Era of Sustained Prosperity Is Indicated for Dominion

A. W. BLUE January 1 1929

Era of Sustained Prosperity Is Indicated for Dominion

A. W. BLUE January 1 1929

Era of Sustained Prosperity Is Indicated for Dominion



A SUCCESSION of record-breaking crops, the greatest for all time harvested in 1928, has been the influence primarily responsible for the unprecedented prosperity which Canada as a whole has been enjoying. Seldom, if ever before, have Canadians had greater cause for satisfaction with the achievements of the preceding twelve months, than they have on this threshold of a new year. In practically all departments of our national affairs, progress, expansion, and prosperity have been the keynotes of the year’s experiences. Never before has general business proceeded at such a high level, and never before have Canadians been so optimistic for the future of their country.

“I have never seen the country looking better, and in all my experience I have not previously found so general a feeling of complete confidence in the country, and its possibilities in the cities and districts where we had the opportunity of talking things over with representative citizens,” is the verdict of President E. W. Beatty, of the Canadian Pacific Railway, which has been reiterated by business leaders throughout the country.

In manufacturing, transportation, trade, mining, and in agriculture substantial and encouraging gains are recorded. The employment figures have consistently advanced, and during the year registered the peak since the records were first commenced in 1920. Bank clearings have established new highs. Bank credits and savings deposits have created new peaks. The iron and steel trade has been unusually prosperous. The rapid development of our natural resources, water powers, mineralized areas, etc., has attracted capital from abroad, thus further stimulating progress.

Prosperity is Widespread

AN ESPECIALLY encouraging feaFv ture of the year’s experience has been the fact that prosperity for the first time in years has been nationwide. It was particularly gratifying to note the betterment in the Maritime provinces. The older provinces of Central Canada, with their industrial as well as agricultural resources, have continued to thrive in an unusual degree. The greatest crop in the history of Western Canada has given to the agricultural community the greatest purchasing power that it has ever experienced, and that force is being felt in

Hundreds of thousands of dollars are lost annually in Canada through careless investment. Fraudulent and worthless securities are being constantly poured on to the market to trap the unwiary. A general observance of this simple maxim will assist in the reduction and elimination of thus economic waste—


all lines of trade. British Columbia has flourished despite the rather tardy recovery in lumbering; but mining and fishing as well as agriculture have had a profitable year, and the diversion of increasing quantities of western wheat to the Port of Vancouver has been a tremendous boon for that city.

Canada continues to look to agriculture as her principal source of new wealth, and in this she was not disappointed in 1928. It is estimated that Canada’s crops in 1928 gave the farmers a return of the huge sum of $2,000,000,000. To this may be added the returns from dairying, poultry, livestock, all substantial items. The livestock market has been somewhat erratic, with strength predominating. During early autumn, cattle, hogs and sheep commanded very high prices, and while this strength has not been maintained, farmers are encouraged in the belief that firm markets will continue for the next year or two at least.

Although the earlier estimate of the Canadian wheat yield by the Dominion Bureau of Statistics was scaled down some fifty million bushels in the latest estimate, yet the final figure of 500,613,000 bushels is a new record, and is sixty million bushels higher than the returns for 1927, and twenty-six million bushels greater than for the previous record year of 1923. To last year’s total the three prairie provinces contributed approximately 480,000,000 bushels.

Railway Earnings Set New Record

NO INDEX of business activity is more dependable than railway earnings, especially in Canada, where the two great transcontinental systems touch practically every community of the Dominion. It is of the utmost significance, therefore, that both the Canadian Pacific Railway and the Canadian National Railways have enjoyed the best earnings in their respective histories. While final figures for the year are not available at the time of writing, yet the results so far released are sufficiently illuminating. The Canadian National Railways, in the ten-month period ended October 31, shows gross earnings of $226,472,565, an increase of $23,665,257, or 11.67 per cent, over the corresponding period of 1927. Net earnings for the period amount to $46,410,110, which compares with $34,586,955, an increase of 34.18 per cent, over 1927. The Canadian

Pacific Railway will probably earn between $14 and $15 per share on its outstanding common after all charges, a record for all time. Gross revenues for the ten months show an increase of twenty-three millions, and net earnings a gain of nearly ten millions, gross at $183,588,531, comparing with $160,384,749, and net of $41,231,569, with net of $31,466,611 for the ten months of 1927. In view of the heavy grain movement out of the west this improvement should at least be maintained for the last two months of the year.

Mineral output for the Dominion as a whole will total about $260,000,000 as against $244,000,000 for 1927. The gain is encouraging but not impressive. The year was probably more noteworthy for the extended scale on which exploration was conducted rather than for the development or bringing into production of new mines. Of course, Noranda came into production at the commencement of the year, and its operations and underground developments have justified the high regard in which the mine is held by the Canadian speculative public. No other new mines of importance came into production. A railway line has been built into the property of the Hudson Bay Mining & Smelting Co., in Northern Manitoba, and this will expedite operations on this outstanding property as well as upon other important projects in the district. Tin has been discovered in Manitoba, and new gold deposits in Ontario, while interest has been extended in Newfoundland and British Columbia. Insufficient work has been done as yet on the new finds to establish their real possibilities.

