Volume 2 - ElectricCanadian.com

78 HISTORY OF THE BANKequalled. Although a gradual improvement manifested itselfin the figures of the bank's statement after 1877, it wasonly in 1880 that the gloom passed from the annual reportsof the directors. From 1874 on, depression, stagnation andstringency are their main theme. In 1876 they attributed thedecline in profits to the inflated condition of the business of thecountry, caused chiefly by overtrading, and reminded theshareholders that the consequent stagnation of industrydemanded the exercise of more than ordinary caution, andcalled for contraction in place of expansion. In 1877 thedirectors stated that "the general depression of trade referredto in last year's report has continued with unabated severity inalmost every branch of industry, rendering it impossible toemploy capitalat former remunerative rates. This circumstance,together with the determination of the Board to confinethe operations of the bank to business of a legitimate commercialcharacter has had the effect of materially reducingthe profits."In May, 1878, the president and general manager wereauthorized to make a special investigation of the affairs of thebank with a view to making provision for all bad or doubtfuldebts. The result of this investigation is recorded as followsin the report submitted at the annual meeting of shareholdersin July, 1878: "It having been apparent for some time pastthat certain obligations held by the bank, which it was hopedwould ultimately prove recoverable, had been rendered morethan doubtful by the trying and protracted ordeal throughwhich nearly every branch of business has been passing, thedirectors determined to deal with them at once. It is possiblethat a portion of these obligations may yet be collected, but tocontinue to include them in the available assets after theircharacter has been definitely ascertained could not be justifiedon any principle of sound banking, and as they are the finaloutcome of business transacted during a former period ofgeneral and undue expansion, when the Rest was largelyincreased, the directors decided to provide for them out of that