ihe EE -- TNE = Sea a 0% ES eo = nit S58 'rs Lc - 1 | bs od 3 DN i 1 £ ¥ i During the year since we last met our economy has passed through a relatively mild recessive phase, A depression which many feared and more than a fow expected did not materialize, Now the commercial and industrial scene is brightening, despite the indications of winter unemployment, The new year seems to hold promise for most lines of production and most regions of our country, In many ways the events of 1958 present a note- Doni ustration of recession and recovery where productivity is im and where money have a tendency to rise together, In such an environment the forces of busi- ness re-adjustment produce a levelling-off of out- t rather than a serious decline, while the follow- g forces of recovery manifest themselves in noticeable upward movements of most indicators, It now seems likely that the Gross National Pro- will have a value fractionally above $32 billion, or about 2% higher than in 1957, Allowing for higher prices the volume of production was probably little changed, Export trade has been well maintained, consumer expenditures have increased moderately and capital investment has shown but a moderate decline, For a year which began amidst gloomy forebodings this cannot be considered as other than reassuring, 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%, There have, of course, been some notice- able changes in the components, There has been a drop in capital expenditures for manufacturing offset by a increase in expenditures for housing which this year are estimated to reach an all time of more than $1.7 billion, an increase of about $350 million over last year. Aggregate of 1958 capital investment will be somewhat less than in 1957 but is still considerably higher than the total for 1956 which we habitually refer to as a "boom" year, By the second quarter of the yout corporation ts before taxes emerged from the uninterrupted that dated from the end of 1956 and there are signs of a steady and possibly improving trend in more recent months, There are some indications that business capital expenditures may be moder. ately reduced next year but an improvement in business expectations during 1959 may bring some upward revision, Value of consumer expenditure is apparently higher than a year ago but consumer price increases would just about offset this increase in terms of volume, As the population has increased by some 460,000, per capita trade in terms of volume was Sighty below iast year and it is thus the in. crease in population which has brought about the over-all increase in dollar volume in consumer buying, The Canadian consumer spends almost two out of every three dollars paid for the nation's goods and services and this year aggregate cons sumer expenditures exceeded $20 billion for the first time, Through most of 1958 Canadians re- duced consumer debts, built up savings, and cur- tailed purchases of durable goods in favour of non. durables and services, The growing liquidity 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 exports should come close to the level of last year Main Doorway, Head Office Building "Climate to induce individual effort and private investment is essential for growth", said Neil J. McKinnon, President, addressing the 920d Annual Meeting of The Canadian Bank of Commerce, but here too, there have been changes in com- ponents, At the same time imports have been reduced, principally of machinery, and this trend is allied with some decline in the level of forel investment in Canada, The over-all deficit in foreign trade on merchandise account will show a marked reduction as compared with last year. If the recovery in business Lh in the United States Is sustained, as is expected, the level of ex- ports from Canada in 1959 will be well maintained. Production «wr» Industrial production is, of course, affected both domestic and foreign demand, It emer from its downward phase at the beginning of the year, Although volume has been adversely affected through industrial disputes it has, nevertheless, im« proved to a level which, barring further work stop- pages, by now should compare well with last year, Mineral production has been adversely affected by less favourable foreign markets and prices but there are signs of improvement in some, although not all, of its constituents, The total value of mining production for the year is expected slightly to exceed that of 1957, Neither the mining nor metallurgical industry, however, had an altogether favourable year, Iron ore output was affected until recently by the low rate of production in U.S, steel mills, A decline in price and world demand for base metals resulted in curtailed operations in that field, The export market for western oil was re- duced, as was that for aluminum, On the other hand, increased shipments of uranium contributed substantially to the strength of export trade, and gold production was the highest in some years, Farm net income this year may Jrove to be slightly below that of 1957 owing largely to adverse weather conditions in the Prairie Provinces, The movement of livestock into export markets and favourable price levels have been a source of sup- port, Wheat sales in the 1957-58 crop year were considerably above those for the previous