'HE BANKING OF CANADA 
 
 as eonneeted with its 
 
 TRADE AND COMMERCE. 
 
 Hn Ebbress 
 
 CELIVEIIED BEFOME THE 
 
 oard of Trade of the City of Ottawa 
 
 31st MARCH, 1897, 
 
 I 
 
 By 
 
 GEORGE HAGUE, Esquire. 
 
 QENERAL MANAQEft 
 THE MERCHANTS BANK OF CANADA. . 
 
 Published by request <rf the Board. 
 
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THE BANKING OF CANADA 
 
 as connected with its 
 
 TRADE AND COMMERCE. 
 
 Hn Bbbress 
 
 DELIVERED BEFORE THE 
 
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 Board of Trade of the City of Ottawa 
 
 31st MARCH, 1897. 
 GEORGE HAGUE, Esquire. 
 
 GENERAL MANAGER 
 THE MERCHANTS BANK OF CANADA. 
 
 Published by request of the Board. 
 
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The Banking of Canada as connected with its 
 Trade and Commerce. 
 
 Mr. President, — ; : ' • 
 
 Sir:— ' ' 
 
 The last time I had the honor of addressing a Board ol Trade was 
 nearly thirty years ago, and, singular to say, it was on the same subject 
 that is to occupy our attention to-nifi;ht. 
 
 The Board of Trade was that of the City of Toronto, I being then 
 the General Manager of the Bank of Toronto. 
 
 But my address was not a mere academic one, as this may be con- 
 sidered to be— but v\'as directly concerned with legislation then betore 
 Parliament, which I and others conceived to be seriously prejudical to 
 the interests we represented, and still more prejudiced to the commercial 
 interests of Canada. And as that legislation was intimately connected 
 'with some fundamental questions affecting both banking and trade to 
 the present monient, I will refer to this matter somewhat at length — 
 previously, however, giving you a slight sketch of the conditions of 
 Banking in Canada up to that period. 
 
 Up to the time I have referred to, the condition of the Joint Stock 
 Banks of Canada might be described as follows :— 
 
 Nearly all the Banks in Canada were large, or comparatively large, 
 institutions, having numerous branches spread over all parts of the 
 country. Each Bank was chartered by a separate Act of Parliament, 
 which Acts, however, were the same in general substance, and were 
 largely founded upon similar Acts in force in the United States. 
 
 Banking legislation there was first initiated under an able and 
 well known financier of the last century, Alexander Hamilton, and 
 while many of its provisions indicated considerable financial knowledge, 
 others exhibited a remarkable want of acquaintance with the function 
 and scope of Joint Stock Banking. They indicated rather a "feeling 
 after " what was desirable, than an acquaintance with what had been 
 found to be sound and practicable Some of the most curious and 
 crude provisions of this legislation were adopted into our Banking 
 
 57760 
 
Charters, all indicating a great want ot acquaintance with Banking as 
 it was carried on in countries where it had attained the highest 
 development and was best understood, viz., England and Scotland., 
 
 Under this general framework of legislative enactment various 
 Banks had come into existence. But when we look at the mode in 
 which their daily business was carried on, the scope of their operations, 
 the manner in which they accommodated their customers, their mode 
 of making advances, and especially at the all important matter of open- 
 ing branches covering various districts of country — in all these respects, 
 which are fundamental, the Canadian Banks gradually parted company 
 with American ideas, and followed almost exactly those of Scotland or 
 England. And they had very good reason for it. ' 
 
 The Banking system of Scotland had been proved during many 
 generations to afford the greatest possible advantage to tiade and in- 
 dustry in a country resembling Canada in many respects ; and espec- 
 ially in having a large lural population in scattered districts, remote 
 from ordinary lines of communication, and where the establishment of 
 independent Banks would have been quite impossible. Thus, it had 
 come about, naturally, and experience proved it to be wise, that Banks of 
 considerable magnitude were established in the great -Scottish centres, 
 Edinburgh and Glasgow, which Banks had spread themselves by means 
 of branches throughout the country, to its very remotest parts, serving 
 the trade and commerce of Scotland, and developing it to a degree 
 superior to that by which trade and commerce had been served f.nd 
 developed in any country in the world — save and except some parts of 
 England and Ireland. 
 
 Now, knowing all this, the early merchants of Canada, who were 
 largely, as is well known, from Scotland, although submitting to have 
 their charters framed by lawyers and legislators on American models, 
 when it came to the rea' working of the Banks, could scarcely help 
 adopting Scotch methods and ideas. 
 
 So it resulted that instead of Canada having a multitude of little 
 Banks, with capitals of $20,000 to $40,000, with a few of $100,000 to 
 $200,000 in large centres, a few large establishments were located in 
 the chief cities, and branches of them planted in the smaller towns. 
 
 The first of these was the Bank of Montreal, founded in 181 7, 
 then came the Quebec Bank— after that, at a long interval, the Bank of 
 British North America (at one time the most important of them all). 
 Then (but I am not speaking chronologically) we have had the 
 
Bank of Upper Canada, the Commercial Rank of Kingston, and, still 
 later, the Bank of Toronto, the Ontario Bank, the Canadian Bank of 
 ('omnierce, the Molsons Hank and others *of a later dale. All these 
 Banks were organized on the principle of large paid-up capital, and all 
 spread themselves over large districts of country, even to remote places 
 where business could be done, competing, in fact, with one another for 
 business, and thus making it certain that the commercial men and 
 manufacturers of the time could obtain from one or other of them the 
 facilities to carry on their business. 
 
 With Confederation also came to be included the Bank of Nova 
 Scotia, the Merchants Bank cf Halifax, the Bank of New Brunswick 
 and others, all of which Banks, with the exception of the last, (for the 
 Bank of New Brunswick never had any branches) served large tracts of 
 country, and spread themselves over the Maritime Provinces to their 
 remotest bounds. <,.-.••. 
 
 The old Banque du Peuplc of Montreal (now defunct) was on a 
 different foundation altogether, and at the time spoken of had never 
 gone beyond the limits of its head office. Neither, generally speaking, 
 up to that time, had the other French Hanks, such as the Banque 
 Nationale of Quebec and others . 
 
 All these Banks were allowed to issue circulation to the amount of 
 their capital, and also to the amount of the specie in their vaults. 
 
 The last was not a wise provision, and it has since been abrogated. 
 
 The Canadian Banks had thus come to differ very widely from the 
 Banks of the United States. Having a large capital they could take up 
 large accounts and carry them on through a whole year. 
 
 Customers of Banks in the States doing a large business were con- 
 stantly obliged (in fact, have been ever since) to seek accommodation 
 from a number of Banks, and also to raise money by loans in New 
 York, a very bad system in many ways. > ' 
 
 American Banks were also as a rule excessively timid about the 
 operations of foreign trade. The larger number of American Banks, 
 even in the seaboard cities, never dealt in sterling exchange, and left it 
 entirely to a class of dealers in foreign bills, like the house of Brown 
 Brothers & Co , of New York. The Canadian Banks, on the other 
 hand, all had their correspondents in Europe, and both bought and sold 
 bills on England all the year round. 
 
