I agree "Canadian financial prudence should not be smugly taken as a given, or as a gift of national character" (Canada Is Not Innately Wise - editorial, Feb. 2); I wish there were greater knowledge of the roots of our financial prudence.
Those roots date to 1817 and the incorporation of the Bank of Montreal, which was heavily influenced by the Charter of the First Bank of the United States, which the Americans had allowed to lapse. Another important event was the 1864 Quebec City Conference, where, unlike the U.S., delegates decided banking and currency should be federal responsibilities. Then came the Bank Act of 1871, which provided for regular reviews to ensure the act was adjusting to changing times.
The quality of the legal framework for banking in Canada was brought out in the 1907-08 fiscal crisis. The 1907 Canada Year Book said this: "In monetary circles, the year 1907 will be long remembered as a period of grave embarrassments and anxiety caused by the extraordinary financial stringency prevalent throughout the world. The crisis was most acute in the United States. ...Such conditions had naturally a reflex action upon the financial position in Canada; but whilst values were greatly depressed the shrinkage was at no time accompanied by panic and the Canadian banking system proved once more the stability of the principles upon which it is conducted."
Plus ça change, plus c'est la même chose - so it was in 1907/08, so it was in 2008/09.
director, Canadian Business History, Rotman School of Management