BUSINESS REVIEW

Johnny Canuck Looks Over His Assets

J. HERBERT HODGINS January 1 1925
BUSINESS REVIEW

Johnny Canuck Looks Over His Assets

J. HERBERT HODGINS January 1 1925

Johnny Canuck Looks Over His Assets

BUSINESS REVIEW

J. HERBERT HODGINS

WE IN Canada have much to be thankful for.”

It was not a playwright choosing an intriguing title for dramatic appeal. It was not a lecturer expounding platitudes from a platform.

It was a banker of practical every-day business. It was Sir Frederick WilliamsTaylor speaking after he had given the Canadian economic situation a penetrating analysis.

“If this were a poor country, our case would be a bad one, but we have riches in our forests, our fields, our fisheries and in our minerals; also in the mighty water powers and in the industry and ambition of our people.”

No one in Canada is more conscious of the business worries by which the country has been beset and no one is more fully cognizant of the fact that Canadian business has not yet definitely emerged “from the woods.” But because of the Dominion’s fundamental soundness the critically examining banker gives Johnny Canuck’s balance sheet an official “O.K.”

Midas, of Greek mythology, gloating over his accumulating piles of gold, induces no healthy reaction. Midas personifies greed and selfishness: the accumulation of gold for gold’s sake.

Johnny Canuck, giving his vast resources a satisfied once-over, presents a cheerful, stimulating picture. Johnny Canuck is not dominated by selfish interest. He loves gold for what gold will do for humanity. He surveys his country richly endowed, and sighs for more people to come and share his treasure.

Immigration has been disappointingly small; we may as well admit it. And without gain in population production will remain proportionately slow. It has been demonstrated that if the countryside prospers the towns and cities will take care of themselves. So it is that upon the settlement of vast areas of presently idle acres and the full development of natural resources that Canada must chiefly rely for future natiqnal progress.

Figures of immigration into Canada for the five years ending 1914 show: 1910, 208,794; 1911, 311,084; 1912,

354,237; 1913, 402,432; 1914, 384,878. Since the war, immigration has been unimportant (1923, 137,000,) but the

prospects for a fresh influx are taking on definite shape. And, once under way, that influx is bound to be large.

In the western hemisphere, Argentina and Canada are, for European emigrants, practically the only countries where farming land is plentiful and cheap. Canadian Pacific Railway lands in the western provinces sell for $13 to $32 per acre, and, although the first-named figure does not cover land advantageously located, good land is available at from $30 to $35 per acre and irrigated land at from $50 and upwards per acre.

For the moment let us brush aside those political anomalies and international disturbances which have swerved our country somewhat from its main course of progress. After all, as someone recently said, if Canada were a private business enterprise, the situation would present no great difficulty. We are solvent, with wealth vastly in excess of our liabilities. A way would soon be found by following the obvious course, cutting down our overhead, and by re-organization _ and rigid economy. We would, thus, quickly return to a paying basis.

Swinging Into NineteenTwenty-Five

SWINGING into nineteen-twenty-five, Johnny Canuck carries a bagful of treasures which were his legacy from nineteen-twenty-four. Most important among these are various items labelled, “indices.”

Examine these indices closely and you will find them sub-indexed with such explanatory notes as, “recovery of trade,” “strengthened buying power among the farmers;” “continuance of Canada’s credit abroad;” “upward movement in domestic business,” and “important development of natural resources ”

Translated into the every day life of the community, it means that Mr. and Mrs. John Canuck have been given a comfortable home, with all the modern conveniences, pantries stocked with food, coal in the cellar and a motor car waiting on the side drive.

All Jack Canuck needs is a job, with wages, to keep the home going. Of income, however, he has ample for comfort, if he will avoid over-indulgence in luxuries. The cardinal virtues are invariably the backbone of a country: hard work and economy.