 This it was that led to the establishment in New York of the 
 agencies of the Bank of Montreal, Bank of British North America, and 
 
afterwards the Merchants Bank of Canada and the Bank of Commerce. 
 They had always been closely connected with Britain, had constantly 
 been in the habit of dealing in British bills in their offices in Canada, 
 and were naturally led to establish themselves for the same purpose in a 
 great centre like New York. And thus it has come about that a very 
 large amount of the bills representing the vast exports of the United 
 States are now negotiated by Canadian bankers, who have their cus- 
 tomers and connections all over the Southern and Western States, a fact 
 which will explain what I once said in this City — that in a business tour 
 through the Souih I seemed just as nr.uch at home in the business 
 streets of Charleston, Savannah, New Orleans, or Memphis as in 
 Montreal or Toronto. As to Liverpool, Glasgow, and London, these 
 have long been familiar places to most Canadian bankers. 
 
 Most of the characteristics that I have specified as prevailing up to 
 thirty years ago have been preserved up to this day, and have been 
 developed, extended and improved as opportunities offered. 
 
 And, although one ot the number, I take leave to say that there has 
 
 ;' never been in the world a more enterprising set of bankers than those 
 
 who have had to do the business of Canada, and a body of men more 
 
 : ready to lay themselves out and take risks to assist in developing the 
 
 , commerce and manufactures of the country. In fact it is their enter- 
 
 • prise and ambition to spread out mto new fields, and to undertake new 
 
 operations, their readiness to assist men of similar enterprising character 
 
 that has led the Banks of Canada into many of the disasters they have 
 
 suffered — disasters which have, in some instances, resulted in the 
 
 absolute wreck and ruin of the Bank, and in others, to enormous cutting 
 
 down of capital and the curtailment of dividends, a fact sometimes lost 
 
 sight of by those who are speaking of the average profit made by the Banks 
 
 of Canada as a whole. But the banks now existing have learned lessons 
 
 of practical wisdom from all this, and are never likely to forget them. 
 
 Shortly before the period I speak of (about 30 years ago) the Gov- 
 ernment, under the lead of Mr. Alex. T. Gait, their Finance Minister, 
 had endeavored to act upon a theory which he had always entertained, 
 that the circulation of the country should be wholly issued by the Gov- 
 ernment. He brought in a measure for this purpose. Nearly all the 
 Banks viewed this with serious alarm, for it would have involved such 
 an enormous curtailment of their power to accommodate the commerce 
 of the country, that untold disasters would undoubtedly have resulted. 
 Foreseeing this, I came to Ottawa and spent much time in conference 
 with Mr. Gait, pointing out these consequences to him, and suggesting 
 
7 
 
 various ways in which the circulating notes of the Banks could be better 
 secured than they were, while leaving us free to accommodate our tra- 
 ding customers. . ♦ 
 
 Others made similar representations, the effect of which was that 
 the bill which was introduced was of an optional and not a compulsory 
 character. 
 
 This brings us down to the period of my address to the Toronto 
 Board of Trade. 
 
 It was in the year 1869 that the (Jovernment proposed to assimi- 
 late the system of circulation in Canada to that of the United States, by 
 requiring that all the circulating bills issued by the Banks (which, of 
 necessity, carried with it that all the bills held in their coffers as well) 
 should be secured by Government debentures. ' " 
 
 i This proposal, while strenuously advocated by some Banks, «vas 
 just as vigorously resisted by others, amongst which the Bank of To- 
 ronto was prominent, so was the Bank of New Brunswick, and the 
 Banks of the Maritime Provinces generally. I can speak with some 
 authority as to what took place among the opposing Banks, for I acted 
 as their Secretary for several years. 
 
 The principal grounds on which we rested our opposition were the 
 following : 
 
 While we did not deny the importance of having the circulating 
 notes of the country made safe, (for we were all interested in that) we 
 were convinced that the proposed means for insuring safety would dam- 
 age the trade of the country to an incalculable degree. It would have 
 necessitated a curtailment of Bank discounts and advances to the ex- 
 tent of about one-third, or equivalent to above sixty millioos at present, 
 a measure which we contended could not possibly be carried out with- 
 out inflicting serious loss and disaster upon the business community, the 
 loss and disaster falling especially upon the Province of Ontario, the 
 rural parts of the Province of Quebec, and the whole of the Maritime 
 Provinces. 
 
 We contended, also, that the passage of such a measure would ne- 
 cessitate the closing of many of the smaller branches of the Banks in 
 rural districts, where profits were principally derived from circulation. 
 It would no longer pay the Banks to carry them on, and so would drive 
 the whole business of these districts into the hands of private money 
 lenders. 
 
 We further pointed out that this system of circulation would 
 
inevitably have the effect of producing great fluctuations in the rates 
 for money, with much higher rates in country districts than in the 
 cities, and that a periodical scarcity would inevitably take place at the 
 time when money is most wanted, viz. : when the crops are being 
 moved and lumber and timber produced. " • 
 
 ■ ' These arguments were duly presented in the Press and to Commit- 
 tees of Parliament ; and the substance of them formed the staple of my 
 address to the Toronto Board of Trade. - 
 
 The American system at that time was in the highest possible 
 'favor, and extolled as the acme of financial wisdom. 
 
 Some of us, even then, had to remind the people of Canada that 
 the notes so secured were practically irredeemable, that they were only 
 worth some 70 cents on the dollar, and '.^at the violent fluctuations in 
 the" rates for money there, which have since become so common, had 
 already begun to develop themselves. 
 
 - The battle raged in our Parliament for more than one session, and 
 created much excitement in the country, for the Bill was a Government 
 measure and went to a second reading, the Government having a large 
 majority. Sir John Macdonald being Premier, with Sir George Cartier as 
 his colleague, and Mr. Rose, afterwards Sir John Rose, Finance 
 Minister. 
 
 But a change in the position of Finance Minister took place. Sir 
 Francis Hincks assumed the reins, and after hearing and weighing all 
 that was said on both sides, he finally concluded to accept our view 
 of the position, and allow the Banks to retain their circulation, and this 
 mainly on the ground that thereby they would be enabled to give larger 
 accommodation to the Trade and Commerce of the country, and 
 especially that such assistance could naturally and readily expand with 
 the country's growth, an all-important matter. ■ ' • ' 
 
 '■■\\ The only stipulation that Sir Francis made was, that the Banks 
 should give up the circulation of one and two dollar notes. This they 
 readily agreed to, as these notes formed a mere insignificant fraction of 
 their circulation, and could be given up without any curtailment of the 
 power to accommodate their customers. 
 
 Safeguards were then introduced which have been since extended, 
 especially the great safeguard of making the notes a first lien on all the 
 assets of the Banks, at the instance and by the proposal of the Banks 
 themselves. Ana the result is, that by our system of Bank circulation 
 the whole movement of the crops in the Fall and Winter, and the vast 
 
movement of logs, lumber, and timber from the forest to the seaboard or 
 the consumer in the United States, upon which two movements the 
 whole machinery of Canadian trade depends, can be accomplished 
 without the slightest disturbance to the general business of the country. 
 
