FEATURE ARTICLES

Better Business Than Usual

The Wonderful Record of Four Years of War

William Byron August 1 1918
FEATURE ARTICLES

Better Business Than Usual

The Wonderful Record of Four Years of War

William Byron August 1 1918

Better Business Than Usual

The Wonderful Record of Four Years of War

William Byron

Who wrote "Service and Super-Service," “Canadians in Mesopotamia," etc.

THE general manager stared moodily at the "special" that lay folded over on his desk with little else but the heavy red headlines showing. He looked worried, uncertain and even afraid

“Take a letter to Rawlins,” he said, finally, to his secretary; and there was none of the usual snap and decision in his tones. “Or, no, you write it yourself. Tell him we’re cancelling that last steel order. We may be forced to close up any day with war starting. Perhaps you had better wire him.

Make it definite, mind.”

After a moment’s thought, he went on: “Tell Mr. Hawkes to see me some time this afternoon to discuss what we can do about keeping the factory running. Write to Seeley & Co. and call off that deal for painting the offices. Then get the XYZ Advertising Agency on long distance and tell them to cancel every single advertising order they’ve placed for us. Make that flat. This is war and the Lord only knows what we’re going to be up against! We’ve got to pull in, conserve, save. I must get that idea all through this organization. Perhaps we won’t have any organization before long. If,” he added, fiercely, “any of those weakkneed jobbers go and cancel the orders they’ve placed with us, we’ll go out of business fast enough!”

A month ago the general manager sat at his desk with two telephones in front of him and barked orders at a battery of stenographers:

“Acknowledge this from Acme Wholesale Co. Can’t fill any more orders. We’ll be lucky if we get around to those already placed. And write to Rawlins and put it up to him plump and plain that if he doesn’t rush along that carload he promised we’ll pull our business away from him—after the war. We’ve simply got to have that steel or we won’t be able to fill those shell orders let alone get around to anything else. Tell him that. And now tell Hawkes to come in and we’ll go into that matter of having the whole factory go on overtime. I don’t care what they say—it’s got to be done.”

FROM August 4, 1914, to June 21, 1918, (when this is written) is a long jump. The four years that intervene have been the most trying, crucial, spectacular and profitable years in the history of Canadian industry. They have demonstrated many things. They prove that we have a reserve strength that can be depended upon in an emergency and that our business men are resourceful. That last has been very apparent. Business has “stood up” well. Every strange turn and unexpected handicap has been faced and met.

Take a bird’s-eye view of the four years! During the fiscal year ending March 1, 1914, the total trade of Canada, imports for consumption and exports of

Canadian produce, was $1,050,045,583.

For the fiscal year ending March 1, 1918, the total trade was $2,502,579,635. The increase during the same period in exports alone was 256 per cent.! This has been accomplished in the face of a severe labor shortage and a still more serious shortage of raw materials.

The wealth of the country has increased enormously in that time. In 1914 the savings deposits in Canadian banks totalled $663,679,223 or $86 per head. In 1918 the savings have swollen to $933,644,688 or $120 per head. This accession of wealth has been accomplished in addition to the $760,000,000 that the people have loaned to the Government for war purposes.

The four years of the war have been remarkable years in the business history of Canada. They have witnessed the smashing of precedents and the setting up of wonderful new records. Business has been remade on the anvil of war necessity.

THE story starts with days that were dark indeed. If there was any silver lining to the war clouds it required a superhuman share of optimism to see it.

War came so unexpectedly that the business men of Canada were absolutely dumbfounded. It was a situation they had never faced before. The possibilities were so grim and unlimited that the impulse of business generally was to “crawl into its shell.” Orders were cancelled wholesale, advertising was withdrawn, deals of all descriptions were broken off. Looking back to those first awful days of the war, business men are inclined today to wonder why they were so panicky and to underestimate the real gravity of the situation.

It is to be wondered at, however, that we came through as well as we did. Canada had just experienced two years of hard times. Business had been very flat.

The Western real estate boom had burst wide open. The war came, literally, as the last straw. Many factories closed down, moratorium was declared in some provinces, unemployment became a grave problem. The report of business failures came thick and fast. During the fall of 1914 and the succeeding winter the crisis was very grave indeed. The slogan

“Business as usual” had been seized upon and it was used enthusiastically by the newspapers and public speakers. But business was not as usual. Business was bad.

In the spring of 1915 the turn came. War orders were beginning to

come through and manufacturers perceived for the first time the prospect of prosperity arising directly out of war conditions. Machines that had been idle all winter were altered for the purpose of shell making or were replaced by new. The rush of enlistments had solved the labor problem.

