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W. B. Meikle and E. R. Wood. In 1909 Dr. John Hoskin, K.C., was made an additional Vice-President but in 1910 retired to take a seat on the London Board. John Sime was at this time appointed Assistant General-Manager. There was no change in the Board during these latter years.

By the close of 1911 this Company, which started in such a small way 78 years before, had a joint stock authorized capital of $3,000,000, a paid-up capital of $1,400,000, and a total Insurance in force of $277,685,611 (1910) of which $215,949,099 was outside of Canada. It had withstood the shocks of a period in which Fire Insurance organizations on this continent had risen and fallen in immense numbers over 1,600 having retired from business in the past 40 years alone; it had paid out in losses to policyholders since its foundation the huge sum of $35,459,275. The British America had, in short, been part and parcel of the business history, the early financial activities, the municipal and metropolitan development of Toronto; it had been associated with the pioneer and testing days of Ontario's foundation and growth; it has had a career closely connected with many important pages of the nation's record; it should have a future development in harmony with its long and honourable past.

HISTORICAL SKETCH OF

THE MERCHANTS BANK OF CANADA

This prominent financial institution owed the initiatory stages of its existence to an Act of Incorporation which was granted "The Merchants Bank" on May 18th, 1861 (24 Vict. Cap. 89) at the request of Hugh Allan, Hon. Louis Renaud, Harrison Stephens, Hon. John Young, H. H. Whitney, Damase Masson, Edwin Atwater, William Edmonstone, Andrew Allan, John Smith, Ira Gould and Robert Anderson-all prominent citizens of Montreal. The first-named was the real organizing factor, however, and, as Sir Hugh Allan, was afterwards for 20 years an important influence in the history of the Bank. The capital stock authorized was $2,000,000 in $100 shares. It was not until February, 1864, however, that the final organization steps were taken and in that month advertisements appeared in the local press stating that the Provisional Directors of the new institution were Messrs. Hugh and Andrew Allan, Renaud, Masson, and Atwater, Adolphe Roy and W. F. Kay and that they believed this "to be a favourable time for the establishment of another Bank to meet the requirements of our constantly expanding trade." The stockbooks were to be closed when $400,000 was subscribed and $100,000 paid up.

The first general meeting of Shareholders was held on Apl. 28th following with $750,000 subscribed and $100,000 duly paid in. The Provisional Directors were confirmed in their places and the Bank opened for business on May 9th with Jackson Rae, a local grain dealer, as Cashier and a staff of four assistants. The Solicitor was Hon. J. J. C. Abbott, Q.c.-long afterwards Prime Minister of Canada. The 1st annual meeting was held on July 3, 1865, and profits for the year of $92,154 were announced with a dividend of 8 per cent. During this period interest had been allowed on current accounts at 4 per cent. on $10,000 and over, 412 per cent. on special deposits for 3 months and 15 days and 3 per cent. on balances not below $5,000. The Directors reported that this policy had caused no inconvenience and that business had so grown as to demand larger premises. For this purpose they had acquired a property, and were building, on the southwest corner of Place d' Armes and Notre Dame St., where, also, the first business of the Bank was carried on. Mr. Renaud retired from the Board and was succeeded by Hugh Fraser. A further allotment of $250,000 of stock was made on May 30, 1866, and on July 2, 1867, $1,000,000 more was issued at par.

At the annual meeting of the latter date the Directors referred to the "continued prosperity" of the Bank and added: "We

have been more anxious to do a moderate and safe business than a very extensive one involving greater risk." On Jan. 1st of the year a Savings Bank branch had been opened. The important event of this period was the successful negotiation with the Commercial Bank of Canada for its amalgamation with the Merchants. The Kingston institution had, on Dec. 14, 1867, Assets of $6,105,607 which included discounts of $2,482,690, Bonds of the Detroit and Milwaukee Railroad valued at $1,770,220 and "doubtful debts" totalling $1,104,713. Its circulation was $596,692 or eight times that of the Merchants and its deposits $1,251,218. Mr. (afterwards Sir) R. J. Cartwright was President and others interested were Hon. L. H. Holton, Alex. Morris, T. C. Street, M.P., and Hon. D. L. Macpherson. The Bank was in a state of practical liquidation and the agreement finally come to was based upon the Merchants' offer of one share to three and a statement which showed nominal Assets of $3,837,640 and Liabilities of $1,170,960. The amalgamation was ratified by the Commercial Bank and approved by the Merchants' shareholders on Feb. 24th, 1868. By this arrangement the latter institution acquired Branches at Toronto, Belleville, Berlin, Chatham, Galt, Hamilton, Ingersoll, Kingston, London, Napanee, Owen Sound, Perth, Prescott, Southampton (transferred to Walkerton), Stratford, St. Thomas and Windsor. Possession was also taken of the Commercial Bank's building in St. James St. for Head Office purposes.

In view of these changes the Charter was amended (1868) so as to authorize a capital stock of $6,000,000 and the shareholders authorized the issue up to $4,000,000-extended in 1869 to $6,000,000. The old Board was re-elected (1868) with Hugh Allan as President and Edwin Atwater Vice-President. At this time the deposits bearing interest were $1,364,620 and without interest $784,542 while the Rest was $100,000. Nearly the whole of the new capital stock was taken up during the succeeding year when the profits of the 12 months (Dec., 1869-June, 1870) were $851,969. In the annual statement of July 4, 1870, the Directors reported several new branches in Ontario making the total 24 in number. The interest-bearing deposits had jumped up to $3,013,914 and those without interest to $1,614,469, the paid-up capital to over $5,000,000 and the total Assets to $13,000,000. Hector Mackenzie was elected to the Board in place of the late Hugh Fraser.

