Practically every country in the world except the United States has recognized the utility, if not the absolute necessity, of the branch system of banking in handling commodities as liquid as money or credit. A bank system without branches is on a par with a city without waterworks or a country without a railroad so far as an equable distribution of credit is concerned.
In October, 1916, there were in Canada twenty-two banks, with head offices situated principally in Montreal and Toronto, controlling 3,296 branches of which 3,190 are situated in Canada, twenty-five in Newfoundland and eighty-one elsewhere, chiefly in the West Indies. Some of these banks have over three hundred branches scattered thruout the Dominion, receiving money in Vancouver today and lending it in Halifax to-morrow, or the reverse; and ceaselessly working to remove money from where it is least needed to where it is most needed. With a branch system money always finds its own level. A merchant in the West pays no more for his banking accommodation than his confrere of equal standing in the East. The immense territory covered by Canada alone makes branch banking an absolute necessity for the economic and efficient distribution of loanable capital and banking facilities. Any other method would be cumbersome and wasteful.
Under the Bank Act banks are permitted to "open branches, agencies, and offices." No restriction is placed by the government on the number or situation of the branches to be opened by any bank, and to this absence of red tape may be ascribed in great measure the successful working of the system in Canada.
As a practical illustration of the work accomplished by the branches in distributing wealth, let us take two towns - it is immaterial whether they are ten miles or three thousand miles apart. A is a comparatively wealthy town, with a population composed in great part of retired merchants and farmers, with practically no industries and with little or no enterprise. Its deposits are large with no demand or outlet for money in the town. B, on the other hand, is a busy little manufacturing town with all its money invested in its constantly increasing industries, and the branch here receives but meager deposits to meet the heavy demands for advances. Now this is where the branch system steps in and enables the B branch to use the surplus funds of A, thus supplying the legitimate requirements of B's customers, to the profit of the bank and the benefit of the town. When it is remembered that this principle is working every day in hundreds of branches thruout Canada in towns and villages ten, one hundred or one thousand miles apart, and yet just as intimately interdependent of each other as in the above instance, the benefit and economy of the branch system will be realized. From this it will be seen that no matter how small the deposits are in a branch, its loanable funds are limited only by the available resources of the bank of which it forms an integral part. A branch till is like the widow's cruse of oil; it can never be emptied nor yet, on the other hand, can it be made to overflow.
A consideration of the great area over which the branches of Canada are spread and the variety of interests to which they minister, impresses one with the fact that Canadian banks are not local in character, and that their interest and their activity are not bounded by the confines of any one town or province, or even by the Dominion itself.