The public purse and state finance: Government savings banks in the era of nation building, 1867-1900

Canadian Historical Review

Volumn 78, Issue 4, 1997, Pages 566-599

  Bunbury, Dan ^a  

^a NONE

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EID: 68349098843     PISSN: 00083755     EISSN: 17101093     Source Type: Journal    
DOI: 10.3138/CHR.78.4.566     Document Type: Review

References (113)

1. Halifax and Its Business; Containing an Historical Sketch, and Description of the City and Its Institutions, Also Description of Different Lines of Businesses with Account of the Leading Houses in Each Line (Halifax: Nova Scotia Printing Co. 1876), 52-53
2. Micheal Piva, 'Continuity and Crisis: Francis Hincks and Canadian Economic Policy,' Canadian Historical Review (CHR) 66, 2 (1985): 185-210;
3. Rosemarie Langhout, 'Developing Nova Scotia Railways and Public Accounts, 1849-1867,' Acadiensis, 14, 2 (1985): 3-28,
4. and 'Public Enterprise: An Analysis of Public Finance in the Maritime Colonies during the Period of Responsible Government' (PhD dissertation, University of New Brunswick 1989)
5. Works from different perspectives about the issue of industrial development in British North America and Canada include T.W. Acheson, 'The Great Merchant and Economic Development in St. John, 1820-1850,' Acadiensis 8, 2 (1979): 3-27,
6. and 'The National Policy and the Industrialization of the Maritimes, 1880-1910,' Acadiensis 1, 2 (1972): 3-28;
7. L.R. MacDonald, 'Merchants against Industry: An Idea and Its Origins,' CHR 56, 3 (1973): 263-81;
8. David J. Bercuson, ed., Canada and the Burden of Unity (Toronto: Macmillan 1977);
9. Kris Inwood, 'Maritime Industrialization from 1870 to 1910: A Review of Its Evidence and Interpretation,' Acadiensis 21, 1 (1991): 133-55;
10. Neil Quigley, 'Bank Credit and the Structure of the Canadian Space Economy, 1890-1935' (PhD dissertation, University of Toronto 1986);
11. Ken Cruikshank, 'Working for the People's Railway: The icr in the Maritime Economy,' paper presented at a meeting of the Canadian Historical Association, May 1992;
12. and the forum issue, E.R. Forbes, 'The Intercolonial Railway and the Decline of the Maritime Provinces Revisted,'
13. and Ken Cruikshank, 'With Apologies to James: A Response to E.R. Forbes,' Acadiensis 24, 1 (1994).
14. E.P. Neufeld, The Financial System of Canada: Its Growth and Development (Toronto: Macmillan 1972), chap. 5, 'Savings Banks.'
15. For other studies of savings banks in British North America and Canada see the following: R.T. Naylor, 'The Rise and Decline of Trustee Savings Banks in British North America,' CHR 65, 4 (1984): 511-41;
16. John Irwin Cooper, 'Some Early Canadian Savings Banks,' Canadian Banker 57 (spring 1950): 135-43,
17. and 'Origins and Early History of the Montreal City and District Savings Bank, 1846-1871,' Canadian Catholic Historical Association, Report (1946): 15-18.
18. An official history of the Montreal City and District also appeared that year; see T.T. Smith, The First Hundred Years (Montreal 1946).
19. A recent work on the early savings banks in Quebec is D.G. Patterson and R.A. Shearer, 'How Did the Industrious Classes of Her Majesty's Government Learn to Save? First Generation Savings Banks in Lower Canada,' paper prepared for the seventeenth Annual Conference on Quantitative Methods in Canadian Economic History, 1990.
20. John N. Benson, Provincial Government Savings Banks: A Case Study of Regional Response to National Institutions (Vancouver: Fraser Institute 1978), 10
21. The three revenue-collecting branches of the Province of Canada became full-fledged departments to facilitate adequate regional representation. To coordinate these departments, the Treasury Board was created as well. The two most important bureaucrats involved in deciding financial policy were both from Ontario B John Langton (auditor general, deputy minister of finance, and secretary of the Treasury Board) 1867-1878, and John M. Courtney (deputy minister of finance and ex officio secretary of the Treasury Board), 1878-1900.
