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Depressing period vmg¢x ya Hv au Finish to sad 705 relief for business By LAWRENCE MOULE The Canadian Press For Canadas major stock markets the bells of New Years Eve will signal not cele bration but relief relief that the Sad Seventies finally are over The Toronto Montreal and Vancouver markets suffered through depressing period for most of the decade the effects of which still linger despite relatively strong per formance in 1979 But market officials and analysts see hope for improvement through the next decade Indeed some analysts already are predicting the Roaring Eighties For that prediction to come true the markets will have to be released from economic burdens similar to those which staggered the markets after the buoyant early years of the 70s The worst shock of the decade was the sudden muscle of the Organization of Petroleum Exporting Countries which jolted Quebec power base all 91 the Western economies by imposing sharp increases in oil prices starting in 1973 ECONOMY ILL In Canada the economy turned down because of drop in exports to the US and variety of other ailments After 1973 real growth in the gross national product declined industrial productivity fell unemployment worsened capital spending was reduced and Canadas balanceofpayments deficit became bloated Central to the economic malaise was in flation which increased alarmingly from 1973 on Manufacturing profits dropped in real terms because of the increased cost of replacing inventories plant and equipment Faith in the future of corporate prosperity crucial driving force in stock markets wob bled Robert Demers president of the Montreal Stock Exchange said in an interview think there was clear indication in 1973 that we were entering into hard period lndividualistic control By TIIE CANADIAN PRESS Eight Frenchspeaking businessmen in Quebec control $30 billion of other peoples savings Sometimes they compete with one another sometimes they work together All of them are individualistic says Paul Desmarais chairman of Power Corp of Canada Ltd with $8 billion in assets perhaps the bestknown member of the billionaires group We know one another and we meet often They form superelite of financiers who control growing proportion of Quebecers savings are involved in almost every big financial transaction in Quebec and pick up corporate directorships left and right Another prominent billionaire is Michel Belanger president and chief executive officer of the National Bank of Canada formed by the recent merger of the Banque Canadienne Nationale and the Provincial Bank of Canada with their $15 billion in assets PAUL DESMARAIS Power Corp chairman Organization predicts Others include Alfred Rouleau president of the Desjardins caisse populaire federation with $12 billion in assets and Marcel Cazavan the civil servant who runs the $10 billion Caisse de Depot et Placement du Quebec which looks after Quebec govern ment pension funds THEY BELONG T00 The others are Andre Marcil president of the $3billi0n Montreal City and District Savings Bank Jacques Gagnon of the $11 billion Federation des Caisses dEntraide Economique JeanMarie Poitras of the $11 billion La Laurentienne life insurance company and Louis Archambault of the $1 billion Trust General du Canada Poitras began as an insurance agent National Bank chairman Germain Perreault started as clerk and Desmaraiss first en terprise was financiallytroubled bus company he took over from his father MICHEL BELANGER National Bank president Bad year ahead for west PARIS AP For Japan and the oil thirsty West 1980 will be the worst economic year since 1975 with rising prices record unemployment record deficits and reduced growth the Organization for Economic Co operation and Development predicted Wednesdav It said the economic outlook for its 24 member countries will be even worse if the Organization of Petroleum Exporting Countries cuts production and if drastic action is not taken to slash oil consumption Dollars and Sense Common stock plan will never come to be By RALPH ALEXANDER Dear Sir understand that the recent federal budget introduced way to buy common stock on tax deductible basis How would that work and in view of the upcoming elec tion is that measure in force Dear Because the Conservative government was defeated in nonconfidence motion on their budget all changes proposed in that budget are negated Therefore there is no assurance that the proposed Canadian Com mon Stock Investment Plan will ever come into force The details of the proposed plan were as follows Canadian resident could deposit up to $20000 in 1980 and $10000 per yaar in subse quent years into Canadian Common Stock Investment Plan Total capital contribu tions cannot exceed $100000 The capital contributions would not be deductible from income tax Rather the advantage of the plan would be that any capital gains realiz ed on the sale of shares within the plan would not be taxable until withdrawn from the plan WITHOUT CONSEQUENCES Thus any capital gains could be reinvested without immediate tax conse quences Dividends and interest earned by funds in the plan would be distributed to the contributor and would be taxable each year in the usual manner Up to $1000 of such in come would qualify for the $1000 invest ment income deduction and the dividend tax credit would apply to dividends Amounts could be withdrawn from the plan any time Such amounts would be considered to have been received first out of accumulated capital gains one half of which would be taxable as income to the contributor As previously indicated this plan will not be implemented at this time second encouragement to invest in Canadian common stock was proposed in the budget This proposal would have allow ed one half of income earned on common stock investments by Registered Retire ment Savins Plans to be received tax free by individuals on the maturing of their plans CONTROVERSIAL SlBJ ECT The taxation of capital gains is con troversial subject On the one hand it can be argued that profits from the sale of common stocks should be taxed in the same way as income from employment On the other and it is realized that if buy stock for $100 today and sell it for $150 in five years the $50 gain barely compensates for in flation To tax these inflatonary gains would not be equitable