industrial corporation. The Company has been and is absolutely untrammelled in the declaration of such annual dividends as the Directors may feel justified in declaring out of the revenue, and Seventeen Per Cent. instead of Ten Per Cent. per annum might properly have been distributed from the average earnings of the railway and the income from investments and extraneous assets during the past few years, had the Directors not been convinced that a prudent and conservative policy was in the best interest of the property. The total capitalization of the Canadian Pacific Railway Company's transportation system, comprising 13,400 miles of railway in Canada operated directly by the Company, with the rolling stock equipment and steamboat craft on inland waters, its splendid terminal stations and facilities, and other accessories, is $623,000,000, but this amount is far below the actual cost of the property, which, excluding the cost estimated at $31,000,000 of the sections of railway constructed by the Government and handed over to the Company, is carried in the books at $687,000,000, after having been reduced by $131,000,000 provided from surplus earnings, land sales and other sources, expended on the property and written off without being capitalized. So that, based upon cost, the transportation system represents an outlay of $818,000,000, or about $61,000 per mile, which is lower than the average cost per mile of the other principal Canadian railways, and about half the cost per mile of the railway system of the Grand Trunk in Canada, based upon its outstanding capital. In addition to the mileage to which reference is made, the Company owns or controls 948 miles of railway lines in Nova Scotia, Quebec and British Columbia that are operated separately for economic or other reasons, but their affairs have no reference to the figures that have been quoted. The great benefits resulting from the conservative financial policy pursued by the Canadian Pacific Directorate are strikingly illustrated by the fact that the net earnings per mile required to meet the annual interest charges on the Grand Trunk, Canadian Northern, Grand Trunk Pacific and National Transcontinental railways, would suffice to cover the annual interest charges, dividend on the Preference Stock, and 7% dividend on the Common stock of the Canadian Pacific. The extraneous investments and available resources belonging to the Shareholders of the Canadian Pacific are quite distinct from the transportation system and play no part in the transportation accounts. They are made up of the Ocean and Coastal Steamship Lines, investments authorized by Parliament in shares of Railway Companies outside of Canada, made, in most cases, many years ago when the shares that now command high prices had only a nominal market value, Government Securities and Loans, money set aside for investment, and other items, amounting in the aggregate to $137,000,000, and available resources in unsold lands, amounts payable on lands already sold, coal mining and other properties, having an estimated present and prospective value of $116,000,000, after providing for the retirement of the outstanding Note Certificates. The total appraisement of these items, namely, $253,000, 000, is substantially below the market value. Large as is the amount, it was not accumulated by speculation or risky exploitation. Apart from the temporary loans and money it represents the accumulated worth of properties and resources many of which had little or no value when they came into the possession of the Company, but were developed and safe-guarded until they became profitable. Doubtless such development in its conception and execution had its selfish side, but no one familiar with the details of Canada's progress in the last quarter of a century will deny that every work of development undertaken by the Company, quite aside from its railway_enterprise and its vigorous immigration policy, has given to the Country a return infinitely greater than any received by the Company or its Shareholders. Summarized it would appear: 1. That the Canadian Pacific Railway, as originally designed, forms but a small part of the present great system with its comprehensive operating traffic and business organization, through which in normal times thousands of people are brought every year to and through Canada from all portions of the civilized world, thus helping to people the country and to bring her vast resources under general notice. 2. That the cost of the transportation system as described in this Memorandum was $818,000,000 against which there is outstanding capital of all classes amounting to $623,000,000. 3. That every share of $100 Ordinary Stock in the hands of the public represents the payment into the Company's Treasury of $112 in cash, and $31 from surplus income, or a total of $143. 4. That it has been the Company's policy to avoid mortgage debt and mandatory interest charges with their attendant dangers. 5. That lands and resources capable of development, belonging to the original Company or that came into its possession through the acquisition of other railways, have been husbanded, developed and utilized so successfully and advantageously that, distinct from their railway transportation system, the Shareholders have extraneous assets valued on a moderate basis at $253,000,000. 6. That the highest dividend paid to Shareholders from transportation revenue, namely, 7% per annum, is only equivalent to 24% per annum on the cost of the railway system, and if the dividend of 3% from Special Income be added, making a total of 10% per annum, the distribution is less than 22% on a conservative valuation of the Company's total assets. 7. That the average rates per passenger mile and per ton mile for the carriage of passengers and freight, respectively, received by the Canadian Pacific were lower than those received for the same services by any combination of railway lines in the United States constituting a through route between the Atlantic and the Pacific Ocean. 8. That the wages paid by the Canadian Pacific in every branch of its service are at least as high as, and the cost of its rails, fuel and general supplies is higher than United States railway companies are required to pay, and in all of these items the increase in both Canada and the United States has been abnormal since the outbreak of the War. 9. That the Company's successful effort to keep its capitalization substantially below the real value of its property and assets deserves the commendation of the Canadian people and should not, in any case, be made a pretext for penalizing the Company when rates for the carriage of traffic, or other matters, relating to general railway policy, are before Parliament or Government for consideration and decision. The Shareholders and Directors of the Company have always been impressed with the idea that the interests of the Company are intimately connected with those of the Dominion, and no effort or expense has been spared to help in promoting the development of the whole country. THE CENTENARY OF A GREAT CANADIAN BANK ANNUAL ADDRESSES AND REPORTS* OF THE BANK OF MONTREAL Annual Ad dress by Sir H. Vincent ident of the Bank. On the third of November, 1917, the Bank of Montreal completed the one hundredth anniversary of the opening of its doors for business. I feel warranted in Bart. Pres- stating that never during this long period was its prestige higher, its business in sounder or more elastic condition and its earning power greater than I believe them to be to-day. I am glad to believe also that it has never enjoyed a wider measure of public confidence. Since our last Annual Meeting, by the death of Mr. E. B. Greenshields, Sir William Macdonald and the Honourable Robert Mackay, the Bank, I regret to say, has lost three of its oldest Directors. All of these gentlemen gave much of their time and valued services in the Bank's interests and their loss is deeply felt. Mr. Baumgarten, who had not attended the meetings of the Board since the outbreak of war, in July last tendered his resignation, which was accepted. The vacancies thus caused were filled by the election of Messrs. H. W. Beauclerk, G. B. Fraser, Colonel Henry Cockshutt and Mr. J. H. Ashdown, thus completing the complement of fourteen Directors called for under our by-laws. In consequence of the Bank's large and increasing business in the Province of Ontario and in the West, your Directors thought it in the best interests of the Shareholders to bring to their councils two gentlemen resident outside of MontrealColonel Cockshutt, of Brantford, Ontario, and Mr. Ashdown, of Winnipeg, Manitoba, both of whom, from their wide experience in their districts and knowledge of affairs generally, will, I feel sure, prove valuable additions to the Board. Approval of your Directors' action in having donated to the Patriotic and Red Cross Funds the sum of $73,500 is asked and, I feel sure, will readily be given. The total Assets of $403,000,000 are the largest in the Bank's history. The year, like the preceding one, has not been free from difficulties and anxieties, but we have been successful in avoiding large losses and are in a position to meet the legitimate demands of all commercial needs in addition to doing even more than our full share in financing both the Imperial and our own Government's requirements. In this connection, it may not be out of place to say that the Banks of Canada have recently loaned the Imperial Government *For preceding Annual Addresses and Reports and an Historical record of the bank see other volumes of The Canadian Annual Review, 1910-16. Annual Meeting dealt with here was on Dec. 3rd, 1917. |