22. Canada, House of Commons, Debates, 1 Jan. 1867, 334
23. Canada, House of Commons, Debates, Ibid., 335
24. Canada, House of Commons, Debates, 335Ibid.
25. Savings Bank activity in Quebec was mainly undertaken by several large institutions: the Montreal City and District Savings Bank, and, in Quebec City, the Provident and Savings Bank and the Caisse d'économique de Notre Dame de Québec. In Ontario there were three similar institutions, but they were surpassed by the postal savings banks: the Northumberland and Durham Savings Bank, in Cobourg, and the Toronto Savings Bank and the Home District Savings Bank, in Toronto.
26. Debates, 2 Jan. 1869, 201
27. Debates, 4 Jan. 1871, vol.2, 317
28. Debates, Ibid., 320-2. In Quebec, unlike the Maritimes, the huge trustee-run savings banks were successfully defended from the encroachments of Ottawa. As in so many other areas of its society, Quebec went on to follow a markedly different path in the development of its financial sector.
29. See Ronald Rudin, 'Quebec and the Canadian Banking System, 1871-1921,' paper presented at the Canadian Historical Association, 1983, and 'Banking on Quebec: The French Banks and the Mobilization of French Funds, 1835-1925,' Journal of Canadian Studies 20, 3 (1985): 47-61.
30. 'An Act to provide additional facilities for depositing Savings at interest with the security of the Government, and for the issue and redemption of Dominion Notes,' 34 Vict., c. 6. The first Bank Act was c. 5, while an 'Act respecting certain Savings Banks in the Provinces of Ontario and Quebec' was c. 7. C. 5 set up what was referred to as the Dominion Government Savings Banks, which were run by the finance department under Courtney's supervision. They were distinct from the Post Office Savings Banks, which were run by the post-master general in the post office department.
31. Ibid.
32. The act governing the Post Office Savings Banks in Ontario and Quebec, passed in 1867, was modified by c. 6 so that all savings bank money received, and dominion stock sold, was monitored by the auditor general. Under the Bank Act, Ottawa reserved the right to issue small-denomination notes of one, two, and five dollar values, leaving the larger notes of multiples of five to the chartered banks.
33. Finance minsters were asked if and when a savings bank agency would be established in a backbenchers's riding. McKeagney (Conservative, C.B. Co.) to Hincks, 1871; Davies (Liberal, Queens, PEI) to Tilley, 1884; Vail (Liberal, Digby) to Tilley, 1884; Stairs (Conservative, Halifax) to Tilley, 1884. See Debates. They also received petitions backed up by the testimony of local mps and senators. See cases for Lockeport and Sydney Mines, ns rg 55, a4, National Archives of Canada (na), Treasury Board Minutes, rg 55, nos.2039 and 2031, and Treasury Board Registry Files, rg 55, v3005, file 470, 1883.
34. By 1872 an assistant receiver general was appointed in Winnipeg and a savings bank duly opened there. In British Columbia a branch system operated from Victoria by a board of trustees had existed before Confederation, with branches located in Nanaimo, Yale, Cariboo, and New Westminster. When British Columbia joined Confederation in 1871, arrangements were made to pay off all depositors and to reopen the banks as Dominion Government Savings Banks. This transfer was completed by the end of 1872 and, on 1 January 1873, three 'new' banks opened at Victoria, Nanaimo, and New Westminster. In 1872 a savings bank opened in connection with the assistant receiver general's office in Toronto. Thomas D. Tims, 'Dominion Government Savings Banks,' Canadian Economic Papers 20 (1884): 259-63, 260-261
35. The Provincial Government Savings Bank at Charlottetown, inherited when Prince Edward Island joined Confederation in 1873. This bank had been started only in 1864. Its liabilities, assumed by the dominion government, were about $250,000. See Douglas Baldwin and Helen M. Gill, 'The Savings Bank of pei: Philanthropy and Self-Interest in the Nineteenth Century,' Journal of Canadian Studies 20, 4 (1985-6): 115-25.
