l

RUAKXJ- 1944' FEB _._

THE CIiARI-OTFETUWQ_QUARDIAN _g____

Say LA. McLeod, President, and H.D. Burns, THE BANK OF

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lIsii-s ‘firs... '

General Manager, at 1

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CANADIAN BANKS HAVE MEASURED UP T0 THEIR RESPONSIBILITIES IN PEACE AND m WAR

12th Annual Meeting IA

gating down of’ taxes will stimulate peacetime activities. gimme?‘ ‘flat-g; ilfiflilit-y at full gillifisnufhs world is in the midst of tin; government and business must co-operate to achieve K18?” l-zlloiéllfl hag guqtgelklryglll; r c ffnfnmou ‘Ziwullwg d’

high level of post-war employment. a taiillaempkjriizsai in pelcletime will “No cgu," h" l, “In;

r J. A. McLeod, in his ‘ _ ' . . . . . " my ' Inhilmvm u" '85:: than Canada in an effective inter-

Mdrcs; m tbs Shareholders at Halifax {filxsttmriigtzduction forlcivihan and tive and we "e Y. . payylm“, moummey-lsitsmlhrThgghayalcter of oitir

February ..nd, spoke as follows. . . "ices ayai ablotncivilians. any pflgg go when w, mchmns the P ll" I ,6 QQPMI Y

°“ bvidcncc of restriction is lobe found in tcmporarysacrifice of inanyof ourri hts a” such that w? must mamlm" m"

Mnbllized for Total War decreased employment in a number of as individusjg w, do M, welcfime expand our foreign trade in order tc j,

“On tho military fronts tiie past jeear

, h te in improvemen in

ill: lhcrlluiicscxiilf fliogUnited Nations. Since the battle of Stalingrad our llua- sian Ally has driven relentlessly west- ward until now she has pressed the hnrilcr of Poland, a_ll the time ivcaring t‘l(Il\'|\ and destroying the Nazi war machine. Chinn. as held fast in the

mmth year of her_ heroic stru glo

..

against the Jap a iuvailcrz An _at m; liL-l, thc vn war-makin capacity of the British Conimonwcult i and the Fnitcd States has been reflected in dc- cisive events on the battlefronts from the Mediterranean to the_Soutli_Seas, in the waters of the Atlantic and in the air over Europe. In this fifth year of the war, the most significant develop- mcnt is thcfactthatthe UnitedNatioiis, and especially the continent _o_f North America, are now truly mobilized for total war, as is evidenced by the growth in the fighting services and y the gigantic output of arms and war materials which seals the doom of the Axis Poircrs." Remarkable Production Record “Canada's part in this achievement l5 nna of ivhich we are justly proud. During tho ast year, in addition to her military c ort, she brought into full production agrcat and divcrsifie lnrma- nicnts industry, she increase even further her already large shipments of fcoilatnfls overseas, an provided huge quantities of esscntjal metals and other bade products for the war programmes of the United Stntcs and Great Britain. Perhaps we have noiv become almost immune to an appreciation oftheastru- noniicalfigurcs oi war, particulnrl when reading those_ of the United totes. Nevertheless, if’ we stop to think of it, we can scarcely fail to_ recognize the significance of a furthcr increase during 1941i of inorc than three-quarters of a billion ilollars 1n the value of Canada's eutpiit of the finished implements 0f war, to a total of about $2 800 millions -:i figure almost three and s. half times as grcnt as that for 1041."

Exports Reflect ltlagiiiludc of 'ar Effort

“Anot hcr impressive indication of the scope of the economic effort is the cnnrmciis expansion in our exports- arms to tho battlcfronts war materials to the industries of eur Allies, and food and a variety of needed commodities to llritain, the United States, rind other bnitcil Nations. In 1943, Canadian cinorls amounted tn $3,000 millions, S900 millions more than in 1942. The rnngnitinlc uf this figure is brought home when we remember that prior to the. u-ar, in 1938, our ex orts were S850 millions and that. cvcnt en we were the fifth trailing nutiiiii of the \\'0l'l(l. T0- ilay uc are the third, exceeded only bv the Lnitcd States and Great Britain."

Railroads do Outstanding 10b “In addition to the achievements of our ncw wnr industries, our basic and lung-established industries have given a good account of themselves. Older capital equipment, and n working force in inanv crises depleted by the urgent demands of the armed serviccs and war industry, have been fullv and effectively" utilircil. This is particularly true of agriculture and the railways. It. is also truc of‘ runny other industries among irhiclnasthcGencralMiuiagcrsaccount. of tho Bank's wartime operations will show, may properly be included bank- ing. The railways are an outstandin Fiitmfllt! of what. has been achieved through increasingly cflicicnt use of equipment to which it has been im- qio-siblq to add in anything like the iroportion of the wartime rise in traffic. .1 hus, last year, though there was little c-apansion over 1942 in the number of curs loaded, there was ‘a considerable furl hcr growth in thc tonnage of freight lmnlcil and cycn inorcin ton-niilea—tho inensurc which takes into account the lcngthcf haul, The President of the lanadian National Railways recent! lprovidcrl an even more remarkab e illustration when he stated that the _is-din: of l9-t3, which vras nearly two and a. half times that of 1017 in ton- inilrs of freight and two and a third times as great in assengcr miles, was hagullcd with 17 ,0 fewer locomotives 10.0 5°“? "fight cars, and onl 6% more passenger cars than in 101 ."

