BUSINESS & INVESTMENTS

SPIRIT OF HOPEFULNESS OVERRIDES CROP KILLERS AS AUTUMN APPROACHES

J. HERBERT HODGINS August 15 1924
BUSINESS & INVESTMENTS

SPIRIT OF HOPEFULNESS OVERRIDES CROP KILLERS AS AUTUMN APPROACHES

J. HERBERT HODGINS August 15 1924

SPIRIT OF HOPEFULNESS OVERRIDES CROP KILLERS AS AUTUMN APPROACHES

BUSINESS & INVESTMENTS

J. HERBERT HODGINS

AS WE approach the autumn season there are two influences of prime importance bearing upon the business outlook, the crop out-turn and the imminence of a considerable government loan. All eyes just now are on the western cereal harvest, in fact, a London cable impresses that “Canada has become the centre of interest in the wheat market of the world.” The extent of the yield, clearly, will be the determining factor in the buying power of the Dominion, and for this reason it becomes a matter for the immediate reckoning of every individual. The crop, too, is not unrelated to the success of the proposed federal loan, as the buying power developed by the harvest will serve to strengthen the volume of available funds for investment. And the Finance Minister at Ottawa has let it be known that he will borrow “in the best market.” We have experienced the seasonable attempt to “kill the crops,” out West; and out of Chicago’s spectacular pit dealings has arisen the dramatic coup of Arthur W. Cutten, erstwhile Chicago grain merchant and native of Guelph, Ont., who in a few weeks, is reputed to have cleaned up profits approaching $1,500,000. Much more picturesque among the wheat spculators, however, was the “green” Russian of whom tales of a pretty clean-up come from Calgary. One day in June this Russian wandered into a grain office in Calgary with four thousand dollars in one hand and a written note in the other hand, and he asked the clerk who approached him to do as the note said, “please to buy all October wheat possible on a ten cent margin.” Forty thousand bushels of wheat were bought for him and he went away satisfied. In the interim there were the early and glowing crop reports and many of the grain men felt that futures would go lower. The Russian held on quietly. He had bought his forty thousand bushels at $1.02. When the price reached $1.07 he bought more wheat with his paper profits, and he pyramided again at $1.12 and $1.17. By the time the price had risen to $1.22 he owned 180,000 bushels of October wheat and he decided that the time had come for him to cash in. Accordingly he wandered into Calgary from the farm and got a draft for $22,000. “Now,” said he, as he shook hands with the grain office men, “I go back to Russia. I bring all my family here. You see me back next year. You bet.”

Unfortunately, however, the producer is nob always as fortunate as the wheat gambler. Someone in Regina figured out when wheat touched $1.35 that $50,000,000 had been added to the value of Saskatchewan’s crop, but as the Montreal Slur points out, invariably, “the large slice of the profit of enhanced prices will he swallowed up by the speculators and not by the growers.” It is an axiom in the grain trade that sudden increases in grain prices advance the price of bread to the consumer, but give the farmer no correspnnding profit. “If there is a lesson to be learned by the conditions revealed,” cornu "Ms the Slur, in its analysis of the midsummer market rigging of wheat in Chicago, "it is that something is rotten in our s\stern of marketing, if a few hundreds of speculators can rob hundreds of thousands of wheat growers of profits which rightfully belong to those who plant the seed and harvest the crop There are too many go-betweens, each taking the slice of profit, between the Goose Lake farmer and the man who buys his eleven-rent loaf in the city. What a

pity that the brains of the Progressives cannot be diverted from the abstract idealism of Free Trade to the concrete problem of the economic marketing of their own farm produce.” Actual Crop Prospects IT MAY or may not be true that the wheat crop of the Canadian West is seriously lessened. July estimates at best are guess work; Cora Hind refuses to start estimating until the end of August or early in September. According to current indications, there will be a decrease of some 375,000,000 bushels in the world wheat supply. “Although the enhanced prices which will naturally result will have the effect of limiting European demand,” comments the Financial Post, “world consumption is a fairly fixed amount and one seems justified in expecting well sustained, higher price levels.” Last year the Canadian wheat crop sold for $316,000,000, but even at the low estimate made by the Dominion Bureau of Statistics on July 15 of 318,640,000 bushels, the wheat would need to average only 99 cents per bushel to yield as large a total revenue to the country as last year’s out-turn. There seems little prospect that the average price will be as low as this, when prior to August 1, a price of $1.40 had been reached. And decidedly bullish factors govern the situation. The following table representing the yield and value of the Canadian wheat crop for the last decade becomes interesting in an estimate of the revenue to be expected from the coming crop:—

