MNUARY g4, 1941

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Produce Prices

Jan. 23-67?)- Pfvdvce Market, prices, here today, l5 repzrtzd by the Dcmtrton De- ilirtment of Agriculture, f llow:

Butter: first grade creamery flit-s. Jobbing price, 34 1-2-85; lrct grade solids, jabbing zce, 34 4i 1-1; Que-bee no 1 pas lined, terraced. whdesale price, as 1-2; Q11 bit no 2. rergaded. 32 1-2

fllieese: western whte and coi- Ol . r-Eiclesale price, for export. 11 p554? Rrcced shipments in used ‘at cases. selling price. A—IHI’KL 23: lg-mcd um 2o l-2—-2l; A-pullets

fPcPtes: zQue whites no 1 15's “r7702 n 2 ,-i.-. r B moun- PET cob- ,a*,jnl‘,@l1a'g3‘s6;5— _ PF! moun- , jklhaoq-Gb- . Bemuda reds no

MONTREAL,

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flflyioo. m. 23-454 "full t) shade higher price basis Pitfall-ed in thc wheat pit during ma‘); ff the session today,

u h=at cored 1-8-3-8 higher, will 85 1-6-86. July 79 8-4-7-8; n,‘ “llchilllllcd to 1-4 lcwer May , 5551f}; July ea 1-4; oats 1-8-

ft umPlNIPpo. son. 23-(CP)— Un.,db" ‘n8 hv Canadian and m-ttter States mills easily am rbed m,“ “l Offerings on Winnipeg w-uafzfflhflflse today and gave ‘otat/olllitsursvserpflfles fl nrlln ‘ ; e rac om; y . lléjéidlfihout and closed 1-8 cent 4- Iii’ wheat 87 1-8 and Jilly Q“ cents a bushel.

,0 mlgitons at Hurncs Aim failed m.“ e far from previ us closing

9111c close: ‘Wheat: lvny ‘i7 1-88, July ‘Iii s-4

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Toronto Exchange

"" ‘filo smile: M t 227.000 share . hm Loan ms marl-e

In addreaain The Bank of Nova Scotia shareholders at tho hlflth‘ Agnufll eatm , held at Halifax, on January 22nd, 1941, b r,“ . . ti cLeod, ‘ resident, outlined the sharp increases in tfilgli 1:881 _ac fvlty, revéewed _Canad_a a financial hcy and stressed

M gca ions or anadian citizens of an a l-out war effort.

u r. cLcod spoke as follows: .

b We look hack upon a year of world-wide upheaval. It has Pica a year of tragcdy._ I\o lesser word can describe the fall of E ance an the obhteration of the smaller democracies of Western filgrtzpffio And ytat), IhNPfIEhBISO brought to ua renewed hope and ‘reepdom able: theeseaaoliabrlfigd all; lull grant stronghold of the dos iler of cont‘ ' tallsi “n owe an “shaken before

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m" seriousness and yca soniictfi ua inla ooh ve realized the should now have, turgency o e pcri in w lch we stood, we h _ oa w atever comfortable illusions we may onco ave entertained, We know now, ‘as we may ‘not have known a ytevhago, that “i1! country is in a total‘ war, _llJ ‘the fullest sense phm ahwor . _ n the words of Mr. Churchill we are moving ug _ a period of extreme danger and splendid hope, when fiyfiryi filigtéuprérglpigrt ‘£11225 ,WIl.l be tested and all that we ave and

“In such circumstances, it is only proper to consider what this ‘total’ struggle means to i_ia as Canadian citizens. Our rima interest _ia, of course, to win the wlir and, us a banker, I eel it is appropriate for me to review the financial policy which we aa a nationhre pursuing to this end and to discuaasomc of the eco- nomic implications of our all-out’ worcflort. First, let m_c survey briefly the outstapding developments in the economic picture of the past year against which financial policy must be viewed."

Remarkable Expansion of Industrial Activity

"It is no exaggeration to describe the expansion of industrial activity in 1940 aa remarkable. _Indced there have been few occasions in the post when ex imsion has been so rapid or nearly so ivcll sustained. Indicating tie general trend, industrial activity, as measured by this Bank's inch-x, has risen steadily since last March and in Novcmbcnwas much the highest on record and some 290/; greater than in the month preceding the outbreak of hoatihtica.

“This pl nounced increase in_Cannrl_a'a productive nctjvitieg has bccn concentrated in the shipbuilding, uircraft, automobile, machinery and chemical industries, and in the concerns which manufacture and frrbricutc such slncwa of wur ns iron and steel, aluminum and other base mctula. The textile trades were also much busier in 1940 than in 1939 and certain of the great export induatnea, such as lumber and pul and pnper, were decidedly more active. Mining aa well share in the general expansion of production. 'l‘_lie construction trades, stimulated by the great grograrnmo of industrial expansion and by the large volume of

cfcyrce work, hlive been increasingly busy. The IiLllWftyE have carried more freight than in any your since 1930 and retail trade has been appreciably better than in 1939.

