Gough Barry M. Historical Dictionary of Canada

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80 • BALDWIN, ROBERT

to form a ministry, thereby furthering the development of parliamen-

tary democracy in Canada. These actions were repudiated by his suc-

cessor, Charles Metcalfe. However, the precedents were established

and responsible government became a reality under Lord Elgin.

BALDWIN, ROBERT (1804–1858). Lawyer, politician, and cel-

ebrated reformer from Canada West, Baldwin combined forces with

Louis Hippolyte Lafontaine, from Canada East, to establish what

became the Liberal Party. With his father, Baldwin devised the

theory of responsible government, wherein the legislative assembly

would control the list of persons working for the government (known

as “the civil list”) and have the general oversight of financial mea-

sures. This met with resistance from Governors Francis Bond Head

and Charles Metcalfe. However, Charles Bagot accepted Executive

Council participation in the legislative government. Baldwin with

Lafontaine resigned in opposition to Metcalfe’s autocratic rule. They

had made their point clear: they wanted local Canadian management

of the government. In 1848, Baldwin and Lafontaine forged a part-

nership. They established what is now generally called “the Great

Ministry,” a successful measure. Baldwin and Lafontaine thus were

party to the transition from imperial rule to colonial self-government,

mainly on fiscal matters. They are also seen as first partners across

the English-French divide of Canadian politics.

BANKING. Institutionalized banking came to British North America

in 1820, when the Bank of New Brunswick at Saint John was granted

a charter by the provincial government. In 1822, the Bank of Mon-

tréal (now BMO Bank of Montréal) was chartered by the Province

of Lower Canada. On the eve of confederation, there were 28 banks

in the provinces of Canada, Nova Scotia, and New Brunswick.

The Bank of Montréal, with origins from 1817, is Canada’s oldest

chartered bank. It participated in many developments in Canadian

economic and financial growth, including the first canals, the tele-

graph, the Canadian Pacific Railway, major hydroelectric projects,

and the development of energy and mining industries. In fact, it

was Canada’s banker from 1863 until the founding of the Bank of

Canada in 1935. The Bank of Montréal had agencies in New York

and London, and in 1893 became Canada’s fiscal agent in London,

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BANKING • 81

a function it still performs. In the early 20th century, bank mergers

and takeovers led to larger chartered banks. In the 1980s, these banks

acquired investment firms—in the case of the Bank of Montréal, the

firm Nesbitt, Thomson (now BMO Nesbitt Burns), and in the case of

the Bank of Nova Scotia (now Scotiabank), ScotiaMcLeod.

Three banks deriving from other geographic and financial centers

of Canadian activity are the Bank of British Columbia, Bank of Nova

Scotia, and Bank of Upper Canada. The Bank of British Columbia,

chartered in 1966 and headquartered in Vancouver, is now fully

owned by the Hongkong Bank of Canada, which is wholly owned by

Hongkong & Shanghai Banking of Hong Kong. Operating as HSBC

Bank Canada, it is Canada’s ninth largest bank. The Bank of Nova

Scotia was founded in 1832 in Halifax and is Canada’s second old-

est bank. Its influence expanded west with the building of the Cana-

dian Pacific Railway, and it opened a branch in London in 1920. It

amalgamated with smaller banks such as the Union Bank of Prince

Edward Island and the Bank of Ottawa. The first Canadian bank to

operate in the Caribbean, it opened a branch in Jamaica in 1889 and

was the first to offer complete banking services in Japan (1981). It

further diversified and expanded and is now global in operations. The

Bank of Upper Canada, chartered 21 April 1821, began operations

in York (Toronto) in 1822. It had powerful links with the Family

Compact. It speculated in lands and railways, and it never recovered

from an economic collapse in 1857, losing the lucrative government

account. It played a strong role in the development of Ontario in

early years but became a casualty and was placed in trusteeship in

November 1866.

