A weakness of the Canadian banking system has been the absence of outside inspection of the banks. The Minister of Finance may call for a report of condition of a bank at any time, and the Canadian Bankers' Association, of which all the chartered banks are members, has supervision over the circulation, but there has been no authority to investigate the operations and affairs of the banks. Each chartered bank has an "inspector" who makes periodically a thorough examination of all the branches of that bank, but there has been no outside au-thority to examine the head office itself. The bankers have contended that they are best qualified to examine themselves, but a feeling has been growing among the public that they should be subject to some kind of supervision. Consequently at the recent revision of the bank act, which went into effect July 1, 1913, provision was made for an annual audit by qualified auditors appointed by the stockholders from a panel selected by the general managers of the banks and approved by the Minister of Finance. These auditors are given the widest powers of access to the records and securities of the banks, and are required to make an annual report to the stockholders. The Minister of Finance may call upon the auditors or any other auditor whom he may select to make a special report at any time upon the affairs of any bank.

Despite the fact that the Canadian system has twenty-three separate and independent banks, without any central or governmental control or supervision, it possesses a remarkable degree of unity and solidarity. Over one-half of the entire banking business of the country is done by six banks. The Bankers' Association binds the banks together on legislative matters affecting their mutual interests. The managers of the six largest banks, each having several score of branches, are ever watchful to discourage speculative excesses. Through information supplied by the branch managers there is practical unanimity of opinion and policy among bankers as to business conditions and the general outlook. The extent to which the larger banks are interested in the trade and industry of all parts of the Dominion through their branches makes it possible to secure unity and solidarity in a time of common peril. The system though quite unlike any other noted in this chapter is admirably adapted to the needs of the country which it serves.

Reading References

Conant: History of Modern Banks of Issue, Chs. II-XII, XVI. Fiske: The Modern Bank, Chs. XXXIII-XXXVII, XL. Howard and Johnson: Money and Banking, Chs. XXIX, XXX.

Publications of National Monetary Commission:

Banking in Russia, Austria-Hungary, the Netherlands and Japan. Breckenridge: History of Banking in Canada.

Conant: The Banking System of Mexico.

Conant: The National Bank of Belgium.

Flux: The Swedish Banking System.

Johnson: The Canadian Banking System.

Landmann: The Swiss Banking Law.

Liesse: Evolution of Credit and Banks in France.

Miscellaneous Articles on German Banking.

Patron: The Bank of France in Relation to National and International Credit.

Philippovich: History of the Bank of England.

Riesser: The German Great Banks and their Concentration.

The Reichsbank: 1876-1900.

Withers and Palgrave: The English Banking System. Scott: Money and Banking, Chs. XI-XIV. White: Money and Banking, Bk. III, Ch. XVI.