PAGE EIGHT

11w CHARLWEQQWALQIIARDLAN

Canada is’ lloming ThEgh n63»... Depression and Difficulties Better Than Other Countries in Similar Economic Position

BANK OF MONTREAL ANNUAL MEETING

5“ 9111114," G°F1l°1L P11151191". ill-address to shareholders, reviews im- portant developments in financial world-Takes view that there L; m; need of a central bank in Canada-In dealing with Canadian banking system points out that not a single depositor has hed to wait a rnorn_ ent to get his money from s. Canadian bank during page ye"... Stresses necessity for honest and efficient leadership in railway policy inr the future, as this is country's moat serious 91-05mm

W. A. Bog, in submitting address oLJoint General Managers,

reviews pro-

gress made during past fiscal year-Bank has maintained traditional liquid position-Points to difficulty of establishing money market in (‘anadav-Only regular money market on continent is New York__ Many considerations should strengthen confidence in (ianptlg, and its

future.

_._..___.->__.€.

The 115th Annual General Meet- irg of the Shareholders of the Bang of Montreal was held in the Board Room at the Bank's Headquarters.

0n the motion of Mr. H. R. Drum- mond, Sir Charles Gordon, G. B. E., was requested to take the chair.

Major-General the lion. S. C. Mewburn, C.M.G., moved, seconded by Dr. George E. Armstrong, that. lot-Col. G. L.. Ogilvic and Mr. G. Rutherfurd Caverhill be appointed m act as Scrutineers. and that Mr. C. H. Cronyn be the Secretary of the Meeting. This was carried un- animously.

THE PRESIDENT'S ADDRESS

Sir Charles Gordon. President, in addressing the shareholders, said in part:

Gentlemcn- -

The report oi the business of your Bunk for the year ended October 31st, which has just been read, will, I trust. be deemed satisfactory, hav- ing regard to the difficult conditions wevailing throughout the eriod.

e have been confronted wi h de- clining trade. dislocated foreign exchange, lessened demand for banking accommodation and low rates of interest in the world's monetary centres; yet we have man- aged to eam fair profits, to preserve I strong liquid position and to meet the legitimate reguiremcnts of our customers.

Before moving the adoption of the report, I desire briefly to survey conditions both hore and abroad. The decennial revision of the Bank Act, which precedes the renewal of our bank charters, is not to be made until the next session of Parliament. Meantime, indeed for many months past, discussion of the monetary question has been rife. and in some quarters there is advocac of a cen- tral national bank after he pattern of the Federal Reserve Bank in the United States; of restriction of note circulation to direct agencies of the Dominion Government; and of the introduction of inflationary meas- ures by Government issues of irre- deemuble Dominion notes.

Now, in the first‘ place, I submit. there is no need of a. central bank in Canada. For allpractical pur- poses, such an agency already exists in the Finance Act, under the pro- visions of which the chartered banks borrow at the Finance De- p ment and obtain such amounts o Dominion notes as may be rc- quired. For these advances the banks Day interest. This legislation has been in operation eighteen years and admirably ‘performs its purpose.

In the secon place, monopoly of the note issues by the Government would not increase by a. single dol- lar the amount of currency in the hands of the public, unless the notes

_ were made irredeemable and reck-

lessly emitted regardless of the se- curity and solvency of the borrower.

The shore of financial history is strewn with wrecks of ventures in irredccmablo paper money. front the time of the French Revolution in the 18th century clown to the days of the Great/War and subsequent years. If there is one fact in finance more firmly fixed than another it is the certainty that the unres ct- ed issue or paper currency culmin- ates in disaster. I may point; out. moreover, that we in Canada. do not suffer from inadequate credit or inadequate currency. Trade has con- traced in volume and value to a degree where much less currency and credit are required for its con-

' duct. Our banks welcome borrowers

to whom they can safely lend. and as trustees oi depositors from whom their loaning resources are derived, bunks ought not to lend on any other condition.

U on the subjects of a central ban . the revision of the Bank Act and also the tying up of the dollar with the pound, much has been said and written oi late. All these ques- tlons are difficult for the lay mind to grapple with, and it is not my purpose to deal with them at this time in detail. '

So far as our banking system is concerned, it is well to remember that» not ‘l single depcsitor has had to wait; for a moment to get his monev from a Canadian bank during the past year. while tens of thou- sands of depositors in the United States have had to wait. in line, onlv to bc told finally that their bunk lind closed its doors. This incl: is nn argument that will appeal to most people.

