually to extend the pale of their influence. It may be that the banks in their control continue in some cases to discharge their proper functions, but there are substantial grounds for the idea common among the people that the controlled banks are sometimes used as engines to further the private schemes of the men in control. Though the panic of 1907 checked the tendency for the time there is danger of its being renewed when the lessons of the panic are forgotten. This tendency is not seen in Canadian banking. Ownership of the stocks of the banks is widely distributed - five and ten share lots, and odd numbers of shares constitute the bulk of the holdings in all the stock lists. Even if some rich capitalists were to succeed in obtaining the control of a majority of the stock in a Canadian bank, fear of a hostile public sentiment would be sufficient to deter them from perverting its operations too largely for their private benefit. If this did not suffice, there would still remain the wholesome influence of the revision of the Bank Act by Parliament every ten years. The House of Commons is quick to notice and resent any departure by the banks from their duty of providing facilities for carrying on the general trade and commerce of the country; and, in their own interests, the banks strive to avoid practices likely to stir up the enmity of that powerful body.

How Large Borrowers Are Carried

Another important difference exists in the manner of carrying the large borrowers. In Canada, as the banks are large, it is the custom to insist that firms and individuals confine their borrowings to one bank, except in the case of very large corporations or companies. Thus, the lines of credit carried by big merchants and manufacturers at the individual banks are often very large, sometimes even when the accounts are at a small country branch. In the United States, on the other hand, the large borrowers are obliged frequently to submit to having their paper peddled among a dozen or more banks. As a consequence, the tie that binds the borrowing customer to his bank is stronger in Canada than it is across the southern boundary, the banker has a more comprehensive oversight of his customer's affairs, and the customer is in less danger of being thrown into bankruptcy, while perfectly solvent, through the happening of a panic or crisis.

Again, in the great cities of the United States there are a number of banks preferring to deal only with customers who will keep large balances, and whose transactions are in large amounts. They do not wish to be bothered with the small fry. In Canada there is nothing of that exclusiveness. The individual of the smallest importance can open a very small account in the savings department of the greatest bank in the country, at its central office, or at any of its branches. The banks quite generally advertise that they will accept deposits of $1 and upwards in their savings departments. These savings departments, run in connection with the ordinary banking business, represent something not generally seen in the big republic, at least not in the eastern part. There the savings banks are separate institutions. As a result of this, and of the lack of branch banks, there are many places in the States devoid of facilities for savings, while in Canada almost every hamlet possesses its branch of a big chartered bank, enjoying the full confidence of the people, and willing to take small deposits at interest.

Comparison With United Kingdom

The chief contrast between the banking business of Canada and that of England and Scotland lies in the greater diffusion of the Canadian business. The branch system prevails in Great Britain, but the branches are all contained in a small island, while in Canada they are scattered over half a continent. Then, as Great Britain is the centre of the largest overseas trade in the world, so British banking is more largely tinged with foreign transactions than is the banking of any other country, or of any British dominions overseas. The enormous range of the foreign investments of the British people, the extent of their mercantile marine, the world-wide activities of their insurance companies, the maintenance of Imperial forces, stores, military or naval works, in all parts of the globe, also impart a peculiar character to the banking of the British Isles.

As the conditions of general business in the United Kingdom are more settled and stable than is the case in a new country like Canada, the business of granting banking credits in the former is attended with less risk in many respects. In the newer land tradesmen and others gather up their belongings and try their luck in a new place more frequently than in the old. The business of dispensing credit in Canada, therefore, requires a knowledge or experience of the peculiar circumstances of the country.