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 Canatia Agricultural Insurance Conqjang, 
 
 •■■f'l'. 
 
 DEFENCE 
 
 OF 
 
 EDWAED H. GOFF 
 
 AOAINBT CHABGEH MADK BY 
 
 PHILIP S, BOSS, 
 
 ^jjecial ^ubttor Canatia ^BgrfruUutal Ciiautance ©ompang. 
 
 .1. . ■ ■ >■ 
 '■ '1* 
 
 PRESENTED TO SHAREIIOLDEES JAN. 22, 1878. 
 
 '.. 'V*v ■ 
 
 Makch 2, 1878. 
 
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 C'anatja agricultural Ingurance Compang. 
 
 DEFENCE 
 
 OF 
 
 EDWARD H. GOFF 
 
 ( *■ -» 
 
 AGAINST CHABOES MADB BT 
 
 PHILIP S. ROSS, 
 
 Sifttitd <&utiitax 
 
 CANADA AGRICULTURAL INSURANCE COMPANY. 
 
 n. 
 
 PEESENTED TO SHAEEHOLDEES JAN. 22, 1878. 
 
 f 
 
 Mabch 2, 1878. 
 
 itfUteMi 
 
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 THE DEFENCE. 
 
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 MoNTlUAI., Ifwrcb 2, 1878. 
 To the Shareholdera qf the Canada Agricultural Inturance Society. 
 
 GuNTiyEHBN, — Mr. Ross has presented you with his Beport in pam- 
 phlet form, which gives you the result of his labors as " Special Auditor " 
 of your Company. The Report has been circulated broadcast over the 
 country; and the public press, believing its contents true, have been 
 most severe in their condemnation of my management. 
 
 During the time that Mr. Ross was occupied in making his audit and 
 examination of your Company's books, I was denied common " British 
 fair play" of giving any explanations whatever. 
 
 On receipt of the Report I immediately called upon Mr. Sowdon, the 
 Company's Auditor until Mr. Ross's appointment, for a counter-state- 
 ment, which is just completed ; and I now present it to you, together 
 with Mr. Ross's Report reproduced. 
 
 It will be borne in mind, that, after Mr. Ross presented his Interim 
 Report to the Directors (Dec. 6 last), Mr. Ross, and Mr. William T. Fish, 
 who has acted as General Agent at Cobourg, Ont., were appointed Joint 
 Trustees and Managers, and entered upon their duties immediately. 
 
 Mr. Fish is no friend of mine, in consequence of my strenuous attempts 
 to reduce the working expenses of his agency, and effect reforms in its 
 management together with other agencies, which I considered necessary 
 in order to save the Company from its present unfortunate position. 
 These reforms were attempted at this and other agencies, but with little 
 effect. All would agree as to their necessity, tmiil it (Effected their own 
 pockets. I had a selfish and greedy lot of men to deal with, who wanted 
 me to finance for money, and let them literally grab every dollar as fast 
 as it came into the o£Bce. In the hands of these men I was utterly 
 powerless to make reforms, or save the Company. 
 
 The principal agencies were either in the hands of Directors, or under 
 their protecting influence, so that their opinions were all-powerful ; and 
 the management, in reality, was in their hands, instead of the Manager's. 
 
 I shall now refer to the correspondence between Mr. Ross and myself, 
 inasmuch as Messrs. Ross and Fish have embraced every opportunity of 
 
A 
 
 giving ex parte statements to the public press, in order to mould public 
 opinion against me, and in their favor ; such, for instance, as writing me 
 letters, and giving copies of same to the press, to convince them of their 
 deaire to afford me every facility to defend myself against their attaclcs, 
 but taking good care not to exhibit my replies. I shall give below cop- 
 ies of all the correspondence, that the public may judge impartially 
 between the statements made by Messrs. Ross and Fish and myself. 
 
 Mr. Ross's flrst letter was received by me Dec. 26, 1878; and as it 
 treated upon several subjects contained in his Interim Report, which had 
 been fully answered in my " Letter to the Shareholders " of Dec. 20 (a 
 full copy of which will be found in baclc part of this pamphlet), I simply 
 sent him a copy of said letter, requesting him to accept it aa my 
 answer. 
 
 Regarding vouchers, which I omitted in my reply, I have simply to say, 
 I never had them in my possession. They were always furnished the 
 Cashier, and by him placed on file. If they are not in the Company's 
 vault, I do not hold myself responsible, as I luiow nothing about them. 
 
 Below Is Mr. Ross's letter ; — 
 
 OANABA AoRICVLTURAL iNSUIUIfCB OOVFANT, 
 
 MoNTRXAL, Deo. 21, 1877. 
 B. H. Ooiv, Biq. 
 
 I>ear Sif,—1 called soveral times to lee you on the following heada, but was nofortu- 
 tnnato In my callR ; viz. : — 
 
 Rent of premlie*. It li fo fhr behind, you will ezcuae its being pressed. 
 
 Notes taken ft-om Misi Finder. I would like to have them returned, and make demand 
 M initruoted. 
 
 The books with memorandum of traiifer of stock, which you promised to let me have. 
 TrusUng to your word to let me have them at any time, I let them away. 
 
 The note of $88,000 having been mace all but useless by the indnrsaUon on the back, 
 I ack yon for a new one, or return of the bonds. 
 
 Will Mr. Sowdon or yourself f^imish me with the vouchers for cash entries for 1874 
 sod 1876? 
 
 "S ou are welcome to access to any books or papers of the Company at any time yon 
 may desire, provided you let Mr. Fish or myself know the time you appoint; and one of 
 us will wait on you to supply every thing you want to see. 
 
 Don't put the paragraph In *■ The Star " to me. I had nothing to do with it. Waiting 
 
 die fkvor of your reply, 
 
 I am, sir, yours truly, 
 
 (Signed) Philip S. Boss, Joint Manager 0. A. J. do. 
 
 BEPLT. 
 
 F. 8. Ross, Esq., Joint Truttee and Manager 0. A. Ini. Co., Montreal. 
 
 Dear Sir, — On my return to town yesterday a.m., I received your letter of the 2lBt; 
 and as my letter to the shareholders of the Company, under date of 20th Instant, cou- 
 ments upon the dUferent points to which you allude, I now enclose one herewith, and ask 
 you to accept it as my answer to your letter. 
 
 Very truly yours, 
 
 (Bigned) Edwabs H. Oorr. 
 
 To show the ungentlemanly and unbusiness-Iike manner in which Mr. 
 Ross conducted his examination and audit, seeming desirous of playing 
 the "detective," I give herewith copy of a letter he addressed to Mr. 
 
/ 
 
 l\ 
 
 Smith of Brome concerning the sale of a mortgage. Had Mr. Rots 
 asked me for information regarding the transaction, it would liave been 
 much more buRiness-lilie than addressing a ietter to Mr. Smith to elicit 
 an explanation, which he hoped, as is reasonable to suppose, would com- 
 mit me in some way, and, at the same time, rouse a suspicion in the 
 mind of Mr. Smith that I was in some way guilty of dereliction of duty. 
 This mortgage was purchased by the Company, and afterwards sold at 
 par with accrued interest, purchasing same myself, and paid cash for it. 
 I afterwards sold it; and, as the notarial transfer from Mr. Smith to 
 the Company had been overlooked, I asked him to transfer It direct to 
 the party purchasing from me, in order to make the transaction as simple 
 and inexpensive as possible. Below is the letter : — 
 
 Canada AsRiooLTtiiiAi. Insuranoi CoxPAirr, 
 MoMTRBAL, Jan. 6, 18T8. 
 O. D. Smith, Eiq. 
 
 J)tar Sir, — In the fell of 187S you traiuferred to thta Oompsny • mortgage on K. O. 
 Carter, Eaq., for $773.00, and interest, $154.38, recolTing In payment thereof ca«h, Jan* 
 10, 1870, the (ums of $212.19, $21S.16; and March following, bill payable, $fiOO. 
 
 I now Hnd, on application to Mr. Carter, that you have transferred this to some other 
 person. Would you be kind enough to explain why you did this? Yon must have 
 known it was wrong to take away a security pledged with us, without first securing onr 
 consent. Your reply will much oblige 
 
 Yours truly, 
 (Blgn«d) Philtp B. Boss, Joint Manager and TnuUt, 
 
 If 
 
 One would naturally Infer from the latter part of Mr. Ross's letter that 
 Mr. Smith had stolen this mortgage. 
 
 Note. — Fearing Mr. Ross's letter might create some uneasiness in 
 the minds of Mr. Carter's friends, I would explain. The mortgage was 
 on his residence, instead of himself. 
 
 When I moved my books and papers from the ofSce of the Canada 
 Agricultural Insurance Company, where I occupied private ofBces by 
 invitation of the Board of Directors, I moved to the office of the M P. 
 & B. R.R. Company, of which I was President; and, not having room 
 there for my private desk and office-chair, I left them in the Insurance 
 Office. I may here mention that the Railway Company occupied offices 
 at 247 St. James Street, which were rented from the Insurance Com- 
 pany. As I was the executive officer of the Railway Company, and one 
 of its principal owners, the Iniiurance Company looked to me for pay- 
 ment of the rent, which I had always paid myself. At this time I had 
 allowed the rent account to nm in arrears, inasmuch as I was continu- 
 ally raising and loaning money to the Insurance Company, and they 
 were owing me a considerable amount. The Insurance Company shonld 
 therefore have charged me with the rent on account of my cash ad- 
 vances. 
 
 Nearly all the furniture and fixtures, including desks, safes, <fec., is my 
 private property; and Mr. Ross, thinking to annoy me all he could, 
 brought suit for rent account, and seized contents of the office: after 
 
which I conclwled to hire a new office, and let hlro gratify his vindictive- 
 ness by selling the property ; and I asked for iny office desk and chair 
 which I left in the insurance-office, with result as shown in his reply to 
 the following : — 
 
 MOMTMAL, Jmi. U, 1878. 
 
 p. B, Rosi, Eaq., Joint Tru*te» and Manager 0. A. Int. Co., Montreal. 
 
 Dear Sir, — I would feel obll|{od if you would deliver my offlotideik and chair to 
 bearer to-day, a* I require It for my own uio. Your Company having taken auch ex- 
 treme measure! In lelxlng on all the furniture In the office of the M. P. 8c B. R.R. 
 Company, all of which U private property, and the majority of *ame belonging to me, 
 I muit now leoure another office; and I require my duak and chair which I left In 
 your office, lilr. Car^ipbell will point out the property, If yoa do not know which 
 tt Is. 
 
 Very reapeotfUUy, 
 (Signed) Edward H. Oorr. 
 
 BKPI.T. 
 
 Canada Aoricultural Insuranob CoxPAirri 
 
 UONTRBAL, JWn. 12, 1878. 
 
 B. H. Oorr, Eaq. 
 
 I>ear Sir, — After consultation with my colleague, we do not see how we can part 
 with any asset Just now. No one In the office can suy that the desk or chair Is youri), or 
 what desk or chair It is, as wo have Inquired at them all : so that we decline parting with 
 any thing but your books and papers. If there are any here. 
 
 After the annual meeting, we shall be either turned out, or have more power to act. 
 
 Yours truly, 
 (Signed) Boss 8c Fish, Joint Manager) and Trustee*. 
 
 The next letter was received Saturday c^ternoon previous to meet- 
 ing of shareholders called for Tuesday, Jan. 22; and was the flrst time 
 an opportunity was afforded me of learning the contents of the Report, 
 except wliat might bo gathered from the Interim Report. 
 
 Mr. Ross was appointed Special Auditor by tlie Directors Sept. 26, 
 1877; after which I met him in the office almost daily: but from Iiis first 
 entry into the office until his Interim Report was presented to the Board, 
 Dec. 6, 1877, he never mentioned the subject qf his work to me, or asked me 
 a single question relative to the Company or its bwdness. 
 
 When tlie Interim Report was presented to the Board, I disputed its 
 accuracy, and demanded an immediate opportunity of making explana- 
 tions, which was faithfully promised me by Mr. Ross and the Directors, 
 This promise was grossly violated by ignoring it ajtogether, and the 
 Interim Report immediately given Mr. Foley of " The Journal of Com- 
 merce" by Mr. Ross, from which a very severe article was prepared and 
 published in the next issue of said paper. Upon my charging Mr. Ross 
 with the violation of his promise, he denied having given Mr. Foley 
 the Report, and intimated that Foley had purloined it from the office ; 
 which I learned, on inquiry of Mr. Foley, to be untrue. Immediately 
 after the appearatice of tlie article in " The Journal of Commerce," Mr. 
 Fish gave copies of the Interim Report to the daily press for publication. 
 
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I leave It for the pubMc to Judge whether it was the desire of these 
 
 gentlemen to act as impartial auditors, or use tlioir position to do me all 
 
 the injury they could. I now wish to withdraw the apology made for 
 
 Mr. Ross in my letter to the shareholders of Dec. 20, 1877, saying I did 
 
 not think him responsible for the publication of the Interim Report. I 
 
 took his word ^or it, and supposed he told me the truth. The following is 
 
 Mr. Ross's letter: — 
 
 Canada AoiuciaTURAL Imscranci Compakt, 
 
 MoMTRBAL, ]Oth January, 1878. 
 E. H. GorF, Biq. 
 
 Dear Sir, — I aikod and appointed with Vr. 6owd.>n to meet mo and go over lome of 
 figures ; but he replied that he was busy. I told Mr. Campbell to Invito you to meet with 
 ■omo member! of the Board yesterday evening, to hear the Report read ; but I am lorry 
 you were not , '•!nt. A« I understanf' that It !■ Intended to read nald Report to the 
 meeting of ahareuolderi, should you >' jsire to see It beforehand, you might appoint an 
 hour on Monday forenoon, aftemooi , or evening ttom eight to ten, and I will plaoe 
 myself at your disposal for that purpose 
 
 I am, sir, yours truly, 
 (Signed) Phiuf B. Robs. 
 
 * Bi,PT.r. 
 
 p. 8. Ross, Esq. Montriai,, Jan. 19, 1878. 
 
 Dear Sir,— I am this moment In receipt of yours of this date, referring to Board 
 meeting of the Canada Agricultural Insurance Company yesterday, and oaying I waa 
 invited to be present, and that you regret my not accepting the invitation, as your Report 
 was to be read before the Board. In answer, permit me to say, I received the usnal 
 printed notice only : no Invitation more than this was sent me. Regarding Mr. Bowdon 
 not meeting you, I would say, I told Mr. Sowdnn T considered, that, inasmuch as both 
 yourself and the Board of Directors had not kept faivh with me in my request to he 
 given an opportunity to explain any items In the books wlilch you did not understand 
 before your Report was made public, which was promised me, I did not want him to 
 undertake any explanations, unless I could be given this opportunity ; and that I should 
 still hold myself in readiness to answer any questions you might ask, and would be glad 
 to meet you in the ofiBce ot any time you might name for that purpose. He (Mr. Bowdon) 
 afterwards told me you would see me last week ; and I appoint"^. Thursday »venlng to 
 meet you, which he informed me waa satisfactory to you. On Thursday, the day named, 
 Mr. Bowdon informed me he had met you, and yon dee.'red him to say you could not 
 meet me during that week. I lutve, therefore, held myself in readiness to meet you any 
 time since, but have not asked the privilege, as it was, at different times, denied me 
 before. I shall be pleased to accept your Invitation for Monday evening, and would 
 respectfully suggest that Messrs. Angus, Ramsay, and Bowdon ho invited to meet you 
 
 with me. 
 
 Yours truly, 
 (Signeil) Edward H. Oofi' 
 
 Below I give copy of the invitation alluded to in Mr. Ross's letter above. 
 It is the usual printed form, and reads as follows : — 
 
 Orrios Canada AoBiouLTtmAi. Insuranok CoxPAirr, 
 180 Bt. Jakbb Stubit, 
 Mo.^TREAL, 17th January, 1878. 
 Sir, — A meeting otthe Board of the Canada Agricultural Insurance Company will be 
 held at the office of the Company in Montreal on to-morrow {Friday), \ith initant,BX 
 fowr o'clock P.M., for the transmission of business. 
 
 BeapectfuUy yours, 
 
 W. Caxfbbu., Swrttary. 
 
8' 
 
 Below I give copy of Mr. Soss's reply to mine of this date, appointing 
 Monday evening to liston to his reading of the Report. A careful peru- 
 sal of this I thinlc quite sufficient to show the lack of sincerity In the 
 words used by Mr. Ross in the opening portion of his Report : " If I say 
 hard things, therefore, in thib Report, it is much against my inclination 
 that I do so, and vrithout any feeling except that of regret." And yet 
 he plainly tells me in this letter, "I do not wish to argue any question 
 In ig so;" feeling, I suppose, the time was so near when he could, if 
 the port was not changed, deal me a crushing blow. He again says, 
 " But I am open to conviction as to whether the statements I make are 
 from the records." Of the truthfulness of this assertion I will leave the 
 public to judge, after reading the report of Mr. Sowdon. Notwithstand- 
 ing explanations were made by me that evening, showing the utter falsi- 
 ty of a considerable portion of the Report, very much ot vhich he did 
 not obtain from the Company's books or records at all, he did not alter a 
 single statement ; simply treated my explanations with contempt, and 
 persisted in reading a Report to the shareholders of the Company, and 
 placing the same in the hands of the public press, which he knew to be a 
 base falsehood, with no other purpose than an attempt of doing me injury 
 by prejudicing public opinion against me, and thus pleaHng those in 
 whose (mploy he was acting as a tool of persecution. Here is a copy of 
 the letter: — 
 
 Oakada Aoricultotul Insubanob CoMPAirr. 
 MONTRKAi., 19th January, 1878. 
 S. H. 'jknr, Hoq. 
 
 J)«ar Sir, — Yours reeeived. I iball be on band from eight to ten on Monday evening. 
 I have not the slightest objection to Messrs. Ramsay, Angus, and Sowdon being present. 
 
 If you want me to read the Report, i' will take about an hour to do so. Of course I 
 do not wish to argue any question In so doing; but I am open to conviction as to whether 
 the statements I make are from the records. 
 
 The Report was only ready on Thursday evening last ; and I would not have read It In 
 presence of any person other than yourself, not even Mr. i3owdon, till it went to the 
 Board. For this reason, I told Mr. Sowdon I wanted him one night, and you another. 
 
 I am, sir, yours truly, 
 
 (Signed) Philip S. Robs. 
 
 1 
 
 Mr. Ross pays a very poor compliment to my common sense if he im- 
 agines he can cram me with his oily words in the closing sentence of the 
 above letter. He says his Report was only ready on the Thursday even- 
 ing (17th) previous. If this is true, how was he to have presented it to 
 the shareholders' meeting flrst called for Tuesday, Jan, 16 ? which date 
 was only changed to the 22d because legal notice had not been given. 
 I say boldly, if the Beport was not ready until Thursdiiy evening, the llih 
 January, it simply suited Mr. Boss to delay it in order to stifle explanations 
 htfore it could he used. Again: he has the effrontery to tell me he 
 " would not have read it in the presence of any person other than your- 
 self, not even Mr. Sowdon, till it went before the Boardi." I simply ask 
 the perusal of an ulicle from "The Monetary Times " of Toranto. Dec. 
 .28, 1877, which I reproduce in the back part of the pamphlet, and let the 
 
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 reader judge if the editor of this joumai, SUS miles from Montreal, could 
 have written such an article ou mere street rumors, or from the meagre 
 information given in Mr. Eoss's Interim Beport. Is it not plainly evident 
 that the same hands that prepared the Ross Report (and I here give 
 credit for Mr. Ross being favored with other ingenuity than his own in 
 its preparation) either supplied the information for this article, if, indeed, 
 it was not written by them ? I have good reason for saying I believe it 
 woo written in the office of the National Immrance Company. 
 
 And, as further evidence of the correctness of this assertion, I may tell 
 the public it was the National Insurance Company that made the "rear 
 tenable offer to re-dnsure." In fact, the offer was extremely liberal, — so 
 much so, that they generously offered to let the Directors move the whole 
 Company — its property and effects — into the oflBce of "The National," 
 and their philanthropic President and Secretary would take it in charge, 
 and wind up its affairs ; and, strange to say, this proposal found advocates 
 on the Board of " The Canada Agricultural." When the pi-oposal came 
 to my knowledge, I told Mr. Angiis, the President of the Company, very 
 plainly, that I should oppose it in every way possible ; that the proposal 
 was simply a sleight-of-hand performance on the part of Ogilvie and Lye to 
 get an opportunity by which they hoped to gratify their desire to attack me ; 
 and, furthermore, the very idea of re-insuring in "The National" was 
 simply ridiculous, as the Company, through the bad management of Its 
 officers, had become a hollow bankrupt concern, unsafe for re-insurance, 
 and totally unworthy of public confidence ; and, as proof that my pre- 
 dictions were correct, I would refer the reader to the statement of the 
 Company's affairs presented to the shareholders Feb. 9, 1878. After it 
 was known that I had opposed this sham re-insurance dodge, it became 
 necessary to give me a severe chastisement, and at the same time/ri^A<en 
 the Agricultural Directors into the acceptance of their offer : therefore 
 the article in question was devised, and the editor of " The Monetary 
 Times " opened the columns of his paper for the " administration of jus- 
 tice ; " and, after a studied attempt at hurling all the abuse upon me which 
 this worthy trio — Ogilvie, Ross, and Lye — could invent, the article 
 winds up with the advice, " The best thing they can do is at once to re- 
 insure on the terms already offered." I will give them credit for one sen- 
 sible idea in this article (although I suppose it was borrowed for the 
 occasion): "This revelation must occasion the fear that there are other 
 organizations deserving the inspection of the commercial anatomists." I 
 would advise the application of this advice to the National Insurance 
 Company, which their statement shows the necessity for. 
 
 On listening to the reading by Mr. Ross of his Report on Monday 
 evening previous to annual meeting, and remonstrating with him for 
 the glaring untruths it contained, the only satisfaction received was 
 an insinuating laugh from hira : as much as saying, " I've got you 
 just where I want you." I left him in disgust, and the next A.H. 
 wrote the following letter to the Directors, in the hope that they had 
 not entirely lost all reason, and were possessed of a sufficient sense 
 
10 
 
 oi justice to prevent the publication of a Report which I firmly declared 
 false and libellous, and give me the opportunity of proving my assertions 
 by appointing a Committee of Investigation. But I was mistaken : t'le re-; 
 quest was refused, and a settled determination evinced of sacrificing me, 
 if possible ; thinlcing, I suppose, my destruction would appease the wrath 
 of the assembled ttocliholders, who were blaming the management for 
 the financial diflSculties ot the Company, without irying in any way to 
 ascertain the causes which led to the Company's suspension. The 
 Directors were simply acting their old policy of " chicken-lieartedness • " 
 afraid to take a bold stan''. in any thing entailing the slightest responsii 
 bility. 
 
 MoNTRBAi,, Jan. 22, 1878. 
 
 To the Directors of the Canada Agricultural Insurance Co. 
 
 Obntlbmen, — I have to Inform you that last evening, for the flrst time, I was given 
 an opportunity (from eight to ten p.m.) of hearing Mr. Boas read bis Report, and which I 
 understand is to he presented to your Board to-day. 
 
 I desire to say that said Report is untrue and libellous; an^ if it Is presented to the 
 shareholders of the Ciompany to-day, or to the public, I sbaU commence proceedings 
 against the members of your Board at once. 
 
 I respectfully demand a Committee of Investigation, composed of tarce unprejudiced 
 gentlemen, with f\ill power and authority to call upon Mr. Ross and Mr. Sowdon for 
 explanations on the accounts and business of the Company. 
 
 Tours very respectfully, 
 
 (Signed) Edward H. Gofp. 
 
 The receipt of the above letter was not even acknowledged in any 
 form; and, the next day after the meeting (23d), Mr. Campbell, Secre- 
 tary of the Company, writes me, giving me a summary of the charges 
 contained in Mr. Ross's Report, and says, " As it has been decided to 
 publish the Report of the Vice-President and Auditors, to be circulated 
 to shareholders, I am instructed to inform you, that, before doing so, it 
 is at your disposal for correction." What right, may I ask, had Mr. 
 Campbell or any other oflBcer of the Company, Mr. Ross not excepted, 
 after the Report had been read to the meeting of shareholders and ac- 
 cepted, and summarized reports from same given to the daily press for 
 publication, to place it at my disposal for correction ? The mere act of 
 doing so I consider an insult to common sense. Mr. Ross knew very 
 well he could not alter the Report after its acceptance by the share- 
 holders, and must have been convinced I would not, at this stage of 
 tho proceedings, especially after his manner of treating my explana- 
 tions the Monday evening previous, commit myself further to his ten- 
 der mercies. But, to show the insincerity of his offer, the letter was 
 received Thursday afternoon, and the corrections must be made that 
 week, giving me all of ttoo days to go over and examine about three 
 hundred pages of manuscript (it was not then in type), and give expla- 
 nations and answer charges, which had occupied four months of his time 
 to formulate. I concluded I would further test his " feeling of regret," 
 and sent Mr. Campbell the answer following liis letter, asking for a copy 
 of the Report ; and in his reply received still further proof that I had not 
 
n 
 
 misjudged the man, iu a letter refusing tlie copy aslced for, on the ground 
 that it was too long to copy, and, if examined, must be done in the 
 office, and done before Saturday night (two days), I should append the 
 letter, only I have mislaid and cannot find it. Below is Mr. Campbell's 
 letter, and my reply : — 
 
 Canada AoBictTLTURAL Insuranck Company, 
 
 Montreal, 23d January, 1878. 
 Ebward H. Qovv, Egq., City. 
 
