Bank of Toronto

In July 1856, the Bank of Toronto opened its offices at 78 Church Street, Toronto, with a staff of three and immediately began development of a provincial network of branches. Thomas Clarkson, a major participant in the growing Toronto commerce, served as one of the first directors from 1856 through to 1858, steering the Bank through the depression of 1857. In 1860, it opened its first branch outside of Ontario (then as Canada West), in Montreal, Canada East.

The Bank of Toronto established itself as an efficient, profitable, but essentially conservative bank through the 19th century. It maintained a very high reserve against its capital and enjoyed the highest share price of any bank in Canada. Growth was very slow and deliberate, with a few new branches opened in emerging regional centres. Core customers remained farmers, merchants, and processors of farm products (millers, brewers, distillers).

With the maturing of the Canadian economy and the opening of northern Ontario and the West in the 1880s and 1890s, the banks became more aggressive in loans to resource industries, utilities, and manufacturing. In 1899, the Bank of Toronto opened a branch in the British Columbia mining town of Rossland. In the first decade of the twentieth century, the banks rapidly expanded their branch networks in central Canada and across the west.

To mark their rise as significant national institutions, the Bank of Toronto moved into a large new head office building at the corner of King and Bay Streets in Toronto in 1913.

World War I brought new challenges for the two banks when they were called upon to finance war expenditures and to support the innovation of war bonds marketed to the general public. Half of the staff of the two banks served in the armed forces.

Except for some contraction in the western provinces due to drought, the decade following the war was one of expansion and increasing profitability due to resource development and industrial expansion. The bank weathered the storm of depression in the 1930s without great difficulty, despite a decline in earnings. Like all Canadian banks, they endured criticism of its credit policies and resisted the introduction of a central bank to control the money supply and advise on fiscal policy. Ultimately the Bank of Canada was established and the banks relinquished their right to issue their own currency.

The coming of the Second World War involved the banks, once again, in the marketing of war bonds and in participation in the control of foreign exchange, rationing, and other financial war measures. Approximately 500 staff, or almost half the total, entered the armed forces.

The Bank of Toronto emerged from the war in 1945 stronger than ever, with assets more than doubled since 1939. With the post-war boom they became more active in business lending and in the penetration of new markets. However, they quickly realized that the costs of expansion and competition with much larger rivals made their objectives difficult to realize. Neither bank had engaged in acquisitions or mergers in order to grow, but both determined that a union with a bank of equal size would place them in a much stronger position to take advantage of the opportunities of the post-war economy.