The following text may have been generated by Optical Character Recognition, with varying degrees of accuracy. Reader beware!

R'Wn.maAV rtW.~ 1O*h 1981 I THE CANAD!AU ~?AT~MAN.. DOWMANVTLI.E. ONTARTft - - v I "4Near-term outloolk is promising" Wben w. met a year ago we had passed turough a mild recessian and were on tue verge of a iorward move- ment lu econamie activity. Many lacked confidence in the. outlook at tuat time but tue advance during tue year dispelled coubts sand we may now suticipate tuat this year tuere will l'e a greater production ai goods and ser- vices tusu wc have experienced in any peace-tmme period. Ile latest figures for Grass National Product, tuose for tue second quarter, indicate a seasonally adjusted annual rate ai $34.7 billion, an increase ai about seven pet cent over last year, sud ai about 51/2 per cent on a constant dollar basis. It sceins likely tuat despite tempo- rary hindrances ta production tue final half ai tuis year WiD show a similar increase. This is penhaps remarkable because tuis bas been a yesr af saine strain un certain respects. An unusually severe winter aggravated tue employment situation, and was iollowed by sanie labour disputes, mare particularly the lumbermen's strike un British Columbia. The effects of tue steel strike in tue United States, while less serious thati might have been expected in view of its duration, wer nevertueless unfavourable. Export demand for saine ai tue larger contents ai aur ioreign trade saggcd, wbile a tise in imports created a heavy deficit balance an merchandise account. And a rapid increase i demand forrl'arrowings ai ail types against a tightly-reined money supply imposed financial strains on tue econamy. Industrial Production Industrial production, turaughaut tue year bas re- fi«ted on tue ane band tue pressure ai demnand in variaus ectors, sud ou tue otuer tue effect ai strike action, here and in tue United States. The mining industry has been supported l'y iron are producers, whose output, despite the. steel strike, has been substantiaily ahead ai last yma's. Shipments ai uranium were also ahead'ai thase in 1958, sud were an important factor in fmaintaining aur cxport trade. 011 production has lagged 'but gai production sud utilizatian continue ta expand. Manufacturing now appears ta be resuming its upward trend witu durable goods indicating a mare substantial Sain than tue non-durables. The industries based on forestry have improved tueir position, sud most af tue ligbt industries are weil employed. The difficulty ai de- tcrmining at tuis stage what tue total effects ai tue steel strike wiil be, cituer on aur .conomy or tuat ai tue United States, injccts sanie measure ai uncertainty into the ~imcdiate outlook for industry. However, a bigh level aifptental donesticdmsudmay weilbemade effective l'y a currently bigh level ai persona! disposable income. Altald, ava'lable information suggests tuat un- dustrial production should b. maintained at a satislactory rate in tue immediate future Agricultural Production Agriculture bu had on tue whole a satisfactory year. Tii. grawth ai population in aur cauntry.during tue ast twcnty y ars bas helped greatly ta salve many maXe- ig problems bût tue problein ai marketing aur largest crop, wbeat, continues. Farm, incarnes, however, bave remained at levels wýhich have encouraged a ltigh rate ai sales af farm macbinery. Continued investment lu modern machinery, the evet-wldening application af tcchnological advanccs and improvement in latin man- agement ta which aur agricultural coileges have.contri- buted so much combine ta iinprove ptoductivity sud increase cffieiency. Consumer Expeàtditures; lTýe rapid recovery from last year's tecessive phase bas been generated largcly by consumer expenditures. While expenditure an non-durable goods advanced in step witu population grawth, expenditure an durable goods showed markcd gains. The greater expeliditure on durable goods tuis year bai also braught about an in- crease in consumer debt. There 1 no sign as yet that con- sumier demand for durable goad 1 bas been iuily satisfied. Consumer expenditures have been refiected inu retail sales which have been at recort levels in practicaily all lines. There seems reason ta ex ýect a continuance htext year, though distribution of exl. énditure may b. sanie- what different than in the present year, with a larger pro- portion l'eing directed ta autbimobiles sud non-durables sud s somewiiat lawcr proportion ta household goods. -Capital Iuvestmeuit Resource developments are nat normally affee,,d by the short-term fluctuations af tue economy. While prýxe it projocts are fot ai tue magnitude tuat gave such mmpetus te tue 1955-56 boom, l'y suy otiier criterion they are en a very large scale, sud tegioitaly weil distributed. Capital investint expenditure I 1959 bai exceeded forecas at tus beg ig iti. ear, a condition