During the next three years the Bank grew in prosperity as did the general business of the country. At the 1872 annual meeting it was decided to increase the authorized stock to $9,000,000 and the additional three millions was issued at 10 per cent. premium with about two-thirds taken up by 1875. During 1872 the Merchants Bank was the pioneer chartered institution to enter the West and it opened a Branch at Winnipeg when the population of that place was only about 2,000. In 1873 a new Montreal build

ing the one still occupied in 1912-was under construction upon the old site and was occupied in 1874 when Mr. Rae's position was changed to that of General Manager and a local branch formed at Montreal. At this time (1874) the dividend was increased to 9 per cent.-it had stood at 8 per cent. since business was started-and the profits of 1873-4 were $1,530,400 although the Directors had to report a "temporary dulness" in business. Mr. Atwater had, meanwhile, passed away and was succeeded by Hon. John Hamilton who also became Vice-President. The 1875 meeting showed slightly increased profits, a continuance of the trade dulness and a Directors' statement that the Bonds of the Detroit and Milwaukee, received in part from the Commercial Bank, had matured and been unredeemed. The 9 per cent. dividend was continued but in 1876 8 per cent. was paid. An Agency of the Bank was opened in London, England and authority given also to open in New York. Up to and inclusive of 1876 the business record of the Bank was as follows:

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5,692,596

1,000,000

5,856,042

3,267,814

13,244,930

16,911,934

1872.

1873.

1874. 1875. 1876.

1,850,000
1,000,000

5,780,383 1,200,000 7,889,745
6,946,280 1,700,000 9,317,511
7,341,497 1,850,000 8,530,250 3,331,784
8,102,046
8,194,597 2,815,459
8,152,016
7,695,770 2,554,090 16,074,169 20,566,714

3,953,814

14,300,890

20,059,460

3,572,837 17,103,067

22,687,497

16,993,140

22,149,436

17,052,601

21,628,938

Then, in 1877, came a sudden and complete change in conditions. The Bank had been going ahead too fast and, with its enormously increased resources and business, its assets of $21,000,000 and its 41 branches as compared with $1,000,000 assets and one Montreal Office 13 years before, it was now face to face with one of the deepest and most far-reaching depressions which have ever touched Canadian trade and finance. Moreover, although it had become the second most important Bank in Canada, with $16,000,000 loaned throughout the country, with large New York operations in gold, currency and exchange, with a heavy loan to the Province of Quebec and with still unrealized securities in bonds and real estate of the Commercial Bank, its supervising machinery and management had been too economically restricted and its higher staff was inadequate for the changed conditions. In February an informal meeting of Shareholders was held in Montreal, the state of affairs discussed and Mr. Jackson Rae's resignation accepted. Shortly afterwards Sir Hugh Allan, who was a man of many Companies and wide interests, deemed it best to retire from the Presidency though retaining a seat on the Board. Senator John Hamilton was elected President and George Hague, who had just retired from a successful career as Cashier of the Bank of Toronto, was invited to become General Manager and,

after a careful inquiry into the financial condition of the Bank, and the promise of a free hand in necessary re-adjustments, he accepted an engagement for a term of years.

At the annual meeting on July 3, 1877, his elaborate report was received and accepted; $2,026,256 was temporarily placed at debit of Profit and Loss as the result of an overhauling of the business, a writing-off and re-arrangement of Liabilities; Parliament was asked by Resolution to allow a reduction of the capital stock by 25 per cent., but the Banking and Commerce Committee of the House of Commons insisted upon the reduction being 33 1-3 per cent., and it was so enacted. A sum was placed, meanwhile, in Contingencies account to help meet any future eventuality. The Board was re-elected with Mr. Hamilton as President and John McLennan as Vice-President. A small dividend (32 per cent.) was paid, and on May 31, 1878, when it was found that profits of $462,208 were available, a dividend of 7 per cent. was paid on the reduced capital ($5,799,200), and $75,000 was added to the new Rest of $400,000 which had been created out of the margin provided for contingencies in the readjustment of Capital account. The Directors were able to report that despite the continued depression, and the necessary curtailment in many directions, the interests of the customers had been safeguarded, new and valuable connections formed, and various profitable accounts cultivated. The London Agency was closed and arrangements made with the Clydesdale Banking Co., there, and in New York with the firm of Jessup, Paton & Co., to undertake the Merchants' local business.

During this and the next year the national depression continued with the clouds beginning, however, to break in 1880. Difficulties were met and overcome, business was concentrated by the closing of several branches in Ontario and Quebec, with (June, 1880) 28 branches maintained. The Winnipeg Branch showed a considerable increase of business and one was also opened at Chicago in 1881. This latter year showed continuous improvement in business and larger profits; in 1882 good times and Western development made their influence still more felt and the dividend, which had stood at 612 in 1879 and 6 per cent. in 1880 and 1881, was raised to 7 per cent., at which it remained until 1893. Business at Winnipeg had now assumed large proportions and a branch was also opened at Brandon. Meanwhile Mr. Hamilton had, in June, 1882, been succeeded by Sir Hugh Allan in the Presidency. The latter died late in the year, and the Directors in their succeeding Report paid high tribute to him as the founder of the Bank and an energetic influence in important shipping, financial, and commercial enterprises. Andrew Allan was appointed President in 1883 and Robert Anderson Vice-President while John Duncan and Hon. J. J. C. Abbott were elected to the Board. During this year the Branch in Chicago was closed.

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