HERBERT HOPE May 15 1924


HERBERT HOPE May 15 1924



THE Canadian business man finds increasing difficulty in swinging far from the influences of politics. The situation which exists in Canada, in this regard, is equally compelling in the United States, and, with the issuance of the Labor Government’s first Budget, in Great Britain, as well.

“Washington has laid a frightening grip upon business,” wrote B. C. Forbes the other day of the dominance of political affairs upon business at the present juncture in the United States. There are those who will tell you that similar comment might be made about Ottawa.

Philip Snowden, Chancellor of the British Exchequer, in his first Budget statement made “no radical departures,” in the view of the Toronto Mail and Empire. But the Budget from which “Socialistic taint” is absent has not been compiled without some far-reaching effects. So far as Canada is concerned, Snowden’s decision to remove the McKenna duties “will mean the striking off of a preference that was serviceable to this country’s trade in automobiles,” according to the Mail and Empire.

“There will be disappointment, but no surprise or complaint, in Canada over the Chancellor’s refusal to ratify the preference proposals of the Baldwin government, submitted last year to the Imperial Economic Conference,” to quote the Toronto Globe. “The resolutions will be left to an open vote in the British Parliament, and it is possible, though not probable, that they will yet be adopted. Tariff preferences on tinned salmon and lobsters, honey, apples, raw tobacco and dried fruits would have been useful to Canadian producers of these things, but they are purely matters for the British taxpayers to decide.”

John MacCormac, cabling to the Montreal Gazette points out that “from the Canadian viewpoint the first Labor budget is as disappointing as from the British point of view it is satisfactory.” “Snowden’s statement was practically the death notice for Imperial Conference resolutions,” MacCormac continues, “since, although the House is to be given an opportunity to vote upon them, it is practically certain that they will be voted down by the Liberal-Labor majority. Reduction of the added duty on dried fruit, in fact, negatives in advance one of the concessions promised to the Australians at the Imperial Conference. The reduction of the sugar duty does not affect the percentage of the Imperial preference, granted on that commodity, which remains at one-sixth, but it makes the duty so low that the preference ceases to have much effect. This may destroy the export trade in refined sugar from Canada, which has at times reached respectable proportions.

“The effect of the removal of the MacKenna duties on automobiles next August on Canadian trade is problematical. The export of American types of cars to Great Britain from Canadian factories grew up under the one-third preference accorded to Empire automobiles. Since the other Empire nations may continue to offer Empire preferences on motor cars, however, it may be found convenient to continue to supply British as well as other Empire markets with standard types of American cars from Canadian instead of from United States factories,”

The question arises whether Canadian business was not suffering sufficiently from domestic bruises, by way of taxation, and tariff pruning, without this added thrust from the mother country.

Wonder develops, too, whether or not the British decision is not the thin edge of the wedge, looking to the complete elimination of all British preferences, which now exist and benefit Canada. Because of the British Preference, Canada has attracted a vast amount of American investment capital, for the establishment of branch factories of American industries. This flow of funds from the United States may possibly cease if it no longer benefits the Amdñcan manufacturers to qualify

for Made-in-Canada marking. Such an eventuality would be a formidable deterrent to the Dominion’s further progress.

Tariff Proposals in Canada

THE new Canadian tariff proposals, of course, present our most immediate domestic concern. “The Budget with its refusal to reduce taxation or seriously to curtail national expenses, and with its announcement of a new national policy, has come as a shock to all industrial leaders and as a great disappointment to all thoughtful, far-seeing, loyal Canadians,” observes the Financial Post, which adds:

“It comes at a time when conditions are all favorable to, and set for, the greatest developments in our history. Unfortunately, it is not a policy that was arrived at from a serious study of conditions, but a haphazard attempt to satisfy, and perhaps stem, the growing prejudices against those engaged in the industries of the Dominion.

“It must be frankly admitted that the Government, in this turning toward the free-trade policy—so decisively abandoned after fair trial forty-six years ago— is giving the country what the majority think they want; and that the refusal to reduce income taxes is not unpopular even among the classes who really understand the wise and good use to which the majority of surplus incomes are put—to wit, the extension of business and industry. There has been a great lack of Canadian patriotism shown in some of the addresses in Parliament and in press comments, and there has been a strong appeal, even by Cabinet Ministers, to class and sectional animosities. That the reactionary features of the Budget were not more drastic is probably due chiefly to the tact, wisdom and the political and business experience of Hon. J. A. Robb, the Acting Minister of Finance, who commands the confidence of all parties in the House.

“The present tariff reductions, while they are far-reaching and in some instances really serious, are not creating as much anxiety as is speculation as to what the development of this policy may bring forth in the near future. Hon. Mr. Stewart, a member of the Cabinet, apparently commits the Government and Liberal Party to the definite policy of complete Free Trade, and is supported by a large majority in the House in ' sentiment and prejudice at any rate. There is no doubt but that the intelligent Canadian people would, in their sober senses, refuse to support such a policy, but as Lloyd George, speaking from long experience, said: No one votes for anything now; they vote against something, and the Canadian people as a whole are taking a stand against big business which they have been allowed to misunderstand.

