THE~BUSINESS~OUTLOOK

There’s a Sound Basis for Prosperity

JOHN APPLETON May 1 1916
THE~BUSINESS~OUTLOOK

There’s a Sound Basis for Prosperity

JOHN APPLETON May 1 1916

There’s a Sound Basis for Prosperity

THE~BUSINESS~OUTLOOK

JOHN APPLETON

Editor of The Financial Post

EDITOR’S NOTE.—April and May, according to Mr. Appleton, will be as busy months from a business standpoint as Canada has experienced. There’s a dearth of labor and it limits the expansion of business, but within these limits the productivity of Canadian soil and the ingenuity of her people -.an be under present circumstances turned to greater account than at any previous time. Canada is prosperous because her greatest products are the urgent needs of the belligerents.

A MONTH ago we were able to point out that in Canada during the current twelve months no less than $610,000,000 will be expended on account of the war, either for the maintenance of the Canadian Expeditionary Forces or the making of ammunition for the Allies. The big orders involved are now being carried out, and new ones are being placed every day. During the last week or two announcements have appeared in the newspapers to the effect that orders running into millions are being added to those already booked. In addition to the orders for shells there have been huge demands for food supplies. Most of the readers of this column will have noticed in the newspapers an order for $100,000,000 worth of canned rations. Previous to the announcement of this particular order the Chicago newspapers told of Canadian buyers being in that market for hogs with demands that put up the price. To fill such an order no doubt it would be necessary not only to tap the United States supply of hogs, but also to place part of the order with United States factories. These orders and this instance are referred to merely to show what is going on in Canadian factories. It would take more space than is at our command or than could be usefully occupied, to deal with each separate order the writer has knowledge of. Suffice it to say that at no time in Canada’s history have the industrial plants been employed so fully.

An obvious feature of to-day is the high wages being paid, and the dearth of labor. When labor is hard to get wages are generally high. That is axiomatic. Such a condition makes business hum. A glance over the floors of the leadEverybody ing general stores of any Being Emcity in Canada at the preployed at. sent time during hours of Good Wages the day when shopping is generally done will leave the impression that the country is very prosperous. Over the counter goods are being sold at high figures and the buyers are not only ready to pay but they want high quality. No better sign need be looked for if one is needed as evidence of general prosperity. If you ask any manufacturer of clothing he will tell you that the mothers are buying plenty of clothes for the youngsters. They have more

money now than they have had for many a day. Even during the boom times of 1912 and 1913 the boys were not better clad nor were mothers as a whole furnished with so much cash to buy the wherewithal they are proud to pay for.

For some reason or other, not quite obvious, outsiders seem to have the impression that Canada should be suffering at the present time, and not prosperous. No other reason for this impression exists than the fact that Canada Why Should is at war. It does not Not Canada seem to dawn across the Be Prosperceptive faculties of perous Now? some of our neighbors to the south of the line that Canada is not Belgium, Servia, or even Germany. She is at war along with other nations of the Empire and will no doubt be at war until the central powers of Europe are vanquished. But Canada happens to have the very resources that are most needed for the maintenance of the Allies’ cause. Her great crops are needed as food supply not only in the United States, but in France, Italy, and elsewhere. Her industrial plant was turned to effective account. Shells were produced as rapidly a9 the more highly developed and older-established plants in England could produce them. Canada, moreover, set an example to Australia which that country is endeavoring to emulate. In this connection let me quote from our esteemed contemporary, Canadian Machinery and Manufacturing News: "Broadly speaking, and by virtue of our intimacy with shell manufacturers in Canada since its inception, we are perhaps more familiar than most with what has been actually achieved by our metal-working plants. In addition, it is on record that the editorial columns of this .journal furnished the first reliable data on the manufacture of high explosive shells to Australia. One of our special Shell Numbers—July 1, 1915, was re printed in booklet form in toto, together with the accompanying illustrations, by the Australian Commonwealth Munitions Committee, Melbourne, for the information of Australian manufacturers of munitions. Sufficient evidence is therefore at hand to show that tin odious comparison set up and sought to be drawn between the two colonies was illconceived.

