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McLEOD, HENRY COLLINGWOOD, banker and yachtsman; b. 9 March 1851 in New London, P.E.I., son of John McLeod and Annabella Mackay; m. first 9 March 1875 Elizabeth Sarah Davison, and they had two daughters and a son; m. secondly 7 Sept. 1882 Ada Gordon in Georgetown, P.E.I., and they had two daughters and a son; d. 19 Dec. 1926 in Camden, S.C., and was buried in Minneapolis, Minn.

“The battles of his life were with other bankers on banking matters.” With these words the Toronto Globe summed up Henry C. McLeod, who managed the Bank of Nova Scotia between 1897 and 1910, a critical period during which the bank established itself in central and western Canada. When he aired his dissident views and disputes with competitors, exposing in the press what propriety compelled others to reserve for backrooms, he gave the public cause to question rather than defer to their bankers. A candid and uncompromising attitude alarmed allies and irritated the Canadian Bankers’ Association, the Department of Finance in Ottawa, and the financial press. McLeod’s activism was inspired by a genuine concern about the consequences of bank failures. At the same time he recognized opportunity in the unease that such failures caused the public. McLeod employed the press to publicize the Bank of Nova Scotia’s pioneering use of external auditors, turning the banking system’s weakness, secretive management, to his advantage and ensuring the bank a reputation for the highest standards of prudence. This was McLeod’s critical feat, securing a new market for the Bank of Nova Scotia by attaining the people’s trust when trust was all important.

McLeod was the son of a ship’s captain in Prince Edward Island, and his thoughts were never far from sailing and the “mid-Atlantic’s pure breezes.” Educated at local schools, he read law for three years while employed as an attorney’s clerk in Charlottetown. In 1872, however, he opted for a business career, joining a firm of commission merchants as an accountant. A year later he entered the service of the small Merchants’ Bank of Prince Edward Island in Charlottetown; he worked there as an accountant until 1875, when he was made manager of the Georgetown branch. His advancement brought social status and the liberty to marry, a step the etiquette of banking discouraged until an income to support a family had been secured. He married Sarah Davison and within a few years was the father of two girls and a boy. The family’s quiet life was tragically disrupted in 1881 when Sarah died quite suddenly. Widowed with three small children to tend, McLeod faced the most difficult time of his life. A year passed before he married Ada Gordon. He then left his native province for Amherst, N.S., where he joined the Bank of Nova Scotia as its local agent. Over the next few years he and Ada would add three children to Ada’s ready-made family.

The cashier (general manager) of the Bank of Nova Scotia was Thomas Fyshe*, a cantankerous Scot with little time for agents who operated outside the bounds of prudence. In Amherst, McLeod proved an able manager worthy of Fyshe’s confidence. When McLeod assumed his duties the bank was confined to the Maritimes, where competition for deposits was fierce. Banks also fought for customers they could safely lend their deposits to, and when clients appeared in short supply a quest for new markets began. In 1882 Fyshe’s search led him to Winnipeg for a share of that city’s booming economy. The timing was unfortunate. Winnipeg’s wave of prosperity crested, as did the careers of the local managers who had been too anxious to lend out the bank’s money.

In 1884 McLeod was sent to Winnipeg with orders to dispatch the manager and wind up what was an embarrassing moment in the bank’s history. En route he stopped in Minneapolis and was surprised by the opportunity that lay waiting for a bank willing to serve the many millers who looked to local banks for loans only to find few able to accommodate their needs. After completing his Winnipeg duties and returning to Halifax in 1885, McLeod persuaded Fyshe that Minneapolis was a good prospect. Later that year he went west for a second time, to open the Minneapolis branch, and was joined by his friend and the inspector of the Bank of Nova Scotia, James Berwick Forgan. Both men were excited by the opportunity that the new agency offered. Forgan wanted to run it and knew that he could have it because Fyshe had promised him a branch of his choosing after he refused the general manager’s job at a competing bank in Halifax. He therefore proposed that he and McLeod switch jobs. Fyshe was initially reluctant, however, and the exchange occurred only after McLeod had threatened resignation. He was too valuable to lose.

