The Canadian banking system “ is predicated upon the assumption that the amount of money borrowed from the people … by the banks will enable the banks to use it as to have it safe for the depositors when they require it .” The Canadian “ system of branch banks , with the mobility that is possible in the movement of credit from one portion of the country to the other , makes possible loans being made on a large scale by a branch with very indifferent deposits , insured by the easy mobility of credits from a point where there is a demand for loans with limited deposits . That is the strength of our branch bank system .”

Prime Minister R . B . Bennett , Minister of Finance and Receiver

General , President of the Privy Council , Secretary of State for External

Affairs in the House of Commons

Canada , House of Commons Debates ( Hansard )

May 13 , 1931

Canadian Imperial Bank of Commerce

By Joe Martin

This year marks the 150th anniversary of the Canadian Bank Act . Canada has had one of the safest banking systems in the world , “ a textbook example of stability ,” marked by a branch banking system and widespread accessibility . The Canadian banking system is more like the rest of the world than the unique American system in that there is a “ Big Five ” group of banks which account for 90 % of all Canadian bank assets .

During the Great Depression in the 1930s and the Great Recession of 2008-9 , no Canadian bank failed and none received

First head office building of the Bank of Commerce , on the southeast corner of Yonge and Colborne Streets , acquired from the failed Bank of Upper Canada . funding from the government of Canada . In the Great Recession of 2008-9 , most Canadians were totally unaware of the historical reasons for Canada ’ s success . Those who ventured an opinion usually cited the Canadian government ’ s decision a decade earlier , which blocked two big bank mergers . The answer lies much earlier — in 1867 , when banking was made a federal responsibility , and in 1871 , when the 1871 Bank Act was proclaimed , bringing stability to the future of Canadian banking . Yes , there were bank failures , but the unique Canadian provision of regular parliamentary reviews resulted in evolutionary improvement in both regulation and supervision

Canada did not have any banks until 1817 . The spark for banking came after the 1812 War when Canadian colonists started to demand paper money . Army bills had been introduced during the war , but they had an expiration date . In 1817 , a group of Montreal merchants began a bank , the Bank of Montreal . The bank ’ s charter was copied from Alexander Hamilton ’ s first Bank of the United States ( BUS ). There were other American influences as well . The first bank teller was American , and nearly one half of the shares were sold to wealthy families in the United States .

From the beginning , the United States had a tremendous influence on Canada in many spheres , none more so than in banking and finance . Canada learned a great deal from the United States , and some of those lessons were adopted and incorporated into the Canadian banking system . But in most cases , since the 1830s , Canada rejected the American model and retained the characteristics of the earlier Hamiltonian system , with limited liability , joint stock ownership and branch banking .

36 FINANCIAL HISTORY | Summer 2021 | www . MoAF . org