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Sciaices
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73 WEST MAIN STREET
WEBSTER, N.Y. 14580
(716) 872-4503
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T
rt--^
REPORT
OF
MICHAEL SAWARD, ESQ,
(Actuary of the Promoter Life Assuraymt Company,)
ON IHF.
OBJECTS AND PRACTICAL WORKING
OF
THE TRUST AND LOAN COMPANY Ot
UPPER CANADA.
LONDON:
PRINTED BY J. RIDER, 14, BARTHOLOMEW CLOSE,
1846.
H E P O H r.
•^ •
I HAVE perused the printed statement of the o})jects and
practical working of the sclieme of the Trust and Loan
Company of Upper (.;anada, and also the Canada Act, the
Deed of Settlement, and the Royal Charter, under which
the Company is instituted and empowered. I am of opinion
that the scheme presents a legitimate, extensive, and safe op-
portunity for the employment of the surplus capital of this
country, and that, with common prudence, the plan cannot
fail not only to prove highly useful and beneficial to the
Colony in which its operations are intended to be carried on,
but to yield a considerable profit to the Company : That the
Canada Act and Royal Charter give the Company ample powers
to raise the necessary capital, and to carry on its operations
with safety and effect : That the interests of the shareholders
are fully set forth, protected, and defined, and their responsi-
bility strictly limited to the amount of their respective sub-
scriptions ; That the bond holders and other obligees have an
easy and effectual remedy against the fund of the Company in
case of need, and they have the opportunity of knowing the
state and condition of its affairs at all times by having the
right to inspect the books and balance sheet of the Company.
ij 2
With respect to the mode of investing tlio Company's funds,
I am of opinion that it vill l)e by far the wiser and more prudent
course for them to i)e invested in safe and unciuestionable
securities, such as mortgages, at the legal interest of the Colony ;
than that securities of a hazardous nature should be taken, or
that s])ocu]ations, however safe they may appear, should be
entered into, in order that a higher rate of interest may be ob-
tained; indeed, I am satisfied that the success of the undertaking
will mainly depend on the ado})tion of this prudent course, for
it nmst be borne in mind that a great part of the Company's
profits will arise from borrowing money in England at a low
rate of interest, and lending it out in Canada at a higher, and
that that operation cannot be successfully carried on unless the
English capitalist is inspired with confidence ; and it will be
precisely in proportion to the nature of the security which the
Company has to offer, and the prudence with which its affairs
are conducted, that that confidence will be secured, and loans
obtained by the Company. It appears to me to be conclusive
that the Company cannot expect to borrow on the best terms
in England, unless it can be shown that it deals only with un-
doubted securities in Canada. Hence it follows, I am opposed
to the investment of any portion of the Company's funds in
the stock of the chartered banks of Canada; and my impres-
sion is, that even were that mode of investment deemed ad-
visable, the Company is prevented adopting it by the 82nd
section of the Royal Charter. I would, however, strongly urge
the Company to use all its influence to obtain a repeal of the
Canada usury laws, as the profits of the Company must be
considerably curtailed whilst those laws remain in force; and
I have no doubt that the reason why so little British capital
has hitherto been invested in those Colonies, and why u Canada
Trust and I-.oan Company has now, for the first time, been
called into existence, can be traced to the operations of those
laws.
I have appended three statements, pvin^ several examples
of the operations of the Company, on the assumption tijat a
given amount of capital has been subscribed and paid u[), and
that money is borrowed in England, at 0, Oi, and 4 per cent.,
and invested in Canada at (» per cent. The results are very
favourable for so secure a mode for the em[)loyment of capital;
but it is highly necessary that a wise economy should be exer-
cised in the office expenses, and that great care should be taken
that the estimated amount should not be exceeded, at all
events in the infancy of the undertaking.
I have likewise given, as desired, the value of the Com-
pany's stock at the several periods, upon the supposition that
the dividend shown by the results had accrued and been
realized.
