Canada's Show

No Federal Reserve System has Canada. Nor has she thousands of small banks like the U.S. Instead she has but eleven big banks with 3,500 branches scattered the breadth of the country.

Half a century ago, Canada passed a law requiring that her banking statutes should be inspected and overhauled every ten years. They were so overhauled in 1880, 1890, 1900, 1913, 1923. Due again to be revised this year, they were fuller than ever before of political dynamite. Battered by Depression, Canada was ripe for change. Her prairie provinces, after years of low grain prices and inspired by the New Deal across the border, were ready for political revolt. The C.C.F. (Cooperative Commonwealth Federation, nicknamed "Cocofed"), a radical organization not unlike the U.S. Farmer-Labor Party, was preparing to raise hob. Canada's banks had stood unharmed through the Depression, but the West was bitter against them for not lending more money at lower rates. Bank scandals in the U.S. prompted Canadians to demand a similar airing of Canadian banking. Proposals were made for "nationalization of credit" to take the power of making loans away from the banks, turn it over to the Government.

Rather than draw a new banking act under such circumstances, Canada's conservative Premier Bennett got the Canadian Parliament before the end of its record 7 1/2-month session to renew Canadian bank charters for one year, postpone a new banking law until next session. He promised during the Parliamentary recess to have a special commission study Canada's banking, currency and coinage. Last week that commission was at work in Western Canada.

First a day's session was held at Victoria, then a two-day session at Vancouver. The Government of British Columbia asked politely that the banks should be more liberal in their loans, asked that the province and cities should be allowed to borrow directly from the Dominion instead of through the banks. Some businessmen complained that loans were hard to get, because they must be approved by bank officers in the East. Bankers denied this and representatives of several chief industries declared themselves satisfied with bank accommodations offered. Decorum was preserved until an Irish-Canadian barrister, Gerald Grattan McGeer, K.C.. representing the Vancouver Trades & Labor Council, got the floor. For three and one-half hours he harangued the Commission, lambasted Canadian banking as a "credit racket'' which was strangling commercial life. He told the Commission that it was "trying to patch up an oxcart instead of buying an automobile" (i.e. nationalizing credit).

The hearings were Canada's equivalent of the U.S. Senate's bank investigating show, but they promised to be a far different kind of affair. After Parliament adjourned in May Premier Bennett, rich and pious Anglophile, often mentioned as candidate for a British peerage, was in London at the Economic Conference. There he got a famed Scotsman to head his banking commission: Hugh Pattison MacMillan, Baron of Aberfeldy.

No tyro at financial surveys is Lord MacMillan. Son of a Presbyterian parson, now 60, bald, gaunt, spectacled, with a mouthful of false teeth, he rose to eminence by Scotch frugality and toil through his profession, the law. Famed for his brilliant, resourceful mind, his shrewd humor, he is today Chairman of the Court of the University of London, a Peer, a member of Britain's Privy Council (Supreme HUGH PATTISOX MACMILLAN He repulsed a monstrous suggestion. Court). Heading commissions has been his forte: the Royal Commission on Lunacy and Mental Disorder in 1924, the Home Office Committee on Street Offences, 1927, etc., etc. At present he heads a committee revising Britain's 240-year-old income tax laws.

Lord MacMillan's most publicized job was as Chairman of the British Treasury Committee on Finance & Industry where he presided over 13 colleagues including Reginald McKenna and John Maynard Keynes. The report issued by that committee is famed among economists. A 300-page volume which cost -L-1,050 to prepare, -L-580 to publish, and was priced at five shillings the copy, it became a bestseller, the only Blue Book ever published by the British Government which netted a profit. Coming out in 1931 it declared: "Our objectives should be ... first of all to raise prices a long way above the present level and then to maintain them at the level thus reached with as much stability as can be managed.'' It discussed (and rejected) devaluation of currencies; it advocated reducing the legal gold reserves of central banks--all this two years before the U.S. began to consider such proposals. In England Premier Bennett induced the author of "The MacMillan Report" to give up his summer holiday, spend two months examining Canada's banking system. For a second member of his commission Mr. Bennett got another son of a Scottish parson. Sir Charles Addis, former director of the Bank of England, former vice chairman of the Bank for International Settlements, now 71, chairman of the Hongkong and Shanghai Bank, proud father of six sons and seven daughters. Fortnight ago the two Commissioners arrived in Ottawa with their ladies, met the three Canadians appointed as their colleagues: Sir William Thomas White, vice president of Canadian Bank of Commerce, Canada's Wartime Finance Minister; Beaudry Leman, general manager of Banque Canadienne Nationale; and Premier John Edward Brownlee of Alberta (named to give Western Canada a voice). After a first meeting in Ottawa the Commission shuttled straight to the Pacific Coast, began a series of hearings which will bring it back city by city from Vancouver to Halifax.

No muckraking expedition will Lord MacMillan conduct. Last week in Vancouver, when raucous Barrister McGeer implied that the Commission was being paid to entrench the established banking system in Canada, the Scots Lord dropped his tactful manner, declared it "a monstrous suggestion." (The Commission gets no pay, only expenses.) Chief problem before the Commission is whether to recommend establishment of a central bank in Canada. "Nationalization of credit" and other radical experiments are not likely to appeal to its economically cautious members.

More interesting than Canada's banking problems to many a U.S. businessman is her recovery from Depression. With no New Deal to titillate prices, only intra-Empire tariff preferences to promote business, Canada since last February has staged an economic comeback almost equal to that of the U. S. Her bank clearings are 27% ahead of last year, her car-loadings up 7%, her wholesale price index stands at 70.5 as compared to 66.6 a year ago and 63.6 in February. Drought has put her wheat up to 80-c- (from a low of 50-c-). Her busy gold mines are working virtually at 100% of capacity, making big profits with gold selling at a handsome premium. Electric power production is up 14%. Her big paper industry has started into renewed activity that parallels the rise of steel in the U.S. Her shoe and textile industries are booming. Exports for May, June and July were $143,000,000 compared to $124,000,000 a year ago.

Those U.S. objectors who argue that the New Deal should get no credit, that recovery in the U.S. started of its own accord, point to Canada with some reason. Other U.S. businessmen who fearful of inflation, talk of moving to less experimental Canada would do well to wait and watch. As Lord MacMillan and his colleagues last week found in the Canadian Northwest, economic radicalism is not dead in Canada. With or without conservative Premier Bennett in power, a Canadian "new deal" may be successfully agitated, with a national recovery act like NRA to speed things up.

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