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THURSDAY, DECC. 22nd, 15 Tu CIAAMSTATESMAM. EOWMANMnLEM. ONTARIO Confidence in comtng,-year wil raîse current levels. of. business. Exwte, tof « addresses delivered at the 89th Annual Meeting; of TFhe.' Canadian "Bank of Commerce "If confidence in the fïture contInues firm," sald James Stewart, C.B.E., President, addressing the 89th Annual Meeting of The Canadian Bank of Commerce, "then most fields of activity should continue to show further improvement." NINETEEN fifty-five bas tumned out ta b. a record year with new peak levels presently being established in many segments of aur economy. Tise encouraging feature cf Uic current picture is the recovery frons Uic slow-down in business activity that taok place during 1 954, and which cantinued ita tise early months cf 1955. In Uic late Spring aur expart position began ta improve and a renewed wave of capital spending served ta recreate the atmosphere of confidence sa necessary to the maintenance of thse growth cycle. For a large part af our population, conditions have neyer been more favourable. For some, however, thse situation is not quite as buoyant as it was a few years aga. Despite thse over-ail prosperity as reflected in national accaunt- ing aggregates, faim -incarne is down and tisere is an unemployment problem in a few localities. In point cf fact, cantinuing difficulties in such industries as primary textiles, farni implements and coal mining are contri- buting ta Uic unempicyment situation. MVAJOR economic developments during this year have again centred largely on resource development. Iron ore production is well ahead af last year wth increased shipments from tise Steep Rock area and from Uic Iran Ore Company in Labrador. The first shipments fronic Labrador mine began in August S1954 and total shiprnents ta Uic end cf August af this year have been over four million tons toward a targèt for this ycar cf six million tans, which objective, it is reportcd, will bc raised ta ten millon tons next year and ta twenty million tons wisen thse St. Lawrence Scm- way lu apcned. Another new iron producer came ita production with tise flrst shipment ai are from the Marmora area in May ai this year. While Uic«flrst expansionary phase un the ail industry appears ta bc over, a steadily increasing rate ai produc- tion and a cantinued inflow cf investment capital char- acterize thc industry today. Intensive exploration is still being carried on in ail tisree prairie provinces. Indica- tive cf tise rate of development work donc by the indus- try, Manitoba is now producing at an annual rate which will supply alnsost isalf ai its annual consuniption. Natural gas discoveries have been weil up this year and witis the recent- announcement cf plans for tise construction cf Uic pipeline ta carry gas ta central Canada, this source of wealth will is tise fareseemble future flow into Uic economy. An early start an Uic Taronto-Montreal brandis af Uic pipeline is planned, for completion late next year, wisen it wiil, pending ap- proval ai thse United States Federal Power Commission, be fed by gas from tise Tennessee Gas Transmission Company until sucis time as it is connected with tise ise from western Canada. P ROS PEROUS conditions is tise economy during Uic p.ût year have contributed ta and in part resulted from an expansion ln foreigu trade. Thse iigh level af dames- tic spending and capital investment increased aur imports by some 12 per cent ln the flrst nise nsnths of the year, with ail areas except tise United Kingdom sharing in tise increase. Likewise tise iigis level oi indus- trial activity in otiser parts af tise world resulted un increasing foreign demand for many Canadian primary and extractive products. Tise value af aur experts ta the United K(ingdom and Commonwealth coantries increased relatively more than those ta tise rest of Uic wvorld, while ta Latin America and tise Far East, exports will be lower tisan last year. This is resulting in 4 mucis larger tavourable balance in mercisandise trade *witis Uic United Kingdom, and an increase during Uic first nine months ai tisis year of mare than $150 million in aur deficit with Uic United States. bu other words, aur bilateral trade witis aur two major trading coun- tries is more unbalanced than last year, and the ever- all multilateral deficit in commodity trade in the nmme- niontis period was $43 million larger tisan in Uic same 1954 period. A study af tise pattern af export commodities reveals that tise gains this year were Iargely in primary preducts witis Uic exception of newsprint and chensicals. Secon- dary goocis appear te be *suffering frons cost or prico differentials. Whilc actual comParisons cf prives, asd wagc levels betwcen countries arc sabjct ta many inaccuracies, it Is gcneraily recagnized that tise hi gh standard of living and Wh wago evel!,in Canadaat tise present tins. roduce thc competitive position cf Canadian mamufactured goods against those miade in Britais, Germany and Japan,. among athers, and that we have mat, generally speaking, Uic benefits wisicistise United States derives frorn mass production metisods msade passible by their barger market. WIJILE dealing with Uic ufficultural scene 1 cannoe refrain fram commenting on certain aspects cf the current situation that bear contemplation and refece- tien in the liglst of thse wider applications. Production artificially encauragcd by subsidies or support prices canne, in Uic long ran, result in otiser than market disturbance. When products enter Into world markets, sucis activity Invites retaliatory measures sucis as ims- part restrictions and Uic like - restrictions certainly nat witsiis Uic framework cf multilateral principles seemingly supported by mmny of tise free nations cf Uie world. Tise world wheat situation prcsentiy lu a case in point and surely we van do sometising mare than rely.. 