Orders for all variety of goods began to arrive from across the seas. Equipment was needed, food was needed, everything, in fact, that we could produce and ship was sure of a ready market.

JN 1915, therefore, began a period of gTeat prosperity. Not only was business good but there were no disturbing elements such as developed later. Materials were not scarce—not as we understand the term now—and the labor problem was not in any sense acute. Our exports that year increased by over twohundred million dollars and for the first time our balance of trade was righted. To put a fitting climax on this period of rejuvenation, Mother Ceres opened her bountiful arms to their widest and Canada had the greatest crop of her history.

From that time on there has been no slackening of industrial activity. Difficult conditions have arisen. Materials have been getting shorter all the time and the prospect of an absolute end is faced to-day in some lines. Metals are particularly scarce. The labor problem has grown steadily worse as the drain of enlistments has continued. But through it all, industry has marched on to ever larger achievements of production and an all-prevailing prosperity has marched in its wake.

During four years prices have more thandoubled in most lines; in some cases they have doubled several times over. The cost of living has pyramided in a giddy spiral. This condition is inevitable, of course, and has contributed to the general prosperity, making increases in wages possible—and necessary. Space does not permit of a survey of the advance in prices but the figures are truly astonishing. The upward trend has made the farmer a veritable plutocrat.

Our war prosperity has been so general that practically all branches of business have benefited. With the few exceptions there have been exceptional circumstances. The best method of securing an estimate of what has been accomplished during the four years is to consider each branch of industry in turn.

Agriculture is the basic industry; and the scroll of history writes one fact large, that agriculture flourishes when men goto war. The Canadian farmer has had to work harder than ever before but his

reward has come back to him in the shape of a vastly increased earning power. The farmer makes to-day at least twice as much as he did back in 1914. In the West where that ideal combination has been achieved—big yields on high markets— the rancher is quite literally rolling in money. Mortgages have been paid off, expensive farm machinery invested in, automobiles purchased. Cases are known where the yield of one season has sufficed to clear off a steep mortgage.

It is significant that Canada’s yield per capita of food materials produced from the land has become the highest in the world. A table compiled by the United States Department of Agriculture gives the following percentages:—

Canada ........................... 100

Argentina ......................... 80

United States ..................... 64

Australia ......................... 35

German Empire .................... 30

Austria-Hunsrary .................. 29

France ............................ 25

Great Britain and Ireland........... 8

TN approaching the subject of manufacturing those who look at the figures alone are apt to be carried away with extravagant dreams. It is true that the four years have witnessed a most gigantic increase in exports—in fact, from $431,588,439 in 1913-14 to $1,540,027,788 in 1917-18. It must be considered, however, that a large part of this is in munitions and, when the peace pact is signed this industry will be summarily lopped off. It is not possible for Canadian manufacturers to maintain their present stride right on into the piping, and perhaps less prosperous, times of peace and we must expect some diminution of the figures. It is an amazing thing, however, that the manufacturers in the face of all the handicaps have been able to rise to the situation on such a scale.

It is not desirable to go into figures to show how and why this great increase has been effected. The fact remains that it has been done and that not only have manufacturers made money, but their employees have also. Paying wages as high as $60.00 a week for purely mechanical work has been a phenomenon of our period of war prosperity. It has, in fact, become almost a commonplace. As the old song says, “War is a bountiful jade.” War costs us dear in the wasted blood of our best and bravest but this terrible war has unquestionably quickened circulation in the arteries of world commerce.

The only worry that manufacturers have now is to fill their orders. The textile people, for instance, are afraid that the Government is going to need so large a share of their production for the army that civilian needs will not be attended to. It is a serious situation, truly, but it spells the opposite of trade stagnation. It means high prices, double shifts, feverish activity all around.

The wholesaler has made money in the trying period since the dogs of war were loosed. It has been a steadily-rising market and the distributor who cannot make money on a rising market is misplaced. Of course, the wholesaler faces the certainty that ultimately he is going to see a declining market, when he will inevitably have to write off losses.

War conditions have so completely upset the markets of the world that there have been remarkable opportunities for the ingenious and far-sighted.

Talk to buying agents in any line of business and stories will drop from them of business coups and quick stratagems that have made neat little fortunes. Take, for instance, the case of the clean up that a Montreal fruit man made in Italian lemons. We’ll call him Despard, chiefly because that is about as far removed from his real name as anything that can be selected.

The market for Italian lemons is New York and buyers go there regularly in season to bid for the shipments which arrive in off the ships from Italy. Advices by cable are sent of the loads shipped and so buyers can judge when it is best to get to New York to buy right. The war upset this by making it impossible to get cabled information as to what was travelling on the high seas.

