The Seaforth News, 1958-01-30, Page 7Annuul Meeting of Shureholders
The Royal Ban of Canada
James Muir declares Electors
and Government` jointly
responsible with Business and
Labour in curbing inflation
Creation of new financial institution suggested
to fill need for more adequate long term
export financing. Time ripe for Money Market
to assume more positive function.
Although the round-robin of
cost and price rises is undoubted-
ly an inflationary factor, even
the best- intentions on the part
of both labour and management
cannot long resist an inflation-
ary environment created by ex-
cess spending through errors or
inefficiency of monetary and fis-
cal management, declared James
Muir, Chairman and President
of the Royal Bank of Canada
in his address at the bank's an-
nual meeting in Montreal on
Thursday, January 9th. "In such
a situation, wages would rise.
even without trade unions to
press for them," said Mr. Muir.
"The employer finds that to in-
crease production in response to
rising demands, he must bid for
labour at a. higher price. He may
often find it necessary to raise
prices, but these higher prices
can be paid only because the
original inflationary environment
makes it possible for his cus-
tomers to pay them. Under these
conditions, wages and profits rise
together, but they are symptoms
rather than the cause of'Tnflation.
"However, once the circle is
broken, by effective monetary
and fiscal policy, mutual res-
traint is clearly in order. Profits
fall first and unions might well
at this point temper the wind
to the shorn lamb. In fact, if
we are to obtain not merely full
employment and growth, but
stability as well, the exercise of
restraint in making demands
mustbecome the responsibility
not only of labour and business,
but of electorate and government
as well."
FREE EXCHANGE RATE
Mr. Muir mentioned that
among the 'built-in stabilizers' of
the 'economy is Canada's free
foreign exchange rate, and, point-
ed out that in the absence of
flexible price levels and with a
domestice fiscal policy geared to
'full employment', the floating
exchange rate provides the only
mechanism of adjustment, other
than rigid exchange controls, to
the ever-changing requirements
for equilibrium in Canada's in-
ternational accounts. "It is some-
times argued that the investment
flow covers our trade deficit,"
said Mr. Muir, "and that any
stoppage of this flow would be
disastrous. But, we should re-
member first•that a large part of
our imports are the result of
the inflow of investment funds;
and, second, that, should foreign
Investment (a n d investment -
induced imports) fall • off, our
flexible exchange rate provides
an automatic device for adjust-
ing any deficit remaining in our
trade in goods and services with
the outside world."
HELP FOR EXPORTERS
Mr. Muir pointed out that de-
serving businessmen seeking. ex-
port markets may be hampered
by inadequate export financing
compared with that available to
their foreign competitors. "As
matters stand at the moment," he
explained, "we have an absurd
situation. A Canadian industry,
for example, obtains . an order
from abroad amounting to mil-
lions of dollars and the export
Credits Insurance Corporation
guarantees to any lender the re-
payment of this paper over a
period of years. However, when
the exporter considers his own
SMALL BORROWER
NOT NEGLECTED
"Generally speaking, banks
are in position to take care
of the legitimate needs of all
credit -worthy small to moder-
ate borrowers," said Mr. Muir.
"In the past few months, how-
ever, there has been a great
to-do about scarcity of credit
for this sector of our economy;
and government authorities
have apparently become ex-
ercised about it. Frankly, I.
am baffled when I read of
these, things and I cannot es-
cape the impression that the
whole ease must be grossly
exaggerated, or that, perhaps
without realizing it, we may
be witnessing an evolution in
this field. It may be that a
fundamental change is taking
place in our economy and that
the small merchant is experi-
encing something that credit
cannot help. There is some
evidence not only that sales
outlets are becoming more and
more concentrated, but that
sales and production units are
developing an increasingly
close relationship with one
another.
"From the inception of the
tight money policy, your bank
has made it clear by word of
mouth and by repeated writ-
ten communications to all of
our branches that they were
still required to deal sympa-
thetically with applications for
personal and small business
loans.
