,4 QMVSTU. HUTQITFZEH EHEQEJKKR .§.Z§fi§'fl.“9§. QEQB. UGFZFEfiHI _ . ._ . _ ,- nr-w-Jfp.» | --._.~_:_ -¢..». A nu- -. I I l t 1 I C € ‘i’. l: ‘STOCK Q1‘ 770$ , Envisages Expansion in Many Lines of Business — Urges Keeping Costs Down” to Mitigate Deflation Process Later bearing on Canada, Huutly R. Drummond, president of the Bank of i at the 122ml annual meeting of shareholders yesterday, voiced in the imeritial unity of the Canadian people and confidence in Tins CHARLOTTETOWN _ GUARDIAN . llluntly lirummcnd Sees Canada United, Strong in Emergency 122ml ANNUAL MEETING of the present world situation in its that might lie ahead. million but more particularly to the Prarie Province, where. in contrast to recent years, the wheat crop is unsusually lar e and of uh- usually high quality. us, Canada has very large supplies of the food products which the Allied and ileu- iral nations will need and the buy- ing power of the agricultural com- munity from their sale will help the general business of the coun- try. In addition to this, with the impact of war conditions, we have nlaliy industries which will hone. fit directly from orders for war SPPPUEE, 8nd We have the prospec- tively important development of Canada as the aviation training centre of the British Empire. "It will thus be seen that on the material side Canada may expect to be better qualified than most countries to meet the inevitable consequences o.’ war, and an added consideration in this respect is the foresight and sagacity of England in providing for the continued lars for British expenditure here in war supplies. “Great Britain has drastically in- creased taxavto provide for war needs and. with normal income tax. becoming effective in May next, of 37 1-2 per cent on all incomes over I-IUNTLY R. DRUMMOND £285, everyone there is sharing the burden. It is high time that. Can- ada should follow this txample. True. we have add-ed a surtrix of 20 per cent to our income tax. bu: the vast bulk of the incc-me of Can- adians is still only lightly taxed. An extension of the income tax. Close 1B7 1-2 9 5-8 5 1-8 38 1'1 7 8-4 l7 7-8 16 28 4 3?: BANK or MONTREALS 28 3-4 47 3-4 21 1-2 21 40 3-4 i3 2'2 ,1 M While emphasizing the gravity l0 7-8 l0 7 7-8 i?» i-gi ‘hflr ability w weather" the storms 45 1.? we SW10 i1 united country in 1a m“ waifilmrt. declared Ml". Drum- 25 b2 mond. It remains for us to bring 7 14 ‘he full BT-Yeflflt-h of a united Cali- 8 14 ‘ ada to the work of prosecuting the 30 b2 Wat’ to a successful conclusion 36 34 i While at the slime time keeping oili 71 ‘fit-airs so in hand that we may en- n ,ter the readjusiliients of post-war l7 |00lll1lE10lls _8s free 0i inflation as 25 Hipossible. with debts at the milli- 5 3-4 glnilrhgkrgtéssibie and with morale un- gg "I am confident that just as we 2 3_8 have entered as a unified Canada lgihtouthe fiery ordeabof war, s10 we a emerge, aria lOIIOllE.‘ at lear‘. but more mature in thought arid as- Eléirit? 5?“§‘i.’°r“i’u§l°"€‘“ "S “ r i ornmon- wealtli of Nations to the great des- tiny which undoubtedly awaits this country." . Close DAt the gutsctdof his adairesfj), lvllr. rum-men ma e re erencc tie 42 late Sir Charles Gordon, who. until 92 his death last July, had held the l2 presidency of the Bank of Montreal 21.7 for twelve years. Many of those 8 years. said the new pres1deilt.wcre l9 fraught with new nild perplexing .23 problems, but through them. he c-b- 109 served, "Sir Charles exercised his 12 b2 tigkilljigtlingstilnflltngnce ‘inn the affairs of 1014 n vii wisdom and 8 b2 courage and he left the Bank 11 stronger andsafcr than at uuv 49 b2 tiwalénilibstlliltzmtlgixilk repected him qgl) ability; \\'c loved him for 215 c , and his example remains 35 as an inspiration to us all, r craze“ u. e vacan. w my en ea- ”? 1_2 your. assured of the support of a 16 loyal and devoted staff. to continue 8B those policies which he so careful- 23 lv follow-ed and to maintain the 175 high traditions oi the Bank of 49 M Montreal. 