Question—What is your opinion of the safety and standing of the Northern Life Assurance Company?—(7. H. F., Kerrwood, Ont.

Answer—The Northern Life Assurance Company was incorporated in 1894 and commenced business in 1897. The authorized capital is $1,000,000, of which $917,000 is subscribed, and $490,377 paid in cash, according to the latest Government report. The company maintains the necessary deposits with the Government for the protection of the policyholders and is a safe one in which to insure.

Question—Is the London Guarantee and Accident Company a safe one in which to insure? What, is its financial standing, and how do the premiums compare with other companies? -P. D., Winnipeg.

Answer—The London Guarantee and Accident Company is a sound concern and one in a very good financial position. The head office of the company is in London, England. It was established in 1867 and commenced business in Canada in 1880. The amount of joint stock authorized is $1,835,000. and the amount subscribed and paid in cash, according to the report of the Department of Insurance for the year 1922, was $948,138.60. The total net admitted assets in

Canada are $1,973,003.12, and the total liabilities are $811,175.02. The net premiums written during 1922 were $1,117,879.33. The losses incurred during that year were $693,026.21 and the expenses incurred were $627,070.68. The net amount of insurance in force at the end of 1922 was $53,385,447. The company’s premiums compare favorably with those of other companies. This company is well managed and is in a sound financial position and is a safe one inwhich to insure.

Question—Will you kindly give mesóme advice in your columns on the following matter : We have two little girls, one age three and the other age one. What form of insurance, if any, would you advise us to secure for them?—J.E. P., Wellwood, Man.

Answer—We do not think it good policy to insure your children in their own name. You can get insurance for the children all right but should they die before they reach the age of fifteen all that would be returned to you would be the premiums paid, plus interest. The best thing to do is to take out insurance on your own life in favor of the children. This is the policy recommended by all the large insurance companies and is very sound indeed. The best type of insurance for this purpose is endowment, either fifteen or twenty year, depending on the age at which you want the policy to mature. The advantage of insuring yourself in favor of the children is obvious. Should you die at any time within the policy period the full amount of the insurance would be available immediately for the children. On the other hand, if the children were insured and you should die, there would be nothing available for their support, apart from whatever other insurance you had on your life. It is a good idea to have policies-for children mature when they are about eighteen, so that if you desire to send them to college the money is available for that purpose. Some insurance companies have special endowment policies primarily intended to provide a fund for educational purposes. In the event of your death the money can either be paid to the children or can be held in trust by the insurance company until the policies mature. Such money held in trust would accumulate interest at a certain percentage.

Question—Some time ago I invested a small amount in stock of the Natural Tread. Shoe Company. Would you be kind enough to give me some information regarding the standing of the company at the present time?—P. K. W., Brantford, Ont.

Answer—V. E. Taplin is the originator of the Natural Tread shoes. He holds that fancy-shaped shoes are injurious to the health. At his factory at Belleville, Ontario, he makes women’s shoes on one last and men’s on two. The company conducts one retail store located at Toronto. Just recently the company has undertaken to launch a sales organization and is interesting a leading shoe dealer in each centre. Style shoes are put on to launch the sale in these centres. Sales for ten months of 1923 totalled $120,000, the profits for ten months being about $10,000, as compared with a deficit of $15,000 the year previous. The whole shoe industry in Canada had hard going last year. Competition from the United States, always keen, was a little offset with an even more keen competition from England. Staple lines alone proved profitable. Mr. Taplin says his costs are well down and he is steadily getting the production.

Question—Will you please give me some information about St. Maurice Power Company, and the prospects of it being able to pay dividends?-O.O.O., Tor onto.

Answer —The St. Maurice Power Company was incorporated about a year ago for the purpose of developing a hydroelectric power site at Gres Falls, about six miles below Shawinigan Falls on the St. Maurice River. The company has $7,200,000 of capital stock outstanding, the majority of which is owned by the Shawinigan Water and Power Co. There is no preferred stock, but there is Continued on page 11

Continued from page 8 outstanding an issue of $9,-026,600 of first mortgage bonds, and $973,400 of debenture stock, or a total of $10,000,000 of mortgage securities ahead of the capital stock. The company is now developing its site, and the installed capacity of the plant will ultimately be 150,000 h.p., all of which will be sold to the Shawinigan Water and Power Co., and distributed on its system. Contract has been entered into with the Shawinigan company for à period of forty years whereby the latter company takes all the power at a price sufficient to yield the St. Maurice Company sufficient net income to meet the operating expenses, maintenance, taxes, interest charges, and a substantial sum in addition. There are excellent prospects of the common stock eventually going on a dividend basis and acquiring a higher value in the market, as the record of other water power companies, particularly those developed by the same group of individuals, is very satisfactory.

Question—What is your opinion of the stock of the Dominion Combing Mills, Toronto?—W.R.T., Toronto.

