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Rotman Insights Hub | University of Toronto - Rotman School of Management

From Wall Street to Bay Street explains why it’s worth looking back at our financial roots

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Joe Martin

Here is a synopsis of the book:

When Joe Martin discusses the 2008 financial crisis, he likes to point out how Canadians have an American — Alexander Hamilton — to thank.

After all, the Bank of Montreal’s first charter was almost identical to the founding father’s outline for the first Bank of the United States. While the U.S. abandoned most of his ideas, Canada embraced Hamilton’s vision of developing joint-stock banks with limited liability and several branches — a framework that continues to stabilize the country’s banking system today, and helped it get through the 2008 crisis relatively unscathed.

These and other often-overlooked stories are captured and analyzed in a new comparative history text that Martin, an adjunct professor and executive-in-residence at the Rotman School of Management, co-wrote with the late Christopher Kobrak, a well-respected professor and former Wilson/Currie chair of Canadian business and financial history. From Wall Street to Bay Street (University of Toronto Press, March 2018) is an essential read for finance professionals everywhere and for anyone seeking clarity and context on the current state of North American finance.

The book’s release comes at a pivotal time, when many are anxious about Canada-U.S. trade relations and the future of finance, generally.

“People are beginning to realize that to have a sound economy, you need a sound financial system. We need to start by looking back at what we did wrong, as well as what we did right.”

Martin, a Canadian, and Kobrak, an American, were inspired to write the book after coming face-to-face with the many differences between the two countries while teaching a comparative business history course together at Rotman.

“Chris was especially intrigued by how two nations that seemed so close — sharing a border on the same continent — could develop such different financial systems,” explains Martin. “He believed it was necessary to look back in history to understand the reasons — the individuals, cultures, attitudes and laws that led to such different outcomes.”

With this in mind, the authors take the reader back to the very beginning: the mid-1700s when each nation was forming its identity. From there, they examine how each country has reacted to major events since — including significant battles (the American Revolution, the World Wars), periods of economic turmoil (the Great Depression, the market crashes and bank closures of the 1980s) and numerous technological disruptions.

Though the countries share many common experiences and appear similar, their fundamental differences come out in finance.

One notable example that Martin likes to joke about was how his co-author was often confused by how “there weren’t more fights in Canada.”

As the book goes on to explain, Canada has consistently relied on consensus-building approaches to stabilize the country — and these values are reflected in its financial system. This thinking has been inherent from the early days when the country worked tirelessly to get a bank act, with its unique decennial review provision, approved and passed — a difficult feat that required three finance ministers and five years. And the focus on stability has been present in more contemporary times, from the decision to establish the Office of the Superintendent of Financial Institutions in the 1980s to blocking the merging of major Canadian banks in the 1990s.

Meanwhile, the American emphasis on innovation and independence has helped it become a world-leader in finance, despite its rather fragmented, complex banking system.

This is not a book about picking sides or pitting country against country. Above all else, the authors focus on what can be learned from each system.

“We didn’t set out to write a pro-Canada book,” insists Martin. “But an important lesson and a theme that came from this work was how, for better or worse, Canada has always looked to the south and learned from it.”

“It speaks to how, regardless of your perspective or citizenship, it’s worth reflecting on the past and looking beyond your own borders.”

This book was originally published by University of Toronto Press on March 12, 2018.

From Wall Street to Bay Street

By Joe Martin and Christopher Kobrak

Joe Martin is the director of the Canadian Business and Financial History Initiative at Rotman and president emeritus of Canada’s History Society. His research is focused on the development of case studies about Canadian business in a global context but has recently been completing research for a book comparing the Canadian and American financial systems from the late 18th century to 2008. He currently serves as founding president of the Canadian Business History Association