Whereas the Bank of Canada acts as an arm of the federal govern-

ment, carrying out its monetary responsibilities and acting as a lender

of last resort to commercial entities, as well as holding assets of gov-

ernment and chartered banks and issuing notes of money, chartered

banks accept deposits from the public and extend loans for commer-

cial, personal, and other purposes. Canadian banks have their origins

in European and especially British traditions and practices. Early

banking history in British North America exhibits ups and downs and

general instability, a situation that continued until the 1920s. Gradu-

ally, legal provisions and government oversight tightened lending

practices. A variance in this came in the 1980s when, encouraged

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82 • BANKING

by the federal government, Canadian banks extended large loans

to Canadian companies wishing to take over subsidiaries of foreign

companies, especially in the oil and gas industry. A weakening of the

Canadian dollar and inflationary expansion of the money supply fol-

lowed. Meanwhile the domestic loan portfolio of banks deteriorated,

with loans to oil and gas companies, forest product companies, and

manufacturers Massey-Ferguson and International Harvester further

weakening bank financial strength. Many loans to Latin America

were written off, and chartered banks became more cautious in

lending practices. Meanwhile, bank profits and dividends continued

steady and even stronger.

The oversight of the Bank of Canada continued to act as a caution-

ary force in lending, credit, and currency, promoting and facilitating

national economic and financial strength and stability while at the

same time encouraging business expansion and portraying Canada

as a safe place for investment. The regulation of Canadian banks is

vested in the Government of Canada and, in particular, the minister

of finance. From time to time, practices are reviewed and matters of

disclosure reassessed. A proposal of 1977 that would have required

banks to provide better disclosure of interest charges was defeated

(and there was therefore no legislation).

Changes in 1980 to the Bank Act established the Canadian Pay-

ments Association, an agency responsible for the check (cheque)

clearing system. Other changes of that date include reducing reserve

requirements, allowing foreign banks to establish themselves under

various rules and restrictions, and allowing banks to become in-

volved in the business of leasing big equipment. Banks, but not their

subsidiaries, were limited to a 10 percent holding of residential mort-

gages. The recent past shows the institution of the electronic funds

transfer system, the computerization of banking through automatic

teller machines, automatic clearinghouses, preauthorized payments

and automatic deposits of government, payroll, and bond interest

payments. Multibranch banking, across-Canada banking integration,

and better accounting practices (and disclosure) also are recent devel-

opments. Federal government policy, derived from experience in the

past 30 years, is to prevent the merger of the great chartered banks

as well as to prevent U.S. dominance in the banking sector. Looked

at from another perspective, Canadian banks operate under overall

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BANK OF CANADA • 83

guidelines and direction as set or interpreted by the Government of

Canada under the Bank Act.

BANK OF CANADA. An instrument of regulation and control, the

Bank of Canada was established on 11 March 1935 under the terms

of the Bank of Canada Act, 3 July 1934. It arose directly in response

to federal government concerns in consequence of the Great Depres-

sion and due to mounting criticism of the way the country’s financial

institutions were structured; in turn, it came in response to the 1933

Royal Commission on Banking and Currency. Originally privately

owned, in 1938 the Bank of Canada was nationalized. Prior to the

Bank of Canada Act, Canadian banks were regulated by the Canadian

Bankers Association.

The new legislation was the major portion of the changes under-

taken. Associated revisions to the equally important but parallel Bank

Act, the law that regulates Canada’s chartered banks, and which

operate nationwide (BMO Bank of Montréal, CIBC, RBC Royal

Bank, Scotiabank, TD Bank, and so forth), made in consequence of

the 1934 legislation, also changed the legal framework for Canada’s

chartered banks, which are obliged to maintain a specified ratio (usu-

ally 10 percent) between liabilities to the public (current and savings

accounts) and their claims on the national monetary authorities (Bank

of Canada paper currency, plus deposits with the Bank of Canada).

The banks could not borrow directly from the Government of Can-

ada, as had been permitted under the 1914 Finance Act. Instead, and

after 1935, they had to borrow from the Bank of Canada.

In addition, the Bank of Canada would manage the national mon-

etary system, the issuing of paper money (bank note operations were

previously run by the Department of Finance), the holding reserves

in precious metals, the buying and selling of bonds in the securities

markets so as to affect the supply of credit and demand for it, and

the buying and selling of gold and foreign monies so as to affect the

demand-supply balance in the foreign exchange market. Bank of

Canada operations thus affect the cost and availability of credit, but

it never fixes interest rates for the public at large or rations the supply

of credit directly.

The Bank of Canada is Canada’s central bank because of its spe-

cial functions in relation to the chartered banks, the international

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84 • BANTING, FREDERICK GRANT

environment, and the federal government. It is also the parent of the

Industrial Development Bank, established 1945, and the Business De-

velopment Bank of Canada. It does not engage in commercial banking

activity, but it has guiding power in setting the bank rate, formulating

monetary policy, and stabilizing the Canadian dollar exchange rate.