'on acts of God te salve dlfficulties and reduce surpluscs. S INCE Uic steady risc in capital lnvestment has been anc cf tise dynmsic factors un Uic maintenance cf buoyant business conditions anc is bound te ponder < tise questions and issues iniserent in encoaraging a steady flow cf investrnent funds. It is generaily agreed Uiat over Uie past few years a large proportion ai total capital formation has come irons corporate saving as contrasted witis open market activity. It is possible that this patterns may sift and that more capital may have ta be sougst frirns Uic public, provided cf course tisatUihe investment climat. is favourable. Time does fot permit cf exhaustive discussion cf possible alternative gavermsent measuresis Uic fleld cf mane- tary and fiscal polivy ta encourage capital investisent, but 1 ams campelled te suggcst that thc tax palivy should be geared te tise encouragement cf venture capital. 1 suggested a marnent ago tisat we well migist sec some shift towards'seeking public subscription for capital expansion. Gêmerally speaking, in a period of grawth, a1 carporation's working capital position will need ta expand accordingly and a growing corporation well may have ta bock ta Uic public for its capital needs. 'IîEý price structure continues to be strong, and, in fact, evidenve is accumulating to suggest, tentatively at this peint, that prives may again mave upward in tise montiss ta came. We continue ta have Uic wage-price spiral ever before us, thougis differing in Impact fram Urne ta Urne. This invites commnent en Uic growing belief that parity wagc rates can b. achieved as 'between Uic United States and Uic Canadian ecanomy. Whether tisis vicw is encauraged by international influences or is af damestic enigin 15 difficult te ascertain. Regardless af source, it is suggested that, wisile Uic factor cf monopoly power aver an important ebement of produc- tien possibly and probably van achieve tisis statistival relationslsip for a short period cf tins., Uic longer run inmplications will equabby influence sucis action. Bear- ing in mind Uic size cf oui nmarkets and Uic disposition ai aur resaurces, there is bound ta b. a s'xi.l cast in achieving such.a goal. As we imprave t-ýitr productivity and as ouirnmarkets expand, thereby allowing for reduced costs per unit, it is canceivable tnat we can achieve some isseasare cf parity at some future date. But legislating for it or negotiating for it nowar fraught wlth difficulties and particularly since "M'fl cmploynient" continues to be au objective oi policy, we must flot price ourselves away from this goa 1 AS WC tam Our thoughts to the ycar ahecad it Is well ta the maintenance of a high level of business activ'ity. 1t may well be that the diversity and depth of our industrial evolution lias provided some degrec of "in- sulation"z' fromn recessions ins other parts of the frce world. On the other hand, the breadth and extent of the upsurge ini United States business conditions ccr.- tainly played an important part In stirnulgting our econaniic recovery this year. :f it caii be anticipated - and signs are flot wanting to invite such anticipation - that the nlamentumn presently inherent in the American econoiny will carry well into the 'coming year, then w. can expect stimulation in at least two directions: in contirnied denand for our export products, and in thse psychological factor - confidence in business. Wce seem at this point ta have established a tempo of production and cansumptian refiected in a Icvel of Grass National Product approximating $26 billion. If productivity impraves during the coming twelve months by two ta three per cent in thse aggregate, and if WC assume even an average agricultural outtumn, we welI miight anticipate an even higiser Grass National Product for l956-in the neighbourhood of $261/.. bil- lion. Should this be the case such improvement would bc refiected in a rclatively higiser level cf disposable incarne than last year and the natural concomitant thereof - a high level of employment. If confidence in the future continues firm then busincss in most fields of activity should continue ta show further iniprove- ment. On thse spending side it would be in lime with the prospective mavement of Grass National Product ta suggest that both capital spending and consumer spend- ing will continue In anýupward direction. Thse consumer spending pattern continues ta bc quite flexible and it nsight be that increasing amaunts wili bc spent on services during the coming year. In the capital sector it i li kéI5; tisat sonficwhat Iess will be spent on housing than during this year while industrial expansion is likely ta show somne acceleration. IWOtJLD conclude on a note of caution arising fromn thse growing awareness of the fact that scientiflo de- veiopments may have brougist us dloser tD thse absence of war as we understand it at thse mid- twentieth century. In fact, atomic and nuclear devclop- ments sceem Bt this time to have generated a form of inilitary stalemate. We must adjust aur thinking ta nicet thse change that this signifies. But of even greater significance to my mind is tisat under sucis consditions thc dangers of propaganda are heightened ratiser than reduccd. We must b. on guard lest internai disturb- ances and doubta weaken thc pofitical and social fabric ta thse extent that aur basic objectives arc obscured or that we lose Uic will ta defend tisem. We must learn to live witis thc technological and sclcntlfic devclopments that we already have witnessed and-those tisat are ahead of us, and wc must be prepared ta resist attempts from whatever source ta destsoy the political and econonslic framework within which we have accomplisheci so much up tase present and which promises so mach for Uic future. ANNUAL STATEMENT HIGHLIGHTS ASSETS Cash Resources (including items in transit) .......