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Page:Popular Science Monthly Volume 49.djvu/354

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336
POPULAR SCIENCE MONTHLY.

tem under which such manipulation is possible is fundamentally wrong.

Under the Canadian banking system, with its large banks, each having enormous capital and branches throughout the Dominion, it is practicable to enforce the rule of "one concern, one bank"; each customer must render a confidential statement to his bank from time to time of the exact condition of his affairs, of his assets and liabilities, and it is to the interest of his bank to accord him the fullest accommodation that his business will justify. Its enormous resources enable it to thus accommodate all its customers. It is evident that under such a system such juggling as that instanced in the foregoing illustration could not have been carried on. Many of the banks of the United States have blank forms which they submit to offerers of paper for discount, the filling up of which completely discloses the condition of their affairs, the extent of their assets and liabilities in every shape and form. Had such statements been required of the coal company and the railroad company by each of the banks before discounting their notes, the possibility of ruin entailed by their reckless procedure would certainly have been averted; but men, shrewd, plausible, and unscrupulous, have a way of quieting the fears of banks and evading inquiries that are searching.

Under the Canadian system the few banks, each with large capital and many branches, find it to their interest to employ as managers men of character, foresight, and ability, and they are not allowed to participate in any way in the borrowing of money from their banks. In the United States each city has its numerous banks, no one of them firmly connected in management with any other bank. The officials often are men of minds not of the broadest and judgment not of the most accurate, who have attained their positions, perhaps, through influence of one kind or another, and sometimes they are in direct partnership with the men who have offered paper to the bank for discount, the recommendation of action upon which comes within their province.

Under the Canadian system there are restrictions upon the amounts which directors of a bank can borrow, and their heavy liability for losses incurred by their bank leads them to exercise much caution in accepting paper. In the United States many bank directors seek their positions almost exclusively because of the facilities they thereby obtain for borrowing, and by their accommodating each other the legitimate business of the bank and the community is prone to suffer.

Under the Canadian system there is an examiner for each large bank, who inspects its operations from time to time to ascertain not only that its status is sound from a bookkeeping and