According to the Bank of Canada Act, the essential purpose of money

management is to help achieve price, employment, and economic

conditions that are “in the best interests of the economic life of the

nation.” In short, it has an obligation to the nation and falls under

government legislation though has independent powers. It is managed

by a senior governor, a senior deputy governor, and 12 directors. The

deputy minister of finance of the Government of Canada is a non-

voting member of the board. Directors are appointed by the federal

minister of finance. By no means independent, the Bank of Canada is

ultimately responsible to the government, as was proved by a dispute

between the government and James E. Coyne, the governor in 1961,

on the question as to the date of the governor’s end of tenure.

It is in the managerial aspects of credit and collateral that the Bank

of Canada has demonstrated its value in financial stability at home

and in the international markets. In its oversight, it aims to maintain

inflation between 1 and 3 percent a year. Its old-style policies and

generally conservative banking practices attracted a good deal of

international, especially American, attention in late 2008 and well

into 2009 during the recession. Canada’s banks did not escape the

downturn entirely, and debate occurred as to whether the banks might

be forced to cut dividends—something not done since the 1930s.

Government support consisted mainly of providing liquidity through

regular auctions of high-quality mortgages held by the banks and

other mortgage lenders. The chartered banks received no aid in the

recent crisis, and in fact resisted any possibility of the same.

In 2009, Bank of Canada Governor Mark Carney cited the strength

of the Canadian banking system as key to the country’s economic re-

covery, saying there is “almost a quantum difference in the financial

position of the Canadian banking system [as opposed to that of the

United States].”

BANTING, FREDERICK GRANT (1891–1941). A physiologist, Sir

Frederick Grant Banting discovered insulin. Born in Alliston, On-

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BATTLE OF THE ATLANTIC • 85

tario, he studied medicine at the University of Toronto and became

a professor there in 1923. While working under John James Rickard

Macleod on pancreatic secretions in 1921, he discovered (with the aid

of his assistant Charles H. Best) the hormone insulin, a treatment for

diabetes. With Macleod, he was awarded the Nobel Prize in Medicine,

which he shared with Best. In 1930, Banting established the Banting

Institute in Toronto. In 1941, he was killed in a wartime air crash. In

2008, the Banting homestead was designated under the Ontario Heri-

tage Act, the intent being its restoration and preservation.

BARKER, WILLIAM GEORGE (1894–1930). Canada’s most deco-

rated war hero, “Billy” Barker was born in Dauphin, Manitoba. As

an officer in the Royal Flying Corps (RFC), he was credited with

40 “kills” of German and Austro-Hungarian aircraft in World War

I. He is best remembered for single-handed combat against at least

30 enemy aircraft, which won him the Victoria Cross on 27 October

1918. Barker became the first director of the Royal Canadian Air

Force (RCAF). He was fatally injured when his Fairchild crashed at

Rockcliffe Air Station, near Ottawa.

BATTLE OF THE ATLANTIC. At the beginning of World War

II, the British received two-thirds of their food supplies, 30 percent

of their iron ore, 90 percent of copper ore, 90 percent of bauxite, 95

percent of petroleum, 100 percent of rubber, and 80 percent of their

soft timber from abroad by sea. If the supplies could not get through,

the British would be unable to fight, and cutting those supply lines

was a major aim of Germany. The Battle of the Atlantic was to de-

termine the outcome.

German U-boats ranged the Atlantic Ocean in search of British and

Allied merchant shipping. In the early stages, this tactic was effec-

tive in reducing the supplies to Britain. Although Britain developed

a detection device, they had few ships that could fight the U-boats.

Between July and December 1940, U-boats sank 1.5 million tons

of shipping. The Battle of the Atlantic began as a race between the

German’s ability to build U-boats and the Allies’ ability to construct

merchant ships, and also between the development of German un-

dersea tactics and the Allies’ ability to build escorts and to learn to

defeat the U-boats.