charac- terisd c CÉ1is- is-gcofiene nndpdrowtu, although tii total may not l'e much ahead of the. average ai tue past tmruneas.Expeuditureson. iousing have fallen sonewatbelowthe l expected early in tue year, while industrial constructon blm tissa sigbtly above. Thon are ladltie u t acapital lnvostment in 1960 will tise perhaps mare significantly in machinery and lu industrial construction. The improvement in corparate profits tuis year wiil likely have an encouraging influence. Foreign Trade and Balance of Payments Export trade was just holding its own as compared witu last year unil tue end of tue tuird quarter, when a substantial increase in shipinents ta practically ail areas brought tue nine-month total ta, a near-record level. Imports have reflected bath an increase in capital investinent sud enlarged consumption expenditure on durable gaods. The larger increases have been un nma- çhinery, automobiles sud parts, sud rolling nul products. The source ai tue greater part of aur imports is the United States l'ut tue proportion ta tue whole this year is somewhat lower tuait in 1958 sud tue otuer countries froni wbich aur imparti are uotmaily beaviest ail show well-distributed increases. The resurgence in business bas been teflected un aur balance ai payments. The rise in carporate profits con- tril'uted ta increaied dividend payinents ta non-tesidents aud tuis combined witu beavier individual remittances ta other countries ail added ta tue natîan's deficit on invisible international payments. Direct investment has been maintained iairly weil, particularly in view of tue increased interest ai United States investars in Europe. Higher interest rates ini tus country have alsQ encour-' aged sanie inflaw ai short-terni ivestinent funds. The total rate ai United States ivestinent i Canada, in- cluding l'orrowings l'y Canadian provices, municipali- tics sud corporations lu tue United States mtarket, bas mare tuait covered aur curtent deficit an trade in material things. We int tus country must begin ta b. much more consciaus that tue loreigit debti which are beig incurred are creating a built-i servicing obligation wbich i les. buoyant conditions may weil b. burdensoine. There i. stîli no clear indication af tue type or extent ai change we may expect in tue pattera ai trade follow- ing tue emergence ai new market forces as tue European Common Market begins ta take shape. The producers in tue Common Market ai Europe wiil have tue benefit ai a dainestic mass mtarket; cxports froin Europe ta, Canada's market ai 17 million people could indeed b. at end-of-ruu prices after tue producer bas supplied a domestie market ai 166 million people. Witu aur heavy dependence on foteigit trade as weil as tue developmnent ai aur modestly growing internai trade, we must b. alert not only ta tue cbanging patternansd conditions ai world trade, l'ut also ta tue nature ai the internal economy and sources ai materials ai tuose countries which have pue- vided mtarkets for aur exports. Employment and Incarne Employment normally lags somewhat in a recovu, period ai a business cycle. However, with rising sales, an increase in employmient eventually becomes neces- sary, sud employment figures have responded turough- outtue year. There was an unusual influx ita tue labour force in tue two previaus years, bath froin immigration sud froin the addition ai tue firat wave af tue "war babies" ta the labour force. It appears tuat we have now abs wl'ed this increase. f itnada's population is now estimated ta exceed 171/2 million, sud has been grawing at about tue saine pace as last year. While tue labour force now appears ta l'e adequate lor aur present rate ai production, tue business expansion may, befote long, create a lairly tight labour situation, despite su increasing rate ai accession ta the labour force because ai tue present age distribution af tue population. lIt September less than tire. etcenth te labour farce was unempioyed whicb, aloing :ftor temporarily unemplayed and tue unemplayable, is considered ta l'e fll employmnent. Trends i mploynient continue; tue number eïigaged in agriculture decined while tue number in trade and in the supply ai services increased. Again tue increase in numbers einployed in manufac- turing bai been les. tuan tueicrease in output. Price Movements Bath wbolesale and retail priceÉ have been relatively stable turougliout tue whole period ai recovery. The gencral wholesale price index moved up lractionally during tue summer but since bas fallen again, wbule tue consumler price index fell until mid-summer and tien bcgan lui slight seasonal risc. The aver-ail increase bas been ai tue order ai 11/2 per cent durlng tue present year, a lessening in tue rate ai increase ai previaus years. Productive capacity sud existing supplies ai most raw materials bave, howcver, been adequate, sud linsaine cases in surplus on