Farmers’ Achievement Truly Great “'l'hc story of agricultural production ls even more notable, when account is taken of the basic character" " of arming. With a severely reduced work- 8 force-—the numbe of male workers "l filled in farming is some 25% lesa I'd“? than prior to the war-—the armors of Canada have raised their Production b more than one-third over lire-war love . They have raised their "llliwt by enough to meet greatly ea- IAYBQd export needs‘ to cover special wartime requirements such as those of "to armed forces in Canada ship's aim". prisoners o war and so_'on; and Ha!!!)sweller a oval of civilian pen- ‘lthsn before t s vréanr. isnldtrtlrilul; great achievement and, though Jflther has helped to make it possible i ‘hid and lon _work on the part of flit; inraier and is family, together with fillitmglvfid methods, have yielded their

1 \

‘Flvlllans Well Fed and Clollaed be , the require-

rion-war branches of manufacturing and in trade. It is also to be seen in afurthcr contraction of private building and, of course, in the increasing scarcity of some consumers‘ goods as distributors’ inventories have been drawn down and not adequately replaced. Bub when all such develo meats arc given their due weighh-anrlmost of us have a. tendency to over-em ihasizs the shortages that we personally have rncnnntcrcd-csn

anyone doubt t hat. Canadians linve been

fortunatc" 'l'hc fact is that the level

of civilian consumption was not much

lower in 1943 than 1942. Though

rationing and certain specific shortages

have necessitated moderate chan es in

the food habits of some citizens, am.

dinns have been wcll fed-on the

average better fcd than ever before.

The other necessaries of life have

generally been available in adequate

quantities, together with n. modicum of

conveaien ces and luxuries which would seem great to the people of Britain and

unbelievably bountiful to the coplcs of ti“ war-torn countries of “uropc sia.’

Inflation Ileld lu Check

"We may also count among our blessings the fact. that. the prices of foods rind services have generally been

ll‘l(l within reasonable bounds, that inflation has not developed with all the inaldistributiim and conflict to which it inevitably gives rise. This is s. great advantage, and one that Canada. has enjoyed to a. greater degree cvcn than most other ciruutrics ivhich have made serious efforts at price control. The wartime increase iii tho Canadian cost- of-liviiig index has been held to slightly nvcr 18%. In the past year, when inflationary pressures were still increas- ing, the rise nus held to only 2%. In the United States. the wartime rise has been 26 b"; and in Great Britain it works out to 289T}. One has only to look back to the inflation of the last war to realize how much better off we have been in the present struggle-—the advance of 18"}. in this ivar compares with a. cor- responding incrcose in 1014-18 of 58%."

Battle of Inflation Not Yet Won

“It is ivell to remember, however, that the threat of sharply rising riccs and. living costs is still serious an is in danger o being accentuated by over- conlitlencc engendered by the success of price control to (late and by the marked improvement. in the war ncivs. This is no time to relax our efforts. The revcntion of inflation will continue to lielp us to sustain tho war clTort, and later to dcal effectively ivithproblcms of transition to peace. While it will not solvc nll of our |lOSb-‘i\‘ill' problems, it will provide an atmosphere and n. back- ground without. which an orderly and effective transition of tlis economic structure would be out of the question."

Problems Involved in Relnving Controls

“Canada, like the llniteil States, is uowreacliiiigastagt- in hcrivareconomy where some shortages are becoming, less acute than formerly. The rent en- deavours that have been ma e to en- large supplies of metals, for example, have borne fruit au that now, iii sonic. instances, there is enough to meet all critical needs and to leave a certain amount available for civilian purposes. I would not suggest that we are on_ tho verge of a general casing of civilian supply. The paper shortage baa re- ccntlv become more stringent. Food supp ies are nnt apt to become more plentiful for some time, Cflififllflll)" in view of international relief require- ments, and in agriculture and forestry in particular the shortage of manpower remains acute. But here and there arc some signs of rclicf, and problems in- volvcd in the relaxation or removal of controls are beginning to arise while we aro still in the midst of a. full war effort."