Canada’s External Trade Grows

"CCONOMIC activity is likewise refleeted in the figures of Canada’s external trade. For the twelve months ended October 31, Canada’s trade totalled $2,560,808,369, a gain of $236,944, 473 over the figures for the corresponding period of 1927. Imports amounted to $1,202,304,859 as compared with $1,078,975,104. Exports were $1,358,503,510 compared with $1,244,888,792. It will be noted that the margin of exports over imports is substantial, reflecting a constructive trend. Iron and steel products made up the largest item in our imports, totalling $312,378,327.

Construction intimately reflects business prosperity, for business expansion creates a need for increased factory accommodation, new office buildings, new and better homes, etc. In 1927 the total of building permits issued in Canada amounted to $400,000,000, and in 1928 the increase in contracts amounts to about twenty per cent. Construction firms are well supplied with orders for the new year at satisfactory figures.

It is interesting to examine the records of the Canadian chartered banks, for they too are directly influenced by economic conditions throughout the country. The credit situation has presented varying phases during the year. Abundant and cheap money at the outset gave way to tightness and firm rates as the year advanced, due to the unusual commercial demands, and greatly augmented requirements for crop moving. Added to this was the fact that speculation was rife, and unusually large sums were tied up in speculative securities. Finally in the later months of the year

the banks sought to discourage speculation, believing that a dangerous situation was being created, and not only issued public warnings, but drastically curtailed credits for speculative purposes. This was reflected in a steady decline in call loan totals during and after midsummer. A peak for all time in call loans was reached in May at $269,000,000, but successive reductions were effected thereafter, until at the end of September the figure had been reduced to $246,618,000, a reduction of $23,000,000 or nine per cent. Even this figure, however, is about $61,000,000 higher than the monthly average for 1927, and $106,000,000 higher than the average for 1926.

Current loans in Canada reached their peak also in May at $1,207,363,245, and have been somewhat lower since, although autumn business revival brought about some improvement. As current loans represent advances direct to business and industry, the consistent improvement over 1927 as indicated in the table of the principal loans of the chartered banks, on the opposite page, is important.

Savings and other deposits likewise continue at a high level, reflecting the thrift and prosperity of the citizens of Canada. The table on this page presents a comparison of the principal deposits.

Healthy Trend in Natural Finances

'VJATIONAL finances are showing a

^ healthy trend. One of the most significant financial transactions of the year was the retirement of the $53,000,000 loan maturing October 15, with cash from the treasury. During the first seven months of the current fiscal year the net debt of the Dominion was reduced by eighty-five millions, or six millions more than during the corresponding period of the preceding year. Total revenues for the first seven months amounted to $275,680,899, or an $18,000,000 increase over 1927.

The basic resources of the country continue to attract outside attention, and to draw fresh capital from external fields. The United States is still the principal source of capital, although it will be recalled that in the years before the war Canada drew her main supplies from Great Britain. At the commencement of the war the volume of United States capital in Canada was only about thirty per cent, that of British. During the intervening period, however, United States investments rapidly overtook those of British origin, in 1922 and 1923 were on a virtual parity, and since then the advantage in favor of the United States has rapidly increased, until to-day British investment represents less than seventy per cent, of the United States figures.

It is possible that United States capital better appreciates the investment opportunities of Canada on account of proximity, but British industrial and financial leaders are not disinterested, as evidenced by the following statement of Mr. John Davidson, Chairman of the British Empire Trust Company, which holds large investments in Canada: “As you can well imagine, our faith in Canada and Canadian investments continued undiminished. T know of no country in the world which combines within itself such a variety of natural resources. Canadian agriculture and the fame of her wheat fields are known throughout the world. Many agricultural countries depend upon agriculture alone and are rich; but Canada

possesses vast timber resources suitable for pulp and also for building purposes. Canada also comprises vast natural wealth in fisheries, both inland and deep sea. Her resources include eighty-five per cent, of the world’s known asbestos supply; ninety per cent, of the world’s nickel, and she is now the third largest gold producing country of the world, and I venture to predict that she may eventually become the greatest gold producer. I am glad to say we have many interests in Canada, and I trust anú believe that our interests will continue to expand.”

Pulp and Paper Depressed

less satisfactory feature of the 'S year has been the pronounced depression in the pulp and paper industry. Overproduction has resulted in acute unsettlement of markets, and in the lowering of the profits of producing companies. Concerted efforts have been made toward placing the industry at large under some measure of control, and apparently progress has been made. The real remedy will necessitate consumption overtaking the present over-extended productive capacity of the Canadian companies, and this will take time.

It is of interest to record the amazing growth of life insurance in Canada. At the end of 1928 Canadians held in the neighborhood of 6,500,000 life insurance policies, representing insurance to the amount of six billion dollars. Fifteen years ago, when conditions in Canada were regarded as generally prosperous, 1,497,000 policies were held, representing insurance of $1,070,309,000. Assets of Canadian life insurance companies have increased from $344,000,000 to $1,415,000,000.

It is no ephemeral boom that Canada is experiencing to-day, but genuine, solid and sustained prosperity. What Canada lacks in population she makes up in resources and the purchasing power of her citizens. She has become a world power in international trade, now ranking as the most important customer of the United States, and will continue to improve her status in this regard. Canadians can well afford to view their position with contentment and optimism.