Net Annual Canadian Production

1920 1921 1922 1923 1924 Agriculture.............'...$1,519,842,776 $1,092,422,570 $1,148,693,525 $1,253,679,400 $1,403,679,000 Forestry................... 408,831,482 258,326,785 266,406,716 270,000,000 265,000,000 Fishing.................... 49,241,339 34,931,936 41,800,210 42,566,545 60,000,000 Mining..................... 213,041,895 162,926,722 177,031,603 214,019,832 213,680,500 Hydro Development........ 65,705,060 73,376,680 82,328,866 91,141,296 90,000,000 Total Primary Production 2,256,662,552 1,621,983,592 1,716,270,820 1,871,406,073 2,032,359,600 Construction............... 185,874,044 276,396,407 277,840,000 314,254,000 289,000,000 Manufacturing............. 1,558,544,194 1,151,970,226 1,130,866,629 1,108,249,297 1,090,000,000 Total Secondary Prod’n 1,694,418,238 1,428,366,623 1,408,706,629 1,422,503,297 1,379,000,000 Grand Total............ 3,951,080,790 3,050,350,215 3,124,977,449 3,293,909,370 3,411,359,500

ARTICLES IN BUSINESS REVIEW SECTION

Johnny Canuck Looks Over His Assets......./. Herbert Hodgins 25

Press of Dominion Scolds Public for Apathy.......Hubert Hope 28

Making Money by Budgeting Your Business.........A. E. Nash 29

The Uncaptained Host.................Bernard K. Sandwell 34

Retain Your Illusions, Counsels C.P.R. Head......E. IV. Beatty 34

$600,000,000 Life Insurance in 1924...........A. M. Allan 35

Canadian Banking is Sound.......Sir Frederick Williams-Taylor 36

Financial Questions and Answers......................... 38

Johnny Canuck’s income, from all sources in 1924, is estimated to have exceeded $3,411,359,500. This compares with $3,293,909,300 in 1923, and $3,124,977,449 in 1922.

There was $365 for every man, woman and child in the country.

The table herewith presents a complete analysis of the Dominion’s income from production, the figures for 1924 being an estimate by the Financial Post, and of course subject to revision as the new year’s returns reveal.

Net Annual Canadian Production

ALTHOUGH Canada is chiefly agrarA ian, increasing revenues develop yearly from other branches of industry, notably from manufacturing and the fuller development of “untapped” resources— mining, fishing, forestry and furs.

Significant beyond any phase of the Dominion’s economics was the recovered . purchasing power of the Canadian farmer. The 1924 wheat out-turn of 271,622,000 bushels was 200,000,000 bushels less than the 1923 crop. Fortunately for the farmer, however—due to a world crop shortage—the price advanced to $1.75 per bushel, from $1 in 1923.

Canada’s gross agricultural income should be about the same for the two years. The net income, however, should be measurably higher. Threshing, labor and transportation costs were less. The farmer’s margin of profit is thus greater and his opportunity to place himself upon a sounder financial basis is broader than it has been since the abnormal and “inflated” years—1915, for instance, when not only a “bumper crop” was harvested in the Canadian West but unprecedented prices were secured under the pressing need of war.

The 474,199,000 bushel wheat crop of 1923 enabled many financially embarrassed farmers to “get on their feet.” The proceeds of the 1924 crop, except for isolated and aggravated instances, should be a debt-paying crop in Canada.

The value of the principal field crops was estimated at the close of the year by the Dominion Bureau of Statistics at $946,663,000 for 1924 as against $899,166,200 for 1923.

Indeed, so remarkable is the agrarian rehabilitation that Sir Vincent Meredith, Bart., president, Bank of Montreal, gives it as his opinion that “it may be concluded that farming in the West, where intelligently pursued, has become a stable industry.”

Hurrah for Canada! Well over one of the great economic barriers of the reconstruction era and not down!

We cannot help being a trifle exuberant. It is in avery Canadian’s make-up. Throughouv the period of agricultural and general business depression—as it was, too, during the dark days of the Great War—we have pressed our lips tightly and carried on.

But the thought that perhaps nineteentwenty-four may have been for Canada what Armistice Day was to the world is too joyous a prospect to be suppressed. We are compelled to give way to our moment of exuberance; just as pent-up waters invariably break through sooner or later.

Building Up Canada’s Trade Credits

CANADA’S foreign trade figures lend further encouragement to Canadian business men and therefore are of vital concern to every member of Johnny Canuck’s family.

