THE~BUSINESS~OUTLOOK

Canada’s Resources Are Telling in Business

JOHN APPLETON June 1 1916
THE~BUSINESS~OUTLOOK

Canada’s Resources Are Telling in Business

JOHN APPLETON June 1 1916

Canada’s Resources Are Telling in Business

THE~BUSINESS~OUTLOOK

By JOHN APPLETON. Editor of The Financial Post

EDITOR’S NOTE.—Canada ivill be able to sell abroad, says Mr. Appleton, enough of her wealth of cereals, paper and minerals to maintain a huge balance in her favor. For the twelve months ending February, that balance ivas $300,000,000, and in the face of tins the value of her paper and minerals, especially, are moving up rapidly. In exports of silver the increased value h\ a year will, Mr. Appleton says, be at least $10,000,000.

SOMEONE who read this column last month asked me a few days ago if I still considered conditions were as sound as at the time the article referred to was written. Certainly. If anything, the position of Canada, although her expenditures on war account are increasing, is stronger. Given a normal crop this year and a continuation of immunity from physical damage at the hands of the enemy, conditions in Canada will be quite prosperous for the remaining portion of the year. Fortunately all the chief raw materials necessary to prosecute the war are to be found within our own territory. Canada, for instance, has abundance of ore, abundance of food supplies and abundance of paper, a surplus of which is available for President Wilson to indite thereon his lengthy notes to the Kaiser. All paper mills are extremely busy. If transportation facilities across the Atlantic were available our export of paper would show still greater increases. Of this manufactured article Canada for the twelve months ending February, 1916, exported $19,502,728 as compared with $15,365,636 in the previous period of 1915. But the increase in paper was not proportionately as great as that with regard to metals, minerals, etc. In official returns they are grouped under that head. At the end of February, for a twelve-month period, the value of the exports stood at $118,506,000 as compared with $60,928,000 for the previous twelve months. Practically, therefore, in this particular line the exports doubled. Equally as startling are the increases in shipments of provisions. That term does not include cereals, that is, wheat, barley or oats, but only butter, cheese and meats, principally bacon and ham. The total of these exported for the twelve months ending February amounted to $65,405,731 as compared with $40,947,195 in the previous twelve months, showing an increase of about 50 per cent. Another article of food Canada exports largely is fish. For the 1916 period the total value exported was $22,000,000 as compared with $18,500,000 in the 1915 period. Of course Canada stands out in the mind of the world most distinctly as an exporter of bread stuffs. For the twelve months ending February, 1915, the value of our exports amounted to $110,345,000, but at the end of February last they stood at $229,034,028 or practically

an increase of more than 100 per cent. By a comparison of our total exports of domestic produce, that is, what the country itself produces, the increase was $300,000,000, or from $391,000,000 in 1915 to $698,000,000 at the end of February last.

Our prosperity at the present time and our hopes for prosperity for the rest of the year depend upon our ability to export in the way we have done Why Canduring the last twelve ada’sExports months. The prospect is Will Increase that in the next twelve in Value months our exports will be equally as great. Of course, as we stated a month ago, so large a crop as last year cannot be expected. But there has to be exported during the current twelve months as large a quantity of bread stuff which, in terms of bushels of wheat, is quite as great at the present time, that is, May, 1915, as the entire crop of 1914. So that Canada has at the commencement of her great producing season as much cereal produce on hand as can be expected from a normal year’s crop.

We start the producing season with a big crop ready to ship, and which we have had in store during the winter. If we add to this the next crop, be it small or great, the gross result is likely to be above the average. If it falls below the average it will be due to very exceptional or quite unprecedented weather conditions. So far the spring has been normal and not later than it has been many times in the past. But in addition to our great cereal output the exports of Canada will be very materially added to in the future, so long as the war continues, by the output of mines, which is but one source of our natural wealth which is so potent in times of stress such as at present exist. Let us devote a little time to the matter of that one metal, the price of which has set the dealers in silver shares all agog with ex^ citement. Toronto brokers have been waiting for such a time as this. Shares are being turned over by the hundreds of thousands and already one merger has been announced. Whenever a boom begins to get on its feet the merger and the promoter heave into sight and through their agency some fortunes will be made. But aside from the incidence of the manipulât-, or, the silver mines are coming into their own. Dozens of mines which were worth

nothing at all when silver was selling around 50 cents an ounce will become rich mines when the price of that metal is 75 cents. But just at the time the price has gone up chemists have about perfected a method of utilizing low-grade ore profitably. This will mean that as the price of the white metal goes up the cost of extracting it from the ore will be going down. This will add very substantially to the wealth of Canada.