year and overseas clearances in the latter part of 1958 have continued at much the same rate, However, total Canadian supplies of wheat at the beginning of the new crop year, although below the level of the previous year, were still high and it seems clear that world Supplies of wheat will be more than adequate in relation to markets in the coming year, Unfortunately there are indications that more diffi cult conditions may arise in commercial sales, Resource Development Although important natural resource projects are in the course of development we do not for the present see ahead of us programmes of the magai- tude of the St, Lawrence Seaway or the intense activity in the oil and gas fields that characterized the past few years, Oil and gas developments con- tinue but the greater emphasis for the present is in the distribution and utilization of products and by- products, Many mining programmes are under study and development and important expendi- tures are being made in preparing for new nickel and iron ore production, Although the work now going on is not as spectacular as that of a few years ago it is soundly based and undoubtedly we shall continue to see in the years to come a steady and important development of natural resources includ. ing the vital field of energy. The Royal Commission on Energy has recently submitted its views in a first report to the Government. This Report has "The Scene is Brightening' attracted widespread attention among those fae milinr with its field of study, A further report Is to be submitted soon and It is apparent that the recommendations and their implications will in Aue course require examination with careful con- sideration of their possible influences on the development of the economy, : Employment Continued population growth through the year with an increase in the labour force represents one of the factors reflected in employment as well as ig Unexpectedly for many, the num- ber of employed Canadians has been just about the same as last year, Notwithstanding this, un- employment in 1958 continued to present a prob- lem to Governments and private employers. The unemployment in this period was caused by a com- bination of cireumstances which was more than seasonal In character, In 1957 our population grew exceptionally~about half a million~and the labour force by 221,000. At least three out of five of these additional working adults in that year were immigrants escaping old terrors or seeking new opportunities, It is not hard to see why unemploy- ment was higher In 1958, a year when, temporarily, basic growth factors were weaker than they had been for some time. Population growth this year has been at a lesser rate than in 1957, It may be expected that the underlying market demand in several key sectors of the economy, partly reflected in the high level of building contracts awarded In recent months, and supported by the stability of 1958, should provide a foundation for further progress in 1959, Housing Residential construction this year is creating a new record with indications that completions ue amount to 153,000 units compared with 117,01 last year. Of the total it now apheats that 80% was financed by individuals and financial institu. tions and the remainder by moneys made available by the Government through Central Mortgage & Housing Corporation, Financial Developments For some years under expansionary forces federal revenues have been greater than rising expendi. tures, and surpluses have in the main been used to reduce the federal debt, This year we have seen another phase of so-called compensatory fiscal policy: the expenditure of greater sums of money than the existing tax structure could provide, Under the growth conditions which are characteristic of Canada we have had little experience with the implications of deficit financing. Under a dynamic economic system there are bound to be recurring periods of advance and rest but we do know from experience In other countries that long continued . deficits can have seriously adverse effects on the price structure and on business generally, We in this country should set our sights on an equilibrium in the economy and a budget in some measure of balance, The past year has also seen a marked increase in money supply in the banking system but with some unused productive facilities there has been only a modest movement upward in prices and one which probably would have taken place in any event, Notwithstanding this monetary expansion accompanied by substantially enlarged holdings of Government bonds by the banking Quen, interest rates are now moving upward, Much of this trend has been influenced by developments in the United States where at least in pu there has been a dis- inclination on the part of investors to buy Govern. ent bonds and a trend to other types of invest ment, : ' Summary Expenditures at all levels of governments in the economy continue to increase, Even excludin public business enterprises, government expendi= tures on goods and services now approach $6 billion a year, There are also those expenditures arising from transfer payments by governments to individuals which seem likely to be at a rate of $3 billion by the end of this year, In all, this repre. sents a very substantial sum in relation to total