A decade of diversification
Inflation, which had been of little concern during the '40s and '50s, began to materialize in the late '60s, becoming an almost permanent feature of the '70s. IDB continued to grow, despite the accelerated inflation, increased unemployment and wildly fluctuating interest rates that characterized the 1960s and '70s. Its operations expanded to a level that its founders would have found difficult to predict in 1944. The number of authorized loans tripled between 1965 and 1974, while the number of branches doubled.
During this decade, IDB's lending portfolio became increasingly diverse, with tourism operators and retailers accounting for a larger share of its financing. IDB became the largest Canadian source of financing for the tourism industry in many parts of the country, and virtually all hotels and restaurants constructed in northern and western Canada during this period were financed by the Bank.
Creation of the Advisory Services Division
In 1971, IDB created an official Advisory Services Division to improve its ability to meet companies' management consulting needs. In so doing, it became the first national organization to provide small business owners with management consulting, training and planning services. Over the course of the following fiscal year, nearly 2,000 small business owners and administrators attended more than 100 seminars organized by IDB. Almost all of these seminars were given in smaller centres where such services were non-existent. The number of seminars had doubled by 1974.
During this period, IDB began distributing free information brochures which proved to be just as popular as its seminars. Its distribution list contained over 5,000 addresses within a year and grew to15,000 by 1974, at which point more than 500,000 brochures had been distributed. The positive impact of this initiative wasn't limited to the business owners who directly benefited from the training. It also attracted the attention of government policy-makers who understood the important economic contribution of small businesses.
New equity financing guidelines
The second main initiative taken by IDB during this period was aimed at reorienting its equity financing policy.
Since its founding, IDB had taken a minority position in the share capital of a very limited number of companies that it supported financially. Its efforts to develop new equity financing guidelines were put on hold until such time as a decision regarding IDB's future was reached.
Once the government made it clear that it expected the new bank to be much more active in the equity financing sector, IDB was able to resume its efforts. In 1974-1975, it issued new guidelines and implemented initiatives to familiarize its staff with the particular features of this type of financing.
Although these were only interim measures in preparation for the role the new bank would soon be asked to play, they resulted in significant growth in this sector. From 1945 to 1972, IDB authorized a mere 48 equity investment transactions; it authorized 33 such transactions between 1973 and 1975!
A broader mandate for IDB
The federal government, beginning to understand the important economic contribution of small businesses, recommended that IDB's mandate be expanded to make it a one-stop shop for SMEs.
The January 1973 throne speech confirmed the expansion and improvement of IDB's services. It also proposed that its link with the Bank of Canada be severed and a separate Crown corporation, owned and funded directly by the federal government, be created.
This new corporation would have its own board of directors and president, and would take on the additional challenge of providing entrepreneurs with equity or venture capital. Furthermore, IDB Advisory Services would absorb Industry, Trade and Commerce's Counselling Assistance to Small Enterprises (CASE) program and offer an even wider range of training and information services.
IDB management was opposed to this split, preferring that the bank continue to operate as a specialized source of financing rather than attempt to meet a wide range of needs. Nevertheless, in July 1973, the government decided to move forward with its plan to create a new corporation into which IDB would be absorbed; an organization created by new legislation, with a new name and additional responsibilities, but with IDB as its "spine and heart".
The draft bill creating a new bank was completed in late 1973, tabled in Parliament on April 9, 1974 and passed on December 4 of that same year. The enactment date, however, was postponed several times and the Industrial Development Bank was only folded into a new organization, called the Federal Business Development Bank (FBDB), on October 2, 1975.
The Mobile Office
Between 1965 and 1974, IDB showed creativity in promoting its services to those who needed them. New advertising methods included spot radio announcements, booths at trade fairs, illuminated signs outside branches, etc. The most surprising of these new advertising media undoubtedly consisted of a rented trailer transformed into a mobile office for visiting smaller centres. The idea originated in the Atlantic region, where the Saint John branch first used a trailer in the fall of 1973 for a week-long trip down the Saint John River valley. The trailer, already converted into an office when IDB rented it, was driven by a credit officer accompanied by another team member. In each town and village, they parked in a conspicuous spot for about half a day, and provided information to passers-by. These trips were proof of IDB's real interest in and desire to help smaller centres.