“In the case of agriculture, the year has been one of heavy production. Not only were crops generally plentiful, and wheat auger-abundant, but the output of hogs and cheese increased au stiintlolly; that of cattle rose moderately, and butter produc- tion was only slightly below the record of the previous your. Farm income for Canada as a. whole was slightly larger in 1940 than in I939 (and indeed the highest in thc past decade) but it was lowcr than in 1939 in many arena of tho West because of the deferred marketing of wheat. Producers of certain other specialized products, such as apples and tobacco have also had a difficult your.

"There can be no doubt that (lllnlltlll produced more goods and services in 1940 than in ally previous your of her history. A rough provisional estimate, compiled by our Statistical Depart- ment, puts the available national income of Canada at. around $5,000 millions as compared with $4,375 millions in 1939 and $4,130 millions i'n I938. While this estimate has been exceeded

in the two previous ylcars of I928 and l929—thc 1929 peak was $5,430 millions-—thc reiison is to bc fouiul in the higher level of prices prevailing lit thiit time. Indeed, when one lillowa for tho difference in thc pricc lcvnl its between the two periods, it becomes apparent that the national income of 1940 represented un aprigtglgbly larger volume of gooda , and services than that o .

"Full Employment" In Sigh!

“In line with the rapid growth of production, employment opportunities lilivc incrciiscd uiid the inujorit ' of tlic unemployed who were rcuciily cmployuiblc have found jo s. The ofliciul cm-

loyment index is at much the highestpoint on record and on December 1st it indicated an increase in the number of wage- enrricra employed since the outbrcrik of war of about 350,000

crsons. When it is remembered flint some 200,000 men have llcen added to the armed forces, it will be soon that employment in industry unrl in the wlir services has incl-nursed b n. totul of around 550 000 persons. For n country of some ll million people, this is a truly notable increase in the short splice of fiftecn months.

“We are steadily approaching what the economist describes as ‘full cmplo ment,’ i.c., a state of affairs whore there is work for all the capab c and adaptable unemployed. In many industries part-time work is a thing of the post und overtime the more usua atatc of affairs. Workers urc being drown away from non-essential occu ationa and women are entering tho lllbour field in increasing num era. Certain artisans arc in particular demand and shortages of some types of skilled labour are ‘ecoming ‘bottle-necks’ in our war programme.

“Of course, this is not to say that we are close to the upper limit of oiir national production liiirl olTort. Some (‘riliolliliiis will be ablc to work hnrilcr rind lnngvi", rind ollu-ra will I1l0\'(‘ from non-essential to more urgent Chll\l(>_\'l]It‘lllS. 'I'lici"u lirc still some unemployed who will fiud jobs and, what is perhaps more iin- portaiit, there remnina a reserve of yrcrsons who are under- employcd nr engage-ll in relatively unproductive occupations, and there is the reserve of woincn who normally would not. RPPk ilidustrinl PIIIPIQYTIIPHI, The prcsent lribnur‘ problem is ryurilitutive rlitlici" tlilin riiiriiititzifivc‘, it is oiic of (ibiriiliing i-iioiigli of lllth right kinds of llibour to mcct the rupiilly rising nccds of wlir- time industry."

Mounting Stimulus of’ War Spending

"There is no need to elaborate nn the rcnsona for the pronounced economic expansion of I940. Obviously, the prime cause la war spending. short timc a o, the Minister of Finance pointed out that the Dominion (lovcrnmcnt/s war expenditures had recently been running in the neighbourhood of $70 or $80 millions per month-or at a rate of around $900 millions per yoaP-and

and weakened a cent, to 6 1-2 and i higher at 83.62 1-2 cents-

CANADA’S WAR FINANCING

' “Home Front” Effort Calls

for Economic Sacrifices Address of J. A. McLEOD, President, at 109th ANNUAL MEETING

THE BANK OF NOVA SCOTIA

Afifliilaltl General Manager, H. D. Burns, Presents Statement and Pays Tribute to Stafl, wilILPnrticuIar Mention of Those at London, England, and on Military Duty

there is every reason to believe that this rate of apendin will be further increased, In addition, the British Government as been making substantial war outloya in Canada. Taken together. it would appear thn_t_tha strictly wartime expenditures of the Dominion and British Govemments in Canada are currently equivalent to at. least 20% and perhaps as much as 25% of our entire national income.

"Added to this enormous and wing wartime im tus, the productive energies of our country ve been stimulate by riain demand both from Britain and the United States for our uaua exporta—the products of the farm, the mine, the forest and also of the factory. There was also an appreciable increase in our exports to the rest of the Empire and to Latin America, thou our shipments to continental Europe were, of course, abrupt y reduce and those to Japan fell sharply."

