\^J H -Nero $ork Halt (Eullege of Agriculture At GJoroell Iniuersitg 3tl)ara. N. $. ffiibrarg Cornell University Library HG5152.F4 Capital investments in Canada; some facts 3 1924 014 000 099 The original of this book is in the Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924014000099 H^HE Publishers will feel obliged if the Editor will kindly cause a copy of the issue containing a review of this Book to be forwarded to them. MONETARY TIMES OF CANADA Publishing Price, $2.50. / s-^v^y; tHt N, Y. NEW 3 BliHEA'J Capital Investments in Canada Some Facts and Figures Respecting one of the Most Attractive Investment Fields in the World. By Fred. W. Field first edition PUBLISHED BY The Monetary Times of Canada MONTREAL TORONTO WINNIPEG VANCOUVER LONDON, ENG. Entered according to Act of the Parliament of Canada, in the year one thousand nine hundred and eleven, by The Monetary Times Printing Company of Canada, Limited, at the Department of Agriculture. Prefatory Note* No better service can be performed for Canada than to make truthful statements from time to time regarding her industrial position and the industrial possibilities arising out of her natural resources. I am, therefore, sure that the publication in book form of Mr. Field's articles in The Monetary Times will be most useful. It is not often that an abundant supply of information on such a wide range of subjects connected with the develop- ment of Canada has been brought together in such a small compass. In saying this I do not necessarily endorse his opinions or statements of fact further than to express the conviction that the intention of the series of articles is to set forth fairly the opportunities afforded to the investor by this country. B. E. Walker. Toronto. ♦Sir Edmund Walker, C.V.O., LL.D., D.C.L. Author's Note In the following pages will be found the first authoritative and approximately correct data regarding the investment of British; American and foreign capital in Canada. While naturally open to some revision, the claim may be made safely that no pains have beerr spared to make it of commanding value and accuracy to bankers, financiers, investors, industrial and com- mercial interests. The subject has rapidly become one of considerable and general importance, the develop- ment of the Dominion depending so largely upon the introduction of capital from abroad. It is also one of the most attractive phases of the upbuilding of a nation, which is diverting streams of capital and labor from their old channels in five continents. Many authorities have been quoted in this volume in order that the greatest possible information on the subject of investments in Canada may be contained between these covers. Fred. W. Field. Toronto, September, 191 1. Contents PAGE British Investments in Canada 9 American Investments in Canada 22 Foreign Investments in Canada 35 French Investments in Canada 42 German Investments in Canada 50 Other Countries' Investments in Canada 58 Canadian Government Borrowings in London .... 63 Municipal Borrowings in London 74 The Financing of Canadian Railroads 82 Industrial Investments in Canada 91 Investments in Canadian Land and Lumber 99 Investments in Canadian Mines 105 ' Canadian Banks, British and Foreign Capital .... 114 Registered Stock or Bearer Securities? 121 Canada's Credit Abroad 127 Canadian Provincial Securities and the British Trustee List 133 New Capital From Immigration 138 The Relation of Trade to Borrowed Money 147 Canada's Share of British Capital 158 Is Canada Over-borrowing? 166 Canada and International Finance 173 Editorial Comments 181 List of Canadian Flotations in London, January, 1905 to April, 191 1 193 Index I. — Personal Names 209 Index II. — Companies and Institutions 212 Index III. — Subjects 220 CHAPTER I. BRITISH INVESTMENTS IN CANADA. In a little more than six years, January, 1905, to April, 191 1, Great Britain has loaned Canada at least $890,805,626. These figures are the best possible reply to the complaint sometimes heard that Great Britain is not taking sufficient financial interest in Canada. Its entire railroad system, for instance, has been financed practically from first to last by the British investor. The following table gives the approximate division of the past six years' investments : — Canadian bank shares purchased by individual shareholders $ 1,125,000 Investments with loan and mortgage companies. 8,725,000 Canadian bank shares purchased by a London house, (public flotation of £100,000 omitted) 550,000 British insurance companies' investments 9.854,000 Municipal bonds sold privately 12,000,000 Industrial investments 26,375,000 Mining investments 57.555. Soo Land and lumber purchases 34,000,000 Purchases of town and city property 8,525,000 Canadian public flotations in London (January 1905 toi April, 191 1 ) 732,096,126 Total $890,805,626 Mr. George Paish, the eminent London financial statistician, states that British capital has been invested in Canada to the extent of ^372,000,000. It is practi- cally impossible to check this sum, but it is safe to accept the estimate of Mr. Paish, who not long since lectured 2 io Capital Investments in Canada. on the advantage to borrowing countries of importing capital. The young country, he says, requires to do all those things which in older countries have been gradually performed through the centuries, and it desires to do those things quickly. The rapidity with which things move in a young country is so astonishing to those accus- tomed to the slower progress of the older countries that it is difficult for the two kinds of countries to understand each other. Persons living in the older countries cannot and do not believe that the growth in the young countries is as rapid as it is said to be. In view of the rapidity of its progress a young country needs all its savings for the construction of houses, for the breaking up of virgin land, the building of roads, the building of factories, etc., and has not the means of constructing the more expensive works required to develop its resources. Hence the opportunity, continues Mr. Paish, given to the older countries to provide a portion — indeed, often the larger portion — of the capital needed for the con- struction of expensive works, such as railways, drainage systems, waterworks, gas and electrical installations, street railways,, and similar undertakings, which offer special attractions to foreign capital is willing to invest at a lower rate of interest and dividend than can be earned by native capital employed in trade, industry and house construction. The importation of this foreign capital, he con- cludes, sets free the growing savings of the young countries for the rapid extension of their industries. Further, the young countries attract large numbers of immigrants who possess no capital, and in order to render this additional labor productive the new countries need a much larger quantity of capital than they them- selves possess. In brief, the importation of capital by Capital Investments in Canada. ii the young countries enables them to construct those great works of public utility, without which their natural resources could not be developed, to secure and to employ profitably a great amount of cheap labor from the older lands, to use their own capital in industries where the return is high, and to employ their own labor in the most profitable manner. The figures relating to Canada, showing what we have borrowed from Great Britain in six years, from January, 1905, to April, 191 1, inclusive, are an excellent argument for the continuance of strenuous efforts to maintain Canadian credit in London. As Mr. K. D. Freiburg, a German economist, has stated, two points should always be particularly regarded by the investor — the occasion of the issue and the country in which it is made. At a period when the money market is tight it is no use making the position worse with foreign issues. Again, the securities of any country which do not offer an absolute guarantee that it will fulfil its obligations should be avoided. The following table shows the remarkable increase in Canada's public flotations in the London market in the period under review: — Year. Amount. 1905 £ 13,530.287 1906 6,427,500 1907 ".203,711 1908 29,354,721 1909 37.411.723 1910 38,453.808 *i9u i3.945.Q97 £150,327,747 *Four months. The aggregate Canadian public issues overseas for the first four years, 1905 to 1908, was ^"60,566,219, and .12 Capital Investments in Canada. for the next two years, 1909 and 1910, ^75,865,531. So that in the past two years we have obtained ^"15,299,312 in excess of the sum raised during the previous four years. In igio we borrowed in London almost three times as much as in 1905. In the first four months of 191 1, Canada's loans in Great Britain were -considerably more than one-third of the previous year's -total. The continued influx of capital will likely be to some extent a diversion from other channels. For this reason the British investor need not seek. The offerings go to him. At present many media exist through which money from abroad can help turn our wheels, unclothe our mineral soil and dress up our fruit lands. Conse- quently, other channels may carry smaller streams on account of Canadian attractions. Yet it should be pos- sible to interest to a small extent at least new British capital. Had it not been for one or two unfortunate Canadian flotations in London, Canadian credit there would have stood even higher than it now does. In addition to British corporations and individuals with large sums of money to place, the man desiring to invest the proverbial nest-egg — not properly nested — should be interested in Canadian offerings. The railroads of Canada have as shareholders individual investors on many continents. The shares of the Canadian Pacific are very widely held. Canada's financial institutions have interested large sums of capital. Several companies in course of formation have brought in English money to help the initial stages of promising promotions. In some -cases the proposed company has been sufficiently attrac- tive to induce British capital to buy outright. No doubt is there that Canada as an investment field 'is one of the most attractive of the present time. It is a new country, with all before it. The personality of most Capital Investments in Canada. 13: of those who are guiding its destinies is marked with energy and confidence in their country's future. This spirit is the birthright of those whose cradles are rocked in Canada. It is a gift to others who have adopted Canada as foster mother. Progress has been enough in Canada to allow capital to feel comparatively safe here. Sufficient nation building has been accomplished to banish grave capital risks that exist in many other countries. The building which remains to be done will insure the obten- tion to capital of adequate return. Canada has cultivated the investor abroad. To some extent, he has come of his own accord. Of recent years, the invitation has been more emphatic. Demonstration has backed it up. No longer should it be possible for the fakir to trade with spurious Canadian goods. When ignorance of Canadian conditions was common, the un- scrupulous magnetized time and again British money into dangerous, unremunerative and fraudulent channels. The legitimate Canadian investment is being shown now in its true colors. The British investor should shortly be in a position to judge accurately of its value. Lord Milner has pointed out that Canada is learning to realize that in future the markets all over the world will compete keenly for surplus capital. By virtue of its resources, the position the country occupies at present and the place it will take, capital will naturally turn to the Dominion. It must be fairly magnetized by gov- ernments, by financial and commercial interests, and by municipal authorities. To invite it with soft tongue only to deal a hard body blow, is not a policy calculated to help build a country. The apparent omnipotence of legislatures throughout the Dominion must be used in the right direction. Otherwise, the country will witness needed capital being turned into all channels except the desired. The maintenance of Canada's excellent credit 14 Capital Investments in Canada. in London is one of the most vital factors in Canadian finance to-day. The financial and industrial outlook in Canada is excellent. Strong and conservative men appreciating sound finance, keen-sighted captains of industry and enormous wealth in natural resources make a firm foun- dation for Canada's economic fabric. The following table shows the division of the large amount, ^150,327,747, publicly loaned in London for Canadian development each year : — Year. Railroads. Government. 1905 12,117,287 2,925,000 7,050,769 8,985,800 15,359,953 8,818,000 3,948,097 1906 1907 1908 1909 1910 *1911 1,200,666 1,500,000 13,719,400 14,337,500 12,000,000 1,400,000 Total 59,204,906 44,156,900 Industrial. 1,010,000 802,500 1,220,000 2,344,000 2,932,508 3,608,847 2,516,900 14,434,755 Year. Municipal. Mining. Land and Lumber Financial. 1905 78,000 325,000 300,000 320,000 1906 700,000 290,000 500,000 1907 822,942 3,930,521 2,109,500 3,079,400 2,606,000 1908 375,000 61,140 1,695,261 1,250,000 1909 1910 *1911 2,136,522 4,452,200 600,000 474,600 4,800,100 1,625,000 12,626,363 8,133,722 7,889,700 3,881,401 Four months. That Canada owes a large debt for its growth in railroad facilities is seen in the fact that in little more Capital Investments in Canada. 15 than six years it has obtained ^59, 000,000 for that purpose. Government loans have been nearly as heavy with a total of ^"44,000,000, while industrial flotations are third with ^14,000,000. Municipal borrowing has also been heavy, the aggregate being ^12,000,000. Mining, land and lumber and financial classes together aggregate less than half the sum represented by federal and provincial government loans and about one-third of the railroad total. The smallest British investments are in the land, lumber, mining and financial securities. Most of the Dominion's railroad financing, as is seen, is done in Great Britain. In one case, late in igoq, while Kansas City financiers were backing a new railroad for Alberta, their money was obtained by means of a public flotation in London. In addition', a sum of about ^8,000,000 was raised for enterprises controlled or partly so by Canadian interests, but whose properties were in other countries. These included the Mexican Consolidated Electric, Rio de Janeiro Tramway, Light and Power, Monterey Rail- way, Light and Power Company, and the Mexico Tram- ways Company. One of the most striking factors in Canada's growth is its industrial progress. The small sum invested by Great Britain in this class is insignificant compared to the millions of dollars sent into the Dominion for that purpose by the United States. Some impatience, to a large extent unreasonable, has been exhibited at the lack of monetary interest on the part of the British investor in Canada's industrial movement. The figures showing our heavy borrowings from Britain in six years for other than industrial purposes will tend to tone this somewhat unjust criticism. Great Britain is putting its hand in one pocket, the United States into another. Both are lending handsomely to Canada and both receive good returns. 16 Capital Investments in Canada. A Western Canadian, Mr. Schlanders, of Sas- katoon, has given me some interesting opinions on this particular phase. The Americans, he says, immediately recognize the merits of a sterling proposition, and are alive to the fact that good things are quick things, that things which will wait indefinitely are sometimes not worth while. They do not ask for long term options on various propositions and expect to get such considera- tions free of charge. This gentleman, and many think similarly, says that on the other hand the Britisher often writes a letter when he should cable, and resents having to pay for an option. Desiring a free option, a charge for it he considers an imposition. "It is frequently cheaper, safer and more profitable to devote time to Americans, with whom business is easy," continues my correspondent. "This may be explained by the British attitude towards almost everything save bonds and other small earnings but gilt-edged certainties. A large Eng- lish company desired an offering of a block of property. They wanted a long, free option. The option paper was to be signed, sealed and witnessed ; attested before an attorney and vised by the British Consul in New York, through which city the offer was to be made, the matter being handled by a New York firm of brokers." He suggests that this is a roundabout route in view of the fact that the Canadian chartered banks and other reputable agencies, several of which have branches in the Old Country, are willing to act in the matter of deals, options, etc. He refers more particularly to large invest- ments in lands, timber limits, etc., and thinks that unnecessary obstacles are placed in the way of larger business. To some extent this is true, but Canada cannot afford to complain bitterly in view of the foregoing figures. On the other hand, a closer cultivation by Great Britain of American business methods relating to Cana- Capital Investments in Canada. 17 dian industries and commerce would probably induce them to invest further in these lines, with less delay in business transactions, at the same time obtaining good security. A fairly large proportion of the Dominion Govern- ment borrowings in England of late years has been for the purpose of expanding or renewing old loans. The sums thus represented would naturally have to be de- ducted from the total amount of British capital coming into Canada, as renewals would remain in England. The figures have been included in the estimate, the money having actually been raised in England on Canada's behalf. The amounts placed in the various classes of invest- ments are analyzed in subsequent chapters. Investments to the extent of $8,725,000 have been placed with Canadian loan, mortgage and trust com- panies. The smallest amount invested was $20,000 with a new trust company. The largest individual sum ex- ceeded two and a half million dollars. The most striking » feature of this class is that practically all the money j invested has come from Scotland. Several companies have unsuccessfully endeavored to introduce English capital. A small percentage came from Ireland. Edin- burgh is the central loaning point for this class in North Britain. What little money has come from England has been sent largely by former Canadians residing there. In Scotland investments in loan and mortgage com- panies' debentures are popular. One company states that in certain cases, while the capital is fairly well distributed throughout Great Britain, there is no doubt that, if it is not all actual Scotch money, "it is Scotch credit." Probably only 2 per cent, of the total comes from continental Europe. 1 8 Capital Investments in Canada. Taking the figures of the Canadian company which has interested most money in these securities it is found that during the five years only 7 per cent, of its total has come from any source in Great Britain outside of Scotland. Here again, of the 7 per cent, much has come through a Scottish connection. From time to time efforts have been made to interest more particularly the London market and some of the larger lending corporations, such as insurance companies in that metropolis. Nearly all efforts so far have proved ineffectual. Generally speaking, there appear to be in the minds of English financiers two arguments against loan corpora- tion debentures. First, they are not listed on any stock exchange, and cannot, therefore, be disposed of as are other bonds. Second, a great part of the English in- vesting public like something in which there is a possible chance of profit, a factor which, alike with the hazard of loss, is usually absent from the loan company's pro- position. It is suggested that if a standard company chose to make a large issue of debentures payable in, say, twenty years, and went to the expense of having the securities listed in London, they might finally be absorbed in that market. Apparently none of the purely Canadian companies have taken this step. They seem to be bound by a curious rule of practice to a limit of five years in their debenture issues. The Scotch have been interested in debentures and land mortgages for many years. These investments have appealed to the man of comparatively small means, as the borrowers seek loans of ^500 to ^2,000 rather than big blocks, and for the reason that they are for fixed periods, and are, therefore, more easily arranged on maturity. Loans falling due in five years are invariably renewed, and there are several millions of Scotch money on short loan in Canada. These loans on debenture find Capital Investments in Canada. 19 acceptance from the fact that they give the lender little trouble. There are no broker's fees or expense to the lender, either in investing or realizing the investment. At the end of each five years the investor, if he desires, can obtain repayment of his investment at par, and is not dependent on the fluctuations of the Stock Exchange, as in the case of stocks. The British insurance companies which transact business in Canada have invested in this country by the purchase of various securities and of real estate approxi- mately $31,460,837. Comparing these companies' total investments at the end of various years, it is found that their approximate investments in Canada for the six years period under review are $9,854,000. To gather reliable statistics regarding British in- vestments in industrial propositions has been the most difficult task, largely because only a small amount is represented. Upon the figures collected it is reasonable to estimate the investments in this class for the six years at $26,375,000. If anything, it errs on the conservative side. The total does not include the amount represented in the Canadian public flotations. Pulp and paper con- cerns in British Columbia and the Maritime Provinces are responsible for a fairly large amount. Four of these in New Brunswick account for $1,300,000 of capital. A large pulp company is located in British Columbia with holdings valued at approximately $5,000,000. About $1,000,000 of Old Country capital is invested in salmon canneries in our Pacific coast province. The British Columbia Electric Railway Company is almost entirely financed by British capital, its total investment repre- senting a large amount. Only a nominal sum is held on the Pacific coast. This company has made public flota- tions in London. 