MONEY FROM CANADA

Greymouth Evening Star, 10 December 1927, Page 2

MONEY FROM CANADA

SUMS IN NEW YORK. Any American who thinks of Canada as a sort of poor relation will be surprised to learn that Canada has £48,000,000 out on call loans in “foreign countries,” which in this case means New York city. In other words, Canada is supplying this sum to help New York to carry on business from day to day. There is more Canadian money for loan in New York than there is in Canada itself. The total for Canada is only £36,800,000, and for this Canadian money the borrower in New York is charged less interest than the borrower in Toronto. The situation is demonstrated in figures of the Federal Department of Finance, giving the return of all Canadian chartered banks. On the surface the situation might look sinister to Canadians. Is there some conspiracy of banking interests to extract money from Canada to promote business in New York? But, according to bankers the explanation is simple. While, theoretically,there is a call loan market in Canada, practically there is not. That is to say, a bank does not feel free suddenly to call in a million or two million dollars from call loans in Canada, because to do so might seriously upset Canadian business. In New York, on the other hand, the market is so huge that a million dollars, or several million dollars, can always be called by a bank on a minute’s notice, and without the slightest fuss. If a Canadian brokerage firm were suddenly called upon by a bank for a large sum of call money, the bank knows quite well that it,,would get no more of that firm’s account, but New York brokers think nothing of being called on for money; ic is al in the day’s business. Where a Canadian broker is called by the bank once a year, a New York broker is called 20 times a year, or more. New York operations give the Canadian banking system an elasticity which would otherwise be lacking.