Grain Accounts In Winnipeg

To follow the process to the cities. There, it is a case of the big exporting and milling firms sending out large amounts of cash to many points at which they have elevators, of their taking over or paying the drafts from country dealers and farmers - their indebtedness to the banks meanwhile growing to large proportions. The security against their advances consists largely of wheat in store at lake ports or milling centres. Their accounts are liquidated by sales and shipments from those points. A boat is loaded with grain for Buffalo for export via New York. The bank buys the lake bills of lading and carries them till they can be exchanged for an ocean bill and a sterling bill of exchange drawn on Liverpool or London. The sterling bill is sold in the New York exchange market, and the bank has its money. Similarly with the exports via Montreal. When the sterling bill of exchange is drawn, with ocean documents, it can be negotiated in New York.

Utility Of The Note Circulation

The strong point about the Canadian method of financing the crop, that which enables the operation to be so easily done, is the use which is made of the bank notes. The extra $20,000,000 or so that is injected into circulation is not cash at all; it is merely a mass of credit instruments. It serves the purpose of a circulating medium every bit as efficiently as the hard cash which the United States banks are obliged to use. In Canada, it is not a case of an existing stock of money being called upon to do extra work at crop-moving time; it is, instead, a case of an extra supply of credit instruments being called into existence specially to do that work. When the work is done, the extra supply vanishes and is seen no more till further need for it arises. The banks are able so easily to make the large loans to grain buyers because the grain buyers take the proceeds of the loans in the banks' own notes.

Business In The Mining Towns

In Canada, of late years, a good deal of attention has been directed to the various mining centres. Although only a small proportion of the bank branches are located in these districts, the business they do is somewhat different from that transacted in the ordinary branches, and it will be interesting to trace some of the peculiarities. Dealings with the mines compose a considerable part of the whole. The general manager of an old and conservative Canadian bank, with many years' experience in this kind of business, used to advise his managers: "Remember, the bank lends no money on a hole in the ground"; that is to say, it is not a banker's business to provide money for development work. The practice of the most conservative banks is well defined. Their rule is rigid, that shareholders of the mining companies must find the money themselves for development work. When mining companies have reached a certain stage of development and are shipping ore to a smelter and getting returns regularly, business may be done with them by lending money upon ore on the dump or in transit. But the managers have to keep in mind the fact that ore from different levels of the same mine will often vary considerably in value. In granting accommodation, the bank is guided considerably by the past record of the companies it deals with.

In the free milling gold camps where the ore passes through the stamp mill, the clean-up is usually reduced at the mine to gold bars, which form an excellent bankers' security until shipped to an assay office and returns are received.