PAGE . 51X. i -

Bank of Montreal President Declares That An Economic Millennium Can- not Materialize By Order-in-Council

URGES DISTRIBUTION OF COST OF become better balanced and GOVERNMENT IN SUCH A WAY AS NOT TO DIMINISH INCENTIVE

George W. Spinney Addresses Shareholders At Bank’s 127th Annual Meeting

\\'.'ii-niiig against lll’: lissiiinptitln that a lii_i>l'\\'fll‘ economic ed, a factor of no small signi-

. _ v . _ -_ _ ,~ , ., ., mh. -, finance from the standpoint of iililltini.iini. iii uhith citrybody \\ill be llllJlL stunt, llL tr ‘nil external trade. Mureoverl we

ilrcsiiiiinlil)" hilppicr, can lllalfiflillilt‘ by (Jrilcr-iil-Cotiilcil, Licorgc have been able m acmmpush \\' Spiiliit-t- C311}. in his presidential address at the 127th our vast mobilization of mate-

annunl meeting of shareholders of the Bank of Montreal, urged an jam“ our ccmwn“, m the hmwsllv rmiisvlc junk at the post-war prospect. He suggested that stresses and our iibcple to the tlic irrimit-rsit-ii of industry ll) civilian iirudtictitni, thc FC-Qlilltltty- nicnt ill pezice-tilnc ptirstiits oi those llil\\' iii the .~\rliicd litirccs and achhayjng our Dust-wim- 51mg in unr work and the restoration of our external trade on a s: favwry M45 “nulll involve prohlcnls of treineiltlous illzigiiiiiidc. Hr. Spinney urged that the ivztrcs of the Ililllfiffhi vciirlnrs hc i lrtzttrd with ll "nice sense oi (llalifllllilifllltlll: '_ 1111' 1111i‘ "1)J1‘1‘1"'v95- 1 n, lig nqiv ihein, ivcre full employment arising out oi productive conditions oi individual libel-iv to ‘billion dollars annually. just about

agtivify and operating under ‘ _ produce a high standard of living in real -teriils oi goods and is probable that m" more than 25

v; on of The Bank Act,_ Mr. Y5l1111" said that the banking system

' 3 i -t eating." fiat? lilgrobiservlex-‘d, would be dealt sonic lcilgih by the Gell- erul lylanuiicl‘ middle would refsl‘ only to the reduction of thp h value of bank shares and o t. e lone; discussions before the Stand- Committee oi the House Commons on Bankllli; and 69m‘ mtyce on the subject of Inner or

the recommenda- tion cf the Committee, Parliament enacted that the par value 0f 1111’- sharcs of all banks (ruin $100 to $l0_ per share. In our case the result ls that instead of having outstandin! 3501090 5115'” at 5100 each. the issue is now £1.- eooooo slriarfs attgéorggsfl. g1 m: Course o {me a wider distribu- f ownership of our stock, ivliich we would welcome.

CONTINGENT nasnnvas

"The subject oi Inner or Con- tingent Reserves occupied atantlal part of the _ the Banking and Commerce Com- mittee and as the discussions re- vgaled many basic ‘misconceptions, some of which received wide P1113-

should like to comment on certain features of this

Jegil/friv I say at the outset that the custom of adding to the Inner or Contingent Reserves of a b11111‘ during the years when It‘ is pos- sible to do so. in order to cushion less favourable periods when loans may unexpectedly become bad anid the vnlue of assets may 51111111“ 5 one which the test oi exileemnge in all countries has provcn to he [he only safe iw11¢v 1° P11111111 l 1-‘ interests of dtBPQ51iQ1f5- The Pr“)? tine nos been recognizedfrom t E inception of banking 19815‘ lation that in valuinll 1155015 111°" vision should be made for esti- mated und unforeseen losses. In-l security", finance and trade: we operate make itcblizatory for The history of Can-

that many of the banking diffi- cultles of earlier days would have been avoided if proper provlslvn

_ i‘; lies not only iigriiis ffllfltllligS allllllji. to bank mcr - crs, which in many C8565 dwwtd have been unnecessary 1f B Efiillfl B reserves had been set up.