In the course of the Dominion’s progress Johnny Canuck, salesman, has penetrated the far corners of the world with his wares. He has carried farm implements to Africa and to Russia, he has taken automobiles to England; newsprint to Australia. Oh, the romance of that international barter!

We were told the other day by Hon. T. A. Low, minister of trade and commerce, that our prairie farmers, so to speak, were changing the traditional

appetite of the Orient. In other words, each year sees an increasing sale in Japan and China of flour, made in Canadian mills, from prairie-grown cereals. A people whose chief item of diet for centuries was rice, now becoming wheat bread consumers! A triumph, indeed, for Number One Northern!

The result is that Vancouver in five years has assumed national significance as a grain terminal. From the port of Vancouver last season were exported 25,000,000 bushels of Alberta and Saskatchewan wheat.

Alexander Macdonald, Winnipeg’s octogenarian merchant prince, once expressed the conviction that geography was not all “luck,” but that it was part of the Divine Architect’s plan for the universe. Mr. Macdonald’s creed would embrace a concrete reason for Canada’s two “front doors” for sea commerce.

Sir William Edgar Nicholls, chairman of Spillers Milling and Associated Industries, Limited, a great British enterprise, made very clear his apprehension of the traffic of Canadian wheat to the Orient when a few months ago he announced the company’s intention of extending its milling activities to western Canada.

“Should the tendency of the rice-eating population progress and become general,” he said, “it would seem imperative that the homeland should be able to create a prior claim on the Empire’s production, and this is best accomplished by linking up the interests of the Old Country with Canada or some other dominion that will give us the necessary supplies. I look on Canada as the granary of the empire.”

Creating Records in Country’s Commerce

FOR the year 1868, and, indeed, until 1882, Canada’s foreign trade did not exceed $200,000,000 in value per annum. The per annum volume of forty years ago is now exceeded, monthly. In 1899 the total reached $300,000,000 for the first time; in 1902, $400,000,000, and four years later definitely swept passed the half million dollar mark—never to “look back.”

Each succeeding year new trade records were achieved until in 1918 with the full force of our war industries’ contribution to commerce, the vast total of $2,549,702,370 was topped.

Under the post-war trade stimulus, Canada continued to participate enormously in international commerce, culminating in a total of $2,450,587,000 in the fiscal year 1921. In the following year, our foreign trade slumped to $1,501,731,341.

We have been convalescing from this collapse ever since. In 1923 there was a slight recovery, which swung forward steadily, but by no means spectacularly. In the year just closed—fortunately from the viewpoint of the general business adjustment—Canadians restricted their buying abroad. _ Simultaneously, we succeeded in disposing of a greater amount of our national production, notably of our exportable wheat surplus.

In eight months of the 1924-25 fiscal year, from April 1 to November 30, last, the excess of Canadian exports over imports amounted to $175,755,300, as compared with an excess of $80,135,800 for the corresponding period of the previous fiscal year.

One notable sequence was the return of the Canadian dollar to par on the New York money markets. The Canadian dollar which less than four years ago suffered as heavy a discount, in international trade, as twenty per cent., was first of the international currencies to recover normalcy in the United States.

Bolstering Canadian Credits Abroad

THIS strengthening of the Dominion’s foreign trade credits unquestionably foreshadows a not too distant recovery of domestic business. In all probability, it will be one of the developments of nineteen-twenty-five.

There is just this mitigating circumstance, however. Foreign competition which for some time has been anticipated is now being felt in several basic Canadian products in neutral markets. This situation is due to the advantage which exporting countries, abroad, possess in their depreciated currencies and cheaper and perhaps more industrious labor.