26 BANICS FINANCIAL POSITION 3 NEVER STRONGER 2g 34 In referring to the Bank's finan- 5 7,3 ciai condition, the president ob- 325 served. “It has always been the a . _ ‘*1 8311f’ Qhviiiiraiti‘ ‘Soitfifl “i? ‘a counts. and I can say with full con- 5 éidence that the aifiairs obi your 53 arr were never in a sronger 15 position. _ 22 gEleren years 0E0d—ll'lf1928 — w en Sir Charles Gol" on lrst pre- l; 1.3 sided at an annual meeting of the 49 Bank, we had total loans of $40,- 31-; 000.000. In 1938 there vv'ei'eth$25&- 135 000,000. In thfi same period e - _ vestments of the Bank had risen 1i 2.1 from $110,000,000 to $440,000,000. 24,5 This change from a preponderance 7 of loans to a preponderance of 321-4 investments coincides ~ with the 31 3-4 growth of spending by govern- 32 merits which has been facilitated 45 1.2 by cheap money policies universal- 3 lv adopted by all central govern- 13 merits. As a resilltbof this tendency, 215 ‘the earnings of anks became so 35 reduced that the banks had to re- 36 dues dividends and later were 127 1-2 forced to cdut in half the interest 700 paid to epositors on savings. 13 1-2 Thus, wlitile governlnienis ligvgtbceil '75 enabled. o incur icavier e s at 300 lower interest cost, it is largely 4,25 at thteo expense of depositors and 233 nves rs. 441-4 “Sometimes we hear criticism of a5 aankilrgeg prdfitsmngt dtlifrlibil so? to 66 es ofour suonsuyou 128 cantesiect from ‘fillet statement pt-e- 56 sen o ou ia on average o- 125 tal assets ythrough our fiscal year 80 of $90I,0tl0,000, the earnin s oftltlhe 8 Bank were $3,462,000. n 0 er 26 1-2 words. on each $100 of assets the 78 1-2 earnings were but 3B cents. 4 1-8 “Tumingthto the tbuslifiss goodi- 86 ons of e couirry, . rurn- 155 mond said that up to the end of 110 August business activity hail beer. 23 1-2 following a course similar to. but 29 somewhat in advance of, that 0i 20g 1-2 19388-108 l h iiati ' h b “ r ear es on,’ e o - 3 served, "an yencouraging advance 35 appeared in the spring. followed by 190 a ividcnintg improvement during 435 the summer monéllls. As a geucrnl 229 indication of the esree oi lIllpl‘0V(’- 190 .ment over last year, our exports 130 Ifor the first eight months of the 209 year exceeded the corresponding 34 i938 figures by the substantial ll margin of 10 per cent; and indus- 119 trial employment was approaching 9 the post-diepresslon peak levels 40 mad-my m i937. True, problems I20 connected with public finance, nig- 120 m-avawd by a longperiod ofre‘. cf 350 expenditure, were perplexing tn an 7° unexamplcd degree. but. notwith- 39 standing this, I am convinced that 5 hart the situation in Europe coil- 5 34 tinucd to justify the hopes aroused 1'15 tat Munich. recovery in Cnllacin 5 14 would have prccccdcd continuously. ea Q 553 Esasésseséaagz _ 6 1-2 Close 1E5 an roe > i}. l! F1 " I S k N. Y. Stock Montrea loc __._ (Canadian ht) luck] Clans “an (Canadian hell Am c and 9‘ 33 B u T, Am Gas El 2 1-8 35M“; m '1' 31%“ 10g i? BHWK n Am e1 -‘ Am Water u 3-4 3,0 POW" a ‘m F” P‘ 2 1'8 Cad‘ Oememt Anaconda 3i 5-9 11 n Aichison as a-s C“ °r Bait Ohio s g9“ g" 1% Baldwin Loco 1'1 3-8 ca“ l" an Ind Al A 3.8021119)? as i a C" P“ a v . Beth Steel 32 1.2 Can Biielmfllip ch“ °m° ' c Msaih lt Chrysler 37 3-4 Dfitfs e Con Oil 23 3-0 D 5°81 PM Comnlollwea i 3-8 om B‘)? e C011 EdLsoli 30 1-8 g?“ Sig“ Curt Wright A — Dom {wan Elcc AutdLite 3a 1-4 D "A ° he 3.1-; his: c. Geri]: rbegds 4e a-a mime“ Gen Motors 53 7-8 Han} midi" GGMiflCll 20 1-8 Ho“ $33“ Goodfvcar Tire 7-8 ERPNHKWI 33.15.35 ilk. Ca: '- ggk Pgyoggi Int Tel Tel a 3-8 M e H L‘ Knlncczlit 3B 7-8 3559f,’ REIT?‘ Mont Ward 54 a-a M¢C° °" N Y Cvllxt m 1g 745 Mil POW?!