20 Capital Investments in Canada. British investments have been made to a moderate extent in Canadian cotton mills and textile companies, while about $30,000 is invested in apple warehouses along the Dominion Atlantic Railway and others are being purchased. London houses take a part interest in these buildings, the builder taking the rest. A small amount is placed in chemical companies. The details gathered in this class were obtained on the condition that the names of the individual companies be not published. Commenting on the keen appetite of the United States capital for industrial investments, Lord Strath- cona recently ventured the assertion that the aggregate debts of the Dominion and provincial governments and municipalities, the bonds and preferred stocks of the railway companies, and British investments in well- established industrial, electrical and power enterprises, placed against the total American capital invested in Canada would show a preponderance of the former. This is proved to be so by the above estimate. One hears, said Lord Strathcona, more of American capital than British, because our cousins from the United States come into Canada and buy a lumber proposition, a mine, a commercial enterprise, or start a branch of some of their own enterprises in one of the provinces. In these cases they go to the country themselves and look after the business in which they are interested, and obtain much publicity. English capital is usually invested in an entirely different way. The investors remain quite satisfied if their moderate interest and dividends are forthcoming at the proper time, and their loans are met at maturity. As a matter of fact, the methods of investing British money and of American money in Canada are on an entirely different basis, and this must be borne in mind when the question is discussed. Capital Investments in Canada. 21 The line of demarcation between British and Ameri- can capital investments is quite distinct. The American, always with an eye to investing money for large returns, is quick to see the opportunities that have been embraced in the Western States duplicated in British Columbia. These are principally mining and lumbering and timber, "with some colonization propositions. Ten years ago, when the export of timber was prohibited from the pro- vince, the American promptly came to British Columbia and started mills. He saw good investments. When mines were discovered, he was on hand in the Kootenay and Boundary districts, took risks, and ultimately sold to British capital. American and British capital are about equally divided in mining interests, although in many cases the American has been the first purchaser, later selling to British buyers. The Porcupine, Ontario, gold camp was a notable exception. CHAPTER II. AMERICAN INVESTMENTS IN CANADA. The lack of British participation in Canada's indus- trial development has been frequently remarked. The criticism has taken the line that Great Britain should help more in this way. The fact has not been remembered always that Canadian railroad development has been backed by millions of British money, while London has been a large purchaser of Canadian Government and municipal bonds and industrial bonds. These in the aggregate compare well with the total United States industrial development in this country. The criticism might perhaps take another line — that of suggestion. The British investor hitherto has been most content to invest in Canadian securities which bring him a small return', give him little risk and secure him no control. Bonds and preference shares are his chief Canadian investment fare. With United States interests it is entirely different. They can see now being repeated on this side of the border line the remarkable story of development which attaches to their own country. Not content to sit at home, they do not give the other fellow their capital, receiving one-third or less of the profits. After a personal visit to the field, they either stay there or leave behind their control and money. In certain in- dustrial lines, the United States have gathered their own investment fruits. Britain has left the gathering to some Capital Investments in Canada. 23 one else and has had to pay the middleman. It is a ques- tion as to whether four per cent, and no worry is better than eight or ten, and the comparatively trifling worry as to the future of a country such as Canada. It is only natural that Canada should depend largely on outside help for the financing of its development. Boston and Philadelphia are indulging in self-praise, stating that their enterprise and capital assisted mate- rially in developing Canadian asbestos properties. Not- withstanding that Canadian banks have about two hun- dred million dollars on deposit in New York, Canadian industrial development seems to attach more naturally to Philadelphia, Boston and London. It was Philadelphia capital which developed the water-power and industries around Sault Ste. Marie. It was Boston capital and enterprise which developed the Dominion Coal Company, the Dominion Iron and Steel Company and the Shawini- gan Water and Power Company. The United States have at present a keen appre- ciation of industrial opportunities in the Dominion. Their channels of information have been more numerous. For instance, the Americans maintain nearly 150 con- sular agents in Canada. Until recently there was but little government machinery in that country to keep British interests in touch with the same opportunities and to give Great Britain the same advantages, in the way of information, as enjoyed by the States. The ap- pointment of Mr. Richard Grigg as British Trade Com- missioner to Canada in 1906 and his small staff of eleven correspondents is already bearing excellent fruit in this direction. The following is an approximate estimate of the investments of the United States in Canada. If anything, it under rather than over-estimates the total: — 24 Capital Investments in Canada. 209 branch companies, average capital $600,000. $125,400,000 Investments in British Columbia mills and timber 65,000,000 Investments in British Columbia mines 60,000,000 Land deals in prairie provinces 25,000,000 Investments in lumber and mines, prairie pro- vinces 10,000,000 Packing plants _ 6,000,000 Agricultural implement distributing houses .... 8,575,000 Land deals, British Columbia 8,500,000 Municipal bonds sold privately 27,000,000 Investments in Canada of United States insur- ance companies 43i293t22i Miscellaneous industrial investments 10,000,000 Purchase of city and town property 15,525,000 Investments in the Maritime Provinces 12,850,000 $417,143,221 The largest number of branch plants of American companies in Canada is located in Ontario, although there is a tendency to utilize Western Canadian points to a greater extent. At least twelve American manu- facturers of agricultural and farm implements have branches in the Dominion and about as many makers of automobiles. In the latter case, the parts are usually imported separately and assembled in this country. Sev- eral American manufacturers of chemicals, drugs, patent foods and cereals have factories or distributing houses on the Canadian side on the international line. A large number of firms manufacturing and supplying various machinery, fittings and plant are also doing business in Canada in a similar way. This American commercial invasion applies to a lengthy list of articles, including asbestos, barrels, blind rollers, buttons, carpet sweep- ers, corsets, condensed milk, bags, corks, carriages, couches, brass goods, billiard tables, cords, cash regis- ters, disinfectant, fly paper, files, fire extinguishers, fountain pens, gramophones, hardware, pickles, presses, Capital Investments in Canada. 25 pulleys, razors, rubbers, sealers, shoes, scales, type- writers, watch cases, tobacco, etc This will give an idea of the scope of American industrial interests in the Do- minion. In mines, lands and lumber the greatest amount of United States money is finding its way to Manitoba, Saskatchewan, Alberta and British Columbia. The lum- ber of British Columbia has attracted considerable capital. Recently, forty miles north of Victoria, fifty thousand acres of timber land in the Cowichan Valley were sold to a New York company for $1,500,000. San Francisco interests purchased for $1,000,000 the controlling in- terests in 21,000 acres of timber and coal lands on Graham Island. A further influx of United States capital into the Kootenay district of British Columbia occurred during the past few months in the opening up of coal mines on McGillivray Creek, Crow's Nest Pass, by Min- neapolis and Spokane men ; the acquirement of the High- land-Buckeye-United mines group near Ainsworth by New York people ; the purchase of the Fife mines, also by New York capitalists; the Queen mine by Duluth people, and the Lucky Jim mine by men from Spokane. American and Winnipeg syndicates purchased early in 191 1, 900,000 acres of land in the Peace River district of British Columbia, the amount involving in three trans- actions about $5,000,000. Arrangements are being made for the placing of American farmers on the land. Capi- talists from St. Paul, Minnesota, have, it is understood, purchased large coal and iron deposits near Cowley, Alberta. The ore is said to be magnetite adapted for the manufacture of steel. The St. Paul financiers have also secured a charter for a railroad from Butte to Calgary. In Ontario, Michigan interests may locate a sugar fac- tory. Duluth capitalists have acquired a half interest in the Durham Collieries, Limited, owning six thousand acres of land on Little Bow River, thirty-six miles north 3 ,26 Capital Investments in Canada. of Lethbridge. New York capitalists not long ago pur- chased a large block of city property in Montreal. A New York syndicate purchased 50,000 acres of timber lands in the Cowichan Valley, Vancouver Island. The president of the Irondale Smelting Company, of the State of Washington, not long ago completed the pur- chase of ten miles of coal lands on Graham Island, making a payment of $60,000 ; also a number of mag- nesite claims at Atlin, British Columbia, paying $75,000. He also stated that his company's experts had decided that it might be necessary to avail themselves of the extensive iron deposits on Vancouver Island, which they have under option. Should this be done, the company would establish a large steel plant to cost $500,000 to $1,000,000, and give employment to over 1,000 men. The British Columbia Steel Corporation, backed by American •capital, is also planning a shipbuilding and steel industry in Canada's Pacific coast province. American capitalists have several million dollars invested in the lumber industry in New Brunswick, and that amount is steadily increasing. One of the latest purchases was the Prescott Company's property by New York men for $100,000, who will probably spend a quarter of a million dollars on a new plant. The Ameri- cans first entered New Brunswick in these spheres when enterprising men went to St. John and built sawmills and opened lime quarries. These mills cut logs from the Maine woods, that were floated down the St. John River, but they also cut New Brunswick logs, and a great deal of the product went to the United States market. Pro- bably half of the mills at St. John are still owned by Americans, and they cut a large quantity of lumber every • year. The lime business was in former years extensive and profitable, but the United States tariff on lime was raised, Capital Investments in Canada. 27 and the trade declined. This industry must eventually grow again to large proportions, for there are immense deposits of the finest quality of limestone, easy to quarry and to ship. The present trade is provincial, but Ameri- can capital is still to some extent interested. The Salmon River lumber property, on the Bay of Fundy in St. John county, New Brunswick, was purchased from Mr. C. M. Bostwick, and in addition to sawing lumber the shipment of pulpwood in barges to Maine ports was begun and is still carried on. Another concern erected a small pulp mill at St. George, and secured timber pro- perty for a supply of raw material. Another company, called the Inglewood Pulp and Paper Company, secured a property near Musquash, not far from St. John, and a friendly company leased the Mispec pulp mill, which it has operated for several years. This mill had proved a failure and had been taken over by the city, which desired to control the Mispec stream in connection with the waterworks system. On the Miramichi the Richards Company's mills and lands were in the market, and an American concern, the Miramichi Lumber Company, was organized and became the owner. Another property in Restigouche was secured "by Americans. The Adams, Burns & Company's pro- perty at Bathurst was also secured by capitalists from over the border, who became owners of a large amount of timber as well as mills. It is stated that Americans have also purchased a lumber property in Kent county, and there are other such investments^ in the province. There is United States capital invested in Queen's county coal areas and in a York county antimony mine. The proposed sugar refinery at St. John was promoted by a Philadelphia man, among American investors. In British Columbia the chief investment of United States capital has been in mining and lumbering, in- 28 Capital Investments in Canada. eluding timber. This is natural, since United States men in the Middle West and on the Pacific coast have made much money in mining and lumbering, and since min- erals and timber are the two great resources of British Columbia. It was stated at the sessions of the Forestry Commission in Vancouver that 75 per cent, of the timber licenses were held by United States interests. A timber man tells me there are, say, 17,000 licenses, with $3,000 against each, which makes $51,000,000. Added to this are Crown grants and leases, and half of these are con- trolled by the United States. As to lumber mills in the interior, two-thirds are backed by United States capital, and on the coast, one-third. While on the coast the pro- portion is that, the United States controlled plants are large, so that the proportionate investment may be a little larger. Conservatively, the value of United States holdings in British Columbia mills and timber to-day at present valuation is placed at, say, a little less than $130,000,000. The investment in actual cash might be about half that sum. The Victoria Lumber and Manufacturing Company at Chemainus, two-thirds of whose stock is owned by Americans, has recently sold for about $4,000,000, 75,000 acres of timber on Vancouver Island, covering 3,200 miles, extending from Comox to Campbell River, to the Fraser River Lumber Company. The tract is regarded as a fine area of Douglas fir, containing between 4,000,- 000,000 and 5,000,000,000 feet. The purchasing company had previously acquired 25,000 acres of timber limits in the Comox Valley, near Comox, where extensive logging operations are carried on. The company, in which many Americans are largely interested, still owns many millions of lumber land on the island, and will continue to operate its large plant at Chemainus. Capital Investments in Canada. 29 Later, the Fraser River Lumber Company, in which much American capital was introduced, sold their hold- ings to the Canadian Western Lumber Company for $7,300,000. Another American syndicate has purchased the McLaren mills at Buckingham, including large tim- ber limits. The deal involves about $2,000,000. It is proposed to run the mills on a still larger scale and estab- lish a fast shipping service to New York and other large American cities. A deal involving an expenditure of over $1,000,000, the transfer of some 54,000 acres of timber land in the Cowichan district from the Esquimalt and Nanaimo Rail- way to an American company in New York, the con- struction of twenty-three miles of railway and the erec- tion of a large export sawmill on the east coast of Vancouver Island has been concluded. A New York syndicate has also purchased the con- trolling interest in the Fir Lumber Company, of Nanaimo, and their timber interests involving a consideration of nearly $500,000. In British Columbia mining, the proportion may easily be placed at one-half United States capital and the rest Canadian, British and foreign. The figure could be safely placed at $60,000,000. Nearly all the big pro- positions, such as the Nickel Plate, recently acquired by the Steel Corporation for a million, the Crow's Nest Coal Company, other coal companies in the same dis- trict, the British Columbia Copper Company, the Do- minion Copper Company, the Britannia, near Vancouver, the Marble Bay mines on Texada, James Cronin and Heinze in the Bulkeley, the Guggenheims in Atlin and Ruffner in the same district are backed exclusively by United States capital. The Great Northern and Northern Pacific Railways, two prominent American roads with their eyes on Can- 30 Capital Investments in Canada. ada, think that it would be better to own coal mines in British Columbia than to purchase coal under the con- tract system. The results of the Northern Pacific Rail- way's tests on Vancouver Island have not been of such a nature as to dissuade the company from seeking pro- perties which have not been open to their diamond drills. Much of the Northern Pacific Railway's work has been done in the Comox field. The Great Northern Railway Company, unable to secure in the Western United States fuel suitable to the requirements of its locomotives, is also looking for Van- couver Island coal. It is desirous of purchasing coal lands and doing its own mining. It would be possible for both these American railways to contract with some of the producing mines for coal they require, but their efforts in the direction of securing their own mines show they do not favor the contract system. At the present time there are many coal properties on Vancouver Island which are under development, and several are shipping. In manufacturing, British and Canadian capital pre- ponderates. Manufacturing, though, is not developed to a large extent yet in British Columbia, though it is ex- panding rapidly. United States capital is largely invested in coloniza- tion or land schemes in the northern interior of British Columbia, and these lands are being sold by active agents in Seattle and other Pacific coast cities. In this instance, the investment would be possibly $8,500,000. There are large enterprises backed by Canadian and British capital, such as the Canadian Pacific Sulphite Pulp Company, which has expended in actual cash over $800,000 and has holdings valued at close on $5,000,- 000 ; the British Columbia Electric Railway Company, the Le Roi mine, the Consolidated Mining and Smelting Company, etc. Capital Investments in Canada. 31 The Pacific Coast and the Western provinces of Canada have considerable United States business senti- ment. The range of mountains in British Columbia is a physical barrier which entails high freight and passenger rates, and business naturally seeks the line of the least resistance. Consequently there is a large trade in all necessities with the people south of the boundary, wha are quick to seize every business opportunity. Moreover, the resources of British Columbia are similar to those of the Pacific Coast States, only richer. The men who know what has been found in Washington, Oregon, Idaho and Montana in the way of timber, minerals and land have become largely interested in British Columbia. If a mine begins to develop well, an offer is made at once by a United States syndicate, the members of which are willing to risk the prospect of values increasing. They also have prospectors throughout the country, and are among the first to locate good propositions. In timber, with money, the speculative instinct and manufacturing enterprise, they are to the fore. In Regina and Saskatoon more especially the invest- ment of United States firms is largely in the shape of distributing warehouses for agricultural implements. Nearly every important United States implement firm is represented in those cities by its agents. The Interna- tional Harvester Company, for instance, is now erecting a $75,000 building, while the John Deere Plow Company has completed arrangements for the construction of a similar warehouse. Among the implement firms located in Regina are Wisconsin, Indiana, Michigan, Minnesota, Ohio and Iowa houses. They do a large business in har- vesting machinery, binder twine and threshing outfits. Flour milling concerns are beginning to scent pos- sible profits in Canada. The Dominion's three large cor- porations, the Ogilvie, Western Canada, and Lake of 32 Capital Investments in Canada. the Woods, have made such remarkable progress that United States invasion of this field will be somewhat difficult. The Saskatchewan Flour Mills, located at Moose Jaw, is backed by United States capital, and it is interesting to note that the telephone system -in the same city was purchased by a United States company, being sold later to the Saskatchewan Government. There has been a tendency on the part of certain United States adventurers to exploit the privilege of many Canadian municipalities in bonusing new indus- tries. Keen competition exists between the. cities of Eastern and Western Canada, and again among the cities in those two sections in attracting new capital in the form of branch factories. The establishment of an- other industry creates new labor demand and at the same time extends local purchasing power. Towns and cities in Canada have offered free water, fixed assessment for a period of years, free sites, exemption from certain taxes, the guarantee of the bonds of the company pro- posing to erect a factory, and other inducements. On the whole, this principle has not worked successfully, and the disposition is to cease the offer of this dazzling array of industrial baits. Several municipalities have undergone unhappy experiences on account of their eagerness to attract new industries in this way. These experiences have often resulted in financial loss. The American fire and life insurance companies have, according to the report of the Canadian Superintendent of Insurance for the year ended March 31st, 191 1, total assets in Canada of $55,456,527, the two principal items being : — • Bonds and debentures $43,293,221 Stocks 162,141 Unlike the British insurance companies doing busi- ness in Canada, the American companies have practically Capital Investments in Canada. 