Volume 2 - ElectricCanadian.com

1867 TO 1901 123It will be evident that during the period 1887 to 1894conditions did not favour large earnings. For seven successiveyears, commencing in 1888, the net profits shown byThe Canadian Bank of Commerce did not vary from one yearto another by so much as $40,000. The largest amount shownwas $538,113 in 1889. As the dividend was maintained atseven per cent, the earnings sufficed for little more than topay the dividend and to provide $100,000 yearly for the Rest,which by this slow and painful process had risen to $1,200,000,or twenty per cent, of the capital, by May 31, 1894. Allprofits in excess of the amount required for the purposes justmentioned were evidently utilized each year by the managementfor the purpose of writing off doubtful assets and buildingup the reserves for contingencies thus strengthening thebank's foundations and preparing for the imposing superstructureto be reared later on. In 1892 regular appropriationsto write down Bank Premises Account were begun, theamount thus applied in that year being $12,500; and in 1895contributions to the Pension Fund first appear.Although Canada, thanks to the strength of her bankingsystem, escaped a panic in 1893, the business situation in theDominion was profoundly affected by the depression thatfollowed the crisis in the United States. Stagnation prevailedin many Canadian industries and trades. The fouryears, 1895 to 1898, were particularly discouraging to bankers.First of all, provision had to be made for the bad and doubtfuldebts which always follow a business reaction of this nature.Then, too, discount rates were very low, there being agreat surplus of idle money after the panic. Notwithstandingthat the Dominion Government was still paying three and ahalf per cent, on deposits, the banks were forced in 1894 tolower their interest rate to three per cent. Although early in1895 the price of wheat had risen to $1 per bushel, and thecrops that year in Ontario were generally poor, prices for allagricultural products fell later on to a low level, owing toheavy crops elsewhere. The grain crop of western Canada