BUSINESS ARTICLES

THE`BUSINESS`OUTLOOK

Settlement of National Questions Necessary to Growth of Normal Business

JOHN APPLETON September 1 1916
BUSINESS ARTICLES

THE`BUSINESS`OUTLOOK

Settlement of National Questions Necessary to Growth of Normal Business

JOHN APPLETON September 1 1916

THE`BUSINESS`OUTLOOK

Settlement of National Questions Necessary to Growth of Normal Business

JOHN APPLETON

EDITOR’S NOTE.—In Canada there is a subsidence of the speculative spirit but not of generous spending by the paiblic, says the writer of the following article. He points out that Canadians with a sense of their national responsibility would not live on a scale as generously as that of our neighbor’s, who have no war debt to take care of. In Canada there are all the signs of prosperity thaï are to be found in the States. One has a big part to play in a big war and to play the part well it is essential that the nation put itself on a frugal diet.

IT can be taken for granted that Canadian factories for the present are doing all they can to meet the demands being made upon them. They are not, however, in a position to handle them all and it begins to appear that they will not be able, at least for some time, to do so. In a recent article The Financial Post pointed out that the demands made upon some factories were of a speculative character. Manufacturers only made the assertion that the quantities of some articles ordered totalled more than normal consumption would call for, the inference, of course, being that merchants anticipated that prices would advance and were anxious to stock up at present price levels. To even things up and make the gross output go as far as possible, the manufacturers asked their customers to cut their orders in two and in some cases still more drastically. Public opinion will, no doubt, view favorably the course pursued by the manufacturers in question.

It may be asked, however, Demands why the orders are so large That Are at the present time when so Not Being many of our men are at the Met front and there is less im-

migration at present than there has been for more than a score years. If there are fewer consumers there must be less consumption. That is very true, but there may be fewer consumers and greater purchasing power, the existence of which fully explains the odd conditions prevailing at present. It may be as well to point out that in some lines the demand is not strong and that on the market there is a surplus of goods. One manufacturer told the writer that he offered an article for which he thought there should be a demand at 10% below the current prices. He could not find a buyer. This, however, is the exception. On the whole the manufacturing plants of the Dominion are not all meeting the demands upon them and it is due to the very largely augmented purchasing power coming at a time when warehouses were low in stock.

The writer has discussed with many

business men the advisability of buying at present for stock and the consensus of opinion is that to do so is unwise. Most business men are of the opinDangers ion that the only safe course of Overto pursue under present cirbuying cumstances is to buy only

those commodities for which there is a quick market and to take vigorous steps to move anything that tends to stay on the shelf. Behind this advice is the certainty that conditions following the war will be very different from those now existing and no man can figure out what trend prices are likely to take and no man can, at the present time, say when the war will end. A number hold the opinion that the present thrust of the Allies will bring the war to an end before the close of the present year. This is an opinion not uncommon in the United States.

In a recent issue the well-informed financial editor of the New York Times wrote :

“To conservative business men a gratifying sign just now is a perSpeculative ceptible subsidence of specuSpirit lative spirit which was much

Subsiding in evidence not many months ago. The excitement that accompanied the enlargement of old manufacturing plants and many new ones to take care of the insistent demands for war purposes has largely spent itself. So, also, has the feverishness which led many merchants to stock up too largely, because of a fear that they would not be able to secure goods when they would need them. Perhaps the hardening rates for money may have had some effect in inducing caution in making commitments. Whatever the cause or causes, it is plain to see that the business community is setting its house in order and keeping its impulses in check, so that in course of time, a reversion to normal may be accomplished without undue strain. This is done too at a time when the prospects for the immediate future are as bright as they have been at any time within the last year or so. Industries are thriving, crop prospects are above normal, labor is well employed, and

the generous buying by the public shows no sign of abating.” The foregoing is very true of Canada, but there still exists a tendency to count too much upon the continuation of present extraordinary demands and on the part of the general public a tendency to dissipate the large earnings and profits on outlays that will not represent liquid assets when the new after-war era sets in.

All the indications of prosperity in the United States are to be found also in Canada. There is, however, one fundamental difference which must be kept in mind and it is that our exOurPosipenditures on war account

tion and have no counterpart in the

That of the economic position of our

United neighbors. They have a little

States difficulty with Mexico, but

it is trifling in comparison with great liquid and potential resources. Generous buying which characterizes the situation there is as much in evidence in Canada, and if it continues here the reversion to normal in Canada will be accompanied by greater strain than in the States. We cannot buy and consume generously and at the same time pay our legitimate share of the war burden. Accompanying the advantages of a commercial character that have come to us as a result of wars there is a disadvantage of generous and improvident spending. By elimination of the latter and the substitution of frugal living, Canada’s gross debt might easily be no more than at the commencement of the war. Nominally it might appear higher, but we would have to set against it a larger credit balance due to us by our Allies. At present, however, our credit balance abroad is not increasing at the same rate as our net debt. There is yet no cause of alarm. If, however, we continue to live at the same pace as the people are doing in the United States, and at the same time carry on our legitimate part in the war, it cannot reasonably be expected that the reversion to normal in Canada can be accomplished without more strain than in the former country. It is the national duty to live frugally and set aside to-day a store to take care of the great obligations that will be our right to assume when peace is declared. To-day Canada is dissipating much effort and wealth that might well be utilized as preparation for the day of settlement. While our industries are busy it might be well for Canadians to take stock.