33 no real estate in the Dominion. On March 31st, 1910, the British companies' real estate holdings in the Do- minion had a book value of $2,832,147. One American company had real estate valued at $58,520. The actual value is far greater than that of the book value. The investment of American capital in Canada has excited considerable criticism in the United States, but they have been well defended by Mr. A. Barton Hep- burn, at one time Controller of Currency and president of the Chase National Bank, New York. He points out that the American investments were largely in farms and undeveloped farm lands. The Americans making such investments came largely from the middle West, and withdrew funds from local banks for the purpose, and in many cases no doubt borrowed additional funds to complete such purchases. The money went, he says, to make up an adverse balance of trade, and it made a considerable demand on the banking resources of the United States. "There is nothing wrong, nothing reck- less or nothing to criticize in such investments in Can- ada," continues Mr. Hepburn. "The resulting demand for money has put the bankers of the whole country upon notice, and they are carefully planning to meet the in- creased demand for money which comes with every fall. The banks in New York have a large surplus reserve. The banks in New York will be in a position to furnish to the interior whatever money may be necessary in the fall. It probably will be at full rates of interest, but that will be no hardship. If money is needed from abroad we will be able to procure it. The great trouble with the American people at the present time is the extravagance in living which characterizes all classes. If conditions should become acute, our travellers abroad would return, our merchants would curtail importations, and a trade 34 Capital Investments in Canada. balance would pile up rapidly which would enable us to procure gold abroad." While the figures of American investments in Can- ada given are only approximate, they are Sufficiently well estimated to give a clear idea of the extent of the United States industrial invasion of the Dominion. Geographical position has been argued in favor of the United States. The time has come when geographical difficulties can be overcome largely by enterprise and early information of possibilities and opportunities. CHAPTER III. FOREIGN INVESTMENTS IN CANADA. At least $139,589,650 of foreign capital has been invested in Canada. The following is an approximate estimate : — France 1 Manufacturing- and industrial development.. $ 8,300,000 Lands and mines 8,750,000 Loans on mortgages, etc 30,000,000 Canadian industrial and railroad securities. 22,250,000 Municipal and school bonds 1,250,000 $70,750,000 Belgium : Western mortgages $ 3,500,000 Purchase of Western lands 2,225,000 British Columbia fruit lands 950,000 Canadian railroad securities 5,000,000 $11,675,000 Germany : Western lands, mines and mortgages $ 8,000,000 Western coal lands 5,000,000 British Columbia coal lands 3,500,000 Canadian railroad securities 9,000,000 Investments in beet sugar industry 1,225,000 Investments in railway to tap coal lands . . . 4,000,000 $30,725,000 Holland : Western lands and mortgages $ 3,000,000 Canadian railroad securities 8,000,000 $11,000,000 36 Capital Investments in Canada. Russia 1 Doukhobors' land investments in British Columbia $ 1,500,000 Turkey 1 One bank's investments in Canadian railroad and government bonds $ 3,000,000 Foreign Holdings of Canadian Bank Shares: In chartered banks $ 1,439,650 Dresdner Bank's holdings in Sovereign Bank 2,000,000 In chartered Banque Internationale 7,500,000 $ 10,939,650 Crand total, foreign investments $139,589,650 Some information respecting the distribution of Canadian railroad shares abroad is given in a subsequent chapter. The following table gives details of some of the leading companies which have interested or are at pre- sent interesting foreign capital in the development of Canada : — Name of Com- Amount of Country of Nature of pany. Capital. Origin. Business. German Development Co $1,000,000 Germany Development (Berlin) of their coal property in Alberta Societe Financiere pour l'Industrie du Can- ada 1 ,000,000 Switzerland Mines and (Geneva) industries Alberta Societe Anony- me Beige du Nord- Ouest Canadien .... 160,000 Belgium Mortgages Western Can. Farm Lands Co 200,000 Belgium Land Com- Societe Hypothecaire du Canada 2,000,000 Belgium Loans (Brussels) Bielgium (Brussels) pany Belgium (Antwerp) Capital Investments in Canada. 37 Name of Com- Amount of Pany. Capital. La Caisse Hypothe- cate Canadienne „ . $2,000,000 Revillon Brothers, Ltd $5,600,000 Country of Origin. France (Paris) France (Paris) Compagnie Francaise France d'Etudes au Canada. (Paris) Belgo-Canadian Fruit Lands Co Belgium (Antwerp) Land and Agricultural Co. of Canada Belgium (Antwerp) Credit Foncier Franco- Canadien $8,000,000 France (Paris) Societe Immobliere des Fermes Canadienne. Nature of Business. Loans on mortgages Fur posts at a number of points in Western Can- ada. Merchants. Col- fruit British umbia lands. Western lands Loans Rotterdam Canadian Mortgage Co Netherlands Transat- lantic Mortgage Co. Holland Canada Mort- gage Company .... Netherlands Canada Mortgage Company . Canada Mortgage Bank Nederlandsch Canadee- sche Mortgage Bank. 5 40,000 2,500,000 gulden 2,500,000 gulden 100,000 gulden 2,500,000 gulden 50,000 gulden Lands Mortgages France (Paris) Rotterdam Mortgages (Holland) Amsterdam (Holland) Holland Mortgages (The Hague) Holland Mortgages (Groningen) Holland Mortgages (Rotterdam) Holland Mortgages (Groningen) The Credit Foncier Franco-Canadien has been so long established in Canada that we recognize it as a Canadian institution. It has offices in Toronto, Win- nipeg, Edmonton, Vancouver, Montreal, Quebec and 38 Capital Investments in Canada. Paris, France, and is reputed to have attracted at least twenty millions of French capital into this country in twenty years. This company made a successful issue in Paris in 1910 of $5,000,000 debentures. Messrs. Revillon Bros., Limited, a company conducting a busi- ness in Western Canada similar to that of the Hudson's Bay Company, is also considered a Canadian house, although it is a corporation of French origin. Generally speaking, foreign capital investments have been made chiefly in Western Canada, the chief excep- tion perhaps being the Province of Quebec, where there is naturally a considerable French interest. The capital of companies other than Canadian, British and Ameri- can registered to do business in Alberta amounts to $11,000,000. Regarding the investment of foreign capital in British Columbia, the amount might be approximately placed at about $6,000,000. There is an investment of a company which controls coal areas at Lille, Alberta, and which is of French origin. French capital in British Columbia is mainly confined to loans. In real estate about $1,500,000 of French capital is invested in British Columbia, and the amount is steadily expanding. Approximately, $5,000,000 of German capital is in- vested in British Columbia, principally in real estate and mining, with a few industrial and speculative enter- prises. The two countries to take greatest interest in Cana- dian investments during the past two years, aside from Great Britain, were France and Holland. France is patronizing Canadian industrial stocks, while Holland is devoting attention to lands and mortgages. Numbered among shareholders of the Quebec Railway, Light, Heat and Power Company are Frenchmen holding 57,000 Capital Investments in Canada. 39 shares. Stock of the Algoma Central and Hudson Bay Railway valued at 3,000,000 francs was placed in Paris last year. At least 6,000 shares of the Dominion Iron and Steel common stock have also been placed in Paris, and about 6,000 shares of the Lake of the Woods Milling Company. The banks in France, as is known, are the great medium of investment, and carry immense capital, on which they pay only small interest. Wherever the banks place their investments the people always follow, and there is no reason why a good portion of the French surplus of money should not find its way to Canada in- stead of to Swiss and Belgian banks, where it is again picked up by other countries. Undoubtedly Mr. Rodolphe Forget, M.P., the Montreal financier who has inaugu- rated a chartered bank in Canada backed chiefly with French capital, has helped to arouse the present interest of France in Canadian projects of the Dominion. Mr. Forget thinks that France is now convinced that the Dominion is the best bargain counter in the world, and is well satisfied with the protection capital is afforded in Canada. Frenchmen are anxious and enthusiastic in their desire to invest capital here. Never, said Mr. Forget, after a recent visit to France, was money so plentiful in France as at the pre- sent time, and only when it was remembered that during the past eleven years a large sum was loaned to foreign countries can an approximate idea of the wealth of the country be reached. The predominating idea in France amongst financiers when all loans were being negotiated was to effect them in such a manner as to add to the wealth of the Republic. Mr. Forget thinks that the Bourse is one of the most active money centres in the world, from three to four thousand people watching the operations of the members and keeping in touch with 40 Capital Investments in Canada. the various markets. The market is so extensive that little time ensues from the date a good security is listed to the day when it disappears from active speculation and finally enters the investment class. Mining enterprises, milling concerns and steel and iron are amongst the industrial securities most favored by the French investor. A great many of the leading Paris financiers are thoroughly posted as to localities of Canadian industrials, as well as with the names of the men who have these enterprises in hand this side of the Atlantic. The investment of French capital is dealt with more extensively in the following chapter. Holland is placing several millions of dollars prin- cipally in mortgages. The present year witnessed two new and important companies planning extensive opera- tions in the Dominion. A slight setback to Dutch con- fidence in Canada was created early in the year by state- ments which temporarily checked investment. The out- look for continued investment from the Netherlands is good. The Holland Canada Mortgage Company was the first Dutch company to operate in the Dominion. The interest among Netherlands financiers in Canadian secu- rities appears to be largely due to the establishment of a trade commissioner service in Amsterdam, and the personal efforts of Mr. Preston, the Commissioner there. Germany is somewhat slow in appreciating Canada's investment possibilities, but there are signs of increasing German capital. Land, timber limits and mines are apparently favored. These investments are treated more fully later. During the past two years, important developments have occurred in the formation of international syndi- cates to finance industrial propositions in the Dominion. The German Development Company, for instance, which is interested in coal lands in Alberta and British Col- Capital Investments in Canada. 41 umbia, obtained not only German, but also Belgian, French and English capital for this enterprise, and also for the building of a railroad to tap the Albertan coal fields. In February, 191 1, a Swiss company was formed under the name of Societe Financiere pour l'Industrie du Canada. It has a nominal capital of 5,000,000 francs, and has been promoted under the auspices, among others, of the following firms : Messrs. Lazard Brothers, Gren- fell, Morgan & Company, Bonn & Company, the Banque de Paris et des Pays Bas, the Societe Generate, and Spitzer & Company, of Paris. The importance of this syndicate is obvious. It intends to finance any large and legitimate industrial proposals submitted by its Canadian representatives. The syndicate will be able to place its issues simultaneously in the principal European markets. The following is a summary of the British, Ameri- can and foreign capital investments in Canada : — Investments in Canada. Amount. British $ 1 ,860,000,000 American 417,143,221 Foreign i39.58g.6SO Total $2,416,732,871 CHAPTER IV. FRENCH INVESTMENTS IN CANADA. After Great Britain, France has shown the greatest interest in Canada as an investment field. The French population, particularly in Quebec Province, and the fact that a French-Canadian Premier is ruling the destinies of the Dominion, may partly account for this fact. France, more than any of the continental countries of Europe, has shown a disposition to invest widely. Mr. Alfred Neymarck, in a paper written for the National Monetary Commission of the United States, states that, according to the latest valuation, the foreign securities, including government bonds, held by French capitalists, reached the minimum figure of 30,000,000,000 francs. The distribution by countries is as follows : — Billions Country. of francs. Russia 9-10 England Y» Belgium, the Netherlands % Germany \ */ Turkey, Servia, Bulgaria 1 Roumania, Greece 3"4 Austria-Hungary 2 Italy 1-1 Yt Switzerland ■ • T A Spain, Portugal 3 % Canada and United States yi-i Egypt, Suez 3-4 Argentine, Brazil, Mexico 2^-3 China, Japan 1 Tunis, the French colonies 2-3 Capital Investments in Canada. 43 In view of the monetary, financial, economic, com- mercial, and industrial crises which break out almost periodically in all countries, and with the destructive force of a cyclone sweep everything before them, the question has been asked how France has escaped these disturbances, or at least has been able to meet with ease their reaction. Many reasons have been given, some of which could not be passed over in a careful examination, for the scientific and mathematical truth of the resulting conclusions is so clearly evident. These reasons, are, in Mr. Neymarck's opinion : — (1) The large amount of French savings and of available capital. (2) The increase and distribution of French and foreign securities held in France. (3) The influence exercised upon the rate of in- terest, the discount rate, and upon the banks, their reserves and deposits, by this wealth of resources. France is regarded as a reservoir of free capital. This result is largely brought about by the negative virtue of Frenchmen, that of thrift. Their capital is obtained by saving, and as Mr. Guyot, of Paris, points out, it is the production which costs the least effort. France is largely interested in Canadian railroad, industrial and other securities. French investors gen- erally guard jealously details of their investments. Nu- merous instances are known where capital has been invested in Canadian and American securities by pur- chases through London brokers. A fairly large amount of Canadian bonds and stock, therefore, which has been credited to English investors is actually of French origin. France holds large blocks of Lake of the Woods, Quebec Railway, Montreal Power, Montreal Street Railway, Toronto Street Railway, Algoma Central and Hudson Bay Railway, and Dominion Steel Corporation Securities. 44 Capital Investments in Canada. -According to Mr. O. B. d'Aoust, of Montreal, millions of dollars will continue to be sent to Canada from French sources. He further states that French capitalists -now consider Canada the ideal country for investments, particularly because of the bonus system in vogue here when companies are organized. The Montreal financier says that one group alone of Paris bankers and capitalists is ready and willing to invest as much as fifty million dollars in any series of enterprises which may be placed •before it. The interest in the Dominion is not wholly confined to Paris, the money centre of the French Re- public, but capitalists from such wealthy communities as Bordeaux have given evidence in a practical manner of their faith in Canada. The Montreal Stock Exchange is now noticed throughout France, the daily transactions and the names -of the leading securities being posted in every important centre of the Republic, and read by an appreciative public. For the purpose of interesting French capital in Canadian securities, Mr. R. Forget, M.P., of Montreal, has invited a party of French financiers and bankers to visit Canada. Among others, a prominent official of the Bank of France, it is understood, has accepted the invi- tation. Mr. Forget was successful in 1910 in having listed on the Paris Bourse the stock of the Quebec Rail- ^way, Light, Heat and Power Company. The stock was -listed at 250 francs, equivalent to 50 on the Montreal market. Mr. Forget thus succeeded in doing what the J. P. Morgan group could not secure for United States Steel common stock, although in the latter case political influences were an important factor. The official committee of the Paris Bourse, it was recently understood, is trying to obtain from the govern- .■ment some modification in the laws regarding the listing Capital Investments in Canada. 45; of foreign securities on the Bourse. If the government proves willing to grant concessions in this direction, it is probable that some Canadian and American stocks of good standing will be quoted as well as such American bonds as have been sold in Paris or are likely to be placed in the near future. Senator P. Roy, who was this year appointed Cana- dian High Commissioner at Paris, has interested a con- siderable amount of French money in the Dominion. His company, La Caisse Hypothecaire du Canada, or the Canada Mortgage Association, has a capital of $2,000,- 000 and power to issue bonds up to $10,000,000. French investors will probably place in Canada through this company from $20,000,000 to $25,000,000. Senator Roy has handled French capital only for mortgages. French money may also become interested in the proposed Kapa- tachawan and Rupert Bay Railway, with which Mr. H. Gervais, M.P., is associated. This year $7,000,000 of French capital have been secured for the new Banque Internationale, a very im- portant development, treated at length on another page. Some small blocks of city property have been purchased by French capital, and more attention is being paid to Western Canadian industries. A visiting Parisian re- marked that one drawback to the introduction of Euro- pean capital in the Canadian West is the fact that Canada is not as well advertised as it might be. There has been an enormous amount of French capital invested in South American enterprises, and there is no reason why much of this money should not come to Canada. He deplored the lack of literature and information to be found on the Continent relating to the opportunities which Western Canada has to offer to the financial world. Such literature as is to be found there is written chiefly in the English language, which renders it practically worthless in 46 Capital Investments in Canada. France. He suggests that the local industrial bureaux send out pamphlets to the different countries printed in their own languages, thus enabling them to get the in- formation they require first hand. In many directions the cultivation of the French market by Canadian interests is being actively pursued. French-Canadian public men, who have lately been in Paris, have returned impressed with the evident desire of French capital to come here. It is realized that this disposition of French capital is of importance, not only on general grounds, but because it means the gradual rise of a second European market for Canadian securities. Within the last year it has become obvious that London is not willing to absorb Canadian securities at the great pace at which they are now being put out. So that a second market is quickly becoming a necessity. Hence the marked cordiality with which French overtures are now being received in Canada and the pains which are being taken to cultivate the Paris market. The listing of Canadian Pacific Railway securities on the Paris Bourse is, at the time of writing, being considered. The proposal, it is understood, is backed by an influential French banking group. For some time cer- tificates for Canadian Pacific stock have been received at the New York office of the company, on which the indorsements and guarantees of signatures have indicated that in some way the stock was being dealt in in Paris for the account of local interests, but more particularly for the account of operators and investors throughout France. It is regarded as natural, therefore, that steps should be taken to make a still broader market among French investors and speculators for Canadian Pacific stock. The plan is the same as contemplated with Atchison, namely, the physical deposit of shares as Capital Investments in Canada. 