"It is elementary that in com- mercial banking risks must be ac- ted and even though lendinfl ts be surrounded with

management can do is LOJIIIIIIIIIIZB the risk of l perience has shown that social betterment in our time and

- iii develop w losses w either foresee nor P1“-

per community service to the pm without making losses. nor bank be operated prudently without reserves t0 111W! losses. The keystone of the bank- system is public confidence. and this confidence can easily bt: through any sharp coil-

words. But as the end of the war

111Z.11'111C11 perhaps in earlier

earnln n zomic reality. n or the published reservw f the banks. Inner Re- serves are the principal means by ‘union banks provide for unfore-

my earnest d re that our hope: can do much to influence for good and expectations shall be achieved. or for ill, the conditions of future But I sometimes wonder whether economic progress. I hold strong- all the brave plans for the future 1y to the view that a supine de- nre accompanied by a full rcaliz- pendencc on government would re- i ntion of what has to be aocomplisli- present thc negation of the qualit- tly needed than in the field oi ex- ed if these plans are to material- ies most necessa .v to an enterpris- port trade. To find our way into 1M1- Ifldted. it would seem that many ln'g and democratic economy. At new markets, under conditions of people are assuming to-day that a the same time it would be idle to active international itlon, pout-war economic millennium. in ignore the fact that by reason of will require a tremendous effort, which everybody will be more sec- the coats of reconstruction and the Even under the most. favourable lire. richer and presumably happier, more permanent demand for social conditions, our fortunes in export can materialize by Order-in-Coun- security measures of various kinds. markets will, in the final analysis, cil. But to take an honestly raalis- the financial needs of government depend upon the factors of quality

ood and bad years.

rves nnd it is doubt- id gave wteatiaiqergtgagll s orms of t e pas . iiiirjiii dontinued throushfluli 1° P1" our part in serving the communa lty, if the management in 81:13 times had not prudently w e11 1 reasonable sums to meet the n- evitable chtmflfl 111 5113mm‘ cm‘ ditions and the effect changes upon the value Bank's assets. At the

... ~z's'_¢.-_ ..._ . ‘_

sion of in 000,000 of deposits entrusted

must be the first consideration of

e f our assets. “lilqiifeliie Mg“ cothslderable discus- aion before the committee o! osalg that all Inner or Cont ng- t Reserves should be disclosed. 1 am opposed to such disclosure “can” n1’ my belief that it would

remain a vast area of effort and op- ment and living standards. portunlty that will challenge to the “Nor do I believe that. there is might develop in poet-war export utmost our courage. ingenuity and an ensy way out of this problem oi trade a world-wide re utatioii for financing governmental expenditure specialty products of ex remely high

powers of ctr-operation.

thins. we are going along the road deficit spending baled upon the Gemially followed to totalltarlan- comfortable theory that ‘we owe our external tradoweehnll be faced ism. 1711s is what we are fighting the debt to ourselves and therefore with the problem of DftWldIflll ways abroad. Let us fight. also against-its the size of it. really doesn't mnt- and means whereby our foreign ter.’ I suggest that it is because we customers can pay foi- the blah vol-

theso reserves ml ht disturb the Dub“, mind and gve rise to feats and miqlvlngo which might be entirily tilieigulxtilefclzga-n iillilime eenctfmes. ‘rneir publication

beginnings at home. because n mere return to pre-War

, hi h in practice could {Qrsmilzulliirnvialigd without violating m; qunfldontiol relationahlp be- m,“ banker and client, would_

