The New York herald., 1921-12-17
MERGER FORCED ON
Big CANADIAN BANK.
Merchants, It's Reserve I'm
paired, Will Be Absorbed by
Bank of Montreal.

MONTREAL, Dec. 16.-Because an In
vestigation has shown the reserve OF
the Merchants Bank of Canada to have
been seriously impaired. it's directors
will recommend acceptance OF an offer
OF absorption by the Bank of Montreal.
1t was announced officially to-day. after
the Montreal Stock Exchange hal or
dered trading in Merchants Bank stock
TO cease.
The announcement came from Sir
Monta gu Allan, president of the Mer-
chants Bank.
Earlier In the day IT had been re-
ported that the Bank Of Montreal, with
81 capital of s22, Oo.oe0. was preparing
20 take over the Merchants with a COM
b,ned capital OF s39.600.000. and this
was confirmed when Sir Montagu ad-
dressed the following letter to the gov
erning committee OF tho Stock Ex-
change:
"you are requested herewith to with
draw Merchants Bank of Canada stock
from your list, as arrangements have
been made with the Bank OF Montreal.
subject to the approval of the governor
in council and shareholders of both
banks, to take over the Merchants
Bank"
Sir Montagu followed this letter with
the following announcement:
"Some time ago the directors of the
Merchants Bank of Canada, having rea-
son to fear thax the banks affairs were
not in the condition as disclosed to
them, secureA the services Of H b. Mac
kenzie formerly general manager OF the
Bank of. British North America and
now general manager of the Royal Trust
Comr%,ls-. and his report showed that
the banks reserve was seriously Inn
palted.
1.-The directors Of the Merchants Bank
have now obtained from the directors Of
The Bank of Montreal an offer to alb
serb the Merchants Bank, whose direc-
tors that control large holdings of stock
have decided to advise their sharehold-
ers TO accept the offer"
The Bank of Montreal later an
nounced the appointment OF Mr.. Mac
henzie as its acting general manager,
with +. c. Noteworthy, its agent in
Neg York, as assistant general man
ager.
1T had been current gossip for some
time that several of the banks invest
fnents have not proved successful, but 1t
was not thought they would have i'm
paired the resources of such an institu.
lion, which was regarded as one Of the
strongest In the Dominion.
II was stated at the Offices of the
sank OF Montreal that deposits held by
the Merchants Bank of Canada are safe
beyond all doubt" Depositors will not
be affected by the amalgamation. 1t was
explained.
Shareholders OF the Merchants Bank
are still in the dark as to their position.
The value of their holdings will depend
entirely on the terms of the merger.
Impairment of the Merchants Bank
reserve is due. according to banking men
here, to losses incurred through failure
of several large Montreal firms whose
paper was held by the bank. One OF
these was the brokerage firm of Thorn
ton, Davidson & Co.. which failed in
July, 1920, for q sum estimated at more
than S4,000,000. The bank has also been
involved in difficulties that several in
dustrial and mercantile houses here have
met with in the last year and half.
The Merchants Bank has large num-
ber of branches throughout the western
provinces, and is reported to have suf-
icTtu " soiiie OeBIet lIOIu Iafm
loan business
During the steps leading up to its
amalgamation with the Bank of Mont
real the Merchants Bank wall carry on
business under Its present nssEa and
staf:.
OTTAWA. Ont, Dec. 1.-THE Merchant
Sank of Canada in its last report Oc-
tober 81 had: Demand deposits, $42,-
G.444; savings deposits, sS9.407,SS2; !;
notes in circulation, s13,994,475 total
liabilities, s165,1s5.70s; assets $685.
4i5,494. Assets included call and short
loans in Canada, s6.970565; current
loans. s106.345.706 call and short loans
outside Canada. s3.571,576: current
loans. S1.667.323; reserve fund, s9,450-
eco.
The Bank OF Montreals assets total
$5l7967754; liabilities. $470,s01,51
Assets Of the merger reach S703, 383,25S,
liabilities S635 OFT 224