A year ago silver sold at 50 cents an ounce and at the present time it is approximately 75 cents. The value of our exports run to about $14,Why the 000,000 a year on the 50Price of cent basis. On value alone

Silver Has the increase during the

Advanced next twelve months will be about $7,000,000, but high figures will very greatly stimulate production. The increased yearly value will at least be $10,000,000. It is quite probable that prices of silver will remain high for many years. This opinion is general amongst metal men. The war’s effects are very far reaching and do not omit from their scope such a metal as silver. War caused gold to be practically withdrawn from circulation in European countries, and in consequence silver has been minted into shillings, francs and roubles, for the purpose of paying the armed forces of the Allies, as the paper money of their home country was not always acceptable where the troops are engaged in conflict. India and China also have bought silver in very large quantities and are likely to continue to be more extensive purchasers. The Sultan of Egypt has decreed that the Indian silver rupee be legal tender in his domain at a fixed rate of sixty-five millièmes (Is 4d) a rupee as consequence of the presence of Indian troops in that territory. This is interesting as a step forward in co-ordinating the local currency of the British Empire, and also an indication of another drain upon the stock of silver rupees in addition to that arising for the upkeep of the Mesopotamian expedition. Not being able to get gold, silver, of course, comes into demand. Canada is the third largest producer of silver, the annual output being 30,000,000 ounces as compared with 67,000,000 produced by the United States and 55,000,000 by Mexico. Given higher prices it is quite likely that the Canadian exports will not only be larger in bulk but also in values than they have hitherto been. As with silver so with other metals such as lead and zinc; the price is not only very much higher, but the quantity being produced is greater than hitherto. World production declining at the same time as the demand is increasing cannot but give to Canada’s output a much greater value, but will also vastly stimulate the industry.

Quite recently in British Columbia a zinc smelter has been established and is now in operation. It is true that this industry will be aided at the War Orders outset slightly by a DominandPermanion Government subsidy. ent Business However, the fact remains the business is established. Another development also under the auspices of the Consolidated Mining and Smelting Company is the installation of

an electrolytic copper refinery at Trail. This means that copper will be refined in British Columbia, and by this means at least $2,000,000 will be paid in transportation. Hitherto the blister copper has been sent to eastern refineries, not in Canada, but in the United States. The Consolidated Mining and Smelting Company through the influence of the war has added equipment that enables new lines not hitherto produced in Canada to be made. But it is not the only industry to do that. The Dominion Iron and Steel Company at Sydney has established chemical plants the profits from which are said to be now practically at the rate of $1,000,000 a year. At Sault Ste. Marie, at Hamilton and other points the producing resources are being vastly strengthened. Under normal conditions to do the same thing, capital would have to be raised at a very high cost. At present, however, the necessities of the nation require that these additions of so important a character must be made and are being made at the public expense. True it is that they are to serve war exigencies, but when their usefulness in this respect is over they will be very great factors in extending Canadian trade in times of peace. In manufacturing centres it is recognized how very important it is that copper and spelter should be refined and made available for so many different classes of manufactures in Canada. When the war is over the basis will have been perfected for a multitude of small industries. All this means greater readiness on the part of Canada to turn to account, in the days of peace, the great natural wealth it is her good luck to possess.

Since the outbreak of the war there has beer, steady accumulation of savings by the Canadian people. To go back no further than January, 1915, we find that the chartered banks carried as Canadian savings deposits $667,000,People Con000. From that time until tinue to Save the end of December of Money that year there was a

steady increase, the total then being $721,000,000. There was a slight recession in June of that year but that was the only month when a decline was shown. In January 1916 savings fell off about $6,000,000, which no doubt was due to the subscriptions to the war loan at that time. It will be remembered that the Government asked for $50,000,000 and got $100,000,000. February of this year witnessed an increase of $14,000,000, and at the end of March another $10,000,000, or in two months $24,000.000. At the end of April when the Government statement is issued, it will not be at all surprising if savings deposits alone do not reach the figure of $750,000,000. Within the year the increase in this class of deposits alone in the chartered banks reached $62,000,000. There has been, however, an increase in deposits in other institutions as well. From the returns of about twentyseven savings companies doing business in Canada the writer has compared the savings at the end of December, 1915, with those of December last, and the increase is approximately 12 per cent., or from $20,000,000 to $24,000,000. The Canada

Permanent at the end of the year had on deposit $6,013,897 as compared with $5,250,765 at the end of 1914. The Huron & Erie Loan Company had on deposit at the close of last year $2,394,623 as compared with $2,012,155 at the end of the previous year. If we turn, however, to the actual cash on hand which the said twenty-seven companies had, we find that they had in their tills at the end of the year $8,500,000 as compared with $6,250,000 at the close of the previous year. Not only are the banks well stocked with cash but our other financial institutions are also. It is quite evident, therefore, that if the Government comes to the country for another domestic loan that it will be readily taken up.