Where Our Canadian Dollars “Go to Roost”

Here is a summary of the national internal, physical wealth of the Dominion of Canada based upon statistics of the Dominion Bureau of Statistics and other reliable data:—

Owned by the People Generally

Urban real property (assessed valuations and exempted property and estimate of undervaluation by assessors,

and for roads, sewers, etc.)....................... $5,944,000,000

Household goods, clothing, motor cars, etc.............. 1,144,000,000

Canals (spent to March 31, 1922) ..................... 141,425,400

Total ........................................!.. $7,229,425,400

Owned by the Farmers

Farm values (land, buildings, implements and machinery

and live stock, census 1921) .....................\ $6,586,648,100

Agricultural products (in possession of farmers and

traders, 1921) ................................... 1,396,223,000

Total ........................................... $7,982,871,100

Owned by Corporations and Business Interests

Mines (capital employed 1921) ........................ $ 559,514,100

Forests (estimated value of accessible raw materials,

pulpwood, and capital invested in woods operations) 1,197,660,000 Fisheries (capital invested in boats, gear, etc., in primary operations, 1921; capital in secondary operations in-

cluded under manufacturing machinery)........... 25,648,600

Central electric stations (capital invested, 1923)........ 581,472,500

Steam railways (investment in road and equipment)____ 2,159,298,000

Electric railways (investment in road and equipment)... 186,519,400

Shipping (estimated census 1918) ..............-,...... 100,000,000

Telegraph and telephone systems (cost of plant)........ 158,678,200

Manufacturing machinery (1921 census of industry)____ 610,068,600

Stocks of raw materials and manufactured goods (1921

census) ......................................... 1,362,535,800

Imported merchandise in store (estimate based on imports

during year) .................................... 660,000,000

Specie (held by Government and chartered banks and estimated for public holdings) ....................... 202,000,000

Total ........................................... $7,803,395,200

Total estimated national wealth ..................$23,015,691,700

A homely instance, too, of the penetration of the domestic market was brought forcibly to the attention of Christmas shoppers who found Toylands stocked with made-in-Germany toys.

Johnny Canuck’s family must be watchful of their purchases abroad. Strawberries in January and February are a luxury import which tend to increase the volume of our unnecessary buying away from home. The more we sell of Canadian products to foreign buyers and the more we deny ourselves of foreign products, the greater national progress will be achieved. Certain imports invariably represent a loss of wealth to the Dominion.

Our favorable trade balance has been built up chiefly from the following exports:

Agricultural and animal products. .. $619,000,000 Wood and paper, including pulp . . . 256,000,000 Minerals and their products....... 158,000,000

Johnny Canuck’s trade and commerce with Uncle Sam continues upon an enormous scale. Johnny Canuck is Uncle Sam’s second best world trade customer. This is of course accounted for to no small degree by geographical circumstances. Canadians find buying “across the line” convenient.

In 1924 a significant attempt was made by the federal government to divert Canadian trade to empire sources. Important new avenues of trade were paved, by means of trade treaties with Australia, New Zealand and the trade mission to the West Indies.

Value of Canadian Mineral Output 1900 ......$64,420,877 1907 ...... 86,865,202 1914 ......128,863,075 1921 ......171,923,342 1901 65,797,911 1908 ...... 85,557,101 1915 ......137,109,171 1922 ......184,297,242 1902 ...... 63,231,836 1909 ...... 91,831,441 1916 ......177,201,534 1923 ......214,019,823 1903 ...... 61,740,513 1910 ......106,823,623 1917 ......186,646,821 1924*.....216,000,000 1904 ...... 60,080,771 1911 ......103,220,994 1918 ......211,801,897 1905 ...... 69,078,999 1912 ......135,048,296 1919 ......176,686,890 1906 ...... 79,286,692 1913 ......145,634,812 1920 ......227,859,665 •— Estimated.

Uncle Sam is doing measurably more of his foreign buying in Canada, each year, as he becomes more dependent upon our natural resources. At the present Uncle Sam is our most important buyer of pulp and paper products. Many of the metropolitan newspapers of the United States control paper mills in this country to assure their constant supply. The Chicago Tribune, for instance, is printed upon Canadian newsprint.

Tapping the Dominion’s Natural Resources

T^VERY now and then, in a burst of TL oratorical enthusiasm, some gentleman tells the world that Canada’s hidden wealth has only been “scratched.” Looking to the longer future, such an assertion may be correct. Few of us now living would dare compute the wealth of hinterlands to the North of presently settled Canada.

The remarkable development of the Rouyn mining area in northern Quebec during 1924 is an example. Aeroplane transportation brought the hitherto inaccessible within relatively easy access. Gone are the heartbreaking hardships of the early gold digger!