36. This agency enjoyed a huge, yet unfortunate, increase in deposits when the Bank of pei folded in 1882. See also Baldwin's 'The Growth and Decline of the Charlottetown Banks, 1854-1906,' Acadiensis 15, 2 (1986): 28-52.
37. John Mortimer Courtney worked for several years at the Bank of Agra in India before coming to Canada in 1869 at the invitation of the finance minister, John Rose, and began a long, successful bureaucratic career. During his tenure at Finance he served on several commissions and retired in 1906. His last important contribution was the chairing of the commission struck in 1907 to investigate the civil service act. Its 1908 report formed the basis of legislation that led to the Civil Service Commission, which instigated compulsory competitive exams. See Canadian Who's Who (Toronto: Musson Book Co 1910), 50-1,
38. and Dictionary of Canadian Biography, ed. W.S. Wallace, vol.1 (Toronto: Macmillan 1945), 135.
39. na, Records of the Department of Finance (df), rg 19, v2080, memo by Courtney, 9 Nov. 1885. Incidents of deflacations and fraud spanned the nation, including serious ones in Toronto and New Westminster.
40. In memos and letters, Courtney repeatedly stressed that Finance should be a 'department of supervision and not be involved in the details of any part of the Public Service.' na, df, rg 19, e 2, v2799, April 1887. Later he stated that 'Certain things should always belong of course to the Treasury, such as the adminstration of the public debt, the disposition of the public funds and the control of the note currency ... To put it in plain English, the less the Treasury has to do with trade affairs and the less patronage it has, the more it is able to cope effectually with the expenditure and the patronage exercised by the other Departments.' 'Memo Respecting the Finance Department and matters connected therewith,' Records of the Department of Finance (df), ibid., v2804, July 1888.
41. Records of the Department of Finance (df), Ibid., v2804, July 1888
42. Courtney's memo to the Treasury Board Report was approved as an order-in-council. Treasury Board, rg 55 v2580, file 351, 14 Nov. 1885. Resistance to the transfers was strong among Cabinet ministers and mps with vested interests in the patronage the system offered. On 18 March 1887 the original order-in-council was modified by a new one stating that transfers would occur only if the public interest was served. df, rg 19, d 6(h), Reports to the Council/Treasury Board, file 712
43. The line item was 'Charges of Management, Country Savings Banks.' This term denoted the government savings banks, mainly in the Maritimes.
44. The account ceilings, fixed by order-in-councils, were as follows: 24 Dec. 1877 B $10,000; 25 Nov. 1880 B $3000; 7 July 1886 B $1000; 13 June 1887 B $1000, at a maximum of $300 per year. See na, df, rg 19, v2582, 'Memo Re: Savings Banks,' 29 Jan. 1891
45. Courtney, who always prefaced his report on the public accounts with a 'state of the finances' address, mentioned the savings bank without fail every year between 1878 and 1902. See Canada, House of Commons, Sessional Papers.
46. Cartwright, Debates, 5 Feb. 1884, 827.
47. In 1885 Courtney advised Tilley that 'our necessity for importing gold arose entirely from the transactions of the Savings Banks.' This situation arose when withdrawals, all of which were ultimately paid for in Dominion notes, increased the money supply, requiring the government to import gold to maintain its reserves ratio. In Nova Scotia alone, $3 million was paid out in withdrawals in 1885, and that would have put enormous pressure on the reserves used to back the nominal circulation of $15 million in Dominion notes. Furthermore, as the government bank with the best connections to the New York money market, the Bank of Montreal ultimately ended up with Dominion notes redeposited into the various chartered banks by the savings bank agents because banks, such as the Merchants Bank of Halifax or the Union Bank, turned any surplus notes they had into brokered call loans to boost profits. With $4 million in Dominion notes in its vaults, the Montreal bank had considerable leverage, leading Courtney to warn that 'we are, in consequence at the mercy of the Bank of Montreal as at the present moment.' na, df, rg 19, e 2, 26 Jan. 1885. In some ways the process described departs from the accepted historiography of Canadian gold transactions, which places most emphasis, regardless of theoretical proclivities, on the role of the private sector. See Trevor Dick and John Floyd, Canada and the Gold Standard: Balance of Payments Adjustments, 1871-1913 (Cambridge: Cambridge University Press 1992).