 Instead of a severe contraction, periodical scarcity,* and high rates 
 for money, during every Fall and Winter, as would inevitably have been 
 the case, the Banks pursue to this day, as you know, an uninterrupted 
 course ot loaning and discounting, only governed by the ordinary 
 exigencies of the money market from year to year. 
 
 And instead of the rural districts of the country being left without 
 the accommodation of joint stock institutions, it is a well known fact 
 that the Banks have ever since found it their interest to push out their 
 system of branches into the remotest parts of the country ; so that there 
 is hardly a district where trade is carried on at alL that has not the 
 services of some Banking institution at its command. And instead of 
 rates in remote parts of the country being very largely in excess of what 
 obtains in monetary centres, the difference between the rates in centres 
 and small country towns is only a difference of one or two per cent, 
 such as is rendered inevitable by the much greater expense of carrying 
 on business in a small place as compared with a large one. These are 
 notorious facts. 
 
 Now, in these days, we are not so fond, as many people in Canada 
 once were, of extolling everything in the United States to our own dis- 
 paragement. But even now, comparisons are sometimes made, for 
 which reason I take the liberty to give you a few present day facts, to 
 show how much reason we in Canada have to be satisfied with our 
 Banking system. 
 
 ' •' COMPARISON WITH THE STATES. ' > •' 
 
 The system of circulation in the United States, which is partly of 
 Government notes, and partly of Bank notes secured by Government 
 bonds, results in over accumulations of money in New York, at one 
 time with a corresponding draining away of money from the centre to 
 the interior of the country at another. Yet, as I will show you, there 
 are vast and populous regions in the States to which this supply of 
 money never penetrates at all. 
 
 The Ranks in New York, Boston, and Chicago, unlike those of 
 Canada, have no branches outside of themselves, and no connection 
 whatever with Banks of the interior, beyond that of being their corres- 
 pondents, 
 
:^'> . ■ • lo , ;'•• "■■-.'■''■ ■■ .-^' .■:' ■' 
 
 Now, when the crops of grain in the West, of cotton in the South, 
 and of lumber in the North, are unusually heavy, a larger amount of 
 currency is required for the purpose of moving them than actually exists. 
 And there is no power to create more on an emergency. The Banks 
 have not a store of their own notes laid by for this emergency, as the 
 Canadian Banks have, with power, in the aggregate, to issue a far 
 greater amount if the exigencies of trade call for it. . :'; 
 
 There is so much, and no more, in the country, and a large crop 
 always means strong comi)etitive demand for money, and in many places 
 great scarcity and very high rates. The Federal Government cannot pre- 
 tend to lend money to all the Banks, or to all the traders ot the country, 
 when there is an unusually large crop to be moved. Indeed, but for 
 the assistance that we poor Canaaians have afforded to American mer- 
 chants at such times, through branches in Chicago, and connections in 
 the North West, (never to the detriment of our own borrowers) no one 
 can tell what straits that country would have been put to, or what rates 
 for money would have prevailed during certain years. ' ■•-• -- 
 
 , •: There is no such thing there as Banks pushing out their circulation 
 - — Banks being anxious to accommodate customers for the sake of circu- 
 lation, or having it in their power to grant loans over wide rural districts 
 in the shape of circulation. Such things are utterly unknown in the 
 States. 
 
 And over vast districts of the rural regions of the United States a 
 scarcity of money exists at times, that we in Canada absolutely know 
 nothing about, and can hardly form a conception of. 
 
 About a year ago, I read in the London Times a communication 
 from a correspondent in the far West, describing the extraordinary straits 
 to which the people of the interior of nearly all the Western States were 
 reduced by the almost entire absence of circulating notes ; or, in fact, of 
 money in any shape. They had their land, and many of them had 
 their produce, but in scores of places, where, under our Canadian 
 system, there would have been a branch Bank, there was no Bank at 
 all. For a National Bank would not pay, neither would a State Bank. 
 Nothing existed in the shape of Banks but the offices of money-lenders 
 and private bankers, whose rates were about double those of a Bank, 
 and whose supplies of money were extremely small. 
 
 I could hardly believe all that this writer said. The whole affair 
 seemed one sided and exaggerated. But these views were confirmed 
 quite recently in a very striking and unexpected manner. 
 
: . i. " II - ■ ■ ■ ;.'.. 
 
 The last time I was in New York, about a month ago, a meeting was 
 going on in the Chamber of Commerce, and the principal subject taken 
 up was that of the currency, practically the supply of circulating notes 
 for the country. 
 
 Mr. Wm. E. Dodge (a gentleman whom many ot you, I dare say, 
 know) a merchant of the highest reputation, a worthy son of a worthy 
 father, then made some statements as to what he had seen during a 
 recent extended visit west, as a member of a Committee of Enquiry into 
 the subject. He said : — *■ - 
 
 " I found that there were great sect'ons of the southern and western country 
 " where there was absolutely no money at all ; where the most primitive forms of 
 " barter obtained, and where everything was most disorganized. One gentleman 
 " told me that in his county, which was quite a rich agricultural county, by some 
 " happy accident a fifty dollar bank bill had come down into the county, and that 
 " he had taken a horse and buggy and spent four days in visiting all the towns in the 
 " county, striving to get it changed into smaller bills, but had been unable to do so, 
 " There were Senators who told me that their constituents never saw a dollar of 
 " money from the beginning of the year to the end. The local storekeepers received 
 " their pay in kind. In fact everything was drifting back to the old times before 
 " money was invented. And this was not in one section of the country only, but in 
 *• large sections." 
 
 He went on to say : — '" • " 
 
 '* We can quite easily understand that where there is not sufficient money to 
 ** establish a National Bank under the very onerous laws at present in force, that 
 " there is nothing else to take their place." 
 
 Thus far Mr. Dodge ; and bear in mind this was not the condition 
 50 years ago, or 100 years ago, but the condition this very fall and 
 winter. 
 
 Now, gentlemen, this is precisely what would have been the condi- 
 tion of Canada at this very day, (and I will particularize the remote parts 
 of the Ottawa Valley, Ontario, and the North West) if we had had a 
 system, where, as it is nobody's business or interest to increase the 
 amount of bills in circulation, there are in many places no bills in circu- 
 lation at all, and people have to go without money altogether. • ; v ?■„ 
 
 As it is, I venture to say that in the remotest lumber camp, right 
 up the Kippewa and Temiscamingue, and all along the shores of the 
 Nipissing and Georgian Bay, away up the shores of Lake Superior, 
 bank bills having their credit centre in Montreal and Ottawa are to be 
 found in abundance. 
 
 As -to the North West, I know it to be a fact, that the competi- 
 tion to supply the people with money has sometimes been carried by the 
 
•'■'■■-■• It 
 
 Banks beyond the limits of safety and prudence. It is their interest to 
 spread their bills out, and these bills are spread out all over the 
 country, the bills being absolutely safe to those who take them, though 
 I am sorry to say that the loans of which these notes are the medium 
 turn out sometimes to be anything but safe. 
 
