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Feb-24-2014 12:11printcomments

For American Stoo-dents... A Virtual History Of Canadian Finance

When I go into a bank I get nervous. The clerks make me nervous; the sight of the money makes me nervous; everything makes me nervous. - Stephen Leacock

Canada flag

(DAYTONA BEACH) - Bay Street in Toronto is kind of like Wall Street. Kind of. Or at least it used to be. Actually, it's more like a Yogi Bera financial center. The volume of trading on the Toronto Stock Exchange got so large that it isn't there any more. At first, after the TSE disappeared from 320 Bay Street, most people didn't know where it had gone. The fact is that it became a virtual stock exchange in 1997, so it no longer really exists, even though it's larger than ever. See what we mean about Yogi Bera?

To understand this you have to realize that it's in keeping with the rest of Canada, which is a virtual country. We have a virtual head of state in the Queen (sometimes known as the Crown, a sort of Wizard of Oz behind an invisible curtain) who isn't really there: because by British law, she isn't allowed to be Queen over anything but England (oh, maybe throw in Wales). There isn't any Crown either, (except for the bejeweled one that sits in the Tower of London waiting to be used in the next coronation. The last coronation was in 1952).

In spite of all that, the Crown owns everything in Canada "at the pleasure of the Queen." The Queen doesn't get much pleasure out of it, because she's never there and doesn't take any notice or care about what's going on in Canada, except maybe Red Rose tea bags.

Canada also has a virtual legal system and a virtual parliamentary system. It's too complicated for Americans to understand, because they chucked all this at Valley Forge and beyond. Just think of a government that is free to do anything it wants as long as it's cool with something called Westminster. We won't even get into Westminster, which is even more virtual because nobody knows what it is. Think of a Supreme Court that isn't really there.

Anyway, the history of Canadian finance is pretty exciting, like most Canadian history. Apart from the banks, which were anything but virtual and were pretty well always there, ever since John Cabot had to piece out Henry VII. Real, that is to say modern, Canadian finance started with a little guy called Alfred Ames, who was a minister's son from Lambeth, Ontario, and you know what they say about minister's sons. Actually, in Alfred's case that wasn't so. Like the star of the old English ballad, "A fine little lad was young Alfred."


Around 1885 at the age of 15, little Alfred took a job in a bank at a place called Owen Sound, which necessitated a night-time journey there in a sort of coach, drawn by a single horse. Apparently the trip took place in a blinding rain storm, so fierce that the coachman gave up the driver's seat and huddled inside the coach with Alfred. There are two amazing take-aways from that journey. First, there is the fact that the horse found its way to Owen Sound all by itself, or the history of Canadian finance might have been different.

Secondly, that the financial industry in Canada had at least it's beginning abaft a horse's posterior. Without drawing too long a bow, not a few disillusioned investors and financial historians today might indicate that the industry hasn't changed in that regard.

After a few years of cleaning the kerosene lamps and posting cheques (the Canadian/British spelling for "checks") Alfred moved to Toronto, where he started something called a bond trading house and married the daughter of George Cox, who owned most of Toronto, at least as far north as Eglinton Avenue. Not necessarily in that order.

The rest of Canadian financial history since then reads like Genesis. George Cox begat (in addition to Mrs. Ames) Dominion Securities, which begat most of the brokers and dealers on Bay Street, including A.E. Ames & Company. Eventually, Dominion Securities itself was misbegotten or acquired by the Royal Bank of Canada, which is anything but virtual.

Canada had progressed from the early fur trade, courtesy of Charles II, the Merry Monarch of the Restoration, who around 1670 gave most of the country to his friends at court. They ripped off the Indians, trading flintlocks for beaver pelts, so that London toffs could wear beaver hats. Opinion varies as to who ripped off whom. I'd rather have a flintlock than a smelly beaver pelt, personally. Besides, the natives later used those same flintlocks to take back their beaver pelts (at flintlock point) on occasions like the Frog Lake Massacre.


There followed land speculation, two hundred years of war between the French and the English, the animosity perpetuating to this day between Montreal and Toronto hockey teams. Construction, as in the Canadian Pacific Railway, settled much of the industrial wealth in Montreal and the mountainous natural resources of the extractive industries - notably in the Canadian Shield, draped like a horse shoe around Hudson's Bay - tended to aglomerate in Toronto the Good, which also came to be known as Toronto the Speculative.

