Volume 2 - ElectricCanadian.com

DEVELOPMENT OF CANADIAN BANKING 463each province. Curiously enough, the provision authorizingthe signing of notes by machinery, which dated back to theold days of individual charters, but which was seldom, if ever,availed of, was amended to require one signature to be in theactual handwriting of the person authorized to sign. Scarcelyhad another decade run its course, when the growth of thebusiness of Canada, and the consequent increase in the demandfor notes, caused this seemingly unimportantrestriction tobear with constantly increasing weight on the larger banks, 1and it was done away with in 1913.Before dealing with the changes introduced into the"pledge" sections of the Act in 1890, it will be well toindicate briefly their importance to the commerce and industryof Canada. From early days the successful marketing ofcertain of the most important natural products of Canada,notably grain and timber, has called for the employment atcertain seasons of much larger sums of money than could beprofitably utilized as capital throughout the year. Thiswould be an ideal field for bank advances, were it not for thefact that experience has shown that the amount of moneyrequired is beyond that which can prudently be lent on thebasis of the amount of capital usually employed in such kindsof business, unless definite and tangible security is forthcoming.Were the customer forced to capitalize his business sufficientlyto entitle him, according to the accepted standards of prudencein such matters, to the accommodation he requires, alarge part of his capital would lie more or less idle during partof the year, and it is obvious that the result of this must tend toincrease the margin of profit on the business which he does inorder that his capital may earn enough to justify its beingemployed in this manner; in other words, he will be forced topay less for the natural products, such as grain and standingtimber, which he buys. In the case of grain the farmer, in thecase of timber the country as a whole, as represented by theGovernment, would be the loser. The banks found that, whenlSee page 547.