I do not consider tha^ the power of reserving part of the
profits, or of anticipating the calls on the shares, requires
particular observation.
I have revised the prospectus, as requested, in accordance
with my view of the subject.
M. SAVVAllD, Acfmiry.
9, Chatham Place, London ;
Fehruary 10, 1845.
Examples of the Operations of the (Jompntaj, supposing Money to be.
borrowed in Emjlund at 3 per cent, and invested in Canada at
6 percent. ; (fivinrf also the relative value of the Stock at the several
periods, upon the assumption that the Shares in the Company were
taken originally to pay F) per cent, on the Investment.
Shares £'20 — and £5 paid vv thereon.
Paid up capitnl £125,000 Invested at 6 per cent.rr
Expenses
Nett
Gives about 3.] per cent, on capital.
£.
7,500
3,120
4,380
Capital £125,000
Borrowed at 3 per cent. 125,000
250,000 Invested at 6 per cent. := 15,000
Expenses ...£3,120
Interest on borrowed money at 3 per cent. 3,750
~ 6,870
Nett 8,130
Gives 6^ per cent, on capital.
Value of stock at this period, 6/. 10s. per share.
Capital £125,000
Borrowed at 3 per cent. 250,000
375,000 Invested at 6 per cent, zz 22 500
pPe«ises £3120 '
Interest on borrowed money at 3 per cent. 7,500
10,620
Nett 11,880
Gives 9^ per cent, on ciipitai. ■"— ""
Value of this slock at the period, 9^. 10.v. per share.
('■'^nUi\ i*l'2r),00l)
borrowed ir jtiey. 37.3,000
£.
.000,000 Invested at (i per ci-iit. z:r .10, 000
Expenses £ 3,120
Interest on bonovved money at -i per cent. 1 1,'2.>()
I4,M70
Nett \r,,r,M)
Gives I'i.^ per cent, on capital.
Vaino of the stock at this j)cri{)(l, 12/. 10,*. per share.
Capital paid up .£12.5,000
Borrowed at 3 per cent. 500,000
625,000 Invested at 6 per cent, rr 37,500
Expenses . £ ;j,|20
Inten.'st on borrowed money 15,000
18,120
Nett 19,380
Gives 15^ per cent, on capital.
Value of the stock at this period, 15/. 10.?. per share.
Shakes £20 — £10 per shake paid up.
Capital paid up
£250,000 Invested at 6 per cent, zr 15,000
Expenses 3,120
Nett 11,880
Gives 4| per cent, on capital.
Capital £250,000
BoiTowed at 3 per cent. 125,000
375,000 Invested at 6 per cent, zr 22,500
Expenses £3,120
Interest on borrowed money at 3 per cent. 3,750
6,870
Nett 15,630
Gives 64 per cent, on capital.
V^dne of the stock at this period, 12/. lO.v. per share.
8
Capital £'2.50,000
liurruwcd at 3 per cent. 'i.OO.OOO
f.
500,000 Invested at G per cent. z:r 30,000
F'Xpenses £3,120
Interest on borrowed money 7,500
10,fi20
Nett 19,380
(fives 7.,' per cent, on capital.
Value oltlic stock at this period, 15/. 10s. per share.
Capital £250,000
Borrowed at 3 per cent, 375,000
625,000 Invested at 6 per cent. = 37,500
Expenses £ 3^120
Interest on borrowed money H ^250
— '■ 14,370
Nett 23,130
Gives 94 per cent, on capital.
Value of the stock at this period, 18/. lO.v. per share.
Capital £250,000
Borrowed 500,000
750,000 Invested at 6 per cent. = 45,000
Expenses £3,120
Interest on borrowed money at 3 per cent. 1 5,000
— '■ 18,120
Nett 2H,880
Gives 10,f per cent, on capital.
Value of the stock at this period, 21/. 10s. per share.
