WAR CONDITIONS AND FINANCE IN CANADA, 1917 ADDRESSES AND REPORTS* OF THE CANADIAN BANK OF COMMERCE Address by We are crossing the meridian into the second halfcentury of the Bank's existence and, pausing to look back, we may well feel satisfaction in what has been accomplished in a comparatively short period of time. While we hold second place only among the Canadian banks in the matter of "Total Assets,' we may point to our premier position as regards "Current Loans and Discounts in Canada" as an indication of the importance of the share taken by this Bank in the task of providing for the financial requirements of the mercantile community, and of carrying on the daily business of the country. In this connection it is interesting to note that by the year 1912 the current loans and discounts in Canada of this Bank were three times as great as those of all the Canadian banks in the year in which it was founded. We had hoped on this anniversary to announce the increase of the Rest to an amount equal to the paid-up capital of the Bank, and this doubtless would have been accomplished had it not been for the war. We have deemed it wise to follow a specially cautious and conservative policy and to provide during the war even more thoroughly than usual for any element of doubt in the loans and securities of the Bank. The increasingly keen competition in business has resulted in the banks being called upon to perform far greater services for smaller remuneration, so that the increase in the volume of their business is out of proportion to the increase in their profits. Naturally an increased volume of business means a corresponding increase in the provision to be made for doubtful items, while the profits do not provide in a corresponding measure for the relative appropriations. Whenever there is offered a new issue of government securities yielding a higher rate of interest, the market for existing securities is depressed to a corresponding extent and this entails a writing down of all securities on hand. Doubtless when the war is over this downward movement will cease and securities will tend to appreciate in value, so that much of this may be recovered. After a review of the Bank's General Statement, the General Manager proceeded: The members of the staff number 3,633, including 280 messengers and 367 janitors; the total, after the withdrawal of * For History of this Bank, see 1910 Supplement of The Canadian Annual Review and succeeding Volumes for yearly Addresses and Reports. This 51st Annual Meeting of the Bank was held on Jan. 8, 1918. [865] the men called up under the Military Service Act, will still be somewhat larger than a year ago. The increase is, however, entirely in untrained women clerks, the number of women being now 1,121, an increase of about 400. On the other hand, the number of male officers has decreased by 128, in spite of the addition of a large number of inexperienced lads under the age of twenty. Having regard to the continued growth of our business and to the decrease in general efficiency caused by the changes in personnel, the burden laid on our men and women grows heavier with each succeeding month. It was therefore particularly gratifying to us that the results of the year's business were such as to justify a more than usually generous percentage bonus to all the members of the staff. Of our officers, 1,422 have now taken up arms, or 75 per cent. of our present male staff, exclusive of messengers. We know that we have supplied our full quota, but we are making efforts to release every man physically fit who is called up under the Military Service Act and who can possibly be replaced, and are asking exemption for only a few officers, the length and the character of whose training are such that they cannot be replaced. With grief mingled with pride, we record a total loss of 153 men killed in action, 69 of whom have made the great sacrifice during the past year. No fewer than 255 have been wounded, many seriously, 7 are missing, and 16 are undergoing the hardships of the enemy's prison camps. During the year the Canadian banks have been called upon to make large advances to the Dominion Government to provide for expenditures in connection with the war, and have also made advances to the Imperial Government for the purchase of our wheat crop, in addition to those already current for the purchase of munitions in Canada. In all this financing the Bank has taken its full share, assisting the Government in the prosecution of the war to the best of its ability. As an item of interest in this connection we may mention that our customers have during the year executed munition orders for a total of over 84 millions of dollars. The outstanding success of the Victory Loan was a striking tribute to the energy and patriotism of the organization which undertook to place the loan in the hands of the public, and the Finance Minister is again to be congratulated on the result of his endeavours to obtain within Canada as large a proportion as possible of the funds required to carry on the war. As in the case of the last Imperial War Loan the banks were not called upon to subscribe directly, as this would have meant a locking up of their funds in a permanent investment, and would also have tended to inflation, as a result of the additional credit thereby created. Instead of this they undertook to make advances to small subscribers with fixed incomes so as to enable them to take a larger amount of the loan than would otherwise have been possible. The encouragement thus given to the habit of saving throughout the community is of the greatest national importance. The total amount of subscriptions to the loan appears to have reached $417,000,000, from about 807,000 subscribers, a financial accomplishment of the first magnitude. The subscriptions received through the branches of this Bank amounted to about $80,000,000 from over 116,000 subscribers. After the United States came into the war the shipments of gold from Great Britain to that country ceased, and a slight adverse movement set in; in order, therefore, to conserve its holdings and to prevent gold from reaching the enemy, the United States Government placed an embargo on exports of the metal. Upon representations being made at Washington, however, through the Canadian Bankers' Association, as to the unfairness of enforcing the embargo against us, the release to Canada of a certain amount of gold was arranged for. While this will, doubtless, aid in the stabilizing of the exchange between the two countries, we feel that it is important that the underlying gold reserves of Canada should be increased to correspond with the great increase in the liabilities of the Canadian banks resulting from war activities. To this end we consider that our endeavours should be directed, and we believe also that the Government of Canada should place an embargo on the export of gold produced in Canada, and see that it is made available for this purpose. Probably few people realize how essential to modern business is prompt and reliable railway service, or how the lack of such service invariably means high prices to the consumer. No modern business could continue in operation were the transportation facilities of the country suddenly to be suspended. A full consideration of the relation between delays in transportation and increased cost to the consumer is out of place here, but it may confidently be asserted that promptness and regularity of service are of more importance to business men and to the general public than low freight rates. Unfortunately of late years Government efforts have been directed almost entirely to the reduction of the latter, while ignoring altogether the greater importance of the former. The general increase in freight rates recently granted is a step in the