Royal assent to establish the “Company of the Bank of Nova Scotia” came in 1832.
The bank’s 13 directors included the leading figures in Halifax’s merchant elite: among them William Lawson, William Blowers Bliss, Andrew Belcher, James William Johnson, James Forman, James Boyle Uniacke, and Mather Byles Almon. They elected William Lawson the bank’s first president.
James Forman became Cashier (equivalent to Chief Operating Officer today) at a salary of $1,200.
According to the Dictionary of Canadian Biography, Forman was a leading light in Halifax society, “active in the community as a member of the Nova Scotia Literary and Scientific Society, treasurer of the Halifax Mechanics’ Institute, trustee for the Provincial Building Society, member of the council of the Horticultural Association and International Show Society, and president of the North British Society of Halifax.”
From a prominent Halifax family, he seemed an ideal choice after a brief internship at a bank in Saint John, N.B. Additional employees included two tellers at $500 per annum and a messenger paid $200 yearly. In 1837, Mather Byles Almon replaced Lawson as president. A close friend of Forman’s, he remained president for decades.
The bank offered a dividend for the first time in 1833, and did every year thereafter. It opened new branches in Pictou, Yarmouth, Annapolis, and Liverpool. The bank also made international connections with the Baring Brothers in London and with the Merchant’s Bank of Boston, plus banks in New York and Portland, Maine.
For almost 40 years the bank chugged along, slowly expanding but offering only modest returns. In the summer of 1870, the bank’s accountant approached Almon with an incredible but irrefutable tale. For decades, their trusted associate Forman had been ripping off the bank. For more than a quarter of a century, Forman helped himself to about $315,000.
According to the bank’s official history, “it was nearly half the shareholder’s total equity in 1870, and more than 15% of the Bank’s total assets.” William Young, Chief Justice of the Supreme Court of Nova Scotia, captured the enormity of the scam: “Everything was fair on the surface, and everything rotten below. The falsifications on the books were endless, but so skillfully done as to defy detection.”
The directors received the news on Aug. 9, 1870, and it quickly went public. One week later, the Halifax Morning Chronicle argued that the directors’ negligence was as much to blame as the embezzler himself. “That Mr. Forman was allowed to pursue his path of dishonesty unchallenged is disgraceful to the President and Directors… It is a pity though there is no way to punish the criminally careless Directors. They are morally responsible for the losses of the shareholders, who entrusted them with the guardianship of their interests.”
The directors stayed silent and the Halifax elite closed ranks. Forman signed over Thorndean, his three-storey Georgian residence in the South End on Inglis Street and all its contents to be auctioned. John S. Maclean, a Halifax merchant and ship owner and Almon’s replacement as president of the selfsame Bank of Nova Scotia, bought the estate.
Forman repaid approximately $180,000. The bank wrote off the remainder and declined to prosecute Forman who repaired to England and died within months.