48. S.R. Hesson (North Perth, Ont.), Debates, 5 Feb. 1884, 829.
49. See also Debates, ibid., 5 March 1885, 819-821
50. Students of capital formation and inflows seem to agree, railway building notwithstanding, that the most dynamic period of capital expansion and domestic investment in the nineteenth century came with the wheat boom of 1896, and that the 1870-96 period was one of relative stagnation. Dick and Floyd, Canada and the Gold Standard, 113,
51. and A.G. Green and M.C. Urquhart, 'New Estimates of Output Growth in Canada: Measurement and Interpretation,' in Perspectives on Canadian Economic History, ed. Douglas McCalla (Toronto: Copp Clark Pitman 1987), 182-99, 190-191
52. This framework is borrowed from Ann Roel Markusen, Profit Cycles, Oligopoly, and Regional Development (Boston: mit Press 1985), 2.
53. The banking sector experienced competitive pressure from insurance and trust companies, savings and loans societies, and building societies that were accumulating large sums of capital as well. The merger phase, which started in earnest by the late 1890s, ushered in the oligopoly phase, which by the 1950s was characterized by the total dominance of the so-called Big Five: the Royal Bank, the Bank of Nova Scotia, the Canadian Imperial Bank of Commerce, the Toronto-Dominion Bank, and the Bank of Montreal. With the deregulation of the mid-1980s came the fourth phase of increased fragmentation and competition, although it appears the banks have won that round too. The numbers tend to bear out this analysis for the earlier period at least. In 1870, chartered banks held 72.6 per cent of all Canadian financial assets; by 1890 their share had fallen sharply to 49.5 per cent. Over the same years, private non-banks (i.e., industries) had increased their share from 18.9 per cent to 39.5 per cent. Life insurance climbed from 2.4 to 8.6 per cent, while building societies and mortgage loan companies had also risen from 9.6 to 24.5 per cent. Savings banks, Dominion Government and Post Office together, climbed from 3.2 to 7.9 per cent by 1890, their highest level. See table 14.5 in K. Norrie and D. Owram, A History of the Canadian Economy (Toronto: Harcourt, Brace, Jovanovich 1991), 380.
54. The scramble to access this new and critical source of capital meant that during the last third of the century, bank branches grew more rapidly than the population as a whole. See Ronald Rudin, 'Banking and Finance,' plate 44, in R.L. Gentilcore, ed., Historical Atlas of Canada, vol.2: The Land Transformed, 1800 - 1891 (Toronto: University of Toronto Press 1993).
55. W.B. Vail, Liberal member for Digby, claimed that he knew of a party who held $30,000 in the savings bank B $10,000 in his name, $10,000 in his wife's name, and $10,000 in the names of his children. Debates, 5 Feb. 1884, 829
56. The link between the problems of Maritime industry and banking and the government savings banks, and Fyshe's role in publicizing it, was first explicated by James Frost in 'Principles of Interest: The Bank of Nova Scotia and the Industrialization of the Maritimes, 1880-1910' (ma thesis, Queen's University 1986), chap. 2.
57. Although readers must judge for themselves the bias of Fyshe's comments, it should be mentioned that he was a highly respected member of the banking fraternity who helped found the Canadian Bankers Association, sat on Courtney's Civil Service Committee, and helped write the Banking Act Revision of 1890. At the time of his anti-savings bank crusade, Fyshe was a forty-one-year-old Scot, a relative newcomer, whose primary motivation was to expose peculiar conditions in the region in which his bank operated and which reduced profits. See James Frost, 'Thomas Fyshe,' Dictionary of Canadian Biography, vol.14 (Toronto: University of Toronto Press, forthcoming).