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86 • BC FERRIES

The climax of the battle was 1943. The number of U-boats at

sea averaged more than 100. For a time, the Royal Canadian Navy

(RCN) was pulled out of the struggle due to ill-equipped escorts

and below-standard training. As well, there was an air coverage gap

off the coast of Greenland, although the Royal Canadian Air Force

(RCAF) Eastern Air Command provided exhaustive coverage out of

Newfoundland. In February and March 1943, 171 ships were sunk

by U-boats. At the Atlantic Convoy Conference in Washington in

March 1943, RCN’s Adm. Leonard Murray took over the Canadian

Northwest Atlantic Command. The Allies gained control over the

Germans by gaining access to German codes in March 1943. As

well, better-designed detection equipment, new weapons such as the

hedgehog, better training, and the extension of escort and, eventually,

air coverage across the North Atlantic turned the tide in favor of the

Allies. In May 1943, the Allies sank 41 U-boats and continued to

deplete the German submarines in the following months. By 1944,

the RCN and RCAF had almost entire responsibility for the surface

escort of convoys. The Battle of the Atlantic was a hard-won Allied

victory in which Canadian forces played a fundamental part. See also

CANADIAN AIR FORCE; CANADIAN NAVY.

BC FERRIES. A crown corporation of the Province of British Co-

lumbia, BC Ferries was launched in 1960 by the Social Credit

government of Premier W.A.C. Bennett. Numerous difficulties with

Canadian Pacific Coastal Steamships, including strikes and corporate

indifference to the Strait of Georgia crossings (Vancouver-Nanaimo

and Vancouver-Victoria), led to this government intervention. BC

Ferries began with two ships (designed for 106 1960 Buicks or

equivalent), two terminals (Tsawwassen and Swartz Bay), and 200

employees. Another route instituted in early days was Horseshoe Bay

to Nanaimo, later supplemented by Tsawwassen to Duke Point (Na-

naimo). By 1998, it had one of the largest ferry fleets in the world,

with 4,000 employees and 40 ships serving 25 different routes, carry-

ing over 22 million passengers and 8 million vehicles a year. BC Fer-

ries concentrated on in-province marine travel (as opposed to trade

with the United States). It pushed Black Ball Ferries, an American

corporation, out of the Nanaimo-Vancouver run; in addition, it ended

the Canadian Pacific Railway’s coastal traffic. BC Ferries inherited

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BEAVAN, EMILY SHAW • 87

Gulf Islands and other ferry routes of the Provincial Department of

Highways. It developed the Port Hardy, northern Vancouver Island,

to Prince Rupert “inside passage” run and the “mid-coast” route

linking the Port Hardy-Prince Rupert run to McLoughlin Bay, Ocean

Falls, Bella Coola and Klemtu, and in the Queen Charlotte Islands,

Skidegate and Alliford Bay. In 2006, its vessel Queen of the North

(8,806 tons), sailing south from Prince Rupert, sailed off course, hit

a rock, and went down with loss of two passengers.

BEATTY, EDWARD (1877–1943). Noted business executive Sir

Edward Beatty was born at Thorold, Ontario, and educated at Up-

per Canada College and the University of Toronto. Called to the bar,

he entered the legal department of the Canadian Pacific Railway

(CPR), rising to become one of the vice presidents (1914). President

of CPR in 1918, he guided the firm’s affairs in turbulent times, which

included a severe depression and rivalry from the newly created Ca-

nadian National Railway system. The latter had the resources of the

state behind it, which Beatty and his associates naturally resented as

unfair. He sought the merger of the two, but a royal commission found

against him in 1932. The revival of Canadian prosperity aided his at-

tempts to extricate the CPR from desperate days. A person of charm

and wide friendship, he was popular with his staff and employees. His

health declined and he retired in 1942. Publicly spirited, he gave time

and money to worthy causes, including Queen’s and McGill univer-

sities, Royal Victoria Hospital in Montréal, and the Boy Scout As-

sociation of Canada. Knighted 1915, he died unmarried in Montréal.

BEAVAN, EMILY SHAW (1818–1897). Author and teacher Emily

Shaw Beavan lived in New Brunswick for most of her life. In 1838,

she married Dr. Frederick Beavan. While in New Brunswick, she

carefully recorded her observations of a settler’s life, which were

later published in England as Sketches and Tales Illustrative of Life

in the Backwoods of New Brunswick. The book provides a good il-

lustration of frontier life and more specifically the role of women.

Although her personal life story has large gaps, her work has pro-

vided great insight into the early development of Canadian life. She

died at Surrey Hills, Sydney, New South Wales. See also WOMEN

IN CANADIAN HISTORY.