It so happened that Despard learned from an indirect source that heavy shipments of lemons had been made rather • earlier than usual and so he promptly made for New York ahead of time. The day he got there he found that, instead of 40,000 boxes as had been expected, there were 175,000 already on hand and the need urgent for getting them sold and away. A price of $3.00 would have been about the average had the usual conditions prevailed, but Despard drove a hard bargain and got all he needed for the season at 75 cents.

He made quite a little “velvet” also by foreseeing the time when Spanish onions would not be plentiful. The only other place where onions of that variety are grown is Mexico. Long before the time when it became difficult to get shipments from Spain on account of the shortage of ships Despard paid a visit to Mexico and bought up certain sources of onion supply. When Spanish onions became scarce, the house of Despard always had a ready supply.

The Spanish onion that you find so

piquant and delightful probably grew in sunny Mexico.

THE retailer has had his up and downs and has come through the ordeal well. It is in the mind of the public that the merchant has been making a literal fortune but it is a fact nevertheless that the bigger prices which the grocer and dry goods man and shoe merchant charge carry no more profit than the lower prices of a few years back; therefore, the percentage of profit on the money invested is less. It is equally true that only by being alive to new opportunities and adapting themselves to new conditions, have the merchants been able to keep up with the hot pace at all.

Take for instance, the case of Varley, a men’s wear dealer in a large Canadian city. Varley had a smart shop in the downtown section which cost him a powerful amount every month in rent. He kept it attractive and right up to the minute because his trade was with the young men about town. He sold more $1.00 ties than he did of the 50-cent variety and he put away more silk underwear than any other men’s wear dealer in the town.

When the war came along, Varley’s customers dropped gradually into a new sphere of life where ties were no longer necessary and silk underwear a dream of the luxurious past. Varley had to make a number of shifts, more or less rapidly too. First he grabbed at the buoy of military trade and sold all variety of supplies for soldiers. It was good business while it lasted, but after a time this began to peter out and then Varley started in and rebuilt his whole scheme of business. He rented the whole floor above him, put in a stairway and opened an upto-date boys’ department. His main store he modeled on lines designed to catch the middle-aged man. The switch was effected just in time to save himself. To-day Varley the Natty Outfitter has become the Practical Purveyor to Paterfamilias.

Whole trades have found :+ necessary to swing the axes on which they revolved. The hardwareman, for instance, found that his business in builders’ hardware to be practically gone for the time being. He swung almost unconsciously into new lines. Automobile accessories are now netting him more' than he ever made out of building materials. It is no secret for example, that the hardwareman sold nails on a margin of about 10 cents a keg or about 2 per cent, which was poor business. He does better on the goods that he sells to the motorist.

The war has been a severe test for merchants in all lines. The unfit have been weeded out. Many of them went down and out early, others made their exit lingeringly. Even the fittest who have survived have been forced to change their methods in important respects. They buy in smaller quantities and oftener. Credits have become more strict. Many merchants have changed over to doing business oh a straight cash basis.

The insurance business has prospered to a remarkable degree. This fact will probably come as a surprise to the average reader, but the facts are eloquently presented in the accompanying table:

1914 1917

Premium income $ 41,094,015 $ 54,887.718

Total insurance

effected ....... 217.006,516 281,958.143

Total insurance

carried ........ 1,242,160,478 1,685.182.446

THERE are some exceptions to prove the rule of our national prosperity. Real estate has not recovered from the stunning blow of 1914. It is not intended to imply that real estate values have suffered permanently. There is not activity in real estate, however, in keeping with the prosperous state of business in other directions. In some centres, where war industries have created a boom of sorts, property is changing hands with all the old-time zest. It is encouraging to note that at a recent sale of school lands in Saskatchewan prices were brought three or four times as great as have ever before been obtained.

In building there has been a steady improvement but nothing spectacular can be looked for here. There has been of course, a very distinct growth in building during the nast two years. If building materials were more readily obtainable, there would unquestionably be a rapid recovery in this respect, for all Canadian cities are badly congested and houses are at a premium.

rPHE greatest of Canadian achieve-*■ ments have perhaps been in new fields. For instance, there is the manufacture of munitions, an intricate business entailing a higher degree of accuracy than most work and something entirely new to Canada. Starting in 1915 in a small and almost timid way, the making of munitions in Canada has developed into a tremendous industry, the scope of which is indicated in a recent statement by the British War Cabinet:

“Canada’s contribution during the last year had been very striking. Fifteen per cent, of the total expenditure of the ministry of munitions in the last six months of the year was incurred in that country. She has manufactured nearly every type of shell from the 18 pr. to the 9.2.

