ame kind of
acquired skill and similar experiences likely to draw the same or at
least similar conclusions from this data; common interests in the
prosperity of the country and in the prevention of speculative
excesses and mutual interdependence in the successful conduct of their
everyday business as well as in times of emergency and stress: and the
Bankers' Association, which through its journal gives authoritative
expression to the best banking opinion and actually acts for the banks
in many matters of common interest. To what extent this community of
action takes the form of rediscounts for each other in ordinary times
it is impossible for an outsider to say, but that it is operative in
times of stress is indicated by the manner in which the failures of
the Bank of Ontario in 1906 and the Sovereign Bank in 1908 were
handled.

In both of these cases the public was protected against loss and panic
was averted by the cooperative action of the other banks in assuming
the obligations of these institutions to the public, and in winding up
their affairs in such a manner as to occasion little disturbance.

While Canadian banks are free to carry on investment as well as
commercial banking operations, their published reports indicate that
they take care to avoid confusion of the two, or the infringement of
one upon the other. Their holdings of investment securities are kept
well within the limits set by their aggregate capital, surplus, and
savings funds, and their method of handling commercial business, based
as it is on accurate knowledge of their customer's operations and upon
the lien upon produce heretofore described, prevents their acceptance,
through ignorance, of investment securities under commercial
disguise.

CHAPTER VI

INVESTMENT BANKING

In the economy of nations the encouragement and promotion of saving
and the accumulation, distribution, and investment of capital are as
essential as the conduct of exchanges, but the performance of these
functions has not been segregated and institutionalized to the same
extent as has commercial banking. Vast amounts of capital are invested
directly by the people to whom it belongs without the aid of middlemen
and large amounts are also invested through brokers of one kind and
another who can hardly be classed as bankers. The most important types
of institutions which have been developed in connection with these
functions are savings banks, trust companies, bond h