Year Bushels Dollars 1914 ............ 161,280,000 196,418,000 1915 ............ 393,542,600 356,816,900 1916 ............ 262,781,000 344,096,400 1917 ............ 233,742,850 453,038,600 1918 ........... 189,075,350 381,677,700 1919 ............ 193,260,400 457,722,000 1920 ............ 263,189,300 427,357,300 1921 ........... . 300,858,100 242,936,000 1922 ............ 399,786,400 339,419,000 1923 ............ 474,199,000 316,934,700 1924 ..... 318,640,000 (estimated)

..... Awaiting Definite Upturn

IT IS questionable, however, if thefe is not too. much disposition throughout Canada to sit and calmly await some definite sign of the “upturn.” It is excellent advice in this relation that a financial authority offered in New York the other day after a thoughtful analysis of the existing industrial and trade situation. Business conditions are only slightly different in this country and in the main what he said to his immediate public applies equally here. “Regardless of crops and politics,” he argued, “it is imperative that the business interests buckle down and work out their own salvation, rather than hope and wait for the so-called upward swing.” He offers the concrete suggestion that “banks and farmers, manufacturers and merchants alike must abandon the illusion that the cost of doing business is, or at least ought to be, the dominant factor in determining selling prices.” Apropos of which we have the invariable situation, that if the necessaries of life will not bring enough to cover the irreducible minimum expense of production, the output is likely to he curtailed with the result that price in time will rise usually to a level that will enable producers, or some of them at all events, to earn a profit. Is this not just what is happening in the business of farming?

“This is an eminently wholesome view to take of the curtent situation and one that ought to be adopted by many more than are at the present time willing to subscribe to it,” says the New York Journal of Commerce, conmenting upon this need of getting costs down to the irreducible minimum in all business. The paper adds, “There is entirely too much disposition on the part of th.e rank and file to rest on their oars and wait with almost an Oriental fatalism for aturn in the tide.” This question of costs, where it relates to manufactured goods, and of prices, where they apply to primary production, is of paramount importance to the farming community. “There are various features in the general position of the western farmer to-day that afford considerable ground for encouragement,” says the Manitoba Free Press, proceeding to explain, “There has been a steady and substantial rise in the price of wheat and there is, at the same time, a downward movement ih prices of manufactured goods. The result is to lessen the difference between the price levels of what the farmer has to sell and of what he must buy—which has been his main worry in the last couple of years.”

Western Canada, as the Winnipeg paper points out is “also interested in the European situation, since the accelerated restoration of Europe to normal conditions would meah the improvement of the market for our principal products.” Western Canadians will therefore be measurably cheered by the forecast of Sir George Paish, outstanding among British economists, that “the greatest expansion of trade the world has ever seen is in sight.”

Absorption of Securities

FROM the first of the year until July 15, Canadian bond sales, government, municipal, corporation and railroad, according to the compilation of A. E. Ames and Company, totalled, $178,157,000 of which amount $133,993,000 was absorbed within the Dominion. Our total borrowing in this period of 1924 was $23,176,000 less than in 1923; the reason, clearly will be found in the broad slow down of business and industry, the disposition to weigh carefully all further expansion of our industrial plant and of all municipal enterprise. Our borrowings in the United States market in this period totalled $40,414,000, which is by no means heavy, compared with previous years.

The lessening of our American borrowing has helped materially to correct the exchange position of our currency abroad. This, and the fact that there is growth in actual commerce and development of such an “invisible balance” as tourist trade has served to bring the Canadian dollar in New York nearer par.

No more intriguing financing prospect is presented than the flotation of the next Dominion loan, which is to be for an amount approaching $300,000,000 — chiefly to be used for refunding purposes. The accumulation of “cheap money” in New York lends promise to the federal government’s borrowing being accomplished this autumn at cheaper rates than have prevailed in a decade—British Columbia has just secured the “cheapest” money which it has borrowed of recent years—and the competition among financiers and bankers makes it wholly uncertain where the bulk of this loan will be marketed. Hon. Mr. Robb, before departing for Europe at the end of July, intimated that the next government bonds

would go to the “best market” and this probably means that the actual disposal of the bonds is contingent, at least to some extent, upon the volume of the next crop and the quantity of banking funds which will be required by the banks to handle the crop movement.

In the midst of our business problems it is refreshing to have had E. W. Beatty’s confident forecast of Canada’s ultimate progress, as expressed before the Advertising Clubs of the World, in London, England. Canada’s greatest asset, according to the C.P.R. president, is a courageous spirit of the people, “a spirit which breathes an unquenchable faith in the country’s future.”

_ “That spirit,” said President Beatty, “is possessed by Canadians in the highest degree and that is why they look forward to their future with confidence and unimpaired morale.”