 Dear Sir, — Aa It has been decided to publish the Report of the Vice-President and 
 Auditors, to be circulated to shareholders, I am Instructed to Inform you, that, before 
 doing so, it Is at your disposal for correction. Bhould you, therefore, wish to see it, it Is 
 at your disposal at the office of the Company any day this week, from ten a.m. to ten p.m., 
 on proper notification to me of such time as you may appoint. I may briefly rccapltu. 
 late the items; viz.: Draft from Watertown of (680.28, not accounted for. Rebate on 
 March premiums by Wotertown Company, not accounted for, (772.05. Allowance on 
 BrockviUe Agency, $500. That $1,500 was received by you from this Company for pay- 
 ment of fifteen shares of the bonus stock. That many Items of goods, and labor, &c., 
 for a period prior to Jan. 1, 1874, have been unwarrantably charged to the Company. 
 That items of cash have been charged twice. That cash vouchers are very much want- 
 ing. That items subsequent to January, 1874, have been charged wblcli ought not so to 
 have been. That settlement of accounts against this Company has been not seldom by 
 your pro note, or otherwise, while the Company has been charged cash. That the Com- 
 pany's acceptance has been attached to drafts now outstanding, from which it received 
 no benefit, and had nothing to do with. That proper statements have not been presented 
 to the Company or Government. That bonds have been sold, bought, exchanged, and 
 otherwise manipulated, without authority, and from which you derived a profit. That 
 bonds or debentures have been bought, sold, or exchanged without correct entries being 
 made in the books of account of the Company. That capital-stock shares have been over- 
 issued. That transfers or scrip representing paid-up stock has been allowed or issued 
 without corresponding benefit to the Company ; and that there Is now an over-Issue more 
 than, and apart from, surrender shares. And that the standing of accounts and the treat- 
 ment of them ore wrong, and calculated to deceive, and have deceived. You are at liberty 
 to hove Mr. Sowdon and any of the Directors you may choose to select present. If you 
 desire any outside of the Directors, we shall be glad to have their names for consideration. 
 
 Yours faithfully, 
 
 (Signed) W. Campbbll, Secretary. 
 
 REPLY. 
 
 Montreal, Jan. 24, 1878. 
 William Campbkll, Esq., Sec. Canada Agricultural Int. Co., Montreal. 
 
 Dear Sir, — I have to acknowledge the receipt of your favor of yesterday, saying it 
 had been decided to publish the Report of the Vice-President and Auditor of the Com- 
 pany to distribute among the shareholders, and that it is open to me for correction any 
 time this week. In answer, I would say, it is unreasonable to suppose I could make cor- 
 rections In the Report In so short a time as two days, and without having a copy of the 
 Report before me. If you will favor me with a copy, 1 will then tell you when I can 
 make the necessary corrections. 
 
 Yours, truly, 
 
 (Signed) SowABD H. QoTW. 
 
 Below I give another specimen of contemptible correspondence to 
 show how these saints of moral rectitude and business veracity, Messrs. 
 
1» 
 
 Philip S. R088 and William T. Fish, Joint Managers and Trustees, were 
 endeavoring to throw dirty water upon ''your late Manager" in every 
 conceivable manner. 
 
 On refereace to my letter to the shareholders, Dec. 20, 1877, in this 
 pamphlet, the reader will And an explanation to the charges contained in 
 Mr. Ross's Interim Report about my taking notes from the office. These 
 notes were charged to my account on the books of the Company Oct. 5, 
 1878. In January postal cards were addressed broadcast, not merely 
 to promisors of the notes in question, but to others, and to those who 
 had paid the Company and held the notes in their possession cancelled, 
 simply to convince them, I suppose, that "your late Manager" had 
 really purloined the notes from the office of the Company. Below Is a 
 copy of one of the postal cards :— 
 
 MoMTBEAL, Jan. S, 1878. 
 A. L. Pettenoili,, Scotbmobb, Qnx. 
 
 Dear Sir,— Your premium note, No. 8,858, was taken from this office without 
 authority. The note is payable to the order of this Company. You will, therefore, pay It 
 only to thlB office ; which please do at once by re^stered letter, addressed " Canada Agri- 
 cultural Insurance Company." 
 
 (Signed) W. Camfbku,, Secretary. 
 
 i 
 
 It may be considered perfectly legitimate and honorable for the men 
 who have taken such an intense interest in the publication of the Ross 
 Report to use all means in their power, fair and foul, to crush one whom 
 they dislike and fear. But let me ask the stockholders of the Canada 
 Agricultural Insurance Company if they wish their pockets taxed to 
 gratify the dislikes of other people. AVhy should the Joint Trustees and 
 Managers of the Canada Agricultural Insurance Company incur the 
 licavy expense of issuing nearly ten times the number of this Ross Pam- 
 phlet that there are English-speaking shareholders, and more than double 
 the number of French and English combined? Was this Report in 
 pamphlet form designed for the stockholders, who alone are pecuniarily 
 interested in it? or was it more particularly for the public at large? One 
 would naturally conclude the latter was the case, especially as the pam- 
 phlet has been handed out in numbers, to those who are well known to be 
 among my bitterest enemies, for distribution in the streets and on railway 
 trains going to the Eastern townships. Are the shareholders of the 
 Canada Agricultural Insurance Company to pay for this style of war- 
 fare ? or is the rumor indeed true, which has gained some currency, that 
 A. W. Ogilvie, Esq., M.P.P., and the Attorneys of the Passumpsic Rail- 
 road, generously agree to contribute towards the expense of the Ross 
 Pamphlet? 
 
 With the foregoing correspondence, and my comments thereon, I shall 
 leave the reader to take up Mr. Ross's Report and Mr. Sowdon's replies. 
 That my defence may be plain and easily understood, I have divided 
 Mr. Ross's Report into sections ; and Mr. Sowdon's replies follow, each in 
 consecutive order. 
 
n 
 
 13 
 
 I ask the public, as a great personal favor to ihyself, to read this pam- 
 pLlet carefully, weighing section with section, and tlieu form their own 
 opinion as to whether I am too severe in tiiy allusions to Mr. Ross and 
 the other gentlemen who I claim have given their aid to the preparation 
 of the charges in the Bods Pamphlet. 
 
 Very respectfully, 
 
 EOWABD H. (JOFF. 
 
 * 
 
 MONTBSAL, March 2, 1878. 
 
 To the Shareholders qf the Canada Agricultural Insurance Company. 
 
 Gbntlbuen, — I have read with astonishment the statements set forth 
 in the Reports of Mr. Vice-President Desjardins, and Mr. P. S. Ross, the 
 Special Auditor named to investigate t^e affairs of your Company. These 
 statements are at such variance with the true state of affairs and with 
 fair play, that I am forced, not only in justice to myself, but in common 
 honesty towards your late Manager, to accept his invitation to supply him 
 with a just and equitable statement, which will explain some of the many 
 erroneous statements made in these Reports. In so doing, I do not intend 
 to constitute myself a " prosecuting attorney," seeking to make out a 
 "case" at all hazards, but will confine myself to explaining the rash 
 statements made in these Reports ; and will deal with facts and figures 
 only, and not with suppositions. 
 
 Your obedient servant, 
 
 P. M. SOWDON, 
 Late Auditor Can. Agricultural Ina. Co. 
 
 Proceedings (if the Annual General Meeting of Shareholders of the Canada 
 Agricultural Insurance Company, held 22d January, 1878. 
 
 Pursuant to notices and advertisement, the above meeting was held at 
 the office of the Company at half-past one p.m., at which the attendance 
 of shareholders was very large. The chair wp.s taken by the Vice-Presi- 
 dent. After the minutes of last Annual Gleneral Meeting were read, the 
 meeting adjourned to the Mechanics' Hall. 
 
 The Chairman called the meeting to order, and read the Report of the 
 Directors, and moved its reception and adoption, seconded by Mr. C. H. 
 Champagne. The Special Auditor's Report to the Directors was then 
 called for, and read by Mr. P. S. Ross, as well as detailed statements of 
 the business and position of the Company ; the Vice-President repeating 
 the same in French. 
 
 The Reports, on motion of Col. Stevenson, were received; and the 
 meeting adjourned till half-past seven p.m. 
 
 On re-assembling at half-past seven p.m., it was moved that the Direc- 
 tors' Report be received and adopted. Carried. 
 
 Several resolutions and alterations of by-laws during the past year 
 
u 
 
 were conflnned; and It wa8 resolved that tbe Joint Manager and TruRtee 
 be continued, with all necesfary powers for the purposes of liquidation. 
 
 A vote of thanks was moved, seconded, and carried, accompanied by 
 expressiops of confidence from vatrlous shareholders, to Mr. Desjardins; 
 and the m-eting adjourned. 
 
 Wm. Campbell, Secretary. 
 
 HoNTBlAi., January, 1878. 
 
 At the outset, I regret that I should be obliged to object to the correct- 
 ness of tho record of the proceedings of the Annual Meeting as here set 
 forth. The proceedings are not correctly detailed. 
 
 No legal votes were taken. There were no scrutineera appointed, and 
 no list of shareholders having a right to vote submitted. The voting waa 
 conducted in a wholly irregular manner, without reference to the qualifi- 
 cation of the voters. As a matter of fact, not one-tenth of those present 
 were qualified voters ; not having paid the second and third calls upon 
 their shares, as required by the Company's act of incorporation. I there- 
 fore hold that no business was legally transacted at said meeting. 
 
 I also hold, the Board of Directors is now, and has been, an illegal 
 board for months past; the majority of the members having trans- 
 ferred their stock so as not to hold the requisite amount for eligibility, — 
 viz., twenty shar.^a, — and those who do hold twenty shares have not 
 paid the calls : consequently, all their acts are illegal. 
 
 I called tho attention of the Chairman and the meeting to these facts, 
 and asked that my objections should be entered in the minutes. Appar- 
 ently they have not been entered, and but a general and garbled report of 
 the meeting is here presented to the shareholders and the public. 
 All of which is respectfully submitted. 
 
 ' F. M. SowDoif. 
 
ANSWER AND EXPLANATIONS 
 
 TO TBI 
 
 EEPOET OF VICE-PEESDENT AND DIRECTORS 
 
 Ain> 
 
 SPECIAL AUDITOR, P. S. EOSS. 
 
 BASED UPON PACTS AND FIOURBS, AND NOT SUPPOSITIONS. 
 
 Br F. M. SOWDON, 
 
 1.AT1 AUSITOB OAITAOA ASRIOULTUBAI. HfgVBAiroi OOKFAVT. 
 
 HoNTMAL, March 2, 18T8. 
 To the SJiareholders of the Canada Agricultural Inmrance Company. 
 
 I take exception to the Report of the Vice-President and Directors in 
 toto, on the grounds that they were not Directors at all, having rendered 
 themselves ineligible by availing themselves of the scheme hereafter men- 
 tioned, of transferring their ten-per-cent stock, and taking paid-up stock 
 in exchange, and the calls not having been paid, as stated in my opening 
 ""^"•^s- F. M, SoWDON. 
 
4 
 
 
 EEPORT 
 
 or TBI 
 
 VICE-PRESIDENT AND DIRECTORS. 
 
 SECTION 1. 
 
 MoMTBKAL, 22d January, 1878. 
 To the Shareholders of the Canada Agricultural Insurance Co. 
 
 OlMTUEMKN, — None more than the Directors, who have remained In charge tlU now, 
 regret the itate of aflUri exhibited by the Report, wblch pretently will be submitted to 
 you. 
 
 The itatement presented to yon at the annual general meeting of 1877 waa not latla- 
 fttctory, as It showed a deficit of ^32,000 on the business of the preceding year; but, 
 though unfavorable, that Report did not show that your Company was In a more alarm- 
 ing condition than that of most of the insurance companies which had done business in 
 Canada during the same period, and would not have justified your Directors in their 
 •ospending the operations of the Ckimpany. 
 
 Reply. — This was the correct view to take of the position of the 
 Company at that time, notwithstanding the prejent adverse opinion of 
 the Yice-Pre^^ident, as the results of the business of the various Canadian 
 insurance companies have since verified. 
 
 SECTION 2. 
 
 The statement furnished by the Mana^g Director, and certified to by the Auditors of 
 the Company, showed an excess of $1,441 of assets over the liabilities to be put at the 
 credit of profit -and-Ioss account, notwithsianding the very heavy losses of the year. 
 
 Tour Directors had reason to think that the Report was correct ; for besides the declara- 
 tions of the Company's officers, and also the certificate of the Auditors, they had the 
 fact of the Superintendent of Insurance having declared himself satisfied, and made a 
 report favorable to the maintenance of the license granted by the government. 
 
 We would farther remark, that the same statement waa sworn to on the 9th March 
 last by the President and Managing Dheotor as being the exact state of afiklrs, and sent 
 to the government as required by law. 
 
 Beplt. — The statement waa correct according to the balance-sheets 
 of liabilities and assets, as will appear hereafter in dealing with the 
 " Special Auditor's " Beport. 
 
 it! 
 
* 
 
 N 
 
\ 
 
IT 
 
 ' 
 
 SECTION 8. 
 
 After dlaonutiiK and adopting the Boport, the elootlon of Director! took place, and 
 moat of the retiring mtimbori uf tho fonner Uonrd were ro-olootcd. 'I'ho new lioard 
 waa conatltiited lmmvdlat«ly, and betpin to work, taking aa baala of their operatlona th* 
 facta and flgurea given In the abiive-inentlonud Report. It would be uaaleM at preaent to 
 enter Into the dvtalli of the queatluii* which were ralaed at the meetlnga of tho lioard of 
 Dlrertora on each uccoalon : aufllco It to aay, without fear of contradiction, that each of 
 the DIructura did all be waa able, at the lioard inuctlnga and othurwiae, to promote tb« 
 beat Inturoata of the Company. At tho meeting of tho Board of Diroctora, and thoae of 
 the Executive Committee, they energetloully Inalated upon an economical management, 
 and a atrlct aurvny of the riaka taken and accepted by tho Agenta ; and In each of thoa« 
 they received the moat poaitlvo oiiRU.-aneoa fh>iii the Treaidont and Managing Director 
 that their Inatructlona weru carefully followed. Your DIrectora do not fear to lay (and 
 In tlila they are auppurted by tho reault of the inveatlgatlon which haa Juat been made), 
 that, If your Company had only to meet tho reaulta of tho tranaactlona of which tha 
 Itoard waa coxnlzunt, or which wero authorized by them, though tho Company would 
 not have nrceMaarlly eacapod Ita ahare of tho heavy loaaoa which have ao deeply affooted 
 tho flnancea uf hmuranco companlua In thti* country during tho laat two yvarH, yet, all 
 Uabllltlea aottled, tho capltul of tho Company would not have boon affected, or, " nffectedi 
 only allghtly, and we would have boon able aa other Inauranoe companlea to vontlniM 
 without (llffleitlty our operation*. 
 
 But the Managing Director, for the pnrpoae, If we may believe him, of putting the 
 Company In poaHuaalon of capital Indlaponaablo to the tranaactlon of affuira, and to 
 Inorcaao Ita Importanco, uaed the poaltlun ho occupied to make certain financial opera- 
 tlona, tho nature and purpooe of which the Special Auditor (Mr. Koaa) will aoon mak* 
 known to you. The effect of theae operatlona la unfortunately but too apparent to-day. 
 They, mure than any thing olde, are tho cauao of the critical poaitloa In whloli your Com* 
 pany la now placed. 
 
 Reply. — Althotigh the Directors met often, their time was usually 
 spent in rUscussing minor and unimportant matters; and, when the 
 question of finance and payment of losses came up, they always tried ta 
 shirk their duty, with the exception of the President, who did all he 
 could to help to raise money for tlie Company's use, even to pledging his 
 own securities; and it is au indisputable fact, that, at nearly all the 
 meetings uf the Executive Committee, the usual way of winding up was 
 by saying, " Oh, Goff I you can work out these matters better than we 
 can, and can raise all the money required for the Company yourself," 
 or words to that effect; (herehy placing all the responsibility of raising 
 money for tlie Company's benefit on " your late Manager's " shoulders. 
 That your late Manager " used the position he occupied" to make finan- 
 cial transactions beneficial to himself, as is here hinted, is maliciously 
 untrue, as I shall hereafter show in dealing with Mr. Boss's Beport. 
 
 SECTION 4. 
 
 These tranaactlona, with the exception of the re-tranafer to Mr. E. H. Qcff of th* 
 bonda of tho Montreal, Portland, and Boaton Itallroad Company, which haa been done 
 by the positive Inatructlona of the Directors, were all made without the authorization or 
 the conaent of the DIrectora, and without their knowledge. 
 
 The minute examination that Mr. Roaa has made of tho books, of deliberations of tb« 
 Board, and of thoao of aoconnta, and the comparlaon ho haa Instituted between them to 
 trace from beginning to end the transactions given partially in one or other of theM 
 
18 
 
 book*, has proved the tmth of the above statement; and has also revealed the fact, that 
 the Directors have received, In many instances, Information that would show In no way 
 the facta such as they were represented to have been. 
 
 Reply. — It is certainly very refreshing to see the cool manner In which 
 these gentlemen, " your Directors," have endeavored to relieve themselves 
 of the responsibility of every transaction, with the exception of the re- 
 transfer of the Montreal, Portland, and Boston Railroad bonds. This is 
 stated here to have been done by " t/jetr positive Instructions." Tliis 
 statement is not correct. The transfer of said bonds was made at tlie 
 request of "your late Manager." (See copy of resolution of date 8th 
 February, 1877, as appears on Section 50 of Special Auditor's Report.) 
 
 •f SECTION 6, 
 
 ^. Before closing these remarks, we think it proper to refer to an Important transaction 
 futhorized by the Board. Wo allude to the transfer to Mr. E. H. Goff of a certain 
 number of ten-per-ccnt shares in exchange of fully paid-up stock. 
 
 If that transaction had been carried out according to the scheme, — that Is to say, to 
 obtain by that way suffiriient mt -us to cover the thirty thousand dollars due to the Bonk 
 of Commerce, — the result would have been as expected : first, to place the Company in a 
 most satisfactory tlnanclal state ; and, secondly, it would have afforded shareholders, 
 preferring few shares paid up to a l.>rger number only partly paid, a good opportunity 
 to suit their views, without injuring the credit and standing of the Company. 
 
 Mr. Ross's Report will show the basis on which your Directors were induced to adopt 
 that decision, and how their instructions were followed, too, by those upon whom was 
 intrusted the course of putting them into execution. 
 
 Reply. — The transaction of transferring certain ten-per-cent shares to 
 "your late Manager," here spolcen of, waa carried out according to the 
 $chemeof the " Iloard :" and all the Directors, with tlie exception of Messrs. 
 R. Mulholland and J. B. Fouliot, were the first to avail themselves of said 
 scheme. There were four thousand five hundred and twenty-flve shares, 
 ten percent paid, transferred to Mr. Goff by various parties, according to 
 the above-mentioned scheme, and for which, and on account of the other 
 fifteen per cent to be paid, he received $41,200 in notes, and $20,825 in 
 cash. Of this $61,525, about $23,000 were paid to the Canadian iinxik of 
 'Commerce, and about $11,000 to the Quebec Bank; and nearly the whole 
 of the remaining $27,500 was either handed in cash to the Company, or 
 discounted for their benefit in the Molsou's, Union, and Consolidated 
 Banks, to pay losses, or meet the notes indorsed by the Dii-ectors, on 
 which loans had been obtained. (Reference to this last aruouut named 
 will be seen in.Section 37.) Extract from Mr. Goff's ledger-account. 
 
 For further particulars of this transfer of stock, showing liow he came 
 In possession of so mucli paid-up stock, I would refer to liis letter to 
 shareholders, under date 20th December, 1877. It is perfictly idle, on 
 the part of the Directors, to pretend ignorance of any matter in connec- 
 tion with this stock transaction. 
 
 SECTION 6. 
 
 At the meeting of the Board in Scptemb< r last, Mr. Q<<IT tendered his resignation on- 
 jtocount of ill nnaith. On that resignation being accepted, Mr. O. H. Duracsnll waa ap- 
 pointed, and cons«nted to act, but temporarily, and without any remuneration. 
 
19 
 
 TonrBoard eonilder It a'duty to acknowledge before 70a the Ivaluable lerrlces ren- 
 dered to your Company during the two months and a half he occupied the poBitton, and 
 to thank htm for the trouble he so willingly assumed in order to relieve the Company 
 ft-om the critical position in which it was left by his predecessor. 
 
 It was on that same occasion that figures were obtained from the Auditor that showed 
 t^o critical position of our flnancos. Those figures were so much in contrast with thofe 
 upon which we had been led to act so far, that we resolved immediately to appoint a 
 Bpceial Auditor, with instructions to in(;[uire into the whole of the affairs of the Company 
 from its organization. 
 
 Reply. — This statement is incorrect, as I frequently prepared state- 
 ments and figures sliowing the position of tlie Company, wliich were 
 submitted m tlie Directors. In fact, the figures here mentioned were 
 the same as had been submitted before; only the Directors found 
 it a matter of necessity at this time, and devoted more of their time 
 to the finances of the Company. Mr. Goff had carried the load as 
 long as he could: therefore, when the Directors found tliey could no 
 longer shirlc their duty, they began to face the music. I may here say, 
 and I state it fearlessly (and I am not the only one who thinks so), Mr. 
 Goff always worked for the Company and its interests with a devotion 
 that surprised everybody who saw it ; and it was a subject of general 
 remark by all tlie agents and employees of the Company, his oflSce-hours 
 usually being fifteen and sixteen hours a day. Had the Directors of the 
 Company given him the aid and support which he was entitled to expect 
 from them, the Company would be in a sound and prosperous condition 
 to-day. 
 
 SECTION 7. 
 
 They secured, with that view, the services of Mr. P. 8. Ross of Montreal, whoM 
 Integrity and skill as an accountant is highly spoken of; and they felt that bis appoint-' 
 meut would be a guaranty that such investigation would bo thoroughly made, and 
 would leave nothing undone. 
 
 Reply. — I may here question very much whether the investigation 
 has been thorough, and whether there has not been done a great deal 
 more than should have been, as my further remarks will show. 
 
 SECTION 8. 
 
 Tour Directors offered their assistance to the Managing Director and Accountant for 
 any thing in their power to facilitate the execution of their respective duties. 
 
 Reply. — Concerning this paragraph, I would refer to my remarks 
 under Section 3. 
 
 SECTION 9. 
 
 At a meeting of Directors held the 4th December, Mr. Angus, who bad been during 
 the last two years the President of your Company, tendered his resignation, based on 
 reasons of an exclusively personal character, and ceased to take part in the dcliberattona 
 of the Board. That new resignation, added to the presenw'ion of an Interim Report of 
 Mr. Pass (made public by subsequently premature publication in the newspapers), 
 eft no other alternative to your Directors, but to suspend immediately the operations 
 
^ 
 
 Ol tVip Company, and to proceed by the mott economical means to the liquidation of Its 
 iliflklrs. 
 
 Mr. Domesnll having manifested his desire to be relieved of his position and duties of 
 ')Canng:ing Director, they appointed as Trustees, for the purposes of liquidation, Mr. Uoss, 
 , And Mr. W. T. Fish, Agent of the Company at the Cobourg Branch since its beginning; 
 
 thus reserving for you the control of your own affairs until you will be put in a position 
 
 by tlie final Report of the Auditor" to decide for yourselves what further measure lo 
 ' adopt. They yet thinlc, after examination of the statements annexed to Mr. Ross's 
 
 Report, that voluntary liquidation, if allowed, will be less expensive, will facilitate 
 
 operations, and will better protect the Interests of the shareholders, at the same time 
 
 giving full Justice to the creditors. 
 
 On many occasions since September, your Directors have negotiated with other com- 
 ' panlus to secure arrangements whereby the business of the Canada Agricultural Insur- 
 . ftnce Company would bo transferred to them in toto, or through rc-insurancc ; but, bo far, 
 I have not found that any of the offers made were such as to Justify their acceptance by 
 
 the Board. . 
 
 '■ Reply. — The appointment of Messrs. Ross and Fish as Joint Trustees 
 and Managers, for tlie purposes of liquidation, was, I hold, illegal, as the 
 ' Directors could not malce any such appointment, for reasons stated. 
 
 J' SECTION 10. ,t 
 
 In the interest of the shareholders, it is of the greatest importance that all the calls made 
 , should be promptly paid, because, the sooner the liabilities of the Company ore met, tl^e 
 amaller will be the costs of liquidation. 
 
 Mr. Ross's Report will now be read, when yon will have been put into possession of 
 all the facts that will bring to light the true causes' of the suspension of your Company, 
 and the losses you will suffer therefrom. It will be then for you to decide as to the pro- 
 ceedings to be tolccn. 
 
 (Signed) A. Debjardinb, 
 
 Viee-Pret. Canada Agricultural Ins. Co. 
 M02(TBKAL, 22d January, 1878. 
 
 Reply. — At the date of reading this Report, very few shareholders had 
 paid the second and third calls, and were therefore not qualified to vote ; 
 and my objections to the legality of the proceedings would hold good, 
 Inasmuch aa there were no scrutineers appointed, and no proper or legal 
 vote taken. 
 
 «/■ 
 
21 
 
 . s»ln^ ./T.V ,rM-itU -8 -T, '-i^Vxr Im' 
 
 )i;J t.i'(fv: 
 
 ..ft- 
 
 SPECIAL AUDITOR'S REPORT, 
 
 MoMTBBAL, January 18, 1878. 
 
 AND 
 
 ■I) 
 
 ■A:.&. 
 
 AUDITOR SOWDON'S REPLY, 
 
 MoNXBEAL, March 2, 1878. 
 
 ■•-Jt- 
 
 K. B. — Mr. Robb's Report la divided into sect' and Mr. Bowdon's Reply follcwa 
 each Bcctlon conaecutlvely thri it the Pamphlet. 
 
 SECTION 11. 
 
 To the President and Directors of the Canada Agricultural Insurance Co. 
 
 Gentlkxbn, — In my Interim Report of 6th December, I gave a Bhort analysis of the 
 unpleasant position of this Company's affairs, without going very minutely into particu- 
 lars, being desirous not to make assertions of an Iqjurious n^Uure vrlthout indisputable 
 proof of their accuracy ; and, finding that there were Items a uluh ro'.i1'\ not apparently ba, 
 reconciled with each other, I requested then that you might so far favor me as to wait a 
 full lieport until I could obtain an authoritative balance-sheet of the books of the Co m 
 pany, to which I might appeal in case of contradiction. This balance-sheet could not 
 then be obtained. Further investigation sustains me in regard to the statements of my 
 Interim Report. I do not see any thing to retract, notwithstanding the cxplanutionB 
 given by your late Manager In his letter circulated among the Bhareholdcrs. 
 
