“Control your own destiny or someone else will,” the old saying tells us. But what can Albertans do? With oil prices falling and global capital vanishing like snow on a warm spring morn, who or what could come to Alberta’s rescue?
ATB Financial (formerly known as Alberta Treasury Branch) was a radical financial experiment born in the dark days of the Great Depression. And once again it’s positioned to play a pivotal role in Alberta’s future.
This curious bank is one of the few financial institutions that has both the mandate and the history to think outside the box and maybe, just maybe, accelerate Alberta’s recovery beyond the expectations of the skeptics.
What’s so unusual about the ATB Financial?
The Alberta Treasury Branch was the brainchild of one of Alberta’s (and Canada’s) most eccentric politicians. William (Bible Bill) Aberhart, the populist evangelical preacher and Alberta’s first Social Credit premier, created the Alberta Treasury Branches in the 1930s to meet the horrendous collapse in commercial credit brought about by the Great Depression.
According to Alberta historian James G. MacGregor, the Alberta Treasury Branches were designed to unlock the riddle of what Premier Aberhart called “poverty in the midst of plenty.”
“In October 1929, the world’s train of prosperity jumped the track . . . by Christmas of ’29, Albertans began to feel the depression’ s impact. . . . The province of Alberta in those desperate days found that ownership of its abundant resources was a hollow victory if nobody could develop them. With rich soil, which could grow almost unlimited wheat, forests which could produce enough lumber to house every Canadian family and mines with enough coal to heat all the continent, and with men eager to work these resources, the system could not put them to the tasks they wanted.”
In the face of this devastating crisis, the Alberta government decided to control the province’s destiny, take on the financial establishment and set up its own lending institution: “to have that control over the curtailment or release of our own credit.”
Much has changed in the intervening decades. The Alberta economy has matured from its agricultural base of the 1930s to become a sophisticated energy economy. Over the years, the Alberta Treasury Branches evolved with the economy, helping to finance urban growth, rural development and the fast moving oil and gas industry.
But the Alberta Treasury Branches weren’t privately-owned (and profit-maximizing) banking institutions. Instead, they belonged to Albertans – they were literally branch offices of the Department of the Treasury.
This meant the Alberta Treasury Branches could take deposits, makes loans that other banks wouldn’t and extended credit to Albertans on their own terms. However, unlike a commercial bank, as they did so they strengthened both their own balance sheet and the balance sheet of the provincial government. This win-win public banking idea was so radical that the Central Canadian banks tried desperately to shut it down.
They weren’t the only ones – in the 1990s, then-premier Ralph Klein tried to privatize the Alberta Treasury Branches, which he considered a blight on his free-market credentials.
What he didn’t appreciate was the tremendous popularity of the ATB in rural Alberta – where for decades it was the only bank in town, the saviour of many farms and rural businesses. At the end of the day, the government conceded and ATB was maintained.
But lacking official support, it slowly distanced itself from its original purpose.
What we need today is more, not less, ATB.
Just as the province did during the Depression, Alberta today is about to experience a massive contraction in credit. And without credit support, a host of business opportunities will fall between the cracks.
There are many good conventional and nonconventional oil and gas opportunities that we need to survive this period of turbulence. And there are many new opportunities in technology, green energy and recycling waiting to be pursued. Similarly, a host of rural development and manufacturing opportunities could be realized with an Alberta-first financial institution.
To that end, particularly to benefit small- and medium-sized businesses, the NDP’s first provincial budget in October injected $1.5 billion into ATB lending programs.
ATB Financial is a hidden gem in Alberta. It’s time for Albertans to repurpose and reinvigorate this unique institution, so it can again fulfil its destiny as the public banking saviour of Albertans in a time of need.
Robert McGarvey is an economic historian and former managing director of Merlin Consulting, a London, U.K.-based consulting firm. Robert’s most recent book is Futuromics: A Guide to Thriving in Capitalism’s Third Wave.