58. 'Government Savings Banks and the Mischief They Are Working in the Lower Provinces,' Montreal Herald and Daily Commercial Gazette, 3 May 1886. Fyshe claimed that the government had failed to extend the 'bounty' of saving bank institutions to the Upper provinces because they 'dare not ... and they know it.' For him, the savings banks were a fiscal boondoggle that reflected 'very little credit on the intelligence and public spirit of the lower provinces.' The cashier also resented the extra costs incurred by the chartered bank when savings bank agents, not having proper safe-keeping facilities, deposited funds to the credit of the assistant receiver general with chartered banks located in their vicinity. The chartered banks then bore the banking overhead of money storage and transportation. Additionally, when depositors withdrew money, they acquired a cheque drawn on the assistant receiver general payable at par anywhere in the dominion. This differed from the practice of chartered banks, where drafts were issued after deducting a commission. In this way the government forced the banks to give free travelling credit to savings bank depositors.
59. In 1883-6, deposits in Maritime chartered banks fell 16.5 per cent (from slightly over $7 million to just under $6 million), while savings deposits in the savings banks increased 41 per cent (about $10 million to slightly over $15 million). With money in good demand, the banks could outbid government for savings. Since 1883, however, interest rates had fallen, but the government had not lowered its rate on deposits. Fyshe surmised that the high per capita level of deposits in the Maritime savings banks, and the low ratio of deposits to capital in the chartered banks, were the result of a draining of capital from the chartered banks into the savings banks. 'Government Savings Banks and the Mischief They Are Working in the Lower Provinces,' Montreal Herald and Daily Commercial Gazette, 1886. Ibid.
60. 'Government Savings Banks and the Mischief They Are Working in the Lower Provinces,' Montreal Herald and Daily Commercial Gazette, 1886. Ibid.
61. na, df, rg 19, v3030, file 2249, 25 June, 3 July 1886. It was on these memos that the order-in-council of 7 July was based.
62. Ibid., Registry files, v3037, file 2893, 'Fyshe to Tupper,' 20 April 1887
63. 'Fyshe to Tupper,' Ibid., Registry files 1882-1917, v3036, file 2848,
64. 'Wilkie to Tupper,' 13 May 1887. It was only natural that Wilkie would focus on the Post Office Savings Banks, since they were the competition in Ontario, there being only the one government savings bank in Toronto at the assistant receiver general's office.
65. 'Wilkie to Tupper,' Ibid., emphasis his
66. 'Wilkie to Tupper,' Ibid., Registry files, v3037, file 2893,
67. 'Fyshe to Tupper,' 20 April 1887
68. See James Henry Hamilton, Savings and Savings Institutions (New York: Macmillan 1902), 409-420
69. Canada, Public Accounts for 1886-7, and The Canada Statistical Abstract and Record, 1888
70. Canada, Public Accounts for 1886-7, and The Canada Statistical Abstract and Record, 1888Ibid.
71. Sir John Rose, the second finance minister, was driven from office after his initial plans in 1869 to allow American-style unit banking were squashed by the powerful banking lobby that later coalesced into the Canadian Banking Association. Sir Francis Hincks's Bank Act, drafted in 1870, was created with the direct input, for the first time, of bankers who consulted at the finance ministry. The bankers aimed to install high minimum ceilings requirements for subscribed capital for both existing and new banks. Originally Hincks set the figure at $1 million, but criticism from Galt, who felt branch banks often fled the countryside when money contracted, and from the Maritimes, where 'local banking was in more general favour and better established than in Ontario and Quebec,' induced him to reduce it to $500,000. In the act passed in 1870 (33 Vict., c. 2), $200,000 bona fide of the $500,000 was actually required to start, the other $300,000 to be paid later. With the amendments of the act in 1871 (34 Vict. c. 5), the requirement loosened somewhat in that only $100,000 bona fide paid up was required in the first year and another $100,000 within two. This reduction, however, was soon reversed. See R.M. Breckenridge, The Canadian Banking System, 1817-1890 (Toronto 1894), 191-200.
72. na, df, rg 19 Registry files 1880-1910, v3036, file 2893, 'Courtney to Tupper'
73. 'Courtney to Tupper'Ibid.