right direction. Fortunately for the public interest, one of the great Canadian railway systems has not been dependent entirely upon its income from transportation, or the problem here would have become more acute. The cost of operation, that is, of labour, materials and supplies, has risen enormously in recent years, without a corresponding increase in the revenue from transportation. It is not always borne in mind that the development of Canada, and its subsequent increase in wealth and population, would not have been possible without the construction of the railroads, and that the large number of people who have invested in railroad securities have, therefore, performed a public service of the highest importance. Whatever may have been the motives which prompted the investment, this service still calls for some measure of recognition. And now a few words as to the future. Up to the present the high cost of living, of which we hear so much, has borne heavily on comparatively few. The great majority of Canadians who are not serving in the armed forces of the Empire are now employed at high wages in war industries. They have more to spend than they ever had before, and many are spending it. They scorn carefulness and the small economies that must perforce be practiced by the inhabitants of less favoured countries. But there will come a time when high taxation and uncertainty as to the future will make men hesitate to embark on new enterprises, when there will be double the number of applicants for half the number of jobs and when food will be still more scarce than it is at present. Only then shall we realize the full effects of the high cost of living. How shall we prepare for that day? The great need of the world will then be abundance of food, at reasonable prices, and if we in Canada by stimulating production, transportation and distribution, are able to supply the nations in abundance, we shall not only have laid broad and deep the foundations of prosperity for ourselves, but shall have earned the gratitude of the nations. We shall have found a way to utilize the services of the unemployed and to lower as far as possible the high cost of living. The machinery for accomplishing this cannot be created on the spur of the moment, and we must equip ourselves beforehand to cope with the changed conditions which will prevail after the war. We must so co-ordinate the productive forces of the nation that there will be, as it were, the nucleus of an organization already prepared to utilize the labour of the unemployed in the production of food, and in its distribution and transportation to the great markets abroad. The period of strain immediately following the war will pass away in time and normal conditions will again prevail. In order that this trade should be permanently successful under these normal conditions, it must be organized from the beginning with a view to efficiency and placed on a sound economic basis. When we consider what difficulties have been overcome in order to transport fresh meat from Australia, New Zealand and the Argentine through the tropical zone to the markets of Europe, we cannot but believe that the less serious difficulties confronting Canada can be successfully solved. We have millions of acres of productive land, we expect to have an abundance of labour, but we require organization and leadership. Address by We meet again with the shadow of the great war affecting everything we say or do. We are nearer the end than we were a year ago, but only because a year has passed; in other ways there is no sign of the end. Although the war is in its fourth year, it is still full of surprises; indeed, the year has been one of many and swift changes. The submarine menace, so ominous at one time, is still very serious, "held but not yet mastered," as Sir Eric Geddes lately said. However, we no longer doubt our ability to cope with it, partly by a lessening in the number of ships lost and partly by vastly increased ship-building. The collapse in Russia and the setback in Italy have altered the aspect on the Western front from one in which victory seemed near to one in which it may perhaps be necessary to wait for the new armies of the great republic, before the war can be pressed to its final stage. Unless Russia comes back into the fighting line, we have to meet the armies of the enemy thus released, but we are not afraid of the enemy ever again breaking through the Western front, and by next spring not only will there be a great accession of strength from the United States for fighting on land, but the building of aircraft and the training of armies of airmen will vastly alter the character of the struggle. Our greatest danger is lest we should falter, because victory is less easy to attain than we thought. In considering our industrial affairs we find that, disregarding as usual shipments of gold and bullion, our exports for the fiscal year ending 31st March last, were $314,706,654 in excess of our imports, and for the following six months ending 30th September, the excess was $237,574,462, making for the eighteen months a surplus of $552,281,116 in the value of our exports. The gain in exports for the fiscal year was $399,911,030, while the increase in imports was $334,292,650. We therefore improved the results of our foreign trade by $65,618,380 as compared with the year preceding. The figures for the broken period indicate an increase on a much larger scale. Of the improvement during the fiscal year, over 350 millions is due to agriculture and to manufactures, the total increase from the mine, the forest, the fisheries, and animals and their products being less than 50 millions. The exports of manufactures amounted to 487 millions, an increase of 237 millions over those of the preceding year. There is an increase in exports and imports under almost every heading, but the only very noticeable item is that of $149,930,000 for military stores, munitions of war, etc., "imported and remaining the property of the Imperial Government. In this there is an increase of $111,296,000 over the corresponding figures for 1916. These imports, mainly necessary to complete munitions being made in Canada, do not affect this country in a financial way. Coal cost us $11,500,000 more, sugar $10,800,000 more, and provisions, much of which was doubtless exported again, $17,500,000 more. Of the various forms in which iron, copper and other metals are used as raw materials, ranging from the ore to beams, tubes, wiring, etc., we imported about $42,000,000 more than in 1916. These partially manufactured articles come under a great variety of headings, but they are all, or almost all, forms that we should eventually make in Canada. I regret to say that articles of luxury still show rather too prominently in the list of imports, and there is not much evidence of restraint on the part of Canadians in the purchase of unnecessary things. A surplus of 550 millions in our foreign trade for the 18 months ending September last leaves, even after interest on foreign indebtedness has been paid, a sum of money unheard of in the past, and to this is to be added the results of the crops since marketed or still to be marketed at prices hitherto unequalled, as well as the results of other products of our industry. The field crops of Canada for 1917 are valued at $1,089,000,000. All of this vast wealth is, however, needed for the conduct of the war, and the problem of the hour is how to apply it to that purpose, wherever it is not needed for some other equally urgent purpose. Great Britain, by shipments from various parts of the world. through Canada to the United States, has sent to that country over a billion dollars in gold, but the time has now come when she must have credit for practically all her purchases, and obviously our own. |