The records are convincing evidence that we have made at least a fair beginning at the process of “tapping.” The following table compares the production returns of the mining industry of Canada over a period of twenty-five years:

Three features are outstanding in mining development, the increased capital interest of both British and United States capitalists, the increased production and a significant increase in the revenue of transportation companies in the carrying of mineral products to their consumer destinations. British capital has continued to be retarded. The yearend rise in sterling and the prospect of sterling’s early return to parity strengthens possibilities of a flow of English funds for development work here.

When the final figures are released it is expected that Ontario’s gold production for 1924 will surpass previous records. Based upon the nine months’ statistics, an output of 894,$12 ounces, valued at$ 18,171,106, it is forecast that the final returns will show a $25,000,000 production.

With the exception of Norway and Switzerland, Canada has the greatest per capita water power development, and, according to J. B. Challies, C.E.,M.E.I.C., director o'f the Dominion Water Power Branch, next to the U. S., the greatest actual development—3,227,414 h.p.

Prior to the world war, the price of fuels was so low that ample motive power could be secured through their agency at such reasonable cost that the development of water power only took place where the natural facilities greatly favored it or where coal costs were relatively high. With the advent of war, coal costs soared and supplies became uncertain. At the same time power requirements became vastly greater and stimulated the development of “white coal.” The return of peace only slightly improved the coal situation. The result is that under stimulus of modern industrial life there has come an increasing demand for hydro power. Canada possesses abundant water power resources, waiting to be harnessed for public utility. There is known to be available 18,000,000 horse power.

Whereas in 1918 there were 795 cáfitral electric stations in Canada, at the commencement of 1924 there were 905. In the same period the capital investment increased from $401,942,000 to $581,472,500. Based upon contemplated development by 1930 there will be invested in hydro power enterprises an aggregate of $1,170,000,000.

The presently operating concerns have a total of 1,122,900 customers, 943,576 private homes being lighted with hydro electric power.

Apropos of which one may quote a business man who said: “Where is there a country, other than the United States, where so high a standard of living prevails? A large proportion of the community, notably farmers, who, at an earlier day knew little of luxury, now have their electric lights, telephones, motor cars and radios.”

Fishing Industry’s 1924 Record

CANADA’S fishing industry has been laboring under the dual problem of marketing and an expensive operating organization built up during the inflation period. Output reached the unprecedented point of $60,000,000 in 1918, but declined sharply in the next three years to $34,000,000. Since 1921, however, gradual improvement has been experienced. The 1924 output is expected to return to the total of $60,000,000.

Like our farmers, our 55,000 fishermen will have a more elastic purse for 1925 spending.

The existing fishing industry in the Dominion is, in the main, the growth of the last half century. In 1844, the estimated value of the catch was only $125,000. It doubled in the following decade and by 1860 had well passed the million dollar mark. Ten years later it had gained to six millions and this was again doubled by 1878. In the nineties, it passed twenty millions and in 1911, thirty-four millions.

Among individual fish products, the cod and the salmon long disputed the Canadian primacy; if the record back to the beginning is taken, the cod is the most valuable fishery. In the past fifteen years, however, the salmon has definitely taken the lead and the heavy pack and high price of lobsters have more than once sent cod down to third place. This has of course affected the relative standing of the provinces. British Columbia now occupies the leadership that formerly belonged to Nova Scotia.

Value of Canada’s Fish Catch by Provinces

1917 1918 1919 1920 1921 1922 1923 Prince Edward Island. $1 786 310 $1 148,201 1,536,844 $1,708,723 $9,924,523 $1,612,599 $1,754,980 Nova Scotia. . 14 468'319 15 143,066 15,171,929 12,742,659 9,778,623 10,209,258 8,448,385 New Brunswick 6’l43 088 6 298,990 4,979,574 4,423,745 3,690,726 4,686,660 4,548,535 Quebec........ 2’86O’419 3’414'378 3 4 568,773 175,111 4,258,731 3,410,750 2,592,382 3,336,412 3,065,042 1,815,284 2,089,414 2,858,122 2,100,412 3,159,427 Ontario....... Manitoba..... l’543’288 1 830,435 1,031,117 1,249,607 1,023,187 908,816 1,020,595 Saskatchewan.. 300 238 447 012 475,797 296,472 243,018 245,337 286,643 Alberta..... 184 009 318,913 333,330 529,078 408,868 331,239 438,737 British Columbi •n 518 595 27 282,223 25,301,607 22,329,161 13,953,670 18,849,658 20,795,914 ’ 67,400 37,820 8,800 33,100 28,988 10,107 11,917 52,312,044 60,250,544 56,508,479 49,241,339 34,931,935 41,800,210 42,565,545