world markets, while tue resurgence af tue European sud Japanese industrial economies bai brought about increaçingIy campetitive conditions for manuiactured goods. These circumstances tend ta have Th. full text of the Prosidents end the G.n.rai ManagWo aoddrea 'Economlc conditions her. and abroad suggest that we may b. reasonably confident about the immediate outlook", said Neil J. McKinnon, President, addressing the 93rd Annual Meeting of The Canadian Bank of Commerce. may, b. obtoired by writing fath Smcroy# Head Office, Toronto. en aver-ail stabiliziug affect on prices. There scems littie reason ta think that the market for raw materials and manuiactured goods wiil be any less competitive during the. commng year. Ii. domestic price level should there- tar continue ta show a fair degrec af stability. Financial Developments T'M. strong consumer demand during lte year had a direct cffect on the, credit situation. lIn October oi last year. the Batik ai Canada stabilized the. money supply. However, increased consumer buylng during late 1958 and carly 1959 necessitated trading concerns carrying larger amounts ai accounts receivable and inventories and generated increased demand for loans ta individuals and increased use ai consumer credit oi ail kinds. These conditions caused steadily increasing use of bank credit, particularly from small sud intermediate sized bor- rawers. Witbin the banking system loans ta larger bar- rawers in the aggregate remained at totals about the saine as titose af two years previously, while a very large in- crease taak place in beans ta smaller borrawers. The rapid increase in bank loa6is i the early part of the year finaliy caused the chartered banks, ithe. absence ai leadership tiiraugh a central bank interest rate or other- wise, ta move ta stabilize a situation wiiich was tiien creating an impairment ai confidence in the capital markets. lIn May, an annauncement by The Canadian Bankers' Association warned af the. tightening monetary situation but because ai a lack ai public endorsement ini official quarters, it iailed ta have influence. The con- tiuuing sales ai government bonds by lte banks in order ta release iunds for boans caused increasing pressure-on a bond market already greatly strained by the necessity of financing large new issues principally by governments and, as a resuit, bath siiort-term sud lang-term interest rates cantinued ta move up sharply. Iu August a point was reached where tue banks, acting again through The Canadian Bankers' Association, iiad ta exercise forceful leadership sud control in order ta avoid immobility i the banking system sud ta re-establisii confidence in the market for public bond issues. The action tiien taken becante effective with beneficial effects ta the economy sud ta financial markets. lTe selling ai government bonds by tue banka was grealy diminished, banks tuen became able ta renew sud in some cases ta add ta their holdings ai government treasury bills, interest -rates on treasury bis sud short-termi bonds tended ta deçline sud a vitally necessary condition ai stabilhty was restored. There are uaw some indications tuat the federal gov- crnment i. maving towards a balanced budget which, it it is inclusive ai capital as weil as current expenditures, wili take much weight off tue new issues market Tiie tight money situation af aur environnient must also b. view.d in a global perspective. lTe expansion ai business throughout tue world is causing interest rates ta ris. in many countries. Large capital investment pro- grains callfot increased savings ai ail kinds, and it would appear tuat, taking a long view, we shaU have ta plan aur expansions under somewhat taut conditions in money markets for some tinte ta corne, although economic con- ditions may induce. mre easing in the situation at tintes. Sununary E&ouomic conditions here sud abroad suggest that w. may be reasonably confident about tue immediate out- look. The industrial picture looks currently sound pro- vlded it is flot marred by strikes of tue seriousness of this past yçar. Consumer spending, which has been running at high levels turaughaut most ai tue year, promises ta continue ta do so next year. Capital investmnent, with tue exception ai housing, may be somewhat larger tuait this year. It is mare diflîcult ta disceru a constructive pattera in our external trade. Much will depend an coin- petitive conditions here and abroad, the. level ai aur dollar lu international markets and tue level ai prosperity in tue nations which provide aur foreign markets. Infia- tionary tendencies appear ta have subsided and aur growth is taking place against a background af reason- ably level prices. Although tue near-term outlook is promising, much ai aur national income is based on ex- port markets for natural sud semni-processed products and much ai aur industry depends on a stili sinail, altuough