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1AaE TWO THE CANA1~IAN STATESMAN. BOWMANVTLLE. ONTARTO TITURSDAY. DEC. Ilth. i~t4 'The Scene is Brightening' Main Doorway, Head Office Building "Climate to induce individual effort and private investmcent is essential for growtIi«'ý, said Neil J. MecKinnon, President, addressing the 92nd Annual Meeting of'Tle Canadian Bank of Commerce. During the year since we Iast met our economy bas passed through a relatively miild recessive phase. A depression which many feared and more than a few expected did flot materialize. Now the commercial and industrial scene is brightening, despite the indications of winter unempl oyment. The new year seems to hold promise for most linos of production and most regons of our country. In many ways the events of 1958 present a note- worthy illustration of recession and recovery where over-ail productivity is improving an d wherc, monev incomes and prices have a -tendency to rise together. In such an environment the forces of busi- ness re-adjustment produce a Ievelling-off of out- put rather than a serious decline, while the followv- in. forces of recovery manifest themsclx es in laoticeable upward movemenits of most indîcators. It now seems likely that the Gross National Pro- duction will have a value fractionally above $32 billion, or about 2%ýf higher than in 1957. Allowing for higher prices the volume of production was probably little changed. Export trade bas been wvell maintained, consumer expenditures have increased nîoderately and capital investment lias shown but a moderate doduie. For a year whîch began amidst gloomy forebodings tbis cannot ho considercd as other than reassurîng. Toward the end of last year concern was- ex- pressed in some quarters about the downward trend of capital investment. Yet a level of about $8.5 billion may be achieved, a decrease of less than 3%7. There have, of course, been some notice- able changes in the components. Tiiere has been a drap in capital exponditures for manufacturing offset by an increase in oxponditures for hiousrng which tliis year are estimated to reach an ail timie high of more than $1.7 billion, an increase of about $350 million over hast year. Aggregatc of 1958 capital investment will be somewýhat lcss than in 1957 but is sti", considerably hliglier than the total for 1956 which we liabitua[ly refer ta as a "boomn" year. By the second quarter of the year corporation profits before taxes emerged froni the unintrrupted dedine that dated from the end of 1956 and thiere are sigus of a steady and possibly improving trend in more recent nîonths. There are some indiýcations that business capital expenditures nîay bc nioder- ately reduced next year but an improvenient in business expectations during 1959 nîay bring sonie upward revisian. Value of conqumner expendibure is apparenbly higher than a year ago but consumer prico increases wouhd just about offset this increuse in ternis of volume. As the population has increased by some 460,000, per capita trade in terms of volume wvas slightly below hast year and it is thus thîe ln- crease in population which bas broughît about thie over-ail irîcrease in dollar volume in consumier buying. Tho Canadian consumer spends almost two out of every three dollarspaid for the nation's goods and services and thsVear agg!regate con- sumer expenditures excecded'$20 billtion for tlie first time. Through nîost of 1958 Canadians re- duced consunmer debts, built up savings, and cur- tailed purchases of durable goods iu favour of non- durables and services. The growing Iiquidity of individual Canadians and many business organiza- tions may well provide a base for further recovery during the period ahead. There are indications that this year's aggregate ixports should come close to the level of last year but here too, there have been changes in com- ponients. At the sanie lime imnports have been reduced, principaily of machinery, and this trend1 is allied witlî sonie declirie in the level of foreign investment in Canada. The over-ali deficit ini foreign trade on merchandise account will show a niarked reduction as conîpared with last year. If the recovery in business activity in the United States is sustained, as is expeeted, tlie level of ex- ports from Canada in 1959 xill be well maintained. Prodiuctioni Industriil production is, of course, affected by both donîesic and foreign dcroarîd. lb einerged froin its downward phiase ut thc beginning of the year. Although volume lias hecu adversely affected through industrial disputes il lias, nevertlîeless, mi- proved to a level wlîich, barring furbher work stop- pages, by now should compare well with last year. Mý,ineral production has heen adversely affected hy Iess favo urable foreîg-n markets and prices but iiere are sigagrs of inîprovernent in sonie, althîougli flot ail, ef its consii tuents. The total value of mining production for the yea r is expected sliglîtly to exceed that of 1957. Nýeither the mining nor nietaillurgi:cal indwitry. how'vevcr, had an altogeflier favourable ',ear. Iron ore output was aflecbed until receîîtly by the low rate of production in U.S. steel iiills. AÀ(Iccline in price and world demund for base niietals resuitecl in curtailcd operations in that field. The export niairLet for we-stern ail wvas re- duczed, as wvas that for alurîinum. On thie