47 security for bankers' certificates and the guarantee of present dividends for a series of years. A few Canadian municipal and school debentures have been bought in France. The great objection to these securities, so a banker in Paris informs me, is their high denomination. He thinks that the French people would take a much greater interest in Canadian stocks if the scrips, instead of being nominative, as they mostly are, were made to bearer with coupons attached, as is the case with bonds. The growing tendency of investment of French capital in Canada is gratifying. Our financiers should do everything possible to encourage this inflow of money by catering to the particular needs, desires and pecu- liarities of the French market. Mr. Guyot, the well- known financial writer of Paris, recently gave some valu- able information in this connection. Suppose a French- man wishes for information, he says. He opens a manual of railways and sees that, in the company whose bonds are offered to him, there are three or four kinds : some are first mortgage, others are secured by such and such a line, others by the rolling stock, guaranteed by a trust up to 90 per cent. He sees redemptions lasting a century. He is used to French railway bonds, secured by the entire property of the company, and feels some anxiety. He queries whether the bond offered will give him every guarantee. Is it the surest? To take it he must trust more in the bankers who offer it than in the security itself. Moreover, he is used to rapid and automatic redemp- tion. He does not understand the system followed by American companies, who, holding perpetual grants, and considering it futile to pay back on the one hand and to borrow on the other, make use of their increased receipts to improve their lines and rolling stock. When he sees 48 Capital Investments in Canada. no precisely determined redemption he is distrustful. The French promoters of the Cleveland, Cincinnati, Chicago and St. Louis bonds, of the Chicago, Milwaukee and St. Paul, did away with this difficulty by providing for a very rapid redemption ; but they are debentures. Many buyers are deterred by the form of the Ameri- can securities, which in the case of bonds comprise very big splits. In the United States the splits generally adopted are of the value of $1,000 or 5,150 francs. As regards shares, the question is still more involved, because American shares are nominal. Their introduction on the French market in this shape is absolutely impos- sible; it was, therefore, necessary to find some means of transforming these nominal shares into bearer shares ; this was done in the case of Utah Copper and the United States Rubber. To accomplish this end, the original shares are de- posited with a trust company, which, in exchange, de- livers representatives' certificates to French bearers, certificate for certificate, so as to give all security to the French bearer. The American shares are deposited and immatriculated in the name of the trust company, as trustee ; but it is a difficulty, for the right of the bearers is the general meetings in the company. As a general rule, the foreign securities — other than State bonds — publicly offered for sale in France must be subscribed to the French "Timbre." Subscriptions to the French "Timbre" includes three undertakings by the company asking for the admission of its shares to pay three taxes : — 1. The stamping tax. 2. The transmission tax. 3. The tax on securities income. But foreign companies only pay these taxes on a fraction of their shares or bonds, corresponding to the Capital Investments in Canada. 49 importance of the circulation in France. The taxed por- tion must not be inferior, in the case of shares, to one- tenth and for bonds to two-tenths of the capital. The amount is determined by the Minister of Finance on pre- vious information from the Commission of Public Secu- rities for a length of three years. Moreover, the company must obtain the recognition by the French Government of a responsible representa- tive. The application for subscription and the demand for introduction to the money market must be signed by the company. This subscription also necessitates publi- cation in the Journal Officiel of a series of information concerning the society, details of which were laid down by the law of January 30th, 1907. These fiscal taxes are vigorously attacked. They may disappear one day. In conclusion, Mr. Guyot says that the bonds actu- ally suit the French public, but some experienced bankers think that if good railroad or other shares were offered on the French market they would certainly be well re- ceived by the French; it is a matter of time and educa- tion. They need to be educated up to an understanding of the true state of affairs, by publication of documents and information, clearly presented, concerning the eco- nomic and financial situation of American undertakings. CHAPTER V. GERMAN INVESTMENTS IN CANADA. Germany has seldom lacked initiative either in com- merce, industry or finance. In investment it has invariably acted cautiously, with the result, as it has happened, that German ventures in Canada have not been large. Canadian Pacific Railway shares are traded in there to a considerable extent, many important Canadian Pacific Railway movements having originated in Berlin. The next interest of any significant importance in Canada was that of the Dresdner Bank with Messrs. J. P. Morgan & Company. This took the shape of a two million dollar investment in the Sovereign Bank of Canada, of which the German bank contributed one million dollars. The failure of the Canadian institution, in the opinion of German authorities, shattered faith, and will for many years prevent further large investments from Germany coming to this country. The Dresdner Bank's invest- ment will remain in the country, that German institution having agreed to the plan of the formation of a new company to take over the assets of the Sovereign Bank. Several smaller investments have been made in farming lands. A land company was incorporated some years ago at Winnipeg and obtained the money of small investors in Germany for the purpose of acquiring and selling farming lands in the West. Having bought areas, at what must be regarded as too high a price, the com- pany is at present unable to sell its lands. This par- ticular concern was launched when the immigration Capital Investments in Canada. 51 movement from Germany to Canada was active. Three years ago the exodus from that country totalled 280,000. In 1909 the figures had declined to 20,000. The chief reason is that Germany has changed from a farming to an industrial nation, the change being furthered largely by the indemnity received after the Franco-German War. The farmers migrated to the prosperous cities and became industrial workers, earning more money with less labor. Like Canada, Germany experiences difficulty at present in obtaining labor to garner its crops. Harvesters are obtained from Russia in order to relieve the situation. There is little likelihood of Germany becoming in- terested in the financing of Canadian railroads. The chief German interest in Canadian investments is in railroad stocks affording speculative opportunities. Canadian Pacific is listed on the Berlin Exchange and Grand Trunks are traded in through London. Whenever the Canadian Northern stock is put on the market it is quite likely that its quotation in Berlin will create a big market in that city therefor. No German interest is exhibited in federal and pro- vincial government and municipal bond issues. Induce- ments do not exist to counteract the influence of distance between the two countries. The small German investor prefers the bonds which are issued by his own country, or by neighboring nations. He also invests largely in bonds which are released by lottery at a premium. Light and power propositions do not, generally speaking, appeal to German capital. The Imperial Ger- man Government makes every effort to interest money available in that country for the promotion of these in- dustries in its own country or colonies. But the Canadian iron industry may one day attract considerable capital from the Kaiser's land. Much educational work must yet be accomplished, as Canada in the minds of many still 52 Capital Investments in Canada. forms part of the United States, and the possible com- petition of the United States Steel Corporation is not regarded favorably by German interests. Another un- favorable factor is the experiments being carried on in the Dominion with electric smelting, which have not proved as yet a successful business venture. In fact, the chief effect of these experiments has been to introduce an element of uncertainty into the situation. Until this question is settled the iron and steel industry will not likely bring in capital from this European country. In mining ventures the Cobalt camp does not figure. The mineral obtained in Northern Ontario is similar to the ore which has been mined in Saxony for the past three centuries. The experts who visited Cobalt in its first days reported that it was a freak camp, and rather deprecated investment in its mines. That fact, together with the failure of one or two badly organized and un- sound propositions floated on the London market, has checked the inflow of European capital into the develop- ment of Canada's silver mines. One German company, for instance, with an office in Toronto, claimed to have the secrets of ore treatment as in use by the Royal Saxonian Government, secrets which have been jealously guarded for many years. The consequent failure of this company created bad feeling in this country and Germany. A large part of the asbestos mined in Canada goes either directly or indirectly to Germany, where the as- bestos industry is important. One might imagine that this fact would prove an inducement to German invest- ment in our asbestos mines. As a matter of fact, had it not been for the big amalgamation of asbestos properties in Quebec Province in 1909, I have the best authority for stating that German capital would have interested itself in the financing of several asbestos properties in that Capital Investments in Canada. 53 province. At present Germany prefers to buy the ma- terial, even at an enhanced price, rather than place its money in prospecting and development of the mines under current conditions. Our timber limits will probably attract no attention in Germany unless considered in conjunction with a pulp and paper industry. The European has decided opinions upon our system of fire ranging, as it relates especially to timber limits. One favorable factor in German invest- ment in Canada is that it seldom makes profits without considerable reinvestment. The German Development Company, for instance, representing important Berlin bankers, started in this country with a capital of $60,000 for the purpose of locating and developing mining pro- perties in Canada. Within one year the investment was raised to a quarter of a million dollars, and later in- creased to $1,000,000. The most important of the com- pany's ventures (coal lands in the West) were amalga- mated with the interests of the Canadian Northern Rail- way Company, and the monetary interest was recently further enlarged. The Canadian Northern Western Rail- way will build into these coal fields representing an in- vestment of $4,000,000, while the coal mines which they will tap have received $2,000,000 of foreign and chiefly German capital. A little Belgian, French and English money is interested in this scheme. German capital to the extent of $3,500,000 is invested in British Columbia coal lands, and in Alberta coal lands there is about $3,000,000 of German capital. There is not enough known of Canada yet in Ger- many to interest the banks to any large extent. Where capital has been invested here it has generally financed the scheme of a man who has made a study of Canadian conditions and opportunities. This situation is likely to exist for some time. 54 Capital Investments in Canada. There are attempts made continuously to attract German capital for the purpose of investing in real estate in the West. Every failure — and such are bound to result if agents only desirous of earning a commission quickly are purchasing — will undoubtedly result in further and larger investments from Germany. German financiers who have become interested in Canada think that land companies, for the purposes of acquiring good lands and advancing of money to settlers as an extra inducement, are good investment oppor- tunities. German capital may also play an important role in the Canadian beet-sugar industry. Its cultivation in Germany is one of the biggest and best-paying industries there. A glance at the names connected with the pro- motion of beet-sugar companies in Canada reveals the fact that German experts are at present very largely associated. Since the removal of the German surtax there is thought to be an opening for German-Canadian trading companies. If Canadian partners can be found, this de- velopment may be an early and important one. There is another phase to be considered in connec- tion with the probable investment of German capital in Canada and the interest of Germany in Canadian secu- rities. Since the action in Berlin against the introduction of the Chicago, Milwaukee and St. Paul shares on the Berlin Boerse, a Copenhagen city loan was offered for subscription in the German market without the govern- ment making any objection to its admission on the Berlin and Hamburg Stock Exchanges. The authorities also consented to admit a loan of the city of Budapest, which, although competed for by a syndicate headed by a Ger- man bank, was taken up by the Credit Lyonnais and other large French institutions. This seems to show that the official action against foreign loans was directed Capital Investments in Canada. 55 against American securities in the first place, although the Government does not favor the introduction of other foreign securities at present. A recent dispatch from Berlin to Financial America, of New York, commenting on this situation, said : — "This. policy, alleged to be designed to protect the home money market, is of great importance to foreign countries, and especially to the United States. This is not so much because of the stoppage of an outlet for German capital, but by reason of the reaction of this 'politics of blockade' on other industrial countries. The newly created capital in Germany is very great and seeks investment. It is pouring into industrial undertakings, most investors being dissatisfied with the low interest rate on domestic loans. As German industry has hitherto depended upon exports, a further increase in her pro- duction will force the Empire in still greater degree than at present to live on outside nations. In past years domestic consumption here has not grown in proportion to the capacity of production, mainly in consequence of wages of labor having been only slightly increased — not at all in proportion with the rise in commodities prices — the people thus being prevented from buying in the measure that they otherwise would do. If, nevertheless, all branches of industry are fully occupied just now, with labor fully employed, it is precisely this expansion of industry that will increase German competition with foreign countries. "German industry has greatly increased its markets abroad because of our excellent machinery, our ex- emplary organizations and the bounty-giving policy of the great syndicates. Germany is also helped by her large and efficient mercantile marine and the great number of German banks in foreign countries. There is no country in the world where the results of German industry have 56 Capital Investments in Canada. not been carefully introduced. Not even the half savages in the most solitary parts of Africa are considered too mean to trade with. The pressure of production in excess of home consumption will force German manufacturers to use the dumping method in a still greater degree than at present." On the other hand, the directors of the Deutsche Bank of Berlin, in their last annual report, urged the advisability, and even the necessity, of foreign invest- ment as a part of Germany's economic system. Mr. Bernhard Dernburg, former Colonial Secretary, and him- self a banker, took issue with the view of the German authorities in barring the shares of the Chicago, Mil- waukee and St. Paul from the Stock Exchanges on the ground that the country was in danger of being flooded with "dangerous speculative securities." Mr. Dernburg declared that foreign loans should be extended in Ger- many rather than restricted, because Germany's ability to expand her export trade was directly involved. He attacked the theory that the introduction of foreign stocks and bonds injuriously affects the popularity of German consols and other Government issues. These, he said, have nothing particularly attractive in themselves and must be viewed from the interest-bearing standpoint purely, the same as other investments. In discussing the question the Deutsche Bank says : — "These foreign investments have become a necessity for Germany's economic system. Frequently, and especi- ally in times when high rates of interest prevail, such securities prove serviceable in adjusting Germany's finan- cial relations with foreign markets. Notwithstanding a few regrettable losses, which were sustained more than twenty years ago by reason of the non-fulfilment of obli- gations assumed by foreign Governments, the average Capital Investments in Canada. 57 result of German investments in foreign securities is exceedingly favorable, and, as can be shown, has en- hanced the national wealth by many hundreds of millions of marks. "Although our activity in issuing new securities is principally and preferably directed toward domestic issues, the Deutsche Bank, after careful investigation and deliberation in each instance, has participated in the introduction of a moderate amount of foreign securities, and may point to the fact that for a long period of years not a single security of foreign origin which it has intro- duced at German Stock Exchanges, has been in distress. But even from bonds which defaulted twenty years ago, Germany's wealth has greatly increased, as was the case with the securities of the Northern Pacific Railroad, the larger part of which has long since gone back to the issuing country with considerable advantage to the Ger- man holders, or may be profitably sold to America at any time." CHAPTER VI. OTHER COUNTRIES' INVESTMENTS IN CANADA. Dutch money is being placed in Canada in the pur- chase of agricultural land and in mortgages. One of several mortgage companies formed in Holland is ar- ranging to advance loans on mortgages in the prairie .provinces at the rate of from $750,000 to $1,000,000 a year. In 1910 Professor Mansholt, of the Dutch Agri- cultural College, and Mr. A. H. Hartvelt, a capitalist of Rotterdam, were visitors to Canada. Mr. Hartvelt came as the representative of Dutch capitalists and proposes to purchase many thousands of acres. He says that Canada is comparatively unknown in Holland, but con- siders there is an admirable outlet for Dutch capital, and has large projects in view. Early this year the Netherlands Mortgage Company was proposed in Amsterdam for the purpose of investing Dutch money in Canada. Some of the promoters had a conversation with Sir Charles Fitzpatrick, of Ottawa, and as a result, it is alleged by Mr. W. T. R. Preston, Canadian Trade Commissioner at Amsterdam, the com- pany was not incorporated. The reader is not concerned with the personal merits of this incident, but happily -confidence was re-established among some of the parties and the chief promoter visited Canada in April, 191 1, to seek openings for Dutch capital. The wealthiest and most important of the previous syndicates refused to -enter the new combination, although it is to be sincerely :-hoped Canada will later benefit by their capital. Capital Investments in Canada. 