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Published online by Cambridge University Press: 07 November 2014
In the Spring of 1951, after more than three years of planning, the organized leadership of the Canadian co-operative movement made a determined effort to persuade the Government of Canada to support before Parliament a bill to incorporate a national co-operative credit society–a national co-operative central bank. While this attempt did not succeed, the co-operative leaders, far from abandoning the proposal, intensified their efforts to secure this incorporation, and a campaign is being conducted throughout the country. In this article an examination will be made of the central co-operative credit societies now existing in the different provinces of Canada; their economic function will be considered and elements of strength and weakness found in them will be analysed. While the emphasis will centre on the provincial units, certain observations on the proposed national co-operative credit society will also be made.
The principles of co-operative banking can be derived from observation of existing institutions. During the 1930's well-developed systems of co-operative credit were operating in almost every civilized country in the world. While these banking systems professed a certain similarity of purpose, embracing such characteristics as non-profit operation, low interest rates to borrowers, the accumulation of funds for the development of co-operatives, and the like, they exhibited a wide variety of organizational structures. Some of these societies served only co-operatives, while others dealt with the general public; some served only credit societies, others all types of co-operatives; some were primarily systems of agricultural credit, while others served urban tradesmen and producers; some operated under the aegis of the state while others were independent of state aid; some practised open membership, while others accepted as members only certain racial or religious segments of the population. Thus the problem of classification of co-operative banking systems is a difficult one.
1 The bulk of the information upon which this article is based was secured from a questionnaire answered by the managers of the central credit societies of each province except Quebec. The Quebec material was furnished by La Fédération des Caisses Populaires Desjardins. Appreciation is expressed to Mr. A. B. MacDonald of the Co-operative Union of Canada, to Mr. J. E. O'Meara of the Economics Division of the Department of Agriculture and to Hon. Cyrille Vaillancourt of La Fédération des Caisses Populaires Desjardins for their assistance in assembling this material. A detailed account of the attempt to secure a charter for a national co-operative credit society is contained in A Challenge to the Co-operative Movement, issued by The Co-operative Union of Canada (Ottawa, 1951).Google Scholar
2 Barou, N., Co-operative Banking (London, 1932), 90-4.Google Scholar
3 Co-operative societies numbering 2,637, with over 1,200,000 members, reported a total business of more than one billion dollars in 1949. O'Meara, J. E., Co-operation in Canada (Ottawa, 1950), 2, 4 Google Scholar
4 The complete history of the credit union development in Canada, as well as a thorough discussion of the Quebec development, is contained in Bussière, E. Dir., Caisses Populaires, (Quebec, 1947).Google Scholar The Economics Division of the Marketing Service of the Department of Agriculture publishes annually a report, Credit Unions in Canada, containing summary statistics of each provincial credit union development, together with an analysis of these figures. Most of the provinces publish annual reports on credit unions, but these differ widely in the information which they contain; some are extremely detailed, e.g. Quebec and Saskatchewan, while others reveal bare summary totals. The standard work on the credit union is Bergengren, Roy F., Credit Union North America (Kingsport, Tenn., 1940).Google Scholar
5 Bussière, E., Caisses Populaires, 143-93.Google Scholar
6 Adapted from Barou, Co-operative Banking, 258-77.Google Scholar
7 Croteau, J. T., “The Caisses Populaires Desjardins of Quebec: A Modern System of People's Banks,” Agricultural History, 10, 1950, 235.Google Scholar
8 Vaillancourt, C., “Nous avons perdu le sauveur des caisses populaires,” Revue Desjardins, 03, 1948, 49.Google Scholar
9 O'Meara, J. E., Credit Unions in Canada (Ottawa, 1950), 11 Google Scholar
10 Barou, , Co-operative Banking, 88.Google Scholar
11 Smith, Adam, The Wealth of Nations (Cannan, ed.), II, 246.Google Scholar Possibly the promoters of this movement might ponder over Adam Smith's remarks found further down on the same page: “Though the principles of the banking trade may appear somewhat abstruse, the practice is capable of being reduced to strict rules. To depart upon any occasion from those rules, in consequence of some flattering speculation of extraordinary gain, is almost always extremely dangerous, and frequently fatal to the banking company which attempts it.”
12 Noble, S. R., “Industrial Development Bank: The First Five Years,” Canadian Banker, Spring, 1950, 29–37.Google Scholar
13 Barou, , Co-operative Banking, 330.Google Scholar
14 Walker, E. R., From Economic Theory to Policy (Chicago, 1943), chap VI.Google Scholar
15 Information concerning the projected national co-operative credit society, the proposed law, and the proposed by-laws has been supplied by Mr. A. B. MacDonald, General Secretary of the Co-operative Union of Canada. Cf. also The Co-operative Union of Canada, A Challenge to the Co-operative Movement.
16 Barou, , Co-operative Banking, 305.Google Scholar
