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HomeMy WebLinkAboutThe Seaforth News, 1943-12-16, Page 6Bankers On Transition From ' ar To Peace Vital Natio'i,al Problem's Discussed by Bank of Montreal President George W. Spinney Gives "the Frank and Co sidered Opinion of a Banker" on Nationalization of Banking With ANNUAL MEETING Strongly Emphasizes Value of Victory Bonds Both During W and After Problems of vital interest to Canadians in the transition from war to peace were discussed at the 126th annual meeting of Bank of Montreal shareholders yesterday by George W. Spinney, C.M,G., president of the institution. Among the subjects he dealt with were nationalization of banking on which he gave what he described as "thel4rank and considered opinion of a banker", the value of Victory Bonds in the war and after, and the need for a healthy, vigorous and flex- ible economy m attaining a high and increasing productivity essential for full employment and decent living standards. Following a presentation of the profit and loss statement of the bunk, as already published, Mr. Spinney spoke as follows: "On the battle lines through- out the world, the past year has given us much cause for profound thankfulness. On the home front too tate year has been one of achievement. But I think that any realistic view of the local scene must lead to the conclusion that the threat of inflation with all its attendant dislocation and hardship has in no way diminish- ed in the past twelve months but has, if anything, increased. More- over, I do not think it too much to say that by reason of the very successes of the Allied forces, we in Canada are peculiarly vniner- abie to the dangers of complac- ency with a consequent relaxation of our energies at a time when our full efforts should be sus- tained. In brief, I think we have a situation in which It is neces- sary for Canadians to draw upon their reserves of sound common sense and their capacity for clear thinking and self-discipline. For it is at a time such as the present that these qualities, displayed by those at home, can have a telling effect on the duration of the dit'uggle and on our ultimate ability to meet and to solve the debt. You will, I am sure, appre- problems of transition from war date my point when I say this is to peace. a development we welcome, since "Much has been said, and right- it is a direct reflection of the ly so, concerning the spectacular • national effort to control infla- wartime achievements of Cana- tion by financing the war to the dian industry — achievements *. greatest possible extent by tax - which would not have been pos. ation and the sale of bonds to sible but for the co-operation and individuals and other non-bank untiring efforts of millions of investor's. While the continued Canadian workers who have purchase of short terns Govern - brought to the task of war pro- ment securities is a wartime duty duction the fullest measure of which the Bank is glad to assume their energies and skill. I should to• the extent required, we are at also like to pay tribute to those one with the Minister of Finance responsible for no less remark- in his desire to see that the neces- alble accomplishments in two sity for this expansionary type of other fields — agriculture and financing is kept to the practical transportation. At no time in the minimum. war has food occupied so vitally "Nor has our attitude in this important a place in the armoury regard been merely one of passive of the United Nations as it does agreement. For our whole organi- at present. The manner in which nation has focussed very special Canadian farmers have met, and attention upon. the matter of aid - are continuing to meet, the chal- ing in the sale of Victory Bonds lenge of vastly increased demands and War Savings Certificates. I upon them, under extreme ban- am proud of our record in these dieaps of shortage of help and great national undertakings. By scarcity of machinery, is descry- written word and oral persuasioe ing of the praise and gratitude we have done everything within of the entire nation. I should like our power to encourage deposit - also to say a word concerning ors hi this Bank to use their funds the services rendered by our two to the utmost limit of their abil- great railroad systems. Despite ity in the purchase of Govern - scarcity of equipment and man- ment securities and to pledge power, the railways are handling their incomes to the same end. freight and passenger traffic in But that is not all. We have all-time record volume. The per- established low rates and special formance of such a task, under arrangements designed to direct trying conditions of operation, these securities into our hands and with relatively little ineon- for safekeeping. The significance venience to shippers of freight of this service goes beyond the and to the travelling public, is an elimination of the obvious risks accomplishment of which the in keeping securities in one's own management and operating per- hone, for we know from experi- aonnel of the railway systems encs that the investor who lodges may well be proud. his bonds at the bank for safe - THE WARTIME WORK OF keeping is thereby helped and THE SANK encouraged to perpetuate his savings. "I think it would be quite in order for me now to draw atten- tion to the manner in which your Bank has endeavoured in a spirit ed service to meet the changing needs of a nation at war. There bas been little change in the vol- ume of loans of both connnercial and financial character, but in other directions the work has vastly expanded. Transactions in cheques and deposits, Victory Bonds and relative coupons, pour- ing through our hands, have been immeasurably heavier than be- fore the. war. Our safekeeping facilities have been under a severe strain. We have already opened thousands af ration coupon accounts and handled coupons running literally into hundreds of millions. 