THE IMPERIAL ECONOMIC CONFERENCE

The outstanding event of the year has been the meeting at Ottawa of the Imperial Economic Conference made possible by the changed flsc galley of the British Government.

y consent of the delegates, who

ame from the four comers of the mpire, a new economic policy of profound significance to the future course of world trade was ado ted. The agreements, by which the nit- m Kingdom and the more important units of the British Empire have undertaken to trade on a basis of mutual preference. open ::p to the countries concerned trading vistas of vast significance. and, as far as Canada is concerned. it is impossible not to believe that highly beneficial results will accrue. Not only Canada given a favoured place in ihe markets oi the United Kingdom or the more import mt oi her ri- mary products, and not only oes ihe secure frec entry into the Unit- .» lngdom for a wide range of manufactured roducts upon which iubstantial dut es are levied against ither countries, but these acvan- ogcs. are scoured to us for a defin- te period, long enough to tes the vfilcacy of the agrement. In con- lderation of these advantages. Can- ida has given freer access to her narkcts for an extensive range of he products of the United Kin!- ‘om both by enlarging the prefer- nceaa bctwcru: these 06110111 911d husc of forrign coun ries and by rworlpq ("fle protection accorded iauv of her own industries. Can-

adian matiuincturers 0:: this ac- count have been called upon to make substantial sacrifices, but I think I can say that in every case they nave done so in a spirit of loy- alty and co-opcration, as their con- tribution to the common cause.

There has been during the inst three years a somewhat constant decline it: Canada's external trade. whether measured by volume or_b_v value. In the twelve months ending with October 31st lust. that trad" amounted to $959,000,000 11111111155 32.584.000.000 in the corresponding period in 1929, a decrease of about 60 per cent... but it. is iillOlTSilllg- perhaps significant, to learn that the ratio of decline has lessened ::: recent months. Two features may bc noted: Canada's commerce with Great Britain is again riSlllF! H1111 our imports from the United Statcfi have fallen oil’. Factors cttusingui larger trade with Great Britain are: tariff exclusion of Canada's farm, forest and mine products from the United States. and the giving of tariff preferences to Em- pirg products by Great Britain. Our adverse balance has been converted into a favourable one. In the twvivc months to October 31st last, exports of domestic products exccctlcd im-

orts by $43,013,000. while ill the like period a year ago irr1l>°1"5 “"9 $42,095.000 in excess of exports, so that the net; gain amounts w $86,008,000.

CONDITIONS IN EUROPE

In re ard to conditions in Europe.

especialy as they affect time nut- look for the recovery o_f internu- tlonal trade, it may be said than the Lausannc Agreement deslgurti to reduce the burden 0f Yell-trillions. the ratification of which is sublflcii to a revision of war debts, has pro- vided the flrst evidence oi practical co-operstion between nations, and the forthcoming World Efccnomic Conference will, it is hoped. mark a further advance in concerted 11C- tion and succeed in evolving mons- uros that will permit of 1i ircrr movement of goods and money. Greet Britain. since llcr cicpurlure from the gold standard some fifteen months ago, has reoovcrrci in largo measure the confidence of ilio world. and although for the time being the ability of London to_ function as a financial centre is limited bccmise ‘of the existing, hindrances to the free flow of credit,- there is assur- ance that when these are overcome the invaluable cxperince and mn- chinery that Londoa,,czin oilcr will again be availed of and will ploy their part in l-he rcconstruciloi: of the economic and financial fabric of the world. _

During the year Great Briton: has balanced her udgct, has repaid the credits obtained from thn United States and France to support thr- pound, and has effected a series oi‘ conversion operations totalling the vast sum of 122.500.000.000. 'l‘hcsn conversions will produce a saving to the Exchequer of 1230000000 per an. num in interest, will make fnr n lowering of interest on all borrow- ings. and it may be will permit n. lightening oi the burden of taxation that: is bearing so heavily on thc country. British Government secur- ities now stand on a basis of about 3% per cent.

In connection with the decline of the pound sterling, changes in the cost of living, as measured by the purchasing power of the pound, have not been important. asihc dc- clino in the values of commodities and raw materials has kept pucc with the decline in that purchasing power. This. of course. cannot be ex- pected to go on indefinitely. In the meantime, however, there has been no important aciynnce in the cost of living in_ the United Kingdom.