Examples of the Operatinm of the Company, supposing Money to be
borrowed in Enyland at '>\\ per cent., and invested in Canada at 6
per cent. ; fjivini/ also the relative value of the Stock at the several
periods upon the assumption that the S/iares in the Company were
taken oriyinally to pay 5 per cent, on the investment.
Shares £20— and £5 vmd therkon.
Capital paid up
£.
£125,000 Invested at fi per cont.n: 7,500
Expenses .'3,120
Nett 4,380
Gives 3.^ per cent, on capital.
Capital £125,000
Borrowed money .... 125,000
250,000 Invested at fi per ccnt.rr
Expenses £3,120
Interest on borrowed money at 3 A per rent. 4,375
15,000
7,495
Nett 7,505
Gives 6 per cent, on capital.
Value of the stock at this period, 6/. per share.
Capital £125,000
Borrowed money .... 250,000
375,000 Invested at 6 per cent.zz 22,500
Expenses . ' ^ 3,120
Intero:>t on borrowed money 8,750
11,870
Nett 10,630
Gives 8^ per cent, on capital.
Value of the stock at this period, 8/. 10s. per share.
10
<'-^'M*'»^"l £125,000
l>on owed money ijfj OQO
£.
500,000 Invested at 6 per cent.— 30
Expenses f '^ l on
3,120
000
• Interest on borrowed money 13125
16,24
Nett,
13,755
Gives 11 per cent, on capital paid np.
Value of the stock at this period, 1 U. per share.
(Capital paid up £125,000
Borrowed at 3.] percent. 500,000
FxDensPs ^'^^'^^^ '"'"'^"'^ ^^ ^ P"^' ^^"^•= ^7,500
i^xpenses £ 3 J20
Interest on borrowed money 17*500
' 20,620
Nett 16^880
Gives 13i per cent, on capital.
Value of the stock at this period, 13/. 10... per share.
SlJARES £20— AND £10 PAID UP TH
EREON.
Capital
£250,000 Invested at 6 per cent.zr 1 5 000
^^P^"^'^^ 3:120
cpei
Nett
Gives 4^ per cent, on capital.
11,880
S'H^'t*^' £250,000
Borrowed at 3.^ per cent. 125,000
Expenses .... .^.^f.'^!^^. . '"'''^'^ ^^ ^' per cent.zz 22,500
Interest on borrowe'd money '. *. '. ". * *. * ' '. '. ". ', "^4 '375
7,495
^'^" 15,005
Gives 6 per cent, on capital. ■—
Value of the stock at this period, 12/. per share.
<
t
11
Capital £250,000
Borrowed money 250,000
£.
500,000 Invested at 6 per cent. =z 30,000
Expenses £3,120
Interest on borrowed money, at 3^ per cent. 8,750
-^ 11,870
Nett 18,130
Gives 7| per cent, on capital.
Value of the stock at this period, 14^. lOi". per share.
Capital £250,000
Borrowed money 375,000
625,000 Invested at 6 per cent.rz: 37,500
Expenses £ 3,120
Interest on borrowed money, at 3^ per cent. 13,125
16,245
Nett 21,255
Gives 8^ per cent, on capital.
Value of the stock at this period, 17/. per share.
Capital £250,000
Borrowed money 500,000
750,000 Invested at 6 per cent.zr 45,000
Expenses £ 3,120
Interest on borrowed money, at 3^ per cent. 17,500
20,620
Nett 24,380
Gives 9| per cent, on capital.
Vrdue of the stock at this period, 19/. 155. per share.
Ifi
Examples of the Operations of the Company where Money is borrowed
in England at 4 per cent, and invested in Canada at 6 per cent.
Shares £20 — and paid up thereon £5.
^ ' r
*^' £.
125,000 capital paid up invested at 6 per cent. = 7,500
Expenses 3,120
Nett 4,380
Gives about 3^ per cent, on capital paid up.