59 The following is an extract from a letter addressed fry Judge W. H. de S. Lohman, of The Hague, dated December 2nd, 1910, to Sir Charles Fitzpatrick, of Ottawa. It is printed because it throws interesting light on the admirable cautiousness of the European investor : — "The reasons of my withdrawal are chiefly the following: — The opinion of Sir Fitzpatrick is that there is in Canada certainly opportunity for doing business, but he believes that at this moment it is not advisable without consideration to start busi- ness, because the value of the land is not quite real, and after some time will decline in value. "He was also of opinion that if one will insist on a security of 50 per cent., our bank could not re- alize 7% per cent, interest, because with a similar security money can easily be obtained' at 5 per cent. "He further deemed it of the greatest import- ance that those who may engage in the management should be personally acquainted with the country before starting, and to make it dependent on the experience obtained there whether business should he started now or later. One of the greatest risks he saw in the necessity for a bank doing business. A private person, he told me, who is not in a hurry has all opportunities of investing his money safely an<3 getting a good interest ; a bank, however, runs the risk that bad securities are put in its hands and therefore it is very necessary that the managers of the bank themselves are thoroughly acquainted with the situation in Canada, and 1 especially with agriculture. "Mr. Fitzpatrick is a person who on account of his position and his past deserves confidence in a high degree, and may be deemed to possess a thorough knowledge of the situation in Canada. I cannot doubt the correctness of his statements ; ■whether they are of sufficient importance to wait some time in accordance with his opinion is an- other question. However, the uncertainty about the business must be sufficient for me as a member of 60 Capital Investments in Canada. the Judiciary to necessitate my withdrawal, though nobody else could be blamed, if, in assuming too favorable results, a hazardous enterprise was start- ed against the advice of a competent expert. "As to this, I repeat what Sir Fitzpatrick said to me expressly, that Canada has a good future and offers a good opportunity for doing safe busi- ness. If, however, our bank should be less pros- perous I could never be personally free from the re- proach that one, whom I ought to consider a com- petent expert, had warned me in vain in proper time." It is almost certain that in due time the Dutch capitalists will not only accept the advice of Sir Charles Fitzpatrick, but will also invest their money in Canada on the advice of Canadian Trade Commissioner. Lands, loans and to a small extent Canadian railroad securities appear to be attracting Belgian capital. Sev- eral Belgian companies this summer have made con- siderable purchases of Western prairie lands and British Columbia fruit lands. Mr. F. de Jardin, of Antwerp, is associated with the formation of three companies hand- ling Belgian capital in the Dominion. One mortgage company, with headquarters in Antwerp, has during the past two years lent about $2,000,000 on mortgages in the West. Belgium has a surplus population and an over-supply of money. Each year the postal savings banks record total savings of $200,000,000. Mr. Brunner, head of the private banking house of Brunner at Brussels, who recently visited Canada, told me he estimated that at least 10,000 Belgians are now residents of this country. He thinks that fact and the fact that financiers of Bel- gium are becoming more interested in the resources and investment possibilities of the Dominion will divert several millions of capital from his country into Cana- dian channels. Capital Investments in Canada. 6i Little Norwegian capital is invested in Canada, although a fairly large settlement of Norwegians is established in the vicinity of Wetaskiwin and Red Deer, Alberta. The number is increasing rapidly. This means the inflow of more money into Alberta, although it repre- sents only small amounts invested in farming operations. Austria has practically no investments in Canada, although the question of interesting Austrian capitalists in Canadian lands is being considered. The fact that that country contributes largely to the emigration stream to Canada may be a contributory factor to investment at a later date. Reimbursements for corn, which is sometimes •exported from Canada to Austria, are probably made through Belgian bankers. Twenty shares of the Quebec Railway Light, Heat and Power Company are held in Spain. The chief Russian investment is that of Doukhobors in many acres of land in the Kootenay District, British Columbia. A colony has been located in that province, and four hundred Doukhobors recently left the Yorkton District of Saskatchewan to take up land in the settle- ment. They find the climate there more suitable for them, and, even if the holdings are smaller, the returns are good from fruit and general farming. The value of their investment is approximately $1,500,000. Canadian government and railway securities have found their way to Turkey. I learn that one bank at Constantinople not long ago purchased $3,000,000 worth of these bonds. This was done with a view to diver- sifying the investments of the bank in question. The introduction of capital in Turkey is rather jealously watched. A few months ago the German foreign office commenced an inquiry regarding certain concessions in Asia Minor long in negotiation between the Turkish government and Rear-Admiral Colby M. Chester, U.S.N. , 62 Capital Investments in Canada. retired. The admiral represents, it is said, a group of American financial interests, including, it is understood here, the Standard Oil Company. Recently Baron Mar- schall Bieberstein, the German Ambassador at Constanti- nople, represented to the Porte that for the Turkish government to grant these concessions would be to controvert the mining law agreed upon by the Porte and the European Ambassadors. The representations of the German diplomats appear to have been made at the instance of the Anatolian Railway Company, which is financed largely by the Deutsche Bank. The entrance of American capital to Turkey is re- garded with misgivings by the German, French, and British interests already there. The Turkish government encourages investments from the United States, as they will tend to relieve it somewhat of diplomatic pressure whenever questions relating to finance arise. Until lately, Italy has been a poor nation, and a borrowing one. In recent years the government, it iy believed, for sinking funds, and other public bodies, as well as individuals, has been buying back Italian bonds sold abroad, until at present the Italian government debt is largely held in Italy. The investment of Italian capital' in Canada is very small. That country's chief contribu- tion to the Dominion is labor. The immigrants from Italy send home from Canada large sums of money an- nually to their relatives. *, CHAPTER VII. CANADIAN GOVERNMENT BORROWINGS IN LONDON. As we have seen, a large amount of British capital has been invested in government loans, both Dominion and provincial. The following is a summary of government flota- tions in London from January, 1905, to April, 191 1 : — Government. Amount. Dominion £36,000,000 Manitoba 2,465,000 Alberta 1,811,000 Ontario 2,020,000 Saskatchewan 1,410,900 New Brunswick 450,000 Total £44,156,900 Of the total Canadian government borrowings in London in the period under review, amounting to ^"44,156,900, Dominion government loans aggregate ^36,000,000. The three Western provinces borrowed ^"5,686,900. Manitoba with ^2,465,000 was a heavier borrower than Ontario with ^2,020, 000. New Bruns- wick was the only provincial borrower among the Mari- time provinces, the amount being ^450,000. The following are details of the Government bor- rowings in London : — 64 Capital Investments in Canada. 1906. Province of Ontario £1,200,000 1907. Dominion of Canada £1,500,000 1908. Dominion of Canada £3,000,000 do. 5,000,000 do. 5,000,000 Province of Saskatchewan 410,900 do. Manitoba 308,500 £13.719.400 1909. Province of Alberta £ 41 1,000 Dominion of Canada 6,000,000 Province of Ontario 820,000 do. New Brunswick 450,000 Dominion of Canada 6,500,000 Province of Manitoba 156,500 £i4,337.5oo 1910. Province of Manitoba £1,000,000 Dominion of Canada 4,000,000 Manitoba Province 1,000,000 Dominion of Canada 5,000,000 Province of Saskatchewan 1,000,000 £12,000,000 191 1 (to April). Alberta Province £1,400,000 The Dominion government has enjoyed excellent credit in London, and its issues in that market have usually been well absorbed. The changing appetite of the investor, requiring a larger return upon his capital, is a consideration which has not been overlooked by Mr. Fielding, the Dominion's Minister of Finance. The yield of bonds to the investor has been steadily increasing over a period of years. That period almost exactly corre- sponds to the time in which the price of commodities has Capital Investments in Canada. 65 been advancing. When the income of the conservative investor can buy less than it previously did, only two courses are open to him. One is to reduce his standard of comfort. The other is to sell his high priced bonds and look for a larger interest on something not quite so safe. This is one of the results of inflation, and, coin- cidently with such periods speculative booms, in land as in America or in rubber and oil shares as in London, are always observable. As a general rule, bonds tend to improve when the price of commodities is low, and vice versa. The credit of the particular city may almost be described as a sec- ondary influence. While this assertion is true, it yet remains to be seen whether or not the present specu- lative tendency and the advancing high prices of com- modities in North America are not to some extent per- manent factors. There will be a swinging of the pen- dulum at periods, but it seems highly probable the in- vestor will ask in future a larger yield upon his capital than hitherto. That financial institutions and corporations desire better results than afforded by the most famous national securities is becoming more evident every day. Mr. E. A. Hoare, presiding at a recent annual meeting of the Bank of British North America, drew attention to the fact that the bank had sold $681,333 of Consols in which it had invested. "We are sorry," he said, "of the fre- quent necessity of making provision from our profits for the depreciation of this security, and, therefore, we de- cided to make a change into exchequer bonds, which are not so liable to fluctuations in price." The 3^ per cent. Dominion of Canada loans have, therefore, had a more difficult road to success than was the case at one time. The British investor is beginning to take greater chances and at the same time is learning 66 Capital Investments in Canada. the art of discrimination. In July, 1909, a Dominion 3^ per cent, loan of ^6,500,000 was floated in London, and for the second time Mr. Fielding appealed to the small investor by allowing applications for amounts under ;£lOO. In connection with this loan, these small amounts aggregated ^5,180. Mr. F. W. Taylor, manager of the Bank of Montreal in London, has kindly given me the following details : — Bonds. Applications. Aggregating. For £10 25 £250 20 29 580 30 IS 450 40 4 t6o 50 62 3,100 60 6 360 70 4 ^8o £5.180 These figures compare with the ^6,000,000 Cana- dian loan made in January, 1909, as follows : — Bonds. Applications. Aggregating. £10 126 £1,260 20 153 3.060 30 62 1,860 40 28 1,120 So 215 10,750 60 8 480 70 S 350 80 6 480 £19,360 The Dominion is likely to be a large borrower in coming years, as it has many big undertakings in hand and in view. Provincial government borrowings have been fairly heavy during the past six years, as the above figures show. Few provincial government loans have been marketed in Canada, one notable exception being Capital Investments in Canada. 67 an issue of a $3,500,000 loan by the Ontario government, which was raised in Canada. The bonds were sold at a 2 per cent, premium, but the absorption was slow. The rate of interest was 4 per cent. The following notes respecting the Dominion's bor- rowings in London since 1907 will be of interest : — In December, 1907, a loan of ^1,500,000 4 per cent, debentures, due 1st October, 1912, was floated at par in London, with option to holders, up to 30th September, 1910, of conversion into 3 per cent, inscribed stock, 1938, on the basis of ^105 stock for each £100 in debentures. This loan was raised for the purpose of providing for obligations arising out of construction of public works and for the redemption of maturing liabilities. In February, 1908, a loan of ^"3,000,000 3^ per cent, stock, due 1st July, 195c!, with option to the Gov- ernment to redeem at par on or after 1st July, 1930, on giving six months' notice, was floated in London. The loan was issued at par and was raised for the purpose of providing for maturing liabilities, for obligations in connection with the construction of the National Trans- continental Railway, and for other purposes. Holders of the ^"1,500,000 4 per cent. Guaranteed Intercolonial Railway bonds, which would mature on 1st April, 1908, were offered an equivalent nominal amount of this stock in exchange for the bonds held by them. In June, 1908, a 3^ per cent, loan of ^5,000,000, due 1st May, 1912, was floated in London. The loan was issued at par and was raised for the purpose of pro- viding for maturing obligations and construction of public works. Holders of 4 per cent, bonds and stock, due 1st November, 1908, were offered in exchange an equivalent nominal amount of this issue. An option, up to 30th September, 1910, was allowed to holders of this 3^ per cent, stock and bonds, of con- 68 Capital Investments in Canada. version into 3 per cent, inscribed stock, 1938, on the basis of ,£106 of that stock for each ^"100 of 3^ per cent, stock or bonds. In October, 1908, a loan of ^5, 000,000, j,y 2 per cent, stock, due 1st July, 1950, with option to the Gov- ernment to redeem at par on or after 1st July, 1930, on giving six months' notice, was placed on the London market. The loan was issued at par and was raised for the purpose of providing for obligations in connection with the construction of the National Transcontinental Railway and for other purposes. Holders of 4 per cent, bonds and stock which matured 1st November, 1908, were offered an exchange for an equivalent nominal amount of this stock. In January, 1909, a loan of ^6,000,000 3% per cent, bonds, due 1st July, 1919, with option to the government to redeem the whole or any portion by drawings at par on or after 1st July, 1914, on giving three months' notice, was issued at 99X P er cent, in London for the purpose of meeting maturing obligations to provide funds for the construction of public works, and for general purposes. Holders of these bonds have the option, up to 30th November, 1913, of conversion into the existing 3 per cent, inscribed stock, 1938, on the basis of £110 of that stock for every ^100 bond. In July, 1909, a further loan of ^6,500,000 2% per cent, stock, due 1st July, 1950, with option to the gov- ernment to redeem at par on or after 1st July, 1930, on giving six months' notice, was issued at ^98^2 per cent, in London for the purpose of providing for the out- standing balance of the loan maturing 1st January, 1910, and to provide for the advance of $10,000,000 (say, ^2,054,794 10s. sd.) to the Grand Trunk Pacific Railway Company to assist in the construction of the National Transcontinental Railway. Capital Investments in Canada. 69 In January, 1910, a loan of ^4,000,000 3^ per cent, stock, due July 1st, 1950, with option to the government to redeem at par on or after July 1st, 1930, on giving six months' notice, was issued in London at ^99 per cent, for the purpose of providing for the redemption on July 1st, 1910, of the 4 per cent. 1910-35 loan. In May, 1910, a further loan of ^5, 000, 000 2% P er cent, stock, due July 1st, 1950, with option to the gov- ernment to redeem at par on or after July 1st, 1930, on giving six months' notice, was issued in London at £99% per cent, for the purpose of providing for the redemption of ^3,500,000 treasury bills, due July 1st, 1910, and ;£i,5oo,ooo 4 per cent, guaranteed bonds, due October 1st, 1910. Nova Scotia has not maiketed a loan in London since 1904. The following loans were floated overseas in the years mentioned : — Year. Amount. Security. 1892 £200,000 3% per cent, debentures. 1899 164,000 3 per cent, inscribed stock. 1904 650,000 z% per cent, inscribed stock. Total £1,014,000 The first loan was required for the purpose of paying off the floating debt of the province, which had in great part arisen from expenditures on public works charge- able to capital — railways, bridges, roads and public buildings — and to provide for expenditure of a similar character already authorized. Prior to the union of the provinces, Nova Scotia had large transactions in the English money market. The Nova Scotia debentures, which were placed through leading financial houses, held a high position in the list 70 Capital Investments in Canada. of Colonial Government securities. All these debentures have matured and have been redeemed. For a number of years after the union of the provinces, Nova Scotia did not issue debentures. The financial arrangements respecting the Union placed to the credit of the province in the Federal treasury a sum of money which was available for expenditure on the public works of the province, and was drawn upon for that purpose. This arrangement was still open to the government of Nova Scotia, there being at the credit of the province at Ottawa upwards of a million dollars. As the Dominion Govern- ment were bound by statute to pay to the province a high rate of interest on this money, the government of Nova Scotia decided not to draw from the funds so invested, but to provide for the necessary public services of the country by issuing debentures at a lower rate of interest. The loan of ^164,000 was required for the purpose of paying off certain floating debts of the province, which had in great part arisen from expenditures on public works chargeable to capital, railways, bridge and public buildings, and to some extent to provide for expenditures of a similar character already authorized. The loan of ^650,000 was required for the purpose of paying off certain floating debt of the province, which had in a great part arisen from expenditures on railways, and, to some extent, to provide for expenditures of a similar character already authorized. In addition to the above loans, debentures of Nova Scotia, amounting to $675,000, dated May 15th, 1905, payable in London, and due 1945, were issued and de- livered to the Halifax and South- Western Railway Com- pany in lieu of subsidy in connection with the Halifax and Yarmouth Railway, and they are secured by a first mortgage on the railway; and $304,000 of debentures Capital Investments in Canada. 71 payable in London were issued and delivered to the Halifax and South- Western Railway Company in lieu of subsidy for the Middleton and Victoria Beach Railway, and are secured by a first mortgage on that railway. The province holds a mortgage of $3,021,191 on the railway of the Halifax and South-Western Railway Com- pany. This is to secure the advance made to the com- pany in lieu of subsidy, to raise part of which ^650,000 of sterling debentures were issued in 1904. In May, 191 1, Nova Scotia had a temporary loan of $1,435,666 for six months, the money being borrowed principally for bridges. New Brunswick has had no dealings with the London money market since 1908. Borrowing since then has been of a temporary nature. It will be noted from the following statement of the public debt of the Province of Quebec at June 30th, 1910, that no public loans have been issued since 1897. The statement does not include loans of the province which have been paid : — Amount. Amount. Date of Issue. Redeemed. Outstanding. Balance. July 1, 1880 $3.o42.iS3-33 $1,233,700.00 $1,233,700.00 July 1, 1882 72°.753-33 1.712,580.00 1,712,580.00 do. do 286,000.00 780,500.00 780,500.00 Jan. i, 1888..... 330,933-33 3,182,800.00 3,182,800.00 Mar. 1, 1894. ••• 389,333-33 2,530,666.67 2,530,666.67 Dec. 30, 1894 5.332,976.00 5.332.976.oo May 1, 1896 2,725,333.33 292,000.00 292,000.00 April 1, 1897 1,360,000.00 1,360,000.00 April 1, 1897 9,236,061.48 8,133,143.28 $7,494,506.65 $25,661,284.15 $24,558,365.95 72 Capital Investments in Canada. The loan of December 30th, 1894, is redeemable after January 20th, 1905, by six months' notice. Date of Date of Rate Amount of Issue. Maturity. Where Payable. % Loan. July 1, 1880 July 1, 1910 London or Paris 4^ $4,275,8S3-33 July 1, 1882 On or after do. S 2,433,333-33 July 1, 1912, by one year's do. do. notice. Quebec 5 1,066,500.00 Jan. 1, 1888 Jan. 1, 1928 London or Paris 4 3,513,733-33 Mar. 1, i8g4 Mar. 1, 1934 London or Mont. 4 2,920,000.00 Dec. 30, 1894 Jan. 20, 1955 Paris 3 5,332,976.00 May 1, 1896 May 1, 1936 London or Mont. 4 3,017,333-33 Apr. 1, 1897 Apr. 1, 1937 do. do. 3 1,360,000.00 Apr. 1, 1897 Apr. i, 1937 do. do. 3 9,236,061.48 $33,155,790.80 The present outstanding debt of Manitoba Province is $12,762,926, much of which has been floated in the London market. The following table gives details of the Manitoba borrowing since 1888 : — Rate Date. Amount. Where made. % Purpose. May 1, 1888 $1,498,933 London 5 Public build- ings, etc. Dec. 30, 1893 997,666 do. 4 do. Nov. 1, 1900 500,000 Chicago & Mont. 4 do. July 1, 1907 1,000,000 Montreal 4 Telephone construction . July 1, 1907 3,399,853 do. 4 Bell Tele- phone pur- chase July 1, 1909 499,806 do. 4 Telephone construction . May 1, 1910 4,866,666 London 4 Telephone construction, grain eleva- tors, etc., and drainage. Capital Investments in Canada. 73 All these issues were in debenture form except that of May, 1910, which was a stock issue. The intrinsic merit of Canadian provincial govern- ment securities, it is to be feared, have not been fully appreciated in Great Britain. This point is exemplified by the fact that in nearly every case the principal city of a province of Canada can borrow on as good terms as the province in which that city is situated. CHAPTER VIII. MUNICIPAL BORROWINGS IN LONDON. The Canadian municipalities have been heavy bor- rowers, as the following summary of flotations in Lon- don, from January, 1905, to April, 191 1, shows: — City. Amount. Winnipeg-, Man ,£2,827,642 Montreal, Que. 2,523,800 Vancouver, B.C 1,968,900 Edmonton, Alta 802,100 Calgary, Alta 583,200 Maisonneuve, Que 879,000 Westmount, Que 500,000 Toronto, Ont 394, 100 Victoria, B.C 277,300 Hamilton Ont 204, 100 Saskatoon, Sask 188,600 Regina, Sask 318,300 Quebec, Que 407,621 Fort William, Ont 165,100 Ottawa, Ont 1 56,900 St. John, N.B 115,000 Port Arthur, Ont 1 10,700 Sherbrooke, Que 102,700 Moose Jaw, Sask 101,300 £12,626,363 Eighteen cities and towns have obtained ^12,626,- 363. This is more than ^4,000,000 in excess of the -provincial government's total loans in the six years' period. ' Winnipeg and Montreal have been the most fre- Capital Investments in Canada. 