The large banks have excellent systems of exami nation of their own, and their examiners are equal in rank to the managers of the branches, a point which has certain advantages.
The Canadian Bankers' Association was organized in 1892, as a private voluntary association. Eight years later the organization was incorporated iand given power to regulate the issues of the chartered banks. It has powers of inspection so far as circula tion goes, but it cannot look into the loans of the banks. The Canadian system is often criticized be cause of the lack of any adequate inspection of the parent banks.
15. Shareholders' audit.—The Bank Act of 1913 provides for shareholders' audit. At each general meeting the shareholders of each bank appoint audi tors from a list of not less than forty names, which is selected by the general managers, subject to the ap proval of the minister of finance. These auditors have general access to the affairs of the banks and they make reports to the stockholders annually or whenever required. The auditors must make an ex amination at least once during the year. They are not compelled- to audit branches, but they may do so if they wish.
The minister of finance may require any duly ap pointed auditor, or an auditor whom he may select, to make a special examination of the affairs of any bank and report fully to him. One weakness of the Canadian system has been the lack of outside exami nation. This has been corrected to a great extent.
16. Other financial institutions.—The privileges of
Canadian chartered banks are so broad that, with their well established reputation and large capital, they have almost been able to monopolize the entire field of bank ing. There are trust companies, but they are not nearly as powerful as are those of the United States. They took out charters originally with the provincial governments, but because of doubt as to who has au thority to grant trust company charters, they have since secured charters from the Dominion also.
The need for savings banks has hardly been felt in Canada. The chartered banks operate savings bank departments. The Dominion government also main tains two savings banks. One, operated by the Post Office Department,is called the Postal Savings Bank; the other, operated by the Finance Department, is called the Government Savings Bank. The former accepts deposits at every post office and is gradually absorbing the business of the latter. Aside from the government savings banks, there are two well-known independent institutions organized for conducting savings business—the City and District Savings Bank of Montreal and La Caisse d'Economie of Quebec.
The chartered banks do a financial as well as a com mercial banking business. They buy stocks and bonds, underwrite new issues of securities, make loans for development purposes and in general they may carry on all the operations which are practised by the various types of banks in the United States.