The Business Outlook

A Revival will Result from the Wealth and Prosperity of the Rural Population of Canada

JOHN APPLETON February 1 1915

The Business Outlook

A Revival will Result from the Wealth and Prosperity of the Rural Population of Canada

JOHN APPLETON February 1 1915

The Business Outlook

A Revival will Result from the Wealth and Prosperity of the Rural Population of Canada

By JOHN APPLETON, Editor of The Financial Post

WE are now well started on the New Year and the outlook for business is no clearer than it was at the commencement of the war. Anxious eyes are peering into the future. The bank president cannot see very much further than the day laborers, and of the two possibly the latter has the least about which to worry. Everyone has his own cause for some more anxiety than usual. Whether it be the care of a cottage housing a city laborer’s family or the conduct of an industrial undertaking upon which the comfort of a thousand homes depend, the duty never has had before it greater

uncertainty than that which enshrouds the remainder of the present year.

Happily for Canada this condition applies only to the city—not to the farm laborer or operator. The calamity of war affects Canada adversely, in this instance at least, only in her cities. War costs will, of course, be shared by all but the advantages in the form of higher prices for the products of the farms, all go to the tiller of the soil and the rancher. So long as war continues and its ruthless hands do not interrupt, and there is no possibility of it doing so, the productive operations on Canadian soil there is no

*Estimated on basis of returns for the first eight months of current fiscal year.

EDITOR’S NOTE.—Mr. Appleton accentuates the fact that the outlook for the rural imputation of Canada is very bright and that trade with it should be better in 1915 than in 1914. In view of the great void being created for all kinds of farm produce through devastation in Europe, and the employment of millions in consuming and destroying in place of producing, the demand for Canadian products will be heavy, with results that will stimulate business. Not only will the demand from Europe be heavy but that from the States will not be negligible as our neighbors will not have a bumper crop every year.

doubt but that the rural population of Canada will profit very largely. On this point all authorities seem to agree.


On this central fact the welfare of the various classes that constitute a typical village community depends. There are storekeepers, professional men and others whose services are essential to a rural life. If these communities are healthy and prosperous there need be no fear for the remainder of Canada. The rural population—of the farm and the village or town—is the backbone of the Dominion and always will be. If all is well with this class there can be no real cause for alarm. Our climate is fairly reliable and if during the coming year the weather man sends us but normal weather the farmer will have as much produce to sell as he ever had and he will get more money for it.


For the last two years the railway builders and the money borrowers, those who have brought to Canada approximately $2,500,000,000, have been anxiously looking to the soil to produce more. We are not pointing this out in a critical sense. The man who homesteaded and lived on the farm has been the most pressing borrower and it is on his behalf that most of the money has been obtained. The distribution of the borrowed money has helped, no doubt, to make business active. The after effects of all the borrowing— many say it is over-borrowing—have been adequately dealt with hitherto and we need not go further into that matter now. At the commencement of the past year the leaders of the nation were urging more production. On the other hand a very large number of brainy and imaginative Canadians were boosting real estate and “blowing” about what could be done rather than of what they were actually doing. This class still enthused by large profits which had been made had not entirely disappeared. But all the “horn blowing” for which the necessary wind could be raised would not induce the wheat to grow or induce more people to come to the land to make good the promise of i eal estate speculators. Circumstances, and the Kaiser, combined to finally eliminate the speculator and enthroned the idea that to make good real estate had to be used and cultivated.


When it was the principal commodity of domestic and foreign trade disaster was sure to follow. With 1914 much has rone respecting which Canada need have r.o regrets. That year, however, gave us the lesson of production which will be the great asset it left for the nation. For years the cities have been robbing the villages of the talent and the energy that was needed on the soil. To-day the problems of the city are driving back to the land men and capital. Attempts are being made to hold the unemployed in the cities by “making” work for them. It is a fundamental error for which the nation will have to pay. The greater the pressure to get men back to the land the bet-

ter it will be for the nation—and for business.


Although we had war, financial paralysis and collapse during 1914, the rural districts of the Dominion were not affected except in well defined districts that were unfortunate in respect of the weather. Farmers got more for their produce than usual; they paid their debts as well or better than usual and look upon another year as having prespects for their material welfare better than those which faced them a year ago. The harvest of 1913 was bountiful but the price was low and it had a sobering effect. A check was given to buying unnecessaries. That year, as well as 1914, were characterized by the liquidation of much debt. At the close of the latter, a week or two ago, the farmers were in the position of having economized, perforce, to a very large extent, for about two years during which they “nibbled” at their liability which now forms a smaller ratio of the wealth they now possess. Since the declaration of war still greater care and economy has been exercised. Under the circumstances it is no wonder complaint with regard to the way in which their liabilities have been taken care of is of rare occurrence.