'rhe ramifications of Foreign. Ex- change control also have added to our responsibilities. It has heen necessary to cope with these situ - idiom with a staff which, by rea. son of heavy enlistments, is seri- ously depleted in its experienced ranks. Of their diligence and' loyalty the General Manager will have something to say later on in this meeting. "In the year just closed, our acquisitions. of Government secur- ities were on a reduced scale as nompared with the preceding year, notwithstanding a substan- tial increase in the Government 0 GEORGE W. SPINNEY, President r wy VICTORY BONDS IN THE WAR AND AFTER "You probably have read pub- lic statements recently that would imply that the hanks and other large institutions have an interest in depriving the individual of his Victory Bonds in accordance with some deep -laid and . sinister scheme of concentration of wealth. Such statements, it seems to me, cannot be the result of a thoroughly informed and unbias- ed appraisal of the facts. First hand knowledge enables me to speak on this point with some authority. As Dominion Chair- man of our Victory Loan organi- zation for a period of two and a half years, I was able to observe at close range the thoughtful planning and tireless energy which the Banks, Trust and Loan companies, Insurauee companies, Investment houses, together with all other responsible groups in the community, brought to bear in distributing Victory Donde into the hands of small hnyere and in endeavouring to have them kept there. The success which these efforts have attained can in some degree he measured by the in- creasing nonibett of individual sales which have been made in Victory Loan campagins. In the First Loen of June, 1941, there were 968,269 subscriptions, In the Loan just closed, there were over 8,000,000 sales, or say one sale for every four persons in the Dominion. "In my view the widest possible distribution of Victory Bonds in public hands, apart from its neces- sity under present conditions, has tremendous poet -war significance. For if the national debt is dis- tributed among all sections of the community, the processes of re- payment will be eased and facili- tated. Moreover, the reserve of purchasing power, built up to -day by 'hundreds of thousands of Canadians through the purchase of Victory Bonds, can play a very real and important part in stabil- izing the post-war economy and maintaining employment. "I know there have been some fears. expressed that there will be a rush on the part of individuals to cash their bonds at the end of the war and that the impact mds, of this spending power on which for some time will be lim- ited in supply, will give rise to an even greater clanger of infla- tion than now exists. This is a possibility Im not inclined to Accept without reservation, for the desire to save and to provide for the future is a basic human instinct, and a habit which quiek- ly takes root. It is true that in the • pre-war years many people were either denied the opportun- ity, or lost the habit, of saving. During the war, saving has again become poetible, and is now not only considered respectable but has been elevated to the position of a patriotic duty. Many people are enjoying for the first time the feeling of independence which only a reserve of savings can bring. I suggest that the will to save can, in large measure, be projected into the post-war years if Canadians see to it that the act of saving continues to be respect- able and that the savings of the individual will be respected. THE INDIVIDUAL AND GOV- ERNMENTAL CONTROL. "At this point I think it would be quite in order to make some reference to the much discussed subject of nationalization of banking. For it seems to me that the frank anti considered opinion of a banker, who like most other Canadian bankers has come up 'the hard way,' is at least as worthy of a hearing as the views of ardent exponents of theories of state ownership. Let me say, therefore, as a banker, and as a Canadian who has the interests of his country at heart, that I am at a loss to understand what good object nationalization of banking would achieve. Indeed I am con- vinced that such a move would be productive of consequences gravely detrimental to the com- munity at large. "To be more specific, I cannot see that under nationalization the many and varied banking serv- ices on which the entire business and commercial organization de- pends, and which everyone is in - dined to take for granted, would be performed with greater effi- ciency and despatch than they are now. I find it difficult to believe that the individual in his dealings with a Government- owned Bank would have a greater assurance of privacy or personal attention to his particular prob- lems than he has at present. May I say too that I can find no need for nationalization in order to place the nation's supply of money under governmental regulation, since the regulation of the money supply is a, function already per- formed by the Government-owned central bank. "Our position to -day is that there are ten banks actively com- peting with each other fox busi- ness; and I can assure you that this competition is real and in- tensive, Under these circum- stances if an individual has rea- son to believe that be is not being adequately served or that hie pro- posals have not revived due con- sideration by any one bank, there is nothing to prevent him from going to another. I think it le safe to say that under our com- petitive system a refusal of busi- ness