An eminent Australian authority, the Engineering and Machinery Review, says of Canada:

“In the production of munitions Canada has shown a promptitude and a power of organic

ation which leaves every other British com aiunity hopelessly behind. From her hastily adapted shops she landed satisfactorily sheii cases in Great Britain even before the private factories of that country got going on munitions and by now she has delivered them to the tune of many thousands of pounds."

In addition, therefore, to the great resources of food which Canada has to place at the service of the Allies, she also has the output of splendidly organized munition plants. The wealth outturn of her industries and of her fields has therefore brought about in Canada a state of prosperity that is very exceptional, despite her having sent to the front approximately 200,000 men.

These facts are referred to, not as indicating what business is going to be like during the next twelve months or beyond that period, but to Indicate that there is a sound basis for prevailing prosperity. What Canada is spending in maintaining her expeditionary forces is being more than compensated for by the added value the circumstance of war has given to her products. If we give Canada her real place amongst the nations from a business standpoint we will see at once that she is not at ail abnormal in being prosperous. For instance, take Japan, one of the least active of the belligerents, who nevertheless did her share in fighting the central powers. She took the initial step to oust Germany out of China. From a commercial standpoint that was a great achievement. But her outlay in proportion to her resources has not been as great as that of Canada. But Canada has greater food resources than Japan. While the floral empire is extremely prosperous at the present time and is likely to continue so, "it must be attributed wholly to war. When Germany raided Belgium, Russia and England were entirely unprepared for such a contingency. No country expected or was prepared for the attack. France was in a better position from the standpoint of ammunition than either Russia and England and the two latter countries in consequence had to turn to Japan, the United States and Canada. The effect of this demand upon Japan made that country prosperous, the United States also, then why not Canada? Japan can ship all kinds of ammunition to the Allies, but she has no food supplies to sell in so large a volume as Canada. In both respects, that is, in the supply of food and the supply of ammunition, Canada has exerted and distinguished herself and in consequence the basis of her prosperity at the present is sound. While doing this—a purely commercial part—that other more important part, providing men, has not been neglected.

Standing on the dock, a captain well known in Eastern Canada said to the writer that he had already engaged for his boat several crews. “A week ago,” he said, “I retired with a comfortable mind, having signed up all Labor Shortthe men I needed. A few age a Serious days elapsed and three or Factor four of them turned up in

khaki. ‘Captain, we couldn’t resist.’ ” That is all there is to it. The Captain started to engage another crew, and is continuing to do so, but he feels he

will never know that he can get a crew until he gets them on the boat and off shore. There are factories all over Canada endeavoring to get adequate help. Quite a number of them actually report reduced output on account of lack of labor. Orders are being offered to them only to be declined. One manager calls female help together once or twice a week and urges them to look out for all the girls they can. At these two-or-three-minute gatherings the point is urged that the prosperity of the factory means steadier employment for the girls. Such is the pressure being exercised to obtain adequate labor. Let us point out here that these factories we have in mind are not employed in making clothing for our forces, but for domestic consumption. For some time dealers all over Canada have been selling from stock as much as possible, and the demands for such stock have been light. Since last fall, however, when so great a crop was evident and the price for the produce of the field was so encouraging, the buying has been srteady and is improving. January and February were perhaps a little slack, but as spring advances the demand will become stronger. The people have the money to buy goods and they will buy them. Economy, such as followed the outbreak of war, could not last, as we have pointed out in this column quite frequently. Actual wear and tear have to be replaced. No doubt in prosperous times there are many extravagant people who do not make the best of their boots or their clothes, or get out of them all the wear they have in them. Boots are discarded when the cobbler could have fixed them up and made them presentable; so with clothing. But after the tailored patches have replaced holes, and heels of old boots are cobbled, they will nevertheless wear out, and the time comes when new garments and new shoes are imperative. If the factories stop for a certain length of time and the storekeepers do not keep continuously replenishing their shelves, there is bound sooner or later to be a reaction, and that reaction has come now. So long as the war continues there will be great demands upon Canadian factories. Their competitors in the United States, in Germany, in Britain, in France, Belgium and elsewhere are busily employed or occupied in other things than exploiting the Canadian market. The consequence is that Canada will have to take care of her own trade so long as the war continues, and her industrial plant is none too large for the undertaking. The war also has another effect which we have already referred to, the creating of a great demand for our resources in food and ammunition production. So long as the Allies need our ammunition and need our food supplies, tradesmen in all parts of the country and factories will be fully employed. That fact ought to instil confidence into business generally, the only uncertain factor being the duration of the war.

