One of the admirable points about the Canadian banking system is its efficiency in handling the yearly harvests. Nearly every autumn the banking system of the United States displays weakness in the face of the crop-moving problems. In various parts of the Union interest rates rise and money becomes tight. In ordinary years nothing like this is seen in the Dominion. The business men and others dealing with the banks notice no difference whatever in the attitude of their bankers. They are able to borrow just as easily and at the ordinary rates - the moving of the crops makes practically no difference to them. A brief description of how the Western wheat crop - the most important part of the harvest-is financed will give some idea of the excellent working of the system. The operation is described as seen from the inside of a bank.

The Western Wheat Crop

During the summer the banks prepare for the crop-moving by ordering large supplies of new bank notes from the bank note companies. Big parcels of these come in at more or less frequent intervals. At the head office, and perhaps at several depot branches, clerks are set to work countersigning them. Every year, between August and the end of November, the amount of bank notes in circulation increases some $15,000,000 or $20,000,000. This increase is chiefly in fives and tens. Then there may be anywhere from $40,000,000 to $60,000,000 of notes withdrawn as worn out or disabled each year. To replace those withdrawn, and to provide the fresh notes needed when the maximum circulation of one year exceeds the maximum of the preceding year, $50,000,000 might be required. If this $50,000,000 were half fives and half tens, over seven million notes would have to be got ready.

Credits Of The Grain Firms

Preparation for the crop is also made in another way. The grain firms arrange their lines of credits, and their respective banks undertake to advance the monies needed for buying the grain. The manager of the Western branch office is expected to keep himself informed as to the exact date on which grain deliveries will commence at his town. We may suppose that he has as his customer a grain buying firm, with elevators at four or five points in the neighborhood, and which has arranged for a line of credit of $50,000. A few days previous to the expected beginning of deliveries the manager will arrange to have a supply of the bank's notes sent to the branch to augment his stock-in-hand. These are mere printed promises to pay, and represent no actual cash whatever.

The deliveries commence. The day before, the grain firm will come in with cheques for $6,000 or so, and will ask for cash to send to the points at which it is buying. Then, perhaps every day, the firm will require some cash - taking it in the bank's notes. It will begin by using its own capital, but that will soon be exhausted ; then it begins to borrow under the terms of its line of credit. As fast as the grain is bought it is put through the elevators and loaded on cars for Fort William, Port Arthur, or Duluth, the terminal points on Lake Superior. As soon as a car is loaded, the railroad station agent gives the shipper the railroad bill of lading, made out for a round number of bushels -the capacity of the car. So the grain firm is receiving, day by day, the bills of lading for cars loaded from its elevators at its buying points. These bills of lading constitute the security it is to give the bank. It turns them in as cover for the loans. Day by day the loan gets bigger, day by day the bank's notes are rushing out. Every few days fresh parcels of notes are received from the depot branch that is supplying. In the meantime, the cars are proceeding to the lake ports. The grain firm will, perhaps, sell from time to time to Winnipeg exporters, or to the big milling companies. For each sale it draws its draft on demand, or at sight, upon the purchaser, and instructs the bank to attach certain bills of lading to the draft. The bank applies the amount of the draft upon the firm's indebtedness, forwards the draft to Winnipeg, and instructs its branch there to "deliver documents attached on payment only." When the draft is paid in Winnipeg, the security is given up. So the account will run. The drafts covering sales of wheat are being applied on the debt; the purchases of grain are increasing it. The maximum of the credit, $50,000, may be reached, or it may not. As the deliveries begin to fall off, the demand for the bank's notes will slacken; and by-and-by the grain firm's indebtedness will begin to come down. After lake navigation closes, it may allow its elevators to fill up with grain to hold through the winter, to avoid shipping to the sea ports, via all-rail route, which is expensive, and to save the storage charges levied by the terminal elevators at the lake ports. In that case, a dead loan of some thousands of dollars may be asked for through the winter. In the spring the advance runs off.

Besides this grain dealing firm there will probably be several Winnipeg firms buying in the market at this point, as well as the agents of the big milling companies. The operations of these would be financed in much the same way, but in Winnipeg banks.

After the process has been going on for some time, the bank's notes begin to come in again. They are brought in by the farmers, who deposit them, by the traders and merchants of the locality, and by the other bank or banks in town. Eventually, the receipts of notes exceed the payments, and the circulation is said to be contracting. In redeeming them the bank gives credit on its books, or, in the case of other banks, its settlement draft on a settling centre.