75 quent visitors to the overseas market, and have obtained the largest aggregate sums. Vancouver loans were not far short of ^2,000,000, while Edmonton and Maison- neuve obtained a little less than ^1,000,000 each. The loans of Maisonneuve and Westmount together amount- ing to ;£i, 379,000 should be added to those of Montreal, as they are now suburbs of that city. This gives Mont- real total borrowings of ^3, 902, 800, placing that city at the head of the list. It is interesting to examine these borrowings by provinces as in the following table: — Province. Amount. Quebec £4,413,121 Manitoba 2,827,642 British Columbia 2,246,200 Alberta 1,385,300 Ontario 1,030,900 Saskatchewan 608,200 New Brunswick 11 5,000 Total £12,626,363 This is a somewhat surprising result, it being gen- erally thought that municipal borrowings in the prairie provinces were heavier than elsewhere. Quebec province is more than ^1,000,000 ahead of Manitoba, which has the next largest total. Montreal contributes the best part of the Quebec provincial record Ontario's loans are half those of British Columbia, and Saskatchewan's bor- rowings amount to half those of Alberta. New Bruns- wick is the only Maritime representative with a small loan of ;£i 15,000 obtained by St. John city. It would seem that Montreal, Winnipeg and Vancouver especially should examine their borrowing position with great care, while Edmonton's figures are also sufficiently large for caution. The entire municipal situation in relation to borrowing should be carefully analyzed by the contri- buting cities. 76 Capital Investments in Canada. The following are the details of municipal flotations in London, by years : — 1905 (City). Amount. Quebec £ 78,000 1907. Winnipeg- £327,642 Regina 1 1 1,000 Edmonton 1 39,400 Vancouver 244,900 £822,942 1908. Regina £113,700 Edmonton 187,400 Montreal 1,000,000 Winnipeg 1,500,000 Quebec 113,921 Saskatoon 100,000 Calgary 133,000 Vancouver 405,000 Victoria 1 59,800 Sherbrooke 102,700 St. John 1 15,000 £3,930,521 1909. Montreal £ 400,000 Winnipeg 500,000 Calgary 124,800 Ottawa 156,900 Toronto 394,100 Vancouver 286,400 Edmonton 187,300 Fort William 60,000 £2,109,500 Capital Investments in Canada. 77 1910. Calgary £ 325.400 Montreal (town of St. Louis) 123,800 Winnipeg- 500,000 Edmonton 288,000 Vancouver 453,600 Fort William 105,100 Montreal 1,000,000 Moose Jaw 101,300 Saskatoon .' 88,600 Regina 93,600 ^3.079.400 191 1 (to April). Westmount £ 500,000 Hamilton 204,100 Maisonneuve 879,000 Victoria 1 17,500 Port Arthur 1 10,700 Vancouver 579,000 Quebec 215,700 ^2,606,000 Conditions in municipal finance have been similar in recent years, the demand for funds having continued with but slight variation. Municipalities generally are financing current requirements only, the majority having, during 1908, liquidated accumulated bank loans by issuance of term debentures. Certain cities and towns have been somewhat lax in the past regarding the prpper provision of sinking funds and the preparation of money by-laws that they may be absolutely indisputable one year or thirty years hence. Great Britain is apparently able, with its unique invest- ment judgment, to make due allowance for those short- comings which heretofore have not reacted considerably 78 Capital Investments in Canada. upon Canadian municipal credit. This may not always be so. On the other hand, it is only fair to note that the chartered banks and bond houses, usually the sponsors of these particular flotations, have invariably acted as a valuable influence to the maintenance of good credit. The municipalities also have shown much more disposi- tion to regard their credit as a delicate and important factor. Room for this criticism, therefore, shortly should not exist. Sixteen Canadian bond houses have interested twelve millions of dollars of British capital in Canadian municipal bonds. Of these, four dealers have supplied me with figures for five years. Some have only recently interested the English investor. Allowing for that fact, the average annual investment is perhaps three million dollars. The Old Country buyer apparently prefers straight term or sinking fund bonds. In that way the principal is not disturbed. Occasionally instalment school bonds have been sold, but not to any great extent. The method of repayment apparently does not suit the market well. The demand for municipal bonds would probably have been larger but for the fact that the return of the higher class securities is apparently not considered large enough. Some selling agencies think that the English market desires municipal bonds that can be placed at par or at a slight premium rather than at a discount. The experi- ence of certain firms is that municipal bonds selling at a discount which would give decidedly good yields are not acceptable, no matter how excellent they may be. The credit of Canadian municipals in London is fairly high and the outlook for an increased demand is good. The investor has a fair appreciation of the rapid municipal expansion, recognizing that considerable sums are needed for the financing of this development. An improvement Capital Investments in Canada. 79- in the British call for Canada's municipals will perhaps to some extent depend upon the united action of Cana- dian municipalities with regard to their borrowing policy. Mr. E. R. Wood recently drew attention to the fact that Canadian municipalities are realizing the importance of placing their finances on a sound business basis, and adopting a conservative policy in regard to all expendi- tures. For some years past the rapid growth of Western Canada placed the progressive cities and towns under the necessity of making heavy capital expenditures, in order to provide those utilities demanded by modern standards of health and comfort. To the conservative investor these frequent loans were not always acceptable, but to-day the credit of our Western municipalities stands high. There is a growing public sentiment in Western Canada against extrava- gance in municipal finances. Nothing is more indicative of the high standing of Western municipal securities than the growing favor with which they are being regarded by the British investing public. A few years: ago only the obligations of the largest centres in Western- Canada could be placed in the London market, while,, during the present year, the British investor has taken in quantity the debentures of those smaller cities and towns whose location and natural advantages give pro- mise of rapid and permanent expansion. Eastern municipalities have, as a rule, pursued their usual conservative policy in making new expenditures,, and, as a result, their debentures have been readily ab- sorbed both at home and abroad. Canada depends largely upon Great Britain for muni- cipal loans. The following table, showing Canadian municipal issues in 1910, will be sufficient evidence : — 8o Capital Investments in Canada. Canadian Municipal issues, 1910. Eastern municipalities issued $19,120,660 Western municipalities issued 15,826,580 School districts issued 801,450 Total $35,748,690 Sold in Great Britain $23,355,128 Sold in Canada 12,043,562 Sold in the United States 350,000 $35,748,690 Of the total, $35,748,690 municipal issues, there- fore, emitted by 141 Western municipalities and 160 Eastern municipalities last year, 65.30 per cent, was absorbed in Great Britain, 33.70 per cent, in Canada and 1 per cent, in the United States. In some quarters hopes have been raised that Cana- dian municipal bonds may be introduced on the Bourse in the near future. It seems improbable that the French people will ever become active bidders for the bond issues of Canadian cities. The market for Canadian bonds is mainly in Great Britain. The people there are familiar with this type of issue, and appreciate conditions gov- erning the value of such issues. Then again there are a number of people in England, large banking firms and private investors, who make a specialty of such issues and will bid prices which the French investor would regard as earning too low an interest rate for him to place his money there. Further, the French investors have most of their resources for this type of security taken up with the European national and municipal issues. Especially is this true in regard to the Russian loans which have been floated during the past two years. All of those have almost entirely been underwritten by French firms. They are familiar with these stocks, and hence they like to deal with them. Capital Investments in Canada. 8i In connection with the buying by Great Britain of municipal securities it must be remembered that the home demand is large. Banks', insurance com- panies and numerous other financial institutions are heavy investors in the Dominion's municipals. The strength of the market is well proved by the fact that despite the recent tendency to see a higher yield on capital, municipals offering a comparatively small return and good security have attracted more attention during the latter, part of the six years' period than during the former part. CHAPTER IX. THE FINANCING OF CANADIAN RAILROADS. Canada owes much to the British investor, if only because he has almost entirely financed its extensive railroad system. Before analyzing loans raised for this purpose, a few statistics respecting the growth of Cana- dian railroads will be of interest. In 1836, there were only 16 miles in operation. In 1867, the year of con- federation, 2,278 miles were being operated. In 1884, for the first time the mileage exceeded 10,000; to be exact, 10,273. In 19,10, the mileage had increased to 24,731, and during the present year railroad construction is very active. The following table shows the distribu- tion of railroad mileage by provinces: — Miles. Ontario 8,230.2s Quebec "3,794.94 Manitoba 3,220.62 Saskatchewan 2,931 .90 Alberta 1,488.42 British Columbia 1,832.28 New Brunswick 1,321.65 Nova Scotia 1.350.56 Prince Edward Island 269.33 Yukon 90.91 Total 24,730.86 Capital Investments in Canada. 83 The mileage during the next few years will probably show large increases in Northern Ontario, Saskatche- wan, Alberta and British Columbia particularly. The total of outstanding railroad obligations in 1910 was $1,410,297,687. Mr. A. W. Campbell, the Deputy Min- ister of the Department of Railways and Canals, Ottawa, has made an earnest effort to ascertain what deduction should be made from the total capital liability of Cana- dian railways. He has allowed for many special condi- tions, such as government subsidies, extinct stock and bond obligations, absorption of small railroads, railroads in stages of construction, etc. He has fixed the amount at $226,298,988. When this is subtracted from the $1,410,297,687 given above, the aggregate capital lia- bility is reduced to $1,183,998,699. There are in the Dominion 2,043.84 miles of govern- ment owned and operated railway, against which neither stocks nor bonds are outstanding. There are also 75.36 additional miles of line to which no capital liability is attached. These two items make a total of 2,119.20 miles, which should be deducted, for the purpose of the present calculation, from the 24,731 given as the total railway mileage. Dividing 22,612 miles of railway into a total capitalization of $1,183,998,699 we have $52,361 as the quotient. That is the actual outstanding capital liability per mile against railways in Canada. Only 7 per cent, of Canadian railroads are owned by the Government. Canada has the largest railway mileage in the world in proportion to its population, and its railroad mileage has increased in forty years from 2,617 to 24,731 miles, or 845 per cent. Compared with European countries, Canada is third in the list in the matter of railway mileage increase during the past fifty years, with a percentage gain of 1,132. 84 Capital Investments in Canada. The following is a summarized statement of Cana- dian railroad borrowing for the past six years and four months, ended April, 191 1: — Railway. Amount. Grand Trunk Pacific .£17,900,000 Grand Trunk Pacific Branch Lines Co 1,270,500 Canadian Northern 12,742,784 Canadian Northern Ontario 1.593. 569 Canadian Pacific 10,857,(200 British Columbia Electric 3,615,000 Grand Trunk 3,348,400 Alberta and Great Waterways 1,520,550 Canada Atlantic 1,025,000 Duluth, Winnipeg and Pacific 950,000 Nova Scotia Eastern 940,000 Atlantic, Quebec and Western 925,000 Algoma Central and Hudson Bay 770,000 Wisconsin 5 14,403 Winnipeg Electric 300,000 Montreal Street 460,000 Central Ontario 200,000 Dawson, Grand Forks and Stewart 125,000 Central Counties 97, 500 Temiscouata 50,000 £59,204,906 In railroad borrowing, one of Canada's new Trans- continentals, the Grand Trunk Pacific, is the heaviest debtor with ^17,900,000. Adding to this the ^1,270,- 500 obtained for its branch lines, there is a total for that road of ^19,170,500, or almost one-third of the aggre- gate railroad borrowing of Canada in the past six years. The Canadian Northern, which will also have a transcontinental road in a few years, is not far behind its rival, for it has obtained in London ^12,742,784. To this should be added its Ontario lines, which have borrowed ^1,593,569, giving the Canadian Northern a total of ^14,336,353, about one-quarter of the aggregate Capital Investments in Canada. 85 railroad loans. These two roads together have obtained overseas ^33,506,853 of a total of ^59, 204,906. Three electric railways, the Winnipeg, the Montreal and the British Columbia, borrowed in the six years ,£4,375,000, the British Columbia Electric having had £3,615,000 of that amount, The Canadian Pacific's loans are chiefly represented by new stock issues. The following are the details of the railroad flota- tions in London, by years : — 1905. Canadian Northern Ry £ 600,000 Grand Trunk Pacific Ry 3,004,000 Canadian Northern Ry 1,923,287 Grand Trunk Pacific Ry 3,200,000 Canada Atlantic Railway Co 1,025,000 Nova Scotia Eastern Ry 940,000 Canadian Northern Ry 1,240,000 British Columbia Electric Ry 185,000 £12,117,287 1906. Dawson, Grand Forks and Stewart Ry £ 125,000 Grand Trunk Ry 1,000,000 Atlantic, Quebec and Western Ry 750,000 Temiscouata Ry 50,000 Canadian Northern Ry 1,000,000 £2,925,000 1907. Grand Trunk Pacific Ry £1,000,000 British Columbia Electric Ry 300,000 Canadian Northern Ontario Ry 793,569 British Columbia Electric Ry 100,000 Canadian Pacific Ry 4,857,200 £7,050,769 86 Capital Investments in Canada. 1908. Grand Trunk Pacific Ry ,£1,000,000 Grand Trunk Ry 1,000,000 Montreal Street Ry 460,000 Grand Trunk Pacific Ry 2,000,000 Canadian Northern Ry 2,000,000 British Columbia Electric Ry 200,000 Canadian Northern Ry 1,027,400 Grand Trunk Ry 598,400 British Columbia Electric Ry 500,000 Central Ontario Ry 200,000 £8,985,800 1909. Grand Trunk Pacific Ry £1,000,000 Winnipeg Electric Ry 300,000 Grand Trunk Pacific 1 ,000,000 Canadian Northern Ontario Ry 800,000 Canadian Northern Ry 1,200,000 Grand Trunk Pacific Ry 2,000,000 Canadian Pacific Ry 6,000,000 Wisconsin Ry 514,403 Atlantic, Quebec and Western Ry 175,000 Alberta and Great Waterways Ry 1,520,550 Canadian Northern Ry 850,000 £i5.359>053 1910. British Columbia Electric Ry £ 600,000 Grand Trunk Pacific Railway Co 1,000,000 British Columbia Electric Ry. Co., Ltd 530,000 Canadian Northern Ry 1,000,000 Central Counties Ry. Co 97,5oo Grand Trunk Pacific Branch Lines Co 1,270,500 Duluth, Winnipeg and Pacific Ry. Co 950,000 British Columbia Electric Ry 600,000 Grand Trunk Pacific 2,000,000 Algoma Central and Hudson Bay Ry 770,000 £8,818,000 Capital Investments in Canada. 87 ign (to April). Grand Trunk Ry £ 750,000 Grand Trunk Pacific Ry. Co 696,000 Canadian Northern Ry 358,888 Canadian Northern Ry 1,543^209 British Columbia Electric Ry 600,000 .£3.948,007 While France has helped to finance the Algoma Central Railway extensions in connection with the opera- tions of the Lake Superior Corporation, London capi- talists are advancing most of the cash. The line will be extended 150 miles to connect with the Canadian Pacific, which will cost about $4,000,000. The road will then be continued to make connections with the National Trans- continental Railway. The Lake Superior Corporation last year secured at least ;£i, 200,000 privately in Lon- don. A London and Canadian syndicate is also inter- ested in the proposed construction of the Eastern Rail- way from a point on the Intercolonial at or near Dart- mouth, N.S., to Guysborough, with certain branch lines. A contract has been signed between the Nova Scotia Gov- ernment and the railway company, which will probably complete the road within three years. It has subsidies from the Dominion and provincial governments of $12,800 a mile. The same people have purchased the Dickie and other timber areas in Nova Scotia amounting to 440,000 acres The stock of the Canadian Pacific Railroad Com- pany is probably the most widely held of any American road, with the exception of the Pennsylvania, which recently reported 64,869 shareholders. There is con- siderable difficulty in learning the number of shareholders of the Canadian railroads and in what countries the stock is held. Sir Thomas Shaughnessy informs me that 88 Capital Investments in Canada. the total number of Canadian Pacific shareholders is about 24,000, the number of Canadian holders being 2,500. Nearly all the four per cent, perpetual debenture stock and the four per cent, preference stock is held in Great Britain,. Of the common stock, holders in Great Britain have approximately 65 per cent., 15 per cent, being held on the Continent, while the remaining 20 per cent, is divided evenly between Canada and the United States. Grand Trunk shares are held by 54,200 persons, against 52,900 a year ago. This puts the Grand Trunk second only to the Pennsylvania Railroad, which has 64,869 shareholders. The Grand Trunk has ^22,474,992 common and ^23,173,632 preferred, and, as is well known, the shares are almost exclusively held in England. Mr. Charles M. Hays, president of the Grand Trunk, tells me that from seventy-five to ninety per cent, of that road's shareholders are residents in Great Britain. Ninety-eight per cent, of the securities of the Canadian Northern Railway are held in the United Kingdom. Mr. Brunner, of the Brunner banking house, Brussels, twenty-five years ago first interested Belgian capital in Canada in the shape of investments in Cana- dian Pacific Railroad stock. At that time, he tells me, he experienced great difficulty in convincing his country- men that the Dominion was more than a wild stretch of ice and snow and the Canadian Pacific something more than a fantasy. In those days Canadian Pacific Railroad was selling at 58. Belgian investors, therefore, have no reason to regret their confidence in this Canadian enter- prise. Mr. Brunner's clients have invested several mil- lions of dollars in other Canadian-owned securities, more especially Sao Paulo, Rio, and Mexican railroads. Capital Investments in Canada. 89 German capital has become interested to a small extent in the Canadian Northern enterprise, and is likely to become further interested in the near future. The British investor has suffered some losses in his liberal financing of Canada's railroads. The collapse of the Charing Cross Bank in 1910, which was heavily interested in the Atlantic, Quebec and Western Railway, is one instance. This road had borrowed at least .£925,000 in Great Britain. Grand Trunk shareholders have not enjoyed an enviable dividend record. The third preference stock received a dividend of ^ of 1 per cent, for the half year ended December, 1910. This was the first disbursement on that stock since 1907. It is only fair to note, however, that in the capable hands of Mr. Charles M. Hays, the president, the road is making gradual and progressive strides. Mr. A. W. Smithers, its chairman, recently described its position as a poor company without a land grant doing an im- mense work with limited means. The most curious railroad flotation of recent years was that of the Alberta and Great Waterways Railway, which was to open up the great Peace River country north of Edmonton. In December, 1909, $7,400,000 5 per cent. 50-year first mortgage bonds of the road were sold in England. The securities were guaranteed as to principal and interest by the Provincial Government of Alberta. The issue was made by the London branch of Messrs. J. S. Morgan & Company. Mr. W.. R. Clarke, a banker of Kansas City, was understood to be chiefly interested. It was proposed to build the road from Edmonton, north-east of the Athabaska River, to Fort McMurray, a distance of about 350 miles. Of the total issue $400,000 covered Edmonton terminals, but the bulk of the loan was based on a guarantee of $20,000 per mile on the main line and branches. The bonds, 7 -go Capital Investments in Canada. issued at no, were rapidly subscribed. Criticism was :heard in London to the effect that the Alberta Govern- ment were ill-advised in their guarantee, which worked out at about 4^ per cent., when it might just as well and as satisfactorily have been done upon a 4^th basis. A crisis in the Alberta Legislature occurred as a result of the provincial government's efforts to force the railroad agreement. The cabinet was dissolved and a royal commission appointed to investigate the deal. The -commission's report was non-committal and the commis- sion failed to take the evidence of most important wit- nesses, including Mr. Clarke, of Kansas City, the chief promoter. The provincial government then decided to cancel the railroad agreement, alleging that the company had defaulted in its bond interest. The money raised by the sale of the railroad bonds in London was on deposit in three banks in Edmonton, the bulk being with the Royal Bank. The government now seeks this money, proposing to utilize it for general public improvements within the province. In the meantime, the British bondholder must feel himself in a somewhat peculiar position, even if not as a political shuttlecock. His chief consolation is that the Alberta government have guaranteed the bonds which he holds. This guarantee will be respected by the pro- vincial government whatever happens. CHAPTER X. INDUSTRIAL INVESTMENTS IN CANADA. Until recently, British capital has shown compara- tively little interest in the development of Canadian in- dustries. During the past two years particularly, a notable change has occurred in this direction, and British capitalists are devoting considerable attention to indus- trial development in the Dominion. The following table gives the details of Canadian borrowings in Great Britain for the period under review (January, 1905, to April, 191 1), for industrial, light and power purposes: — 1905. Imperial Paper Mills of Canada, Limited £ 60,000 Montreal Light, Heat and Power Co 150,000 Shawinigan Water and Power Co 500,000 Western Canada Pulp and Paper Co 300,000 £1,010,000 1906. Canadian General Electric £ 220,000 Electric Development Company of Ontario 500,000 Canadian Pacific Sulphite Pulp Co 82,500 £ 802,500 1907. Annapolis Iron Co £ 140,000 Shawinigan Water and Power Co 200,000 Mexican Light and Power Co 480,000 Canadian General Electric Co 400,000 £1,220,000 92 Capital Investments in Canada. 