CONDITIONS IN THE UNITED STATES

In the United States. as a result of the increasing severity of the cie ression and the persistence of pr ce declines, the number of com- mcrclal failures reached the high- est total on record. Liabilities in- volved were also greater than in any previous year . Particularly sharp declines occurred in the iron and steel industries, and thc out- put of automobiles and rclalcrl lines dropped to the lowest level of n decndc. Agricultural iucnln» suf- fered a sharp decline. owing to the decrease in prices of farm products. Evidence oi this is found in the fnct that the average value pcr acre. of the ten lending crops was less than $0 in 1932, us compared with over $13 in i980 and over $19 in 1929. The year was marked by serious rims on banks, followed by many bank suspensions. In rcc- ent months remedial measures adopted by the Government have caused a sharp drop in such fail- ures and reopenings of closed banks during this period enunlled or ex- ceeded the number oi suspensions.

Owing to doubt of the stnlvlllrv of the American gold stnndnrd. hcnvy withdrawals of foreign hal- ances took plncc at one period, causing an unprecedented dcmnnd for gold: nll such demands wcrc met, however. without weakening the financial structure of the coun- try, At the peak of the rlcmnnd in June inst. the monclnrv gold hold- ings of the United States were rc- dttced "to l3.0l0.000.000. as against average holdings of 84.464.000.000 in 1920, considered a normal post-war year. Gold holdings are now back to 04.200.100.000 and the flow con- tinues inward.

It has been n. problem t.» cmplov {irofltablv that portion of the Bank's reserve carried in New York. as money rates have been cxtrcmcly

l . ow MANUFACTURE AND AGRICULTURE.

In COmfiltln-Wiiih those of all other countries manufacturing conditions in Canadahave been fa:- from satis- factory. Outstanding in this respect hes been the situation in regard to

the pulp and paper industries which have headed the industrial lists o!

l ublic debt which I 11g: mieotgiltais ‘included 51.044.000.- 000 borrowed by the Dominion Gov- ernment and loaned to the Cflnfldim National Railwa s, but I have not

the Dominion in wage and salary distribution since 1022 and have been the first in gross value of pro- ducts since 1925. Canada's exports of newsprint have for years been second only to her exports oi wheat, and it is unfortunate that over- dcvelopmcnt oi productive ca aclty. combined with sharp reduct on in demand. has reduced the industry to a non-profitable basis. Recent price-cutting has added to these disabilities and lms shown more clearly than ever that there can be no permanent bcttcrntent until llll'35lll'€‘S for co-ordlnating produc- tion are put into effect. Leaders in the industry have been working enrncstl and assiduously to this end an are well advanced in the intricate valuations and other com- pllotlons neccssru-v as t1 bZlSlS upon which to formulate plans for a, practical solution. Other major in-

included that o Dominion Government as 81111111111191‘ for securities issued direct by the Canadian National Railways which amount to 9'10 millions of dollars. upon which and other funded debt of the Canadian Notional Railways, totalling $306,000,000 interest of ap- proximately $56.000,000 was paid in i031, The Canadian National Rall- ways are costing the people 35.00% 000 monthly in n

the Canadian National Railways in private hands. and about the same amount in interest on Dominion debt representing advances to the Canadian National Railways-w. to- tai of $10,000,000 monthly.

er liability ‘of the

tercst on bonds of

Public ownership of more than

half the railway mileage 0f 011111111“ has increased i118 011F119" 0! taxation and complicated

finances. In view of this serious

enernl cderal

zlustries have felt the depression state oi affairs. 1-116 301111111011 GOV‘

ncufcly (luring the your. The lack

. , and Trans ortation of cxpoit demand mid the low ebb gfitlllmixl‘): the sltuauwlll. upon the report of this Commission. and the presentation to Parliament of a Bill drafted upon its recon:- mendatlons, Parliament and people of this country arc now giv- ing serious study to the whole rail-

to whici: building construction has fallen have brought the lumber in- dustry practically to e. standstill. In the milling field, producers oi’ siltwr, ccpper. loud, zine illld as- bestos have laboured under great disadvantages owing to lo\v world

‘ ernment appointed u. Commission on

to Following

the

prices lor their products. and the way situation.

