Banks in Canadian-American Relations

The Canadian Review of Amencan Studies, Volume 10. No 3. W111ter\979 Banksin Canadian-American Relations Kenneth M. Glazier John Fayerweather. The kfercantile Bank AJfair: A Case St11d1· o( Canadian Nationalism and a Multinational Firm. New York: New York University Press. 1974. 444 pp. John Hutcheson. Dominance and Dependenc:r: Lihera/ism and National Policies in the Nmth Amencan Triangle. Toronto: McClelland and Stewart. 1978. 182 pp. In 1967 Canadians were enthusiastically preparing for the celebration of the 100th anniversary of Confederation. While the wave of national pride was rising, culminating in Expo '67 in Montreal, an event took place which nearly spoiled the mood of the party. The First National City Bank of New York (Citibank) announced that it was planning to take over the Mercantile Bank of Canada (a small Netherlands-controlled bank). Canadians had become accustomed to the American take-over of various production components in the economy: manufacturing, mining and petroleum . But for a U.S. bank to have an important foothold in the Canadian banking structure was something else. It not only aroused the concern of the Canadian chartered banks and the business community but of the man in the street in Montreal and Moose Jaw. The Mercantile Bank affair became the subject of discussion not only in the corporate board rooms but in the living rooms of many Canadians. Canadians have a peculiar feeling about their banks. Since there are only ten chartered banks in Canada, they are easily identified, and Canadians have a personal relationship to their banks and are proud of their record of stability. Canadians are a cautious people. They feel secure with their money in a Canadian bank and are sensitive about any events which may change that feeling. When an American bank planned to enter that area of Canadian life, the reaction was swift and strong. Canadians rallied to the defense of a strong pillar of Canadian society-their banks. 372 Kenneth M. Glazier The account of what took place in 1967 was published five years ago in a book by John Fayerweather entitled The Mercantile Bank Affair: A Case Study of Canadian Nationalism and a Multinational Firm. The author brought to his task an impressive academic record and experience at Harvard , Columbia Graduate School of Business, and now at the Graduate School of Business Adminstration, New York University. He produced an important volume on the roots and expressions of Canadian nationalism and its relation to the Mercantile Bank case. The Canadian newspaper coverage of the controversy is discussed at length. Fayerweather writes with clarity, and the drama of the events is not lost in the details. It is significant that the account was written not by a Canadian but by an American, who tried to be factual and fair. Citizens of both countries have reason to be grateful that this significant book was written to document a crucial issue in Canadian-American relations. The cast of characters described in the book is impressive. The leading role on the U. S. side was taken by James S. Rockefeller, President of Citibank, whose name had enough magic to arouse both interest and some suspicion. Rockefeller was supported by Robert McFadden, President of Mercantile, and others. On the Canadian side of the table were Louis Raminsky, Governor of the Bank of Canada; Walter Gordon, Minister of Finance and a leading nationalist; Mitchell Sharp, who replaced Gordon as Minister of Finance; and Bryce Mackesy, a Liberal Member of Parliament . Prime Minister Lester Pearson, while he did not sit at the negotiating table, was fully aware of the discussions and the political and economic significance of the decisions. The deliberations were tough and at times acrimonious, but after the usual compromises on both sides an agreement was reached that Citibank would take over Mercantile and be allowed to continue in Canada provided that twenty-five percent of the stock would be owned by Canadians. The deliberations were watched closely by the State Department, but it did not interfere. Canadians took a firm stand that Canada would keep its banking system under Canadian ownership and control, with minor exceptions. Today the Mercantile Bank is found in some major cities in Canada but with a...