Our neighbors believe that war will end this year and one of their reasons for so thinking is that they are receiving fewer war orders and of less volume. In Canada orders are still beMunition ing placed as fast as the Board and plants can turn them out. the End When one is completed it is of the War usually followed by a repeat order, a circumstance indicating that the Imperial Munitions Board does not look for an early termination of the war. “We thought we had cleaned up the demand for ammunition waggons,” said one manufacturer, “but just as soon as the authorities found, that the order was nearing completion the demand came to go ahead with another hatch.”

Under circumstances that are so prci mising of immediate profits, and are s, very exceptional the only course to tak let it be again repeated, is to take or] bearings carefully. No general would ris an army ever so well equipped into r gions he had not carefully surveyed ar determined the sources from which dai ger might arise. There are problen ahead of Canada some of which date fro' pre-war days and which have taken added gravity as a result of the wa Whatever they are the policy of the n; tion with regard to them ought to be la down definitely, and as quietly as po sible, so that they will not be a stumblir block to Canada’s reversion to peace co: ditions when the curtain falls on tl drama being enacted on tl Settling war fields. At present oi

Belated country is prospering indu

National trially largely as a result Problems bountiful crops given i added value by the war aí largely also as a result of the confiden established in the Imperial Munitio' Board. Happily the Allied authoriti and the manufacturers of Canada have that body great confidence, which brin to our factories and workshops orde greater than their capacity to execu' Such is the confidence in the Imperi Munitions Board that financing their J quirements has become a matter of ve little difficulty. For the moment this the outstanding cause of general prospi ity. It takes first place in a series of c cumstances that bespeak very great pri perity for the Dominion so long as t war lasts. Enumerated these circu stances are:

(1) National confidence engendered the able administration of the wc of the Imperial Munitions Boar'

(2) Submission of the railway probl to a commission of outstanding ir whose experience has placed th beyond the influence of fads a faddists.

(3) Promise of a crop much above n mai and that will have a va equal to that of the previous ye

(4) The expansion of foreign trade a increase in available tonnage.

Of the foregoing not the least in i portance is the appointment of a cc mission to review the entire railway si ation in Canada. Through party sti and contending financial groups it 1 been lifted into a position which lo* more serious than it really is. Dome: bickering became so loud as to be he: by the investors that have done so mi to provide Canada with working capi' and that same bickering has been he: and has left a bad impression upon new investors, upon whom for some ye we may have to rely. The new comn sion will place our railway position in true light before the world. Tremend' obligations have been assumed sol through the initiative of the people thi selves. As cities, provinces and in tl capacity as a federated people Canadi; encouraged by offers of bonuses and lí

grants the building of railroads on a scale that ultimately was limited only by the ability to get capital. MisRailway takes were no doubt made, Question but the fact remains that, and taken as a whole, the lines

Business are needed as one of the chief and essential initial steps towards carrying out the ideals of thenation. Conscious of its possession of great resource, and energized by its participation in the great war, this young nation will not cease to strive towards the attainment of ideals which found expression, but partially in the great railway development of the past decade. The next step to take will be determined for us by the new commission. Happily it has a constructive purpose to actuate it and is not designed, as too many have been, to disclose and classify known weaknesses so as to serve more effectively as food for party bickering. Whatever may be the finding of the new commission it would form the basis upon which the nation’s plan for the settlement of the railway question should be determined. Behind this settlement there ought to be a united people determined that every dollar legitimately invested under their auspices shall be made good. When the nation does assume this attitude firmly and decisely one of the clouds on the business horizon, before and after the war, will have been removed. As long as uncertainty as to our railway situation hangs over the financial mind, and is sustained there by our own dissensions and party strife it cannot be reasonably expected that the capitalist from abroad will join us in developing our country. He will very naturally ask: What are you going to do about your railway question? Not until the nation speaks unequivocally can business enterprise on a permanent basis again take root.

A few days ago the general manager of the Canadian Credit Men’s Association made the statement that the position of the merchant throughout the prairie provinces was never better than it is to-day. This is not a statement made on the basis of general observation, but upon the basis of carefully ascertained facts. Mr. Detchon, who occupies the position referred to is a Westerner and has had practical experience in determining the credit standing of retail merchants, manufacturers and others with a view to actually giving them credit. What he says, therefore, may be taken to be the carefully ascertained views of a really practical man and are not those of a professor or a theorist, with or without half-inch rims. Without, however, relying upon what Mr. Detchon says it is only necessary for us to take up any up-to-date newspaper and examine the grain inspections at the chief points on the continent. The world has the idea that Chicago is the great and commanding wheat centre on this continent and in later years some of the glory of that city in this regard has fallen on Minneapolis. If, however, reference is made to the returns in question it will be found that grain receipts at Winnipeg at the present time, at the tail end of a crop year, are greater than the combined receipts at all other important inspection

points. Moreover, the cities of the West are becoming known for the amount of live stock assembled there to be marketed. No wonder, therefore, that Mr. Detchon is able to say that reports as to credit standing of Western merchants is better

than it has ever been before, and this at a time when we are in the throes of a great war. It means something to be part and parcel of the British Empire.