Reports of Joint-Stock Banks.

BANK OF BRITISH NORTH AMERICA.

THE half-yearly general meeting of the proprietors was held on the 4th November, at the offices in St. Helen's Place, Bishopsgate Street-John Bloxam Elin, Esq., in the chair-for the purpose of receiving a report from the directors.

The Secretary having read the advertisement convening the meeting proceeded to read the following report :

In conformity with the practice hitherto adopted at the general meeting of proprietors in the month of December, the directors have carefully examined the accounts of the bank up to the latest dates received, and have based their calculations of profit thereon, and on a proportionate estimate for the remainder of the year. The anticipation of an abundant harvest in Canada has been fully realised, while the favourable prices for grain and flour, consequent upon short crops in Europe, must prove very advantageous to the farmer and beneficial to the province generally; but the effects will be made more apparent in the ensuing than in the present year. Some delay has, indeed, occurred in getting the crops to market, from the insufficiency of the means of transport. Trade in the eastern provinces continues steady, and the transactions of the bank, both at Halifax and St. John, are satisfactory. Business at Victoria, Vancouver's Island, continues to progress, although not very rapidly, so that the operations there are not at present taken into account. Upon the probable results of the year's accounts the directors have declared a dividend, for the half-year ending the 31st instant, at the rate of 6 per cent. per annum, free of income tax, payable on and after January 5th next. The usual statement of accounts will be submitted at the annual meeting in June next." The Chairman said that nothing particular had occurred in the affairs of the bank since the meeting in June last to call for any lengthened observations on his part on this occasion. The accounts, as stated in the report, had been made up to the latest dates received, and the directors had based their calculation of profits thereon, and on a proportionate estimate for the remainder of the year; but the directors had reason to hope, from the increased activity in the fall trade, that their estimate would be exceeded. The most important thing connected with Canada was the abundant harvest there, which had been the largest ever produced; and though, as stated in the report, some delay had occurred in getting the crops to market, from the deficiency of means of transport by railways and otherwise, yet large shipments had been made to this country, which were likely to meet with a ready sale at favourable prices. The proceeds when realised must of necessity give an impetus to trade generally, and also give an increased value to property, which had been so long in a great state of depression. The business generally in the British North American provinces had not been so active as the board had anticipated it would have been at the beginning of the year. The general reports received held out fair prospects, but looking to what was going on in the United States, it would be hazarding too much to say what might occur; but their managers were quite alive to all that was going on, and the board hoped that the bank would rather benefit than be injured by the existing state of things. He was ready to answer any questions that might be put, and he would conclude by moving that the report be received and adopted.

Mr. Borradaile begged to ask, in consequence of reports which had been

flying about, what amount of Grand Trunk of Canada Railway shares or bonds were held by the bank?

The Chairman, in reply, stated that they did not hold any of these shares or bonds.

Mr. Borradaile. It was reported in some of the newspapers that the bank had made advances to the Bank of Upper Canada. He wished to know whether such was the case.

The Chairman could not say anything as to reports which might have appeared in the newspapers; but he could state that the bank had advanced nothing to the Bank of Upper Canada but what they had an equivalent for.

Mr. Borradaile.-It was also stated that three banks, of which this was one, had joined to give support to the same quarter.

The Chairman.-That report has since been qualified.

Mr. Borradaile. Then the answer was that the bank had good security for whatever they had advanced ?

The Chairman.-They had undoubted securities; in fact, the acceptance of the bank's agents in London.

Mr. Thomas Smith.-In the report it was stated, that from the estimated profits the directors declared a dividend of 6 per cent. per annum. Did the estimate of this year bear an excess upon the estimate of this time twelvemonth ?

The Chairman.-There was not an excess.

The Proprietor. Then there was but a sorry hope of receiving more than 6 per cent. next June?

Mr. Borradaile said he did not wish to make a long speech on any matter calculated to raise irritation, but he thought this report was less copious than it should have been. It was a meagre one. Those who were desirous that a second meeting should be held in every year supposed that the directors would have their accounts made up to the end of September or the beginning of October, which would give nine months of the colonial accounts, and touch eleven months of the London business accounts. In this meagre report what was meant to be conveyed by this apportioned estimate? Was it intended to say that the board might venture to give a dividend of 6 per cent. and no more? Did they show whether or not they had made an extra £10,000 on the other side? Then they were told that the business in the eastern provinces was satisfactory. That would imply that at the branches in Canada such was not the case.

The Chairman. They were not eastern provinces.

