BUSINESS & INVESTMENTS

MR. BUSINESS MAN STILL LOOKING TO OTTAWA FOR HELP WITH HIS PROBLEMS

J. HERBERT HODGINS March 1 1925
BUSINESS & INVESTMENTS

MR. BUSINESS MAN STILL LOOKING TO OTTAWA FOR HELP WITH HIS PROBLEMS

J. HERBERT HODGINS March 1 1925

MR. BUSINESS MAN STILL LOOKING TO OTTAWA FOR HELP WITH HIS PROBLEMS

BUSINESS & INVESTMENTS

J. HERBERT HODGINS

WHETHER or not the Government wills, it begins to look as if the present parliament would be turned into a grist mill for the business man’s problems. The Government may have had other legislative plans in prospect, but the first month of the current session at Ottawa has demonstrated clearly that Mr. Business Man is looking definitely to Premier King’s administration to bring forward specific correctives for the country’s economic ills.

And what is good for Mr. Business Man—in setting the wheels of industry humming; in keeping Canadians, in the •mass, employed—is sufficient to keep all Canadians cheered up.

Fundamentally Canada may be sound. But at best the general business of the country can be described as no more than convalescent from a long period illness. The important indices of business are by no means buoyant. For one important thing, railroad earnings are lower: for the eleven months ended November last the C.P.R.’s gross was 5.6 per cent, lower than for the previous eleven month period (due chiefly to the smaller grain outturn in the West). Operating expenses, however, were held well in hand with the result that the net reduction was less than one per cent. The C.N.R. did not make as good a showing: its gross was reduced 6.1 per cent, and its net is 13.4 per cent, lower than the previous year.

The Dominion’s net debt, according to the figures as of January 31, shows an increase of .13 per cent, from $2,411,388,604 to $2,415,471,564.

Bank clearings for the twelve months of 1924 totalling $16,979,923,607 are two percent, lower. Grain receipts,August 1 to January 30, 1925, are thirty-eight per cent, below the figures for the same period of the previous year. In this instance—fortunately for the producer, but unfortunately for the grain carriers— the lessened harvest is more than offset by the measurably higher dollar return per bushel, with the recent sensational advance in wheat prices, due to international shortages.

The Financial Post tells us that Ottawa hears the voice of business. The question is, will Ottawa heed the plight of that voice?

“The signs are multiplying, showing that the agitation conducted by the Ontario Associated Boards of Trade and similar bodies for more adequate protection of industries; for reduced taxation; for a revision of the preferential trade legislation so that it shall be employed on a basis for concession; and for equitable railway rates reasonable to all concerned has made good ground. It would not be surprising if these demands were placed before parliament in concrete form,” declares the Financial Post, in summarizing the business outlook.

Problem of Taxation Acute

NO MORE serious situation confronts the business man to-daythroughout the Dominion, than the taxation problem. So far as the business man sees it, the Government is getting nowhere with a solution of this vexatious deterrent to our economic recovery.

Premier King, on the other hand, has made clear what he regards as the Government’s inability to “do some of the things that otherwise it would be in the national interest to do.” He virtually declares that tax pruning at this time is impossible, and this is the impression which is being increasingly stressed upon those business men who visit Ottawa.

Premier King says the national debt, with its interest burden of $135,000,000, annually, is fundamentally to blame.

“No government, except as it pays off this gigantic debt, can reduce this amount one cent or lessen the taxation involved in meeting it,” he pointed out in his recent Toronto address. “The sum of $135,247,000 must be raised in taxation to pay the national obligations before anything else is considered, or we become, not a heavily mortgaged nation, but a bankrupt nation.”