 Your Instructions to me being to review the whole operations of the Company, and not 
 clraply to audit th^ boolu, leads me into an extended field, and requires a very fUll report 
 of transactions, as well as figures and accounts ; and, whatever the result may be, I have 
 Bttemnted to do as requested, as faithfully and impartially as poBsible. 
 
 The duty is not a pleasant one to me, and I would much rather have praised than 
 blamed any one or all of your officials. If I say hard things, thc.-efore, in this Report, it !■ 
 much against my inclination that I do so, and without any feeling except that of regret. 
 I simply perform the duty imposed upon me to the best of my ability, without fear or 
 fevor; and any statements made shall be either from the records of the Company, and 
 supported by extracts therefrom, or fTom undoubted external evidence if I depart from 
 them. 
 
 I alluded in the Interim Report to the formation of the Company, and now go more 
 Into detail. The charter was obtained, apparently, on 14th June, 1872, but remained lb 
 abeyance for a considerable time. The minutes of the annual meeting, held °20th January, 
 18T5, states that the first policy was issued in May, 1874. The Policy Register of the 
 Company, and returns to Government, say business commenced March, 1874. I mention 
 this as relating to a perplexing opening of the accounts of the Company to be referred to 
 hereafter. Active efforts were made in August or September of 1873, and following 
 months, to carry out the Intentions of the charter, and to organize the Company, culml> 
 nating in arrangements with the Agricultural Insurance Company of Watortown, K.T.,. 
 U.S., authorized by the Directors of your Compaily at a meeting under date of Wik 
 
March,, 1874, and carried Into effect by notarial deed before J. S. Hunter, N.P., nndet 
 •date or 28th April, 1874. 
 
 By this arrangement, your Company, fVom and after the first day of May, 1674, aasumed 
 the risks, agencies, and business of the former Company in Canada. 
 
 The basis of the agreement is shown by the following extract from the minute-book of 
 tbe Company : — 
 
 Extract from W« Minute-Book of the Canada Agricultural Inturanct Company. 
 
 (FoUo 30.) 
 
 Memoranda of the re-insuronce of the Canadian risks of tbe Agricultural Insurance 
 Company of Watertown, K.Y., and purchase of tbe good will of their business in 
 Canada. 
 
 Amount estimated at risk. May 1, 1874 ..... $30,000,000 
 
 Dr. 
 Re-lnsurancc on above lisks estimated at accordance with the 
 
 Company's past experience to be 46,000 
 
 Cr. 
 By estimate value of the good will, including agency, plant, 
 
 books, and general ouppiies in agents' hands in Canada . $25,000 
 By cash gold draft on New York 20,000 
 
 N.B. — The annual losses of the Agricultural Insurance Company of Watertown, 
 N.Y., in Canada, during their operation here, carrying the above amount of risks, average 
 about $30,000 (thirty thousand dollars). As their policies are nearly all written for three 
 years, it is admitted that the whole amount of insurance at risk at any given time 
 would be equal to thirty million dollars to carry for eighteen months, or a year and a 
 half; hence, if losses average thirty thousand dollars per annum, it would be safe to esti- 
 mate total loss on amount now at risk to be forty-five thousand dollars. 
 
 (Signed) K. H. GoF», Managing Director. 
 
 As nearly as I can make out, the risks outstanding on the first day of May, 1874, 
 amounted for the Quebec and Lower Provinces, aa tbe register-books of the Company 
 abow, to between eight and nine millions of dollars ; and for Ontario, according to what 
 ought to be correct information, about fifteen millions of dollars; making a total of 
 between twenty-three and twenty-four millions. I have been unable to verify it more 
 olosely, as I cannot find one of the old Policy Registers ; but I am satisfied that the 
 ampunt is pretty accurate. The Oovernment returns, published in 1875, for the bnsinesa 
 of the year 1874, do not state the amount at risk by the Agricultural Insurance Company 
 of Watertown at the date of tbe transfer to the Canada Agricultural Insurance Com- 
 pany ; nor is there any Oovernment return to show the amount. Other portions of tbe 
 subsequent Oovernment returns show by analysis that it could not have been at a lower 
 figure than twenty-four millions. All the parties to the arrangement between the two 
 oompanles know and acted with reference to this estiinate of between twenty-four and 
 thirty millions. 
 
 Reply. — Before proceeding with explanations in regard to this Report, 
 I must be aliowed to occupy the position of critic for one moment, and 
 ■ay, tliat, in reading it, it seems to point to but one object; viz., to saddle 
 every thing on " your late Manager: " and even your Special Auditor waa 
 not satisfied with only reading his Report to the shareholders ; but, in. 
 doing so, he interspersed it with several little side slaps at "your late 
 Manager." Hence it cannot bo looked upon as the Report of an un- 
 biassed and impartial Auditor. 
 
28 
 
 SECTION 12. 
 
 T may flnUh ray references to this matter by stating thRt the loss Incurred upon the 
 transferred risks amounted In round numbers to about (74,500. 
 
 • Rkply. — Tliis *' your late Manager" was not responsible for. See his 
 remarks in letter to shareholders, Dec. 20, 1877; all of which, I believe, 
 gives a correct version of tlie Watertown risks. 
 
 SECTION 13. 
 
 It has to bo borne in mind, that Mr. E. H. Qoff acted as the Agent of the Watertown 
 Company for Quebec Province previous to the transfer to your Company of the business, 
 and 80 continued while that Company had an interest In Canada; viz., to the first day of 
 May, 1874. Prom this cause has arisen the complication of the opening accounts before 
 referred to. From the Ist of January, 1874, until the date, whatever It may have been, 
 whether March, April, or May, wlien your Company exercised the right to do all the 
 business in Canada, Mr. Goff generously threw in for the benefit of the Canada Agricul- 
 tural Insurance Company the results of his labors, profit or loss in nogutiatiug insur- 
 ances, &c., which he had been continuously doing nominally as the agent of the 
 Watertown Company. At all events, his transactions as Agent are entered in the books 
 of your Company as part of your Company's business. I have no doubt whatever that 
 the motives were good; but the rtsults were not so : there has been some loss from this 
 cause. 
 
 Had it been intended not to make the business of this period part of your Company's 
 business, a proper account for it would have been kept to transfer the profit or loss to the 
 proper party at its close ; which, not being done, sustains my treatmentof the accounts of 
 the period, as shown afterwards. The Agricultural Insurance Company of Watertown 
 did not so treat this period, but headed their accounts to Mr. B. H. Goff, and apparently 
 looked to him, and not to your Company. 
 
 Reply. — " Your late Manager " was not exactly Agent for the Prov- 
 ince of Quebec, but contracted with the "Watertown Company" under 
 certain conditions, as will be hereafter stated. 
 
 SECTION 14. 
 
 As, however, your late Manager has chosen to represent in the books of your Com- 
 pany that the operations of that period were those of and belonging to the Canada 
 Agricultural Insurance Company, he has left me no alternative but to treat of them in 
 that light. But, while doing so, I object to certain charges pold after January, 1874, 
 which were obligations incurred previous to said dato, either by the Agricultural Insur- 
 ance Company of Watertown, or of Mr. Ooff as Agent thereof. These obligations or 
 expenses, I am of opinion, should not be charged against the business after ^an. 1, 1874; 
 some of them dating as far back as 1871. 
 
 If, therefore, your Manager chose to consider that he presented to your Company thli 
 portion of his business, and also in view of the fact that it was not beneficial to your 
 Company, all matters of benefit connected therewith ought to have been to the benefit of 
 your Company, which I think will bt undisputed. I therefore proceed to treat of this, 
 under the impression that I have eaught the true meaning of your late Manager, — the 
 true state of the consequent book-keeping of this period, — and the true position of 
 affairs generally; viz., that your late Manager gave up to your Company the profit or 
 loss of his agonuy business during the intermediate period between January and May, 
 1874. In connection with it, I therefore refer to the two following accounts ; vie. 
 The Agricultural Inturance Company, and 
 TSt Agricultural Inturano* Cotnpany ctf Waterlown, 
 
If 
 
 24 
 
 On ledger, folio 87, there In an account, headed the " Agricultural Insurance Company, 
 Watertown," being a nuppoaed record of the tnuiBacUoni with the Agricultural InBur> 
 ance Company of Watertown. The agreement between the two companies lu March, 
 1874, was nut to take effect till Ist May, 1874; and, although the books of the Company 
 contradict It, your Directors, In their Report to the shareholders of 20th January, 1875, 
 stated that the first policy was Issued In May, 1874. The premiums, therefore, taken 
 between Jan. 1 and April 30, 1874, should have belonged to the other Company, less 
 the expenses, &c., connected with the business; and It should have received the profit, or 
 ■nstaiued the loss. The account has not so been treated, as already explained by me at 
 length ; but your Company Is supposed to receive the premiums, and pay all charges, 
 accounting for a portion of the receipts (loss a portion of expenses) to the other Com- 
 pany which Involved a loss to your Company, taking all things Into consideration. 
 
 Reply. — The opening of these accounts, under the headings "Agri- 
 cultural Insurance Company, folio 1, and Agricultural Insurance Com- 
 pany, Watertown, folio 37," was perfectly correct, inasmuch as the items 
 in connection with the first had nothing whatever to do with the second. 
 Folio 37 contained all the transactions had by that Company with the 
 Canada Agricultural Insurance Company, and which properly belonged 
 thereto. Folio 1 simply showed the transaction with Mr. Go£E as (Agri- 
 cultural Insurance Company) and the Canada Agricultural Insurance 
 Company, wliich represented the sale by him of certain plant, such as 
 safes, office furniture, insurance supplies, agency balances, and bills re- 
 ceivable (or premium notes), the sole property of Mr. Goff, but was 
 designated by name "Agricultural Insurance Company" to show the 
 nature of the whole transaction as specified in detail in the journal of 
 the Canada Agricultural Insurance Company. For two years previous 
 to the commencement of business by the Canada Agricultitral Insurance 
 Company, Mr. Goff had conducted his insurance business in the Province 
 of Quebec on his own account, under special contract with the Agricul- 
 tural Insurance Company of Watertown, N.Y., by which the latter Com- 
 pany simply furnished him their policies for issue, carrying all his risks 
 at a specific rate for each $100 of insurance. He fixed his own rates, and 
 psfid all expenses, and in fact owned the business, together with the oflSce 
 furniture, agency balances, supplies, &c., connected with the business in 
 the Province of Quebec. The Watertown Company simply received the 
 npeclfied premium, and paid all losses under their policies. This business 
 Mr. Goff conducted in the Province of Quebec under the stylo and name 
 of "Agricultural Insurance Company." When the Canada Agricultural 
 Insurance Company commenced business, May 1, 1874, Mr. Goff gave 
 them the benefit of his business from Jan. 1 to May 1, — i.e., liis con- 
 tract continued up to May; and the Watertown Company loolted to him 
 for payment of the preraiuhis under their contract with him up to the 
 aforesaid date, and the Canada Agricultural paid Mr. Goff the amount 
 called for under the specified rate aforesaid, thus accruing to the Canada 
 Agricultural Insurance Company something in the neighborhood of 
 $3,000 of his profits. The settlement of accounts for this period between 
 Mr. Goff and the Watertown Company the Canada Agricultural Insur- 
 ance Company had no interest in whatever. I may here add, that Mr. Ross 
 
35. 
 
 was informed in my presence of the above facts the evening prior to the 
 reading of his Report, and might easily have obtained eariier information 
 had he desired it. 
 
 SECTION 15. 
 
 In fact, If wo deduct the April premiums, which covered riaka that were taken subse- 
 quent to the agreement with the Watertown Company, and for which that Company 
 was never responsible, nor was to be responsible, there would be a loss to the Company 
 of over $2,000 (two thousand dollars) on this account. The application of such an 
 account, if it had been properly opened, would have been against the other Company, or 
 its Montreal Agent, your late Manager ; but the method of keeping the account, as fol- 
 lowed In your books, has precluded the direct result fh>m being apparent. The itema 
 connected with the other Company's business being mixed up, and at this date scarcely 
 separable fl-om the organization expenses of yoor Company, it Is almost Impossible now 
 to present an accurate statement, so as to show a correct result. It could be done, but 
 would not bo worth the trouble or expense of doing it, seeing it would lead to no corre* 
 spondlng benefit to your Company. 
 
 But this account docs not contain a record of all the transactions in connection with 
 the business of said period between the two Companies, nor does any other account in 
 your Company's books; although there Is another account, to which I shall refer when I 
 •m done with this one. 
 
 I present an approximate statement of how the aoconnt would have stood, If properly 
 kApt : a more searching examination might alter it slightly for the worse or for tho 
 better. (Not printed.) 
 
 Reply. — The statements of accounts between the Agricultural of 
 Watertown and the Agricuitural Insurance Company (E. H. Goff) were 
 Icept entirely separate and distinct from each other ; and any mixing up 
 of accounts is wholly in the imagination of the Special Auditor, and ia 
 evidently made use of to mystify and mislead the shareholders. 
 
 SECTION 16. 
 
 In this account I find that the Watertown Company Is credited with March premium* 
 amounting to $1,546.95. This Is written off by another entry to the debit, and $1,530.79 
 again credited instead. The cash-book says that $1,546.95 was paid to tho other Com- 
 pany by your Comi>any on Nov. 10, 1874; but no such sum was paid the other Company : 
 in'addltlon to which, although tills sum is charged against your Company, tho Water- 
 town Company throw off as discount or allowance at settlement the sum of $772.05, being 
 within a dollar of the half of the amount said to have been paid by and charged in the 
 cash-book as if paid by your Company. I do not And tliat your Company ever got 
 credit for the said amount of seven hundred and seventy -two dollars and five cents, in 
 any shape, cash, or otherwise; and it looks as If the cashier, your late Manager, did not 
 account for this sum. 
 
 Replt. — This is fully explained in Section 14. Tlie premiums for 
 this period were payable to Mr. Goff, and by him to the Watertown 
 Company. 
 
 The item of $772.05 the Canada Insurance Company had nothing 
 vohateter to do with. This settlement was of the private account be- 
 tween Mr. Goff and the Watertown Company, and the deduction of 
 t772.05 was an allowance made him in consideration of claims he had 
 against them. Tite item is not obtained from the booica of the Canada 
 
r 
 
 'I ^ 
 
 26 
 
 Agricultural Insurance Company at all ; but, on your Special Auditor 
 writing to the Watertown Company for information, he was informed of 
 the manner in which they settled with Mr. Goff, and at once jumped at 
 the conclusion that this $'^2.05 belonged to the Canada Agricultural 
 Insurance Company. 
 
 SECTION 17. 
 
 I alio And, .connected with thin account, that the other Company emitted yoar Com. 
 pany a gold draft of (681.28 on 2Tth June, 1874, to pay for a loss by one CunlKfe, policy 
 Nu. 6,384, belonging to the other Company's budneu previous to tbu transfer, and payv 
 ble by them. 
 
 Of this amount, $600 (six hundred dollars) has been charged to your loss account as if 
 chargeable to and to be paid, and paid by your Company ; while no corresponding credit 
 has been given for the cash reculved : at all events, I have been unable to trace It; and I 
 think your Manager has this also to account for. 
 
 Reply. — The item $681.28. I And Mr. Goff drew a draft on the Agri- 
 cultural Insurant 3 Company, Watertown, for this amount, being for loss 
 under policy 6,384, one Cunliffe, — $600 for loss, and $81.28 adjnstina; ex- 
 penses. On the 20th August, 1874, 1 also find a check was drawn by Mr. 
 Alexandci on the Exchange Bank in favor of Union Bank of Lower 
 Canada for said Cunliffe loss, — $600. If, therefore, this entry was not 
 carried into the books, as it should have been, the fault, I think, should 
 lay at the door of the then cash-book keepf r, Mr. Alexander. I could not 
 see the books of the Company to find out about this entry, they (the 
 books) not being in the office: atieast, I was so Informed by Mr. Boss 
 when I called to see them. 
 
 SECTION 18. 
 
 A farther item, that does not appea In this account, but which, I think, should be to the 
 credit of your Company, was an allowance made by the other Company on the Brockville 
 agency transferred over to your Company. I think yo;ir Company, under the terms of 
 the agreement with the other Company, was fairly entitled to this item, independently of 
 complicati(.n of accounts. I And. on Investigation that there was some trouble at this 
 sub-agency of Brockville, and considerable expense was Incurred setting the matter 
 straight; but it appears to me that ^ our Company paid all the expenses, and your Man- 
 ager's time was amply compensated for In his salary. I think this also has to be account- 
 ed for. 
 
 These three items amount to $1,872.06 (eighteen hundred and seventy -two dollars and 
 five cents). 
 
 Reply. — Mr. A. A. Dewey, son of one of the Directors of the Water- 
 town Company, is the Agent at Brockville. In the contract between 
 the two Companies, It was agreed to retain Mr. Dewey's senrices up to 
 January, 1875, on same terms as given him by the former Company. Mr. 
 Dewey was somewhat unmanageable, and gave both Mr. Goff and the 
 Watertown Company much trouble ; until finally Dr. Munson, Secretary 
 of the Watertown Company, met Mr. Goff in Cobourg, June 16, 1874, 
 and offered to c;ive him a consideration if he would cancel tlJj part of 
 the contract, wiiich Mr. Goff was only too willing to do. 
 
M 
 
 27 
 
 The following document will explain itself : — 
 
 Ojmada. AoBicuiiTxmAi. Imsurakoi Cokpaxt Aobnot at Coboubo, 
 
 Juno 16, 1874. 
 
 Whereas, The Canada Agricultural Insurance Company of Montreal 
 did by contract purchase the business, good will, and policy renewals of 
 the Agricultural Insurance Company of Watertown, N.Y., to take effect 
 May 1, 1874, in which contract the Canada Agricultural Insurance Com- 
 pany agreed to retain the services of A. A. Dewey of Brockville until Ist 
 January, 1875, at the same commission paid him formerly by the Agricul- 
 tural Insurance Company of Watertown, N.Y., provided he did his busi- 
 ness to the satisfaction of the Board of Directors of the Canada Agricultu- 
 ral Insurance Company : Now, it is agreed on the part of the Agricultural 
 Insurance Company of Watertown, that they, the Canada Agricultural 
 Insurance Company, may dismiss the said Dewey at any time they see 
 fit ; and it is agreed on the part of the Canada Agricultural Insurance 
 Company, that, if said Dewey refuses to work for said Canada Agricultu- 
 ral Insurance Coitapany, it shall in no wise affect the contract existing 
 between said Companies, by which the said Agricultural Insurance 
 Company of Watertown, N.Y., agreed to transfer the good will of said 
 Compan} 'o the Canada Agricultural Insurance Company. 
 
 (Signed) Isaac MimsoN, Secretary. 
 
 Edwabd H. Goff, Manager. 
 
 The following is the consideration allowed : — 
 
 [COPT.] 
 
 For a valuable consideration, I hereby agree to transfer to E. H. Goft 
 a note against W. Smillie of five hundred dollars and interest, given to 
 Agricultural Insurance Company of Watertown, N.Y. 
 
 (Signed) Isaac Muksok, Secretary. 
 
 Coboubo, Jime 10, 1874. 
 
 The note still remains unpaid, Mr. Smillie claiming a contra account 
 sufficient to balance the same. 
 
 SECTION 19. 
 
 Your Manager explains that he was conducting business In the Province of Queoeo 
 under the stylo of " The Agricultural Insurance Company," and that in this connection 
 the 'Watertown Company simply underwrote the risks taken by Mr. Goff; and you will 
 please bear this in mind In hearing my further remarks. 
 
 I now turn to the second account in this connection; viz., that one upon ledger, folio t, 
 headed " Agricultural Insurance Company." 
 
 Although not stated to be so, this account is intended to be another imrtion of the 
 account of the " Agricultural Insurance Company of Watertown." 
 
 One-half of the items certainly belongs to that Company ; and if the other half does 
 not apply to it, then the account is used to cover something which was meant to be con- 
 cealed ; and I may as well say plainly, that the last-mentioned half does not apply to ttukk 
 other Company, with whose acooonts it had not, nor ever had, any conueoUosu 
 
MHBP 
 
 28 
 
 Rbplt. —This has been fully explaiued before, and was also fully ex- 
 plained to Mr. Ross by Mr. Go£F in my proaeuce the evening previous to 
 the shareholders' meeting; so that, while ho was reading hia Ilcport to the 
 shareholders, he mi'.sc have been aware that he wa.s stating that which 
 was incorrect: and it appeared to me that Mr. Ross evinced a determina- 
 tion not to talce any notice of any objections made to his Report when 
 reading it on the evening aforesaid. 
 
 SECTION 20. 
 
 I itiall refor to these two dtvlatons aa briefly as I can. Vint, there are two Items, 
 amounting In the aggregate to $4,000 (four thousand dollars) for goods supposed to have 
 been purchased from the other Company. These were never purchased from fhe Water • 
 town Company ; nor was that Company paid for them In cash or otherwise; nor did that 
 Compatiy know of or recognize any such transaction. There is no vouchur from any 
 person for any such payment, although payment appears from the books of account to 
 have been made In cash, and appears In the books of the Company as If so paid In cash 
 to the Watcrtown Company. Again : If the amount had been paid In cash or otherwise 
 to the other Company by your Company, It would have been In contravention of the terms 
 of agreement between the two Companies, as appears from the following extract from tho 
 mlnuto-book of the Company. 
 
 Rkplt. — The four thousand dollars here spoicen of were for offlce- 
 furniture, supplies, «fcc. (see Section 14), the sole property of Mr. Goft, 
 and nothing to do with the Watertown Company, as before explained. 
 
 SECTION 21. 
 
 JBztract fiwn the Xinute-Book of the Canada Agricultural Inmrance Company. 
 
 (1874, April 28. Before J. S. Hunter, N.P., Montreal.) 
 " The party of the first part (the Agricultural Insurance Company of Watertown, 
 N.Y.), In consideration of the covenants and agreements hereinafter contained, to be 
 kept and performed by the party of the necond part, hereby sell, assign, transfer, and 
 convey to the party of the second part the entire business of Insurance heretofore and 
 now being donu by the party of the first part within the Dominion of Catiada, together 
 with the books of record, applications for renewals, and policy-registers, now In use in 
 the bands of their agents, pertaining to the said b\isinoss, together with the good wlU 
 of the party of the first port with relation thereto." 
 
 Reply. — This agreement refers to the contract between the Canada 
 Agricultural Insurance Company and the Agricultural Insurance Com- 
 pany of Watertown, and liad nothing wliatever to do with the property 
 belonging to Mr. Goff, and in use by liim in conducting his business in 
 the Province of Quelwc under the name and style, "Agricultural In- 
 surance Con^pauy." 
 
 SECTION 22. 
 
 Again : the valuation of the Items seems to have been, as to some of tlie articles, ex- 
 travagant; and some of them wore of a nature that they could not have proved a perma- 
 nent asset, and must long since have bceii used up. They have been charged to the stock 
 or fbrniture account, and remain at the debit of that account as a good asset of your 
 Company to this day. I will refer to it further on in treating of stock account. There 
 Is therefore something to explain in regard to this item. 
 
29 
 
 Rbplt. — The valuation wai put at what the variouf articlM cost; 
 •very thing being nearly new. The mere form of name, whether stock 
 account, plant account, or furniture account, does not make any differ- 
 ence. The uccount waa called stock account; and all purchases of furni- 
 ture, suppllefi, horse, carriages, and robes, also safes sent to Ottawa and 
 Halifax branches, furniture at the several branches and agencies, were all 
 charged tu this account. 
 
 SECTION 28. 
 
 The lecond two Itoms are a aredlt k. the other Oompsny of 
 
 Agency balances ••• $1,083 M 
 
 BllU receivable ..i. 3,639 66 
 
 Together making an amount of (3,822 10 
 
 1 The other Company'* oorreipondlng charge against their Agent here waa only (3,041 80 
 Wbnt the discrepancy U neither here nor there. In so far us my argument Is concerned. 
 In the books of account of your Company, these two sums, amount. 
 
 Ing to (4,000 00 
 
 and 3,622 10 
 
 (7,622 10 
 
 are Mid to be paid in cash, as follows : — 
 
 1874. Jan. 31, Cash . (6,077 47 
 
 «• Feb. 11, " 886 01 
 
 " Feb. 23, " 1,800 00 
 
 •• March 9, "... 868 72 
 
 (7,622 10 
 
 There are no vouchers for any such cash payments, nor were uny suul' cash payments 
 ever made to the Agricultural Insurance Company of Watertown. This I attto after 
 having corresponded with the latter Company. Nor did they receive one cunt of the four 
 thousand dollars menUoned, In cash, or In any other shape whatever; nor do they know 
 any thing about It. 
 
 Replt. — The Items here spoken of have nothing whatever to do with 
 the Watertown Copn puny,. all. being the personal property of Mr. GofF, 
 and which were piu'clia.sed from him by the Canada Agricultural Insur- 
 rance Company, a» >>efore referred toj and so explained by him to Mr. 
 Ross in my presence. ' 
 
 SECTION 24. 
 
 As for the (3,622.10, the items representing it, more or less, appears In the account of 
 the other Company, hut after additions and deductions of various items was settled for, 
 not in cash, as represented in your l>ook8 of accounts, hut by the promissory notes of your 
 late manager, as follows ; viz . : — 
 
 Kov. 14.— Note at three months' date (1,00000 
 
 Note at six months' date 2,000 00 
 
 Gold dr«n 760 00 
 
 Making together a total ot. %,*,,,. (3,760 00 
 
 The Btatoments in your books of account are therefore incorrect, and it is for your late 
 ICanager and Book-keeper to account for the same. 
 
 Farther : the amount of (3,632.10, as stated above, being the inpposed balance of so- 
 
il' 
 
 
 I 
 
 80 
 
 eonnt earront at tluit dat«— tIz., Jan. 1, 1ST4— between t)io AgrlmiHiintl TnnnrtinM Oora 
 pany of WaUirtuwn aAd lotno ponon or peraon* unknown anil honi»loKat4id Into jrour 
 Company'* traniaotloiui, wbllo It ihoulJ not have been charged to your Company, baa 
 rciullud In a direct Iom to yuur Oumpany on both the lt«m« comprUlng It; vli., agaoQjr 
 balanooa and bllU rocilvable. 
 