 In the promotion of the settlement and trade of the vast regions of 
 the North West, the Banks of Canada have lost millions of dollars. But 
 the bills they have supplied have been as safe a currency as if they had 
 been Bank of England notes. * . 
 
 Let me here say that though I am freely criticizing the American 
 banking system^ I have the highest respect for the large body of intelli- 
 gent men who control the operations of the Banks there. With a few 
 exceptions, and these connected with the very small class of rural 
 Bai.ks, ihey understand their business well, they discuss it in their con- 
 ventions and in their financial journals intelligently. Having addressed 
 their annual gatherings repeatedly, on various subjects, I have always 
 been received with the utmost courtesy, and any suggestions made (if I 
 did make any) have been welcomed wirh the utmost respect and atten- 
 tion. And my friend, Mr. Walker, of the Bank of Commerce, can say 
 the same thing. 
 
 It is the American banking legislation that is at fault, and particu- 
 larly their system of circulating notes. 
 
 Unfortunately, bankers have not been called in to consult and 
 advise American legislators on financial subjects as a rule, or many evils 
 under which the American public suffer severely would have been 
 remedied long ago. American bankers know as well as we do that 
 their system of circulation is defective, and that the defects of this 
 system harass and restrict them, and trade and commerce with them, in 
 many ways, to the disadvantage of the whole people. 
 
 But even the National Banks of small places are, some of them 
 very curious little affairs. You know very well that no matter how 
 bmall -an office any of our Canadian Banks may have, say, in the small 
 towns of the Ottawa Valley, or remote 'parts of Ontario, or the North 
 West, if there is an office of a Bank at all, the whole credit and power 
 of the parent Bank is there, and the whole of its resources are at the 
 back of the persons who represent the Bank at that spot. 
 
 The depositors in that little country Bank know that on any 
 day that they choose to ask for their money, either in whole or in 
 part, that the demand will be satisfied. And the traders and manufact 
 
Lirers of the place also know that if they have made arrangements with a 
 Bank for a regular supply of money to carry on their business, such a 
 supply of money, at that spot, can be depended on. For it is part of the 
 daily care of a general manager, (and a heavy care it is, I assure you,) 
 to see that this is the case at every point, no matter how far off, where 
 his Bank carries on business. This matter of a supply of money in 
 a multitude of places works so smoothly, almost automatically, that few 
 can realize what carefully considered arrangements, and what constant 
 watching are needed to accomplish it. 
 
 But let me read you a few words from the address of a Banker 
 from Georgia, at the meeting of the American Bankers Association 
 last September. He is boasting that since the close of the war there 
 has not been a failure of a country bank in the State of Georgia — 
 certainly, a very creditable thing to say. But he goes on in the follow- 
 ing strain, and I think it will amuse yo;i to listen to him as much it 
 amused me. He says : — 
 
 " Occasionally a young man writes his name over a grocery store and calls it a 
 " Bank," (he could not do it in Canada) *'and starts with a few dollars made by the 
 " sweat of some other man's brow. This is ihe sort of private Banking institution 
 '* that goes under. But you take a Chartered Bank, a country Bank with a Board 
 " of Directors, with a moderate capital of $25,000 and it is the safest Bank we have 
 " in the country, because it is in an isolated community, where you can control all 
 " the depositors, and if a man comes and wants his money you can tell him to just go 
 " home ; that you will attend to it for him." 
 
 Well, if the Banks can tell their depositors to " go home " when 
 they want their money, instead of paying it to them, as we do, and that 
 they will " attend to it '' for them — (some day) that is a style of bank- 
 ing that may do very well in Georgia, but it would never do in Canada. 
 Canadian people would never stand it. Certainly a Bank need never 
 fail if, it can tell its customers to " go home "' when they ask for their 
 money, and if the law will let them. However, this gentleman seemed 
 to think it all right — and if the people of Georgia are satisfied with it, 
 it is none of our business. But that is not the kind of Banking that 
 our country customers want. 
 
 But now, are not the merchants and men of business of Canada at 
 a disadvantage as compared with those in the United States in the 
 matter of the rates of discount? A fair question, and I will answer it. 
 I have said to you — and it is perfectly provable — that one effect of our 
 system is, that rates are free from extreme fluctuations, and, also, that 
 as between city, town and country, the rates do not vary more than 
 
■^ 
 
 -,■< .' 
 
 one or two per cent. But now, if these unvarying rates are on a higher 
 scale than those prevailing to the south of us, there may be some 
 reason for finding fault. I am, therefore, going to give ycu the exact 
 facts. 
 
 I have before me answers to questions I have recently put to 
 parties in a position to know, viz : the parties who deal in such 
 matters, with regard to the rate of interest charged to the bt^t commer 
 cial borrowers in various parts of the country to the south of us during 
 the last five years. . , -. • - V '^-■■^■v* >. ^ 
 
 V In New York, which is, as you know, the great monetary centre of 
 the Continent, to which, naturally, all the spare money of the country 
 flows at one time, and from which it drains out at another, the fluctua 
 tions are always the greatest. , ^,, 
 
 The rates of the open market in 1892 were from 3)^ to 7%. ' 
 
 In 1893 — 5 to 15%, and for months together, new money not to be 
 had at any price. 
 
 In 1894 — 3 to 7 /. ■• ■ 
 
 In 1895— 2-}4 to 8%. ^ ^ .'■■•.-■ ■ 
 
 ;. In 1896— 31^^ to 10%. ^ •. . .', ■■^;. .; V 
 
 The rates in Boston followed very nearly those in New York, 
 varying from 3 to 7%, 3 to 12 one year with another. And in 1893 for 
 months together new money was hardly to be had at any price, and 
 those who did get it had to pay from 15 to 20 p. c. 
 
 In that year we had ourselves, and so had other Banks in Canada, 
 the most urgent entreaties to lend money to manufacturers in New 
 England, and New York State, for which they were willing to pay 
 almost any rate we chose to ask. Our own Bank did not think it 
 prudent to send any Canadian money away, for we concluded that the 
 same scarcity might in turn come to us, and our supplies were, of 
 course, primarily pledged to Canadians. ■ , . ,. . .' r -. ';^- .. i 
 
 The conditions in Boston prevail generally in all the large cities of 
 New England, But in the smaller cities and towns rates are generally 
 more steady, and two or three per cent, higher than the average between 
 the highest and the lowest. 
 
 In Western New York the fluctuations were not so great. 
 
 In Buffalo they varied from 6 to 8, with a preponderance of the 
 larger amount during a good part of the last five years. The same has] 
 been the case in Cleveland, Ohio, the rates never going below 6, o 
 above 8. 
 
 ! 
 
I 
 
 15 
 
 In Chicago the open market rates in 1892 were 4 to 8. 
 
 In 1893 — 5 to 7, with a period when rates of 15 to 20 p. c. 
 prevailed, and money to most people was not to be had at any price. 
 
 In 1894-95—4 to 7. 
 