Competition in the Maritimes was a constant irritant for Fyshe, but it was no less a problem in the western United States, where well-trained Canadian bankers were in demand. In 1887 Forgan joined the Northwestern National Bank of Minneapolis and McLeod returned to the city to protect the Bank of Nova Scotia’s interests. Now, instead of making deals with his old friend, he battled him for business. Forgan, it seems, did not come out on top. McLeod built a profitable loan business between the bank and local American banks in which its advances were secured against gilt-edged securities. (He also acquired a keen sense of the American animosity for bankers, a feature of the country’s political culture alien to Canada at the time.) The Northwestern felt the pinch of his presence and in 1892 tried to lure him to its side, as it had Forgan, offering a salary of $7,500 a year. With Forgan having defected and with an enviable record in hand, McLeod possessed the leverage needed to demand a similar offer from his employer. In September the bank’s board of directors quickly agreed. McLeod then closed the Minneapolis office and opened an agency in Chicago, where he remained until 1897. In that year Fyshe accepted the job of joint general manager at the much larger Merchants’ Bank of Canada, based in Montreal. The door was thus opened for McLeod to take charge of the Bank of Nova Scotia and lead its expansion in central and western Canada. He was appointed cashier on 25 June 1897. Just five months later he established a branch in Toronto, and in January 1899, as general manager (the title had changed in 1898), he reopened the Winnipeg branch.

Relatively unknown nationally and lacking the stature of his predecessor, McLeod differed from Fyshe in other ways as well. Despite his surly persona, Fyshe had long advocated cooperation between banks and he had been one of the principal founders of the CBA in 1891. McLeod did not possess the same proclivity and made his position painfully clear in 1899 when he threatened to scuttle a loose agreement between the Department of Finance and the larger banks to pay no more than three per cent for deposits. What had provoked McLeod’s ire was the treatment his Winnipeg manager had received at the hands of the local subsection of the CBA, which accused him of soliciting the business of other bankers in Winnipeg, conduct it considered “unprofessional, improper and unsafe.” McLeod vigorously denied the subsection’s power to censure members of the association, “much less to pass resolutions calculated to prejudice public opinion to the disadvantage of a member.” Frustrated when the CBA did no more than acknowledge his complaint, McLeod announced in July that the Bank of Nova Scotia would withdraw from the association and “from all regulations and agreements connected therewith.” This threat prompted the general manager of the Canadian Bank of Commerce, Byron Edmund Walker, to try to appease McLeod, but McLeod would not be moved unless given an apology on terms he dictated. In desperation, Walker wrote to the deputy minister of finance, John Mortimer Courtney*, pleading for the intervention of minister William Stevens Fielding to prevent McLeod from abandoning the agreement on deposit rates, saying it would “embarrass the government and must inevitably lead to an upward movement in deposit rates over the entire country.” McLeod kept his pledge to withdraw from the CBA. He did not, however, raise rates; he preferred toying with the association’s more excitable general managers by letting them think he would.

Within the Bank of Nova Scotia important changes were underway while this dispute continued. McLeod’s enthusiasm for central and western Canada began to pay dividends, but the bank’s growth in these regions was hampered by the delays attending long-distance management from Halifax. At the start of 1900 it was determined that the head office would move to Toronto. McLeod left Halifax in April to take charge, sailing his cutter the Gloria alone and arriving in Toronto in a manner symbolic of the bank’s heritage as much as the independence of his character. At the bank he did not mask the stress of his job well and was known for his short temper. He did, however, continue to prove himself a creative thinker, introducing in 1901 the “unit system of work,” which measured the labour involved in various aspects of the bank’s operations and recognized those officers who were most efficient.

Both McLeod’s temper and his creative abilities had been put to the test early in 1900 when he learned of the proposed incorporation of the CBA. The move had been suggested by the Department of Finance and was eagerly supported by the association’s main backers, who had long complained that the organization was not powerful enough to impose conservative methods on its members, or interest-rate and other agreements that were deemed necessary. The CBA was to have power over the country’s clearing houses, an essential means of monitoring and influencing the management of banks, and regulatory control over the banks’ circulation. For McLeod, the proposed arrangement was “nothing short of coercion.” He protested the association’s right to inspect the accounts of the Bank of Nova Scotia even though it was not a member and maintained that incorporation would give the CBA “all the attributes of a trust.” “If the Association persists and succeeds in its purpose,” he told its president, Edward Seaborne Clouston*, “the likely result will be . . . an aversion by the public to banking interests similar to that in the United States which has resulted in . . . Banks being taxed out of existence and in making the adoption of banking reforms a matter which no political party dare attempt.” McLeod reasoned that if conservative, prudent banking was the objective, government inspection of banks was the best answer. He took his views to the press and to the House of Commons, where Robert Laird Borden*, a leading Conservative, championed his cause and obliged the Liberal whip to enforce the finance minister’s wishes.

