THE PROVINCE HAS THE POWER TO MAKE IMPOSSIBLE FOR any bank to operate within its borders, to prevent it enforcing its claims for debt, to make the business of money-lending illegal and impossible, to publicise banking practice, and in many ways to inflict severe penalties upon the financial interests. I do not suggest that the financial interests in their turn have not the power to inflict damage upon Alberta but I do not believe that that power, if seriously challenged, is anything like so great as it is popularly supposed to be. Nor do I think that the condition of affairs in Alberta would be very much worse, except possibly for a very short time, if such very ill-advised action upon the part of the financial authorities were put to the test. The financial system is essentially a system of black magic and one of the best protections against black magic is not to believe in it.
Major C.H. Douglas1
On April 1 1936, Alberta was Canada's first, and only, province to default on a principal debt payment. In this unusual case of a default, the interests of a governmental debtor and institutional creditors dashed. The Dominion government recognized the importance of meeting the expectations of finance capital but Alberta's provincial government was committed to thwarting the claims of finance capital. The reaction of the Dominion government, the Bank of Canada, the chartered banks and international finance capital to the default is well documented. The inter-relationship of these various players illustrated the importance of government's maintaining "credibility" when borrowing in the capital markets.