 Rhplt.— This mixing up a transaction Mr, Oofl b>id direct with the 
 Canada Agricultural Insiurance Company, and a separa'^ private transao- 
 tion he had with the Watertown Cumpany, ia totally Incorrect. Tliose 
 notes given by Mr, Qoft to the Watertown Company wore for balance due 
 tliat Company under his iormcr and private contrac'u witli them, and 
 represent the amount he was indebted to them for premiums at the 
 time. Mr. QoH's {Private books will verify the abovo. lie gave the 
 Watertown Company his onn notes, and they were paid by him. 
 
 SECTION 28. 
 
 'Of tlicao bin* receivable, tome were dated aa far back aa 1873. Bome wore only ool. 
 lected during the current yuar, 1877 ; and others tiavo not yet been collected : yet your 
 Company paid for them In ooah early In 1874, before your Company had commencec) 
 bualneaa operations. 
 
 Tlie whole account results In saddling your Company with the doubtful or Imaginary 
 assets belonging to some other party or parties under the fictitious title of "The Agrloul* 
 tural Insurance Company." 
 
 I present a correct copy of the statement of the account fi-om your ledger. 
 
 AGRIOUI-TURAL INSURANCE COMPANY. 
 (Ledger, folio No. 1.) 
 
 187B. Db. 
 
 Jan. 31. ToOash, — cash-book, folio 33 . . . • . |(',0T7 47 
 
 Feb. 11. " " folio 36 886 91 
 
 23, " " folio 39 1,300 CO 
 
 Mar. 9. •• *' foUo 46 368 72 
 
 $7,022 10 
 
 Cr. 
 
 Jan. 3. By Stock Account, Jonmal, foUo 6-0 ... . $3,964 00 
 
 Oeneral Kzpense Account, folio 6-0 ... 36 OO 
 
 Agency Balances, folio ..... . 1,082 64 
 
 BllU receivable, foUo 9 2,639 66 
 
 $7,822 10 
 
 And I hold, for the Inspection of any one who may desire It, a copy of the statement of ac- 
 count from the books of the Agricultural Insurance Company of Watertown, N.Y.,U. S. 
 I have now done with these intermediate aooounta,and proceed with tl^ tranaacUooa 
 proper of your Company. 
 
 Ebply. — The bills receivable and agency balances were considered 
 perfectly good at the tiine, and were the personal property, as before 
 stated, of. Mr. Goff, and sold, by him to the Canada Agricultural Insur- 
 ance Company, and accepted by them as a good and available asset. 
 Therefore the whole of the statement of the Special Auditor in regard 
 to the trtmsaction, and the attempt to mix it up with the Watertown 
 Company, is incorrect ; and any account he may have obtained from that 
 Company could not bear in any way upon the transaction. 
 
 r 
 
► 
 
 d 
 •e 
 r- 
 
 it. 
 d 
 rn 
 
 at 
 
 81 
 
 SECTION 26. 
 
 On paRo 3 of the lodger !• mi account headed " Qeneral Bxpenio Aoconnt Organis- 
 ing Oompany." 
 
 Thl* account ihowfi an otpendltare of $10,432.08; from which haa been dadueted 
 $&,&00, and the net buluiioa of $10,IK12.08 baa been transferred to proflt-and-loaa aoooant. 
 The $5,600 duUuctud from the actual uxpundlturo of $16,432.iM U a auppoaod profit upon 
 bonda or dubunturvit an follows; viz.: Waterloo bondi, flice value, $UU,0OO; bought for 
 $34,A00; prnrtt, $4,r>00. Frullghaburg bonda, $5,000 ; bou|{ht for $4,000; proflt, $1,000. 
 Total pront, $5,500. If thU auppoted proHt had bevn reallced, Its tranafur to thin account 
 U • mlaappllcntlon of Itcmi, and could only bo Intended for one purpoae, — to preiont 
 the actual »xpon<llturu f»r thu purpoHo of orgunlzing the Company to the view of a oaaual 
 Inapector of thu accounts, as being of loss amount than it really was. But this account 
 dous not exhibit nil thii Items of oxpendltiiro for the purpose of organizing thu Company. 
 There are othrr Items and accounts that ought to have been gathered together Into this 
 account to show a true result; and the profit on debentures, If such profit was realized, 
 had certainly nothing wluktever to do with It. 
 
 I shall refer to thu profit on bonds when treating of that aoconnt. It may be said that 
 this treatment of accounts Is a more matter of book-keeping ; and In this case, as In others, 
 the main result wns not Htfected In any way. Bo far, this Is correct; but, on the samo 
 principle, there was no use of opening separoto accounts for this and like matters at all, 
 unless It was Intended to have them oorreotly treated to show special result*. As this 
 account hei been kept, It does not present any true result; In fact. It Is totally erroneous 
 and mislenillng. Thlu account, in my estimation, should have presented Itself something 
 Uku the following stuturacnt, In which I show the ledger account as It is, and my Idea of 
 how it should have appeared for a comparison : — 
 
 General Expet\*e Account, OrganMng Company (Lodger, folio 3). 
 
 1874. 
 ICaroh to Deo. 
 
 Dr. 
 
 To B. H. Ooff, stock voted . . . $15,000 00 
 
 To charter 200 00 
 
 To sundry charges, (being travelling ox- 
 ponsos by Ooff, Smith, Mthony, and 
 other agents of the Company, printing, 
 advertising, &o . 1,232 08 
 
 Or. 
 By profit on bonds, $4,500 and $1,000 
 
 Balance carried to profit and loia 
 
 $16,432 08 
 
 5,500 00 
 $10,933 08 
 
 Reply. — The propriety of passing a supposed profit on bonds or de- 
 bentures would liave assumed a very different pbase if the financial 
 condition of tlie country had not been affected as this and all otlier 
 countries have been during the past three years. It was Just as lilcely 
 that there would have been this profit as that it turned out afterwards 
 a loss. I would here call particular attention to this statement of the 
 Special Auditor, and then, to show the utter inconsistency of his remarks, 
 draw attention to the Government returns of the " National Insurance 
 Company " for 1870 (see page 118, stock or bonds held by that Company), 
 and compare the par valu6 and market value ; tlicn turn to jiage 81, same 
 returns, and see the par, value and market value as reported by the 
 " Canada Agricultural Insurance Company." It must also be borne in 
 mind that Mr. Ross is Auditor for the " National Insurance Company," 
 
mW' 
 
 ! V 
 
 ■m 
 
 I 
 
 and prepares tbeir statementa. How does he reconcile these glaring 
 facts ? Comment from me is unnecessary. 
 
 Now comes the question of keeping accounts. Tlie very fact of open- 
 ing a general expense account " organizing company " was to show at a 
 glance how much liad been expended for each purpose ; and it may here 
 be observed, that, in the first annual statement, the whole of the organi- 
 zation expenses were ruled ofiE to *' profit and loss," Instead of carrying 
 them over a certain number of years, and proportioning so much to each 
 year, and treating the balance f ; an asset, as done by at least one 
 company to my knowledge; viz., " The National Insurance Company." — 
 Vide Report for 1876, in which the balance qf organization expenses, $20,- 
 000, is put down as an asset (Mr. P. S. Ross, Auditor). 
 
 It will be observed here, that the Special Auditor only represents it as Ma 
 idea of how the accounts should have been treated. It is, therefore, only a 
 matter of opinion, and open to argument ; and with statements and theo- 
 ries which are so contradictory, as shown in his treatment of accounts of 
 these two Companies, I leave it to the public to judge of how reliable his 
 statements are, or how much dependence can be placed in his opinion 
 as an accountant. 
 
 Ill 
 
 !:■ 
 
 Stocks or bonds held by Canada Agricultural Insurance Company 
 (see Government Report for 1877, folio 81, as returned by that Com- 
 pany) : — 
 
 Fkr ICwket 
 
 Value. Value. 
 
 Townsbip ofWaterloo bondt '. '. . .... (30,000 28,600 
 
 " " Bolton bonds 16,600 16,600 
 
 <• <• Ely bunds 2,700 sifitt 
 
 " " Obambly bonds i 18,400 1T,4W 
 
 *Hontreal P. and iJ. K.R. bonds ... . . . 38,000 88,000 
 
 Town of LongucU bonds 7,000 8,060 
 
 Town of Laparairlo bonds, cost 1,000 1,000 
 
 City of Three Rlvbrs 69,000 SS,0M 
 
 Town of St. Paul's d'Abboteford 6,000 6,700 
 
 Total par and market value 8178,600 8172,446 
 
 Assets. 
 Stocks or bonds held by National Insurance Company (see Covenunnnt 
 Beport for 1877, folio 118, as returned by that Company) : — 
 
 P. S. KoBfl, <4'j Ji^r. 
 
 Town of Long^aell, W. W. bondt . . 
 " •' North Stukoly bonda . . 
 M « Ely bonda ..... 
 
 Par 
 Value. 
 . . 860,000 
 7,000 
 
 Market 
 Value. 
 
 $iiO,000 
 
 7,000 
 
 4,800 
 
 * Since realised at ftx. 
 
83 
 
 Parish of St. Pie bonds 
 Town of Longucil bonds 
 
 Total par and market value 
 
 «U,400 
 2,000 
 
 ^76,200 
 
 $11,400 
 2,000 
 
 $76,200 
 
 SECTION 27. 
 
 The Auditor thinks it ought to have been gathered together as follows ; viz. : — 
 
 1874. Dr. 
 
 To Charter $200 00 
 
 " Oood win of Watertown Company 25,000 00 
 
 *' Bonus stock for expenses 15,000 00 
 
 *' Sundries as above 1,232 08 
 
 " Do. fi-om stock account 2,537 46 
 
 " Commissions paid . . • . 7,877 00 
 
 •' Do. do. 1876 489 00 
 
 " Do. do. do 1,800 00 
 
 " Sundries, stationery, printing, advertising, legal expenses, 
 
 rents, salaries, &c 2,000 00 
 
 $65,335 53 
 
 Cb. 
 
 By pi-ofit-and-losB account $66,336 53 
 
 Yon will observe that I have added into my statement an amount of twenty-flve thou- 
 sand dollars, ?ald in the minute-book of the Company (already referred to in speaking 
 of the basis of arrangement) to have been allowed for the good will of the busincBH. 
 This Is properly and purely an organization expense; yet it has been altogether k»pt out 
 of the books of account of the Company. Tour late Manager disagrees with me in this, 
 and says that the arrangement with the Agricultural Insurance Company of Watertown 
 was not based on the amount of forty -five thousand dollars, but was simply on the ground 
 of a re-Insurance of their risks for a sum of twenty thousand dollars. All I can say is, 
 that the statement I have followed appears in the minute-book of the Company signed 
 by himself. If it conveys a false impression, the question naturally arises, Why was it 
 made as it has been? My duty requires mo to follow the authoritative records of the 
 Ooaipany, and ascertain whether they have been correctly used and treated. 
 
 0,000 
 7,000 
 4,800 
 
 Replt. — The Special Auditor having here shown his idea of how the 
 account sliould have been kept, why did he not add the accounts opened 
 in the ledger, under the style of " General Expense Account Organizing 
 Company and Commission on Stock Organizing Company," together at 
 foot of Section 26? The fact of bringing in the item $26,000 for good will 
 of the Watertown Company to this account would have caused an asset 
 to have been shown in some other account. The only item treated with 
 in the books at the time was the $20,000 received in cash for premium of 
 insurance on the first policy issued by the Canada Agricultural Insurance 
 Company to the Watertown Company, and was passed to the credit of 
 premium account. Bringing in the $25,000 would not in any way alter 
 the actual results. The Special Auditor certainly follows this idea of 
 departing from the authoritative records of the Company with a ven- 
 geance, when he writes to the Watertown Company of New York, and 
 
% 
 
 i^iii 
 
 obtains from them statements of a private account between that Com- 
 pany and Mr. Ooff, and with wliich the Canada Agricultural Insurance 
 Company has nothing to do, and then incorporates these statements in 
 his Beport, for tlie purpose, it would appear, of creating prejudice against 
 " your late Manager." 
 
 SECTION 28. 
 
 I have further to remark In regard to tblB account, that one of the Itema to the debit 
 of It 1b that of bonus paid-up stock of ^15,000 (fifteen thousand dollars). This Item has 
 been correctly applied to this account ; but It would seem to me that the amount so spe- 
 cified has not been used as contemplated by the Board. At all events, I have again to 
 appeal to the ntlnute-book to sustain my views ; and therein I find the following resolu- 
 tion; viz.: — 
 
 Extract from the Minute-Book of the Canada Agricultural Insurance Company. 
 
 18T4, March 12th. — Present, Messrs. Harwood, A. Desjardlns, B. H. Ooff, W. Angus, 
 A. A. Stevenson, T. H. Mahony, and Rev. P. Lcblanc. 
 
 " It was moved by William Angus, seconded by Col. Btevenson, That this Board ap- 
 proves of and hereby ratifies and confirms the engagements .entered Into by Edward H. 
 Goff, Managing Director for the organization of the Cacada Agricultural Insurance 
 Oompany, and the acquisition by him of the business of the Agricultural Insurance Com- 
 pany of Watertown, N.Y., now being placed in this Company; and, in consideration 
 thereof, we hei eby allot and place at the sole disposal of the said Edward H. Ooff, for the 
 purposes esaid, the sum of fifteen thousand dollars, paid-up stock of this Com- 
 pany." Carried. 
 
 It would therefore appear that this stock was placed at the Ma!>".i^r's disposal to be 
 applied for organization expenses, say paying commissions, or enlisting influence on be- 
 half of the Company for establishing the Company; but it seems to have been considered 
 by your then Manager as his personal perquisite, and to have been so used by him for 
 his own use and behoof. It is for you to consider whether his or my interpretation of 
 the minute is the correct one : the language and terms of It are certainly in favor of my 
 view. 
 
 Reply. — With reference to this fifteen thousand dollars in paid-up 
 stock allotted to Mr. Goff, I quote the following extract from liis letter 
 to the sliareholders, and copy of letter signed by Mr. Angus, Ex-President, 
 and mover of the resolution, when said stock was so allotted, which 
 will at once indicate the proper interpretation to be put on the minutes. 
 
 Extract from Mr. Goff's letter, Dec. ^0, 1877: — 
 
 " The fifteen thousand dollars of stock bonus was granted to me, un- 
 solicited upon my part, by the Directors of tlie Company, at the time of 
 organization, and was given in return for my getting up the Company, 
 and the benefits to be derived from a business that I had devoted ten 
 years' labor in organizing." 
 
 Mr. Angui's Certificate. 
 
 MoMTiiEAl., 22fl February, 1878. 
 I, the undersigned, hereby certify, that, in reference to the fifteen thousand dollars 
 bonus stock spoken of In Mr. P. S. lioss's Report to the shareholders of the Canada Agri- 
 

 85 
 
 cultural Inraranoe Company, it was voted to and given Mr. Ooff for his sole uae and 
 beneflt; and, furthermore, that It was nevur intended tliat it should be npplied by him 
 for organization expenses, or enlisting Influence in beliaif of the Cump<uiy, but waa 
 intended as a bonus to him for the good will of ills business In the Province of Quebec. 
 
 Wm. Anous, Mover of ike ReioluHon, 
 
 SECTION 29. . • 
 
 In cnnection with the organization of the Company, I refer to an account on ledger, 
 folio 108, headed " Commission Account Stock." 
 
 This account is supposed to represent the sums paid as commission for procuring 
 subscriptions to the capital stock of the Company, and, I presume, represents truly the 
 amounts so paid ; showing a total for 1874 of $7,377 ; for 1875, of $489. There is another 
 sum In 1876, called Commission on Stock, of $1,500, which, with the $489 before men- 
 tioned, as belonging to 1875, have both been carried to Insurance Commissions. These 
 three sums make the whole commissions on stock amount, therefore, to $9,366. I have 
 been unable to verify the Items of this account, as nearly the whole are unaccompanied 
 with vouchers. I think this is Inexcusable, seeing that two sums of one thousand dollars 
 each, and others varying Arom two hundred dollars, tiaro been so paid without vouchers 
 being forthcoming. 
 
 Reply. — If Mr. Ross had tahen the trouble to look up the monthly 
 reports of the several different agencies and of the Chief Inspectoi,he 
 would have found, at any rate, some record of commissions paid for 
 procuring stock. Again, checks payable to order acted as receipts for 
 same; and, again, several amounts were paid in ca^h; and the commis- 
 sion handed over the counter to the party bringing in the subscription, 
 and charged at once in the cash-book. 
 
 The item of $489 does not make any great difference, inasmucli as the 
 Commission Account Organizing Company was ruled off for the year 
 1875; and this amount, properly belonging to organization expenses, 
 was transferred to G«neral-Commission Account. 
 
 SECTION 30. 
 
 I draw your attention to the item of $1,600 referred to by me as having been paid in 
 1875, and charged to Insurance Commissions Account. This item is made by a Journal 
 entry to the credit of your late Mana^r's aocount, and to the debit of Insurance Com- 
 mission Account (see Journal, folio 164, and Ledger, folios 142 and 106). On referring to 
 the Jonrnal, it Is explained that this was for commission on stock; but upon what 
 amount of stock such a commission as this was warranted, there is no statement or 
 explanation. The amount represented the value of fifteen shares paid up in full, and 
 the shares were transferred as follows : — 
 
 April 22, 1876. Fred Stancliffe (10) , ten shares. 
 
 April 24, 1876. W. U. Smith (6) , five shares. 
 Smith transferred his five shares to Stancliffe on the 12th May, 1875 ; and on Aug. 7, 
 1875, StancUflb transferred the fifteen shares to one B. Parent, who now holds them. 
 These shares were part of the bonus stock voted to your then Manager. The treatment 
 of the item is Irregular at least. 
 
 Rkply. — The fifteen shares of paid-up stock were given by Mr. Goflf, 
 out of his $1,500 paid-up stock, to flght the Ottawa Agricultural Insur- 
 ance Company, which Company was just at that time being established. 
 
X7 
 
 86 
 
 This action was approved of by the Directors at the time, and this is the 
 81,500 spoken of by your Special Auditor as having been charged to the 
 wrong account. It was, first of all, charged to Commission Account 
 Organizing Company; but I considered it more properly belonging to 
 Commission Account on procuring business, and consequently trans- 
 ferred it to Insurance Commission Account. 
 
 SECTION 81. 
 
 Another commigaion account U opened for commUslonB for procuring insurance risks ; 
 and it appears to be in good order, with the exception of charging the two sums before 
 mentioned of $489 and $1,600 to it, and the erroneous crediting of a supposed profit of 
 $200 (two hundred dollars) from a transaction in debentures, all of which are irregular. 
 CommUslons under this head have been paid to salaried ofllcers of the Company, as well 
 as on stock. 
 
 Reply. — It is true, commissions were paid to the salaried officers of 
 the Company, to wit: to James H. Smith, Chief Inspector and Director 
 (paid officer), Montreal; W. T. Fish, General Agent (paid officer), Co- 
 bourg Branch; John Fisher, Director (paid officer), Cobourg Branch; 
 also to T. H. Mahony, General Agent and Director at Quebec ; and J. C. 
 Norsworthy, District Agent and Director at Ingersoll, — as the monthly 
 reports will verify. It may be mentioned, however, that not one dollar 
 more than the usual commission of one per cent for procuring stock, 
 paid by all Companies when being organized, was paid by this Company. 
 Therefore it would be naturally inferred that these observations are 
 made to throw onus on one head only; viz., "your late Manager." 
 
 111 i 
 
 SECTION 82. 
 
 In regard to the printing, stationery, and advertising accounts of the Company, I find, 
 as I have before stated, that items in these accounts should properly have been charges 
 against the business of the Agricultural Insurance Company of Watertown, or Its repre. 
 eentatlves. 
 
 In this connection I would refer to the cash account. Up till January, 1875, this ac- 
 count was kept by your Cashier or late Manager to his own credit at the bank, or other- 
 wise. Vouchers are very much wanting, especially in the matters of travelling expenses, 
 commissions, printing, and other Items. Some amounts are charged more than once, 
 and others without the slightest explanation. 
 
 Curing the whole period it has been very much mixed up with your late Manager's 
 account, — Indeed, too much so, and without the slightest necessity, to a great extent; 
 also In an unwarrantable manner. 
 
 I have to complain also that your late Manager undertook the settlement of many ac- 
 counts by giving his own promissory note or other consideration to the creditors, while 
 charging the amount to your Company as cash at dates of settlement; and, as the 
 vouchers are incomplete, it is Impossible to verify these accounts. Of such are U ebhardt 
 8c Co., T. & R. White, Canada Paper Company, J. Wright, J. Currie, and La Minerve, 
 and other parties, either connected with the accounts of printing, 8u:., or other similar 
 accounts of the Company. The state of the Company's finances did not on all occasions 
 render tills mode of settlement absolutely necessary ; but one consequence of It was that 
 amounts were charged twice, — once at settlement, and again when the note became due. 
 In some cases this has been rectified ; in others, not. It Is presumable, therefore, from 
 bis and the want of voucheri, that all amounts so wanting vouchers are open to question. 
 
m 
 
 Rkply. — The reason the notes were given by your late Manager per- 
 sonally was, because the Company's charter does not permit of its doing 
 so: and I believe, that, in one or two instances, the cash was charged at 
 dates of settlement, and the notes paid by Mr. Qoff at maturity ; but, in 
 the majority of instances, the Company was not in funds to pay with. 
 
 If the vouchers are not to be found, it is simply because they have not 
 been carefully looked for. In the cases of Gebhardt & Co. and T. & R. 
 White, notes were often given by Mr. Goff to them for worii that was not 
 completed, so as to accommodate them when hard up, both of said firms 
 being continually borrowing money from Mr, Goff, or soliciting his finan- 
 cial aid by signing notes for their accommodation, — the latter firm par- 
 ticularly. If any accounts were charged as stated, it was simply an error 
 on the part of the keeper of the cash-book, Mr. Alexander, and for 
 which he, and not your late Manager, was responsible ; and, inasmuch 
 as the errors which your Special Auditor speaks of as having been in 
 some cases rectified were made by the aforesaid Mr. Alexander, it is fair 
 to presume he was responsible for all, as "your late Manager" did not 
 make but very few, if any, entries himself in the books of the Company. 
 
 SECTION 33. 
 
 In the printing account ia Included an amount paid Gebhardt for pictures ; but as I 
 find from the minute-boolc of the Company that your late Manager voluntarily presented 
 these to your Company free of expense, except the framing of them, I presume an over- 
 sight has been committed in allowing them to be p^id for by the Company. 
 
 Extract from Minutt-Sook of the Company relating to a Presentation of Picture*. 
 
 18T6, Sept. T. — Kxecutlve-Committee Meeting. 
 Mr. Goff then presented the Committee with one thousand very pretty show-cards at 
 his expense, but requested that the Company would consent to pay for the expense 
 of framing thero ; which was assented to, and the thanks of the Board tendered to Mr. 
 Goff for the presentation. Wx. Anodb. 
 
 (Signed) K. H. Goff. 
 
 F. M. SOWSBN. 
 
 Reply. — With regard to the assertion made by the Special Auditor in 
 re presentation of show-cards to the Company, I simply state it is incor- 
 rect. 
 
 The following is a statement of the account taken from Mr. Qoflt's 
 private books (invoice in my possession) : — 
 
 Dr. G. J. GiBHABDT. 
 
 1870. 1876. 
 
 Aug. 24. To paid Kerry WaUon, $161 00 Aus. 24. 
 Stock . . . 176 00 
 Bills payable . . 149 00 
 " " . . 296 00 
 
 Or. 
 
 By 1,000 Show-Cards, 
 
 Canada Ins. Co. . (400 00 
 
 Extra labor, not in- 
 cluded in estimate, 30 00 
 
 100,000 Envelopes, 
 Canada Ins. Co. . 350 00 
 
 (780 00 
 
 $780 00 
 
.f^ 
 
 S8 
 
 III 
 
 I', 
 
 The bills payable, $140 and $205, Mr. Goff paid Mr. Oebhardt himself, 
 and did not cliarge them to the Canada Agricultural Insurance Company. 
 The Company gave Mr. Goff a check for the envelopes, $350. The date 
 of settlement Was the 24th of August, 1876; and the entry of $600, as in 
 Section 36, had no reference thereto. I could not say, without looking at 
 the books, what this $500 was for, unless for the French edition which 
 was afterwards ordered, but which Mr. Goff did not present to the Com- 
 pany. 
 
 SECTION 34. 
 
 ■;» 
 
 Arbitrary balances have been left at the deblti of these accounts on Slit December, 
 1876, which. If they had been carried to the expense or proUt-and-loss account of that 
 year, would have affected the annual statement for the worse. 
 
 Reply. — The leaving of arbitrary balances to the debit of printing 
 and advertising accounts was done because they would apply to more 
 than one year: i.e., if a large quantity of printing was done, such as 
 policies or supplies, towards the end of a year, a large portion would 
 be on hand. The Special Auditor having called attention to this, as 
 affecting the annual statement for the worse, and to show the inconsist- 
 ency of his reasoning, and that, in forming his wise conclusions about 
 accounts, very much depends upon whether his impartial statements are 
 to affect those with whom he is on friendly terms or otherwise, in this 
 particular, I would ask him why he passed over the arbitrary balance of 
 $20,000 organization expenses of the National Insurance Company, of 
 which he is Auditor, and called it an available asset. Further comment 
 is unnecessary. 
 
 SECTION 86. 
 
 There has been an account kept, called In the ledger stock aoconnt, and in the Ooy- 
 •mment returns furniture account, Sec. This ought to have represented articles of a 
 permanent value, and now stands In the ledger at (8,085.81, after deduction of certain 
 effects sold to the Montreal, Portland, and Boston Uailroad Company, to the amount of 
 $1,152. This account ought to have had something written off yearly for deprecia- 
 tion ; but this has not been done. Suf&clent assets are not forthcoming to show for the 
 amount of (8,086.81 the ledger balance as above stated. An inventory taken this month 
 ■hows value for ( 
 
 Reply. — The writing off of something yearly from the furniture ac- 
 count is simply an assertion, and is open to question as to whether any 
 Bum should be taken off for depreciation in value. I should much like 
 to see the inventory taken this month to find out if the safes and furni- 
 ture at Uie various branches and agencies have been ..eluded therein. 
 