‘ Nct Am Co 22 5-3 N“ B"? c lvh Pacific a s-a "at 5f,“ i" psiillhiOliilb 1 7-9 Niiligécam Penn R R 22 3-4 Que . W" t on. 39 H; Shaivlnigan Phil M is L , c m Pa: a 58 it ure i o - ‘ Radio Corp 6 5' ca“, burs Roe Co 80 WP? Es“ Sid Oil J ' S‘i_‘(le C01‘) 9 3-4 Texas Corp 45 United Air 4g g-g _ 4 7:3 (Canadian Press) U21 ':i Gus Imp SEIOKIEONTO. Des- 6- U s R" bb" - c U S St} C(ol 69 Aiderniiic u <5 Ind Al 22 3-4 Amm Gold Vriiladium a4 l-z Ana Con Warner- Bros 3 7-8 Arntfleid West Union 26 l-E A0110? West Elix- lll 3-4 Bagainac Woolivonli -— Bhiliififld lgease ‘Metal att e i Montreal Curb Mi- Bobjo Bralorne -—-— Broiilan (Canadian Pres!) Brotvn Oil Stocks (‘Ion Buff Arik Abitibi Com Cal Ednl Abitibl Pld 3-8 Calmont Asbestos 25 3-4 Cdh Mal B A Oil — Cent Pat Beauharnois 6 Cent- Pore Bathurst A i4 1-2 Chem Res Can Vlckcrs '7 1-2 Chester Dom Tar 6 1-4 Comwea-lth Don A l0 Coniarum Fraser 19 Con Smel Fraser V T O 20 7-8 Davies Ford A - Denison Imp Oil I6 Dome Oil Int Pete 23 5-8 Duquesne Price Com 20 1-8 East Crest Price Pfd 68 East Mal Eldlggado Fa n Francoeur New York Curb oily-gy- Go e Golgalé 1 —--— G0. age - (Canadian Press) Gold Gil-tie Stocks Close Giandoro Am cyan B sl a-a Gunner 0°14 Am Gas Else s’! 5-8 I-Ialcrow Am Super Power 3-8 Hard Rock Brown Co Pfd 26 3-4 l-Iarker Cities Service 4 7-8 i-IolllriZf-‘l’ El Bond shire a LHome 011 Gulf Oil Corp 30 3-4 Home-Vi Humble Oil 83 1-4 HOW?!’ Lockheed Air 31 1-2 Hud B83’ M!!! Ni!!! i-lud a a-4 inspire Pant Oil 5 IInt hiokel iii act) a Jellicoe - GRAIN is" Kirk I-Iud Kirk Lake .___._ Lake Shore CHICAGO. Dec. 6——(AP)—The IL-‘figqggd ‘wheat. pit had to absorb heavy Latch profit-taking today as all futures Lime L L, climbed to new seasonal highs and Macassa reached the best prices in about MucI-cod two years. wggo Wheat cilised ls-a-l s-4 higher, Mgmty" ‘Dec 07 1-2-3-8, May 9a e-a-a-al; Mcxeme Corli l-B lower to 1-2 higher, Dec Mcwaigcrs 54 5-8-43-4, May 55 1-2; Oats iin- Min Corp changed to 3-8 higher. Moneta _ WINNIPEG Dec, 6—(CP)—Mix- lxil/Itlfihb K14‘ ed tmdirig shunted wheat fixtures Ng-mda prices along an irregular path on Norgold Winnipeg grain exchange today Nonneiai Quotations were up nearly a cent OBrien at one stage but profit-taking Okalta crept in to leave them 1-2-3-8 Omeglg, w cent higher. Dec at 79 1-2. May 33 ggamf‘ 3-4-7-8. Jly B5—85 1-8 cents. . Pam“, -_ - --- - -- - ---------- Partaneéi Paymas er Perron Gold Pick CIOW i Pioneer a. Powell-l Pram er Preston For common gtoyzxlliatg Udtllilry ‘sort Bu“ Ant "°° Sand Rim‘ senator Stilt?’ e Sigma siscoe Sladen Slagepebakd S Steep R0 straw Lake sturgeon Sud Basin Sullivan D o Y Bylviinlte Teck H0811 Texas Corp Need Money 50pm“ c Upper Ca-n u i! $50 $500 " k200i... Wcstflank Wood Cad W I nd mono to pa oi; hills, to ypurehas: w“ HM“ 'ri§§§?ri"$'-'¢§'i'ihiim§r"i§' UNLISTED any useful purpose Km, Town No embarrassing ques- Mandy ‘tilons to borrower or en- fiitxigmgc orsers. GENERAL FINANCE EASTERN LIMITED Bank; Phillip’! Building Grafton Street ___._.. Charlottetown. P, II. I- (camellia Pull Look for Confidential Loan Rfmln Sign Canada Ulfiee noun ace-ea fgmgfi" Saturday 9.00-6.00 my“ i _ fiVl i With the outbreak cf war, we were. of course. immediately confronted with a completely altered situa- tion." ’ CANADA WELL PREPARED FOR WAR EFFORT The circumstances which led to the outbreak of war, and to Can- ada's inevitable participation, call for no comment. for they are pres- ent in everirbodys mind, the presi- dent observed. "But." he cou- tinued, “it is relevant to a TCVIPW of our business to point out that War clouds had been gathering for so long and so obviously that. we were not unprepared for the shock when it came. Tiler-e was no repeti- tiOn of the financial crisis of i914. There was even a certain business stimulus in the prospect of in- creased demand for our products, magnified somewhat by the rela- tivey low level of forward com- mitmeiits which exist/rd in many sections of business owing to pre- vious uncertainty." Of outstanding importance at tliLq juncture, lic said, was the fact ‘that Canada entered u n the war period with one of t e best all- round crops in the history of the country. "This," he stated. "applies ts practically new pert of the Do- Importance of Regarding Government Controls as Temporary Expedicnts Touching upon the various govcrilincnial regiraiions llfipilstd on IZZIUJ slid finance since the outbreak of rm; mend, Balhk of Montreal president, told shareholders ye» these restrictions should be regarded n5 tillilpflfafy expedielits and not in any sense as being of permanent character". “As a contribution to the maintenance of business on standard- ized levcls." said Mr. Drummond, “it is interesting to note the