THE CIZIARLOTFETOWN GUARDIAN

Bankers Ask for Realism on Post- War Problems

"WEIYIBER o. i944

A Vantage Ground For The Future

"I am no peulmist concent- ing this countrykpost-wnr pos- sibilities." Mia Mr. Spinney in the course of his address. "Canada will start, out int» the post-war era with some great advantages. Due to tile tremendous stimulus of war production. our economy has

diversified as between the pri- mary industries and manufac- turing than ever before. Our population has acquired new skills. We have brousht 8170111 n veritable revolution in pro- ductive methods and techniq- ues that is full of promise for the future. I think also it is fair to say that our reputation and stature among nations of good-will has become enhanc-

rial resources without sub-

criicl injustices of inflation. It‘ seems to inc that our hope of

5- depends in large measure upon maintaining these advantag- es."

three times the pre-war rate; but it

percent of our present exports re- presents ordinary peace-time bus- iii s. These facts in themselves indicate clearly that reconversion of our economy will not be effort- less or easy.

REAL BASIS OF WELFARE

“We shall probably hear much from the panacea vendors within the next few years and we shall do well to cultivate n nice sense of discrim- ination in apraislng their wares. We shall also need to have a clear-_ headed appreciation of the true, significance of measures whiclii may redistribute goods and services‘ but which do not of themselves in- creasc productivity. Some of these measures are undoubtedly desir- able from humanitarian and soc- ial standpoints, but I hope we shall not fall into the error of regard- ing them as short-cuts to national prosperity. Even full employment, _ it seems to me. is not necessarily wholly synonymous with material welfare. There can be full employ- ment in a slave state as the opp- ressed populations of Europe know their cost. There can also be om- ploymcnt that because it is aimless‘ and unproductive is void- of benefit . to the community and spiritually dc- gradirlg to the individual. Then too, SPINNEY. CM G. . a high national income is not neces-

esldent lsarily the ultimate end of econ- ——-—-——-—~-~~"~—>———-~— l omic policy. The national income m; Qnly be dnnggyqug but tl-ouid may rlsc in reflection of an inflat- bo misleading to depositors and 111111115’ 11P111Ee in P119115 5111111 a" 5hgrehg]dei'5_ increase ould not bring about an

“I do not propose to review in 1111-1111111d improvement in 11111118 detail tlic long discussion on the standards. but would simply make tax position of Contingent Reserves lllinzs more cXpF-‘Ililve 101 81/9151" as this was dealt with by the Min- "Q1111 ister of Finance in his statements "As I see them. the true objec- before the Banking and Commerce lives of post-tint plliunlnl; must

GEORGE W’.

i General Manager Says Bank Act Revision Permits Maintenance of High Type of Banking Service

B. C. GARDNER OUTLINES PROGRAMME FOR BANKS PERSONNEL IN SERVICES.

Tribute Paid To Co-operation 0f Customers In Difficult Times

B. C. Gardner, General Manager of the Blillh’ ofllloiiircal, stated iii his address that the revision of thc Blink Act this year permits thc hanks to itiaiiitziiii thc high standard of banking service to ivliich tho people of Canada have been zicctistniiicrl.

lii his review of the Bank's ziccoiiiiis hc >Zll(.l that profits for the year :iliioliiited to $3,i9.l.000, after all cxpcnscs including provi- sinii for had lttld dtilihtflll tltllis zintl for l‘_t.(l‘.‘l'lll govcriitllcilt taxes of S3.7.>5.ooti. These profits compared with $3._3o3,oo0 in the

previous year.

"In considering the Profit and Loss statement now submitted." be said, "I should point out that in1 comparing the figures with the preceding year regard must be had tn the adjustments in taxation. to which the president has referred. As a resitlt of the tax adjustments a comparison of net. earnings be- fore taxation shoivs a reduction of just under 81.500000 from the lid- justed figure of the previous vcar. Gross curent earnings were in l1ighei~ figures. notwithstanding a lower level of commercial loans and reduced revenues clue tomaln- tenance of higher cash reserves, but thc increase ill gross earnings was more than oflset by increased ross operating expenses, tvhlch neludetl all increase of more than

$1,000,000 in interest paid to de-

positors, and a special additional

contribution to thc Pension Fund Society made possible by amend- men to the Income Wnr Tlix Act."