 .'Ill 
 
 SECTION 86. 
 
 Many of the articles charged to this account were of a perishable or changeable nature : 
 for Instance, In January, 1874, (2,000 for agency-supplies ; (5C0 for show-cards ; which, In 
 the nature of things, could not last forever. A horse that died was also continued as 
 an asset. A sleigh and robes, charged to it, disappeared two years ago. Tear after year 
 
ttali account ba« gone Into the annual itatements and goTemment retnrni at Ita cost 
 value, a«8Utlng, although not much In Itself, with other tbtoga of a gUutlar nature, to 
 convey a misconception of the Company's true position. 
 
 It Is not too much to say, for instance, that if this account, and those of printing, 
 ■tationery, advertising, legal expenses, and salary, had been properly treated on Decem- 
 ber, 1877, the Company's position would have been about ten thousand dollars worse 
 than the shareholders were made to believe it was. 
 
 In exa nining this account, I discovered that a horse, buggy, and harness had been 
 •old this last year to Messrs. Ooff, Bcnham, 8c Co. The Manager states that this transac- 
 tion is with Mr. Mace, not Qoff, Benhara, & Co. ; the price to be taken out in livery hire 
 •t two dollars per day. No entry had been made in the books of the Company until I 
 ordered it to be done. 
 
 Reply. — In regard to articles of a perishable nature, the agency's sup- 
 plies were always being renewed, and would at any time represent the 
 value of $2,000. The Item of $500 for show-cards should undoubtedly 
 have been placed to advertising account, and not to furniture account. For 
 making this error the book-keeper is responsible. If the sleigh and robes 
 had been looked up, I think they should be found at the boarding-stables. 
 If they are missing, it is unknown to me. The remarks following those 
 observations of the Special Auditor, although not much in themselves, 
 convey the idea that your late Manager knew all about them ; while I am 
 satisfied he does not. It may as well be mentioned here that Mr. Goff 
 resigned the position of Secretary of the Company about a year and a 
 half ago, and had little or almost nothing to do with the books of 
 accounts. 
 
 SECTION 37. 
 In Regard to Bills-Patsablk Account. 
 
 The drafts accepted by the Company have not yet been posted into the ledger. The 
 record of them was the bill-book; and, when they matured and were paid, a charge was 
 made, carrying them to the account of the proper party. There are overdue bills of 
 $10,000, (9,000, and $3,000, entered into the books, with which the Company had nothing 
 to do. If paid, they would be charged to the private account of your late Manager. Th^ 
 name of the Company has been unwarrantably used in connection with them. 
 
 Reply. — Mr. Ross says, that, in drawing these drafts of $10,000 and 
 $9,000, the name of the Company was unwarrantably used in connection 
 therewith. Now we will see how far this statement is correct. On tl 9 
 day of the Executive-Board meeting, 17th July, Mr. Goff asked me how 
 much the Company owed him ; and I gave him a memorandum that the 
 amount was $22,700.17, and said I would check the account over with 
 the Company's book-keeper (Mr. Mace), which I did that same afternoon ; 
 and the following is the statement of the account from the ledger of the 
 Company : — 
 
! 
 
■ 4t 
 
 The foregoing statement of account was placed before the Directors at 
 their meeting, July 17, 1877, by Mr. Goff ; and, upon inquiry of the Book- 
 Iceeper and Auditor as to its correctness, it was accepted. Mr. Goff liad 
 given the Company money that lie should have paid to the banks ; and 
 at this time, as the banks were pressing him for payment, he wanted 
 the money returned, or authority given to draw on the Company for the 
 amount, which was given him. 
 
 The following is the resolution of the Board relative to said indebted- 
 ness, copies of which were given the banks with the drafts ; and the fol- 
 lowing is a true copy of one of these certified copies of resolutions given 
 to the banks at the time drafts were made in accordance with the reso- 
 lution: — 
 
 Copt. 
 
 " The following resolution is an extract from minutes of meeting of 
 Executive Committee of the Canada Agricultural Insurance Company, 
 held at the Company's office, 180 St. James Street, Montreal, 17th July, 
 1877, viz.: — 
 
 " On motion, it was Besohed, That, inasmuch as this Company is in- 
 debted to Edward H. Goff in the amount of $22,700.17, he is hereby au- 
 thorized to make drafts on the Company to the amount of his said claim. 
 
 [Seal of Company.] (Signed) " W. Campbell, Secretary.'* 
 
 A true copy. [l. s.] 
 
 Is it necessary to bring forward any thing further to prove that Mr. 
 Ross's statement is incorrect? 
 
 The $.3,000 was a note signed by Mr. Goff, and made payable to Mr. 
 Angus's order (for reasons before stated, that the Company could not 
 give a note), and indorsed by the Company, and discounted in the Union 
 Bank, for whicli Mr. Angus deposited $5,000 of stock as collateral. The 
 Company had the benefit of this money when it was first obtained from 
 the bank ; and to say that the name of the Company has been unwar- 
 rantably used in above matters is incorrect, but calculated to throw dis- 
 credit on "your lalt Manager." 
 
 SECTION 88. 
 In the general expense account of yonr Company, there t« one item to which I consider 
 it my duty to draw your attention, — that of ilvery, From February, 1874, until December 
 1876, the amount paid under this head, apart from the charges for cab-hires not talcen 
 into account, is, for board of horse, (190.60; and for livery charges, $406.53. Total, 
 (602.03. Further amounts are charged in following years. As the Company was the 
 owner of a horse (referred to in the stock or furniture account), I presume part of it waa 
 In connection with that animal. I see nothing to authorize or necessitate this expendi- 
 ture. In 1875, this General Expense Account has credited to it a supposed profit on bonds 
 of (6,880, reducing the real amount fi-om $22,040,36 to the apparent one of $16,160.36. 
 
 Rbply. — In regard to livery charges, nearly the whole of this account 
 was for the Special Agent on the Island of Montreal for board of horse 
 and livery teams for your Chief Inspector. The fact of the Chief Inspect- 
 or nearly always requiring a double team when he went to settle a loss 
 
Ml. 
 
 y..''. 
 
 42 
 
 not approachable by train, was, It is presumed, suflScient authority for 
 this expenditure. 
 
 SECTION m- 
 
 In Salary Account I observe that your Manaffor payii for the year 1878 one thouRand 
 dollara towards the salary of your book-keeper, being for a portion of the time of the lat- 
 ter devoted to the private matters of the former. 
 
 I find, that, by a resolution on the ralnuto-book, your Directors were aathorlsed to draw 
 Ave dollars for each sitting. They have occasionally done so, but not regularly : In fact, 
 the amount dr-'.wn was ozceedlogly small ; the amount in all, since February, 1874, being 
 $370. I observe that the Manager, though under salary, drew his proporUon. 
 
 Replt. — The Special Auditor could not refrain from giving "your 
 late Manager " a slap here, because he, with the other Directors, received 
 five dollars a sitting at Board-meetings. It evidently did not suit his 
 purpose to say, that, the last year he remained with the Company aa 
 Managing Director, his services were given gratuitously; voluntarily 
 remitting his salary, so great was his desire to have the Company suc- 
 ceed. 
 
 SECTION 89. 
 
 The meeting* have been numerous, and the attention required very groat, and the 
 attendance has been fair. 
 
 To flnlsh the accounts, I will next take the annual statements, to which I would pre- 
 face a tew remarks, especially as It has been stated by others that the different method I 
 adopt is a mere matter of book-keeping. The mechanical work upon your books has 
 been excellent and praiseworthy, being extremely correct. What is done has been well 
 done. It is the system uf the application of accounts to which I take objection ; and I 
 cannot see any good reason for, say, the distribution of supposed protit on debentures to 
 the various accounts of organization expenses, commissions on stocs, commission* on in- 
 surance risks, general-expense account, and proflt-and-loss accounts. In book-keeping 
 accounts are, or ought to be, opened for their special application towards a speciflo 
 object ; and, when otherwise dealt with, they fall of their intended result, and may mislead, 
 and operate Injuriously to the business they are Intended to guide. Buch has been the 
 effect In your case, aa, had the account* been properly presented, they would probably 
 have attracted attention ; and I am of opinion that the second dividend, at all eveutit, 
 would not have been declared and paid, and probably measures have been originated that 
 would have saved the Company from Its present disastrous termination. 
 
 Thus, then, the statements presented to the shareholders and government being very 
 far from correct, and thus being deceptive, led to the declaration of dividends which the 
 Company could not afford to pay, and which I am of the opinion that neither your Direct- 
 or* nor shareholder* would have sanctioned, had the true figures been placed before 
 them. I have already stated that the Organization Expense Account had transferred to 
 the credit of it a sup osed profit on debentures of $&,600 ; and a farther supposed profit 
 of #12,000 was deducted from the agjn'ugate of the general expenses in the annual state- 
 ment of the year's business made and presented for iiOth January, 1876. 
 
 That statement was as follows ; viz. : — 
 
 Receipts ft-om Premiums, Interests, and Interest accrued .... tllS,9M 00 
 Disbursement*, Fire Losses paid; adjusted, but not paid; Return Preml. 
 nm«, and General Expense* 87,710 84 
 
 Leaving a aurpln* of profit $2fi,277 10 
 
 I am of opinion that there should have been no allowance made for profit on invest- 
 ment* In deduction from the expenses, as the same had not been earned, and was not 
 then, nor ha* it *ihoe been, realizable. I would, therefore, deduct — 
 
 I m 
 
48 
 
 M not 
 
 riV'.tonDobenturoi . . . , • i '. . . $17,600 00 -t 
 
 Rouuctiun on Furniture Aooount 2,500 00 
 
 Outstanding Loiiua overlooked. In round numben about . 10,000 00 
 
 Making a toUl of (30,000 OC 
 
 . ; And leaving In plaoe of a lurplui of 26,377 10 
 
 h A doflclcncy of $*,1i2 M 
 
 j: By a proper treatment of the arrangement with tho Watertown Company aa to book- 
 keeping, and opening an account for re-lnauranoe, to ascertain ultimately the reiult of 
 the buslnesB taken over umer It, thli defloleucy would have been further Increased this 
 year by the sum of (6,000; but, as It would not have altered next year's balance, I leave 
 It as It stands. 
 
 By the same treatment, the expenses of tho Company, with the dednctlon of the flo- 
 tltlous credit of profit on bonds, would have appeared as $80,701.65, In place of, as pr»- 
 ■ented to the shareholders at, $44,301.56. If any one will tell mc, on looking at this, that 
 a mere matter of book-keeping Is nothing, I can only leave bim under his pleasant dela- 
 tion. In the face of a presentation of accounts in tho manner made by me, would the 
 Directors have declared, or the shareholders sanctioned, a dividend at the rate of ten per 
 cent per annum, amounting to $0,660,677 
 
 Rkply. — All this is only the opinion of the Special Auditor as to the 
 mode of treating the accounts, and bringing in the arrangement with the 
 Watertown Company, which, as before explained, i» incorrect, and known 
 to be so by him. It seems, however, very inconsistent, when comparing 
 bis ideas in regard to the treatment of accounts in regard to this Com- 
 pany, and the way he has treated the accounts of " The National In- 
 surance Company" (vide Report of that Company, 9th February, 1877). 
 
 If any one will tell me, on looking at said Report, that it is a mere mat- 
 ter of book-keeping, putting down $20,000 balance of organization ex- 
 penses as an asset, " I can only leave him under his pleasant delusion " 
 (I regret in being obliged here to very nearly quote Mr, Ross's own 
 words). 
 
 SECTION 40. 
 Ton will observe that I have deducted the losses adjusted, and not paid, of $7,961.76 ; 
 and, of course, I do not charge them against next year's fire losses. " In this I follow 
 the Gkivemment returns, which stated ^at they had been paid." 
 
 The statement presented to shareholders and the Government on the 19th January, 
 1876, was as follows; viz. : — 
 
 Receipts fl-om premiums. Interests, and accrued interest $120,166 04 
 
 DisbursementK, fire losses, adjusting losses, return premiums, expense of 
 
 management, and dividends 101,884 17 
 
 Leaving a not surplus of ....... . $18,281 8T 
 
 This I amend as follows : — 
 Interest accrued of last year reversed ...... $2,648 06 
 
 Reduction of furniture account, for sale, &c. . . . . 1,462 00 
 
 Loss by agents, and unpaid dividends 689 09 
 
 Supposed profit on debentures deducted fh>m expense account . 6^880 00 
 
 $11,579 U 
 Add also deficiency last year ........ 4,722 84 
 
 16,301 98 
 
 Dw'lact balance of losses not noUoed .... .' . 86001 
 
 16,883 67 
 
 Leaving a net surplus of ...... . $2,848 90 
 
W' 
 
 44 
 
 e!i'ii! 
 
 In place of the one preeented to the ahareholderi of $48,283.67, and npon the itrength of I 
 which a dividend of ton per cent wai declared, and partly paid. 
 
 Reply.— Thenfl losses wera luipaid in 1874, and paid In 1876 ; about eif^ht 
 thousand dollars being carried over which were unpaid In 187A t(* 1876, 
 and so on, until it came to the end of 1876, when about ten thousand 
 dollars remained unpaid of those entered in the books. (This is from 
 memory.) In going over the returns with Mr. Clierrlman, Superintend- 
 ent of Insurance, this was explained to him ; and, althougli he drew 
 attention to the fact that they should have been mentioned in the 
 Report, he said he would let it pass, as he was in a hurry to get the re- 
 turns printed, but requested that they should be mentioned In the 
 returns for 1877. When he examined the bool(s of the Company in 
 July, 1877, he was shown the loss Register, and was made conversant 
 with the fact of the large amount of losses which had not been reported 
 or entered upon the books of the Company. 
 
 SECTION 41. 
 
 The third and latt utatement waa preiente<^ to the shareholder* on the eighth day of 
 February of 1877, being for the builneas of the year 1870. 
 
 Receipt! from premlama, intereata, and accrued Interests, and a anppoaed 
 
 proflt on InvoBtmenta $132,042 00 
 
 Dlaburaeraonta, fire loasea, adjusting do., return premtuma, and general 
 
 expensua 164,104 18 
 
 Direct losa thla year $82,062 18 
 
 To which dcflclenoy haa to be added : — 
 
 Dividends puld $11,.-U7.36, unpaid $689.05 $12,036 41 
 
 Accrued Interest lost year reversed 3,960 94 
 
 Supposed profit on bonds 5,790 00 ' 
 
 Outstanding losses 25,407 26 
 
 47,203 61 
 
 $79,205 74 
 Less previous surplus 2,348 90 
 
 Buposed deflcleney $76,916 84 
 
 In addition to this, adverse balance was, aa referred to In treating of stock account, a 
 probable additional amount of about $10,000. 
 
 The above deficiency was covered up and kept out of view by entering or keeping on 
 the books of the Company as assets the following Items ; viz. : — 
 
 Overestimate of stock account $3,962 00 
 
 Supposed profit on debentures 30,250 00 
 
 Losaer outatanding not noticed, although reported before Dec. 
 
 81, 1876 43,000 00 
 
 $77,212 00 
 
 Altogether I eatimate the Oompany'a deficiency at Slat December, 1870, as amounting 
 in round numbers to $86,000, in place of a aurplus of $1,441.61, as per statement made tP 
 the ehareboldcrs at their annual meeting on the eighth day of February, 1877. 
 
 Repli. a very large portion of the losses here referred to were not 
 reported, but were held In abeyance by the branch offices, as the loss 
 register will show to-day ; and a large percentage of same in Cobourg 
 office, under Hr. Fish's management. 
 
 u t 
 
\ 
 
 SECTION 42. 
 
 I have itAtcd thnl the dcbvntarM uu(cht not to bava been treated ■• tbey have bean, 
 and tbui niadn U) uliow a profit In vatluiHtinK the Company'* true poaltlon. If againit 
 thli It ti iirKud that there wan no other method of valuation, I reply by the following 
 Itluatratlon : — 
 
 Ou the 8th February, I87T, the Annual lleport waa read to the abaraboldert, with ao* 
 companying ntutement*. In thU Ileport, If we take, lay, the Threv-liiver* debenture*, 
 we And them valued nt 95 cent*. Now, while thi* report wa* being read, on the *ald 
 eighth day of Februaiy, 1877, declaring the value of the debenture* a* at Oft cent*, your 
 book* of account and oa*h-book *how that on the fifth day of January, 1877, one month 
 prevlouily, a lirgu portion — yli., $U,000 worth — bad been lold for elghty-olght (88) 
 cent* on tlie dollar. 
 
 Rkply. The statement read to the shareholders on the 8tli February, 
 1877, was made up to Slst December, 1876, and not to 8th February ; and 
 at that time none of the Three-Rivers bonds had been sold : consequently 
 they were shown In the accounts at coat, — 05, — and Mr. Ross's theory of 
 dealing with permanent securities, " they are worth all they cost, but 
 only what they cost until realized," acted upon. 
 
 Mr. Ross's studied effort throughout his whole Report to cast discredit 
 upon "your late Manager," and injure him in the eyes of the public, is 
 made so (glaringly apparent, that it does not require much comment from 
 me, as I consider his animus is thoroughly unmasl^ed here. While writ- 
 ing tills criticism on the bonds of this Company, he was at the same time 
 preparing a statement of the same class qf bonds for the National Insur- 
 aAce Company, and valuing them at par. 
 
 It appears to me that the chastisement he so liberally bestows upon Mr. 
 Goff should be applied to his own slioulders. 
 
 Particular attention is here directed to the dates, and how the Special 
 Auditor manipulated them to further his own ends. The statement was 
 to Slst December, 1876, and not to 8tli February, 1877 : therefore the 
 sale on the 5th January did not affect the statement. In going over the 
 statement to the Government with Mr. Cherriman, lie said he could not 
 talce any municipal bonds at i}ar value, the department having adopted 
 a rule of accepting all municipal bonds, irrespective of value, at eighty- 
 five cents on the dollar, so as to save the Government the trouble of 
 ascertaining the market value of each class of bonds presented for de- 
 posit. The Government valued them at eighty-five cents all round, in 
 accordance with their rule, and took such on deposit at that rate. 
 
 00 
 
 SECTION 43. 
 
 Yon will And more In connection with this In my remarks on bonds and debentures. 
 In making my corrections of the statement*, I uave treated your securities at cost, the 
 only reasonable method of dealing with permanent securities. They are worth all they 
 cost, but only what they cost until realized ; and, as it is not Intended that a Company like 
 yours is to be engaged In buying and selling stocks or debentures every day as a specu- 
 lation, therefore the market value, even when followed, la not a correct valuation for the 
 estimate of the Company's position and balance-sheet. 
 
 A merchant, in taking an inventory of his goods, ought to value them at the market 
 
W'i 
 
 , 
 
 rate, because he Intends to sell them next day, If possible; but the case li d'ff unt with 
 a company which Is making a permanent invcstm'iii:. 
 
 The bills i\ 'lelvable, accounts, Insurance sto k, and general, are In an equally unsatls- 
 fitotory state with all the rest. 
 
 Rbply. — I cannot help drawing attention to your Special Auditor's 
 sige remark, " treatinr/ your aecuritiea at coat, the only reasonable method 
 qf dealing with permanent securities," and at the same tltro, i" iils Report 
 of "The National Insurance Company," treating their .'^t 'Hties at the 
 pary&\\ie (see statement of February, 1878, and compare ?-:ti' Govern- 
 ment Report of 1877, in which you will observe the par valu^j and the 
 market value put in at the same amount, — $75,200, as well as $75,200 In 
 February, 1876). It may here be stated that the bonds or municipal de- 
 bentures held by the National Insurance Company are the same class of 
 securities as held by the Canada Agricultural Insurance Company, to 
 which the Special Auditor takes such strong exceptions. Why he should 
 wish to treat those held by the Canada Agricultural Insurance Company 
 differently from those held by the National Insurance Company, I leave 
 the public to guess. ,j^ 
 
 SECTION 44. 
 
 I now enter upon the consideration of the two remaining items of the debentures or 
 bonds, and also capital stock of the Company, 
 
 FIB8T DEBENTURES. 
 
 Btj far as I can see, there ha* been no authority for the purchase or reception of the 
 debentures held at any time by the Company ; for although there Is a minute as follows, 
 viz., — 
 
 Extract* JTom the MtnuttSook of tke Canada Agriculttiral Inmtranct Company, 
 
 relating to AcquUition or Sale of Debenturen. 
 (1876, Jan. 7. Executive present, — Messrs. Angus, Stevenson, Desjardlns, and Goff.) 
 Surplus funds to be invested : Bank-stocks, bonds, municipal debentures, mortgages, 
 &c. ; and, in case of any shareholder, owing this Company for stock, owning any such 
 securities as above enumerated, and being willing or desirous of exchanging same at a 
 fair valuation for his or her indebtedness to the Company on account of any such notes, 
 the Managing Director is hereby authorlEcd to negotiate and complete such arrangement. 
 
 (Signed) S. H. GoFr. 
 
 — yet when it became known that it was H. P. and B. R.R. bonds that had been received 
 under the authority granted by that minute (and it was a consldorabio time after before it 
 was realized or known), the reception of them was objected to. Without exception, the 
 debentures or bonds passed Arst through the hands of your Manager. They appear to 
 have been bought by htm from the owners, and sold by him to the Company ; and as the 
 only ones I can trace, from first to last, were bought by your Manager at one price, and 
 sold by him to the Company at a higher, leaving him a proflt, it lays ail the other transac- 
 tions open to suspicion of a similar treatment. There are no brokers' purchase-notes relat- 
 ing to the tranactiona in bonds or debentures, so far aa I can discover. Debentures havo 
 been received in payment of stock, in exchange for others of a different kind in the lianda 
 of the Company, and some have been paid for cash. Purchases, receptions, exclionges, 
 and sales have been made without authority or due communication to the Board or 
 Executive. The whole account is an unsetisfactory one; and it la In on unsaUsfaotory 
 state in the books of the Company. 
 
 iiiW 
 
7^' 
 
 I have alluded above to one lot of bonds aa being bought at one price, and sold to the 
 Company at another, by your Manager. This U the purcbaao of Three-Blvers bonds, of 
 which the story seems to be as follows : On Juno 30, 1870, your then Manager negotiated 
 the purchase of 690 bonds of $100 each, or (50,000 worth, from the Throe-Rivers Corpo- 
 ration, at 85 cunts on the dollar, and paid for them on 8th July as follows ; viz. : Cashi 
 $15,000; also his short-dated note or draft for $5,000, and his own promissory notes (I 
 believe three of $10,000 each), amounting to $30,000. The last three promissory notes he 
 covered with collateral by giving the Company's scrip, representing 301 shares paid-up 
 100 cents In the dollar. Your Manager took these debentures to the city and district 
 savings banks, and obtained a loan of $20,500, or one-half the face value. Without detail. 
 Ing the entries In your cash-book as to the loan, I And that $15,000 of It went to the Three* 
 Rivers Corporation, and the balance your Manager took for his own financial purposes. 
 The $15,000 wcs charged In your books to an account opened for the purpose, headed 
 " E. H, Goff, Bond Account." The short-dated draft of $5,000, when It became due, was 
 paid, and charged to Municipal Debenture Account, on 17th August, 1876; but this error 
 being discovered In Juno, 1877, a rectifying entry was made, transferring it to your Man- 
 ager's account, which had the credit of the said amount of $5,000 all that time. 
 
 The cost of the bonds to your Manager was $50,050. The cost of the same, as trans- 
 ferred In the ledger from E. H. Goft" Bond Account to Tlirec-Hlvers Debenture Account, 
 and subsequejitly to Municipal Debenture Account, was $66,050, being at the rato of 96 
 cents on the dollar. 
 
 Oh the 7th Beptembcr, 1876, your Manager, two months after date of tiie negotiations 
 and purchase of those bonds, for reasons of his own, communicated the fact of the pur- 
 chase to the Executive in terms of the following minute: — 
 
 Rkply. — The Three-Rivers bonds were bought through P. D. Brown, 
 broker ; and Mr. Goff paid liim the brokerage by his own check. 
 
 The best answer to this Is given by Mr. Goff in his letter to the share- 
 holders of the Company, in answer to Mr. Ross's Interim Report, from 
 which I quote the following; viz. : "During the month of June, 1876, a 
 prominent banker solicited me to purchase |5,90l) in Three-Rivers Water- 
 Works Bonds; which offer I declined. He afterwards spoke to me sev- 
 eral times upon the subject; and having great anxiety to place the 
 Canada Agricultural Insurance Company on a solid basis by the accu- 
 mulation of a larger paid-up capital, which for several months I had 
 been advocating with the Directors and shareholders of the Company, — 
 which idea met with general approval, — I finally concluded to make an 
 offer for the bonds, and purchase them in the Interest of the Company, 
 if I could do so, and not part with any of the Company's funds in mak- 
 ing the purchase. I made the following offer: To purchase the bonds 
 myself at 85 per cent, and pay $20,000 cash, giving my own notes for the 
 balance of $30,1&0, payable six months from date, with interest at six 
 per cent." This offer was made with a view to handing the bonds over 
 to the Company for the $20,000, and accept paid-up stock for the balance ; 
 relying, of course, upon being able during the ensuing six months to 
 sell the stock, and realize cash to relieve my notes. His offer was ac- 
 cepted, and the transactirn ;ompleted on tlie above-mentioned basis. I 
 immediately handed the bonds over to the Company at 05, — $20,050 cash, 
 and ^.'W.OOO in fully paid-up stock. The ten cents on the dollar advance, 
 amounting to S5,900 in stock, was set aside for payment of commissions 
 and brokerage on the sale of the $36,000 stock, and any possible depreca- 
 
 
>f^. 
 
 i 
 
 I ii 
 
 1 
 
 i 
 
 tion in the market value. At the same time, I told the Directors of the 
 Company, that, if it could be sold for any saving on this sum, the Com- 
 pany should have the benefit, as I did not enter into the transaction as a 
 speculator, but simply to strengthen the Company's position. In order 
 to be able to pay the $20,050 cash, I effected a loan with the City and 
 District Savings Bank of |29,500 for six months at eight per cent, giving 
 the said bonds as collateral security, paid the $20,050, and handed the 
 balance, $9,450, over to the Company. These bonils were sold at various 
 prices, ranging from seventy-five to eighty-eif' ' cents on the dollar for 
 cash. The loans were then paid, and the balance, amounting in all to 
 about $25,050, realized and used. For this amount obtained, at a time 
 when it was most pressiugly necessary, the Company never parted with 
 one dollar of money, timply realizing on $36,000 stock I had accepted for 
 the bonds, and which, when my notes for $30,150 matured, I had not 
 sold, and could not sell at any price." The purchase of the bonds at the 
 time was considered very advantageous for the Company, and, as I under- 
 stood, was warmly approved of by Mr. Fish, one of the present Trustees, 
 The story seems a little different with him now, as he evidently sees an 
 opportunity of using it for the purpose of inflicting a wound upon "your 
 late Manager." 
 