If Canadian farmers can maintain the good reputation of the last four or five years in so far as production is concerned, the foundations of business prosperity

will be greatly strengthened. Not for a moment is it probable that What Will that the crop of the current the Farmers year will approximate that Produce? of last year. Such a phenomenal crop cannot be expected to occur twice in succession. We have the precedent, however, for such a thing in the United States. Last year they had a bumper crop; so they had in the year previous. Canada two years ago had the poorest crop in her history. We were fortunate in that prices that year were high and Canadian agriculturists received as much for their produce as they normally do. Last year was phenomenal. An average crop, say, of wheat for Canada would be about 230,000,000 bushels as against the abnormal crop last year of more than 350,000,000 bushels. It would be imprudent of business men to figure upon more than an everage crop, say, of 230,000,000 bushels of wheat, and other grains accordingly. In this connection some rather pessimistic statements have been circulated, one being to the effect that the total acreage prepared for crop in 1915 was 13,372,615 and at the present time not more than 8,038,051 acres are already prepared. There is a nominal diminution of approximately 5,000,000 acres. These figures are not accepted as being reliable; that is, in so far as the final crop acreage is concerned. No doubt land tillage was interfered with in the fall of 1915 by reason of the very heavy crop and in the spring of this year tillage will no doubt be hindered somewhat byhauling grain which could not be shipped at the normal time in the fall of last year. It must be remembered, nevertheless, that a very large acreage of land was prepared for seed. Out of the big crop last year farmers have considerably strengthened their resources in power and implements. It will be noted that at many points in the West car-loads of horse9 are arriving from other parts of Canada and are being readily picked up by the farmers. It must be noted, also, that in addition to laying in a better stock of horses, greater attention is being given to cattle raising. Implement men report that demands upon them have been quite unusual. One bank manager in a note to the writer said that in his district the recruiting sergeant had taken away about thirty-six men. This fact alarmed him somewhat, and in consequence he discussed the matter with a number of his farmer customers. It was their impression that the loss of thi9 number of men would not materially interfere with the acreage under crop or the amount of grain taken off it. Other means would be found of getting the work done. No doubt the farmers will be equal to the occasion and find some way of serving their country by producing as much as normally they do.

The heavy fall of snow in the West during the winter will be of some assistance to the farmer. Sloughs will be filled, thus ensuring a good crop of feed for cattle, and hay. April will, of course, be the critical month in so far as seeding is concerned. Usually the snow is gone by the commencement of that month and there is little likelihood of any of it being left this

year at that period. Taking into consideration that the farmer generally has become more efficient from a productive standpoint, from year to year, it is quite reasonable to assume that the West will have a normal crop this year, despite the hindrance resulting from labor shortage, which to a certain extent will be offset by added efficiency in power in organization. A normal crop, therefore, can be looked for, but not a normal increase. In any case if the crop is slightly below normal the prices are likely to be high, and therefore from a business standpoint satisfactory.

Some figures were published recently and attributed to official sources which showed that the number of head of cattle in Canada was in 1915 approximately 300,000 less than in 1910. There are still, however, some very large Some Record herds of cattle in Canada Prices for which are at the present Live Stock time becoming more valuable every day. The maintenance of a score of million men in the trenches in Europe, to borrow a newspaper expression, is already beginning to tell, as far as cattle prices are concerned. The sale of prime beeves in Chicago on March 23 at $10.05 per hundredweight indicates what is taking place. For Stockers and feeders as high as $8.25 has been paid and at Toronto during March beef cattle sold as high as $8.75 per hundredweight. From present indications the number of live stock marketed in Canada will be less this year than in the previous year, but the prices promise to be higher. As we have indicated previously in this column, Western provinces are giving more attention to mixed farming and to the breeding of hogs and cattle. Of course the same thing is being done in the other provinces of the Dominion. Hog products are especially in great demand, and are bringing high prices. There seems no doubt but that the prices of live stock will remain high for a very long period inasmuch as herds all over the world are being depleted to satisfy the unprecedented demand for war purposes.