 In 1896—5 to 7. ■ . • , . •/ 
 
 This, was remember, in the great monetary centre of the West, 
 and where a much higher class of security can be obtained than is gener- 
 ally offered here. But in Chicago, as in New York, where merchants 
 make arrangements for supplies of money all the year round, supplies 
 they can depend on, they are very willing to pay a steady 6 p. c. . 
 
 Northwest-wards in Minneapolis, the lates were: 
 
 In 1892 — 6 to 8 p c 
 
 In 1893 — 6 to 8, and higher during scarcity; with the same im- 
 possibility of getting money before spoken of, at any price. 
 
 In 1894—5 to 8 
 
 In 1895 — 4 to 8 . 
 
 In 1896—5 to 8 
 
 The higher rates prevailing for the longer periods, beginning with 
 the Fall and continuing till Spring. 
 
 Duluth was from 1892 and '93 7 to 10 p. c. and upwards, 1894, 5 
 and 1896, 6 to 8 p. c, at which it has continued ever since. 
 
 These rates I know to be true, for we have lent ourselves in the 
 same district at various times more than a million of money in the 
 aggregate, on the beot security, at the high rates quoted, all of which 
 loans were promptly paid. This, of course, only being the spare money 
 which our Canadian customers did not want. 
 
 The rates in places more remote, such as Kansas City, the largest 
 monetary centre of the South West, were : ' / 
 
 In i892-'94 7 to 8 p. c. and much more in part of '93. •' , 
 
 In i895-'6— 6 to 8 .. 
 
 In Council Bluffs, Iowa, the rates have been, in 1892 — 6 to 8 p. c. 
 
 In 1893 — 6 to 10 p. c. and upwards. < 
 
 In 1894-95—6 to 8. 
 
 In 1896 — 6 to 10. 
 
 Coming to the smaller class of commercial centres and towns, we 
 have rates in South Dakota of 6 to 10 p. c. from 1892 to 1896. North 
 Dakota steadily about 9 to 12, where it remains up to the present. 
 
 Now, taking the Pacific Coast, the large monetary centre of San 
 Francisco, a city whose wealth and importance you are all acquainted 
 
 >f 
 
 )f 
 y 
 
 n 
 
with, in 1892-93 paid 7 to 8 p. c. witii, however, violent fluctuations 
 for some months when rates ruled up to 15 and 20 p. c. Since then 
 the rates have been steadily 6 to 8 p. c. 
 
 The interior towns in the State of California have had rates of 9 to 
 10 p. c. steadily for lii? last five years, subject at times to the impossi- 
 bility of getting new money at any price . / - 
 
 '"' ' Portland, Oregon, a large and important city with double the popu- 
 lation of Ottawa, had rates in 1892 of 8 to 10 p. c. 
 
 :,. In 1893 — 7 to 10 p. c. and very much higher rates for a time, 
 
 In 1894 and since then of 7 to 9 p, c. 
 
 The busy and enterprising towns on the Pacific Coast, such as 
 Tacoma and Seattle, which do a stirring business in lumber and other 
 commodities along the seaboard, have had rates ruling steadily at 10 to 
 13 p, c. monotonously during the last five years. 
 
 During all this time, corresponding Canadian towns of the same 
 size, and in the same kind of district, have been obtaining money at 
 rates from 2 to 3 per cent, lower. For example, North Dakota, with 
 its rate of 9 to 12 per cent., may be contrasted with Manitoba, closely 
 adjoining, with its rates of 6 to 8 per cent. , :. ■ - -wi ;• ? 
 
 ; • Oregon and Washington, with their rate of 8 to 12 per cent, could 
 similarly be contrasted with our British Columbia rates of 6 to 8 per 
 cent. 
 
 The rates in the South have not fluctuated to the extent that they 
 have in great commercial centres, and have ranged from 7 to 8 per 
 cent. But this is the rate at which business has been done in Savannah, 
 Charleston, and Galveston for years. In New Orleans the rate has 
 been 6 to 8 per cent. In the smaller towns in the interior the rates 
 were steadily at 8 to 10 and 10 to 12 per cent. ....... 
 
 These last were the rates charged by such Banks as those of our 
 friend from Georgia, who could tell his depositors to " go home " when 
 they asked for their own. ■ > ... , . •.;^- / . >ir ", 
 
 I have now gone over the ground pretty thoroughly, and demon 
 strated that in the same circumstances — in towns and places of the 
 same population, with the same kind of trade to carry on, the rates 
 which Canadians have to pay are, on an average, decidedly lower than 
 in corresponding places in the United States. 
 
 It is to no purpose whatever to quote newspaper rates of NewBu 
 York, and compare with the rates, for example, of Montreal-^'for as lip 
 have shown you, New York being a vast reservoir for all the superfluou«vv 
 
money of the continent, casual discounts may be had there for months 
 together by firms of established wealth and credit at very cheap rates. 
 Hut then, on the other hand, when this supply of money drains off, as 
 it periodically does, those who have not permanent arrangements, but 
 depend on the casual supply of the market, have to pay rates as far 
 above Canadian ones as the others were below. • 
 
 And I may tell you this, which I know for a fact in our own ex- 
 perience, that the merchants of New York or Boston, whose business 
 requires them to make arrangements that will last all the year around, 
 arrangements that can be steadily depended upon — such as these are 
 never charged the highest rates, nor do they ever pay the lowest ones. 
 There is a steady average all the year round of 4J to 6 per cent — 
 according to the quality of the account. But I may tell you that every 
 customer who gets regular discounts, is expected to, and does, keep a 
 considerable balance at his credit without interest — such balance being 
 from 20 to 30 per cent, of his advances. How this tells upon the rate 
 you can easily calculate. • • •. '; ■,"■;■ -^z : ,, ^^ ■ 
 
 We have mercantile customers in New York ourselves, and they 
 are well satisfied to pay a steady rate in consideration of their being 
 able to get their supplies when required, no matter what trouble out- 
 siders may have in financing over stringent times, paying 10 to 15 per 
 cent, for moiiths together, while our customers pursue the even tenor of 
 their way, paying 5 to 6 per cent. 
 
 The truth is, and this is at the very root of the matter, that the 
 rate to be paid for the use of money is regulated by a higher law than 
 any law of Parliament or Congress, viz. : the fundamental law of supply 
 anddemand. ' j ' .:- . v: •';A\^:;. V • ^'v > > ■'' 
 
 So it is in Canada in its various parts. So it is in the various dis- 
 tricts of the United States, and so it is in England, Scotland and Ire- 
 land, always bearing in mind that the supply of money is not the same 
 over a whole district of country, except as it may be promoted by just 
 such arrangements as we have in Canada, which tend to equalize the 
 [supply over large districts, and to keep rates steady. 
 
 Where these do not exist, the great disparities that I have referred 
 to must inevitably prevail. 
 