 I also present below an abstract from Mr. Goff's private ledger, show- 
 ing his account with the Canada Agricultural Insurance Company, and 
 showing how the $29,500 was disposed of. Mr. Goff, in writing his letter 
 as above, it will be recollected, did so from memory, and did not get the 
 amounts paid precisely correct. The $15,000 was paid to the Three- 
 Hivers Corporation's Secretary Treasurer, Mr. Frijon, by Mr. Goff, in 
 the oflSce here ; and the $5,000 as statatl by Mr. Ross was afterwards 
 paid by the Company, bj' mistake of the Company's Cashier, but after- 
 wards charged over to Mr. Goff's account. 
 
 Statement of E. H. Goff's Account icith Canada Aqbicultckai. Inburancb Co. 
 
 i 
 
 Canada Aorichltubal Inbubance Cohpant, MontbiaLc 
 Cr. 
 1876. June 16. To balance of ac't 1876. 
 
 at this date . . . |,6.902 91 
 June 20. To cash loan. . 600 00 
 
 June 24. To proceeds note, 
 $960 .... 
 June 26. To cash loan . 
 June 27. To casta loan . 
 June SO. To Longucil draft . 
 To Three-Rivers . 
 To balance . 
 
 924 40 
 
 16 00 
 
 881 00 
 
 2,731 60 
 
 . 16,000 00 
 
 . 4,616 24 
 
 $30,672 03 
 
 June 17. By cash . , 
 Juno 20. By cash 
 June 24. By cash 
 Juno 30. By cash C. & D. 
 Bank . . . . 
 
 Dr. 
 
 $47 05 
 
 26 00 
 
 1,000 00 
 
 29,500 00 
 
 $30:672 03 
 
 Mr. Mace, the book-keeper, was told to rectify this $6,000 entry at the 
 time. He either forgot to do so, or forgot how to do it ; for liis attention 
 was called to it by myself. 
 
49 
 
 
 
 SECTION 46. 
 
 1876, Sept. 7. — Executive-Committee Meeting. 
 In reference to paid-up Btock, the Manager stated that be had bought $59,000 of the 
 Three-Rivers bonds at 00 cents on the dollar, and had paid for the same by cash $20,000, 
 and $33,100 paid-up stock, which stock be had to dispose of. v 
 
 Wm. Angus, PMsident. 
 i: (Blgned) E. H. Qorr, Manager. 
 
 f . F. M. SowDON, Secretary pro tern. 
 
 The loan fl-oin the City and District Savings Bank was subsequently repaid by the 
 ■ale of the bonds, which resulted in a loss, under the cost price of 95 cents, of, say, in 
 round num)>er8, about $9,000, On the 3d October, 1877, some annoyance having been ex- 
 pressed in regard h> these bonds by the Directors, your Manager gave in a written state- 
 ment, which is found signed by himself in the minute-book of the C!ompany, as follows ; 
 Tla.:- 
 
 Msn. 
 
 (%lnw 
 
 jii'*!; 
 
 Oct. 8. The following explanation of the Three-Rivers bonds was pre- 
 sented by the Managing Director in his own handwriting, and signed by 
 him: — 
 Purchased $59,000 at 85 cents, $50,150, discount .... $8,850 
 
 Sold to C. A. I. Company $59,000 at 95 cents, $56,050, profit . 5,900 
 
 $56,050 paid cash $20,050, C. A. I. stock $36,000 .... 66,0, 
 
 LOAN TRANS ACTION. 
 
 Borrowed fi-om C. & D. Savings Bank at 60 cents on the $1. 
 $69,000 at i $29,500 
 
 Paid 20,000 ; ' 
 
 Jan 5. 
 
 Mar. 3. 
 
 Oave Company 
 
 $9,500 
 
 $9,600 
 
 Sold $12,000 at 88 cents 
 
 $10,560 
 
 
 i loan paid 
 
 6,000 
 
 
 Oave Company 
 
 
 4,660 
 
 Bold $15,000 at 80 cenU 
 
 $12,000 
 
 
 i loan repaid 
 
 7,500 
 
 
 Gave Company 
 
 
 $4,600 
 
 Bold $32,000 at 75 cents 
 
 $24,000 
 
 
 i loan paid 
 
 16,000 
 
 
 Q«ve Company 
 
 
 $8,000 
 
 $26,560 
 
 On the Three-Rivers bonds transaction $25,560 was realized in cash for the 
 Company, for which it did not Invest one dollar In money. All that this 
 '"'^,!" V Company parted with was $36,000 In stock. 
 
 (Signed) X. H. OoFr. 
 
 Oct. 3, 1877. 
 
 »3 
 in 
 
 Reply. —This was as the minutes read, beyond a doubt; but the con- 
 tradicting figures are simply clerical errors, as explained to Mr. Ross. 
 The minutes were written hastily, and without revision. The entries 
 made in the books at the time qf purchase, detailing the whole transac- 
 tion, were correct, and is in accordance with Mr. (JofiE's letter of 20th 
 December, 1877. The figures given regarding the loan transaction are 
 correct. 
 
I kI 
 
 ;ll 
 
 i' 
 
 The whole transaction, from beginning to end, Is of the moit Irregular nature; and you 
 will perhaps allow me to recapitulate the Items. 1st, They were bought without author. 
 Ity and without necesgity. 2d, They were bought at cighty-flvo cents, reported to the 
 Board as purchased at ninety cents, and entered In the account-books of the Company at 
 ninety-tlve cents-. 3d, They were reported as bought for so much cash, and so much paid- 
 up stock of the Company ; whereas the stock was never accepted unless as collateral, aa 
 may be seen in the transfer-book. 4tb, The scrip given to represent paid-up stock waa 
 given without authority, and without value received by your Company ; and there waa 
 no such paid-up stock in existence, except in so far as it was made for this purpose. 
 6th, The scrip still lays as collateral only for the unpaid portion of your Manager's note* 
 in the hands of the Quebec Bank. 6th, The name or indorsement of the Company baa 
 been used on a portion of your Manager's notes without authority. 7th, These bonds are 
 entered at the value of ninety. Ave cents in the statement presented at your Annual Meet- 
 ing of 8th February, 1877 ; although a portion had been sold a month previously at eighty- 
 eight cents. 8th, A sworn return to Government states the market value at ninety-five 
 cents, although two sales had been previously made at less : viz., Jan. 6, ^12,000 worth 
 at eighty-eight cents ; and 3d March, 1(15,000 worth at eighty cents. 9th, The manipu- 
 lation of the accounts whereby erroneous entries are made to the several accounts through 
 which they passed. These seem curiosities enough connected with one transaction. 
 
 Reply. — The answers to items one to five are these. The bonds were 
 purchased precisely as stated by Mr. Goff, and sold to the Company as 
 stated. The discrepancy, as shown in the minutes as being bought at 
 ninety cents, is a clerical error, and should have been altered. The Com- 
 pany took the bonds at ninety-five cents, and paid 1^20,050 cash and 
 $;36,000 stock. This was done by crediting Mr. Gofif with nine calls of 
 ten per cent, or ninety per cent on $40,000 of ten-per-cent stock which he 
 held, thereby making it $40,000 fully-paid stock; and $30,100 of this stock 
 Mr, Goff transferred to the Corporation of Three Rivers, as collateral 
 security for his own notes which he gave them, as before explained. 
 
 6. Incorrect. See copy of resolution given to Quebec Bank. 
 
 7. Statement made to 31st December, 1876 ; and no bonds sold at that 
 date. This statement is evidently made to mislead the shareholders. 
 
 8. Statement to Government to 31st December, 1876: therefore entries 
 for 5th January and 3d March, 1877, should not be brought in here. 
 
 SECTION 47. 
 
 With regard to the other bonds, there seems also to be inexplicable dealings, though 
 not so easily traceable as the above. The purchased bond* in the account-books of the 
 Company do not tally in detail with the statements of them to the Government, or as I 
 found them on inspection ; and yet, curiously enough, the ledger-balance is brought out 
 the same in aggregate. Bonds have been sold, or are in hands, which do not appear to 
 Juve been bought. For instance, Ely bonds are returned in tlie Government statement 
 of 9tb March, 1877 ; but I cannot see a purchase in the books of the Company, unless it 
 be an entry of an amount about equivalent to the value of the Ely bonds, but without 
 explanation, and which your accountant cannot explain, dated June, 1877 (three months 
 after the Government return) . The said entry of June is a transfer from your Manager's 
 private account. Other bonds appear to have been bo<tght, which have been sold, or ar« 
 in hands, as the books show; but of bow and when bought, there is no record. 
 
51 
 
 1 
 
 Bbplt. — Some of the bonds may have been changed for others of 
 equal value ; but, if any changes took place, it was in handing over the 
 bonds to the National Insurance Company, and done in error: at all 
 events, Mr. Ross does not show that any loss has resulted to this Com- 
 pany therefrom. It may be mentioned in connection with this, that the 
 two Companies occupied the same offices some time ago, and the securi- 
 ties of both Companies were deposited in same vault. 
 
 '' ""' '" SECTION 48. 
 
 I give a statement of what the books of the Company show as to transactions In bonds, 
 and a list of the present deposit with Oovernment as verified along with the Inspector. 
 
 Date. Item. " Pace Value. Bought or 
 
 1874. *°'" 'O""- 
 May 22. Waterloo Bonds, purchased at 85 per cent . . . $30,000.00 $26,500.00 
 
 (In hands of Receiver-General.) 
 Nov. 11. Frelighsburg, purchase at 80 per cent . . ofii^^Clii 6,000.00 i,000.00 
 
 1878. 
 Dec. 31. Frelighsburg Bonds taken and exchanged by your 
 Manager at par for Montreal, Portland, and Boston 
 
 ' Railroad bonds at 80 per cent 6,000.00 6,000.00 
 
 1874. 
 Dec. 31. Chambly Basin, no interest, 26 yearly Instalments of 
 
 $800 each, purchased at 40 per cent .... 20,000.00 8,000.00 
 ;v fi. Received payment, three bonds . . . i%,,a^J* 2,400.00 2,400.00 
 
 (Balance In hands of Oovemment.) . ; 
 
 1875. ' • 
 Jan. 4. Montreal, Sorel, and Chambly Railroad Bonds, pur- ^' 
 
 chased at par 1,000.00 1,000.00 
 
 Dec. 81. M. P. and B. R.R., from W. Angus, paying 10 per cent 
 
 on Stock, 80 per cent 11,000.00 8,800.00 
 
 E. H. Goff, do. do 10,000.00 8,000.00 
 
 E. H. Qoff, exchanging for Frelighsburg furniture, 
 
 &c., 80 per cent 10,000.00 8,000.00 
 
 1877. 
 May 21. Sold to S). H. Goff for his note at par . . . . 88,000.00 38,000.00 
 
 1876. 
 Dec. 31. Lapralrie Road Bonds, purchased at par . . . 1,000.00 1,000.00 
 
 (StUl on hand.) 
 
 1876. 
 
 Dec. 31. St. Pie and Btukely supposed Bolton Bonds, purchased 
 
 at 96 per cent . . . . ... . . $0,600.00 $9,120.00 
 
 1878. 
 
 Jan. 28. Purchased at 95 per cent . ...... 2,000.00 1,900.00 
 
 Nov. 80. Bolton, purchased at 80 per cent ..... 8,200.00 6,660.00 
 
 .-t Mooney's draft 800.00 
 
 1877. $19,800.00 $18,380.00 
 
 June. Sold to E. H. Goff, 92 ® 921 . »,»:-' r • • 8,200.00 8,610.00 
 
 In bands of Government $10,600.00 $9,870.00 
 
 7,300.00 
 
 Error somewhere ....... $8,800.00 
 
52 
 
 n3 
 
 'I! Ill 
 
 
 Date. 
 
 1879. 
 June 30. 
 July 80. 
 
 18TT. 
 Jan. 
 
 Item. 
 
 Longueull bonds, 27 | u 
 <i I) 27 » 
 
 Par Value. Ooit. 
 •6,400.00 ^5,400.00 
 
 " '• 21 ® 80 per cent .... 2,100.00 1,700.00 
 
 Dlicount(Oct.31, 1876, (1,000), March, 1877, $1,000 .... 1,000.00 
 
 (Reversed.) ^^-^— 
 
 .Wft!Jfs<<i<*tffi/ $8,100.00 
 
 Oovemment 7,000.00 
 
 Balance error $1,100.00 
 
 Sept. 21. 
 
 St. Paul d'Abboteford, 83 ® 80 
 
 Bept. 26. 
 
 " " 2 @ 80 
 
 Oct. 12. 
 
 " " 26 @ 80 
 
 $3,300.00 $2,640.00 
 
 200.00 160.00 
 
 2,600.00 2,000.00 
 
 00 
 
 $6,000.00 $4,800.00 
 
 Reply. — Regarding the statements and figures given above, I would say, 
 the mystifying manner in wliich they are rendered malces it all but impossi- 
 ble to make any thing intelligible out of them ; and, as I have not been 
 favored with the books or personal explanations from Mr. Ross, I can 
 only refer to a few of them ; viz. : — 
 
 An extraordinary affair, E. H. Goff exchanging $10,000 for Frelighs* 
 burg FUBNITUBE, &c., At eighty per cent. I am sure I never heard of 
 any such transaction. 
 
 For explanation of the $38,000 note, see Section 60. 
 
 Mr. Goff purchased the Bolton bonds at 99^ per cent, which cost the 
 Company 80 per cent ; thereby benefiting the Company to the extent of 
 12i per cent. 
 
 The St. Paul d'Abbotsford bonds were afterwards sold E. H. GofiE for 
 ninety cents. They were deposited in Merchants' Bank of Canada as 
 collateral for a loan of $5,000. Mr. Goff purchased them at ninety cents, 
 and gave the Company the money to pay loan (see entry of June 6, 
 1877), thereby benefiting the Company 10 per cent. 
 
 Regarding entry of June 5, 1877, — $5,400 " paid in on railroad bonds." 
 This is not correct. If Mr. Ross had looked at Government Report, 1877, 
 he would have seen what was done with the St. Paul's bonds. The 
 dates in this statement of the bond account seem to be mixed and con- 
 fused by the Special Auditor, and to be mystified. 
 
 On the 4th April, 1877, a loan was effected from Mr. Baptiste, — $24,- 
 000 for four months, and $32,000 of the Three-Rivers bonds given as col- 
 lateral. When the loan n ttured, the Company could not pay it; conse- 
 quently forfeited the bonds; 
 
 1877. 
 June 6. 
 
 18T0. 
 July 8. 
 
 Taken by Goff for 60 at 90 
 
 And the proceeds or value paid In on Railroad Bonds, 
 same day, as per cash-book. 
 
 Three-Rivers Bonds, purchased 690 at 96 
 
 $6,000 00 $6,400 00 
 
 $60,000 00 $66,060 00 
 
53 
 
 18TT. 
 Jan. 6. Sold Nioholi & Marler, 120 at 88 
 Mar. 8. Bold Seminary, 150 at 80 
 
 Forfeited to a. BapUste, 320 at 75 
 
 690 
 148 C. B. Dltconnt credited 
 
 $10,560 
 12,000 
 24,000 
 
 $40,560 
 1,000 
 
 1877. 
 June. 
 
 Ely, supposed purchased, 27 at SSl- 
 In hands of CK>vernmcnt. 
 
 The Railroad Bonds have turned out 
 The LongueuU Bonds " 
 
 The Bolton Bonds " 
 
 The difference between these two • 
 and the Railroad Bonds of . 
 
 $59,000 00 $37,660 00 
 . $3,700 00 $2,400 00 
 
 $0,000 more than bought. ^ 
 1,100 less. 
 3,300 " 
 
 4,300 
 6,000 
 
 Tlz., $1,700 
 arises from'tbe treatment of thorn In the account. 
 
 Cost. 
 $25,600 00 
 6,600 00 
 1,000 00 
 
 Par. 
 
 $30,000 00 
 
 17,600 00 
 
 1,000 00 
 
 7,300 00 
 
 7,000 00 
 
 7,000 00 
 
 2,400 00 
 
 2,700 00 
 
 
 $65,600 00 
 
 Item. 
 
 Waterloo Bonds, Oovemment Deposit .... 
 
 Chambly Bonds, " . . .. , ... 
 
 Laprairle-road Bonds, In safe . . . . '''/('"''i 
 
 Bolton Bonds, Government Deposit .... 
 
 There Is some great error here, and these have got 
 
 mixed up with St. Pie and Stukely, and probably 
 
 LongueuU Bonds. 
 
 Longueuil Bonds, Qovemment Deposit .... 
 
 Something wrong here ; $1,100 should he more. 
 Ely, Glovemment Deposit ...... 
 
 The whole, except Laprairie Bonds, are deposited with Government. 
 
 I have to remark, in justice to your late Manager, that In assuming bonds, or many of 
 them, he did so at a price higher than he charged them to your Company. 
 
 The Chambly bonds were over-valued ; and this over- valuation could not have been 
 Ignorantly made. These bonds consisted of a series payable at the rate of eight hundred 
 dollars yearly, fortwenty-flve years, without Interest. They could not possibly therefore 
 he worth par; and, by your Manager's treatment of them at par In the books of account 
 of the Company, a supposed profit of twelve thousand dollars was used to cover up so 
 much of the expenses of the association. 
 
 Rbplt. — Must have access to the books in regard to these matters. 
 There should not be any error in this account. Notwithstanding Mr. 
 Ross's statement to the contrary, tliey were correct 31st December, 
 1876, 1876, and 30th June, 1877, and agreed exactly witli the bond ac- 
 count. I should be able to give positive information oq this point had I 
 been permitted to examine the books ; but Mr. Ross informed me, when 
 I called to see them, that they were not in the office. 
 
 The Chambly bonds are in the hands of Gk)vernment, but, on account 
 of their nature, are not held on deposit. Originally there were twenty- 
 five of these bonds of $800 each, or |20,000, and cost $8000; difference, 
 
n 
 
 I! 
 
 M 
 
 !fl< 
 
 $12,000. Now three of them, or $2,400, have been paid ; and yet the dif- 
 ference in the cost and par value remains the same ($12,000) for the 
 balance. Hence I presume your Special Auditor would say, that, when 
 there is only one remaining unpaid, there would still be $12,000 differ- 
 ence In cost and par .value; at least I should presume so from these 
 figures, which, of course, must be correct according to Mr. Boss. 
 
 SECTION 49. 
 
 I am not quite certain but that there may have been reasons for an increased valuation 
 of them, for IJtnd your Manager instructing the Company's Auditor to report to Govern- 
 ment, that interest on these bonds had been arranged for. If this waa aOiVour Company 
 never got the benefit of the intoreM ; and, as there is no trace of It In the books of the 
 Company, I am compelled to treat .of them as I And them there. 
 
 Bbplt. — I certainly do not remember the Manager Instructing me to 
 say in the report to Government, that the interest had been arranged for 
 on these bonds, as they do not bear Interest. I have examined the Gov- 
 ernment returns, and do not find any allusion made to this italicized para- 
 graph. If any such instructions were given, they must have been in 
 reference to something else; and I- question very much if Mr. Gherriman 
 will remember any thing of the kind. I confess I am beaten here. 
 
 SECTION 50. 
 
 Of the railroad bonds, $1,000 were paid in cash at par; $21,000 worth was taken at 
 eighty cents on the dollar to pay stock calls. $10,000 worth was taken at eighty cents to 
 pay for Frelighsburg bonds, which the Company had in Its possession, and some other 
 items. This makes a total face value of $32,000 ; but $38,000 were sold, being $6,000 over- 
 sold, the Biiurce flrom wlUch this surplus cams being unaccounted for in .the books of 
 the Company. 
 
 These railroad bonds were handed or sold to your Manager In terms of the following 
 minutes : — 
 
 1877. Feb.i. rolioSa. 
 
 Objections having been made to the Company's holding railroad bonds as securities 
 the Managing Director requested that the bonds of the M. P. & B. B. be returned to him 
 for which he would return the Company's stock taken in exchange for said bonds. 
 
 It was moved, seconded, and resolved, that it is the opinion of the Board that the Com- 
 pany should hold no railroad bonds whatever ; and that steps be taken by the Executive 
 Committee, in consultation with Mr. Hatton, the Company's Solicitor, t "omply with Mr. 
 OofiTs request for the retransfer to him of the bonds of the M. P. & B 
 
 April 27. I-oUo in. 
 The Managing Director gave ample and satisfactory explanations to Mi luUot's 
 objections as to the values of these seturites ; and to Mr. Poullot's special objoctions to 
 the railroad bonds, the I'resident assured Mr. Poullot that there was a preirent prospect 
 of these bonds belng^old for cash at par value, 
 
 June 4. J'olio 116. 
 The Managing Director asked the Secretary to read the resolution passed at the meet. 
 Ing of the Directors on the 8th February last, instructing and authorizing the Kxecu. 
 tive Committee to comply with the request made by Mr. Ooff that the railroad bonds be 
 re-transferred to bini« 
 
55 
 
 The reiolutlon having been read, the Mnnnging Director stated his object In calling 
 attention to the matter was to annonnee the fact that he had assumed, subject to the 
 approval of the Committee, the railroad bonds at par, the rate at which they were given 
 to the Government; had given his note for the whole sum (thirty -eight thousand dollars), 
 upon which he paid ten thousand dollars cash indorsed on the note. He now submitted 
 the transaction. There was his note as stated ; and he hoped it would meet the approval 
 of the Committee, as he considered It In the Interests of the Company far better than If 
 he had carried out the Instructions of the resolution of the Board at the meeting of 8th 
 February last by simply re-exchanging the railroad bonds at seventy-flve cents for this 
 Company's shares. This would have depreciated the securities represented In the bonds 
 ft-om thirty-eight thousand dollars to twenty -eight thousand five hundred dollars, being a 
 deficit of nine thousand five hundred dollars ; whereas, by the transaction now submitted, 
 this Company sMU controlled the stock sbaroa given for the bonds, also held this note 
 now handed in for twenty-eight thousand dollars, and the cash paid thereon, ten thou- 
 sand dollars. The Company was amply secured, and faith was not broken with the 
 •Government. 
 
 After consideration, it was unanimously resolved : That, In accordance with a resolu- 
 tion passed by the Directors of this Company at a meeting of the Board, hold on the 8th 
 February last, authorizing the transfer of the thirty-eight-thousand-dollar first-mortgage 
 bonds on the M. P. and B. K. K. to E. H. Goff, we do now soil and transfer the said 
 bonds to Mr. Goff for and in consideration of thirty-eight thousand dollars, for which 
 this Company will accept Mr. Goflfs promissory note for a like sum, dated May 21, 1877; 
 and, as Mr. Goff has already paid Into the hands of the Company the sum of ten thon- 
 cand dollars, this amount shall be indorsed on said note as part payment; and for the 
 payment of the balance of said note the Company shall bold a like sum of ten-per-cent 
 stock 08 collateral security. 
 
 June A. 
 The Managing Direotor reported, that, notwithstanding the privilege given him by the 
 Committee in accepting his note with ten thousand dollars indorsed on It for the railroad 
 bonds, he was glod'to inform the Committee that he had to-day made a further payment 
 of five thousand five hundred dollars on account of the bonds, which sura was also in- 
 dorsed on the note. Tho statement was received with much approbation. 
 
 On the back of the note given by your Manager In payment for these bonds, he has in- 
 dorsed the following extraordinary memorandum, and it was so done surreptitiously : — 
 
 Memorandum upon Back of a Promiitory Kate for Thirty-Eight Thoutand Dollar* 
 given by E. II. Goff for Railroad Bondt. \ 
 
 Copy of Notb. 
 ^,000. MoNTBBAL, 2l8t May, 1877. 
 
 On demand I promise to pay to the order of Canada Agricultural Insurance Company, 
 at their office In Montreal, thirty-eight thousand dollars for value received. 
 
 No. 502. (Signed) E. H. GOFF. 
 
 Imdobbsd om Back. 
 1877. 
 
 May 28. Paid on account $4,690 00 
 
 May 29. Paid on account 6,310 00 
 
 * 110,000 00 
 
 June 4. Paid on account . ; 200 00 
 
 #10,200 00 
 
 June 6. Paid on account 6,300 00 
 
 $16,500 00 
 
f" 
 
 
 ■ 
 
 
 
 ft 
 
 1 ' 
 
 '] 1 
 
 
 1! 
 
 1 
 
 i 
 
 t 
 
 
 : 
 
 1. 
 
 t 
 
 i 
 
 i 
 
 i\\ 
 
 s \ 
 
 W' 
 
 56 
 
 Vaao. 
 
 ir- 
 
 Tbti noto U given the Company for Uilrty-eiifht thouwuid doUari M. P. luid B. R. R. 
 bonds, the Board of Dircotorii having auUiorlzod nu; tu take the bond* ft'om the Company 
 at aame price paid, — vU., Rcventy-flvo cents on the dollur, — and surrender a like lum of 
 ton-por-cent stock of the Company, — viz., twenty-eight thousand Ave hundred dollars; 
 but, as it is questionable If a company can buy its own stock, I Hl);n and give this notd on 
 the agreement of the Directors that I am not to bo called upon for payment of same, and 
 that it shall simply represent a like amount of stock, which will be held by the Company 
 a* collateral ; viz., twenty-eight thousand Ave hundred dollars. I give note for the par 
 value of bonds; but it U understood only to represent the bonds. ., 
 
 (Signed) B. H. Otorr. ■■ 
 
 On discovering this memorandum, and feeling persuaded that it affected the value of 
 ■aid note, I called on your late Manager, and requested hira to give me a new noto or pos- 
 session of the bonds until the matter was put on its proper footing ; but he declined, say- 
 ing that the memorandum was in accordance with the bargain. I leave you to compare 
 It with the minutes. 
 