Eno Task of Finance

_ “There la far too little public ’ tandin of the vitally important topic of finance. The people of Canada have under- ‘takenan all-out \var_ effort—i_n tho words of the Prime Minister we will make financially r L‘ the utmost effort the people of Canada are physically and morally capable of making.‘ To put it another way, this means that we have committed ourselves to raise, not just what money can be raised convenientlv, but all the money that can be spent effectively for the war. That is the problem of financial policy.

“We talk of war finance in terms of money, but we should realize that it la fundamentally a question of human effort and sacrifice. Let us remember that behind the dollar signs are the goods and the services, the labour and the sacrifices of a people engaged in a great physical and moral effort. We say that the Government ia raising money because it needs it for war purposes and this of course la true. But fundnmeutallythe Government in raising money for war purposes is prevcriting it from being spent for non-war purposes-and thus restricting civilian demands on the productive powers of the nation so that more labour, more machinery and more materials will be available for wartime production and service."

Policy of Financing Successful

Mr._ McLeod reviewed briefly the record of Canada's war financing up to the close of I940 and stated that financial policy tliua far had been successful in raising the funds required for the war without untoward consequences. “Des ritc the fact that the Covcrnmcnt has been spending on a ra i ly mounting scale- its total outlays ln_Octoher were 8128 m' lions-there appears to be no evidence of inflation in Canada.

“In the first place, the level of prices has risen only moderately both in relation to international developments and in relation to the rise in the notional income which has thus far occurred. When it is remembered that the war brought a 9% discount in the Canadian dollar in terms of U.S. funds and that ocean frei lits and insurance rates have risen sharply throughout tho wor d, the 12% increase in wholesale prices and the 7% rise in the coat of living since the outbreak of war cannot be considered unduly great. ‘Furthermore, it is of interest to note that the wholesale price index in Canada is still somewhat lower, and the cost of living not n great dcnl higher, than was the. case during the recovery of 1937 when tho national income was much below the level prevailing today.

“In the second place, it should be noted that the increase in the volume of ban credit has been modest when compared with the increase in production and employment. While Canadian deposits in the Chartered Blinks rose from $2,582 millions in Aiigust, I939, to $2,823 millions in November, 1939, they dc- clincd subsequently and in N ovember last stood at $2,733 millions. Thus, the not increase since the beginning of the war was about $200 millions or 8%. When viewed against the 17% increase in ernplo mcnt, and the 25% gain in industrial activity, this expan- alon o credit. appears comparatively small."

Existing Problems of War Finance

“If anything is clear, it. is that the problem of finance is rapidly assuming lurgcrfiroyéortions in linc with the mounting scale of our war effort. e ominion’a over-all re uirements for its own war expenditures, for ordinary outlays an for financing British purchases in Canada during the fiscal year ending March 31st next. appear to be somewhere in the neighbourhood of $1,500 millions, the bulk of which has been raised. While it is not

ossible to any just whilt mliy be tho requirements of the coming 'scal year, a total of $2,000 millions would acem to be a con- servative estimate.

“How is such a vast sum to be raised’! On the basis of present rates, taxation ma bc expected to yield perhaps as much as half of the require funds. The remainder, except to the degree that toxritinn may be increased further, will therefore have to ho raised by borrowing. To this cnd the Minister of Finance has outlined a two-fold policy. First, he announced that the next war loan would be organized on a largo-scale co-operative basis, similar to that of the victory loans of the last war and that it would be issued next Summer. I-Ie added that the loan would he a ‘very large one.’ Secondly, he emphasized the importance of the Favinga Certificate scheme as a means of encouraging regular saving for the wlir effort.

"Itleilmvliilc, in order to meet fully the Government's financial needs bciiveen now and the next public flotation, a short-term loan of S250 millions is being obtained from the Canadian banks." Mr. hlcLeod (llscussed the implications of this loan and indicated that in his opinion it. could not he “regards-d as in any way inllritiniiiii'_v, provided flint. the linrrnrvilig and faxing policies of the (lO\’i‘l"ll|ll(‘lif prcvolit. :rn int-nurse in lllf‘. volume nf civilian speuiliiig. 'l'li<- money is needed to liriiint-c rilltliilnnul wnr produc- tion: of that there can be no doubt. ’l‘|iis war production, how- ever, will give risc to a further increase in individual incomes and if this nicnnt tlilit the general level nf individual spending would be rriiscd corrcs ondingly, ilir-n the loan would have inflationary consequences. llit, ris we rill know. the Government is striving to rlivcri ri growing portion of individual incomes tnulirrls tlio will" ollurt through taxation riiill public borrowing, rind to the (ll-grow: tlult this polio l i.- successful the development of inflation can and will be avoi ed."