The Business Viewpoint

UNDER such a financial handicap, of course, efficient executives of a business organization would promptly proceed to cut down “overhead.” Presenting the strictly business viewpoint, Sir Herbert Holt’s recent utterances carry weight. Sir Herbert’s wide business associations make him keenly cognizant of the insidious inroads of taxation. “The continued increase in disbursement for taxes—municipal, provincial and federal— reflect the national situation with respect to the present habit of lavish expenditures by government agencies,” Sir Herbert said the other day to shareholders of the Montreal Light, Heat and Power Consolidated. He added: “It is a question that calls for serious, individual thought when a business furnishing public necessities is called upon to disburse in taxes the sum of $1,136,608—upwards of seventeen per cent, of the company’s net income.” The Canada Cement Company, too, offers an amazing instance of the remarkable pyramiding of taxation against industrial enterprise. Frank P. Jones, the general manager, states that this company for 1924 paid in municipal, provincial and federal taxes a total of $932,166.

Such vast amounts as these two companies have paid out in taxes cannot be extracted from general industry—as they continue to be with no immediate promise of a lifting of the rate of taxation—without continuing to hamper business, generally, and automatically retard employment in Canada.

“A tax burden,” as the Financial Post points out, “which amounts to one fifth of the total net revenue of all industries, including agriculture and mining, and which involves a per capita tax of more than sixty dollars for the entire population of Canada is, indeed, serious.”

The Drift Over the Border

CANADA’S excessive taxation, and its concomitant evils, undeniably has driven many Canadians to the United States. No good can come in shutting our eyes to the facts of the case, ostrichlike. Figures of the United States department of commerce show that for the years 1921, 1922,1923 and 1924, four hundred and forty-two thousand Canadians emigrated to the neighboring republic. Official figures do not reveal Canada’s actual population loss, however, because of the facility with which many from this country cross the border and fail to declare themselves to the United States immigration inspectors. Competent authorities estimate that fully half as many as paid the United States head tax slipped into the country unregistered.

As a contrast to this depressing economic consideration is the fact that in the three years prior to 1921 the Dominion expended four million dollars to

secure 355,000 settlers; and a further nine million dollars, in the three years subsequent to 1921 to secure 322,000 settlers. In other words, the country paid thirteen million dollars in six years to bring in as many settlers as Canada lost in three years by the outflow of our people to the United States.

Is it to be wondered that the aroused business interests of the country are quickening to the need of immediate, speedy, corrective machinery being set up at Ottawa?

General Business Situation

IN THE general business situation there is broad evidence that trade and commerce is not picking up as manufacturers, wholesalers and retailers had earlier hoped it would by this time. The volume of buying particularly by the public is still curtailed, although money is probably less “tight,” and from abroad there is somewhat healthier demand for our products.

Quite the most intriguing item of foreign buying of this year or of many years, as a matter of fact, is the Russian purchase of one million three hundred thousand barrels of Canadian flour. The Maple Leaf Milling Company of Canada will furnish one million one hundred and fifty thousand barrels and the Western Canada Flour Mills the balance.

“I do not believe an order of that size for any commodity has ever been placed before, the world over,” was the comment of D. A. Campbell, general manager of the Maple Leaf Milling Company.

“It means twelve million dollars’ worth of Canadian goods going abroad between now and April. It is equivalent to five thousand carloads of flour or one hundred and sixty-five trainloads, as they work now-a-days. That means two hundred and fifty million pounds or twenty-two shiploads of the size they have been carrying. It will take six million bushels of wheat to make the flour.”

Surely there is romance left in business —to swing a deal of this magnitude!

The order, too, will be accepted as significant of the broadening trend of export trade. This will be distinctly welcome to Canadian producers, naturally.

As a matter of fact our export trade has been giving a spirited account of itself in the past year, and to this extent contributing measurably to the uplift of business life. The latest statistics of Canada’s foreign trade disclose the position for the calendar year 1924. Exports of $1,058,057,898 compare with $1,014,944,274 for 1923, an increase of 4.2 per cent. Imports were reduced from $903,030,515 in 1923 to $808,195,573 or 10.5 per cent. The result was that the balance of international trading was distinctly in Canada’s favor, being $249,862,325 for the twelve months, compared with $111,913,759—a position improved at the rate of 123.2 per cent.