second reason for favorable treatment of capital gains is to encourage investment in order to produce jobs Prior to the budget capital gains were favored in that only one half of such gains aretaxable The budget proposals would have increas ed the attractiveness of Canadian Common Stock investments Unfortunately it would have further complicated our taxation system To RRSP DPSP RR1F RHOSP RDT0H etc it would have added CCSIP The picture was that the good days wsre gone and the future looked grim People did not foresee any appreciable growth and became pessimistic about the future of Canadian companies and the economy in general To fight inflation governments tightened monetary policy and pushed up interest rates Controls on increases in stock dividends were imposed as part of the anti inflation program in 1975 adding to the bearish influence of the capital gains tax introduced in 1972 As the cumulative result of these in fluences trading activity on the stock markets diminished Many investors turned to fixedincome investments such as bonds finding better rates of return and less risk than the stock market offered Stocks of natural resource producers suffered not only from the US recession but from battles between the federal and provincial governments over taxation rights These disputes which lasted roughly from 1973 through 1976 were particularly hard on the mining industry Distress in the mining industry was serious setback to the Vancouver market dominated by stocks of regional resource companies Morale also slumped because the New Democratic Party held power in British Columbia through the period of the taxation disputes Bob Scott president of the Vancouver exchange recalled In 1969 and the early 705 the average price of our shares was $125 to $140 During the mid705 we were lucky if the average value per share was 65 cents No sooner did the governments settle their differences and realign resource tax policies than the markets had new fear to contend with the election of the Parti Quebecois in Quebec in November 1976 Fears that Quebec might separate from Canada preyed on the stock markets throughout 1977 Although consumer spending picked up in 1977 and Canadas trade balance improved inflation continued high and increased production costs labor disputes and rising unemployment dogged the markets Product index decHnes OTTAWA CP The index of real domestic product declined 01 per cent in October from September to 1403 Statistics Canada said Wednesday The index adjusted for seasonal change is measure of the goods and services produced in the economy Its decline for the second month in row indicates the general slow down in growth this year The index still above 1373 for October 1978 stood at 100 in 1971 With the exception of construction which grew by 06 per cent all goodsproducing in dustries declined in production down 07 per cent in October from the month before Increased residential housing activity con tributed to construction productivity The index of mining production fell by 43 per cent in October Serviceproducing industries recorded gain of 02 percent in the month thanks to in creased production in transportation communication business and personal service industries However trade finance real estate and government services productivity declined Weak retail trade especially in food car and clothing sales more than Offset gains in wholesale trade the examiner Fridaypec 21 1979 Gordon KenYS Barrie locallon l5 DUNOp Street in thedowntown coretxaminerPhoto Secondhand book business turns into firstrate venture By ALISON MERKEL Of The Examiner What do Louis LAmour Barbara Cartland and Gordon Kerry have in com mon Louis LAmour is sensationally suc cessful writer of westerns Barbara Cartland is the reigning monarch of romance fiction But who is Gordon Kerry Barries Gordon Kerry also helps to satisfy the appetite of voraciously hungry reading public In the highlycompetitive world of bookselling he has helped to develop formula that brings the reader backagain and again Kerry operates modestlooking second hand shop on Dunlop St Mikes Book Store If the appearance of the enterprise is un pretentious the reality of the business is impressive In the highly competitive field of book selling Kerry has developed formula that incorporates low overhead healthy return on investment and an impressive growth pattern Six years ago Gordon Kerry and his brother Norman opened 100 squarefoot shop in the town of Collingwood population 12000 They had four or five hundred used books no knowledge of book retailing and had just experienced an unsuccessful business venture Today they direct an enterprise that will have total of eight bookstores in operation coast to coast by March The shops at this time are all located in Canada The second hand books are being sold to buyers all over the world In 1973 the Kerry brothers sold their in terest in Collingwoods Dorchester Hotel That business has ceased to exist but at that time there was an empty front room One hundred square feet unused because there wasnt much you could do with it Gordon and Norman had given that room some thought and they decided to gamble on hunch The two went back to work in the hotel which they had sold While waiting on tables they collected books four or five hun dred of them All were used and Gordon says we payed too much for them The majority of small businesses fail within the first two years Here was an enterprise that had all the ingredients fre quenty outlined as causes of failure The entrepreneurs lacked background in business notes Manager hiring in March HayesDana Ltd manufacturer of truck axles will hire new personnel manager sometime around March according to com pany manager Mike strowski The position was left vacant after the death of William Dow Nov 30 following headon collision on Highway 27 Better economy forecast MONTREAL CP The Royal Bank of Canadas economic index the Trendicator points to new vigor in the Canadian economy in the second half of 1980 the bank said Wednesday During the third quarter of 1979 the Treiidicator rose at an average annual rate of three per cent compared with 07 per cent at the same time last year Chairman appointed MONTREAL CP Du P0iit Canada Inc announced Wednesday that Ted Newall president and chief executive officer will also become chairman of the