by several banks would prob. eaibly be sufficient evidence that the proposal was not one which, by say stretch of the imagination, Strong Pinanctl Statement Showing Record Resources Presented by IL C. Gardner, General fan,: ger BANK SERVING 1,200,000' CUSTOMERS Staff Now 58% Women -- Relieving Many Men for Military Duty With resources at the highest figure in the bank's history, the financial statement present- -ed to Bank of Montreal shareholders yesterday by B. C. Gardner, general manager, reflected unprecedented strength and indicated the extent to which the institution was participating in the nation's war effort. in submitting the 126th annual statement of the Bank, Mr. Gard. net' eommonted briefly as follows: "Our total, assets now aggregate $1,818,066,000 as compared with $1,176,319,000 a year ago, Quick as- sets aggregate $1,030;610,000, or 88.81% of all liabilities to the put- Iic, "Notes of and 'deposits with the Bank of Canada amount to $119,- 866,000 representing approximately 11,39%8 of all deposit liabilities in Canadian dollars. "Investments, not exceeding mar- ket value, carried at $799,848,000, show an increase during the year of $116,701,000. This increase was mainly in our holdings of Dominion of Canada Deposit Certificates and other short-term obligations of the Dominion Government. Our hold - lugs of Provincial and Municipal securities show some further con- traction reflecting the lower bor- rowing requirements of these bo- dies. "Current Loans and Discounts are little changed from the prev- ious year-end figures. Our Com- mercial Loans continue to reflect the reduction in inventories, the shortening of credit terms, the re- duced activities of companies en- gaged in the financing of durable consumer goods, such as motor cars, the inactivity of financial markets, and the reduction of pri- vate debt. "In valuing our assets, ample provision has been made... for all bad and doubtful debts and for de- preciation of securities. SANK SERVICES "The services of the Bank have been maintained at a high level of efficiency in spite of the greatly increased volume of routine result- ing from wartime conditions. The rise in bank deposits has been ac- companied by a growth in the num- ber of Current and Savings Ac- counts and we now provide banking facilities for about 1,200,000 eus- tanrers under these headings. This increase has been accompanied by au even greater growth in the vol- ume of transactions haudled at our branches. In the loaning field the Bank has supplied, with Government co- operation, the necessary funds to finance operations of a character that would normally hardly qualify for banking assistance. "In all of these operations we have little or no criticism from those who use our services and I should like to pay a tribute to our customers and to the public gen- erally for their cheerful co-oper- ation in these difficult times. BUSINESS ACTIVITY "The volume of Canadian bus- iness activity reached new peaks in the twelve months just closed. Durtng the past five or six months. however, production has remained steady at a high level and It seems reasonable to expect that the in- dex of general business in Canada could conform to good banking principles. "The alternative which the pro- ponents of nationalization offer - in exchange for the present sys- tem of competitive banking is a banking monopoly under govern- mental control. Under such cir- cumstances once the borrowing requirements of a customer were denied, for any reason whatever, he would have no recourse ex- cept through the channels of spe- cial pleading or political - influ- ence, - "One of the most prominent proponents of nationalizd bank- ing recently stated, as one of the points in its favour, that control of finance is a most essential step to control of the whole economy. With the truth of this statement as applied to nationalization of the banks I would most definitely agree. Set up a government monopoly of banking in Canada and the socialization of the rest of the economy would scarcely be more than a "mopping -up operation." For if a govern- mental bureau becomes the only source of day-to-day credit ac- commodation for Canadian indus- try and agriculture, the Canadian economy will have already lost its independence regardless of the extent to which any field of en- deavour may continue to retain the outward appearance of free enterprise. This, 7 suggest, is a point that employees, as well as owners and management, may ponder. For if the Government, directly or indirectly, is til attain control of the entire productive facilities of the country, suit an important element in production as labour eann:,t noesibly hone that the vast 1'egimeniat'en in - (Continued an following Pale) B. C. GARDNER General Manager STAFF UNDER HEAVY WARTIME PRESSURE "By all standards the past year has not been an easy one for the Staff, who have worked long hour's and have performed their many and varied duties with courtesy, efficiencyand despatch. I cannot speak too highly of their loyal services. The increased volume of routine plus special wartime duties have entailed many extra hours of work. Especially are we mindful of the heavy pressure upon our :Managers, Accountants and other senior officers who have had to train inexperienced em- ployees in the handling of rel- atively senior posts, very often on short notice. We have been impressed with the way M which our women clerks, both perm- anent and temporary, have risen to the occasion. They are doing gplenclid work and, without them, either we could not have carried on our full banking ser- vices dr we would have been forced to ask for the deferment from military duty of some of our experienced personnel." ---B, C. Gardner et Bank of Montreal Annual Meeting. 