We have said a good deal about activity in our fields, but below the surface in various districts in Canada there is also exceptional activity. Coal and metalliferous mines in the Maritime Provinces are very active, and their Below Suractivity is only limited by face Activities the supply of labor. LikeUnusual wise at the other end of

the Dominion in the Crow’s Nest Pass there is unusual activity. Smelters in British Columbia make great demands upon the coal mines. Every ton of concentrate requires about three tons of coal. At no time in our history have smelters been busier than at present. The Franco-Canadian Coal Co., which is owned by Belgians, is opening its mines and expects to turn out a thousand tons per day, which will be increased to 2,500 by the first of the year if labor is available.

Not less active are the metalliferous mines both in Nova Scotia, Ontario and British Columbia. The silver mines have received great encouragement through

the advance in the price of silver from 57 to 60% cents. The gain is attributed to various causes. European countries require it for coinage, but in addition India and China are making great demands. The Mexican situation, of course, has cut off the supply from that country. It is fully expected that silver will continue to ascend its price until some 70 to 75 cents is reached, a fact of some significance to Canada. Last year our silver output was valued at $14,088,397 based on a value of 49.684 cents per ounce.

In New Brunswick the lumber cut will be very much larger this winter than was anticipated at the commencement of the season. Returns from the New Brunswick Railway Company’s Among the land show a cut of 65,000,Lumber 000 feet fully equal to last Mills. year’s figures. On the St.

John the cut is 53,500,000 feet. In other localities the cut is regarded as being quite equal to former years and will keep the mills active. In British Columbia orders booked for shingles amount to 50,000,000 shingles in excess of the actual stock on hand, more than enough to keep practically every mill in the Vancouver district busy for at least a month. Orders are still coming in. General lumber orders continue to be in excess of the supply at the present time. This condition is naturally turning the attention of operators to the woods. Shingle bolts are high in price and in consequence attractive offers are being made to lumber men to get busy. But the winter has been unfavorable; snow being so heavy, and then again the question of labor arises which is a serious one.

A good deal has been said about Canadian prosperity and it might just be as well for business men to look carefully to what is being done with the savings that should result therefrom. It will be noted that the February bank statement shows an increase in savings deposits of approximately $13,000,000 or figuring the savings deposits and the deWhat Use mand deposits together the

People are increase is approximately

Giving. $17,000,000. After paying

up the war loan of $100,000,000 Canadians are accumulating money very rapidly. Obviously all the money being earned through busy factories and productive fields is not being expended but a considerable amount is being put into the banks as savings and invested in securities. Although savings accumulated to the extent of $13,000,000 there have been invested many millions in government loans and other forms of security. One bond house is said to have imported bonds from Great Britain and marketed them in Canada to the extent of $1,000,000 per month. The writer has good reasons for believing that this figure is reasonable. Savings only make this possible. When the Government decides to issue another loan in the course of a few months no doubt it will be as readily subscribed as the first loan. Every dollar put into a Government loan or loaned to Britain means so much of our debt wiped off. We have through the government and our banks given a credit to the Allies

now of over $100,000,000 and we have invested in one of our own loans $100,000,000. If the war continues no doubt Canada will furnish still greater credit to the Allies, equalling the amount of our own expenditure on war account.

During February there was a slight expansion in commercial loans and also an expansion in Canadian bank notes outstanding. This is a sure index of increased business activity. When the March returns are available there will, no doubt, be a further expansion along both lines and it will continue through the months of April and May, two months that should rank amongst the busiest in Canadian commercial history. Not only will there be a tremendous accumulation of produce ready for shipment across the ocean but there will be large orders of a domestic character. The great question in those months, April and May, will be that of labor. Canada will gain vastly more by the thorough organization of her industrial resources and in this work there is a splendid opportunity for leaders especially representatives In Parliament who by that right are looked to as the source of activity in mobilizing the labor and industrial skill of the nation.