"In spite of our lending pol-
icy there has been a reduction
not only in the number of, bor-
rowers but a substantial re
duction as well in the amount
borrowed in this particular
field. As far as this bank is
concerned, the credit facilities
have been available, our Man-
agers have known of this p01
icy, and yet it would . seem
that small borrowers have not
taken advantage of their op-
portunities to obtain credit"
financing, we have no device
within this country suitable to
his needs.
"What he requires is the dis-
count of paper maturing over
a period of years or a term loan
for a similar period secured by
that paper. During a period of
tight money, the chartered banks
do not have available in any
quantity funds for this purpose.
The result has been that some
of our Canadian corporations
have had to go outside the coun-
try to arrange their credit re-
quirements with non -Canadian
banks. We have actually seen
cases in which the absurdity
arises that a Canadian bank is
asked to lend its customer money
which he, in turn, deposits with
anon -Canadian bank to facilitate
that foreign bank's lending
operations.
"I would liketo suggest that
a consortium of Canadian banks,
Canadian exporters, and perhaps
other interests, should consider
the formation of a company with
power to discount commercial
paper covering the kind of long-
term export transactions which
I have here described."
Total lksseis
have now passed
$33/ billion mark
K. M, Sedgewick, General
Manager, noted that not only
had the assets of the Royal Bank
reached the imposing total of
$3,760,544,617, but that mortgages
under the NationaliAHousing Act
had increased by more than
$30,000,000, reaching a figure of
$216,590,000 which represents ap-
proximately 38% of the total for
all Canadian banks.
Mr. Sedgewick reported the
year's net profits at $13,919,550,
an increase of 11.6% over the
previous year, and that capital
funds now stand at more than
$202,000,000. "The Balance Sheet
confirms that the cash position of
the bank is strong," he said. "As-
sets in this form, coupled with
Canadian. Government Treasury
Bills and Day -to -Day Loans rep-
resent 22.5% of the bank's 'ag-
gregate liabilities to the public."
"Because of the peroid of so-
called digestion through which
we are now passing," remarked
Mr. Sedgewick," we look for no
particular increased demands
from industry as a whole, but
we wish to emphasize that the
real needs of our credit -worthy
customers, small or large, are of
concern to us, and are needs
whichwill be satisfied within the.
limits of our ability."
Discussing the bank's exten-
sive building and renovation
program, Mr. Sedgewick report-
ed that the bank now operates
a system of 821 branches in Can-
ada and 82 abroad — a total of
903, representing an increase of
31 during the past year. Includ-
ed among new branches was one
established at Frobisher Bay, the
first Canadian bank to be open-
ed in the Arctic Islands.
ROYAL BANK ABROAD
"Due to experience gained in
more than 50 years since our
first branch was established
abroad, we arL well equipped to
deal with the peculiarities of in-
ternational banking," said Mr.
Sedgewick. Referring to the Brit-
ish West Indies area where im-
portant constitutional develop-
ments are taking, place, Mr.
Sedgewick mentioned that the
bank is playing a part in assist-
ing in the economic growth of
this newly developing member
of the Commonwealth family. He
also spoke of the unusual op-
portunities which exist for
young men with the aptitude and
desire for a career in interna-
tional
nternational banking, pointing out that
there are openings in the bank
for a select number of such
young men each year.
BROADER MONEY MARKET
Four years ago, Mr. Muir re-
called, he had mentioned that
it might be worth while to in-
vestigate the possibilities of a
short-term money market •in
Canada. "Such a market," he
said, "did come into being about
six months later. We should, I
believe, now study the possibili-
ties
of broadening the base of
our money, market. As of now,
the only instruments available
for use within this market are
Government Treasury Bilis and
government bonds with a matur-
ity not exceeding three years.