But to turn to another class of company to which we have become accustomed to regard as always being in debt to the bank. And so they were. At the end of last year, however, they had, instead, of a debit, a credit balance of very considerable proportions. Some one has gone to the trouble to compile the cash assets of a number of industrial companies as at the end of the years 1914 and 1915, as here-

Company.

National Steel Car A. Macdonald Co.

Steel Co. of Canada ____

Can. Fairbanks-Morse .. Standard Chem. & Iron.

Can. Con. Rubber ......

Illinois Traction .......

Can. Westinghouse .....

Can. General Electric .. Riordon Pulp & Paper..

Winnipeg Elec. Ry.....

Canada S.S. Lines ......

Penmans Limited .......

Dorn. Power & Trans ...

Canadian Cotton ........

Dominion Linens .......

Bell Telephone .........

Shawlnigan W. & P....

Smart-Woods Co.......

Inter. Nickel Co........

Canada Cement ........

St. Law. & Chi. Nav.....

Ford Co. of Canada ____

N.S. Steel & Coal ......

Standard Reliance M____

Can. Foun. & Forgings.. Toronto Railways ......

1915. 1914.

$ 12,230 $ 6.513

62,722 33.S96

182,691 99,407

305.053 120,436

14,614 ......

71,180 57,363

163,451 148,092

1,078,253 512,779

477,631 S2.8S4

13S.701 40,909

182,448 13,922

138.054 131,566

166,378 21,621

33,680 7,593

1,811 406

12,569 529

2,160,732 1,512,534

435,573 107,350

6,530 2,524

4,457,398 1,907.888

610,459 7,048

385,714 S,22»

2,609,998 1,257,032

566,189 13.1S6

138,403 114,170

257,832 ......

572,134 819,347

$15,245,458 $7,027.824

We have not checked all the foregoing figures, but as several examined were found to be correct, the balance was accepted as being so. They indicate the very great change that has been effected in the position of many of the leading industries of the Dominion and it is because they have been able to turn to good account so much of the natural wealth the country possesses. We are not unmindful of lhe fact that in some classes of industries, notably the textiles, there is a great dearth of certain classes of raw material, dyes, etc. But while these are hard to get the big essentials are available. Our paper may lose much of its whiteness which in times of smiling peace is so much in request but in times of stress the clayey appearance is tolerated and becomes acceptable with usage.

Canada it is admitted, depends very much on the farmer. It is true that the city man and the city Farmers Never woman regard him as Had Better impossible. The former

Outlook says that he is never

satisfied, and the other says that he always wants too much for the eggs and other produce that he brings to the city home. In their hearts, either of the home or the economists, the farmer is the man on whom the present and future of the country is based. To-day he gets for his hogs about $11 per cwt., as compared with $8.50 a year ago. Whether hay or cattle the prices are higher. Cereals are somewhat lower than a year ago, but they are still above the average. Prom month to month the exports of the country, originating with the farm home, will be very much greater than they are usually, and this means money for the homemakers of every country side. It may be said that the farmers will have to pay high prices for the things he needs. All round, prices are very much higher. Theoretically that may be true. But the shrewdness of the farmer in trade, whether the selling of a cow or cabbage, is of the same kin that makes him avoid purchases when prices are high. What is there, when it comes to a show down, that the farmer has to buy? He is more in the habit of “making things do,” and “getting things done” without outlay than city people and this accounts for his being able to save more in times of high prices and times of stress. It is the rural frugality that is the backbone of the country’s financial soundness.

There is one great danger ahead of Canada and it is that the earners of the high wages will not economize but waste away their earnings in pastimes and frivolities that keep other people from doing useful work. If, for instance, all the cinemas were closed what a number of men and women would be released for more useful work at this time, and what would be lost? Nothing of value. What educative work is being done by the picture show is more than offset by the foolishness that is cinemaed into the heads already too prone to frivolity. But there are luxuries which eat up national wealth and vitality to a more alarming extent than the picture show, and it is against them the country will have to be on its guard if the present prosperity is going to add to commercial stability.

If the people can be induced to hang on to their savings, and live as economically as possible there will be no reason to be anxious with regard to what will happen at the close of the war. There will be no reason to be anxious, economically speaking, during the war. But if we allow our public debts to pile up as we waste our substance in unnecessary extravagance the end of prosperity will he brought very much nearer. Sound business is better than “roaring” business. When people waste their earnings and make business “roar” for a time a quick reaction brings remorse. The war is making business “roar” for the time being, and if while doing our best under the circumstances profit is made, that profit should be saved as a reserve against the next great change, the character of which the wisest do not pretend to foresee.