Wednesday, October 07, 2009

History of Banking -- why is it federal?

One. The global financial collapse drew attention to the way Canada's banks -- few, large, and relatively-closely supervised by a national bank regulation system -- avoided many of the pitfalls that created the crisis in many other countries.

Two. Okay, when I get a new Canadian history, I sometimes look myself up in the index first. Last week, at the launch of Joe Martin's casebook in Canadian business history, Relentless Change, I found I am not in the index but deserve to be. Martin writes (page 3):
Section 91 of the British North America Act provided the federal government with powers over currency and banking as well as life insurance. This was an important provision and one that contributed significantly to Canada's development of an effective financial system. Yet an examination of general textbooks on Confederation, or Christopher Moore's 1867: How the Fathers Made a Deal, reveals little discussion of the matter.
It's a good point. In the confederation settlement, many aspects of business regulation became provincial powers along with "property and civil rights." One can see currency being naturally national, but why banking? Martin's quite right that there's no explanation in my book. I wonder what the answer is, or if anyone has really addressed the question.
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