What we have said applies to Canada, taken as a whole. In the West the conditions, generally, have not been quite as favorable as in other portions. The crop failed in limited districts so completely as to necessitate the action of the Government on behalf of the suffering farmers.

Speaking generally, however, the farmers have been economical now for two years; they have paid off much of their liability and their wealth is greater than ever. This attitude has resulted in quieter business for the tradesmen and in general trade contraction. But we cannot attribute to the farmer responsibility for all our trade contraction. By far the greater proportion is due to the cessation of large capital expenditures in the form of railway building and other large enterprises. That part of our domestic trade which originates and is sustained as a rule by the farmer is the steadiest and the most reliable. In the earlier months of the present year it will be found that many failures will take place, but they will not be due to an extent appreciably exceeding normal, to the delinquences of the rural consumer, or impairment of his purchasing power. His wants constituted the most normal element in trade during last year and his wants during the ensuing year will be, if present prospects hold, larger than usual and will in our opinion result in setting in motion some of the present idle wheels of industry.


Starting the New Year we find the rural districts of Canada in a position that they have not hitherto faced. At no time have the chances of higher prices for every kind of farm product been better. It is all very well to talk of prospects but what are the foundations of our belief in this? It is patent to everyone that mil-

lions of men usually employed in producing more than they consume are now engaged in destroying much and consuming more than usual. This will create a great void for the very products for which Canadian soil is best fitted to produce and at no time in Canadian history has the producer been better equipped to produce. Not only is the market in Europe offering greater demands than usual but the gates are open wide to a market on this continent. The United States is taking our produce to a greater extent every year. The accompanying diagram which was prepared by the Financial Post shows the trend of our exports to the United States, and it should be remembered that the exports are those originating on the farm. Out of a total of $13,427,269 in living animals exported for the twelve months ending October last, the United States took $13,096,875. These figures together with some others are reproduced herewith to show how rapidly our trade with the republic to the south is growing and it is the farm that is at the root of this growth.

Farm Produce and F'ish and the Amount Sold

To U.S.

1913. 1914. 1914.

Aulmals, liv-

ing .......$ 4,919,677 $ 13,427,269 $13,096,875

Breadstuff? . 150,797,726 139,558,811 14,460,20;’,

Fish ........ 18,638,51« 18,781,072 7,583,241

Hay ........ 1,821,498 2,140,522 1,353,852

Hides ....... 8,359,700 8,442,660 8,412,434

As our business depends fundamentally upon the farmer we have no reason to be gloomy with respect to the future. Facts tell us, beyond question, that for our produce during the past year we have received more than usual and the prospect is that, for a very much larger production, during the current year the farmers will obtain more than they did in the past year. If there is any real distress in the country, or any class of business that is suffering it is because it has not been built upon sound foundations. That being the case it is to the advantage of Canada that it should at this time crumble and pass away and leave the land purged of what is not fit to live.

For all the operations on our farms there is every prospect of the banks of the country having all the necessary funds. For the moving of actual produce for which there is a real demand there will be no doubt as to the financing. During the last week of December last the Government statement covering the operations of the chartered banks of the Dominion for the month of November was issued and it disclosed a state of affairs that was indicative of steadiness, and which was re-assuring. Deposits by the public were shown to be on the increase and correspondingly commercial loans contracted. The latter movement is not unusual at that period of the year. For ever dollar the public had on deposit with the banks seventy-nine cents were out on loans. Usually the amount out on loans is eighty-four cents or thereabouts out of every dollar. Never before has the ratio of loans to deposits been so low. Another fact worthy of note in connection with the bank statement is that the aggregate of actual cash in the till, the amount due to banks from their correspondents abroad, and Government securities were very much larger at the end of November than it has ever been before. We may take it from these facts that the banks are in a position to take care of the legitimate commercial needs of the country during the year. One thing is sure the movement of any kind of merchandise will be facilitated.

The chief thing is that more wealth is being produced than is being consumed. That appears to be the position in Canada to-day. Undoubtedly the result will be more business in due course. If the producers are busy we cannot but think that even the industrial conditions in Canada will very soon right themselves. Meanwhile the village store, or any store that has business with the fanner and the producer need not worry as to business during the year. The prospect is that the demands from rural Canada will be quite normal before the close of the present year.