What 3 have particularly in mind
is a study of possible steps to
achieve the stature of a real
money market, that is, a market
that would include commercial
paper in the form of bankers'
acceptances. Useful as our pres-
ent money market is, it would,
I believe, be worthwhile to de-
termine whether or not it is
ready by this time to outgrow
its swaddling clothes and become
a more lusty and an increasingly
independent part of our financial
system."
Royal ,='ask Head
Reviews Past,
Envisions Future
Mr. James Muir, Chairman
and President, said: "I shall not
attempt today to determine
whether in the gobbledy-gook
of economic forecasting we are
having a 'recession' or a 'rolling
readjustment'. Whatever we call
the phenomenon it is abundant-
ly clear that, though all infla-
tionary forces have not disap-
peared, we have reached what
seems to be the end of the latest
Inflationary surge. A mild slump
at this time should cause little
surprise or apprehension: it
would be unrealistic to expect
our economy to go on expand-
ing indefinitely, without some
kind of breathing spell.
"Lower interest rates do not
mean that money has become"°.
really 'easy' and it is unlikely,
in my view, that the time is yet
ripe to adopt either deficit finan-
cing by government or easy
moneypolicies by `the monetary
authority and - the • chartered
banks. It would seem that now,
as in 1953 and 1954, price ad-
justments are necessary to main-
tain stability and prosperity at
home and to ensure our compet-'
#tire position in world markets.
The fact that lower taw material
eosts have not been reflected in
retail prices means today, as in
that earlier period, that we have
suffered not only from, open in-
flation but from a concealed in-
flation of •production and distri-
bution costs. The . process of
healthy adjustment would seem
now to require the elimination
through price reductions of in-
flated production and distribu-
tion costs. A tight money policy
has inhibited inflation and has
indeed been instrumental in
breaking the circle and ending,
for the time at least, the round-
robin of cost and price increases
that can continue' indefinitely
only if the money supply or the
velocity of the monetary circu-
lation is allowed to increase."
* ' o
"Four years ago I mentioned
that it might be worth while to -
investigate the possibilities of a
short-term money market in•Ca-
nada. Such 'a market did come
into being about six months
• later. We should, I believe, now
.study the possibilities of :broad-
ening the base of our money
market. As of now the . only in-
struments available ' foruse
within il'l's market are , Govern-
Ment Treasury Bills and Govern-
ment Bonds with a maturity not
exceeding three;years. What I
have particularly in mind is a
study of possible to achieve
the stature of a real 1'„oney mar-
ket, that is, a market that would
Include commercial paper in the
form of bankers' acceptances.
Useful as our present money
market is, it would, I believe,
be worthwhile to determine
whether or not it is ready by
this time to outgrow its swad-
- dling clothes and become a more
lusty and an increasingly inde-
pendent part of our financial
system.
"Today, in contrast to the high
spirits and great expectations of
a few years ago, we find a grow-
ing uncertainty and lack of en-
thusiasm. This is an, extreme
that we should avoid. After all,
we have the same country with
the same people,` -the same enor-
mous natural resources, and the
same potential for prosperity
and economic growth.. There is
no reason, therefore, for a pes-
simism born of a temporary
check to the'allnost unbelievable
prosperity and expansion of the
past few years, Let us then re-
member the principles of ser-
vice and humility which, in pros-
perity, we tend sometimes to
forget. But let us remember
them, not in a spirit of gloom
and guilt, but as sources of even
greater strength in Canada's
continuous and inspiring strug-
gle towards the great destiny
which, 1 believe, Providence it-
self has ordained for this young,
strong, growing giant of the
north."
Big Business
As R. H. Macy , & Co., Inc.,
began celebrating its 100th year,
a just -published book gives. an
idea of the magnitude of the
giant enterprise.
Besides the parent store (19
floors, 163 selling depts.), Macy's
numbers 32 other complete de-
paslment stores, including five
branches in the New York area.
Its •30,000 employes sell mer-
chandise at a $450 million -a -year
clip, packing it in 4,848 miles
of cotton twine and 5.7 million
boxes.