great, measure of controlwhich the Canadian Government has assumed for the better stabilizing of supply and prices and, therefore, for the more efficient prosecution of the war. clude IJITJVISIOII’ for a regulation of prices and distribution, for the regulation of imports and exports. and. through a Foreign Ex- change Control Board. for a form of control by which withdrawal of oigiéltahlfrotn thin lgomiriionl isflforbidden. h 115 08s n5 u 1011s. nc u our banks. ave co-o rate the fullest extent in these measutizgs. De d w R0 0n 1960!?! here to the effect that these controls are a restricting influence in business and that forbidding the with drawai of capitnl from Caniadia. undoubtedly has discouraged the int/crest in this (‘hunt-Ty oi citizens of other lands who. having invested their money in Canada, now find themselves unable to withdraw it. In any C086. it is important that all the control regulations Ehflhld be reftflflled as a temporary expedienbto meet an extra- ordinary situation. and that they Should be abolished at the earliest possible moment Otherwise. We shall find ourselves saddled with a self-perpetuating autocratic bureaucracy contrary to the true basis 0f democracy for which we are now fighting. The Romans had the Til-m ideh 1Y1 U115 respect-in a. time of war thev called Cincinnatus front the plough to be their dictator and after the enemy had been glgeffig-grdn the dictatorship was at once abolishodl and lie returned to rday that These mts-asures in- It is only meet. however, to supiiy o! many commodities at normal prices. "If Canada's role in the war is to be largely as a source of supply to Great Britain, then we should see to it that there shall be no ex- cessive profits. Our aim should be a. fair price for wheat and other .l pzoducts and a fair price for manufactures in which the Govern- ment will have the full support of business and labour, to prevent a vicious spiral such as that in which the cost of living and wage rates endlessly pursued each other in the last war. "By keeping costs down asmuch as is possible, we will keep domes- tic trade moving and, after the war, this policy will mitigate the pain- ful process of deflating prices and ivages which is the inevitable sc- quciice of an undue rise." In referring io conditions in Great Britain B/nd France, the presi- dent, commented. "It is generally felt that the first months of the war have been satisfactory for the lies. Britain's war services, her financial machinery, and the unity of her peoples at home and abroad are all felt to be vastly superior to what they were iii 1914, and the country looks forward with deter- mination, calmness and confi- deuce." Mr. Drumimond felt that the wide- spread indications of the deep sym- pathy of the majority of the people of thc United States with the al- lied cause had been particularly" heartening to the people of Great Britain and France, and "not less so to Canadians.” - "As elsewhere." he observed, “business in the United States has been continually under the shadow of the European situation, but des- pite the recurrent crises abroad. a forward movement occurred during the summer. with marked accelera- tion in certain lines following the outbreak of war, Thereupon there were sharp advances in prices of almost nll commodities. but bllsi- ncss leaders have shown them- wlves keenly alive to the dangers of speculative commitments and ru- nid advances in the price level and following the initial upswingmorc stabilizing influences have pre- vfillcd." "PAY AS YOU GO" IN PUBLIC FINANCE In discussing the tax situation. ihe president said, “Taxation, fol- lowing public debts-Dominion and Provincial -— today seven billion dollars, ten years ago four and onc- half billion dollars has been steadily mountfn-z for many lfehY-i- and with the heavy expense of war a further increase in thc Dominion field seems inevitable. With theex- PAIISiOII of business and of our fav- curable balance of trade which may be expected as a result of war- time demand for our natural re- sources and manufactured prod- ucts, Quf pollcge, as far as practi- cable, should to pay