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Zurich Herald, 1943-12-16, Page 2Bankers Ou Transition From Wur To Peace Vital National Problems Discusses by Bank of Montreal President George W. Spinney Gives "the Frank and Considered Opinion of a Banker" on Nationalization of Banking 126th ANNUAL MEETING Strongly Emphasizes Value of Victory Bonds Both During War 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 "the frank and considered opinion of a banker", the value of Victory Bonds in the war and after, and the need for a healthy, vigorous and f1es- ible economy in 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 bank, as already published, Mr. Spinney spoke as follows: 'On the battle lines through- eut the world, the past year has given us much cause for profound thankfulness. On the home front too the 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 bas 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 vulner- able to the dangers of complae- 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 t 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 struggle and on. our ultimate ability to meet and to solve the debt. You will, I am sure, appre- problems of transition from_.war eiate 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- wh3ah would .not have been pep. ation'. an `eatansale :of .bonds to- sible, but ter the eo-operation arid- individuals' and other non-bank untiring efforts •of millions -of investors. While the continued Canadian workers who have purchase of short terns Govern - brought to the task of war pro- went 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- able 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- st present. The manner in which zation has focussed very special Canadian farmers have met, and attention upon_ the matter of aid- ' are continuing to meet, the dial- ing in the sale of Victory Bonds lenge of vastly increased demands and War Savings Certificates. I upon them, under extreme han- ant proud of our record in these d!icaps of shortage of help and great national undertakings. By scarcity of machinery, is desert.- written word and oral persuasion ing of the praise and gratitude we have done every thing within of the entire nation. I should like our power to encourage deposit - also to say a word concerning ors in 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- merit securities and to pledge power, the railways are handling their incomes to the sante 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 incon- 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- home, for we know from experi- sennel of the railway systems ence that the investor who lodges nay well be proud. his bonds at the bank for safe- keeping is thereby helped and encouraged to perpetuate his savings. GEORGE W. SPINNEY, C.M.G. President THE WARTIME, WORK OF THE BANK "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 et service to meet the changing needs of a nation at war. There has been little change in the vol- ume of loans of both commercial and financial character, but in ether 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 of ration coupon accounts and handled coupons running literally into hundreds of millions. The ramifications of Foreign Ex- change control also have added to our responsibilities. It has been necessary to eope with these situ- ations with a staff which,' by ren- own 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 iiI this sleeting, "In the yeti just closed, out acquisitions of Government secur- ities were an a reduced scale as compared 'with the preceding year, notwithstanding a substan- tial increase in the Government were 968,259 subscriptions.. In the Loan just closed, there' were over 3,000,000 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 post-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 of this spending power on goods, which for some time will be lim- ited in supply, will give rise to an even greater danger of ;infla- tion than now exists. This is a possibility I am not inclinedto accept without reservation, for the desire to save and to Provide for the future is a basic human instinct, and a habit which quick- ly takes root. It' is true hat in the pre-war years many eople were either denied the opportun- ity, or lost the habit, of a,aving. During the war, saving has again become possible, and is now not .only considered eespeetablan 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. VICTORY BONDS IN THE WAR AND AFTER "You probably have read pub - lie statements recently that would imply that the banks 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, Insurance companies, Investment houses, together with all other responsible groups in the community, brought to bear in distributing Victory Bonds into the hands of small buyers and in endeavouring to have them kept t1�, e, The suceess which these efforts have attained can in some degree be measured by the in- creasing number of individual sales which have been made in Victory Loan campagins. In tha First Loan of June, 1941, there 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 and considered opinion of a banker, who like most ether 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- clined to take for granted, would be performccl 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 for busie 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 he is not being adequately served or that his pro- posals, have not revived due eon• sideration by any one bank, there is nothing to prevent him from going' to another. I think it is cafe to say that under our dont- petitive system a refusal of busi- ness by several banks would prob., ably be sufficient evidence that the proposal was not one which, by any streteh of the imagination, Strong' Financial Statement Showing Record Resources Presented by B. G. Gardner, General Manager 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- ner commented briefly as follows: "Our total assets now aggregate $1,313,065,000 as compared with $1,175,319,000 a year ago. Quick as- sets aggregate $1,036,610,000, or 83.51% of all liabilities to the pub - lie. "Notes of and deposits with the Bank of Canada amount to $119,. 