RURAL DEPOPULATION RESULTS FROM THE DESTRUCTION OF OUR SMALL COMMUNITY BANKS

Alastair Fraser; Canadian Rural Revitalization – Public Bank Coalition Canada

Starting in the 1920s the Government of Canada decided to strengthen the Nation’s banking industry by forcing our small regional and family-owned banks to amalgamate into their larger competitors. Finally, by the end of the 1960s, Canadians knew only members of the Big Five Canadian Banking cartel. Let me say clearly at this point, Canada has been well served in many respects by our strong banking sector.

Yet, there have been those Canadians whose communities have been damaged during the forming of the Federal Government’s sponsored Bank Cartel. Many of the losers can be found in Rural Canada; the Maritime Provinces, the Prairies and the northern regions of all our provinces. Actually, it is not the existence of the Big Five Banking Cartel which led to the damage caused to Rural Canada but the effects and repercussions of the destruction of Canada’s smaller business banking sector.

Small Banks are more efficient at servicing the smaller business capitalist. Thus Canada’s financial and investment sector became stunted and did not form the class of banks suited to service the capital niche investment needs of entrepreneurs, or the requirements of micro business, penny capitalists and growing small business sectors.

There are no investment capital sources presently in Canada which are comparable to the Capital Partner firms found in the United States or the traditional family Merchant Investment firms or old community Investment Banks found in Europe.

Canadian banks became efficient at extracting capital out of Rural Canada. The Big Five Commercial Banks are not efficient in returning investment capital to our rural regions in order to capitalize on emerging business needs or to facilitate growth capital requirements. By the late sixties, the Commercial Banks began to abandon rural towns and villages. Rural Canada saw, in many circumstances, Banks replaced by consumer credit unions who, like the banks before them, are not efficient at capitalizing small business in rural Canada.

Today, the present ongoing trend in the financial cooperative movement is that the local democratic credit unions and Caisse Populaires are being absorbed into one of the nation’s four big corporate credit unions. These Big Credit Unions act more like the Banking Cartel than as true members of the democratic cooperative movement. All these trends serve only to accelerate rural depopulation. Rural Canadians, who want to save their communities, maintain their democratic place and influence over their own culture, traditions and way of life must take action to halt the rural depopulation forces at work in Canada.

Rural Canada is not in poverty. Let’s acknowledge the large capital amounts flowing into Rural Canada from farm receipts, Farm Credit investments and Provincial development grants but let’s recognize it flows out just as fast.

In aggregate where is this large amount of capital today? Who controls this capital resource? Who is benefiting Rural Canada’s storehouse of capital? These historically large capital flows have failed to prevent Rural Depopulation and the loss of rural heritage all across Canada. Therefore, ask yourself, what is missing from this picture which, if present, would constitute a healthy rural economic sector. Why is the nation not experiencing prosperous growing rural communities with an increasing vibrant populace?

“No Man is an Island” and let it be said also, that the nation’s modern Agriculture industry is not an island unto to itself. Sole reliance on monoculture industry finance has hidden consequences similar to monoculture cropping. There are ever declining numbers of people and innovation in rural areas that suit the policy needs of big credit financial institutions, Banks. The forgotten peoples in rural Canada also need access to investment capital. Hence, a new investment capital source is required to stop the hidden rural decapitalization crisis, the depopulation crisis, the loss of the rural services crisis and the disappearance of rural culture and heritage.

Young people in rural areas cannot rely on the same finance capital institutions which may have served previous generations well. Rural Canadians must develop capital investment institutions that address today’s reality. Hope and inspiration can be accessed from the successful 200-year-old German Sparkassen Banking Network in Germany. Sparkassen provides a leading model to revitalize Rural Canada.

Visualize a national network of non-deposit investment co-operatives. These new financial cooperatives, member-owned, would work in tandem with and not in direct competition to present local credit financial institutions, whether they are a bank or credit union.

The Sparkassen inspired co-operatives known as Community Reserve Banks, are local community investment banks. They specialize in servicing the small business capitalist, innovation and local entrepreneurs. Their success relies on the economic principles of Velocity of Money, District Currency Unions, the impact of closely held community investment capital assets, principles of mentorship and strong due diligence practice.

The following article, number five, in this series will address what is the promise of introducing a Community Investment Co-operative into Rural Canada. Thereafter the following discussions will start exploring how these new Community Reserve Investment co-op Banks are to be funded, capitalized and brought into existence in every town, borough, and village in Canada, just as they already are in existence in Germany.

Starting now you must consider whether your rural community has the wherewithal to choose life.
What it involves is marshalling to renew, recapitalize, repopulate, and revitalize the elements of the community in Rural Canada. Why don’t we start today?