The War Effort and the Home Front "Let us fncc the f flint grcntcr economic sacrifices are mvvossnryn It fa erfc trun that the Government. has been taking a lnrgc rin growing portion of our incomes throu h taxa- tion and borrowing. Brit tht- nniionlil income of Canada as been rising rapidly and, even slici- these substantial ’ ‘actions, the

TnHE CHARLOTTETOWN GUARDIAN

Canadian people as a. whole have had more to spend than prior to the war, and they did spend appreciably more on their indivi- dual welfare in i940 than in 1939. y "The reason for this state of afiiiira is that we have been able to increase our production sharply and thus to provide for a rising war output without curtailing civilian or, peacetime gro- duction; indeed, we have been able to increase it. It woul be leasant, but uitn unrealistic, to think that we could g0 on ncing an a -out wlir effort with little real sacrifice of an economic nature. There are two compelling reasons why this cannot be done. One is that we are steadily approaching a condi- tion of full employment and maximum production and thc other is that we have undertaken to go on increasing our war production and effort to the limits of our capacities. It stands to reason that this country cannot go on indefinitely producing more and more war materials ltlitl equipment, withdrawing more and more men from the productive system into the armed forces, rind lit tho same time continue prlivirliiig more gnolls for civilian consump- tion and use. Since we must. have a rapidly mounting war pro- duction and larger armed forces, we shall have to foreilo an improving standard of living and, in a great many cases, accept a somewhat reduced one. In short, if we are to pull our full weight in the cause tn which we lire dedicated, individual spending must be progressively limited in favour of the war effort. ‘

Increased Saving n Vital Need

"My reason for stressing this point. Ia that I do not believe it is auflicicntly or widely enough understood. To manv, indeed, the income tax bill payable shortly may come as ll. rude shock even though the increases were announcer] seven months ago. Some may feel that they have carried their full Fllllrfl by paying the higicr taxes, But the truth is that after the taxes have llccu paid there will still remain enormous and growing sums to be raised from the citizens of Canada through borrowing nf one sort or another. And if inflation is to be avoided, there ls onlv one way which Canadians can find the necessary money-that is by strictly limiting their expenditures and thus increasing their rate of savings. It. is therefore a vital part of the wlir effort on tho ‘home front’ that everyone who can reasonably economize should save more and more. For those whose incomes arc rising as a result of tho ivilrtilnn expansion, a high rritc nf saving is not only the art of patriotism but also the plirt of wisdom, for in so bull ing up a reserve thov will be providing against. the day of goat-war readjustment when their jobs and their incomca may

e gravely threntoncll.

"We rill rt-vngnizr- that this is a ‘total’ war, but perhaps because our battles lire being fought uii the other sillt- of tho. oruarr we n_rc sometimes slow t0 realize its full iinjllivritiilns. One implica- tion fqr those of us on tho ‘homo front‘ is that, in doing our proper share in the country's wlir cllort, we must. pay, and pay as wc go al0ng—in flic form of taxes, loans to the (lnvcrrimcnt, or if these fail, inflation. All of us lire anxious to avoid any serious inflation because it. is unjust. inefficient. rind threatening to the very fribric of our society. [fuller llicsc circumstances, we must. willingly accept licuvy taxation and, more than tliut, we must srivc to tlic maximum nf our ability. It. may appclir flint this is the hard way to finance the Will‘, blit because it combines ofllcicnr-y rind justice in the greatest measure, it is the best way and the democratic way.

Govcrumcnt Control and Regulations

“I have not mentioned the increasing variety of controls, regulations rind tnxcs designed to mcct. special aspects of the wartime problem. Of necessity, Canada has built up on elaborate system of exchange control, some measure of price regulation a growing amount of control and direction over production, an a

ody of special taxes and regulations for thc purpose of curtailing civilian demands on certain kinds of lnbour, crlulpment and other resources needed for war purposes. By and lnrgc those controls have been administered effectively’ and fairly, and ctr-operation rather than compulsion has been the order of the day. Never- theless, because of the over-riding needs of the war, we are build- ing up what is becoming a controlled economy, in which individual rights and individual initiative are for tho time being limited by the state. When, as at present, we can all agree on one pre- eminent objective, thcrc arc grout and obvious advantages in unified control and direction. Brit let ua ncvcr forgot that the driving force in our democratic society is the individual rather than the state and lct us rcsolvc to rte-establish when peace returns conditions that will provide for freedom of individual enterprise in the economic as well as In the political sphere."

Assistant General ItIonager-‘s Address

“The President has already commented on the tragic cvcnta of the past year, and I Ellilll not attempt to amplify his remarks: it is, perhaps, not too much to any that in the practical operation of the Bank these events brought their own problems."