856,000 representing approximately 11.39% a all deposit liabilities in Canadian dollars. "Investments, not exceeding mar- ket value, carried at $799,848,000, show an increase during the year of $115,701,000. Thi._s increase was mainly in our holdings of Dominion of Canada Deposit Certificates and other short-term obligations of the Dominion Government. Our hold- ings of Provincial and Municipal securities show some further con- traction reflecting the lower bor- rowing requirements of these be. 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 rivate debt. "In valuing our assets, ample provision has been made for all bad and doubtful debts and for de- preciation of securities. BANK SERVICES "The services of the Bank have been maintained at a high leve] 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- her of Current and Savings Ac- counts and we now provide banking facilities for .about 1,..2e0;-000, cus- tomers under these headings. This increase has been accompanied by an even greater growth in the vol- ume of transactions handled 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 foi 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. During the past five or six months. hoevever, production has remained steady at a high level and it seems reasonable to expect that the in- dex of general business in Canada 9 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- eumstances 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 - nee 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 morethan a "hopping -up operation,�� For if a 'govern- mental bureau becomes the only source of day-to-day credit ae- commodatioa for Canadian indus- try and agriculture, the Canadian economy will have already lost its independence regardless of the extent to grhich any field of en- deavour may continue to retain the outward appearance of free enterprise. This, I suggest, is a point that employees, as well as owners and management, may ponder. For if the Government, directly or indirectly, is to attain control of the entire produetive facilities of the tountry, s°reh an important element• in production as labour cannot nossi ilY hope that the vast re rintenneften in- (Continued on fo lowirg Page) • 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 hours and -have performed their many and varied duties with courtesy, efficiency and 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 a n d 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 in which our women clerks, both perm- anent and temporary, have risen to the occasion. They are doing Splendid work and, without them, either we could not have carried on our full banking ser- vices or we would have been forced to ask for the deferment from military* duty of some of our experienced personnel." —B. C. Gardner• at Bank of Montreal Annual Meeting. will not show 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 wan' 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 af- fasted 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 in the level of construc- tion activity and the use of cone struction materials. On the other hand, the demand for raw mater. Isis for the new productive facii- ities brought into being has increased. Moreover, as the war progresses it brings changes in the requirements of the fighting forces which necessitate re -adjust- ment in the employment of our industrial facilities. "With production and employ- ment at a high level, retail trade has been very active but some signs of a moderate tapering off are in evidence. This is in part a consequence of curtailed inventor- ies of consumers' goods, particu- larly in t he 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, 62% of those of military age have volunteered for and are now on active service. This 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 unable 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, 58% 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- selves hem selves well in their new -unties. "It is a source of keen sat'isfac- ` tion to us that a number of our men now serving their King and Country have won distinction and decorations on the field of battle. Ten members of our staff are list- ed isted as prisoners of war and ten axe 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 be 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 and 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 return. It is our expectation that because of the duration of hostilities and their long absence Trow 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 assured of•a warm welcome back to our service. CALLS FOR CLEAR T IINAING ON POST -.WAR PLANNING "Underlying all the talking and thinking about post-war planning which we hear so =oh of to -day is the determination that out of this war there must come a better Canada; auci that those who have fought and worked 'for victory must be as- sured of an opportunity as free and independent citizens to ob- tain and enjoy for themselves and their children the material benefits of the freedom they have helped to defend, No one will deny that in the accomp- lishment of these purposes there will be a place for governmental measures wisely conceived and administered. But I suggest that the real basis for full employ- went and decent living stand- ards is a high and increasing productivity that will bo pos- sible only in a healthy, vigor- ous and flexible economy. We shall be be great need of init- • l.ative, • imagination; and invent- ive nventive genius, And as we value. our political freedom laid our econ- omit future, we .must guard against the doctrine that the way to achieve the postwar objectives we seek 'is to confine the Canadian economy within the strait -jacket of government- al regulation, ownership and control Such a doctrine ignores political and economic realities as well as some of the persist- ent frailties of human nature, and rests upon the assumption that government ownership and control are inherently `right' and individual ownership and enterprise inherently 'wrong.' My hope would be that Canad- ians will never, through indif- ference er lack of clear think- ing, acquiesce in the creation of au economic order in which enterprise and initiative, and the spur of competition, are re- gardod as of little value anal low reputation. "The whole subjeet is ane at vital national importance and i am confident that you, as pro- prietors of the Bank, would feel that it would have been remiss on my part if at the proper time and place, I had failed to state my views. This seems to ane to be a proper time and a proper place." —George •VV. ,Spinney at ]lank of Montreal Annual Meeting.