 Now, what have been the rates for loans of money in Canada 
 
 [under the operation of the law of supply and demand for some years 
 
 past ? When the supply of money in the country was as limited as it 
 
 Iwas thirty or forty years ago, the ordinary Bank rates for commercial 
 
fi 
 
 transactions were from 8 to lo per cent. And this was cheerfully paid, 
 for all the arrangements of trade were in harmony with it. This was 
 the rate at which mortgages were negotiated, too. The rate, as you 
 are well aware, has been steadily bearing down — the lo per cent, became 
 9, and the 9 became 8, and for the better class of borrowers the 8 
 became 7, and the 7 became 6, and there it has remained for several 
 years, for the demand has kept pace with the supply. 
 
 The rates paid by the Banks and by the Government for deposits 
 have fluctuated in the same style, just as the rates fluctuated for money 
 the Government had to borrow in England. I can remember a time 
 when the Government could not borrow a pound in England at less 
 than 6 per cent., and, indeed, when they could not borrow a pound in 
 addition o what they had borrowed, at any price, and when a Finance 
 Minister received snubbing letters from Glyn & Co., such as would 
 make any of you angry if you received anything like them from a banker 
 here. • Such was the condition of Canada forty years ago. 
 
 We were very poor in Canada in those days. Money was very 
 scarce, and we were accorded corresponding treatment by our London 
 bankers, But our condition forty years ago, poor as we were, was a 
 great advance upon the condition of thirty years before. At the first 
 annual meeting of the Bank of Toronto in 1857 I well remember the 
 Hon. Henry John Boulpn stating as a fact of his own knowledge 
 that when an attempt was made to establish the Bank of Upper 
 Canada, the amount fixed as the minimum to be paid up 
 before commencing business was the modest sum of ten thousand 
 pounds, Halifax currency, or forty thousand dollars. The amount 
 to be subscribed was obtained readily enough, but when actual money 
 had to be paid in, so poor was Canada at the time, that in the whole 
 province of Ontario it was impossible to raise this forty thousand dol 
 lars, and the projectors were about to abandon the enterprise in despair. 
 The intervention of the Government was then sought, and the last ten 
 thousand dollars obtained from the Military Chest, so enabling the 
 Bank to commence business. This was no idle story, but a plain 
 matter of fact statement, made by a gentleman who was there at the time 
 and knew all about it. 
 
 When the system of Government Savings Banks was first instituted 
 the rate allowed to depositors was 5 p c, which was less than the Govern- 
 ment could borrow in England for. I think I am not mistaken in this. 
 Bank rates for deposits, naturally, had to be adjusted in harmony with 
 
 
V 
 
 this. When the rates for Canadian loans in England came down, as a 
 consequence of the greatly improved credit of Canada, naturally the 
 rate paid by the Government came down too,first to 4>^ p. c, then to 4, 
 until now it stands at 3^, which is, in my humble opinion, more than 
 the Government need to pay, for the very good reason that it is more 
 instead of less than the Government can borrow for in England And 
 bear in mind that every additional half per cent, costs the country over 
 $200,000 a year. (Since this address was delivered, the Government 
 have advertised that the rate will shortly be reduced to three.) 
 
 The Banks, of course, have reduced their rates also. As the lending 
 rate came down, the deposit rate, of course, came down too, but not 
 always in the same proportion. 
 
 The rate paid by the Hanks for deposits is, in my humble judg- 
 ment, kept up to an artificial level, and this inevitably reacts upon the 
 trading community. • ; 
 
 If it be pleaded that the poor are entitled to consideration, I am 
 not aware that the people who, in the aggregate are worth nearly fifty 
 millions of money, can be called the " poor " of Canada. 
 
 I am not here, bear in mind, to decry thrift. I have said too much 
 about the importance of thrift in various places, and have learned to 
 practice it myself in early days, under the spur of the necessity for rigid 
 economy. It is not for me, therefore, to be decrying its importance at 
 this time of day. 
 
 All I say is that we should proceed on natural, and not artificial 
 lines, and allow those who have saved money a fair rate of interest for 
 it. But I don't see that any man has a right to expect more, especially 
 at the expense of the hard-working business men of the country. 
 
 Now, a few words in conclusion to illustrate the exact connection 
 between the trade and commerce of the country and its banking. 
 
 The fundamental mistake with theorists on the subject of circula- 
 tion, both in England and the United States, is, that they dissociate 
 it entirely from the movements and requirements of trade. Sir Robert 
 Peel's attempted legislation of 50 years ago ignored it, which was the 
 reason that Scotland and the country Banks of England were determined 
 to have his scheme modified. And they got it modified. 
 
 The framers of the National Bank system of the United States 
 ignored it, for their great thought was to get money to carry on the war. 
 
 And our legislators of 1869 ignored it too. And when they 
 attempted to bind the Banks in swaddling clothes, we strenuously 
 
90 
 
 resisted, knowing well that it was not so much the Banks that would be 
 bound as the traders and merchants of the country. 
 
 Having shown how we succeeded in preventing commerce being 
 clogged and impeded by a bad circulating system, I will now — in few 
 words — tell yow what the nature and scope of the connection between 
 Banking and the Trade of ihe country is. 
 
 Joint Stock Hanks are corporations organized for the purpose of 
 doing a remunerative busmess for their shareholders, who expect divi- 
 dends. In other words, Banks are expected to make profits. The only 
 way in which Banks can make profits is by lending the money at their 
 command, and also by rendering service in the way of transmitting 
 money from one point to another in Canada and other parts of the world. 
 
 Now, with regard to lending money, they are subject to stringent 
 regulations forbidding ihem altogether to lend money in certain directions- 
 These prohibitions we find no fault with. They are founded upon ex- 
 perience. It has been demonstrated by a long course of costly and 
 sometimes ruinous experience, that the only proper sphere of a Banker 
 in lending money is with the trading and commercial classes of the 
 country, and the only proper use which can be made of money thus 
 borrowed from a Bank is in furtherance of the trade and commerce of 
 the country, including, of course, manufactures and production in all 
 forms. This with few exceptions. 
 
 There is another class of corporations who lend money and are 
 allowed to do what Banks are forbidden to do. These render very 
 great service to the country by lending money on fixed property, viz., 
 lands, iarms, buildings, or factories. If then, a person comes to one of 
 your Banking offices in Ottawa and says : •' I have got a fine row of 
 houses, or stores. I want to build some more. Lend me $10,000 and 
 I will give you a mortgage on the houses I have got." The Banker 
 will be obliged to say " no " to that or any similar proposal — no matter 
 from whom it may come. 
 
 On the contrary, let a man come to a Banker here and say " I am 
 worth so much money. I have built a saw mill, I have got so many 
 miles of limits, all my capital is absorbed in these costly prerequisites. 
 I want now to commence operations. I purpose taking out 30,000,000 
 feet of logs. To do this I must purchase supplies. I must pay wages 
 for many months together. I must operate my mill for months before 
 I can make a single thing that I can sell. I shall, therefore, need a 
 large amount of money. Will you lend it me ? 
 
3T 
 
 The Hanker can receive a customer of that kind, and can deal with 
 him. This is what the law allows him to do. This is what his corpor- 
 ation is organized for. Of course the Hanker considers whether the 
 loan will be safe, what security can be given for it, whether the party 
 understands his business, whether his mill is a good one and well 
 situated, whether the limits are good limits, easily supplied and the 
 logs easily got out, and if they will produce good timber and deals. 
 
