Introduction
Bank of Canada
Monetarism
Unbelievable!
Believe It!
Ideology
Article 18
Ex. 1/Ex. 2
A Vision
Conclusion

The Formation of The Bank of Canada

Until the BoC opened in 1935, The Treasury Board, which administered the Finance Act of 1923, had no responsibility to see that advances made to the banks answered the needs of the economy. The unsatisfactory nature of that arrangement was revealed during the Great Depression. In 1934 Parliament passed the Bank of Canada Act, and the bank itself was founded a year later. Since 1938 the bank has been owned entirely by a single shareholder- the federal government (i.e., Canadian taxpayers).

The Use of The Bank of Canada, 1938 - 1974

The 'nationalization' of 1938 perfected the mechanism that allows the central bank to create money to finance federal projects on a near interest-free basis. It may make loans to the Govt. of Canada or any province (BoC Act Article 18 (c), (i) (j) or guaranteed by Canada or any province (c). This is explained fully in our "Article 18" link (see left).

Initially, the bank fullfilled its mandate. It was of great assistance in getting Canada out of the Great Depression, financing the war, and building infrastructure and social systems in Canada into the 1970s. But then things began to change.

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