“In the case of the 18 pr. no less than 55 per cent, of the output of shrapnel shells in the last six months came from Canada, and most of these were complete rounds of ammunition which went direct to France. Canada also contributed 42 per cent, of the total 4.5 inch shells, 27 per cent of the 6 inch, and 20 per cent, of the 8 inch and 16 per cent, of the 9.2 inch. In addition, Canada has supplied shell forgings, ammunition components, propellants, acetone, T.N.T., aluminum, nickel, nickel matte, airplane parts, agricultural machinery and timber, besides quantities of railway materials, including no less than 450 miles of rails torn up from Canadian railways, which were shipped direct to France.”

Another outstanding example is the growth of our shipbuilding industry. There was a time when the Maritime coast was dotted with shipyards. The coming of steel, however, gradually drove the wooden ship into secondary place and the shipbuilding industry of Canada languished and died. When the war broke we were doing very little in that way. Since the enemy launched his U-boat campaign and the winning of the war has become a matter of building enough ships to replace those sunk by these wolves of the high seas, Canada has gone back to ship-

building again with grim determination. There is under construction in the Dominion at the present time one quarter of the total merchant tonnage in the whole United Kingdom last year. Eighty per cent, of this ambitious program will be completed this year. If it were not for the scarcity of materials and the fact that no rolling plates or beams are yet being rolled in the Dominion, the shipbuilding program would have been still further extended. It will help to visualize just what is being done, however, when it is stated that $51,000,000 is being spent on shipbuilding in British Columbia alone.

THAT the enterprise shown has left the country prosperous is most strikingly demonstrated by the comparative ease with which the Government has floated war loans. It is a fact that before the war the bulk of the bonds issued by the Dominion Government were sold in Great Britain and that even for our municipal bonds and debentures there was always a readier sale on the British market or in the United States. So large was the volume of bonds thus sold abroad that annually Canada paid in interest charges $125,000,000 to British investors and $50,000,060 to Americans.

When the war expenditures of the Government became so great that they could not be met by any means of raising the revenue, three different issues of war bonds were launched and the bulk sold right here in Canada. The third which ran to $418,000,000 was largely subscribed in comparatively small lots by the citizens of the country. This fall a new loan will be launched, probably for $500,000,000 and again it will be placed before the people atlarge. That it will be a success no one doubts. Despite the fact that the people of this country, who were not bond buyers at all before the war, have already

subscribed $760,000,000 for war purposes, they are going to find half a billion* dollars this fall to accelerate the downfall of Kaiserism.

This means an increase in our wealth of $200 per head in addition to the larger volume of savings carried in the bank which runs, as shown before, to an average of $120 per head. When the war ends, it will leave Canada in a condition of unprecedented prosperity.

So much for the past. Business has weathered all war storms and business men regard with more or less equanimity the possibility of still further shocks. Whatever readjustments are necessary the industrial world will wag on and the motto will continue to be not “business as usual” but “better business than usual.”

But what of the future; what of that trying period that will follow the signing of peace? No man would dare to predict what will come to pass when the nations lay down their arms and the men get back to productive work again. The world may face a period of stark depression, a period of uncertainty and readjustment or, on the other hand, the need for restocking the world may serve to bridge things over with a minimum of loss. But one thing is certain; Canada will face the period of readjustment with a better reserve than ever before. There will be few families indeed in the whole broad Dominion without a bigger bank balance than before. Liabilities have been reduced, mortgages lifted, deficits removed. As already shown bank savings have increased and at least a billion dollars worth of high interest-bearing war bonds will be distributed in more or less small denominations all along the line. Most business concerns will be in sound condition.

Canada will, therefore, enter upon the period of peace well equipped to face any conditions that may arise. This is an important consideration. It is becoming clearer, however, that the difficulties of the situation will not be as great as was at first feared. No longer do business men fear the possibility of a sudden collapse. Prices, for instance, cannot drop out of sight over night. Food is going to be scarce for at least two years after the pact is signed and the demobilization of armies begins. At the start it will be so scarce that the nations will find their gravest problem to be the outpacing of starvation. It follows that food prices will continue high and that the present prosperous position of the farmers will be maintained. Can business become bad while the agricultural section is doing well? Precedent says no, most emphatically. Shortages will have to be made up also in practically all lines—metals, raw materials, manufactured goods, with the need for rebuilding parts of France, Belgium, Italy and—God willing—Germany and Austria, and the ever increasing scarcity of all manner of supplies it may be that the first years of peace will be prosperous years, consensus of opinion is that in Canada, at least, business will be good.

When we have withstood the shocks of war so well, why need we fear the uncertainties of peace?

•Using the word in the American sense to mean one thousand million.