 All these things a 1! inker (and in speaking of a Hanker bear in 
 mind I include a Hoard of Directors) has to discuss, and does discuss, 
 and must be able to discuss, if he is to carry on his business with 
 intelligence. 
 
 These preliminaries arranged, what is called a Bank Credit is 
 established. The Bank agrees to lend so many thousands of dollars to 
 carry on the business. And if the business is in your own city, you will 
 bye and bye see the fruit of it in great stacks of lumber piled up and 
 preparing for market. In fact, 'you may see such to-day. 
 
 But the Hanker does far more than this. He will assist the 
 manufacturer to send his lumber away to market, and although that 
 lumber may not be paid for by the purchaser for months, the Hank 
 will furnish cash to the lumberer on the mere written promise of pay, of 
 people who live hundreds of miles off, in foreign cities, or in cities on 
 the other side of the Atlantic. 
 
 The transaction is never out of the H.inks' books until the whole 
 reaches its destination, and is finally settled for by people in the 
 United States, or Liverpool, or Glasgow, or London. To enable 
 the Hanker to do this he must have his correspondents in all these 
 places, and pay them for their trouble, directly or indirectly (though 
 very often he does not get paid himself) that is, he must be in a posi- 
 tion, as it is called, to negotiate Bills of Exchange, drawn upon Albany, 
 or Boston, or New York, or Liverpool, Glasgow, London, or places on 
 the Continent. The Banker's hand is upon this business from the 
 first barrel of pork which is sent into the woods, to the last dollar 
 received for the product, which may not be for two years afterwards. 
 Now, this is a sample of the way in which Bankers deal with all parties 
 in our vast exporting trade, whether it is in lumber, timber, grain, 
 cheese, flour, cattle, manufactures, or what not. 
 
 There is a kind of exports which I must confess to viewing with 
 great jealousy and dislike, viz : the export of saw logs. All our logs 
 ought to be cut up in own country. 
 
'I'he funds of our Hanks are employed in these transactions from 
 the beginning to the end. From the day when the first payment is 
 made to the farmer for his grain, cheese or cattle, or advances made to 
 the fishermen of Nova Scotia for his supplies, or the miner of British 
 Columbia for his wages, to the day when in distant parts of our own 
 country or of the United States, or of England, the final purchase 
 money is received, every stage of the operation is represented by 
 advances in one shape or another by the Banks of the country. 
 
 . But another customer will come in and say I am an importer. I 
 have a large warehouse suited to store the productions of many foreign 
 countries, which the people of Canada want. A grocery merchant, for 
 example, buys goods in the Mediterranean, the West Indies, in China 
 and Japan. The Banker is glad to see him, and if his arrangements 
 are satisfactory, what can the Banker do for him ? He can give him 
 letters which will enable him to buy for cash at any port in the 
 Mediterranean, at Palermo in Sicily, or Smyrna in Turkey, or in 
 Yokohama in Japan, or Shanghai in China For Bankers form a great 
 federation all over the world. They are known to one another, they 
 are trusted by one another to inconceivable amounts, a trust which, to 
 their honor be it said, is never betrayed. For whereas, the merchant 
 in Shanghai or Yokohama would never take the risk of sending his 
 goods all round the globe to a grocery merchant in Canada, trusting 
 some day to get paid for them, he is quite glad to sell his goods to a 
 man who can give the guarantee of a Canadian Bank that he will be 
 paid. A large part of the productions that are sold in our grocery stores, 
 and that are previously floatmg about the seas of the world, or stored 
 in the great marts of the world, of these you will find a considerable 
 part represented by entries in the books of Canadian Banks. 
 
 But more than this : Another importer, we will say a dry goods 
 dealer, sells his goods to people all over the Dominion on long credit, 
 sadly too long in fact ! but, then, he cannot help it generally. He cannot 
 possibly wait during all the long interval, 6 or 12 months, or longer, 
 for his money. He could not possibly carry on his business if he had 
 to do this, unless he had an immense capital. So his customers send 
 him little slips of paper promising to pay their debts at certain times, 
 which slips of paper, promissory notes or bills of exchange, he can turn 
 into cash through his banker, and thus pay his own bills and meet his 
 own engagments, the Banker waiting patiently, sometimes impatiently, 
 until all this numerous array of promises is fulfilled. 
 
■y:::-^.:. ■-/■■■■ , . 23 ' . .■■ .' .'■;■ ■•■;. 
 
 This is the way in which the vast importing trade of the country 
 is carried on. It is all represented in the books of the IJanks. 
 
 Similarly with manufacturers. A woollen manufacturer only buys a 
 part of his raw material in Canada — a good deal of it comes over the 
 water from Australia or the Cape. • * •w^ 
 
 Will an Australian wool merchant sell a Canadian manufacturer on 
 
 credit and send his goods nearly all round the world in the hope of 
 
 getting paid some day ? He will do nothing of the kind. He must 
 
 have a Bank engagement to pay, and such engagements are constantly 
 being given. 
 
 But Bankers do not send supplies of money to Australia or to 
 the Cape — they send their credit. The money is all settled for in that 
 great clearing house of the world— the City of London. That is where 
 the money is finally paid, for nearly all the transactions of Canada, and 
 every other country on the face of the earth. 
 
 So it comes about that every Canadian Bank must either have an 
 office of its own in London, or have correspondents in London, who can 
 receive and pay monies for it, and settle the numerous transactions 
 which arise in connection with the foreign trade of Canada from day to 
 day. 
 
 That is, in brief, the connection between Canadian banking and 
 the larger operations of Canadian trade and commerce. The connec- 
 tion is inseparable. It is like that of the Siamese twins. The one can- 
 not move without the other ; the one cannot prosper without the other ; 
 the one cannot grow or decline without the other. We bankers have to 
 keep in close touch with every department of trade if we are to carry on 
 business intelligently. So much is this the case, that part of our own 
 machinery is a regular weekly report from every one of our branches, of 
 the movements of trade and commerce of that district, of the condition 
 of the market for their commodities, and the drift of prices. These are 
 carefully studied — studied, in fact, with as much care as the captain of 
 a ship studies his compass. 
 
 The vital connection between banking and the trade and com- 
 merce of the country can be shown by a simple set of figures which I 
 will now give you, which figures must be highly satisfactory to all that 
 love Canada, who have watched her progress, who are proud of that 
 progress, and who argue from past progress what may be the possibilities 
 of the future. 
 
 We have had banking statistics, first inaugurated under Mr. 
 
Hincks, as Inspector-general, for about fortyyears. Forty years ago the 
 whole amount of the deposits in the Banks of Canada was about fifteen 
 million of dollars. They are now $200,800,000 by our last return, 
 besides the forty-seven millions held by the Government Savings Banks, 
 and thirty-four millions deposited with Building or Loan Companies 
 and others — more than $280,000,000 in all. 
 