74. na, df, rg 19, e 2, v2795, 'Courtney to Tilley,' 29 Dec. 1885
75. Canada, Public Accounts 1886, 'Receipts and Expenditures: Loan Debt of Dominion of Canada'
76. na, df, rg 19, v3037, 'Courtney to Tupper,' 7 June 1887. Courtney also noted that he received a note from the Banker's section of the Toronto Board of Trade concerning government competition.
77. 'Courtney to Tupper,' Ibid., v2803, file 694,
78. 'Courtney to Tupper,' 19 May 1888
79. 'Courtney to Tupper,' Ibid., v2582, clipping, and memo dated 29 June 1889.
80. See, too, a rough draft in v3058. Courtney had also made a close study of interest rates across the country before all this transpired. See 'Memo re rates of interest payable on deposits,' 28 May 1889, rg 19, v3058.
81. In 1894 Richard Cartwright, in referring to the savings bank borrowings, stated: 'It has been used for a great variety of purposes, including the putting down of the North-West Rebellion, the construction of the Tay canal and other assets which are not particularly productive assets.' Debates,7 April 1894, 3192
82. Morris Altman, 'Railways as an Engine of Economic Growth? Who Benefited from the Canadian Railway Boom, 1870-1910?'
83. W.T. Easterbrook and Hugh G.J. Aiken, Canadian Economic History (Toronto: University of Toronto Press 1988), 410
84. C.R. McKay, 'Investors, Government and the cmtr: A Study of Entrepreneurial Failure,' Acadiensis 9, 1 (1978): 71-94.
85. For an analysis of the impact of the icr, see Daniel Hickey, 'Moncton, 1871-1913: Le commerce et l'industrie dans un carrefour ferroviaire,' in his Moncton 1871-1929: Changements Socioeconomique dans une ville ferroviaire (Moncton: Editions d'Acadie 1990), 41-62.
86. Preface to Public Accounts, 1891, 1892, 1893
87. na, df, rg 19, v3431, volume entitled 'Canadian Government Savings Banks, 1906-1910.' Data from 'Statement showing Balances at Transfer of Government Savings Banks, and Balance, 1906'
88. Preface to Public Accounts, 1894
89. Preface to Public Accounts, Ibid., 1902
90. na, df, rg 19, v2582, 'Courtney to Foster Memo re Savings Banks,' 29 Jan. 1891.
91. Courtney offered three options to increase savings bank revenues and to avoid the London market: raise the interest rates, raise the account ceiling, or offer a 3.5 per cent stock to depositors. In 1892 the yearly and total account ceilings were repegged to $1000 and $3000, respectively. During the recession, depositors had withdrawn almost $3 million more than they put in during 1890-1. See Debates, 7 Feb. 1892, 252.
92. Debates, 7 April 1894, 3186-3194
93. Public Archives of Nova Scotia (pans), mg 3, v5181(c), 'Fielding to H.C. McLeod,' 15 Sept. 1903
94. In analysing the trials of the cotton, sugar, and steel factories, he held some hope, especially for Scotia Steel, but emphasised that 'a feeling of disappointment and sense of loss remains B a consciousness that we have made bad investments and thrown away a great deal of money. The country however has its fair share of resources and with a return of the enterprising spirit and an abundance of capital there should be no fear of its future.' na, df, rg 19, Registry files, v3037, file 2893, 'Fyshe to Tupper,' 20 April 1887
95. pans, mg 3, v5181(c),' D.R. Clarke to W.S. Fielding,' 28 Sept. 1903.
