470 AGRICULTURAL CREDIT. DAVIDSON. 



then repeatedly urged that " a measure which would provide 

 facilities for the establishment of local banks . . . would 

 confer a great benefit." (Can. Hansard, 1885, p. 119.) And the 

 advantage was supposed to be that savings would by this means 

 be fixed in fcheir own localities, to the great benefit of borrowers, 

 at least in such provinces as New Brunswick, which saves more 

 than it can lend. Whether this difficulty can be overcome is 

 another question. It is not overcome by any European system, 

 for People's Banks were devised to provide a remedy for this 

 evil. Nor is it overcome under the highly decentralized system 

 of the United States. The Canadian banking system is not an 

 agricultural system, ar\d perhaps never has been any more fitted 

 to supply agricultural credit than it is to-day; but it is a better 

 system, even for the farmer, than any other that has been 

 devised as an ordinary banking system. As a matter of fact, 

 fixing local savings, which seems so desirable to the borrower 

 who resides in a district that saves more than it invests, is not 

 realisable under modern business conditions. Sooner or later, 

 economically or otherwise, surplus savings will find their way to 

 the district where there is demand for them. The distant bor- 

 rower may be made to pay more, but the money cannot be kept 

 at home. 



There have been various proposals to amend our own and 

 other banking systems in the interests of the farmers. So far 

 as the Dominion is concerned, these proposals have been either 

 to adopt the Dominion system of local banks or to establish land 

 banks neither of which promises any relief. The small local 

 bank is not forbidden by our Canadian banking act, though 

 new banks with less than $500,000 cannot now be established 

 with rights of issuing paper money. Such local banks do continue 

 to exist, and chiefly in the maritime provinces. Of fourteen 

 banks with a paid up capital of less than a million, ten are in 

 the maritime provinces. None of the New Brunswick banks has 

 an authorized capital of more than $500,000, and the average is 

 only $293,000 ; one of these, the People's Bank, the smallest in 

 the Dominion. Yet these small banks do not serve to fix savings 