 But the record on the other side is equally remarkable, The 
 deposits represent the saving of the people ; the loans and discounts of 
 the Banks are an equally good index of the /fade and commerce of 
 our people. The figures of the discount columns of the Bank state- 
 ments are the totals of the advances made by the Banks, and almost 
 wholly to the men who are carrying on trade and manufacturing. '''-• 
 
 Now, the whole discounts of the Banks forty years ago amounted 
 
 to about $30,000,000, while the last return showed them to be $213,- 
 
 000,00c. 
 
 But you must double these figures to get the true index of the 
 
 relation of Bank Discounts to the volume of trade ; for the trade transac- 
 
 ;. tions of any one year, are at least double the total discounts, taken in 
 
 any particular month. 
 
 As our savings in forty years grew from 15 to 200 millions, so the 
 
 - business of traders and merchants with the Banks grew from 60 to 430 
 
 millions. And to the last of these must be added very large sums, 
 
 which, however, cannot be accurately estimated, representing the ster- 
 
 t Ung bills negotiated by the Banks. . -• v- 
 
 But take these two sets of figures as they are, and I ask — are they 
 not a creditable record ? Some of you have seen all this with your own 
 eyes, as I have, and I say there is no country in the world that can 
 show a finer example of progress. 
 
 Should any man, either an uninformed American or an unacquainted 
 Englishman, ever talk unwisely about Canada being a slow and unpro 
 gressive country, give him these figures as evidence of a growth that 
 has all taken place in the last forty years. ' - '•'■ '^^ >- 
 
 But it may be asked, have our Banks no dealings with Farmers ? 
 Yes; they have. Thousands of Bank depositors are farmers. But 
 in so far as farmers are traders, they are welcome discounting 
 customers to a Bank. They can obtain money from a Bank, for 
 instance, to represent the amount of their yearly production, and thou- 
 sands of them do so. We have the names of large numbers of farmers 
 on our discount books, and a good class of borrowers they are — if they 
 do not borrow too much, and if they have cattle and grain to pay their 
 
indebtedness. But we have to be very careful not to lend a farmer what is 
 represented by his land. That is the business of a Loan Company. 
 
 There is, also, another class of borrowers from Banks, viz., the 
 various Municipalities of the country, who may borrow pending the 
 collection of taxes. But a Bank would be very unwise to lend a muni- 
 cipality what is represented by fixed improvements. Such loans as that 
 should always be in the shape of long debentures. 
 
 I have thus endeavored, gentlemen, to give you an idea, and it is 
 a very inadequate idea, in the brief space of time at my command, of 
 what our Banking system in Canada is, and the methods by which we 
 . carry it on, assisting to develop to the utmost of our power, the trade, 
 commerce, and manufactures of the country. In doing this we are at 
 times subjected to a great deal of criticism, both from oui* own custom- 
 ers and from the public generally 
 
 The customers of Banks, on the whole, I think, are well satisfied 
 with the arrangements they have made, and even when Bankers have 
 the disagreeable duty of saying " No," either when larger advances are 
 wanted than is considered prudent, or are wanted for a purpose which 
 the Banker considers unwise and dangerous, they generally come round 
 in the end to acquiesce in the wisdom of our refusal. 
 
 I have rnyself, and so probably has every other Banker, been 
 thanked for the firmness with which we refused at times to lend money; 
 — the customer came to see that if we had fallen in with his wishes he 
 would have been ruined. 
 
 The fact is, we Bankers of experience have seen so much, and 
 cannot help knowing so much, that we have reason to exercise a con- 
 serving, guiding, and sometimes, a restraining influence over the opera- 
 tions of our customers. And you may depend upon it that any cus- 
 tomer of a Bank will be wise to consult his Banker before embarking in 
 any large new undertaking, or any large extension of one that he is 
 aheady engaged in. For even if the manager of a local branch may 
 be a young man, without much experience, he has at his command the 
 experience of the men at headquarters, directors and general managers, 
 whose range of view and breadth of experience is vastly greater than his 
 own, but which is readily placed at the service of any customer, no 
 matter where he may live or what operations he miy be carrying on. 
 
 The Bankers of Jjte: ctni|itr| ^h^Vfe' prpvet^ tJifenlsfilVes, by a very 
 
 long course of operatidQS,.'thb&the'<tru&st; fVteDdfi'ot.tbe« merchant and 
 
 manufacturer, and th«y ,hayf^ sor^ rpa^^njlo |hii>k •thtart* they should 
 
 **9 -•#»•• •••»••• •• ••*•• • 
 
 / ■ 
 
 •• •• •••• 
 
be trusted by an intelligent community like that of Canada, and not 
 viewed with uspicion such as is entertained by the Populists and 
 Socialists of the Western and South Western States of the Union. 
 
 We have very onerous and responsible duties to discharge, and we . 
 have reason to ask that we should be supported in the discharge of 
 these weighty duties, not only by our customers and the public generally, 
 but by the Government whose interests we serve in a thousand ways, 
 by serving the interests of those from whom all Government revenue is 
 derived. 
 
 Only one word more. It is a fixed conviction of Bankers in Eng- 
 land and Scotland that Canada is not as remunerative a field for Bank, 
 ing as it ought to be, and there is some reason for their thinking so 
 Bankers in England and Scotland, with the full consent and hearty 
 cooperation of their customers, are remunerated for numbers of services 
 that we perform for nothing. Whilst we make no complaint of the rate - 
 of discount that we receive, which is equitable and fair, we have some 
 reason to complain of the manner in whicti we have to handle and 
 transmit enormous sums of money, hundreds of millions every year, 
 from one part of the country to another, back and forth, to and from 
 all parts of the United States to Canada, to and from PZngland and the 
 Continent to Canada, all for a mere insignificant fraction, far less than 
 such skilled and onerous service is worth. This I say to you without 
 the slightest hesitation, and if you knew the facts lam certain every 
 one of you would agree with me. 
 
 We have to run very great risks in endeavoring to serve the interest 
 of the trade of the country. In this very Ottawa Valley, the Banks 
 have lost, I venture to say, millions of money while endeavoring to further 
 the interests of those who have carried on its business. They are navi- 
 gating a business sea in which there are many rocks and quicksands, on 
 which many a gallant barque has been wrecked, such as demand the 
 highest skill of the Banking Navigator to avoid. And you may depend 
 upon it, that it would not be to the detriment of any party concerned, 
 to act in a fair and reasonable spirit with those who have such vast 
 responsibilities upon them, and who are endeavoring constantly to do 
 business in such a manner that the best interests of all classes of the 
 comm'unity, whether traders or manufacturers, shall be conserved and 
 developed to'tJiefftjlPesl'fjc^.ijt*,! that ;this.Cana(ia of ours may continue 
 to grow and prosper,'rfnd'beeome'"as rmporiant' a factor in the destinies 
 of this North' 'Afrr,eVk5£Cn C{)nJi4fi^t. 'afs our pwn lietle British Islands are 
 to the Contin^bf'of Bucdiiew'- •'. / ' • ' , 'r" \-, :