board on Jan He succeeds Robert Richardson who be comes director senior vicepresident and executive committee member of the parent company El du Pont de Nemours and Co of Wilmington Del Recession predicted LONDON Reuter Britons were told on Wednesday that they are headed tor recession next year with recovery depending on whether they can conquer inflation The Bank of England said in its quarterly bulletin that expansion had flattened and is likely to give way to recession It predicted that Britains gross domestic product would decline in 1980 Dominica to get loan MONTREAL CPI The Royal Bank of Canada said Wednesday that it will lend Dominica $225 million to boost the islands economy following disruptions created by hurricane David last summer The bank said $11 million Wlll go towards redevelopment of Dominicas banana industry Another $115 million will assist in the development of low cost housing Car agreement reached GENEVA AP Renault and Volvo have reached an agreement aimed at sharing components for passenger automobiles and jointly developing new car The accord is limited to passenger vehicles The development of new car uniting Renaults energysaving engines with Volvos body work and constniction is still in the distant future the firms said in joint statement Wednesday Rockefeller quits NEW YORK Reutcr David Rockefeller the politically powerful banker who played key role lll getting the deposed shah of Iran into the United States an nounced Wednesday he is quitting as chief executive officer of the Chase Manhattan Bank Rockefeller said he will retire as chief executive officer on Jan but will remain the banks chairman until April 1981 Fine imposed MONTREAL CP The St Lawrence Seaway Authority has imposed fine on vessels moving through the seaway after the official closing date spokesman said Wednesday Fines of $80000 each will be im posed on 15 vessels most of them Canadian which have been in the MontrealLake Onlt tario section of the seaway since it officially closed at midnight last Tuesday night their field Capital investment was quite limited Their shop as too small to ac commodate merchandise The location did not have sufficient traffic and the popula tion of 12000 did not present favorable projection for sales potential Today the Kerrys would not open retail outlet with that profile When they started outthey had everything to learn WORKED HARD The Kerry brothers learned the second hand book business by working at it every day for two years Determination and perceptiveness carried them through to new Collingwood location and the point where they could pay themselves $25 each per week At that point they became so competent in their field that second store was opened in Barrie followed by successful associate ventures in Orillia Landner BC Peter borough and Toronto January will see the seventh secondhand bok store open in Owen Sound and by March the chain will link in with an open ing in Liverpool Nova Scotia Four years of profitable operation for Mikes Book Stores have been field train ing experience for what Gordon Kerry sees as coming period of accelarating expan Sion Each new store does better than the last one Gordon said The precarious economy doesntaffect sales adversely The harder times get the better this gets If there is no money for movie if so meone doesnt have $35 or $40 to fix their TV they can always afford 25 or 50 cents for book Gordon points out that everyone is potential customer Just about everybody reads something or other The movies even help us to sell old novels every time movie like Jaws is shown we have big demand for the book The merchandising in second hand book store offers unique potential in this infla tionary period Paperback novels are being offered in rental outlets for over $5 in some instances with nonfiction titles going in sometimes for over $20 There are magazines on the newstands for $3 The Kerryshave incorporated several practices that encourage the reader to buy in Mikes Book Stores The customer gets the book for half price Sometimes better deal than that par ticularly on hard covers The book or magazme can be returned and then the customer can have half his purchase price refunded The return of book is not restricted to the store where purchased It can be return ed to any one of the associate outlets In dealing with customers the Kerrys havea firm policy If you make mistake he sure it is in the wstomers favor SITCATION OF TRIST ur business is built on situation of trust Gordon says Part of the secret of everincreasing sales is the large selection of titles are becoming available as locations increase There is never day that we dont take in books Gordon estimates that the customer can select from at least 200000 titles available between the shops Customers write and phone for books from the US Mexico and England We have two women who have bought at least 5000 books Gordon says He explains that they send them to relatives overseas Many people seem to prefer to purchase book at the low price rather than take copy out of the free library They just dont want to have to read that book by certain date or pay fine Sometimes they prefer to pass the book on to friend or relative Porno is another situation about which they have firm policy No hard core por no is allowed in the store gordon says Playboy and similar magazines are wrap ped and available at the front desk Adult reading material is available on request but not to youngsters Expansion is an important objective of Mikes Book Stores at this point The Kerrys see the ideal propriators of an associate store as representing family situation There are definite criteria for selecting an appropriate location and the new storeowner is provided with training and stock Definite management policies are laid out and shop hours are under specific agreement Looking back on the struggle to work out system that became profitable Gordon Kerry reflects on the opportunity that has been created for associate store owners Theyll never get rich with the arrange ment but they all seem to be happy with it They are making more than they ever did before Downtown bank Work crews are busy constructing wall of the new Continental Bank branch to open in Barrie behind the Simcoe Hotel Workers expect the exterior of the building to he completed by the end of January Ex aminer Photo