as W! 80 and, as far as we can. to rdDM-Ylhifl Canadian indebtedness abroad. The Government has already taken the hm; step wwam this latter desir- able object by arranging t0 revolt a sterling loan out of funds ad- vanced in London by the British Government to whom in turn our ()0 metfes dvnced an a“ Wm "their-Zu- dol- even at a mucll lu\v~el' rate than that in Great Britain, would pro- duce many millions in Canada and be a barrier against the ‘inflation inherent iii a policy of borrowing. “But it is in reducing expendi- ture iii noli-eseniinls that oilr Government can give a lead p, Canadians. Sectional needs should no longer be given first place, nor should our rarway problem. with its cost to the country of a hundred million dollars per aiinuim, be left unsolved." In his concluding remarks. and Queen, the Crown to many of us. was Just a word the true sig- nificance bf which was little rea- lv..*<i_ When, however. we saw this perfectly human and charming royal couple and heard them speak Drummond said that a period of trial such as that upon which the country had IlOW (‘lllf .:l must prove either a time of tilstiilegra- Lion or of the strengthening of the moral fibre of a nation. JACKSON DODDS “In ihc last your." he oil-sewed- "Cnnadn may be said to have found itself nnrl to have reached matur- itv its b, nation. Since then wc have experienced many vicissitudes. in the midst o which we have nt limes leaned toward sectional in- tclests. forgetting the national good. The tide in this direction has now tunied and we face the word a more united nation than ever. “Two events. in my mind closely connected. haw/e served to empha- size the things that unite us. One i5 the visit of our beloved Kfnfl "nil Queen and the other is the 5PM’- of broad Ciinadianism to which our French-speaking compatriots have given such notable expression. Pie- vlous to the cornin of our King to us in our own anguagc. WM‘- ther that be English or French. Showing an increase of nearly a record not only in the annals of the history of Canadian banking as Mr. Dodds pointed out that for the first time in the history of the bank the items in the balance sheet this War amounted to over a thous- and million uollars. BCSICQS the T600111 figure Cf $025,000,000 in us- seis. the statement which he pre- sented showcd deposits by the pub- lic totaallnig $914,000,000, which uisu constituted a record. Ill referring to the profits for the year which. amounting to $3.- 452000. had shown a moderate in- crease oi $64,009. the general man- ager commented on the taxes paid by the bank. Those paid to the Dominion and to the Provinces. lie said, totalled $1,198,000, and were equal to over 4i per cent of the dividend paid to the bank's share- holders. Iie pointed out that, in addition. the 0'13 branches of the institution paid municipal taxes amounting to a substantial sum. Commenting upon the new high record in assets, Mr. Dodds said, "These figures t$1,025,000.000) are a measure of our responsibility to the pilblzc. The problems which this responsibility entails are so widely misunderstood that it is perhaps permissible to say a fow words on the subject." LOANS AND INVESTMENTS He took up first the question of Loans and lllVCbliillfilliS. "it is lic- quelitly claimed," he observed, "Lilli; inc banks are reluctant to risk their lllliiili)‘ in 11211113 to business, prefer- ring mo supposedly easier course of holding securities; aild the fact that uie total securities field by the chartered banks substantially exceed their loans is cllcd llS sim- pic plcqi that this lS s0. "Nothing could be further from the truth. Our deposit liabilities do indeed require us always to hold a due DITIPOIWiOH of high grade secur- ities as a supplementary reserve against theln. but beyond such rc- quircments we would prcicr in all cnrnnislmlccs to use our" laudable funds in sound advances i0 foster industry, trade and commerce. Our organization. with its nation-wide system of branches, has been devel- oped with this pill‘ use particularly iil view_ Ill consilerntion both oi service to the country and of ino- fitable business