The Role of Canadian Chartered Banks in US Banking Crises: 1870–1914.

The paper examines the role played by Canadian chartered banks in the banking crises that occurred in the U.S. over the period from 1870 to 1914. The particular hypothesis investigated is whether Canadian chartered banks, operating through their U.S. branch offices, increased their share of total U.S. deposits during these crisis periods. Such an occurrence would imply that the U.S. depositors perceived the Canadian chartered banks as being safer than American banks during periods of financial distress. This perception would have enhanced the reputation of Canadian chartered banks and facilitated their expansion into the U.S. market. The period 1870-1914 is chosen to consider this hypothesis for several reasons. First, in 1870 the Canadian government enacted the Bank Act, the first piece of formal legislation governing chartered banks in Canada. This act required that all chartered banks keep records of their domestic and foreign operations and submit monthly reports to the Minister of Finance. Second, during this period prior to the establishment of the Federal Reserve System in 1914, there were many instances of financial distress in the U.S. banking system.