9 teeter' the output of Canadian in- dustries, such as gold mining, lumbering and newsprint, "The period of huge additions to wartime manufacturing plants ap- pears to be past, with consequent reduction inthe level of construe. tion activity .and the use 00 eon. struetioe materials. On, the other hand, the demand for raw mater- ials for the new productive facile !ties brought into being has increased. Moreover, as the war progresses it brings changes in the requirements of 'the fighting forces which necessitate re -adjust - latent in the employment of our industrial facilities. will not .allow any sharp increase in the immediate future. Basic- ally, this reflects the fact that we have reached, for all practical pur- poses, a condition of full employ- ment of human -and material re- sources. This does not mean that more intensive use of existing re- sources could not result in some additions to our aggregate output. It does, however, suggest that for the duration of the war at least, any very marked advance in one branch of industrial production is likely to be at the expense of some other department of the economy. Already lack of manpower has at "With production and employ. ment at a high level, retail trade has leen very active but some signs of a moderate tapering off are in evidence. This is in part a consequence of curtailed inventor - les of consumers' goods, particle. laxly in th a durable goods categories, and is also the result of restraining influences of taxation and the voluntary savings effort undertaken by the Canadian people. STAFF "Of our male staff, 02% of those 00 military age have volunteered for and are now on active service. 'Phis total includes a large number not subject to military call-up be- cause of their marital status, while a number of others have volunteer- ed but have been enable to qualify on medical grounds, In August, 1939, 64% of our staff were of- ficers, 30% stenographers and women clerks and 6% messengers. To -day the figures are 37% officers, GS g's stenographers and women clerks and 5% messengers. I think you will agree that this is an im- portant change in the composition of our staff, "We have been asked for and have loaned additional officers to the Government and we are glad to know they are acquitting them= selve6 well in their new duties. "It le a source of keen satisfac- tion to us that a number of our men now serving their Bing and. Country have won distinction and decorations on the field of battle. Ten members of our staff are list- ed as prisoners of war and ten are reported as missing. Our thoughts are with their relatives and friends and it is our earnest hope that the day is not far distant when they will he returned safely to their families. I have to record with deep regret that thirty-six of our men have paid the supreme sacrifice. Their memory will en- rich the traditions of our service and our deepest sympathy goes out to their relatives and friends." "I should mention that already we have given a great deal of thought anti. study to the question of reabsorbing our men now on Military Service and plans have been prepared to enable us to fit them into their rightful places in our organization when they velem It is our expectation that because of the duration of hostilities and their long absence from civilian life, members of our staff on active service may require assistance in re-establishing themselves in civ- ilian life and we are, therefore, prepared to provide financial help where the need is clearly indicated. They may be es -mired of a warm welcome bink to our service. CALLS FOR CLEAR THINNING Oil POST-WAR PLAIUUiU "Underlying all the talking and thiektng about postwar planning which we hear so entch of te,-clay is the determination that out at this war there must roma a better Canada; and that those who ' have foeght and worked for victory must. be as- sured of an opportunity as floe and independent citizens to ob- tain and enjoy for thrntsolves and their children the material benefits of the freedom they have helped to defend. No ono will deny that in the ace0mp- lishment of these purposes there will be a place for governmonlal measures Nicely eoneeiVed and administered. Bet I suggest that the real basis for full entploy- ment and decent living stand- ards Is a high and increasing productivity that will be pos- sible only in a healthy, vigor- ous and flexible economy. We shall be in great need of init- iative, imagination and invent - ism genius. And es wo value our political freedom and our 00011- 0mta, furore, tie trust guard s8a.iust the doetrinc that the wa.y to achieve the post'w'ar objectives we seek to to confine OW Canadian e0on0nly within the strait -jacket of government- al regulation, ownership and control. Such a doctrine ignores political and economic, realities as well as tome o1 the persist- ent frailties of lumen nature, end rents upon the tt:•suniptiou that government ownership and control are inherently 'right' and individual orvnerehip and enterprise 111110romly 'wrong•.' hay hope would he Ilial Cauad- tans will never, Iln'ough intli1' Terence or Melt of cletir ihiulo- ins;, acquiesce in the er"atintt of an-oanotnie order in which emeriti -lee and initiative, and the spun' of contpa,titiou, are re- garded as of little value and low repeinl101,. "Tile whota1 subject is one af• vital national intporiance tutti. I 111n confident than. you, as pr0- prielots of the Bruck. would Biel I.1151 1t would have tern remise 011 my part if 1)1 the proper time and dinar, 1 had foiled to state my Views. This seams to - Me in be a propel' titno Mid tt prnper place," a"orgc W. Sjrlauey at Hank, of 'Stintatreat Annual AInail pg,