Two stock exchanges developed accordingly in Toronto, beginning with the Standard Stock and Mining Exchange, which enjoyed more trade but had a poor public image. And no wonder.

All that was changed when the Standard merged with the Toronto Stock Exchange.

The Toronto Stock Exchange had been established in 1861, with 24 members (who paid $5 each to belong). Active trade took place for half an hour each day in a Masonic Temple. Across town, more action set in with the launching 40 years later of the Standard, but it tended to set a reputation as the North American locus of twirly mustachio'd scam artists. Perhaps half a million investors were bilked out of $100 million or so before the merger in 1934.

Nothing much went on after that until the 1950's, when Viola MacMillan glamorized the art of stock fraud with her Windfall Oil and Mines. While Viola went to the slammer and a Royal commission successfully purged the TSE of stock fraud artists, who fled to a new sucker venue in Vancouver, Canada's benevolent justice system - for anyone of white complexion - succeeded in granting her parole after eight weeks in durance vile.

Viola died a happy mining pioneer in 1993, not only fully vindicated and pardoned, but in fact the recipient of the Order of Canada, as close as colonial Canada can come to awarding a knighthood. Or in the case of women, a Damehood. Unlike the cast of "Guys and dolls," in the British colonies "Dame" is the female equivalent of a Knight. So Dame Viola, in death as in life, remains a Toronto icon of financial nobility.


With the 1960s, Bay Street came of age, with investment dealers and stock brokers merging their twin operations in a unique Canadian blend. The merger and acquisition litany that followed produced the big Daddy of them all, Anthony Smithson Fell of Dominion Securities, who bestrode the industry like a colossus.

Rising like a cork to the top of his firm, "D.S.", as it was called for the following 30 years, Tony Fell proceeded to acquire most of the industry.

Wood, Gundy & Company was another patrician icon of stalwart integrity and respectable avarice. Its Grecian-pillared edifice fronted King Street, its interior main floor configured like a full-rigged ship of the line, with the deckhands and midship ranks arrayed below, the directors, vice-presidents and the regal Charlie Gundy himself occupying the quarterdeck.

The growth and expansion of the industry, and particularly DS and Tony Fell (who never did) continued until the Millenium. We haven't left out much, except for about 100 other broker and dealer organizations, most of which Tony Fell acquired anyway, and the four major Canadian banks which, following the Big Bang in the Eighties, and the trend enabling banks to buy brokers, which they did, including even Tony Fell and D.S.

Tony Fell at that point retired in order to spend more time with his money. At least one truculent financial historian has cited him as a sort of precursor and role model for a younger Lloyd Blankfein of Goldman Sachs, but in a milder Canadian version. In addition to which, he pursued other options (realty options, stock options and even Greenshoe Options), not to mention the virtual acquisition of Newfoundland and the likes if not the body corporate of Montreal's Power Corp.

This is admittedly a brief history, but it can be pursued further by interested American students by referencing Wall Street, where all the major Canadian banks ended up as branch offices anyway.

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Bill Annett grew up a writing brat; his father, Ross Annett, at a time when Scott Fitzgerald and P.G. Wodehouse were regular contributors, wrote the longest series of short stories in the Saturday Evening Post's history, with the sole exception of the unsinkable Tugboat Annie.

At 18, Bill's first short story was included in the anthology “Canadian Short Stories.” Alarmed, his father enrolled Bill in law school in Manitoba to ensure his going straight. For a time, it worked, although Bill did an arabesque into an English major, followed, logically, by corporation finance, investment banking and business administration at NYU and the Wharton School. He added G.I. education in the Army's CID at Fort Dix, New Jersey during the Korean altercation.

He also contributed to The American Banker and Venture in New York, INC. in Boston, the International Mining Journal in London, Hong Kong Business, Financial Times and Financial Post in Toronto.

Bill has written six books, including a page-turner on mutual funds, a send-up on the securities industry, three corporate histories and a novel, the latter no doubt inspired by his current occupation in Daytona Beach as a law-abiding beach comber.

You can write to Bill Annett at this address: bilko23@gmail.com

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Bill Annett February 24, 2014 3:28 pm (Pacific time)

A footnote on George Cox, who could probably be considered The Father of Canadian Finance. In the early days, his wife was asked how many employees George had. She replied: "there are 10 with Cox, and nine without Cox." Which is a testament to the fact that even in those days his was an equal opportunity organization in Toronto.

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