1908. Penmans, Limited £ 300,000 Montreal Light, Heat and Power Co 80,000 Richelieu and Ontario Navigation Co 200,000 Kaministiquia Power Co 265,000 West Kootenay Power and Light Co 240,000 Penmans, Limited 170,000 Toronto Power Co 500,000 Western Canada Flour Mills Co 225,000 Canada Iron Corporation 364,000 £2,344,000 1909. Montreal Water and Power £ 100,000 Montreal Cotton Co 200,000 British Canadian Asbestos Co 144,032 National Drug and Chemical Co. of Canada 300,000 Lake Superior Corporation 1,028,806 Northern Light, Power and Coal Co.,, 411,522 Standard Chemical Co. of Toronto 100,000 Canadian Car and Foundry Co 648, 148 £2,932,508 1910. Ocean Falls Co., Limited £ 300,000 Canadian Car and Foundry Co ' 482,877 Calgary Power Co., Limited 350,000 Pryce Jones (Canada), Limited 70,000 Steel Co. of Canada, Limited 924,600 National Drug and Chemical Co. of Canada, Limited 49,370 Price Bros. & Co., Limited 1,000,000 Canadian North Pacific Fisheries Co 400,000 Western Canada Bag and Envelope Co 12,000 Noiseless Typewriter Co 20,000 £3,608,847 Capital Investments in Canada. 93 191 1 (to April). Canadian Steel Foundries £ 410,900 Bell Telephone Co. of Canada, Limited 250,000 P. Burns & Co., Limited 200,000 Lake Superior Paper Co., Limited 719,000 Spanish River Pulp and Paper Mills 267,000 Standard Chemical, Iron and Lumber Co. of Canada 200,000 Minnesota and Ontario Power Co 100,000 Canadian Cottons, Limited 370,000 £2,516,900 The liking of the London market for equipment issues is noticeable in the above list. Ten electric light, heat or power companies obtained nearly four millions sterling. The Shawinigan Water and Power Company obtained altogether ,£700,000 and the Montreal Light, Heat and Power Company ^230,000. One of the largest industrial borrowers was the Canadian Car and Foundry Company, its loans amounting to £1, 131, 025. Pulp and paper companies borrowed altogether in the six years £2, 368,500. Two iron corporations, the Annapolis and the Canada, got between them ^504,000. Considerable British capital has been devoted to the development of our coal mines, our iron and steel in- dustries, our lumber, pulp and paper industries, our fisheries, our milling industries, our various lines of manufacture, and other more or less local and domestic enterprises. Canadian government municipal and railway secu- rities have long been regarded with favor by British investors. A general survey of the Canadian outlook and the progress of Canadian development gave satisfac- tory assurance of returns from investments of this nature. But large investments in miscellaneous securities show a more intimate and detailed knowledge of Can- ada's commercial and industrial activities. The British 94 Capital Investments in Canada. investors are becoming familiar with Canada's more localized undertakings. They are finding it advantageous to consider the outlook of the various industries affording openings for profitable investments. The American is closely allied with Canada's in- dustrial development, and has placed large amounts of money therein. If the present tendency in Great Britain continues, it is likely that within a few years we may find the Britisher and the American not only keen rivals for the import trade of Canada, but also for shares in the financing of its industrial growth. It is stated that $1,000,000 of English capital will be invested in a new whitewear company with a factory at Three Rivers, Quebec. British manufacturers of high grade ammunition are contemplating the establishment of an assembling plant at Fort William, while a Scotch syndicate were recently considering the manufacture of fertilizers at Sydney, C.B. An English and New Bruns- wick syndicate was organized in January with capital stock of $5,000,000 for the purpose of developing the mineral oil industry in connection with the shale deposits of Alberta and Westmoreland counties, New Brunswick. Other proposed British enterprises in the industrial line are an electric smelting plant on the Ottawa River, a steel plant on the Fraser River, British Columbia, a lace fac- tory, a perforated music factory, and a furniture factory. British capital also became interested this year in a power street railway scheme at Saskatoon, while an English salt firm had under consideration the establish- ment of a branch factory in Ontario. The stockholders of the Canadian Locomotive Works, Limited, of Kings- ton, Ont., in June accepted the offer of an English syndi- cate for the sale of the works. The company was re- organized, the capital stock increased, and the capacity of the works doubled. Capital Investments in Canada. 95, In tramway, light and power and industrial bond issues the British investor is prominent. Taking the figures for 1910, we have the following result respecting a total of $7,945,400 tramway, light and power loans: — Percentage Sold in Amount. share. Great Britain $4,850,000 61 Canada 3,095,400 39 Of a total of $56,856,500 miscellaneous issues, which included a large number of industrials, the following was the disposition in 1910: — Percentage Sold in . Amount. share. Great Britain $43,847,500 76.92 Canada 12,859,000 22.73 United States 150,000 0.35 This represents the absorption of industrial bond issues alone, and naturally does not show the extent to which American capital has participated in Canadian industrial development. In the opinion of Mr. E. R. Wood, the prominent Toronto financier, the increase of British patronage of light, power, tramway and indus- trial issues was the most significant feature of Canadian bond sales during 1910. The visit of Sir George Doughty to Canada in 1910 was significant in view of his inspection of fisheries off the coast of British Columbia in the interest of influ- ential British investors. It is understood that he has strongly advised that steps be taken to establish a Cana- dian fishing industry in British Columbia backed by British capital. There is an abundance of whitefish and salmon in the fisheries extending from Vancouver north to Stewart. At present these waters are almost exclu- sively used by Americans and Japanese. In June, Sir George announced his intention of engaging in the fish- ing business at Prince Rupert, B.C. 96 Capital Investments in Canada. Another phase of this subject was discussed by Sir William Priestley, a prominent British manufacturer, on a visit to Canada. He was asked many times if he would justify the establishment of manufactories in Canada, and invariably responded by asking, "What do you mean by the word 'manufactory'?" In Great Britain, it is un- derstood the men who take hold of the raw material are making it into the finished article. In Canada it is spoken of as taking the finished article in bulk from Great Britain or the continental powers of Europe, and simply transforming it into a commodity for the indi- vidual. Sir William would not advocate the establishment of factories in Canada as he understands them in Great Britain, because the purchasing power of Canada to-day is not great enough to justify anyone connected with most of the industries to establish a concern where he has to take hold of the raw material and turn out the finished article, with only 8,000,000 of people — which is about the population to-day of the city of London, and not equal to that of Lancashire. "For example, in British Columbia," said Sir Wil- liam, "I was asked why I, in the worsted trade, could not establish a concern in that province. I replied that their area was as great as France, Prussia and Bavaria together, but that their population, for purchasing power, was only a little greater than my city of Bradford in England. Therefore, it would be foolish for me to think of establishing a manufacturing concern in British Col- umbia, or even for the consumers in British Columbia to think that such a concern could sell to them economi- cally. The demand upon variety in Vancouver and Vic- toria is just as great with respect to men's wear and women's wear as it is in any great city in England ; and no manufacturer of men's wear and women's wear could Capital Investments in Canada. 97 possibly make a profit of the consumption of the people of British Columbia, because' the cost of production would be so tremendous, to meet all the varied demands. Besides, if politicians in Canada look into the question seriously of the upbuilding of manufactories, they will find there is some natural cause why certain industries have centred in certain districts and in certain countries ; and before any English manufacturer in any branch of industry could say he could establish an industry in any part of Canada, he would have first to go very deeply into the natural conditions — water, humidity, and many other qualities that are necessary to different industries. "After putting the matter in this crude way, I have come to the conclusion that Canada has before her a great future as a manufacturing country; and I seriously believe that what she must do is, first, to increase as rapidly as possible her population, and thereby increase her productive power, and her purchasing power." Another important development is the interest of large British firms in the establishment of shipbuilding plants, floating and dry docks in Canada, and the send- ing of capital from other sources for the same purpose. A large number of new dry docks have been mooted, of which the following are the principal: — Estimated Proposed Location Cost of Company. of Dock. Dry Dock. Vancouver Dry Dock and Shipbuilding Co. Burrard Inlet, B.C $1,214,150 Canadian Vickers, Maxim Co Montreal, Que 4,000,000 British Col u.m b i a Marine Railway Co., Limited Esquimalt, B.C 3,000,000 Grand Trunk Pacific Railway Co Prince Rupert, B.C 2,000,000 98 Capital Investments in Canada. Estimated Proposed Location Cost of Company. of Dock. Dry Dock. Dominion Dry Dock Co Levis, Que EsquLmalt Graving Dock and Shipbuild- ing Co Pacific Coast 2,637,800 British Canadian Ship- building and Dock Co Sydney, N.S 6,000,000 Many, if not all, of these schemes will probably materialize. It is definitely decided that Montreal is to have a first-class dry dock, and undoubtedly the Grand Trunk Pacific Railway will build one at Prince Rupert. The Dominion Dry Dock Company may build at St. John, N.B., instead of Levis. In all the above proposals British capital forms the backbone. The Dry Dock Subsidies Act of 1910 gives encour- agement to investments of this nature. This Act differ- entiated between first and second-class docks as fol- lows : — "A first-class dock shall be capable of receiving and repairing ships of at least 25,000 tons ; shall cost not more than $4,000,000; and bonds to this amount or less shall be guaranteed for a term of 35 years. "A second class dock shall be capable of receiv- ing and repairing ships of 15,000 tons ; the cost shall not exceed $2,500,000; and the bonds shall be guar- anteed for the term of 15 years." The rapidly increasing interest of British capital in Canadian industrial growth is one of the most important developments of recent years. CHAPTER XI. INVESTMENTS IN CANADIAN LAND AND LUMBER. In land and timber properties there is a small amount of British money when compared to the invest- ments of United States interests, although much more British cash is now being invested. The estimate of United States capital in British Columbia mills and tim- ber is $52,000,000. Great Britain's land and timber in- vestments can scarcely exceed in the six years a sum of $24,000,000. The large railroad corporations have been instrumental in selling considerable land areas overseas, while land companies, some with offices on both sides of the Atlantic, have disposed of many thou- sands of acres. Timber propositions apparently have been almost monopolized by United States capitalists, when con- sidering money other than Canadian. In real estate, while the British investor does not predominate, he holds large areas in the aggregate, and is buying heavily at the present time. If any provinces are more favored than another by the English buyer they appear to be British Columbia and the Western provinces, although Ontario real estate has also attracted considerable sums. While there is comparatively little English capital in the lumber industry except a few instances where sawmills have been established in connection with pulp manufacturing plants, activity is noticed in the development of fruit lands in British Columbia's interior. These areas are ioo Capital Investments in Canada. acquired, irrigated and then leased, or sold, in small holdings. This is recognized as a good opportunity for returns. Irrigated lands in Alberta have also met with a large sale. During 1910, the Britisher exhibited greater interest in lumber propositions. The following is a list of the land and lumber com- pany flotations in London from January, 1906, to April, 1911 : — 1906. Western Canada Land Co £ 300,000 Southern Alberta Land Co 400,000 £ 700,000 1907. Canadian Estates, Limited £ 215,000 Western Canada Timber Co 75,000 £ 290,000 1909. British Columbia Fruitlands, Limited £174,600 Southern Alberta Land Co 300,000 £474,600 1910. British Columbia Fruitlands, Limited £ 174,600 Canadian Western Lumber Co., Limited 1,500,000 Western Canada Land Co., Limited 300,000 British Empire Timber Co 500,000 Dominion Sawmills and Lumber Co., Limited.... 800,000 Swanson Bay Forests, Woodpath and Lumber Mills, Limited 1 50,000 Canadian Mills and Timber, Limited 100,000 Anglo-Canadian Land Co., Limited 475, 500 Dominion Sawmills and Lumber Co 800,000 £4,800,100 Capital Investments in Canada. ioi 1911 (to April). Canadian Wheatlands, Limited £ 350,000 North Saskatchewan Land Co.j Limited 450,000 Anglo-Canadian Timber Co. of British Columbia 225,000 Columbia River Lumber Co 600,000 £1,625,000 Two of the companies, the Southern Alberta and Western Canada, went to the London market twice, the former obtaining a total of ^700,000 and the latter ^600,000. Most of the loans were raised in connection with Western lands. Among the purposes of issue were colonizing, fruit land development, saw-milling and lum- ber culting. The buying of town and city real estate is a growing feature. Britishers own property, in some cases very valuable, in all the leading municipalities. Land pur- chases for the next few years will probably be confined chiefly to the prairie and the Pacific Coast provinces. Wheat and farming lands will likely be the chief choice in the former, while fruit lands are making the best appeal to British capital in British Columbia. The rapid appreciation of real estate values in or near growing towns, large and small, is becoming a matter of more common knowledge across the ocean. The manner in which Canada has developed, and is still developing, transportation facilities is one of the most important aids to the increasing value of real estate. The Dominion experiences periodical "booms," which are unhealthy for legitimate speculation and investment. The trouble is that the future is sometimes discounted to too great an extent. Conservative financiers and Canadian bankers generally have in the past acted as an effective check to wild speculation in land. A know- ledge of Canadian conditions and possibilities, national 102 Capital Investments in Canada. and local geography, is obviously essential to the pur- chase of land which will yield a good return to the investor. In the past six months a large amount of British capital has been placed into Canadian lands and city and town real estate. A British syndicate purchased for cash three large blocks of Canadian Northern land in Saskatchewan, the deal amounting to more than $2,000,- 000. Another syndicate has purchased city blocks in many districts in Western Canada, while English and Scotch investors recently secured control for about $500,000 of 250 acres along the Lake Shore Road, Toronto. Another English syndicate has purchased orchards in Ontario and Nova Scotia. The products therefrom will probably be shipped to the London market. Among recent real estate deals are the purchase of the Dominion Trust Building at Vancouver by English capital for approximately $1,000,000. An English syndi- cate has also studied the field with the intention of ex- pending $1,250,000 in the establishment of summer hotels throughout the Dominion. Much money is likely to be invested by Great Britain in Canadian real estate during the next few years. Mr. H. V. F. Jones, the London manager of the Canadian Bank of Commerce, after a trip through Canada last year, was inclined to the belief that in a great many cases in the West the prices being paid for outside properties is not justified by local conditions. One hesitates to say, with past experiences in view, that these prices will not still advance, but he advocated for British investors the necessity of exercising the utmost caution in speculating in properties outside the towns proper. In several of the large Western centres there probably will be scope for investments in city property Capital Investments in Canada. 103 for some time to come, but even in this caution is desirable. Until recently the Americans controlled by far the greatest proportion of timber limits and pulp mills. Early this year British investors purchased timber in British Columbia, one deal involving the sum of $2,000,- 000, while English capitalists purchased late last year 56,000 acres of pulp-wood limits on the north-west coast of Vancouver Island. Another million dollar deal was consummated about the same time in Canada's Pacific Coast province. An influential financial company, of London, not long ago acquired the Dickie timber limits of Nova Scotia, comprising about 405,000 acres. These are indications of an increasing interest in this line of investment. There are great possibilities for the investment of British capital in the pulp and paper industry, Northern Ontario, Quebec and British Columbia particularly pos- sessing the raw materials and water powers. British investors in Canadian pulp and paper producing indus- tries can find much to interest them in the report of the United States Tariff Commission recently submitted to the Senate by President Taft. In regard to the question as to how far American mills are on an equal basis for competition with the Canadian mills in the matter of equipment, the report presents the answer that the total average of equipment and efficiency is slightly better for Canada than for the United States It is declared that in 44 per cent, of the American mills investigated, a con- dition exists as to machinery and equipment, which would force them, if obliged to meet really extensive competition from Canada, greatly to curtail other ex- penses, greatly increase their investment for equipment, ■or shift to making other kinds of paper. The Commis- sioners find that a ton of news print paper is made in 104 Capital Investments in Canada. Canada for $5.35 less than it is made in the United States. The average Canadian cost is given at $27.53, and the average cost in the United States at $32.88. The duty upon a ton of news print paper under the present tariff is $3.75. Taking all the items into consideration, as the report enumerates them, the comparative costs follow : — The total average cost of a ton of ground wood pulp in bulk at a mill in the United States is $14.59; m Can- ada it is $9.56. The total cost of a ton of sulphite fibre in the United States is $31.39; in Canada it is $26.47. The total materials entering into the manufacture of a ton of news print paper in Canada are shown as $16.89, and in the United States as $22.74. The labour cost of a ton of paper in the United States is shown to be $3.27, and in Canada $3.19. All other allowances for manufac- turing costs in the United States are $6.87, and in Can- ada, $6.45. Labor costs in all the items concerned run very closely alike. One feature of the report shows that the cost of manufacturing news print paper in the United States varies widely. The lowest cost recorded is $24.50 a ton; the highest is $43. From this the tariff board strikes an average of $32.88. At the Canadian mills the lowest price recorded for producing a ton of news print paper is $24.97, and the highest is $30.18. Average, $27.53. CHAPTER XII. INVESTMENTS IN CANADIAN MINES. The investment of British capital in Canadian min- ing enterprises has been small. On the whole, the English investor has learned many bitter lessons, causing him to regard the Dominion's mining proposals with some suspicion. At the same time, the Canadian investor has had similar experiences, while the American to a great extent has remained unscathed. In the meantime, Canada's legitimate mining industry has suffered. The following table shows the production of minerals in Canada in 1910: — 1910. Value. Copper $ 7,209,463 Gold 10,224,910 Pig- iron 11,245,630 Lead 1,237,032 Nickel 11,181,310 Silver 17,106,604 Other metallic products 559,186 Total $58,764,135 Less pig iron credited to imported ores 9,594,309 Total metallic $49,169,826 8 io6 Capital Investments in Canada. Asbestos and asbestic $ 2,476,558 Coal 29,811,750. Gypsum 939.838 Natural gas 1,312,614 Petroleum . . . ; 388,550 Salt 409,624 Cement 6,414,315 Clay products 7,600,000 Lime 1,131,407 Stone 3.499.772 Miscellaneous non-metallic 1,886,704 Total non-metallic $55,871,132 Grand total $105,040,958 In 1886 Canada's mineral production was valued at $10,221,255. The following are the details of Canadian loans in London for mining purposes : — 1905. Western Canada Cement and Coal Co £225,000 Northern Sulphite Mills of Canada 100,000 £325,000 1906. Western Dominion Collieries, Limited £300,000 igo7. Vancouver Copper Co £ 80,000 England's Premier Cobalt Mining Co 220,000 Bluebell Gold Mines 20,000 £320,000 1909. Dominion Oil Co £120,000 East Tilbury (Canada) Oil Fields 200,000 Ymir Gold Mines 20,000 Canadian Mineral Rubber Co 170,000 Dominion Mica Co 1 5,000 Dominion Iron and Steel Co. 1,200,000 Canada Cement Co 360,082 Manitoba and Saskatchewan Coal Co 51.44° £2,136,522 Capital Investments in Canada. 