to ourselves. we nu- turally wish to see our facilities ful- filling their purpose to the fullest possible extent. "Unfortunately our readiness to lend to creditworthy borrowers does not. affect their disposition to apply far loans. for the (lclmnd for ccm- mercial loans depends upon the state of trade and the prospects of profitable use of borrowed money. The fact that the condition of the markets for many of Clllildffs prin- cipal products llas in recent. years pleventcd anything like a full l0- coverv of business activity‘ or (li commodity prices 1111s therefore limited the inducement to borrow, and has confronted us wit-l: the problem of finding other use for our funds. The possibility of sock- iiig a way out of this situation by rr-‘axtng our standard of safety in lending money is of course pre- cluded by our obligations to de- positol-s.” ENLARGED HOLDINGS OF SECURITIES Willie the (i-einnlld for ncommcr- ciiil credit had ihm remained at a relatively" lcw icy-cl, tllc potential supply of credit, Mr. Dodds said, had simultaneously been increased as a result 0d the policy of mone- SPINNEY bulwark in a wo .d distraught, we realized the deeper mcun-iilq of the Crown as the living syinbn of‘ our common aspirations and our com- mon being. "Wllh respect to that other event. iii which the people of the Prov- ince of Quebec have figured, Cali- ada wns the first country ill the Empire to have an election in which participation in the war was the main issue. Tile result has llecn that our fellow-Canadians who speak the mother tongue of France have given to all the VUUTIfI truly remarkable testimony of the unity 0f the Canadian people, not 0il‘.v by endorsing this ilatioirs efforts in support of the Allies but by Llicir ad lerenoe to the principles upon which which. at Confederation, the about the vital things of which the itation of which they are such an 11min to which II belong is the important part was founded." com! and private individuals and substantial advances in all the important headings of the bank's business. Jackson Dodds, on behalf! of himself and his fellow general manager, G. W. Spinney, laid before Bank of Montreal shareholders yesterday a financial statement the set ankers Confident‘ 0f Canada Capacity in War Effort Bank of Montreal Ready Tc Meet War Requirements Says General Managers Report Shows Record Figures for Assets and Deposits — Loans Increased $30,000,000 in Year - ProfitS Up Slightly $30,000,000 in loans to business con- more this IZZ-y-ear-old institution, bu in well. tary expansion whim the Bank u! Canada had pursued since its cs- tablishrrient in 1935. “We have coh- sequently had no practical alterna- tive to enlarging our holdings of securities." lie remarked. “In this way, of course. our operations, with those of the other banks, have been the means of makinlg the central bank's Policy effective. “We have thus constantly co- operated with the Bank of Canada in carrying out its general policy, as also in less significant details of routine and administrative proced- ure. But it must be admitted that the process of adding to our in- vestments in the circumstances just described involves difficult prob- lems of management. "It is not sufficient that our in- vestments should be of unquestion- ably high uality. They must as far as possi le be of such a char- acter that they can be converted into cash without lose. whether to pay our depositors or to enable us to extend additional credit to business. Provision must also be made against possible reduction in the aggregate value of the total portfolio owing to changw in mar- ket conditions, for any such reduc- tion constitute; a. loss which must be made g00d out of our profits. "We have met these requirements principally by maintaining a, sub- stantial proportion 0f uur invest- ments in the short-term category. Over 502;. of our holdings - inion and Provincial securities will mature within two years. 