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88 • BEAVERBROOK, LORD

BEAVERBROOK, LORD (1879–1964). William Maxwell Aitken,

Lord Beaverbrook, was born in Maple, Ontario, a son of the Pres-

byterian manse. He lived early years in Newcastle, New Brunswick,

and then became active in various financial lines, including bond

sales, securities, and corporate mergers (esp. Canada Cement). At

one time, he owned the Rolls auto company. Through personal con-

nections with fellow New Brunswicker Andrew Bonar Law (later a

British prime minister), he stood for election as a Unionist and was

elected a member of Parliament at Westminster in 1910. His self-

benefiting influence as a Canadian was widely felt in Westminster,

Whitehall, and the City of London. He wrote summaries of Canada’s

military achievements of 1914–18 and collected documents of Can-

ada’s military affairs. With Lord Rothermere, he initiated the Cana-

dian war artists project. He became a prominent newspaper owner.

He was also a cabinet member of prominence, serving as Britain’s

minister of information. His art collection is housed in the Beaver-

brook Gallery, Fredericton, and is the subject of persistent ownership

wars between his kin and that institution.

BEGBIE, MATTHEW BAILLIE (1819–1894). Known as “the

Hanging Judge,” Sir Matthew Baillie Begbie was born in England

and educated at St. Peter’s College, Cambridge. He was called to

the English Bar in 1844. In 1858, he was appointed a judge to the

Crown Colony of British Columbia. Begbie was very important in

preserving law and order in the new colony during the days of the

gold rush. He had a decidedly tough-minded attitude to criminals,

but he was generally fair and not really responsible for many hang-

ings. In 1866, when the colonies of Vancouver Island and British

Columbia were united, he became chief justice of British Columbia.

He was knighted in 1875 and was still chief justice at the time of

his death in Victoria.

BELL, ALEXANDER GRAHAM (1847–1922). Inventor of the

telephone, Bell also formed, in Halifax in 1907, the Aerial Experi-

ment Association, whose Silver Dart made the first manned flight in

Canada in 1909. Hydrofoil HD-4 is preserved in the Bell Museum at

Baddeck, Cape Breton, Nova Scotia.

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BENNETT, RICHARD BEDFORD • 89

BENNETT, RICHARD BEDFORD (1870–1947). Prime minister

and later member of the House of Lords, R. B. Bennett became a

symbol of all that ailed Canada in the 1930s, possibly an unjust as-

sessment. Born in Albert County, New Brunswick, and educated

in Nova Scotia, Bennett became a lawyer and then politician. He

was proud of his alleged Loyalist roots, his Methodist values, and

his rise to prominence from humble origins. He is seen as a Tory’s

Tory. He prospered as a lawyer in Calgary and became, in 1911,

MP for Calgary for the Conservative Party. In 1927, he became

the leader of the party. The stock market crash of October 1929

ended the Roaring Twenties and the economic boom of the times. It

ushered in a decade remembered as the Dirty Thirties. His political

opponent, the then prime minister, William Lyon Mackenzie King,

leader of the Liberals, underestimated the depth of serious problems

confronting the country, its regions, and its peoples. Bennett and the

Conservatives won the election of July 1930. Bennett became prime

minister and held the position until 1935. While prime minister, he

poured all his energy and talents into dealing with the economic

woes of Canada and tangentially of the British Empire. However,

the challenges he faced by the Great Depression were numerous and

impossible to meet in totality. These were years of hunger, homeless-

ness, and unemployment—and thus social protest—on a scale never

before seen in Canada. Bennett was often vilified as a symbol of all

the economic ills and government indifference. His opponents had

a field day, and he was the target of their wrath and their simplistic

political solutions.

Autocratic in manner, he appeared insensitive to the suffering of

the country. History shows otherwise. He convened the 1932 Ottawa

Imperial Economic Conference, which facilitated means of bilateral

Empire trade preference. As well, his government launched the Price

Spreads Commission in 1934, which revealed retailers’ exploitation

of employees in department and chain stores. He proposed the Wages

and Hours Bill and Unemployment Insurance. His government’s

Unemployment Relief Act provided $20 million to help people get

back to work. He embarked on a program of tariff increases designed

to protect languishing Canadian industries from foreign competition.

He also established relief camps for single men. He brought forward

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