only brmich 0i the industry which has advanced its position during the your is gold production. Unsatisfac- tory world lllnrkvls have rendered fishery operations in the East rc- lntivcly unproductive of profit. but on the Puriiir: Coast the salmon puck of approximately 1,050,000 cases is being nutrkctcd satisfactor- i1

$1

yAmoug factories, those engaged il'|)-')li cotton, vxouileti and artificial $1ll€.-Il!'0(iUCif§ have been fairly well cmpiovtrri, us also have boot and shoe factories. Public works are not being proof-riled will: Oil nny large sonic, and riulwirv construction, to- gether Will] (ht: production of rail- way equipment and materials re-

m

The position ls that. 0n thv 011"

hand. we have the Canadian Pacific Railway Company with a capital of

.1oo,oo0.oo0. composed of bends‘

preferred and common stock sub- scribed ior by the public, partly in Canada, but for the most pail abroad, not a dollar of which vnsl sum is guaranteed either as to principal or interest, b; the

in any wn _v,

people of Cnnncin. and the 111W-

en of interest upon this caPiIfl‘

depends entirely on the ability oi‘ the directors and management to make the road pay. This money has

Joint (lencral Iisusgerl. "W?! "ll 1" part ls follows:

Mn President out! Gentlemen:-

On nehiiir or m. Dodds and myself- I liuro tho honour to present to you llie one liunilrcd and fifteenth annual balance sheet of the Bank.

A ncficx of the further sbrinknite in general business whlelrhns occur- red tlirougiimlt the Dominion this 71"" is to he fuunll in the figured inbuilt-

toil. WIIIPII show that the Hank's its is now total $70'.),200,000 against 37!: ' mm u your neo_ 1: ilrrrcnlP

000ml. ’i‘l|1.~= decrease I

you will agree, is n nunlonite one. in view of the stnte cl’ domestic business, the large decline in foreign trrulo nnd the lmv levels to which all i-omnu-illty values have illcn.

As illustrating the effect o! the illlrlllliulfi situation on banking figure?! ii: t,"‘ii|~l<|i, tho totnl tlciiils 0f nil hunks it: (‘nnmln to lutlivutluvil nr- munls for llm l2 months outline Iilst in-tolu-r inst amounted in $20,771,000,- illifl n rlcciinn of $.':.iiii1,(l00.00l\.

(‘omuicrrinl failures ill (‘nnnrlri for lilo. your muting 30th Hcyvtcmlier nun:-

lii‘l"i"(l 2,4"? with linbiiitics of $19:- (NL000, s compares with 2,258 failures with liabilities of $44,307,000 ii: 1113i.

The linuk has maintained its tradi- tinmil liquid position and this has l-m-n done ivitlmut in any way cun- miling thc legitimate needs of our

this has now been pnrlinlly relaxed lo far as domestic nui Empire needs Ire concerned.

l1: France during the YB-‘IP-mld‘ and commerce, boll: llltflrnlll I110 foreign, have been on n greatly re- iluccd scale nnti innny inilinltrics have also seriously felt the strnin, Export trade il hampered by reduced pur- chasing power nhrond lmi by b11111 tar-m. Against Franco. imports have IllllMl owing to the slowing up of manufacturing nnil also on account of the lntrmiticiloi: of (he quota system, notwithstanding whirl: the visible liti- vcrse balance of trnllu for the tel: months up to 31st October vvns Fcs. 8,320,000,000.

The highly nm-cesnful conversion of veverni high interest Government ls- sues into n 41.’. percent. issui- has Imp" my important stop tnwnriis pinc- lng the cnunirws finances m: ll pmmrlr-r unri lunrc ccmlnmil-ni trails.

In tho Vnitml States, throughout til". past your the arr-no in the financial ‘em-m h“ IIPF“ n shifting one, with- out purniicl, nml 1|: inrlitslrlnl null agricultural pursuits coulinuml fnii- ing prices nmi lmivilvlcriiig uur-crtnlnty have prcvnllril. 'l‘lu- your 1m.‘ R0011 liquliintlnn lu r-ni:::nodity' uml secur- ity mnrkcts, Ivirlosprcnrl commercial nnd banking failures, IlflIllVIlilR of currency rind gencrnl lmpnlmnent oi’ confidence.

