Volume 2 - ElectricCanadian.com

110 HISTORY OF THE BANKa spirit of co-operation, and thus the two banks togetherin the next ten years built up one of the largest and mostimportant foreign exchange businesses then in existence,having as its basis the movement of cotton, grain and othermerchandise from North America to Europe.The interval between the annual meetings of 1887 and1888 was marked by the disappearance from the scene of twowell-known banks, the Central Bank of Canada, which failedin November, 1887, and the Federal Bank of Canada, whichwent into voluntary liquidation less than three months later.As early as the summer of 1884, The Canadian Bank ofCommerce had, in association with other banks, assistedthe Federal Bank to a very large extent, taking as securityapproved paper, principally that of private bankers. InNovember, 1887, an appeal for similar assistance was madeby the Central Bank of Canada and a meeting of the leadingbankers of Toronto, of which Mr. B. E. Walker was electedchairman, was held to consider the request. Suspension wasclearly imminent, and investigation showed that the failureof the bank could not be averted. The position was a delicateone, because it was evident that some of the directors of theCentral Bank would endeavour to throw the blame of thefailure upon the other banks, if the latter declined to help.Under Mr. Walker's guidance, however, the banks, instead ofrefusing to help, agreed to provide whatever was necessary,on condition that on examination the Central Bank was foundto be solvent, with the further proviso that if insolvent it shouldimmediately suspend payment. It was a foregone conclusionthat investigation would show insolvency, for the recklessnature of its management had been well-known in bankingcircles, and the revelations made in the liquidation proceedingsthat ensued showed clearly why help would have been unavailing.Branches had been established at any place where theresidents would subscribe for a sufficient amount of stock inthe bank. In certain cases it had paid brokers for assistancein increasing its note circulation, and its deposits were built up