$ 350,329,012 Securities .............................................. 873,804,326 Total Loans ............................................ '1,011,450,327 Mortgages and Hypothecu insured under the N.H.A. 1954 ........................................ 172067 Acceptances, Guaraintses and Letters of Credit ... 32,506,859 Other Assets ............................................ 39,647,314 Total Assefs .......................................... $2,356,909,905 M NI.. NEIL J. McKM1NN VICEPRESIDEN'r and GENERAL MANAGER, mter reviewlng the balance aseet, highlights of which are sUM. marizeil below, maid in part:t The ciglsty-ninth Ampual Statement of thc Bank now before you reflccts a record breaking year of growth in thse business of Uic institution. Aggregate de- posits incrcascd by more than $272,000,000 ansd total assets increascd over $298,000,000 to a total of more than $2,356,000,000 refiecting Uic greatest year of growth in Uic Bank's history. Business conditions duriU tIse past year moéved tbr- ward frons Uic pause in 1954 intta steadily inçreaslssg activity and practically ail aspects of Uic economy with thse important exception of agriculture wiil achieve new records. In agriculture thc gcncraily good, even buimper, crops tend ta offset Uic lowcr farm ptices for many products aund f6ri cash incarne for thse ycar will flot lhkely differ mucis from that of 1954. The increase during the year in aIl fors o f credit lias been substantial and with business at a higher level of activity and with presently fia gencral labour surplus of consequence available for ensployment some caution is necessary ta guard against the possibility of an increase in money supply with fia corresponding increase in produétion of goods and serices, wlsich would cf course encourage lncrcasing price levels. No one under these conditions can justiflably abject ta a degrec cf restraint designcd to avoid an unwar- ranted expansion of credit but it is at Uic same time af tise greatest importance that there shouid b. con- tinuous adaptation ta Uic legitinsate necds cf business growth. The ban"&~ mechanismn is a sensitive anc and palicies and attitudes n«%dýtj b. at all Urnes flexible, with a full understanding thatJso.Jusiness and trading enviraient is constantly in a prodese. of change. Thse Balance Slieet shows an increase Ïiýpersonal savings deposits in excesu of $95,000,ooo anc',.a8s in- crease in otiser deposits cf approximately $ 16 ,r. ýý 000. Depasits by govemfiments decined $ 16,000,000 while deposits by ather banks incresd by$24,000,000. k Tisere has been an increase cf $150,000,00 in the quick assets af Uic Bank reflected principally through an increase in cash and transit items of $32,000,000, an increase i holdings of Gaverisment cf Canada se- Other current loans lncrcased by $ 98,000,00 and martgage loans under Uic National Hausing Act i-. creased by- $43,000,Ooo. Tise Balance Siseet also reflects Uic increase in capl. taI stock and Rcst Account arising ram thse issuance cf subscription rights ta sisarcholders i December 1954. The Rest Account hasbeen additionmily increas- cd by a transfer cf $2,250,000 irons profits and, in all, Uic shareholders' investmcnt in tise Banik ias increascd by more than $22,000,000 duriisg Uic year.- (G Tise Statement cf Undivided Profits shows an in- crease in ptofits ater taxes of $855,000 and miter pmy- ing enlarged dividcnds arising ram Uic issuance of ad- ditional capital stock there rernalned a sin cf $3,001,000 eut of wici, as already mentioncd, $2,250,000 was transferred ta tise Rest Account bemv- ing a balance in Undivided Profits of $1,399,000ooens- pared with $647,000 a year aga. - YEAR ENDED OCTOBER 31, 1955 LUAbILITIES Deposits.................... ............................$2,21 1,427,472 Acceptances, Guarantees anid Letters of Credit ... 32,506,859 Other Lablities ...................................... 8,137,603 Cnta*tl, Reat Account and Undiylded Profits ..104,837,971 STATEMENT 0F UNDIVIDED PROFITS Profits before Incarne Taxes.......................................................................................14,309,899 Balance available for distribution ... ......-2 Dlvidends ..............................................................55, 1 Amount crried forward .........................-' ... ... .... ... ... , ................ 4,23,01114 Transforrec te Reut Account ................................................................................... 2,250,000 Sclance of undivided profits October 31, 1955........................................................... 19 9 The full text of the. Prosid.np's ond the Gen.raI Manager's addreusamay b. obtain.d by writing ta tth. Socrotary, Hecad Office, Toronto. THE CANADIAN- BAN K 0F COM MERCE More. Thon 700 tranches A cross Canada 1 ýl ý -,.-