national expenditure, Fow Canadians fully realize the extent and signifi. cance of the influence on our country of government expenditures and Budgetary; fiscal and monetary policies, The magnitude of this influence and its ime plications raise many factors--the level of governs ment deflcits, the rate of price increases, the Jorabiity of increasing taxation=which give pause or thought, How can a climate favourable to private investment, individual enterprise and maxi= mum economic freedom be preserved? For ex- ample, in the period ahead there may be demands in some sectors of our economy exceeding the readily available resources which may be freely allotted to those sectors, and we must be conscious of the importance of maintaining freedom of action in the capital markets to balance requirements of production and consumption, ' There are many more allied considerations, Canadians have always been resourceful in their genius for finding the means of compromise and moderation and an increasing awareness will help to solve the problems of the future; The nation has been built on sources of individual enterprise, skills, imagination and creativeness with adequate incentives and rewards, A vital part of our national development must be to preserve adequate scope for these foundations for future growth, ban ors and good citizens, J. P. R, Wadsworth, Vice-President and General Mauager, reviewed the balance sheet, highlights of which are summar ized, an in parti 'The 920d annual statement shows total assets to have exceeded for the first time three billion dollars and the Increase from one year ago amounts to §435,097,000, This is the largest growth in one year In the history of the Bank, The increase in money supply in the banking over during the year was greater than the mand by business and Individuals for bank loans 50 that quick assets represented principally by Government of Canada securities have increased, Commercial and other loans at $1,011,352,000 decreased by $48,920,000, While the number of borrowing customers increased, public, financing to fund temporary loans brought about reductions which more than offset the general increase In most classifications, The Bank's activities in the Personal Loan field, which commenced over 2 Jan ago when the Bank ploneered this service in Canada, have continued at a steadily growl pace, Since the Inception of this plan over one an a quarter million individual loans have been granted, The Bank's participation in the year's activity in the residential construction field Is reflected In an Increase of mortgages insured under the National Housing Act of 1954 of $43,384,000, The total of these loans now on our books stands at $140,215,000, Deposits now total $2,818,400,000, an increase of $411,557,000, Both savings and other deposits reached new highs, while deposits from govern ment sources In the aggregate remained about the same, 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 provides the opportuni of r orting ad th Put 0 ye 'The figures speak for themselves and represent the combined efforts of a group of more than 10,000 men and women, However, even in banking, figures cannot tell the whole story, The day-to-day services to more than two million customers are largely of a personal nature oquiring Hew thule ness, understanding and courtesy, Behind this large group of front line personnel are all those whose roles are equally iinportant in a supporting or staff capacity, In tion, however, to the various roles played during the business day there # the 10s it Yo 3 in which v0 of our men and women play an important am A a EE im the President will wish to join with me in an expression of a ation to all the personnel of the Bank for their ready acceptance of responsi bility and the faithful discharge of duties as good RR a dad ' ' ; ANNUAL STATEMENT HIGHLIGHTS 14 , YEAR ENDED OCTOBER 31, 1958 ¢ Assers | Cash Resources (Including Home | In rama) on § 529,206,848 Government and Other um Securities Call Loans |, "Total Quick Auets on $1,774,712,286 Loans and Discounts wens, 1,011,767,250 Mortgages and H oes Inaum ie . the Nir 1954... § 140,215,347 Customers' Liability under Accep= tances, Guarantees and Letters ' of Credit, as per contra .......... 35,600.79) 8 Total Aol icin $3,016,792,362 . Ta 8 LIABILITIES LL SRR . $2,018,399,750 Acceptances, Guarantees and | Letters of Credit ie 38,600,781 Other Liabilities ........ccccvin w 16624747 Shareholders' Equity Capital Paid Up $ 45,000,000 Rest Account ...... 100,000,000 Undivided Profits 1,167,084 Total Liabilities ................ STATEMENT OF UNDIVIDED PROFITS Profits before Income Taxes ........... $20,162,347 146,147,084 Provision for Income Taxes ............. 9,950,000 Balance available for distribution .. $10,212,347 co RR SRE 7,198,544 Amount carried forward ..............$ 3,013,803 Balance of undivided profits October 31, 1957... 218,201 $ 5,167,084 Transferred to Rest Account .......... 4,000,000 Balance of undivided profits October 31, 1958. uci $1,167,084 --_--_------eMLt The full text of the President's and the General Manager's addresses may be obiained by writing to the Secretary, Head Office, Toronto, THE CANADIAN BANK OF COMMERCE 807 BRANCHES TO SERVE YOU Ye ni THE OSHAWA TIMES, Wednasdey, Desamber 10, 1990 13 /