96. While the People's Bank complained about its inability to support local business, the general manager of the newly relocated Bank of Nova Scotia 'relentlessly insisted on avoiding small operators and sought out the accounts of companies which would likely be less dependent on local business.,' J. Frost, 'The "Nationalization" of the Bank of Nova, 1880-1910,' Acadiensis 21, 1 (1982): 3-38, 27
97. Quigley, 'Bank Credit,' 285-300
98. An example of this competition comes from Prince Edward Island, where the Merchant Bank of Halifax (the Royal) had tried and failed to establish a deposit business there. According to Queen's mp, Davies, 'while that is a good bank, and the people have confidence in it, they have not the confidence that they would have in a Government Savings Bank.' Debates, 5 February 1884, 826. By 1892 Fyshe was still keeping a close eye on the savings banks. Head office ledgers of the Bank of Nova Scotia contain a series of tables comparing the growth in deposit business of the two bank systems where they competed head to head. Even the relatively powerful Bank of Nova Scotia listed five agencies B Bridgetown, Campbellton, Digby, Moncton, and St Stephen B where, although they all showed net increases in deposits between 1886 and 1892, they were outperformed by the local government savings banks. Extracts of Bank of Nova Scotia Ledgers located in pans, mg 3, v5179 (a)
99. Quigley, 'Bank Credit,' 307, 338-343
100. Another theoretical framework, quite different from Quigley's, investigates the effects of location and space on the formation of business perceptions and decisions through the analysis organizational literature. See Mark Lutes, 'The Social Construction of Maritime Economic Reality: A Textual Analysis of Late 19th Century Banking Practices' (ma thesis, University of New Brunswick 1986).
101. Eric Sager and G. Panting also take up the problem of knowledge and culture, but from the standpoint of the individual investor. 'And today, when recent theorists have so forcefully reminded us of the domains of 'power/knowledge,' discourse and language, and the ability of these to define and limit fields of perceived truth, the economic historian can no longer be content with truisms about opportunity costs and profit maximization as determinants of investor behaviour.' Maritime Capital: The Shipping Industry in Atlantic Canada, 1820-1914 (Montreal: McGill-Queen's University Press 1990), 158
102. A good example of a shift in location leading to a diminution of control occurred at the Merchants Bank of Halifax. Even before the transfer of the head office to Montreal, all large credit decisions were made there, while the Halifax board members approved only smaller, local applications. See Duncan McDowall, Quick to the Frontier: Canada's Royal Bank (Toronto: McClelland & Stewart 1993).
103. In both New Brunswick and Nova Scotia, imports almost always exceeded exports by a large margin. Between 1850 and 1870 in New Brunswick, one half of all imports were manufactured goods. Sager and Panting, Maritime Capital, 106
104. See Monetary Times, 4 June 1886.
105. Bankers held the same view. See E.B. Walker (president of Bank of Commerce), 'Address to the n.y. State Bankers Association,' Saratoga, 10 July 1895,
106. and 'Banking in Canada,' paper presented to the Congress of Bankers and Financiers, Chicago, 23 June 1893. Canadian Institute of Historical Microreproductions (cihm), 14643 and 14131. Similar sentiments were reflected later by C.M. Neill, president of the Royal Bank. When asked by a Commons committee in 1924 whether there were more deposits than loans in the Maritimes, he answered: 'Of course, the Maritime Provinces are really more a depositing centre than a loan center.'
107. Quoted in Benjamin Beckhart, The Banking System of Canada (New York: H. Holt 1929), 413
108. 'The difficulty with assessing the relative importance of many of the causal forces that did occur in history is that those causal processes often appear to be extremely complex. The would-be counterfactual speculator therefore remains uncertain as to what should be mentally removed in addition to the single casual factor whose importance is be assessed, uncertain as to the impact of that removal upon the development of substitute causal factors, and uncertain as to the likely impact of those substitutes upon the effect being studied.' Peter D. McClelland, Causal Explanation and Model Building in History, Economics and the New Economic History (Ithaca: Cornell University Press 1975), 163. A metaphor he cites likens the exercise to unscrambling the eggs of history.
109. Sager and Panting, Maritime Capital, 195
110. Maritime Capital, Ibid., 154-5.
111. Indeed, in 1878 Peter Mitchell of New Brunswick stated that shipbuilders had made 'ships the savings banks of some portions of the Dominion.' Maritime Capital, Ibid., 180
112. Maritime Capital, Ibid., 156.
113. H.N. Wallace, cashier of the Halifax Banking Company, noted in discussions leading to his company's merger with the Bank of Commerce in 1903 that while deposits in their sixteen-branch system were growing, 'the field of investment was contracting.' This seems to point to an investment market where savings accounts were the preferred choice. Ross, The History of the Canadian Bank of Commerce, 120