 Reply. — Notwithstanding the Directors gave Mr. Goff permission to 
 take these bonds, and return the Company an amount of stoclt equiva- 
 lent to their cost-price, he tried to sell them for cash, and give the Com- 
 pany the benefit of the sale, instead of taking it liimself ; and at one 
 time he did arrange for a cash sale, which, owing to some business ar- 
 rangements, fell through; and was not completed. 
 
 The minute of Feb. 8 should be compared with the Directors' Report. 
 (See Section 4.) 
 
 I can give no better explanation of the way in which these bonds were 
 finally assumed by Mr. Goff, than to again quote from his letter to the 
 shareholders under date 20th December, 1877; viz., — 
 
 " Here is the explanation. I sold to the Company thirty-eight-thousand- 
 dollar bonds of the Montreal, Portland, and Boston Railway, at eighty 
 cents, on account of which ten-per-cent stock was accepted. The Cana- 
 dian Insurance Commissioner, not approving of the Company holding 
 bonds of any railway, although the American insurance companies use 
 them largely as a favorite investment, the Board of Directors, in Febru- 
 ary last, passed a resolution authorizing me to take back the bonds at 
 the same price as paid, and to surrender a similar amount of stock. I 
 told them I did not consider the Company could purchase its own stock, 
 and I did not want to see them do an illegal act. I therefore offered to 
 take the bonds, and give my note in payment; for which the Company 
 could hold a corresponding amount of ten-per-cent : tock as collateral, 
 it being distinctly understood that the note represented the stock, and had 
 no money value. Although I gave the note for the bonds, with the ex- 
 press understanding that it represented no money value, as the Com- 
 pany were in desperate straits for want of money during the past sum- 
 mer, I gave them $15,500: and, instead of treating it as a loan, it was 
 indorsed upon the bond-note ; thus, in fact, making the Company a 
 present of the money." 
 
 From the above it will be seen Mr. Goff gave the Company $15,500, 
 which he was not called upon to do, and which at the time I remon- 
 
 11 ^11 
 
strated with him for doing; telling him, if he did let the Company have 
 the money, in justice to himself he should treat it as a loan : but he was 
 so anxious to aid the Company, that he always considered their interests 
 and requirements as paramount to his own. 
 
 All the pf^^ments on this note were made by checks on the Toronto 
 Bank, which can be produced. 
 
 No matter what Mr. Ross's opinion may be, the transaction was carried 
 out as was stated ; and his remark that the indorsation was done surrep- 
 titiously, is not correct, to my personal knowledge, as I jras present, and 
 heard the whole transaction discussed. 
 
 -!'/•> .»■» '*'«>H i"V,'»^*Ji»|(4-;:il 
 
 SECTION 61, 
 
 4.HI«t"T«. 
 
 On the back of the note U Indorsed a payment of (6,310. fhli waa paid in the Company 
 on the 2tlth May, and $4,000 drawn by your Manager the game day. Another payment of 
 $5,800 on June 6, 1877, indorsed on the back as made to the Company, was so made by 
 your Manager giving you this money, and purchasing from jrpu, then or previoualy, the 
 Bt. Paul D'Abbottsford bonds at a valuation of $6,400. 
 
 Beply. — The payment of $5,810 was made to the Company, and the 
 funds used for paying the Merchants' Bank for a $5,000 loan and interest 
 on collateral security of $6,000 St. Paul D'Abbotsford bonds made to the 
 Company some six months before. (See Government Report.) Mr. 
 Goff paid the money over to the Company by his own check at Bank of 
 Toronto, and then took up loan at Merchants'. 
 
 The $4,000 said to be drawn by Mr. Goff on the 20th May, the 
 same day on which he paid in $5,310 on his note, I find, stands thus : 
 The President, Mr. Angus, had advanced cash to the Company in 
 the following suras: $2,000, $1,000, and $1,000 as temporary loans, 
 which had been credited to Mr. Goff, Mr. Angus not wishing his name 
 to appear in the books. Mr. Angus requested the return of the $4,000, 
 which was paid to him ; therefore, as Mr. Goff had been first credited 
 with the $4,000, of course, in paying Mr. Angus the money, it was 
 charged to Mr. Gaff's account. I think this clears up the false impres- 
 sion that would otherwise be formed from the wording of Mr. Ross's 
 Report. 
 
 SECTION 52. 
 
 Tour late Manager, In his letter to the shareholders, states that he was obliged to 
 purchase debentures, &c., for financial purposes. An examination of the books of the 
 Company will show that this was not the case ; that, on the contrary, the holding and 
 acquisition of so many unrealizable bonds or debentures caused the greater portion of the 
 financial troubles of the Company. There is, at the present moment, overdue on the sale 
 price of the railroad bonds assumed by your late Manager, the sum of $22,500, which, if 
 paid in to the Company, would place it in a position to more than satisfy the holders of 
 overdue drafts for losses by fire. 
 
 Reply. — This is incorrect, as will be seen on reference to extracts 
 from minutes of June 4, Section 50. 
 
I: 
 
 "% 
 
 SECTIOK 68. • " ' ' — ,> 
 
 I come now to the enpltsl »took of the Company. '"'^ 
 
 1 preient a staroment of the preient poiltlon of thU matter on inparato Rhcota, being too 
 
 long fur Inaorttun, which ihowi the number outnlandlng at 0th Decuinber tu be 11,683 
 
 ■hares, and the amount owing to make the itock paid up to thirty per cent tu be about 
 
 $1S5,'265, oxclualve of the over-luue. 
 
 Reply. — It may here be explained that the large amount of ten-per- 
 cent stock assumed by Mr. Goff from the shareholders, was done with 
 the express stipulation on the part of tlie Directors, that no further calls 
 should be made fipon it; this amountinR to nearly iKJO.OOO actually paid, 
 which Mr. Goflf expected would, in accordance witli resolution of share- 
 holders of 8th February, 1877, be converted to fully paid-up stock. 
 Therefore, in the few instances in wliich he transferred stock as col- 
 lateral, he did not consider he was trespassing upon the Company; and 
 this will account for the small over-issue of stock at present, which, 
 according to Mr. Ross's figures, amoimts to $16,880. Mr. Goff holds 
 about $60,000 paid on ten per cent as an offset. 
 
 SECTION 54. 
 
 One account — that of Bartho, ctock-broker — iho ws In the hooka of the Comipuiy as If It 
 wag overgold by ten aharns ton per cent paid up, and twenty iharua a hundred cunta paid 
 up. This matter ought to be Inquired Into immediately. 
 
 ■u; » 
 
 Reply. — Simply loaned to Barthe by Mr. Goff, and to be returned by 
 him. The Company has nothing to do with this transaction. 
 
 SECTION 66. 
 
 The haaty action by which the rstock of the Company waa to have been reduced (In 
 terms of the resolution of the shareholders at last annual meeting) , (torn a nominal amount 
 of one million of dollars, to a paid-up amount of two hundred and fifty thousand dollars, 
 haa produced an unfortunate complication, which will require the immediate attention of 
 your Board to set right, so as to do Justice to all concerned. 
 
 On and after May, 1876, and between that date and January, 1877, scrip for paid-up 
 stock, or transfers of so-called paid-up stock, were issued or allowed without correspond- 
 ing benefit to the capital stock of the Company. In several instances these Issues or ' 
 transfers were returned or replaced ; but there Is still a balance outstanding. 
 
 22d May, 1870. An unwarranted issue of one hundred shares of the Bank .of Com. 
 merce, presumably to raise money ; but there is no record of the purpose or results in the 
 account-books of the Company. 
 
 Reply. — The Company had no interest in transfer to Bank of Com- 
 merce, May 22, 1876, as it was from Mr. Gofl's own stock that it was 
 transferred. 
 
 Section 66. 
 
 80th Juno, 1876. An Issue of three hundred and fifty-one shares for the purpose of 
 purchasing Three-Rivers bonds, which was two months afterwards communicated to 
 your Board, say on the 7th September. I have fUlly explained this issue in my pre. 
 vious remarks on the bonds and debentures. 
 
 Reply. — Yes ; and it ip fully explained in my previous remarlcs in an« 
 Bwer thereto. 
 
SECTION 67. 
 
 20tb Jnne, 18T8. An iMue of Ally ihures to the B«nk of Oonunero*, to oovvr dli- 
 eoant of Mcominod«tlon-nota. 
 
 Replt. — This, alto, is from Mr. OofPa own account. 
 
 SECTION 68. 
 
 8th Aug. 1878. An iiiae of flftnen sbarei to one Brown, Tbere U no record of Miy 
 benefit aoorulng to the Oompany from tbU Uiue. % 
 
 Reply. — Sold by Mr. Gofl from hla own stock, which the Company 
 had nothing whatever to do with. 
 
 SECTION 59. 
 
 37th Aug. 1878. An Ume of one hundred sharei to the Union Bank for an advance of 
 $fi,000, credited when got, and charged when paid to your Manager'* account. 
 
 Reply. — For the Company's sole benefit: they had the money. The 
 item was carried through Mr. (JofiTs account, as he indorsed the paper, 
 and procured tha discount for the Company ; none of the banks in the 
 city being willing at that time to grant the Company any accommodation. 
 
 SECTION 6a 
 
 On 29th Augnat, to pat these, in a measure, straight, yonr Manager deposited hU 
 promissory note for (46,000, being nine calls on five hundred sliares of ten-per-ccnt 
 ■toClc withdrawn. 
 
 13th Sept. An over-issue of five hundred shares to Barthe, and through Btrathy sub- 
 sequently to the Bank of Commerce, for an advance of between 29, or (35,000, for wliich 
 your Company got no benefit, and which shares are stlU held by the bank as collateral 
 for a debt with which your Company has nothing to do, although your name or accept- 
 ance has been attached to (10,000 of it, under a pretended resolution of the Board, which 
 has never been confirmed, and was strenuously objected to by the members who were 
 •a'.d to have been present, as shown by the minute-book of the Company. 
 
 Of the money received trova. the Bank of Commerce, or about that date, as the cash- 
 book seems to show, (22,600 of it was paid in to account of the promissory note of 
 (46,000, referred to before as having been deposited to square up previous irregulari- 
 ties. The balance of this promissory note has never been paid. 
 
 Reply. — In reference to this, I would again refer to Mr. GofTs letter 
 regaiHling this transaction with the Bank of Commerce ; and I vouch for 
 its accuracy. This is one and the same transaction, as per extract from 
 letter. 
 
 Mr. Goff holds the original note given for forty-five thousand dollars, 
 with Cashier's indorsement of twenty- two thousand five hundred dollars, 
 which was given Sept. 13, instead of Aug, 20. Said note was given for 
 the nine calls on fifty thousand dollars of ten-per-K;ent stock, as repre- 
 sented; and Mr. Boss's assertion to the contrary is simply an untruth. 
 
fir 
 
 60 
 
 SECTIOIT 61. 
 
 ■'• Thli over-U(ue waa partly offiot by the return of gome of the flrgt-mentloned shareR, 
 by a balance of the shares issuod In connection with the Throe-Riven bonds, authorlied . 
 7th September ; but a portion has not yet been offset by any thing. 
 
 Reply. — When all these amounts have been paid to the Bank of Com- 
 merce, Quebec Bank, and others, and these shares transferred back, the 
 account would be very nearly equal ; and there is not such an amount as 
 a hundred and fifty-seven shares over-issued. 
 
 lu./i jii«-;(n«>".v«-i. >» ivwwiin taawi 
 
 :{rt>:'i'-r,r:y ir ..^t,,}. 
 
 SECTION 62. 
 
 .-ia-wt;) 
 
 llth Oct., 1876. An over-issue to one Walters of one hundred shares, for which the 
 Company get no beneflt whatever. These shares, after passing through one or two 
 hands, were ultimately returned on 7th January by Moat. 
 
 All these issues wore of stock, said to be paid up one hundred cents on the dollar ; 
 and as the shares neither existed, nor, when issued, had been paid up, and as the use of 
 them does not seem to have been for the beneflt nor In the interesta of the Company, It U, 
 to say the least of it, a matter for grave censure. 
 
 Reply. — My previous explanations regarding paid-up stock will show 
 the transactions very fully ; and I leave it for the public to judge of Mr. 
 Ross's remarks as to their having been for the benefit or interest of the 
 Company. 
 
 ICTION 68. 
 
 I need not recapitulate the actioi. ^ken in regard to what is called surrendered shares, 
 as It neither accords with the instructions of the shareholders as recorded in the minute- 
 hook of the Company, nor with the necessary legal process ; nor has your Manager fol- 
 lowed the arrangement intended by the Directors in regard to the application of the 
 fUnds arising from the fifteen per cent realized from the exchange. The fifteen per 
 cent ought to have yielded about (60,0OU at least; of which ten per cent, or about $40,000, 
 belonged to, and should have been paid into, the funds of the Company for the call made : 
 but, as your Manager took a .vay two books relating to these transactions of exchange 
 (and, although promising to let me see them, has not done so), I cannot approzlmato 
 closer to the amount received. 
 
 Reply. — In regard to this, see Section 6, where the whole is explained. 
 
 SECTION 64, 
 
 In one Instance, at least, a few shares have been cancelled, and the party released. 
 By what authority this waa done, I cannot say. There are shares on which nothing boa 
 ever been paid. 
 
 Reply. — No shares have been cancelled that I am aware of. 
 
 SECTION 65. 
 
 OONCLUSrOlT. 
 
 Without making any remarks on the premiums received, or the rate, or on the fact of 
 the larger amount of premiums taken in promissory notes, or on the apparent want of 
 dlllgenoo in the collection of these, or on the amount of lose by fire, I have no hesitation 
 
61 
 
 In laying In conclDslon tbat the affairs of the Company have been very much roiiman- 
 aged ; while the credit, the oaBh, and the securities of the Company have been unwar- 
 rantodly used for other purposes than the prosecution of the Company's interests or its 
 'Welfare. I am of opinion that the expensive raismonageq^ent of the Company's business 
 is wholly responsible for its present unsatisfactory position, and that a groat part of its 
 dlfflculties arises fk'om complication with matters with which it had nothing to do, and 
 fk'om which it recoiveckno beneflt whatever, added to the non-reoelpt of the fkmds which 
 ought to have come from the second call. With this I present a balance-sheet, accom- 
 panied by a few remarks as to the present position of the Company. 
 All respectfully submitted by yours respeotfully, 
 
 Philip B. Bobb, Auditor. 
 MONTBBAL, Jan. 18, 1878. 
 
 Reply. It is quite evident that It lyould not suit tUe Special Audi- 
 tor's purpose to refer to tiie premium and loss accounts, as it would 
 show the careful reader the real causes of the Comptoy's difficultiec ; 
 but I will do so : and, notwithstanding Mr. Ross treating these items 
 of such insignificance, I will give below an approximate statement of 
 how these items show in the Company's books. ' ;^;,/ g' a i, 
 
 Db. 
 
 Capital Btock paid in Cash $106,676 00 
 
 Bills receivable 26,679 00* 
 
 ! '»; * :-• • $223,266 00 
 
 Dednct excess of Expenditure over Receipts, as per statement on next page, 68,623 89 
 
 Leaving this much of the Capitcl Btock to be accounted for . . • . $164,781 14 
 
 Now, what has the Company got to show for this balance, as per their 
 books? This,— 
 
 Municipal Debentures In hands of Oovemment . . . . . . $66,400 00 
 
 Agency Balances 80,612 11 
 
 Bills receivable, Insurance Company ' . . 16,041 00 
 
 •• " Btock 26,579 00* 
 
 '< " General . ■» , ,- . ,^ ,.._„,_ „,- -^.1,, . 22,666 60 
 
 '^Mf 
 
 $160,198 77 
 
 * The above statement leaves $4,532.87 to be accounted for, which would he easily done 
 by adding furniture and stock accounts. Mr. Ross not producing the books when I 
 called for them, I cannot give all .be items; however, the above figures will be sufllcicnt 
 to convince the intelligent reader that the Special Auditor's statement is Incorrect, and 
 calculated to convey an erroneous impression; ... 
 
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 63 
 
 ' In regard to the expensive management, I quote from Mr. Gofl's let- 
 ter; viz.: — • I- ^ '^ 
 
 " Mr. Ross speaks of the heavy expenses of the Company. He is, I 
 must say, correct in his allusions to this account. These heavy expen- 
 ditures were, in a measure, unavoidable, from the peculiar nature of the 
 business done by the Company; it being apparent to any candid mind 
 that the expense of doing a farm-property business — the average premium 
 upon its policies being about $7.60 each — is very much heavier than that 
 of commercial rislts. This account has been very largely augmented by 
 the extra inspection and consequent expense rendered necessary by the 
 condition of the Watertown Company's business. Again: the Company 
 has been worlting under a false system of general agencies and premiima- 
 notes, botli of which have cost large amounts of money, upon both of 
 which I have tried hard to make improvements; but which, owing to 
 the fact of these systems being to a great extent under tlie influence of 
 Direitora interested in theirmaintenance, I was powerless to effect. Per- 
 sonally, I have used my best efforts to reduce the expenses of tlie Com- 
 pany; indeed, so great was my anxiety to do this, and my endeavor to 
 set an example to others who seemed so selfish and greedy in their own 
 interests, that I remitted my salary altogether during the past year, and 
 worked without remuneration of any kind. 
 
 , ■, ; SECTION 66. 
 
 After giving several pages of mixed-up figures regarding the bonds, 
 stock, and resources of the Company, which I confess I am not suffi- 
 ciently versed in the art of figures to unravel, Mr. Ross ends by say- 
 ing:— 
 
 I think it is more than probable, however, that a call of twenty per cent will haye to 
 be made. 
 
 If, on the contrary, Mr. OtoS will pay all that he owes to the Company, — about 
 $200,000, which IncludcB calls up to thirty per cent, — on stock, same as others, a return 
 of considerable amount would be made to the shareholders without further calls. 
 
 If the twenty -five-per-cent shareholders will pay in live per cent more, thf ifompanjr 
 might struggle through, as it will impart confidence, and make collections etuinr. 
 
 Reply. — It was distinctly understood and agreed, that, in the transfer 
 of shares, Mr. Goff was not to he called uopn for any calls on the ten-per- 
 cent stock ; so this supposed statement of Mr. Ross, showing how much 
 he would like to make out owing by Mr. Goff on such, is imagination, and, 
 I should presume, done with a view to make it appear that he was in- 
 debted actually to the Company in some $200,000. How does Mr. Ross 
 reconcile tliis with his statement to tlie Board of Directors, that the 
 transfers of this ten-per-cent stock to Mr. Goff were illegal, and must 
 revert back in statu quo. It would seem as if he had, for some strange 
 and unexplained reason, become suddenly converted to the legality of the 
 transaction, and sees no other way than that for the stockliolders who 
 hold the twenty-flve-per-ceut stock to pay five per cent, and Mr. Goff to 
 
64 
 
 pay ap to thirty per cent on all he holds, the majority of which had 
 been tranpferred tohiin according to the scheme of the Directors. It is 
 too patent not to see the idea of saddling him with a huge debt ; but, as 
 Mr. Ross said at the shareholders' meeting he did this auditing business 
 for the " love of the thing," perhaps I have not caught the " true mean- 
 ing" of his ideas. ■ 
 
 MR. GOFF'S LETTER TO SHAREHOLDERS. 
 
 To the Shareholders of the Canada Agricultural Insurance Company, 
 
 Okntlsmbn, — BInce my resignation as Kanager of the Canada Agricultural Insurance 
 Company, some three months ago, when the Directors found it necessary for them to 
 assume the heavy responsibilities which for so long I had home almof^t unaided, my past 
 course has been most severely censured by those who had formerly found It so agreeable 
 to please themselves whether or not they performed their duties, and so convenient, were 
 the results scarcely what were desired, to thro-w the blame upon the Manager. Indeed, 
 80 much fault-flndlng has been indulged in, that the Directors, some weeks ago, secured 
 the services of Mr. P. S. Ross to Investigate the Company's buainess, and make a Report 
 thereon. 
 
 Mr. Ross, early this month, made a Report to the Board, which has since been gtyen to 
 the press for publication, notwithstanding Mr. Ross's own declaration, that " The Report 
 would, in his opinion, be most prejudicial to the Company's interests; and he would, 
 therefore, ikdvise Its being kept private by the Roard until such time as it was presented 
 to the shareholders." In Justice to Mr. Ross, however, I stiould say that I have reason 
 to believe that the Report was given to the newspapers without his approval. At the 
 time this Report WM read before the Board, I asked both Mr. Ross and the Directors that 
 he should explain in plain words the irregularities of which he complained, and give me 
 • ohance of defending myself against serious charges, which in the Report were only hinted 
 at In vague and insinuating language. Mr. Ross and the Directors said that this oppor- 
 tunity should at once be granted. Subsequently, in conversation with Mr. Ross, I 
 expressed surprise at the contents of his Report, which, upon several points, v/as in no 
 way clear; bor dcs which, previous to making it and giving it to the public, he bad never 
 •een fit to ask me any questions. I told him that I considered that it would have been 
 only business-like, to say nothing of the Justice of the thing, to have clearly pointed out 
 what he considered to have been irregularities, and which, had the occasion been afforded, 
 I might have cleared up. I further said that 1 should be ready at any time to meet him 
 tmd answer any questions he desired to put; indeed, to render him all possible assistance 
 towards arriving at the true position of the Company. However, from that day to this, 
 no Mslstanoe upon my part has be«n availed of, and no opportunity of explanation 
 
65 
 
 afforded me. Yet this Report hs? heen given to the preRi for publication, and, lo ftr a* 
 I am informed, wltliout the aanetion or even knowledge of the Directors, whose first 
 information upon this point would be ft-om the appearance in print of the Report Itself. 
 Verbal statements, most damnatory in their character, have been given to the representa- 
 tives of the press ; various compromising rumors have been putupon the street ; and other 
 naost discreditable means have been resorted to to prejudice me in the eyes of the public. 
 Indeed, the enterprise manifested in this work of traduction was, I am compelled to ad- 
 mit, worthy of a far better cause. Moreover, a settled determination to destroy me by 
 ruining my credit and blasting ray reputation as a business-man appears to have taken 
 hold upon a large number of persons, among whom are to be found gentlemen (?) who, 
 in times past, received the most generous treatment at my hands. 
 
 I have patiently endured all this without uttering one word nf protest or denial, in 
 order that my adversaries might have the utmost freedom in making their allegations, 
 and that I might be in a position to know all whereof I was accused. Besides, I con- 
 sidered that the charges which had to be preferred against me, as well as what replies I 
 bad to make to them, should be addressed to those pecuniarily interested In the issue. 
 I mean the ahareholder* of the Oompany; and hence it is to them that I now make thia 
 statement. In this letter it Is my intention simply to refer to those portions of Mr. Ross's 
 Report (and those stories that have been made to do duty) which reflect upon my o-.vn 
 reputation and business-standing; leaving the unsatisfactory condition of the Company's 
 finances for the Directors and shareholders to deal with as they may deem expedient, it« 
 cause being traceable to fire-losses and the general demoralization in rates and practices, 
 as other Insurance Companies in Canada have learned to their cost. 
 
 It is to me a matter of regret that, owing to my having been denied access to the hooka 
 of the Company, — notwithstanding that I still hold a seat on the Board of Directors, and 
 since my resignation of the post of Manager was unanimously elected, by the Directors, 
 a member of the Executive Committee, — I am unable to give as satisfactory explanations 
 as I could wish, and as I know it would be within my power to do. Unfair and unwar- 
 ranted as is this treatment of one who holds ten times more actual paid stock than any 
 other shareholder, I have accepted the situation as graciously as possible, and shall now . 
 proceed to give the best Information I can flrom memory. 
 
 FOUNDATION OF THE COMPANT. 
 
 Mr. Ross, In his Report, says, — 
 
 ' " The arrangement made for the transfer of the business of the Agricultural Insurance 
 Company of Watertown to this Company appears to have turned out a great loss. This 
 might have been expected, when it is taken into account that virtually this Company re- 
 insured the total risks of the Watertown Company of about twenty-four million dollars, 
 at about eight (8) cents on the one hundred dollars, for an average period of one and a half 
 years. Then even this small sum was virtually given up in the bonus of fifteen thousand 
 dollars of paid-up stock for originating this Company. The terms of the arrangement 
 with the other Company, as per notarial agreement, do not appear to me to have been 
 carried out In various particulars ; for which departure from agreement I see no authority. 
 Taking departures Arom the agreement pro and con., I think it has been to the disadvan- 
 tage of the Company, as items properly chargeable to the Watertown Company, less 
 items they should have received credit for, show a loss to this Company. The bonus 
 allowed of fifteen thousand dollars, and some items credited the Watertown Company 
 (which, I think, ought not to have been so credited), swallowed up all that was received 
 from the latter Company, and left this Company holding risks to the extent of twenty- 
 four million dollars, without having received one cent of premiums. On this account 
 alone has been lost from seventy-five to eighty thousand dollars up to this date. When 
 we come to take into consideration, also, the large amount of commission paid for pro- 
 curing stock, amounting to close on eight thousand dollars, yon wUl see how far the 
 leeway was at the commencement." 
 
 However much thla arrangement may now be regretted, resalting, aa it baa done, la 
 
66 
 
 lerlona loii to the Company, It wu, nevertbeleu, highly commendvd at the time It wa« 
 entered Into, and by none more wHrinly than thoie who, at the present time, have lo 
 much to urge agalnat it. Indeed, I muy aay, go udvantuguous waa it coniidcrod, that an 
 old-eitablishud and leading Insurance Company ottered to talce over the Hume business at 
 a considerably less premium thim that received by the Canada Agricultural Insurance 
 Company. Of this I was informed by the Secretary of the Wutertown Company, after 
 the transfer had been effected. 
 