Romance Almost Gone from Furs

ROMANCE the fur industry. has virtually The days gone of out the of “intrepid trapper” have given way to scientific methods and railway transportation has influenced the trade wherever it reaches. In short the old picturesqueness has succumbed to modern business.

Far cry, indeed, from the days when “Beaver” was Canadian currency!

Commencing with 1881, records of the value of production of raw furs in this country were obtained for the decennial censuses. In 1880, the value of pelts is

shown to have been $987,555 andin 1910 to have been $1,927,500. By 1920 the fur trade had been placed upon a definite business foundation, an international fur auction being established in Montreal where pelts valued at $5,057,114 were disposed of and, in the aggregate, the year’s fur business returned $21,000,000. This figure should not be taken to indicate an average year’s production, as abnormal prices were paid for pelts.

The following table will illustrate the extent to which the fur industry has been established as a going business concern:

Numbers and Values of Pelts Purchased by Traders from Trappers and Fur Farmers for Years ended June 30, 1921 and 1922 (latest available data)

Provinces Number of Pelts of Pelts 1921 1922 1921 1922 Prince Edward Island 5,678 7,167 256,137 $ 448,786 Nova Scotia.......... 53,051 52,472 112,948 188,887 New Brunswick....... 32,858 52,214 72,500 162,421 Quebec............... 374,167 402,799 2,061,853 3,326,626 Ontario.............. 739,113 1,101,556 3,048,815 4,959,492 Manitoba............ 505,177 643,299 1,055,865 1,690,278 Saskatchewan......... 341,839 798,066 717,149 1,679,812 Alberta.............. 539,832 682,266 1,087,164 1,377,139 British Columbia..... 120,499 283,867 507,134 1,568,009 16,126 69,796 78,189 203,402 Northwest Territories.. 208,068 273,288 1,153,840 1,834,015 Total for Canada . 2,936,407 4,366,790 $10,151,594 $17,438,867

Our Amazing Forest Wealth

UNDER business conditions to-day wealth is derived from our forests by two immediate sources, the lumbering industry and the vastly developed modern pulp and paper industry.

The clearing of forest land was the primary step toward the settlement of early Canada. To-day the clearing of forest lands is productive of enormous cash revenues, yearly. Lumber production alone is upon a $100,000,000 per annum basis. Exports of forest products from Canada for the 1924 fiscal year aggregated $273,000,000.

Last year 3,200 saw mills operated in the Dominion, employing 30,000 individuals, upon a pay roll approximating $27,000,000.

THESE, then, are Johnny Canuck’s material assets. This is his collateral for banking credit, at home and abroad; without doubt the finest, soundest, most far-reaching security any unit of the world’s surface has to offer. This is the reason for an abiding confidence in the future, a confidence which may properly overlook the uncertainties that arise with recurring cycles of business decline;

trusting in the homely virtues of the Canadian people and their inherent capacity for working out their own economic salvation.

“Canada, like the United States, is abundantly blessed by nature,” Otto H. Kahn, eminent American financier and banker, told Ottawa Canadian Club the other day. “Like us, you are free from serious problems, except perhaps one, namely, the problem of securing an adequate supply of population to take hold of your opportunities and bring them to realization. But that problem is very much like the problem of youth; time is certain to cure it.

“Moreover, the intrinsic value of these opportunities grows the longer they are unexploited. Canada is like one huge deferred dividend, of which your children and children’s children and their descendants will be the beneficiaries.”

Yes!

Canada is a treasure house of minerals, of furs, of forests, of fish, of water powers, of untold acres richly fertile and awaiting agricultural development.

“We in Canada have much to be thankful for.”