othier lîand, increased slîipinents of uranium contributed substantially to thic streng.tb cof export trade, and gold production wvas tlie highest in somne years. Rirai net inconie this year may prove to be slightly below thaI of 1 957 owing largely ta adverse weaîlicr conditions in f lic Prairie Provinces. Tlîe mnoveriient of livestock into export markets and favourable price levcIs have been a source of sup- port. Wlîcat sales in thie 1957-58 crop veur were considerably above tliose f'or tbc previous year und overseas clcaranîces in tlhe latter part of 1958 have conîinuied at iuch flic sanie rate. However, total Cariadiari supplies of wheuî ut the beginning of the ne\v crop year, alflioughi below tlie level of thie previous year, were stili high and it seems clear that world supplies of wlieat will ho more thun adequate in relation to nmarkets in the coming year. Unfortunately there are indications that niore diffi-. cuit conditions may arise in commercial sales. Resource Development Although important nabural resource projodîs are in the course of developnîent we do flot for the present sec alicad of us progranmmes of the miagni- tude of the St. Lawrence Seaway or the intense activiîy in the ail and gas fields thut clîaracterized the past few years. Oil and gas developments con- tinue but the greater euiîpliasis for tlie present is in tie distribution and utilization of produets and by- products. Many mining programnmes are under study and development and important expendi- turcs are being made in preparing for new nickel and iran are production. Although the work now groîng on is not as spectacular as that of a few yeurs ugo ib is sourîdly based and undoubtedly we shall continue ta sec in the years ta corne a stoady and important development of nubural resources includ- ing the vital field of enorgy. The Royal Commission on Energy lias recently submitted its views in a first report to the Goverument. This Report bas attracted widespread attention among those fa- ijîjlar witlî its field of study. A further report is to bc subiied soofl and it is apparent that the reconinmendations and thecir inmplications will in due course requirc examnination with carcful con- sideration of tlicir possible influences on t.he devclopmcint of the econorny. .E llplov ilent Continued population growrhi through the year wvithi an increase in the labour force represents one of the factors, rcflccted in cmiplolmcnt as well as irnemiploymcent. Unexpectediy for many, the num- ber of eniployeci Cariadians lias been just about (lie saine as iast y'ear. Notwj tlst an(ling this, un- emnployienit in 1I9-59 coninucd to prescrnt a prob- [cmi to (loveriomients and private cmiplovcrs. The uncniploynicnt in this period was causcd by a coin- bination of circumstances whih~as more than scasonal li character. ln 1957 our population grew exceptional ly about lialf a rillion-and the labour force bv 221 .000. AI lcast tlirec out of five of tiiese adlditional working àduts in that vear were iniinigrants cscaping old terrors or secking new opporttunitl.-s. ît is flot liard to sce whv unemploy- nient Nvas lîii'hcr in 1958, a v'car N hcn. temporarily, basic g-rowili factors were wveiker than they hiad licen for soniflIimie. Population growth this year hias been ut a lesser rate than in 1957. It may bc expected that the undcrlying nmarket derriand in several kevy sectors of' the cconomy., partly reflected in thl ic ihl level of building contracts awarded in recent mnonths, andl snpporced by the stability of 1958, should provide a founldatiori for turilher progress in 1959, llotusing Re.sidential construction this vear is creating a ncw record xithi indications iliat7completions rnîa amnounit t 153,000 uinits conipared with 1 17,00i) last x'ear. 0f the total it now appears that 80%,t 'vas ilinaiîced by individuals and financial institu- tions and the rernainder by noieys madle available bw the Governrnent through Central Mortoae & I-Iousing Corporation. .e& Financial Developments For some years under expansionary forces federal revenues have been greater than rising expendi- tures, and surpînses have in the main been used to reduce the federal debt. Thir, year we have seen another phase of so-calleci conpensatory fiscal polic: the expenditure of greater sums of money than the existingy tax structure could provide. Under tlie growthi conditions whiclîare characteristic of Canada we have had litile experience with the imiplications of deficit financing. Under a dynamnic economie systemn there are bou-nd to be recurring periods of advance and rest but we do know froin experience in oth er cotintries tliat long continued deficits can have scriously adverse effects on the price structure and on business generally. We in this country' shoulci set our sighits on an equilibrium in the economy and a budget in sorno measuro of balance. The past year has also seen a marked increase li nîoney supply in the banking systein but with sonie unuscd productive facilities there bas been only a modest niovement upward iii prices and one wvhich probahly would have taken place in any event. Not\withs tanding Ibhis nionetary expansion accomnpanied by substantially enlarged holdings of Goverriment bonds by the hanking, system, interest rates are now inovin1g upward. Much of this trend bas been influenced by developments in the United States where at Icast ini part there has been a dis- inclination on thie part of investors to buy Govern- nient bonds and a trend to otho-r types of invest- ment. Sunimary Expendîtures at ail levels of governnîents in tie econorny continue to increase. Evert excluding public business enterprises, goverfiment expendi- turcs on goods and services nowv approacli $6 billion a year. Tliere are also those expenditures asigfrom tfransficr paN nients by govcrnments to indivicluals which secei ikelv Io he at a rate of $3 billion by thic end of this ycar. In aIl, tlîis repre- sents a very subsýtantial surn in relatioJn to total national expenditure.