125,000 capital paid up.
125,000 borrowed at 4 per cent.
250,000 invested at 6 per cent =s 15,000
Expenses £3,120
Interest on borrowed money . 5,000
8,120
Nett..,..'.!i.. 6,880
Gives 51 per cent, interest on capital.
Value of the stock at this period 51. \0s. per share.
125,000 capital paid up.
250,000 borrowed at 4 per cent.
370,000 invested at 6 per cent =22 500
Expenses... £ 3,120
Interest on borrowed money 10,000
13,120
Nett 9,380
Gives 1\ per cent, interest on capital.
Value of the stock at this period 11. \0s. per share.
1
13
£.
125,000 capital paid up.
375,000 borrowed at 4 per cent.
£.
500,000 invested at 6 per cent = 30,000
Expenses £ 3,120
Interest on borrowed money 15,000
18,120
Nett 11,880
Gives 9 1 per cent on capital.
Value of the stock at this period 91. 10s. per share.
125,000 capital paid up.
500,000 borrowed at 4 per cent.
625,000 invested at 6 per cent = 37 ,500
Expenses £ 3,120
Interest on borrowed money 20,000
23,120
Nett 14,380
Gives 11 1 per cent, on capital.
Value of the stock at this period \\l, 10s. per share.
14
Example, -MouP!/ borrowed at 4 per cent, in England and lent w
Canada at 6 per cent.
SlJAIlES £20— £10 PAID vv.
Capital paid up £250,000 Invt-stedut 6 per cent, zr 15^000
^^''Penses 3J20
^-'t^tt 11,880
Gives 4| per cent. 011 capital. """"""""
Paid np capital £250,000
Borrowed at 4 per cent. 125,000
Fx..e.,se. '^^'^*^'^^** ^nvoMed at 6 por cent. :z: 22,500
Interest on borrowed money 5'o(
5,000
8;'120
Nett 14,380
Gives 5| per cent, interest on paid up capital.
Value of the stock at this period 11/. lo.^ per share.
Paid up capital £250,000
Borrowed at 4 per cent. 250,000
Expenses .
500,000 Invested at 6 per cent. — 30,
^ I — ^ '^
Interest on borrowed money . lo'
. - £ 3,120
000
000
13,120
Nett ,. 16,880
Gives 6:^ per cent, interest on capital. '
Value of tiie stock at this period 13/. 10.. per share.
]■)
Paid up capital £'250,000
I'lOiTowcd at 4 per <,miiI. ;{75,000
G-jr^.OOO liivcsied at (') per cpiit. r
Expenses . £ 3, 1 '20
Interest on borrowed nioncv 15,000
£.
37,500
1 8, 1 '20
Nctt 19,380
Gives 7| per cent, interest on paid np capital.
Value of the stock ar. this period 15/. 10s. per share.
Paid up capital £250,000
Borrowed at 4 per cent. 500,000
750,000 Invested at C> per cent. = 45,000
Expenses £ 3, 1 20
Interest on borrowed money 20,000
— ■ 23,120
Nett 21,880
Gives 8f per cent, interest on capital.
Value of the stock at this period 17/. lO-s per sliare.
I inriiiTfWfc'iiiMfiatTiM'Trm
I have given examples of one quarter and one half of the subscribed
capital being paid up, and the operations of the Company being con-
fined to the employment of that money alone ; I will now give the
result on three quarters and the whole being paid up : —
Paid up capital . £375,000 Invested at 6 per cent, rz 22,500
Expenses rr 3,120
Gives 5^ per cent, on capital 19,380
Paid up capital
£500,000 Invested at 6 per cent. =: 30,000
Expenses n: 3,120
Nett 26,880
Gr.cs 51. Is. 6d. per cent, on capital.
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LONDON:
J'niNTED BY J. niDER, 14, RAnTIIOrOMEW Cf.08F-.
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