Enrly in the your. for ll short time

i'il§i(1llil‘.i'.!. Tho cuiii nnd quick assets (hut we heirl nt the clone of o::r bunk _\'ll|I‘ nmounlcil to I430,7tl8,000, rep- roscniliu; till-Iii per cont, of our tolni lwihilltics to tho public. 0f these lis- sots nrtunl cash, i. e., Government locals 11ml coin, amounted to 12.1".‘ Der i‘:'|ii'.

iii Loans ni $15,200,111]? show i: use: ‘of 5117100000. Tlinst: in Cun- rv zloivi: s|.1o0,on0_ tlmsc ebronti .' \\‘r- imlil 1:: New York l .--.vi..~i:::vli:il nmnunt of llnltcil Slates (iovvriimcnt r-‘lml-t tern: nbiigullntin (aim-l: nro iliiilii‘lllllii'l,\' realizable.

(Ml. ih-pnslls in other bunks are $'Il}.i\u,0|:n_ m: inn-reuse of.$0,(i00,l'l00. i-rvcmllng nuirkct

lll\'i'.1(llll‘lli.~l, , not‘ \':l|ln\_ uuwuvit o $2li7,l\00.000, ns com- |.;,.-.-,| w“), 0h_000 lust your; the 1..-.-.-...-.- nt‘ s nouuurrt being entirely

in immlnlmi ::|:(i Provincial Govern- ment ercurltirs. ,4‘|:i-rr=::i Loans in (‘nmltin (including (I! t.» nmnicipilllties) tritnl $281,- - , a div-rouse of $41,000,000,

{'|||-[‘(\||f Loans ciucwhcre aggregate snunrhoun, .1 ili-i-ronru: of iii.l00,tl00.

Imnk luwunls-i-sflirc shown nt $14,- pimium, Hm sflilli‘ figure as in 103i.

in ruining our nsscts, nmplo [Ira- v'~ir.:: luvs iwci: nmrlc for all had snil liiiiiilirill iIlliiH nmi depreciation of 'll‘itlt“l1, -»'(-|l nml Iicst remain unchanged

been used by the Canadian PitClilC Railway Company to carry out thv terms of its original contract w_:th the Dominion. made in 1851. Willfil»

qulrcd tor mniixtcnaiice. 0110B B provided for the establishment of .:' 1mm $011M" v1‘ (‘Illllloyinent of perpetual service. It has been used“ labour. is at n standstill. Such not only in the building of a Tilli- itidircs m. our loadings, railway way and of all the services that. go earnings, bank pleat-lugs, bank de- with it, but in the development u! bits and imts- circulation attest the many other projects. such its jmml. rccessiol: in the volume of business. gratlon, agriculture. mining nnti

liydro-ciccirii: development has rcurhrri the point of saturation, and until trntlc iiilfl industry take on more nctiritv ::r‘\\' projects are not likely to he undertaken.

The full ~-: cmimodity prices and the liuciuu l.\‘ m foreign exchange have filSlfltilirii the commerce of the your. The mick number of com- lllOdliv priPr-s us a Wh01e has de- clined 1.1 cmtndl: from 100 in i026 to 65.9 in Orinbcr last, or by_ one- iliird. 'I‘hls riwvssioll has hit itard- est the uzzrirtxltural classes, the prices of whose. products have drop- pccl to 44.0 from 100 in 1926, or more 1,, tlum tmc-lzziif. In such circum- slant-cs. inducement, to retailers to curry unorc ihm: hand-to-mouth sit is lacking. In the security markets the lowest point was reach- ctl in June. since which time there has been some betterment.

The harvest, notably of grain, in Cnnaulzt ivus of good average, the 411000.000 bushels of wheat pro- duccci in the three prairie provinces being 127000000 bushels in excess ct lust. y'cnr's crop, and of coarse grains production was substantially largo:- thnn in 103i. The Western whcnt crop nioireti rapidly. deliver- lcs bctwccn August lsl: and Novem- bcr 10th exceeding 230,000,000 bush- cis. ‘it is (mfortunutc that. the price 9 of wheat has dropped to the lowest figure in the history of the Winni- peg Exchange, (iupllciltlng in this (liiCliilC to new low levels the course of many other world commodities. 'i‘hcrc has been u. largo make oi‘ choose, butter and other dairy pro- ducts, and a greatly increased ex- port of meats to Great Britain. The removal of restrictions on Cana- ciinn cattle imported into Great llritnin ns a result of the Ottawa Cnnicrcllcc is expected to stimulate slupiucnts to that market ncxt sea- won.