Favour Orderly Removal of Restrictions

"All of the wart ime controls were im- posed to deiiheithcr with iartieulur shortages, or with the gcncra shortage of oods in _rclntioa to purchasing power. In this latter category are i_n- cluded the price ceiling, an the special measures of war finance. It seems evident that wartime controls should lac removed as the shortages they were ilesigned to combat are IClICVNI and overcome. A few specific controls have been relaxed alrc . Many others may well be relax before the auri- render of eur enemies, while still others may be needed for vnryin riods after the close of hostilities. or example, the relief drain on our fopd supplies m-y. an" the I I 0 seine kinds of food rationing. Further- more, it is possible that the threat of inflation ma remain for some time after the fig ting has stflllllcd N"? l" such circumstances pncoyontrol might be one of the last to be entirely removed. 1t seems to me that the emergency controls should be removed when the sins ricy has _ an that any wartime controls which the Canadian poopls Il1l¥d0ll|f8 to perpetuate shoulid

' arhrimeatasnewmsasures.

Socialism Not The Answer to Full Employment

"Thgrg l; today a great deal of dis- cussion about the importance of full

As was to expected Iientl of the war in 1043 continued to

employment after tlis war. No y

is". rag "lysine-mm; "_is

rcgimentatioa but we do accept. it— political, economic, and social. Shall we be repared to pay the some price for ful employment when the war is over? Shal we have the saine unity of view’! There are alresd divergent opinions m! to how full emp oyment can be approached in the postwar period. fhcro is the view that _he_ stats should do the job through socialization of in- dustry and trade. On the other hand, thcro is the more realistic o inion, that private enterprise shoul and can achieve the greatest possible measure of pro ress, the state confining itself to suc _ of assistance or restraint as experience has shown to be desirable. To approach f ul-l employment overn- ment and free enterprise will ave to play complementary and not conflictin roles. For if Canadians fail to wor together and waste their strength in social conflict, there will be no hope of attaining the better society which is ilesiredrwe shall get the sort of ost- war society which we deserve. f we do some hard thinkin now as to the ways and means of ac 'eving full em- ployment we shall have s reasonable chance of approaching our objective."

Urge In Build and Take Risks, Natural to Free Men

"I do not wish to suggest that government has a small part to play in the transition to peace. Its role is s. vital one. There is the major task of providing a greater measure of social security which, in addition to its direct advantages, would have some influence in checking economic depressions. There istlicjobofmaintainingsuchs ' ‘ion of trade and industry as may be re uired to protect the public interest. ‘here is the whole sphere of monetary and financial policy. There is the matter 0f providing emergency employment in the transition period through public ivorks and other means. 'l‘hcro is the complex and essential job of determin- ing our trading and exchange relation- ships with other countries. beve all, there is tho job of helping to provide conditions in which individual initiative can best. do the vast work of production and devclopmen‘ f which it is capable, and which indeed is-an absolute essen- tial to our post-ivar welfare. But the point. is that. government can only help, and it will he ahlo to hclp only if it is motivated by an informed and active public opinion. Basically we must depend upon those qualities of resource- f ulness and self-reliance that have al- ways been characteristic of the Cana- dian people. The desire to im rove one/s lot. the urge to build an eon- struct, the willingness to take risks, these are qualities csscntinl to economic progress and natural to free citizens.

Need for Agreement on Mouetn y Stnlilliutlon

“In the international sphere, there has hccu an increasing amount ef thought and discussion directed to post-ivar reconstruction. One of the most important developments is 1I.'| the field of monetary stsbihzation. I_do not wish to attempt here any evaluation of the merits of the particular plans ‘iftlllflifid by the monetary ex rts of i'itain,the UnitedStates and anada. Indeed, ' seems to me unfortunate that cm hasis has been so largely upon di creaces in detail rather than upon the fundament ‘ roblsms with which all three of the p ans are designed to co . These planssro designed to provide for the countries of the world sufficient resources of foreiign exchange _with which to start the ow of international trade after the war; to establish a means of dete ' ' the exchange rates at which the flow shall _be re- started and of achieving and maintaip- ing a maximum degree of stability in rates over the longer term; and to set up what is csseritially _a short-term international credit machinery desi ne_d to meet short-term maladjustmen 111' the accounts of the ‘ "' nations and to provide time and technical assistance to make adjustments of a morafunda- mental nature. The necessity of achieving these ends in some wa is obvious to all who remember the 'fii- culties and chaos of the thirties-—the losses of international liquidity sufiercd by some countries, the instabihty_of exchange rates and the increasing attemptsjo solve these problems ‘ v ‘ ‘ ‘ ‘monetaryandcredit bargaining.”