Answer—The Dominion Combing Mills is a comparatively new company. The plant at Trenton has been operating for some time and sufficient machinery to take care of the present demand installed. Wool combing is a new industry in Canada and it remains to be seen whether it can be profitably conducted here in the absence of tariff protection. The wool now used is being imported from Australia and New Zealand. The proposal is to use all Canadian wool when it is available. The demand for the company’s product, wool tops, is coming from the United States and Canada. It is rather difficult to get a line on profits as yet. The company plans to treat wool for farmers much the same as the old grist mill used to grind his grains. Stock in this company at the present stage of development can only be considered as a speculation.

Question—Would you kindly give me all possible information regarding Canadian Farm Implements, of Medicine Hat? —G.B., Ruddell, Sask.

Answer—According to our information the Canadian Fàrm Implements should be able to produce at reasonable prices, quite an amount of desirable machinery, peculiarly adapted to the conditions of the country. Failure has to be expected in regard to some of the implements, but with good location, with power and labor at a reasonable price, there should be reasonable opportunity for success. The men behind the project are w'ell regarded. Directors’ annual report issued in August of last year stated that the following implements are being supplied—rotary harrow, double sickle mower, stubble burner, and weed destroyer, Canadian tractor and grain cleaner. The sales

organization is being built up by reliable agents in each district. Regarding the auditors’ statement and balance sheet, the president, J. E. Davis, states that while it does not warrant paying a dividend it showed'a surplus and tangible assets, that should soon put the company on a paying basis. He asks reasonable time to get the concern organized, and operating on a sound commercial and industrial basis. The issue cannot be regarded as an investment, as there is an element of speculation present.

Question—I am interested in securing information regarding the National Brick Company. What is its present standing? —G. L. T., Belleville.

Answer—According to the statement •of the National Brick Company for the twelve months to February 29, 1924, there is a certain improvement in the company’s position during the year. The balance sheets for 1924 and 1923, when compared, seem to show great upward strides by the company, but this greater improvement is more apparent than real. By a re-valuation of assets the company has been able to get rid of the deficit in its balance sheet, and to convert it into a surplus. The president, C. C. Ballantyne, points out that many valuable improvements and additions have been carried out during the fifteen years that have intervened since the -company made a valuation of its prop«erties. The re-valuation has increased

the property account of the company by $714,802. This improvement added to the increase during the year in the company’s liquid assets gave the company a surplus of $231,963, where a deficit of $640,375 stood a year ago. The company’s plant operated at about sixty per cent, of capacity during the year. No preferred or common dividends were paid during the year, and earnings went to improve the liquid position.

Question—Has the English Electric Company shown any improvement during the past year? I own some stock and would be thankful for whatever information you have.—W. C., Halifax, N.S.

Answer—The English Electric Company is in a better position now than it has been for some time. Earnings for 1923 are expected to show a substantial increase over the previous year. A strong position was maintained and the company ended its fiscal year without bank loans or funded indebtedness. Late bookings are the heaviest since the inception of the company, which include important contracts for traction, water power and mining equipment. The annual meeting will be held some time in May, on the return of the president and chairman of the board, who are in England on business for the company. During the past year, the electrical business generally showed an improvement over 1922, but was still much below normal. It is estimated that the various electrical companies in the Dominion were only able to operate their plants at approximately twenty-five per cent, of capacity.

Question—Do you consider the bonds of the Drummond Investment Company a good investment for a business man?— —W.L.M., Montreal.

Answer—The bonds of the Drummond Investment Company are secured by a first mortgage on lands, building and equipment, constituting the original Drummond apartment and the new apartment building now in course of construction, and will also be a first charge on net revenue derived from these properties. The entire property has an area of about 54,976 square feet, with about 218 feet frontage on Drummond and Standard Streets, and a depth of approximately 252 feet from Drummond to Standard Streets, Montreal. The existing buildings and new building .when completed, will have 198 apartments. The commercial valuation of the land, buildings and equipment, is $4,000,000. From the standpoint of security and yield these bonds are attractive, but with a smaller issue, such as this, and one that is not listed, you might experience difficulty in finding a market, should you desire to sell quickly at any time.

Question—Can you give me any information regarding the Algoma Steel Corporation five per cent, bonds, maturing in 1962? —C.B.W., Belleville, Ont.

Answer—Algoma Steel Corporati r. is a subsidiary of the Lake Superior Corporation which has guaranteed the issue of five per cent, bonds maturing in 1962. Its chief difficulty in the past has been that its business has fluctuated widely at different periods according to the demand for steel rails. The assets behind the bonds appear to be quite adequate and, in spite of contrary expectations, they have paid the interest to date. It can only be regarded as a speculation; as such it is regarded favorably in many quarters. There have been rumors of a re-organization which have affected the price of the bonds. Even though a reorganization took place, the equity of the bond holders would scarcely be cut below the present prices.

Subscribers to MACLEAN’S MAGAZINE desiring advice in regard! to Canadian industrial investments, or life insurance problems, will be answered freely. Inquiries should be addressed to the Financial Editor of MACLEAN’S MAGAZINE and a stamped, addressed envelope enclosed.

If you are asking in regard to insurance, please give full details of your own financial and family position, so that definite and individual suggestions can be given.