As the incorporated CBA assumed responsibility for the banks’ circulation, it had to deal with a watchful critic in McLeod. Most hoped that the renegade banker would quietly go away. Instead, in 1902 he launched a campaign calling for fixed reserves to protect depositors from unscrupulous and imprudent bankers as well as government inspection to ensure that such reserves were maintained. From figures given in the banks’ monthly returns to the Department of Finance, McLeod demonstrated the continuing decline, since the 1880s, in their reserves. He was fighting a losing battle. The same demand had been made, by J. M. Courtney among others, and rejected during the 1890 revision of the Bank Act. Disappointed, McLeod concluded that if he was to enjoy any influence with fellow bankers, the Bank of Nova Scotia would have to renew its membership in the CBA, which it did in 1902. His hopes, however, were misplaced. At CBA meetings he could not even count on anyone seconding his motions to discuss matters that interested him.

The CBA’s efforts to stifle McLeod ultimately proved unwise. The issues he wanted addressed soon emerged as issues the public wanted settled in the aftermath of several bank failures. During most of this period the financial press had downplayed McLeod’s concerns. Toronto’s Monetary Times described outside inspection as a “delusive panacea.” Even finance minister Fielding mocked McLeod, calling his ideas “poppycock.” Papers such as the Globe, the Toronto World, and the Montreal Witness were more sympathetic. So were advocates of banking reform in the House of Commons, who commended McLeod and the Bank of Nova Scotia for considering the public’s interest and leading the way, after the Ontario Bank failed in 1906, on external examination. One of the more perceptive banks, Montreal’s Molsons Bank, recognized the advantage accruing to McLeod as he championed inspection and followed his lead, albeit quietly. The majority of bankers as well as the CBA remained publicly opposed. As time passed and 1908 brought three bank failures, their position became increasingly untenable. The weight of public sentiment cracked the resistance of the Monetary Times, which threw its support to outside inspection conducted by the CBA. McLeod exploited the rising tide of concern in 1909 when he released a pamphlet on bank inspection reiterating the arguments he had made over the years and unsuccessfully challenging the CBA to answer popular cries for reform.

By the end of 1909 McLeod had been embroiled in this public dispute for seven years. His deep involvement had not, however, prevented him from aggressively pursuing the expansion of his bank. Branches had been established in Edmonton, Calgary, Vancouver, Regina, and Saskatoon, and many more were added in Ontario and the Maritimes. Altogether some 50 branches were opened during the course of his tenure as general manager. But in spite of his success – the bank’s assets had more than tripled and its stock, up by $80 a share, had taken first place among Canadian bank stocks – he was growing weary of the public struggle for bank reform. His main source of happiness in 1909 was found aboard the Amorita, which he sailed to victory in a race between New York and Bermuda. By January 1910 he had decided that sailing was more satisfying than banking. He submitted his resignation; however, he could not remain aloof from Canadian banking for long, even after moving to Montclair, N.J. It was there that he had his papers shipped from the Bank of Nova Scotia so that he could continue his magnum opus – a statistical tell-all documenting the growing weakness of Canada’s banks and reinforcing his support for government inspection. In 1913 he was called back to Canada to give testimony before the parliamentary committee considering changes to the Bank Act. He won what some considered a partial victory when the government introduced provisions for a shareholders’ audit, but it took the disastrous failure of the Home Bank of Canada in 1923 to bring about government inspection. The office of inspector general of banks was created the following year.

McLeod’s retirement years were darkened in 1917 by the loss of his younger son, Norwood, who like so many of his generation perished overseas during the war. He spent his time writing articles on banking and working on his book, which had grown to a thousand pages by 1924. He complained about the frailty that old age brings but enjoyed shows over the modern radio. At 75 he suffered a fatal heart attack in South Carolina at his winter home by the sea. His wife survived him by nine years, dying in Toronto in 1935.

John A. Turley-Ewart