The whole incredible story of
the growth of this greatest of
emporia is told in a new book
by Margaret Case Harriman,
"And the Price Is Right.” She
tells Macy's story in terms of
its people from Rowland H.
Macy, the seafaring Quaker who
started it all, to autocratic "Mr.
"Jesse" Straus, who turned it
into a public corporation in 1919.
Macy set up his store in 1858
at the then -residential corner of
Fourteenth Street and Sixth
Avenue, ("Come, come, time,
time, come, come, time, time,
the time has come," roared one
of his early newspaper ads.) The
Strauss family, which had oper-
ated a china concession for Macy,
became partners in 1888, after
the founder's death, and owners
'in 1896. Six years later, the
Strauses moved Macy's uptown
to Herald Square, where bright
merchandising — plus a long-
standing policy of 6 per cent off
for cash - sent Macy's rocket-
ing to success.
'There, beginning in the 1920s,
Kenneth Collins left off teaching
English at Harvard to organize
the group of bright young
women who wrote the ads that
gave Macy's its modern stance.
One was Bernice Fitz -Gibbon,
who wrote the famous slogan:
"It's smart to be thrifty."
Mrs. Harriman •does not over-
look such minor characters as
Toni Maloney, a porter "with the
shamrock in every syllable." A
male customer once asked Tom
if he could point out the Chintz
Room. "That I can," said Tom,
escorting him to a door labeled
"Men."
She also lists the distinguished
Macy graduates — fiscal expert
Beardsley Ruml, hat merchant
Lilly Dacha, poetess Margaret
Fishback, to name a few. An-
other later won fame on Broad-
Way. "I walked out at 1 o'clock
one day and never went back,"
says .actor Tom Ewell. Macy's
nevertheless sent him a full
week's pay. "I guess they didn't
miss me," Ewell adds. .
—From NEWSWEEK.
Unafraid Of Toil
People in the Agricultural Ex-
tension Service at 'Athens
(Georgia) are quite elated this
week, and understandably so,
over the accomplishments of a
4-11 Club member in growing
sweet potatoes.
Freddie McLeod had a net re-
turn of $1,152 from two acres
of sweet potatoes. Freddie is
just 13, but he .prepared and
cultivated his crop with all the
forethought and care of a juve-
nile Burbank.
Naturally, he used certified
seed. The two acres received
heavy,Japplieations of fertilizer,
and the crop was hoed twice and
cultivated twice. It was properly
dusted to keep insects away.
Freddie put the money in the
bank, against the day when he
attends college. The Extension
Service happily observes that
Freddie, rt the rate he's going,
should L3 able to send money
home instead of writing home for
help.
In these days of juvenile way-
wardness and the aversion of
many boys for anything resem-
bling toil, the example of Fred-
die McLeod shines like a beacon.
Georgia could use to advantage
many more just like him.
—Atlanta Journal.
MERRY MENAGERIE
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How Can 1?
By Anne Ashley
Q. Sow can I relieve a sore
throat?
A. A remedy for sore throat
is to gargle with a warm. solu-
tion of salt water. Or, dissolve
one teaspoonful flour of sulphur
in hot milk and sip slowly.
Q. How can I clean nickel
faucets?
A. Try using lemon rinds, af-
ter squeezing out the juice. Rub
thoroughly, then wash, and pol-
ish with a dry cloth. The tau-
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Q. How can I prevent rubber
boots from cracking?
A. Rubber boots will not crack
and the air will be permitted to
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if the boots are held erect with
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Q. How can I overcome the
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a bottle?
A. All necessary is to push
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Q. How can I prevent starch
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A. Starch will not stick if a
drop or two of kerosene, or a
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basin of starch and then allowed
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ISSUE 4 — 1958
MEDICAL
READ THIS — EVERY SUFFERER OF
RHEUMATIC PAINS OR NEURITIS SHOULD
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