TRANSACTIONS AT RECORD

The General Manager reviewed the more important changes in the,

balance sheet. ivliich has already appeared in the press.

pealing witii the services oi the bank, Mr. Gardiner stated that they have been maintained at a high level of efficiency aiid coil- tinued: "The voltune of transac- tions cxceedcd all previous records. We have litld a satisfactory in- crease in the number of current and savings depositors and in the

number of borrowers. The increas- ed volume of normal banking rCu-

tine is in addition to the substan- tial increase in special war-time services relating to Victory Loan

distribution, Ration Coupon Bank-

ing. Foreign Exttiatige Control, ei

ceteru.

"We have continued to co-opcr-

ate to the utmost m every endeav- our to facilitate the war pro- gramme. Special efforts have been made to widen the distribution of Victory Loans among our tlellusit-

Committee. It was, however, made 1>'~‘—1'111I 91111110311101“ 111E111! 0111 01,- ors and the general public. We are

clear that reasonable provision for Dmdflflive activity 11nd, 0961111111!

pleased that our safekeeping filCl-

losses must be considered as an 11111161 00111111111115 0f 111d1V1d1l111 111l- llties are being availed of by nsub- expense of doing business and, 01W 10 P10111106 K 111211 81111111111111 01 stantially larger number of Victory

therefore. as a charge in compnt- living in real terms of goods and lng taxable income." services. I know of no other objec-

REALITIES 0F rosr-wluz menus of a progressive and free-I PLANNING (loin-loving people. Nor do I know.

Mr. Spinney spoke at. consider. be achieved except through pro-

Bond purchasers as we consider" _ _ this is all important factor in thc tlvca that will satisfy the require-l maintenance of such distribution.

"In view of the greatly incl-cased

volume of transactions and of ’Il'E-,‘ of any way in ivhlch these ends chili sent. staff conditions, I would like‘ to pay tribute again to our cus-

able length on the important sub- 1111611011 0n tho 11101111651 DOBS1111B- tomers and to iiie public generally jcct of post-war plans and plann- scale and the ireest possible ex- for their cheerful co-opei-ation in ing with special reference to "social change °f ‘he T931111“! P10111191! these difficult times."

within our own borders and beyond “Thanks to the courage and 111E111- sacrifice of those on the fightin

El fronts and to the efforts o; an SOME PRACTICAL OBJECTIVES On the contrary. I believe it is well

who have pin ed their parts faith-

within manageable proportions in

fully and wel in their appointed “Accepting these broad objec- relation to our present and poten- places at home, the year n35 tives, and keeping our initial ud- tial productive capacity. But if brought the United Nations far vantages in mind. certain practical over the long term we complacently along the road to victory. It is not, consequences follow. In the first accept and apply theories that so: unnatural. therefore, that dcspltg place it ‘VILI bc essential that the no practical limits to the size of the sobering) knowledge that inucli {success achieved thus far in the war the debt. then we shall only have e

remains to

done before the final in holding down prices and livin ourselves to blame if the value of

goal is reached, men's minds are costs be maintained and carrl that debt ultimately and inevitably now turning forward to the days through into the period of post-war diminishes in terms of the quantity of peace. It is quite obvious that readjustment. Up t0 the present wt- of goods the dollar will buy. I do there is emerging in Canada a have been able to avoid the ex- not ailment that in each and every deep and overwhelming conviction cesses of inflation because as n peo- yefll‘ 1119 81199111111111“ 01' ifvvemmfiilt that after the pain and struggle pie we have had the common sense should be c0ml>lefe1y 0011016111 by tux- of this war there must come newland the will-power to do s0. These ation. What I do suggest ls that

opportunities for individual and

for our children. Hence, we find that post-war planning is a suh- iSllIeS. Blit even more important._in i

attitudes of mind and will have over a period of years governmen- been manifest in intelligent com- tal income must bear a reasonable pliance with price control men- relationship to governmental outgo

f the value of the debt and the

ject on everybodys mind and ‘my opinion. has been the growing currency and confidence therein lire 1111 vverybodys tongue. ‘Full realization of the value and slgrilf- to be maintained. Moreover, what employment’ and ‘social security‘ icance of voluntary saving, l.‘ have said emphasizes in my own

