Volume 2 - ElectricCanadian.com

APPENDIX VII.OFFICERS' GUARANTEE FUND.One of the first matters that engaged the attention of theBoard of Directors after the formation of the bank was thequestion of guaranteeing the fidelity of its officers, as requiredby the provisions of the charter. 1On May 14, 1867, the daybefore the opening of the bank for ordinary business, the cashierwas instructed to obtain fidelity bonds from all its officers.At that period it was customary for a bank to obtainbonds of guarantee for the fidelity of its officers from theirrelatives or friends, the names of the persons offered as suretiesbeing approved by the Board of Directors.In a few cases,municipal debentures, a bank's stock, or similar negotiablesecurities were accepted in place of personal sureties. Aboutthe time when The Canadian Bank of Commerce beganbusiness the first companies to transact fidelity insurancein Canada appear to have entered the field, and the bondsfurnished by them were offered from time to time. At firstsuch bonds were looked on askance and preference was given topersonal securities, presumably because it was considered thatthe limited liability of the companies issuing fidelity bonds didnot provide the same security as the unlimited liability of thepersonal surety. This prejudice disappeared very rapidly,because it was found that death or misfortune frequentlyovertook the individual and affected the value of his bond,while in most cases the corporate bond was strengthenedas time went on by the growth in size and strength of theissuing company, as its business became better established.On September 24, 1867, a list was submitted to the Boardof Directors of those who had furnished security in the form^2 Viet., 1858. c. cxxxi, s. 15.