growing, domestie market. We are greatly in- fluenced by tue international environnient and we should seek ta understand its movement sud direction in ad- vance ai its impact on us. Equaily important, we must seek ta maintain a business climate which will give tue necessary incentives ta individuals sud corporations ta grow sud expand. J. P. R. Wadworth, Vice-President and General Manager, reviewed the balance sheet, highlights of which are summarized, and said in part s The 93rd sunual statement records new peak figures in several areas and lower tatals in others. Personal savings deposits in Canada at $ 1,368,000,000 increased l'y $57,7 00,000 during the, year and boans at $1,200,000,000 increased l'y $188,671,000. The tinusuailly large inc-re-ase uins nmade t n4- s THE CANADIAN BANK 0F COMMERC MORE THAN 850 BRANCHES IN CANADA AND ABROAD u National Houslng Act at S186,611,000 show au b- moease of $46,396,000. Under eulstinp mmetarycondition ar activities in thus fild meIlnuted. Cal loins amaunt. ed ta, $199,756,000, au lucre...of $25,104,000, pria- cipaily in day-to-day laineta nsoaey markt dealer. Ibi ncrease in volume et business I recuit yean brought with it a large increase i the totaloa choques snd other transit item in the course af clearing. Thtis asset doos fot carn interest and durth~ atya i tensive efforts bave been made tte ti.cl ng of these items. Ibe succeas et aur imprve8ssta shown in a reduction of $78,524,000 in'ta, tiitems. Because somewhat'more thait anc-baï o the tO f transit items represents chequés drawn on accounts at varicus branches aofhte Banik, a reductionM of approx- imately $40,000,000 iÎ gone"a deposits resulte.This togetiier with the withdrawal of certain large depasits which were held temporauily a ycar ago, ta, which refer- ence was made iluat ycar's report brought about a reduction in ather depasits boni $1,27 1,000,000 las year to $ 1,165,000,000 this year. Deposits bythe Government ai Canada decreased tempararilyby $2 1,000,000. Total msets at the. end of the year amouot- cd ta $2,976,000,000 compured wlth a total et $3,016- 000,000 a-year ago. Notwithstanding the large expansion n lo ans durMg the yca strong liquid piosition was malntaincdwt total quick amets a--u---gta $ 1,497,000,000 repre. uenting 53.5 per cent Of toa liitot the public. This year a number of necessary mnlargement pro. grams at existing branches were complcted sand new branches were established in new and growlng areas. 11»e total number ai bankiing offilces naw stands at 831. During the. year the. Banik a *oit.d a senor afficer as Burapean Represmntative wih eadquarters in Zuricti, Switzerland. Ihe offeriug to *sholdersof 900,000 shares et December 12, 1958 incrcased paid-np capital during titi ; a y$8,971,000 and ret account by $19,736,000. Z umber ai shareholders increased during the. ym. by 2,075 sud uow stands at 20,371. lIte utatement ai undivided profits shows su increase in profits after taxes of$906,033. Incarne taxes in- creased by $2,100,000. After pravidiug for dividend payments ai $9,163,829 au amaunt of $1,954,552 wus carried forward icrasngthe balance et undivided profits ta, $3,121,63. .Once again, 1 want ta take this oppcrtunlty te psy tuibute ta ail members ai the personnel for th*eilya and devot.d service.,Ib. past y car bau posed many pro- blcms, in particular în the. field et credit administration, and the. raie playcd by the. branci managers has becs more than ever an extremely important anc. They tumr have ben backed up by agod tcain thie eganal Offices and in the Head Office Depatments, sud 1 know tihe sharehalders will wlsh ta join with the. Chairman, the Presdent and myselfin hi s expression af appreciatian ANNUAL STATEMENT MIGHLIGHTS YEAR ENDED OCTOSU 31, 1959 ASSETS Cash Resources (indudfig e u in transit) ...............................$ 410,M2,511 GoYOemment und OtherSuie.. 887,3390022 Coli Loans ......... . 199,756,578 Total Qulck Ast.... ....... $ 1,497,116,11il Loans and Discounts .......- ...... 1,200,442,«0 Mortgages mmd Hypothee ingumvd under the N.H.A., 1954........... 186,611,352 Customers'LabIliy under Acespo lances, Guam iantesmd Luossn Of Credit, as Per otu.......... 32,552,422 Other >.ssets ..........*.... ...... ........ 59,497,653 Total À.ssets ....... ............... $ 2,976,219,938 LIABILITIES Deffl its ...........................$275,8 80 Acceptancus, Guarantees end Letters of Credit .................. 32,532,422 Other Liablilties .... 13,055,M5 Shoroholdora'Equif'y Capital Pald Up .....$ 53,971,132 Rest Account ........ 119,736,M8 Undvd.d Profits ..... 3,121»66 176»89,257 Total LUabilities............. ..$2,976,219#938 STATEMENT 0F UNDMDEO PROFITS Profit bef are Incar, es... Provision for Incarn, taxes......-..... 12#050,000 Balance avallable for distribion-m.....A..$11.118.280 i rammAy. Inw. i loth. MO TM CA14ADL« STATZSBLN. BOWMANVnJ.& 011TAPJO