3V8 become almost household

post-war relations I take seconlurlle t0 no man in eminent and individual enterprise‘-

through our great national Vic- mind the need for an approach to ltory Loan and Wai- Savings cam- post-war reconstruction in Canada approaches. this post-uiar piann- lpaigns. in holding down the cost of along lines that will in every pos- iving and in providin s. basic fin- bible way encourage the processes of

‘days often took the form of a anclai reserve for mill ons of lndiv production and lnterchan _ licr pleasant, intellectual exev- iduizis. private agencies rather than cise, now looms up as a hard ecn- “Secondly, I su gest that the through the channels of ZOVCIIIIIIEIII‘ p between 801/1 511911111118-

FOREIGN TRADE AND ITS IMPLICATIONS

“Nowhere will qualities of init- ative and enterprise be more great-

tic look at the post-war prospect arc likely to remain at a conalder- and price. I-Il h production costs at

is to recognize that the reconvcr- ably higher level than before the home can str ke a blow to our ns- ustry to civilian produc- war. Under such conditions the dls- pirations in the export. field. Nor tlon, the re-emplo ent in petlce- tribution of the cost of government can we gxpgcv, our iorglgn cugtom-

time pursuits of t ose now in the becomes a matter of peculiar im- ers to favour us at the cost of sac-

Armed Forces and in war work mid portance. For if these costs are dis- riflce in quality, or to accept a the restoration of our extemnl trade tributed in such a way that incen- product not wholly suited to their on a satisfactory basis will involve tivcs arc diminished and individuals needsl Here I suggest that Canada, problems oi tremendous mamiitude. or corporations are thereby discour- with great natural resources and a And after giving full value to ev- aged or deterred from entering into highly intelligent nnd adaptable erything thatgovcrnmentaiagencies productive undertakings. then the population. has a potential advan- ' @1111 1190111113’ do to aid the traiisi- net result. will be a loss to the tage oi real promise. Is it not. con-

tion from war to peace. there will Canadian people in terms of emplny- ceivable that with sklliul and carc-

ful use of our opportunities. we

"If We let Government do cvery- by resort to n long-term process of quality and a dependable standard?

Then too. in the development of

"The challenge is the greater owe the debt to ourselves, because 1ume of Canadian goods which we

the bonds that Canadians hold to- iwould like to see thorn bu . In large conditions obviously will not be, dav rear-amt their work. savings measure we have met ths problem good enough. There are to-dayi mid self-denial throughout the in the war years by the simple ox- aomething like 1.300.000 more Can- “era rf war. and their assets for

dient f l i ood away, It liriians lit work or in the Armed p. o in“; a s

Jhe future. that llle trend of this will undoubtedly be necessary for Forces than at the start of thr- dcbt in rears to com:- dncs matter some time after the war to keep on war. We have an export trade that

very much indeed. I am not alarmed doing this to some extent as artof is running at the rate of over tiireel

at the size o! the national debt. our contribution in rehnbiitatlon

:tall with the long discussions rm which took place within the Hank- ing and Commerce Committee when The Bank Act was under

that in the record of the hearings many erroneous statements and

other: were equally sure that the

B. C. GARDNER

General Manager

REV ION OF THE BANK ACT

The Bank Act revision was re- ferred to by the General Manager who said iii this connection: "Dur- tlic banking system of Canada was the subject of wide public zittc-iition as a result of the revision of The Bank Act. ‘Itic new Act. into force on September l, _ extends the charters of thc bailks