Canada. Royal Commission on Banking and Finance : The Royal Commission on Banking and Finance was established under Order in Council P.C. 1484, 18 October 1961, under Part I of the Inquiries Act (R.S.C., 1952, c.154) and on the recommendation of the Minister of Finance. The Commission was mandated to inquire into and report on: (a) the structure and methods of operation of the Canadian financial system, including the banking and monetary system and the institutions and processes involved in the flow of funds through the capital market; and (b) to make recommendations (i) for improving the structure and operations of the financial system and, (ii) concerning the Bank Act, the Bank of Canada Act, the Quebec Savings Banks Act, and other relevant federal legislation. The Commissioners were Dana Harris Porter, Chairman, William Thomas Brown, James Douglas Gibson, Paul H. Leman, Gordon L. Harrold, John Crerar MacKeen and William Archibald Mackintosh. The Secretaries were Harold Anthony Hampson and Gilles Mercure.
The appointment of the Royal Commission on Banking and Finance resulted mainly from a dispute between the Governor of the Bank of Canada, James E. Coyne, and the Diefenbaker government over the economic policies of the Government of Canada. The dispute reached a climax in June 1961 when the government demanded Coyne's resignation. Coyne resigned in July 1961 after the Senate refused to approve a government bill providing for his dismissal.
In its dealings with Coyne, the government claimed that it did not have control over the Bank of Canada's monetary policy, which was counter to government policy, that Coyne was making controversial public speeches, and that the Board of Directors increased the governor's pension without informing the Minister of Finance. Consequently, the government directed that a royal commission take a close look at the Bank of Canada's relationship with the Minister of Finance in the field of monetary policy. The Minister of Finance, Donald Fleming, disclosed that it was the government's intention to appoint a royal commission in his budget speech of 20 June 1961. Fleming told the House of Commons that:
"Such broad topics as the pattern and behaviour of interest rates, consumer credit and instalment financing, and the management of the public debt, will be included in the terms of reference. The commission will be asked to study existing financial institutions, such as the chartered banks, the Bank of Canada, and other institutions that perform banking and credit functions, and the various acts of parliament which govern their activities. The commission will also be asked to consider ways and means of encouraging the development of savings institutions."
The royal commission of 1961 undertook the first comprehensive review of Canada's banking and financial system since 1933 when the Royal Commission on Banking and Currency, which led to the establishment of the Bank of Canada, was appointed. After 1933, parliamentary committees on the Decennial Revisions of the Bank Acts, on Dominion-Provincial Financial Conferences, and on the Royal Commission on Canada's Economic Prospects undertook further reviews of Canada's financial institutions.
It was expected that the royal commission of 1961 would submit its report in time for Parliament's decennial review of the charters of the banks under the Bank Act and the Quebec Savings Banks Act, which expired on 30 June 1964. The commission was not completed until 1966, however, and Parliament had to postpone its review of bank legislation until that time. (See House of Commons, Debates, 20 June 1961, p. 6648 and Scrapbook No. 1, Newspaper Clippings, RG33-64, Vol. 47.)
Hearings of the commission were held in Charlottetown, Halifax, Fredericton, Montreal, Ottawa, Toronto, Winnipeg, Regina, Edmonton, Vancouver, and Victoria from 12 March 1962 to 22 January 1963. The commission received 95 submissions. RG33-64 General Inventory