'I'h.is course necessarily reduces the av- erage earning power of our asets. As the supply of suitable securities is limited. the demand for them has raised their prices and lower- ed their yield to the point where the rate of return is very low as regards short-term issues and ai- though higher as regards longer term bonds. it affords little mar- gin from which to provide against possible future depreciation." These conditions. he said. maybe modified as a result of the war. adding. "We may anticipate that the increasing production of war requirements in this country, to- gether with the secondary effects of this activity, will stimulate a more active tiemand for commer- cial credit. In view of the con- dition which our balance sheet dis- closes it will be seen that we are well prepared for any such devel- opmcnt." INDUSTRY AND COMMERCE Turning to the industrial and commercial situation, the general manager referred first to wheat crops in the Prairie Provinces which in 1939 amounted to 452 mil- lion bushels, compared with 326 million iii i938. “The larger crop" he said. "is one factor in raising gloss operating revenues of the two railways, which, to the end of October. were some $19 million higher than in i938. The pace of economic activity on the prairie has quickened, and it is hoped that the improvement may continue. “In the ela d months of the current calen r year, production of copper in Canada amounted to about 400 million pounds. com ar- ed with 380 million pounds in 938. Lead production was 283 million pounds, against 319 million pounds in i038. when large stocks were ac- cumulated abroad. Iii the first nine months of 1039 zinc production amounted to 301 million pounds. against 295 million pounds in the same period of i938. r-i ‘uotlori of nickel has substantially exceeded tlhe 1938 volume and is slightly ahead of the banner year I937. Gold production to 31st August to- talled 3381000 ounces, compared with 3.056.000 ounces during the same period last year. "The immediate outlook for the pulp and paper industry is bright- er. Consumption in the United States has been rlsilllg and EXPOT" from the Baltic countries to the United States have been subjected to uncertainty of delivery and higher transportation costs aris- ing from wartime conditions. Con- sequently, pulp and paper prices have been firm." COMMODITY PRICES A decline in commodity prices had marked the course of 939, the general manager observed, an during the early months of i939 they had failed to recover, show- ing even greater weakness in the PECEMQ-B 1-1929 --__ s summer months. continued, the comparable while during both h 19h. temper of [mm “m I939 the index w ‘fright? para“: than in any “xitetail {fffim years’ r e was i prior to the sudden lush Bdipzbiiging that developed in Septenlber ~11}! lowing the declaration of Will‘ o" June total was the highest for in comparable period since 193i e "Foreign trade for the first‘ » months of was showed a 5mm,“ of exports of 312800011X). whit-iii; an improvement of 331000090 ‘o, _ the corravpondiivg months o; ma? NEWFOUNDLAND Tumimz to conditions 1,, N“. foundiand. Mr. Dodds sold: '09P‘ ations of the paper mills at cc-urf Brook and Grand Falls ‘have bu? well maintained (illfilli; life pf], twelve months alid thc mine; Buchans and Bell Island have N; working atcapacity, u-irh ma} querit benefit to tieir l'€.ip€.".il\'e communities; but the codflsh dustry, which is perhaps the nlalll. sta of the Island. has been 5% fer fig from adverse condition; 1,, the chief lm. rting countries d“, ls-rzelv to ex tense difficulties‘ m, in Spain to the recent civil “m- aIid its effects. “The C0mmission of Govcmmmy is making every effort . Velflpmeflt by land 5€iLi9lll‘:.., Plans are also under collslderluon with a view to increasing the hi. ports of fresh fish and. ivhile all these projects take time to bring to fruition. it can fairly in m; that progress is being made “From year to year, SlllCe m, Commission of Government twi- cha-YBB of affairs in Neu-ioundland in February, 1934, the Moihgi- Country has assisted by making ETBHfS-lfl-flld to moot the vermin": annual deficits and so falw-thatiir to sav, to June 30 inst. the elld of the Government's financial rear- has paid to Newfoundland Shiite,- 000 in this connection." UNITED STATES Commenting on conditions in the United States, the gclleinl iliallager said that the country vms today endeavouring to step into the piacl hitherto occupied by the bellige- rents, but. under much different conditions. "Both the channels and character of world trade have changed over- night.