Should Reduce Trade Barriers

"Agreement as to monetary stabilisa- tion would be one very important step toward reviving international trade ln an ‘ of _ ' and free- dom. Other steps wilf also be necessary, among which perhaps the most un- p01 taut is agreement as to commercial

licy. Though the necessities of war

ave temporanl pushed aside some of the barriers to trade, the whole ma» ehinery of trade ‘ " remains. Unless plans are made soon to reduce and eliminate trade burners, we _may find that the channels of international commerce are again clogged when the war is over. The announcement before the end of the war of plans designed to reduce im iuients to trade would be a positive aid to reeonvsrsion. Further- more, tlis chances of reaching agree- ment on such matters are probably

much better today than they will be

ii

lave alsatigfacgory standard of living. e co ossa vo ume of our trade toda is no measure of what it may be whsh the war s ever. Then, instead of an anlimiteil. demand for industrial pro- ucta an: raw materials we shall have to meet keen competitiiin particular] in those spheres of production to whic war has added so much additional capacity-capacity for beyond the bounds of any foreseeable domestic market. The fullest attention should be given, and given soon, both by busi- ness a_nd by government to seeking and planning for opportunities for post-war

trade

Need for Positive Immigration Policy

“Consideration must also be given to the subject of immigration. There is a r r misconception in Europe and Asia that Canada with a population of only twelve millions makes poor use of her igantio area. The fact that so mucli of the Dominica's lands are be-

'ond the northern fringe of effective uman settlement. is not alwa s ap- preciated. Yet when this act is re- gnizcd, can anyone believe that Canada with her vast natural resources of land, timber, and minerals could not support a larger population? Since the beginning of the thirties, when like other countries under the influence of the depression, we adopted n negative att-ituc c toward immi ration, little thought and study has been given to this problem. The benefits of immigra- tion from a. Canadian stand oint. seem to have been almost ovcrloo ed. I am satisfied that thcro are real possibilities or‘ selective immigration and that our policy in this regard may have a very important bcarin noinic welfare. '1‘ llS is surely a. subject on which Canada should have a posi- tive and constructive rolicy, for men and woincii of the right. typo are the greatest asscts of a nation and there will be multitudes wishing to leave, or already uprooted from, the lands of their birth when this conflict is over.

Farm Population Needs Replenishment

“Another matter of great importance to our post-ivar welfare is tlis main- tcnance of o. healthy and growing agri- cultural community. In large measure this is an international problem, as all those who have followed the prices of wheat, or for that matter, of hogs or steers, know full ‘well. In this regard, it. is encouraginito note that a serious attempt is new ein made to develop the means and the wi lfor consideration of agricultural clicies on an inter- national basis. or Canada, a prosper- ous and active agriculture is essential to economic progress and to a well balanced economy. In my opinion, Canadian agriculture has by no means reached its full potentialities of‘ develo meat. The war has inevitably cause a very serious drain of population from

to a degree of industrial dcvelo meat, some of which it may not prove easible to sustain. Replenishment of the farm population after the war will help to restore a better balance between agri- culture and industry and should make a significant contribution to the solution of our economic problems."

Banks Have Measured up to Responsibilities

“Before concluding I must refer to that section of current political and

osal of nationalization ef t io banks.

‘ith the General Manager, who will have more to say on this subject, I am convinced that the banks are perform- ing their functions effectively and with a. proper sense of their res onsibiliti to the Canadian public. t is worth remembering that nearly ten years ago a Royal Commission on banking and currency int ' ’ criticisms then being made of Canadian banking prac- tice and theory and avs the banks a clean bill of hcalth._ t the conclusion of the hearings Sir Charles Addis,

b of the C ' ' and afore-

most British banker regarded the presentation of the banks’ case as worth? of the following comments:

‘ am proud of my profession. You have been subjected to e searching questionnaire and ou have given us a straight reply. ou have refuted one b one t e many ill-informed and, may add _ia some cases, malicious charges which have been levelled at the banks, and you have done so with a dig- nity and with_a moderation, and with a frank sincerity which com- pols conviction. I believe that 'our document will stand historical as a “ ‘ of tho f‘ _Ban ing System and if this Commission, in my judgment, _has _done nothin more than elicit this response would not altogether have foiled in the task allotted to it.’

You will remember that as arcsult of its studies tho Commission did recom- mend the creation o_f _s central bank with aview to ‘ the‘: ‘ of monster policy and exercising con- trol over t e_volumo of credit. That recommendati was carried outb the Government, but strangely enoiig the banks continue to be arged with the misuse of powers over credit which have

believe that the other arguments used to

on our future eco- in

the land and at the same time has led C

economic thought; sponsorin the pro- P05

been centralized in the bands of the u Bank of Canada since its inception. I e

justif nationalisation of tJis banksare o? yill-Ioundsd. Wbantlieaetlvitlas o thebaaksareapinoonsideredb a public committee, as they will be _w_ en the Bank Act comes up for revision, 1 am satisfied that. tlis verdict will be essentially the some as that brought