* Few Caniadians fullv realize the extent and signifi- cance of the influence on ourcotintry of governmient expenditures and bud-etary, fiscal and nîonetary policies. The mnagnitude of this influence and its im- plications raise ixîany factors-the level of govern- muent deficits, the rate of price increases, the possibility of increasing taxaion-which give pause for thought. IHow cari a cliniate favourablo to priva-te nivetnnt, idiidaener -ieAdm- t - 7 J. P. R. Wadswortb, Vice-President- and General Manager, reviewed the balance sheet, higlilights of which are summar. ized, and raid in part: The 92nd annual statement shows total assets to have exceeded for the first time three billion dollars and the increase from one year ago amounts ta $435,097,000. This is the largest growth i one year in the histary of the Bank. The incroase in money supply in the banlcing system during the year was greater than the. demand by business and individuals for bank loans so thut quick assoIs represcnted principally by Goverument of Canada securities have increased. Conmmercial and other loans at $1,011,352,000 decreased by $48,920,000. Whîle the nunîber of borrowing custorners increused, public financing to fund tenîporary loans brought about reductions which more thun offset thîe general increase in mast classifications. The Bank's activities ln the Personul Loan field, which commenced over 22 years aga when the Bank pianeerod this service in Canada, have continued at a steadily growing pace. Since the inception of this plan over one and a quarter hmillion individual loans have been graîîted. he Bank's participation in the year's activiby in the residential construction field is reflected in an icýrease of mortgages insured tinder the National 1-ousing Act of 1954 of $43,384,000. Tlîe total of these loans now on our books stands ut $140,215,000. Deposits now total $2,8 18,400,000, an increase of $41 1,55 7,000. Both savings and othor deposits reached new higlis, whiîe deposits from goveru- nient sources in the aggregate remained about the sanie. The total number of banking offices at the end of the year stood at 807. During the year 32 new branch offices were opened, in new or growing urban and rural areas. The Annual Meeting Drovides the opportunity of roporting on the part played by the personnel. The figures speak for themselves and represent tîho combined efforts of a group of more than 10,000 mon and wamen. However, even in banking, figures cannot tell the whole story. The day-to-day services ta more thun two million customers are Iargely of a personul nature requiring thoughtful- ness, understanding and courtesy. Behind this large group of front ine personnel are ail 'hose whose raies are equally important in a sur*ng or staff capacity. In addition, howeve'.jwh variaus raIes played during the business day there is the rablu the comnîunity in which sa many of aur mon and womien play an importatit part. I arn sure the shareholders as well as the Chairman and the President wil vish ta join with me in an expression of appreàiation toalal the personnel of the Bank for their ready acceptance of responsi- bility and thîe faithfub dischiarge of duties as good bunkers and -good citizens. ANNUAL STATEMENT 1-IGHLIGHTS YEAR ENDED OCTOBER 31, 1958 ASSETS Cash Resources (including items in transit) . .ý... $ 523,286,848 Government and Other Securities........................ 1,076,772,950 CalI Loans.. ...................... 174,652,458 Total Quick Asseis .*........ $1,774,712,256 Mortgages and Hypothecs insur- Customers' Liability under Accep. tances, Guarantees and Letters ofhe Crets per..contra.*' Totr Assets ý LIABILITIES 140,215,347 ......54,496,728 Acceptances, Guarantees and Letters cf Credit ......... .. Other Liabilities.................. Shareholders' Equity Rest Account .- 100,000,000 Undiilcdecl Profits 1,167,084 146,167,084 Total Liabilities ..........i31 6,792,36j STATEMENT 0F UNDIVIDED PROFITS Profits before Incarne Taxes .......$20,162,347 Provision for frncome Taxes............ 9,950,000 Balance pvailable for distribution ... t$10,212,347 Dividends' .......................... 7,198,544 Amount c9arried forward ............ $ 3,013,803 Balance oýý undivided profits October' 31, 1957 ................ 2,153,281 $ 5,167,084 TransferreçJ to Rest Accotant ......... 4,000,000 35,600,781 16,624,747 Balance of undivided Octoben 31, 1958 profits $ 1,167,084 The fui! fexf of the President' and the Generai Mana ger's addresses may be obtained by writing to the Secretary,J THE CANADIAN BANK 0F C0MN' ERCO.*E 807 BRANCHES TO SERVE YOUJ p i r i k (,i A THURSDA'T. DEC. llth, I-.4j -1 . PAGE TWO THE CANADIAN STATESMAN. BOWMANVILM ONTARIO 35,600,781 Head Office, Toronto.