Our Natural Resources

THE perplexed financial and business situation has developed a significant awakening to the possibilities of Canada’s natural resources: in much the same spirit that the average individual looks over his capital holdings when his income falls behind.

Canadians when depressed at the thought of a national debt of undue proportions unconsciously dismiss the idea of worry with the thought that these resources, fully tapped, will pay the bill. This spirit undeniably has led to thoughtless expenditure.

It is not surprising, then, to see developing an apprehension for these natural resources, with a view to conserving them for Canada. In other words, Canadians are quickening to a realization of the unsound principles of spending from capital rather than from income. The first weeks of 1925 have witnessed a definite trend toward the policy of keeping for the Canadians those national heritages which, if converted, will bring about the fuller progress of the country, industrially.

The recommendation of the Royal Grain Commission for an export duty upon Canadian wheat, going to the United States, equal in amount to the tariff barrier erected by the FordneyMcCumber legislation, which was tabled in the House of Commons, at Ottawa, last month, brings before the Government a trio of economic conditions of grave portend.

Coupled with the question of a wheat export tax are the problems of pulpwood and hydro-power export, all three of which are of the utmost importance, as affecting the future of the country. The solution of these three questions may easily mean all the difference between haphazard progress and an established permanency for agriculture and industry in this country.

Advocacy of a forty-two cent per bushel export tax on wheat going to the United States as a definite “tariff reprisal” was not wholly expected. Additional weight is given the proposal, however, in that the chairman of the commission, Mr. Justice Turgeon, as Puisne judge of Saskatchewan, may be regarded as “knowing his West.” Obviously the key of the wheat problem is in the West.

The wheat export tax proposal lends point and support to the growing agitation for conservation of our hydropower and forest resources for Canadian industry. Sir Herbert Holt, president of the Royal Bank of Canada, Hubert Biermans, one of the outstanding pulp and paper manufacturers of the Dominion, the Canadian Pulp and Paper Association, Frank J. D. Barnjum, Hon. Arthur Meighen, and the editors of the influential publications throughout the country, including the Montreal Daily Star, the Halifax Herald, the Toronto Mail and Empire, the Toronto Daily Star, the Victoria Colonist, emphatically support the proposal to stop the free flow of Canadian pulpwood out of the country.

Canada last year received some thirteen million dollars for exported pulpwood. Retained in this country and converted into the finished product the return to Canada would have exceeded seventy million dollars. The difference between thirteen million dollars and seventy million dollars would have gone into the pockets of Canadians—to workers in Canadian mills, chiefly, and thence through all the avenues of daily trade.

Keeping Hydro Power Here

E. W. BEATTY, chairman and president of the Canadian Pacific Railway, has become a staunch advocate of keeping our hydro-power at home. “Canada has many natural advantages which we must concede form the basis of its future development and commercial expansion,” Mr. Beatty points out, going on to explain: “The possession of vast water powers is among the most important, and will be of the utmost importance in attracting industries to this country. It is, therefore, only the part of ordinary wisdom that these resources should be conserved in order that the country itself should realize the greatest benefit from them in the immediate and distant future. In these circumstances, I would think the granting of permission to export power would be a grave mistake.”

Patently, Mr. Beatty’s argument is fundamentally sound. Those who advocate that export of our “white coal” should be permitted, do so on the theory that the Dominion has much power which might be developed and which would not be required for its present commercial necessities or those likely to arise in the immediate future. They, therefore, argue that this wealth should be realized upon by disposing of it in the United States. Virtually the same argument is applied in the instance of our pulpwood.

But is such a policy not short-sighted? As Mr. Beatty says in the instance of the hydro-power, “Obviously the export of Canadian power would lead to the establishment of industries in a foreign country and occupation for many thousands of workmen. However, once permission were given and, in consequence of the power supplied, industries were established, communities developed and towns and cities supplied with light and power in a neighboring country, it would, I should think, be impossible to have the concessions withdrawn.

“If this is a correct deduction, then one of Canada’s greatest assets would be diverted to contribute to development elsewhere to the detriment of Canadian industrial expansion in the future.”