Mr. Borradaile.-No; but when they talked about the satisfactory state of transactions in the eastern provinces, the inference was that matters were not so satisfactory in other cases. He, therefore, hoped the directors would so compose their report another time that no such inference could be drawn. He thought the directors might have produced something better. He believed this was the fourth year on which they had been labouring, with a bank established 26 years, and were now receiving only 6 per cent. There might be every possible exertion used by the board at home, but how was it that when other banks were paying 10 per cent., this bank was paying only 6 per cent? When the Newfoundland Bank, recently opened, was paying 12 per cent., and the Montreal Bank was paying 10 per cent., was it not, then, a fair question to ask, why, with a large capital, this bank only paid 6 per cent. ? If they got no explanation of this difference, the proprietors must conclude that the management was not an able one. A more detailed account was required in lieu of the meagre report which had been presented.

Mr. Josiah Wilson said he could not help concurring with his friend on his right (Mr. Borrodaile), that this was really a milk-and-water report, which amounted to nothing at all. It was not the sort of document which ought to emanate from men who had to give an account of their stewardship. The report stated that they had examined the accounts, and that they had determined to give a dividend of 6 per cent.; but they did not say whether their accounts were good or bad. Now this was not a sufficient statement for stewards to give to their masters. The object of the proprietors in attending this meeting was, to hear something as to what they were doing; as would be the case of a building society, or a water company, when the shareholders would hear what buildings had been erected or bought, or what mains had been laid on. The directors thought it right to name 6 per cent. dividend, but they did not say that the accounts were good or bad. The fact was that the report was not worth the paper on which it was written. None of the banks in the colonies paid less than 8 per cent. This institution had within itself such channels of success that it could afford to pay two or three times as much as it did if properly managed in the colony. Let them look to the Australasian Bank, the Union Bank of Australia, and others, which, under all circumstances of depression, paid well. If the directors had said that they had carefully examined all the accounts, that they were more prosperous, and that they proposed a dividend of 6 per cent. for the last time, that would have been something encouraging to the proprietors. He thought the account given was a shabby affair, that it should not be received, and that it should be sent back to the directors to amend and alter. He would not, however, recommend that course to be taken, but he would repeat it was an account which was of no value whatever. The proprietors could tell nothing of what they had been doing.

The Chairman said that the Bank of Montreal had declared a dividend of not 10, but of 8 per cent. He could say that the system of this bank was to go most rigidly and strictly into all outstanding debts, and to make full provision for everything that was considered bad, and the amount of profit was, of course, diminished by this provision. He might add, that the effects upon the trade of the North American provinces of the year 1857 could not be expected to be got over completely in a year or two.

A Proprietor asked whether that did not reflect on the management.
The Chairman.-Certainly not. It was impossible to avoid bad debts.
The depression of property had been excessive.

The Proprietor. The board spoke of their great circumspection. Surely they could have anticipated such a result had that been the case.

The Chairman.-They only said they had examined the accounts most carefully, Assuredly the greatest caution was and would continue to be exercised; but it was no use denying that there were old debts which had not turned out so well as they had expected.

Mr. Smith wished to know whether any of the London board had been to or could go to Canada to look into the local management, or was everything left to their local manager? It appeared to him that their affairs required more than ordinary supervision. He came to the conclusion that they would not be in a better state in June next than they were now, and his opinion was that their affairs in the colony were badly managed.

The Chairman.-As to any director going out to Canada, that was not likely. Mr. Gillespie had been there lately, but not in an official character. A Proprietor asked whether there was any occasion on which the proprietors had not received any dividend?

The Chairman.-There was one half-year, many years ago, when no dividend was paid.

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Mr. Borradaile asked whether the chairman could state that all the banks had paid per cent. in Canada? They all knew what banks in London paid. What did the banks of Montreal, Quebec, &c., pay?

Mr. Chapman (a director).-The bank of Montreal paid 8 per cent.; it was not every bank that did so; and he confessed that he thought they would be more satisfied with the smaller payment which the board proposed to pay as dividend that day, rather than with a larger payment without the condition that every provision had been made for every contingency that might occur. His friend, Mr. Wilson, he might refer to, who knew that the same course of proceeding prevailed elsewhere at a board where they were colleagues. Here the board had the accounts up to the 30th of September, and they took a careful investigation of these accounts. Now, when gentlemen spoke as to the condition of Canada, he himself had other relations with Canada, which gave him an intimate knowledge of the general condition of the country, and in connection with which he was brought into immediate contact with the agricultural classes of the country, who had been largely indebted to the merchants, and had been in a most prostrate condition, and this was the first time for a period of three years that they had been restored to a state of prosperity. With reference to what had taken place in the United States within the last few weeks, it was his conviction that the disturbance in monetary affairs in New York would not affect this bank injuriously.