“ Mr. Dodds s.ii(i. "Tile oil- portun~ities, particularly in respect to Latin-American markets. are greatly enlarged, but it must be remembered that the foreign trade of many of these countries has of late been conducted to a consider- able extent under barter agree- ments and that their normal 0x» ports to Europe consist principally of commodities with WIliDIlV the United States is already plentiiuily supplied. Trade canilomfiz- any length of time remain a one-WI! affair and temporary credits must sooner or later be liquidattxi by cargoes or default ensues. “As to the course of buslnes. gen- erally rior to the commencement of hos fifties, it may be said that the consumer's ods industrial, stimulated by a h h rate of Gov- ernment expenditure — not m it- self a reassuring barometer but; cause for anxiety-mare operand at a satisfactory lcvcl, ivhlle till construction industiy. slLStil-iIl€d_ Government appropriations and a: to private residential blinding, fill made substantial proyless. _ "The continued rllau of vavihl from Europe. involving gold shill‘ merits on an unprecedented r6816. has left the United SW!“ l“ ptolfxition of hOldiniZ 110°“ i“ d; of the present world n? st0ck—not a healthy situation. The volume of 6000"“ “M,” ing brought to iil(“lllf\l‘il(‘iv_-l akflin been disappointing. Olin d per cent of the total "litter-mt, new money requirements. lnditfl ing that the 1on1! "n85 9“ for capital investment was still W satisfactory. “With money so grPflUy i“ ‘up: ply," he said. "there has bPPu Pr“ tically no change in shori-tghr: money rates. Cali moot‘) 19"‘ at @119 per cent with 11ml‘ dfmadlfi and the bill market has btifgugh‘ with no movement in rates ti oultn ngdncifiiid Mr. Dodds struck I note of confidence ffllll‘? “ion Canada had prcfilfgffil m‘ her destined ivay sum‘ break of war in i914. dmanu plies of wheat, ‘minerals all d “h factured goods. he 09mm’ M“ contribution toward the will; m“ effort on the side of right‘! w“ war will far exceed ivlutl -dll‘men able to offer in the last. fill" m is abundant evidence in (‘Vfltl gay vinoe of the Dominion thn" b‘ adws contribution in mcntim m Mil/pile and of the type "i? gm last war brought ever-ins. iii! to this country.’ “Exchange Control that wh o the banks, as were subject to the Board's auth tioils and individuals. they had authorized dealers additional wolf: at all branches war. he sad: trol measures which tlonal accounts. in Canadab economic position, been heaviLv in our substantial repatriation of our the fullest. possible extent be ernmsnt. Similar measures belligerent governments." pl Reflect Weakness in Economic Position” Referring to the far-reaching extenfilflh 0f‘ ""l*'“?‘r."°rel2i§.“slufsi:"“ " t es at imeii o e r , ~ s: Dodds, s eaklng at the Bank of Montreals nnnual meeting "This." he remarked. "involves P- E°°“,,,,, our . kl be a plied as effectively "5 D0 mu t’ .1, should be emphéuizezi 311:: of m’ we ncter is therefore éhiiiItrQellyijséfIilgdinrfgllln réwn yam h“, compelled to adopt by reason of and which were evidence of weaknear. These neasures do not thev represent recognition of the fact» that time of war is an economic weapon of have been put in Measures Co Not Government control articukar town Contro Bun-id. J“ hange OIXT-wimi orlty 8118:1313 sigh “h” °*‘*“‘;".“.= 515° been gppflillied to actmnflxbf and at head office, iii Wl ct ff h e co-o rated most readily. _ . t,“ c a Poiiliting outtnthst the pur se of the measures iei:ri§§im"“,‘l‘,,,_,. to mobfizc Canadals externa resources m such R Wt)’ U“, liaiisi‘ "m" ])(‘*'.‘il l u ufl- heavy deficits in their 101:5 as to be regarded iii Eliifil 9“- _ , reflect an)’ ‘fsffmlii for the bfllafi-cc of lY-lln“ ‘HM, a favour for several WET-f hm‘ h“ m“) . ‘ll’. external debt. On W" f"“““ ability b0 in‘, ulusi. to Emat, power, W! . t. “cad a m? disigsrfllrce b