 Mr. Ross 1b very much in error as to his version of that transaction. Instead of there 
 being assumed from the Watertown Compauy rUlcs of twenty -four million dollars, they 
 only amounted to fourteen million dollars {vide Oovernmont lieport, 1874), which, it waa 
 estimated, forty-live thousand dollars would re-Insure. On the other hand, the good wlU 
 of the Canadian business of the Watertown Company, which had already been estab- 
 ll8bed,and was supposed to be lucrative, was considered to be worth twenty -Ave thousand 
 dollars. Upon this basis the Canada Agricultural Insurance Company accepted twenty 
 thousand dollars cash for the re-lusuranco. 
 
 The disastrous results of this undertaking are attributable to a variety of causes, at 
 ^ome of which It may be advisable to glance. 
 
 The country was Just entering upon a period of the most unexpected, serious, and 
 wide spread financial depression and general stagnation In business, to a degree never 
 known in the history of Canada, and from which it has ndt even yet emerged. In such 
 times it Is a well-understood fact that the moral hazard of Insurance rlelu universally 
 Increases to an alarming extent. This was especially the case in regard to this Com- 
 pany, as I found upon an examination of the business in Ontario, where more than one- 
 half of the whole business was conducted, with the character of which I had been 
 unacquainted, except from the representations of the Watertown Company and their 
 Ontario agents ; my own operations having previously been confined to the Province of 
 Quebec, for which I had been their General Agent. A large portion of these I subse- 
 quently found to be almost disgraceful for ony company to hove upon their books. I saw 
 At once that the risks must all be carefully inspected ; and, the further I proceeded, the 
 more I found it necessary to cancel and change agencies, and, in fact, to "institute a 
 general reform of a bad business." All this entailed heavy expenses ; nevertheless, but 
 for this system of inspection and reform, the already large " Loss Account " would have 
 been augmented by many thousands of dollars. I in no way consider myself responsi- 
 ble for the disastrous results of this transaction, the Company having been misled as to 
 the character of the risks it was re-insuring. 
 
 The fact of carrying to the insurance or premium account the ^20,000 received from 
 the Watertown Compauy, and objected to by Mr. Uoss, is a mere technicality of book- 
 keeping. It was $20,000 received for premiums, in whatever way it might be placed in 
 the books of the Company. 
 
 The )1&,000 of stock bonus was granted to me, unsolicited upon my part, by the 
 Directors of the Company, at the time of organization, aud was given in return for my 
 getting up of the Company and the benefits to be derived from a business that I had 
 devoted ten years to work up. How Mr. lioss could make out it " swallowed up all that 
 was received from the latter Company, and left this Company holding risks to the extent 
 of $24,000,000 without having received one cent of premium," is beyond my comprehen- 
 Bi6n. " The large amount of commission paid for procuring stock, amounting to close 
 on $8,000," objected to by Mr. Ross, I should call the email amount of commission, one 
 per cent being the smallest commlsslun generally paid by insur&nce companies in secur- 
 ing subscriptions to stock. At that rate the $1,000,000 capital would have cost $10,000, 
 In the case of this Company it was done fur about three-quartere per cent, or a saving of 
 over $2,000 upon the coiijmlsslon usually paid. 
 
 CAPITAL STOCK. 
 
 Mr. Ross complains that this account is in confusion, and that its position la Irregular 
 and illegal. He says, — 
 
 "IbaveaU9 Cf»s^9tfH(ly to nuljifiUJb; Uwtt.tliM representation under which this action 
 
% 
 
 ■K 
 
 wu Uken — viz., to repay the bsnk fnr sdviuiceR — wm, so far m I have been ahle to 
 aiieortaln, Incorrect; nor was It for tho purpose of sustntning the market-price of ths 
 stock. Several cancellations of stock have also been made without, so far as I can see, 
 any authority from the Board." 
 
 If Mr. Ross had seen fit to ask me a question about the stock, or given me the slightest 
 opportunity of explaining what he confesses he does not understand, I could have made 
 It quite oleur to him. I will now explain this mysterious stock transaction, of which so 
 much ban been said. During the month of June, 1876, a prominent banker called upon met 
 and solicited me to purchase $59,000 In Three-Rivers Water-Works ; bonds which offer I 
 declined. He afterwards spoke to me several times upon tho subject; and having great 
 anxiety to place tho Canada Agricultural Insurance Company on a solid basis by the 
 accumulation of a larger paid-up capital, which for several months I hod been advocating 
 with the Directors and shareholders of the Company, — which Idea met with general 
 approval, — I Anally concluded to make an offer for the bonds, and purchase them In the 
 interest of tho Company, If I could do so, and not part with any of the Company's funds 
 In making tho purchase. I made tho following offer; "To purchase the bonds myself 
 at elghty-flve per cent, and pay $20,000 cash, giving my own notes for the balance of 
 $30,150, payable six months from date, with Interest at six per cent." This offer was 
 made with a view to handing the bonds over to the Company for the $20,000, and accept 
 paid-up stock for the balance ; relying, of course, upon being al Ic, during the ensuing six 
 months, to sell the stock, and realize cosh to retire my notes. This offer was accepted, 
 and tho transaction completed on the above-mentioned basis. I Immediately handed the 
 bonds over to the Company; at nlnety-flve, — $20,050 cash, ond $38,000 in fully paid-up 
 stock. The ten cents on the dollar advance, amounting to $5,000 In stock, was set aside 
 for payment of commissions and brokerage on the sale of the $36,000 stock, and any pos> 
 slblo depreciation In the market value. At the same time, I told the Directors of the Com- 
 pany, that, If It could be sold for any saving on this sum, the Company should have the 
 beneHt, as I did not enter Into the transaction as a speculator, but simply to strengthen the 
 Company's position. In order to be able to pay the $20,050 cash, I effected a loan with 
 the City and District Savings Bank of $29,500 for six months at eight per cent, giving the 
 said bonds as collateral security, paid the $20,050, and handed the balance, $9,450, over 
 to the Company. During the latter part of the year, at a time when losses were pouring 
 In upon the Company with disastrous results, these bonds were sold ut various prices, 
 ranging from seventy-five to eighty -eight cents on the dollar for cash. The loans were 
 then paid, and the balance, amounting In all to about $25,000, realized and used. For 
 this amount, obtained at a time when It was most presslngly necessary, the Company 
 never parted with one dollar of money, simply realizing on $36,000 stock I had taken, 
 and which, when my notes for $30,150 had matured, I had not sold, and could not sell at 
 any price. So much for Mr. Ross's Report, and the slanderous reflections upofl myself 
 contained In an article in " The Monetary Times," under date of 14th December Instant, 
 as follows : — 
 
 " It Is reported that the late Manager, Mr. Ooff, has been in the habit of using bonds, 
 the property of the Company, to suit his own purposes ; that he has bought bonds with 
 its cash and other assets without the knowledge of the Directors, and afterwards sold 
 them at an advance to the Company." 
 
 I may add, that this attack Is without the shadow of foundation. I never used a 
 bond or security of the Company for my own purposes in any matter whatever; and, If 
 the editor of " The Monetary Times " Is the fair-minded gentleman I have always sup- 
 posed him to be, he will publicly name his Informant, in order that ho may be branded as 
 a vilifler of personal character, — a despicable moral assassin. So much for the Three- 
 Rivers bonds transaction in June. 
 
 The follovring September the "loss account " became so serious an item, that Tree, 
 ognlzed the Company must have more money ; and as the Directors had never shown 
 much, if any, interest in the affairs of the Company, — having Invariably, when meetings 
 were called, seemed to consider their attendance a personal favor to myself, — I resolved to 
 •boulder the whole load, and finance for what T considered would only prove a temporary 
 
68 
 
 dUBeulty. At this time, I admit that I oaght to have placed the want* of the Company 
 ■qnarely before tbo iharebolder*, and made a call of Ave or ten per cent; but the itock 
 . being mainly beld In the rural district*, and among people who were patron* of the Com- 
 pany, I felt thot confidence would bo lost In the Company were they called upon to pay 
 additional Inatalmenta upon tlieir itook. This opinion wai ihnred by many prominent 
 ■tockholden, and by other* even upon the Directorate, lome of whom were acting aa 
 •gent* or offlclaU. I therefore determined,- If poiKlble, to form a syndicate ; to purchaae 
 paid-up stock ftrom the Company, and lell It through itook-broken ; being of opinion, that, 
 If the heavy losses could at onoe be paid off, the Company could easily recover Itaelf, and 
 ■urmount Its troubles. I oonseqnontly purchased $60,000 of ten-per-cent stock, — l.e.» 
 $6,000 paid up, — and gave the Company my own note for the ninety per cent, amounting to 
 #46,000, and took $A0,000 In fully paid-up stock. I then made an arrangement with 
 brokers to carry two-thirds of this transaction upon giving them one-half per cent broker- 
 age on the whole amount, they to raise cash for their share, which I would pay over to 
 the Company on account of my note, and pay off the balance as the *tock was sold. Two- 
 thirds of this (46,000 would be $30,000 loss the half-pcr-cent brokerage, $2,600, and would 
 net $27,600. Having deducted $6,000, the ten-per-cent stock previously purchased by 
 me, I paid the Company on my note $22,600. To enable the brokers to raise the money, 
 I had to consent to the whole amount of stock being transferred to a firm of brokers, who 
 re-transferred It to the Canadian Bank of Commerce for a call loan. Contrary to my own 
 expectations, and to the general dismay of all Insurance-men In Canada, fire losses, during 
 the last six months of 1876, increased to such an alarming extent, that It became evident 
 all the Insurance companies must sustain tremendous losses on the business of the year : 
 consequently. Insurance stocks could not be sold at any price. To add to the heavy bur- 
 den which I carried, at this Juncture came the disastrous failure of one of the heaviest 
 brokers on 'Change; a casualty which so crippled the firm that had obtained the call loan 
 Arom the Bank of Commerce, that the bank became alarmed, and called for their money. 
 The borrowers could not respond ; and the brokers with whom 1 was assooiatcd in the 
 original transaction being also crippled, and unable to pay any portion of the loan, the bank 
 threatened to throw the stock upon the market at once, and advertise It for sale. This I 
 felt would most certainly bring down the Canada Agricultural Insurance Company, and 
 at once determined to save the Company by assuming the whole loan, if I could possibly 
 satisfy the bank aa to security. The loan with Interest at this time amounted to $33,- 
 241.87. The bank would not consent to carry the loan for me without a large amount of 
 additional collateral. This I gave by borrowing $10,000 of reliable stock firom a friend, 
 and deeding my family out of houte and home by pledging my private residence aa 
 collateral ; and this to-day is In the hands of the bank. Thus I was left with $86,000 of 
 •took, and under a personal liability of $63,471.87 ; to pay all of whloh I had consented 
 <n the interest of ihareholdere, and to prevent calU being made upon them. Uow to 
 meet the payments upon this Immense Indebtedness was my dilemma. I discussed the 
 situation with the Directors; and It was finally resolved, as the transaction bad been 
 made by me In good faith In tho Company's Interest, that the some should be protected 
 b the Company, and I should be relieved from loss : therefore a call of ten per cent was 
 made upon the stockholders. A resolution was passed by the shareholder* at the Annual 
 Meeting to reduce the capital of the Company to $260,000, one-fourth of Its original 
 amount, and have It paid up In full. I was, therefbre, authorlced by the Directors to sell 
 off the paid-up stock to the shareholders by accepting fifteen per sent, cash or notes, and 
 receiving their tenper-cent stock at par, which would be equal to twenty-five per cent on 
 their original stock, and give them paid-up stock at par value. This was, In fact, selling 
 paid-up stock at sixty per cent, which on my own account stood at par, while I was ac- 
 cepting the ninety -per-cent liability on the ten-per-cent stock transferred to me. In manjr 
 instances, whore I found stock In the hands of poor men, I accepted the ten per cent, and 
 gave paid-up stock which was selling at fifty per cent. Whatever I realized fk'om the 
 •took lu this way, I paid over to the banks on account of the debts I had assumed ; until 
 •t length the Company needed money so badly, that I gave them the proceeds of various 
 ■ales, amounUng to some $20,000, which leave* ma still In debt to the amount of $12,0CiO 
 
 
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 on aoeonnt of the |08,4T1, uid hoUIng over $500,000 of itook, ropreMntlng *baiit 940,000 
 paid, aud Mt iliu pri-a«ut Uine not worth a farthing. In atlUIUon, luy credit la rulued, 
 while the very men fur whom I liavu aacrlfloud my nelfaiidmy family'* iDtvreata, fcarinK they 
 may be hJAini'il by tho eharuhdUlt'r* aiul pntrona uf tho Company, are urIhk all mcani to 
 blaokun my ohurnoter, and ar« houndlntf mu Uko a felon. X am Indoretir on about $20,000 
 of the Company'! paper, on which eulte are now being brought, and in font* ijuartert cart- 
 /ully made to appear a» my own private debt*. Capltul baa buoD made agalnit me on tho 
 ground that I had entered Into leveral of thoie heavy tranaactlona without having re- 
 ceived the ipeclul authorization of the Board of Directort. To thU 1 reply, that, whqn I 
 ooniulted them, they Invariably snid, " Ooir, wo know nothing about ttioio matter* ; you 
 do a* you think moat advlxible:" and, ho* been exphUnod, I did notlUng which I did 
 not think would be advoutageou* to the Company, however dl*advaotag( ou* 11 might bo 
 to my*elf individually. 
 
 TIIE RAILWAY BONDS, ko. 
 
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 Mnoh ha* been said about tho railway bond* held by the Cunnda AgrlcuUnral Iniur- 
 •nco (Company. Here I* the explanation : I sold to tho Company $3tl,00U bond* of tho 
 
 Montreal, I'ortland, and lioaton It^ll way , at 76, on account of which ten-per-cent (took waa 
 accepted. The Canadian Ineuronue comml**loner, not approvlnfc of the Company hold- 
 ing b<<ndR of any railway, — although tho American inauranco oompanloa use them largely 
 B* a favorite Inveatment, — the Itoard of Director*, In ITebruary lout, poaaed a rcaolutlon 
 •uthorlzlog me to take back the bond* at tho aamo price aa paid, and to surrender a 
 ■Imilar amount of stock. I told them I did not ooniider the Company could purchase Its 
 own stock, and I did not want to see them do an Illegal act. I therefore otfcred to taku 
 the bond*, and give my note In payment, for which the Company could hold a correspond- 
 ing amount of *.en-per-cent stock as collateral ; it being distinctly underetood that the note 
 
 repreaented i te utock, and had no money value. Thl* note Is a portion of the $47,000 
 notes' which the Company hold against mo, and atmut which so much baa been *aid ; the 
 balance of thoae note* being the amount repre*«nted in tho $50,000 stock transaction, 
 Against any loss upon which, aa I have before stated, the Directors engaged to protect 
 me. Albeit, although I gave tho note for the bonds with the express understanding that 
 It represented no money value, a* tl>e Company were In desperate strait* for want of 
 money, during the past summer, I gave them $15,500 ; and. Instead of treating It as a loan. 
 It was Indorsed upon the bond note, thus in fact making the Company a present of tho 
 money. Instead, therefore, of my being indebted to the Company, It is honestly and 
 Justly owing me a very large sum. 
 
 As regards Mr. Ross's charge, that there are some error* In the accounts, I can say 
 nothing, as I have no idea to what he specially alludes. He 1* not sufficiently explicit, 
 and I have not been afforded, face to face with the accounts, the opportunity of making 
 any explanations. If the cash voucher* are not in the Compony's offlce, I know nothing 
 about them, a* they have been always In the custody of the cashier or book-keeper. As 
 for myself, I was not Secretory during the present year, having resigned office In Novem- 
 ber, 1876. 
 
 Mr. Itoss speaks of the heavy exi>enses of the Company. He is^I must say, correct 
 In his allusions to this account. Those heavy expenditures were. In a measure, unavoida- 
 ble, from the peculiar nature of the business done by the Company, it being apparent to 
 any candid mind that the expense of doing a farm-property business — tho average pre- 
 mium upon Its policies being abont $7.60 each — Is very much heavier than that of com- 
 mercial risks. This account has been very largely augmented by the extra Inspection 
 and consequent expense rendered necessary by the condition of the Watertown Com- 
 pany's business. Again : the Company has been working under a false system of gene- 
 ral agencies and premium-notes, both of which have cost large amounts of money, upon 
 both of which I have tried hard to make improvements ; but which, owing to the fact of 
 these systems being to a great extent under the influence of Directort intereited in their 
 maintenance, I we* powerless to effect. Personally, I have used my bast efforts to re- 
 

 70 
 
 K 
 
 duce the cxpeneee of the Company; Indeed, io great was my anxiety to do this, and my 
 endeavor to sot an example to others who seemed so PcldBh and fjreedy in their own 
 interests, that I remitted my salary altogether during the past year, and worked without 
 remuneration of any kind. 
 
 While writing this, m> attention has heen directed to an item in " The Daily Star " of 
 this date. In which I notice the following : — 
 
 " We have been informed that Mr. GoflTs assertion, that he was refused Information 
 necessary for his defence, is not exact. Owing to his having taken away two books, 
 which he has not returned, and obtained a number of promissory notes from the book- 
 keeper, under the pretext of collecting their amounts, and then refusing to give them up 
 or aocount for the money, he was told by the 8c .retary he could not tnke away any more 
 books or documents out of the office. This, however, will not preclude him from getting 
 access to the books in the office under proper supervision." 
 
 I do not know who gave this Information to " The Star," nor do I care, as the state- 
 ment is a deliberate falnehood. I met Mr. Campbell, the Secretary of the Company, on 
 the 17th InstAnt, and told him I would call at the office that afternoon, and wanted access 
 to the minute-book and other books of the Company, in order to answer the ohargoa 
 made against me In Mr. Ross's Report; and was told by hiin that his instructions would 
 not permit of his granting my request, and that I pould only have the privilege by a 
 resolution of the Board of Directors. He added that he did not know when they would 
 meet again. 
 
 I have not taken away from the Company's office any book or books belonging to the 
 Company. When I was taking my private books and papers from the Company's office, 
 Mr. Ross requested me to lend him two memorandum-books, ray own property ; and I 
 proniised to do so. Mr. Ross has not kept faith with me, accord'ng to his promise to give 
 me an opportunity of explaining the accounts ; but I have not yet refused to lend him the 
 books that he desired. I submit, now, whether, under the circumstances, I am in any 
 way bound to extend such a courtesy to him. 
 
 In regard to the notes : A few days after my resignation as Manager, and while I wa« 
 still in the office assisting the management, I took premium-notes to the extent of nine 
 hundred dollars, which I believed I could collect; and, as Is customary with this Com- 
 pany, whenever a i.ote leaves the office for any purpose whatever, the notes were charged 
 to my account. At the time, the Company were borrowing money from mo, and owed 
 me several thousand dollars, borrowed only for a /et. dayt, not a dollar of wMoh has 
 beeir returned to me. I therefore refused to return the notes. If there Is % stociholder 
 in the Canada Agricultural Insurance Company who says I am wrong, I should like to 
 hear from him. 
 
 Very respectfully, 
 ■■ ■ '< s.; EowABU H. Oorr. 
 
 Mo^TB■ilL, 20th Deoember, 1877. . , ,: . , , ,. ■■. , ',.;,, ,'j^- i , ■ 
 
 
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 fProm the " Monbtart furai," Toronto, Dec. 28, 1877.] " " 
 
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 "FREEZINa OUT" POLIOY-HOIiDERS. 
 
 The position taken by the Directors of the Canada Agricultural Insurance Cot spany 
 since its failure Is not by any means creditable to these gentlemen. They, by their 
 silence, intimate to their policy-holders In effect this : If you desire to pre .ect yourselves 
 In other Co>-.panles, you should send In your policies to be cancelled ; otherwise. In the 
 »ivebt of loss, your position would not be a pleasant one. But should you continue to 
 
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 lie Insured In this Company, and a claim arise, you will then share Its assets pro rata 
 with other creditors, This Is cold comfort for Insurers who wish to feel tbumselreg 
 secure. But to insure elsewhere would be to forfeit all claim for rebate. It is under- 
 stood tliat the Company has at present at risk about $24,000,000, and every rc-insuranee 
 that is now effected relieves it from just so much liability either for rebate or for loss by 
 fire. ItV; understand that the Directors have had what is regarded as a reasonable offer 
 to re-insure their risks, and one that the Company is supposed to be in a position to 
 accept, if they call upon their shareholders to pay ; but thiy decline to do this, which 
 amounts to what is called "freezing out" its policy-holders. This, to put it mildly, it 
 wrong. To assiime a risk, and afterwards wilfully attempt to evade the responsibility 
 of so doing, is dishonest. 
 
 What is a directorate? Plainly, a body of men chosen to direct and control the affairs 
 of a company in which they have an interest. Have these gentlemen done this? We think 
 not. They must have had an inadequate idea of their responsibility. Would any body 
 of men pretending to the direction of an ordinary business-operation have " gone it blind " 
 M these Directors appear to have done ? 
 
 Bisks to the value of many millions assumed without adequate provision for re- 
 Insui'ance ; expenses covered up by fraudulent book-keeping entries ; profits purporting 
 to be shown from speculation In bonds of very questionable value; constant elibrts to 
 finance for means of existence by accomraodatlon-paper, while bonds and debentures 
 were being purchased as investments when the Company had no money to Invest; fire- 
 losses accumulating which could not be met; suits threatened and actually Issued for 
 rent of premises ; resolutions intended to be p.'used at Board meetings used for improper 
 purposes in spite of remonstrance ; inquiries for statements of accounts ignored or syste- 
 matically set at defiance; — and yet, in the face of all this, they weakly consent, because 
 of the reiterated demands of their Manager, to condone transactions of an extremely 
 doubtful nai,ure. 
 
 It Is quite time that directors were taught a lesson of duty. ^iVhen men meet, as the 
 Directors of this Company did, and pocket their five dollars a sitting, it is but fair that a 
 measure of responsibility should ' tach to the remuneration. 
 
 This revelation must occasion the fear that there arc other organizations deserving the 
 Inspectlou of the commercial anatomists. It Is also a melancholy fact that men of high 
 probity and honorable feeling in other matters have so fur lost themselves as to havo 
 become partakers in transactions such as we have enumerated, without indignant remon- 
 strance, though surely not without a twinge of conscience. We believe that, to a certain 
 oxtent, the Directors of the Company have been imposed upon by an unscrupulous and 
 designing man ; but, while granting this, there were surely circumstances that should 
 have called for more supervision than has been given. 
 
 We have not space to allude to all the startling facts that crop out in *' is interim Re- 
 p.irt of Mr. Ross ; but we desire to make some pertinent inquiries, which, in the interests 
 of commercial morality, ought to be answered by the President. 
 
 How much stock did he subscribe for in this Company ? and how did he pay the instal- 
 ments? Were they paid by his receipt of a large commission for procuring stock, and 
 by Montreal, Portland, and Boston Railroad bonds at eighty per cent, the market value 
 of which was questionable? And, apropos of the railroad bonds, were they bona fldet 
 or, as the rumor goes, Is there an over-Issue of the bonds of this railway with which he 
 was so closely connected ? 
 
 Uow comes it that in his sworn statement to the Government, in March, 1877, he say* 
 he has subscribed for |105,000 worth of stock, of which 1>16,0U0 is paid up, when he woe 
 at that time the owner of only one hundred and twenty-eight shares of paid-up stock, 
 worth (12,800 at best, and these received by transfer from Mr. £. H. Goff, and, in part at 
 least, as collateral only? 
 
 Did he make it his duty to inspect and see how the cash was kept betweeu September, 
 1873, and February, 1875? and was he aware that It was lodged in bank to the private ac- 
 count of the Manager, and what was the monthly balance, and how was It used during 
 that Interval? 
 
I I J ii l lM i |l l|l !l IM p'W'IIMI Wi I ll|i||iii >^ i |M li 
 
 72 
 
 Receivlns;, aa he wni, a Urge commUaion for procuring subscrlberB to stock, did this 
 prevent him frum (OinUimging payments of commlssioni to aome peraon or persons 
 unknown, for which there arc no vouchers ? i 
 
 Was be aware that the Manager or Cashier wa' discounting the Compjiny's stock- 
 notes, or notes for payment of insttlments on stock, and using the same, and using the 
 Company's indorsement to float these and other notes? 
 
 Did he, or did he not, know that he assisted In furthering irregular transactions under 
 cover of the Company's indoi'sement, such, for instance, as the Three-Rivers bonds 
 matter ? 
 
 Let us now appeal to the Directors for replies to a few questions equally plain. 
 
 Seeing that they had made the Government deposit of over $50,000 in bonds, and that 
 they were in distress for funds, Wiiy did they not remonstrate against their Manager pur- 
 chasing bonds? Did they ever Inspect in detail the accounts of the Company? and did 
 the largo and unprecedented expenses uot strike tliem as excessive? Did they inspect 
 the loss-register of the Company, and compare that with the statments issued? and did 
 they compare the losses and expenses with the premium receipts of the Company? 
 While sanctioning the reduction of the Company's capital to twenty-tive per cent paid 
 up, did they do so In accordance with the resolution of the shareholders? Did they 
 ever take steps to have this resolution legalized by sanction of the Legislature? and did 
 they ever take the proper means to see thnt said resolution was carried out for the under- 
 stood purpose of relieving the stock held b/ the Bank of Commerce? and has this been 
 done? Is it not a fact that their Manager has grabbed the proceeds of the proposed re- 
 duction where made, and has left the said stock intact in the hands of the banks? 
 
 Have they not attempted to take advantage of the Illegal action for reduction of the 
 stock, thus hampering the due liquidation of the Company's indebtedness? 
 
 It is to be hoped that the shareholders, at their approaching meeting, will put men at 
 the helm who will do their duty ; and that duty ' plain. The approaching Report is 
 anxiously awaited by the public; and we have no doubt Mr. Ross will let the truth see 
 daylight. 
 
 We do not doubt tliat the Directors have felt their position keenly, and that they have 
 shown anxiety to retrieve the Company's lost position. But if, as we believe, the true 
 replies to our interrogatories will show them to have been unfaithful to their trust, the 
 best thing they can do in at once to re-innire on the terms already offered. Otherwise 
 let them issue a circular to their policy-holders, asking them either to send in their poli- 
 cies for cancellation, and to secure their rebate as soon as the monr y can he procured, 
 or take their chances along with other creditors. Nothing shprt of this will extricate 
 the Directors from the unenviable position they now occupy. 
 
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