A Proprietor. The proprietors had heard that the accounts rendered in June were up to the Christmas preceding. What would be the difficulty in having the accounts for the half-year to Midsummer? He was not a commercial man, but he did not see why this should not be the case.

Mr. Oliver Farrer begged to say a single word as to the statements made by Mr. Josiah Wilson and Mr. Borradaile. Those gentlemen spoke as if the board had been anxious to call the proprietors together a second time every year, but what was the fact? It was urged upon the board by the shareholders, who expressed a strong desire to have a second meeting, and whatever might have been the feeling of the directors, they thought it right to acquiesce, it being understood that the accounts could not be presented, and that it was impossible such a course could be adopted. The object was to answer all questions that might be put, but he feared they had not been answered satisfactorily to some gentlemen. If the proprietors were dissatisfied with the course pursued let them change their directors. (Cries of "No, no.") It was a very unsatisfactory position for the directors to be placed in, to have gentlemen invariably finding fault with them. If they had any charge to make against the directors let them bring it forward at once. Was it not equally the interest of the board that things should go on prosperously? Perhaps from the affliction of bad health he had not himself taken so active a part in the direction as he could have wished to have done, but this he would say for his colleagues, that more active, zealous men, or men more anxious to promote their best interests, could not be found than in the persons of the gentlemen who sat around him at that table. If the proprietors were dissatisfied let them elect others. There was one gentleman who found fault upon every occasion, from whom, in every instance, the board received chastisement. If they did not place confidence in the board they could soon have a change,

Mr. Borradaile would not have risen but for the observations of Mr. Farrer, who had evidently alluded to him personally and emphatically. But had he not a reasonable and legitimate right to make the observations he had, or to find fault with the report? Had not the proprietors the right to say they were dissatisfied? He had suggested the hope that more extended

and elaborate accounts would be given in future. He had had no previous consultation with Mr. Wilson, who agreed with him that the report was meagre. He thought the accounts should be produced up to the 30th of June. He had also felt it to be his duty to make inquiries on points which required elucidation. If he could not do this without a threat of resignation on the part of the board, the sooner he and others ceased to be shareholders the better. He thought this report was meagre and unsatisfactory.

Mr. Carter (director) said that as to the delivery of the accounts that was a matter which had been brought before the meeting over and over again. There were two grounds which would show this could not be done. The first was, that the business in the North American colonies was of a peculiar nature. From the 1st of January to the beginning of May the navigation was closed; there was no activity in business; the active business commenced in May, and continued till December. If the accounts were made out from the 1st of January to the 30th of June, they would include only two months of active business out of six, while the next account, to the end of December, would include five months of active business. If the board, therefore, were to adopt the plan suggested, the proprietors would have accounts which would not give a correct idea of the working of the bank. That was one reason, but another was that the period when it would be necessary for the bank's officers to be employed in preparing the detailed statements necessary for the publication of accounts, up to the 30th of June, was the busiest season of the year, when the officers of the bank were so pressed with the current work of the bank that it would materially interfere with the business to employ them in the preparation of these detailed statements. Mr. Thomas Smith explained, with reference to Mr. Farrer's remarks, that he had stated that he had come to the conclusion that there was bad management; but he never thought there was bad management in London, but in the colony.

A Proprietor said it was evident to him that they were dependent on the manager in the colonies as to whether they received much or little information. He agreed with the gentlemen who had preceded him as to the meagreness of the report; it told them nothing of the state of their affairs. He disclaimed, however, any intention to cast reflections on the directors, but, as Englishmen, the proprietors had no right to be told their questions were disagreeable to answer. As to the political aspect of affairs in the United States, that had nothing to do with the matters under consideration.

The Chairman said that all colonial banks must, to a certain extent, be dependent upon the judgment and discretion of their managers abroad, but then this board had no reason to complain of their advice and instructions not being followed?

Mr. J. J. Cummins (director) was sure there was no one less disposed to stop questions, or to interrupt inquiry than his hon. and respected friend Mr. Farrer. The returns of this bank went weekly under the examination of a committee: and thus a strict scrutiny of the transactions of the bank took place. He believed that there was one feature in this bank which was peculiar, and that was the great caution exercised. It was at a very early period of the bank's existence stated that the object of the board was to protect the capital intact. That capital was one million paid up. During the last three years the state of Canada had been that of extreme depression, and this bank, in common with others, had restricted their advances; and in point of fact, it was only for a few months of this year that they had allowed advances to be made to the usual former extent.