The branch system and the note issues are the two principal factors which have enabled the banks to assist so materially in the expansion and upbuilding of Canada. They are so closely connected and interdependent that it is necessary to consider them together. Without branches the circulation would lack in a great measure the elasticity of issue and redemption which is its most useful and characteristic feature. Without the circulation privilege it would be impossible for the banks to open branches in new and sparsely populated districts.

It is well known that the average branch is run at a loss for the first three or four years, and bearing this in mind a consideration of the large number of branches opened yearly by the banks, must lead to the conclusion that many banks are devoting at least the whole of their profits on circulation to the opening of branches and the development of new districts. An average of three or four new branches opened yearly might easily absorb the profit on $1,000,000 circulation, especially in the West, where the initial and the operating expenses are high.

With the exception of Scotland, where branch banking has been brought to a great degree of perfection, Canada shows a larger number of branches in proportion to population than any other country in the world, as the following figures will show:

At End of 1912

Scotland ........

one bank to every 2,106 people


one bank to every 2,847 people

United Kingdom. . .

one bank to every 5,116 people


one bank to every 5,422 people

United States

one bank to every 3,407 people

As regards cities, Bristol, England, for example, has one bank for every 5,674 people, while Toronto, a city of similar size, has one bank for every 2,354 people. Cincinnati, in the United States, has one bank to every 9,120 people. Taking Canadian cities as a whole, there is one bank to every 3,100 people, while the United States can show only one bank for 9,700. It will be seen from this that Canadian banks have given a good account of their stewardship so far as supplying banking facilities to the country is concerned. Without asset currency, however, such expansion would have been impossible.