107 1910. Canada Cement Co £ 205,500 Amalgamated Asbestos Corporation 624,480 West Canadian Collieries Limited 200,000 Nova Scotia Steel and Coal Co., Limited 309,000 Canadian Oil Producing and Refining Co., Ltd. 75iOOO Canadian Collieries (Dunsmuir) Limited 2,054,800 Oklahoma Oil Co 67,000 Lake Superior Iron and Chemical Co 616,420 Hawthorne Silver and Iron Mines Co 100,000 Standard Oil Co. of Canada 160,000 British Columbia Goldfields of Canada, Limited. 40,000 , .... £4,452,200 iqii (to April). Ontario Porcupine Gold Fields Development Co.. £600,000 Only one of the mining companies which have bor- rowed money in London has visited that market a second time. In 1910 ^4,452,200 were raised by Canadian mining companies overseas, compared with ^2,136,522 in 1909. The loans for previous years never exceeded ^400,000. The following table shows for what minerals the money was raised : — Mineral. Amount. Gold £ 680,000 Silver 320,000 Iron and coal 4,731,660 Copper 80,000 Oil 622,000 Cement 790.S82 Miscellaneous 909,480 £8,133,722 In addition to the ;£8, 133,722 representing public flotations in London on behalf of mining companies, a large amount is otherwise placed in Canadian mining propositions. In the Cobalt, Elk Lake, Gow Ganda, Porcupine and Larder Lake districts approximately $1,025,000 have been invested by direct purchase of mining stocks and claims. A few hundred dollars have been placed in gold mining companies in Nova Scotia, J :io8 Capital Investments in Canada. while coal properties in the same province account for perhaps $500,000 in the five years. Prior to the period •covered by this investigation of this subject, large sums of British money were placed in the mines of Nova Scotia and British Columbia. Coal companies in the prairie provinces account for -approximately six millions of British capital. It is in British Columbia that Great Britain holds a far greater interest in mining than has been the impression. From special inquiries it is found that in round figures the capital investment is $50,000,000, the most notable mine perhaps being the Le Roi at Rossland. Leaving past history, such as the Rossland, British Columbia, and Yukon booms to take care of themselves, we may examine the question of capital investment in ~the two most important camps of recent date, Cobalt and Porcupine. Cobalt has been a veritable Oliver Twist, so far as capital is concerned. Always the cry has been for more. Millions of dollars have consequently been emptied from pockets. Thousands of innocents, though, forgot the ventriloquial powers of the fakir. Plenty of coin has been sunk into alleged mining properties — pro- perties consisting of little but a potato patch, a few shrewd and conscienceless men, some ready pens, and several hundredweights of optimistic literature. The capital story of Cobalt is interesting. Three personal factors were prominent — the man from Canada, the man "from Britain, the man from the United States. When stories of the mining camp first commenced to tickle the imagination, comparatively few men of the Dominion got into the field right away. New York and Boston poured a human stream into Ontario. The cash was there, too. The fame of Ontario's mineral wealth had not then hit London's investment susceptibility. The consequence was that citizens of the United States, possessing well- Capital Investments in Canada. 109- defined bumps of foresight, wiped off the Cobalt bloom from the Cobalt plums. Incidentally, they gathered in a pretty respectable basketful. The belated got smaller fry; others managed to get only the stalks. It has so happened that, although the first to come were the first to be served, something remained for the later. Some- thing there is yet for future investors. Europe's interest in Cobalt, passing and monetary, until the summer of 1908, was inspired by the things that should not have been. For several years London knew only of Cobalt promoters, whose apparent and intense desire to let in British capital on a lifetime's chance, bordered on the ridiculous. It is not easy to cheat John Bull. Neither is it wisdom. Sidetracked illegitimately of one dollan, one need not appeal to him again. His purse-strings remain tightened, no matter how honest the second enterprise may be. The visit to the oamp of a party of European mining engineers in September, 1908, was the best Cobalt eye- opener for Europe. At Cobalt they soon discovered that even he who knows not the difference between hematite and neophyte might label Cobalt a mining region. In the mines of South Africa, the inexperienced must be- told what is ore and what is good for the dump heap. The inexperienced visitor to Northern Ontario's mines can learn a mining thing or two by no more than a little amateur scratching. The mining engineers of Europe, although disciplined to bridle their opinions, let them run during their Canadian visit. So it was that the stamp of technical knowledge and desirable approval was impressed upon Cobalt in half a dozen languages. If the principals, the corporations, the friends of these men have a habit of taking good advice, the coming of foreign capital for mining development is but a matter of time. no Capital Investments in Canada. Generally speaking, wild speculation has been elimi- nated from Cobalt's existence. Unfair it is to say that the mine managers and those around them exhibit no interest in the price peregrinations of stocks. The man- ager having no time for an occasional glance at the stock exchange blackboard would probably be asked to look for a new job. But the chief feature of the camp is that real mining is considered of primary importance. While methods at the beginning were crude, science now has been brought to bear upon the art of bringing up ore from the earth's bowels. As time progresses still further scientific treatment will find activity. With this era of mining proper came foreign interest of value in Ontario's minerals. While speculative drum-banging and gong- beating continued, men whose opinions are worth more than a cheap luncheon, held aloof. Cobalt has demon- strated its deservedness of capital. Further, it can shove that demonstration up to the hilt into the hide of in- credulity. Capital need not fear to cast in its lot with Cobalt. The eternal provision that capital must not play blind man's buff in a mining camp, holds good also. Even now a large number of Cobalt companies are finding a reorganization of their finances an imperative necessity. Usually this does not bode well for the small investor. We have heard of Porcupine for several years, but, as the area was difficult of access, little prospecting was done until two or three years ago. When the Timmins brothers commenced to show results, the onlooker who remembered their exploits in Cobalt commenced to take notice. A Toronto barrister is said to have been the first to discover gold along the shores of Porcupine Lake. He forsook, for the time being anyway, the spheres of legal tomes for the region of mineral Domes, East and West, and Preston East and others. Capital Investments in Canada. hi About five hundred miles separate the new gold camp from Toronto. That means, if things go well, Porcupine will have a population of size. The first ques- tion one is likely to ask is whether the attractions are of comparative permanency or of a temporary nature. To this are two substantial replies. The Consolidated Gold Fields of South Africa, the Moreing-Bewick people, the Anglo-French Exploration Company, with J. B. Tyrrell, F. A. Heinze, the Montana copper king, and others, would not have their fingers in among the Por- cupine quills unless they anticipated something tangible later. Again, we have the statement of Mr. H. E. T. Haultain, of Toronto, a mining engineer on whose word explicit reliance can be placed, that there are promising prospects scattered over a very large area which will take years to explore. One may be assured, therefore, of some permanence. In many ways, the beginning of Porcupine resembled the birth of Cobalt. But there are several important dif- ferences. The American pretty nearly swallowed Cobalt before the Canadian had decided that the savor was good or that his digestion for a new silver mining camp was strong enough. Porcupine, on the other hand, already has an international flavor. News of what might be expected got overseas in remarkably quick time. Scotch capital was early in the field, and so was London with a corps of prominent mining engineers, who immediately gave the camp importance. Canadians profited by their Cobalt lesson, with the result that they froze on to Por- cupine instead of waiting to be frozen out. American capital has also had its look in, and intends to stay. Unlike Cobalt, Porcupine is not likely to be dominated by Uncle Sam's money. There is another vital difference, too. The silver camp lay yawning long before big mining interests prodded it to action. As soon as Porcupine was ii2 Capital Investments in Canada. discovered, the big men of the mining world allowed it no time for beauty sleep. They were there in a trice with their colleagues to size the situation. That done, Northern Ontario will know them for some years. A third difference in the two camps is one of senti- ment, though it also kept out capital for a while — that was the price asked for prospects. When mining mag- nates and their scouts began to become as numerous as shacks in the camp, the prospector imagined his pile made. He thought that London and Edinburgh would bite at gold-colored bait. That was a bad oversight, and London and Edinburgh turned their heads the other way, which soon brought prospects salesmen to reasonable figures. Mr. C. A. Moreing says that many men asked mone for a Porcupine prospect than he would think of paying for a mine in West Australia. The fact that mining engineers and magnates know the difference be- tween a mine and a prospect should be borne in mind by the prospector. That fact, too, will prove of assist- ance to the camp's development. As yet only one Porcu- pine flotation has been made in the London market. The Canadian mining industry has suffered from lack of capital. Money, to a large extent, has been focused on what may be termed "boom" regions. There are numerous opportunities in the Dominion for profitable investment elsewhere than in famous mining camps. The Canadian Mining Journal again drew attention to this fact recently. "Deposits," it said, "of such minerals as iron pyrites, scheelite, chalcopyrite, pyrolusite, gra- phite, gypsum, barite, magnesite, and so on, are lying undeveloped in many parts of eastern and western Canada. Not a few of these deposits can be easily and quickly proven. Many of them are already known to be commercially workable. The growth of our own markets Capital Investments in Canada. 113 alone demands that they be exploited. The possibilities of the foreign markets lends additional inducement. "Even more attractive are the chances that offer in the older gold fields. Study of provincial and federal reports shows that some of the gold discoveries of from thirty to fifty years ago were as rich as anything of recent times. But not until within the memory of this generation have circumstances been such as to en- courage a large measure of enthusiasm. The limiting conditions were the lack of means of communication, and the absence of adequate media of information. "Times have changed. It is now possible to work to advantage all kinds of mineral deposits throughout the length and breadth of the Dominion. To the disap- pointed searcher for cheap bonanzas in Porcupine we would suggest that he read up the mining history, not only of Ontario, but also of British Columbia, Quebec, and Nova Scotia ; and that he take steps to ascertain for himself the merits of forgotten districts." CHAPTER XIII. CANADIAN BANKS, BRITISH AND FOREIGN CAPITAL. A fairly large amount of foreign capital has been placed in Canada by the purchase of Canadian bank shares. The following table gives details as to the approximate amount: — Germany $1,096,150 France 284,750 Italy 32,700 Spain 12,350 Sweden 3,300 Japan 2, 100 Belgium 1,650 Servia 1,500 Austria 1,250 China 1,200 Russia 800 Turkey 750 Brazil 600 Holland 400 Cuba 100 Mexico . 50 Total $1,439,650 The investment of the Dresdner Bank of Germany in the defunct Sovereign Bank of Canada, amounted to $1,000,000, and is the second largest individual sum placed by a foreign country in Canadian bank stock. It is possible that a small proportion of the amount tabu- lated above represents bank stocks purchased by Cana- dians in Canada who later removed to foreign countries. Capital Investments in Canada. 115 Large and numerous purchases have been made in Great Britain of Canadian chartered bank shares. These investments extend over a greater period than five years, in which time the investment was approximately $1,125,- 000. This sum represents but a small percentage of the total British investment in bank shares. As is known, The Molsons Bank sold $2,000,000 worth of its stock to a London syndicate. It is highly probable that British capital will play a larger part in Canadian banking. The wheat area of Canada twenty years ago was 623,245 acres. In 1910 it was estimated at 8,377,949 acres, a gain in that period of 1,244 P 61 " cent. While the increase in acreage may not prove so remarkable in the next twenty years, it will cer- tainly be large. Before then, one of two things will pro- bably happen — the introduction of European aid in crop financing, as has been the case in the United States, or the increase in the total available bank capital in Canada. The tendency of banking in this country has been to the conservation of banking strength in a comparatively small number of banks. For instance, in 1889, we had 41 chartered banks, which number ten years later had been reduced to 38, and in April, 191 1, to 27. On the other hand, the number of bank branches has more than made up for the diminution of the head office total. Two years ago the number of bank branches was 1,608; in April, 191 1, it was 2,434, with additional branches in the United States, England, Newfoundland, the West Indies, France and elsewhere. While the bank figures show astonishing increases during the past forty years, the paid-up capital figures do not show such large gains proportionately as do other items. The paid-up capital of Canada's chartered banks in June, 1869, was $30,289,048. In March, 191 1, it was $97,441,842, a gain in 42 years of 221 per cent. n6 Capital Investments in Canada. In view of these considerations, the introduction of British capital by the sale of a large block of Canadian bank stock in England is of unusual interest. In con- nection with this, the British investor, must remember the double liability clause of our Bank Act. Colonial bank shares have complications of their own, the prin- cipal one being reserve liability, which in some cases is equal to the amount of a share, and in others double. The fact that there is such a great variety of bank shares known to the London investor causes him to study care- fully the exact position of any given share. This is one of the chief reasons why bank shares are so little dealt in on the London Stock Exchange, but comparing those of the various overseas Empires, it is safe to say that the Canadian bank share offers the greatest attractions. A new development was the purchase by British capital of a block of shares of the Molsons Bank, a public flotation of ^100,000 of this block being later made in London. An offer was also made for a block of shares of the Union Bank of Halifax, which institution, how- ever, was absorbed by the Royal Bank of Canada. The most important development in banking spheres along this line is the chartering of the International Bank, promoted by Mr. Rodolphe Forget, M.P., of Montreal, and backed with $7,000,000 of French capital. It has been suggested that this new bank will not eaten solely to the country's commercial needs. There- fore, one may, perhaps, anticipate that through his new institution he will loan money to stock brokers, underwriters and promoters, and to a large extent Mr. Forget is already doing that business, as several times his willingness to loan any part of one million dollars has been reported. Our chartered banks have always regarded Canada's industrial and commercial needs of Capital Investments in Canada. 117 primary consideration. For this reason perhaps stock exchange trading has suffered to some extent, the banks loaning money on call to brokers and withdrawing it at the first sign of pressure from commercial spheres. With the exception of times of panic and extreme depression, nearly all complaints regarding money stringency have emanated from brokers and their colleagues. A bank, therefore, inaugurated for the special purpose of catering to that market, and honestly operated, should prove successful. There are several reasons for supposing that the Forget bank, which will be largely supported by French capital, will not attempt to cater to the financial neces- sities of captains of industry. The Forget bank is an experiment in Canadian banking. French capital pro- bably understands that fact. Mr. Forget thus has con- siderable responsibility on his shoulders. If the bank succeeds, the increase in the influx of French capital should be large. If the institution finds that profits from financial banking are not as great as anticipated, it will mean a decided blow to the cause of French investments in the Dominion. It is Mr. Forget's opinion that periodical money stringencies experienced not only in brokers' spheres, but also in business circles, is caused by Canadian enter- prise abroad. The Dominion, he says, is beginning too early in her career to father these enterprises which have, however, met with considerable success in Mexico, South America and in other parts of this hemisphere, although not under the British flag. England and France, each country having a plethora of money to embark in foreign enterprises, can do this well, but Mr. Forget does not think that Canadians should send money out of the country when there are so many places await- ing development all over the Dominion. n8 Capital Investments in Canada. In selling exchange in his own business since he had established financial relations with France on a fairly large scale, Mr. Forget said that in many instances he had received replies to the effect that banks were not in the market, so he is of the opinion that another large bank will relieve the situation generally, and the fact of four French directors sitting on the board and keeping in touch with the financial and commercial pulse of the Dominion cannot do otherwise than bring the resources and general development of the country into greater pro- minence amongst the financiers of England and the Con- tinent, and especially in France. The new bank will have nine directors, five in Montreal and four represent- ing the European interests. As a side light on this weaving of international banking relations, it is interesting to note that at the end of March, 191 1, 29 Canadian chartered banks, be- sides their 2,420 branches in Canada, had 64 branches elsewhere, as follows : — No. of Country. Branches. England S France • 1 Mexico 2 United States 14 West Indies 31 Newfoundland ll There are many German colonies in various parts of the Dominion, and it is not unlikely that one day a German bank, co-operating with a Canadian bank, will cater especially to the financial needs of these colonies. It is thought in this way that a far greater amount of business will result. Capital Investments in Canada. 119 Another indication of international banking rela- tions is seen in the following dispatch wired from Win- nipeg on April 26th: — "Speaking of the financial side of the move- ment of American settlers into Canada, Canadian moneyed men will do well to cultivate the business of these new-comers. Thousands of these settlers send back to the United States for their financial wants. As reported in the States, the branch banks of Western Canada seem to send their funds to the large financial centres, and farmers find trouble in securing' the money necessary to expansion. As a result they turn to the banks and money lenders 'back home,' and thousands of dollars, which under different conditions would remain in Canada, come back to the United States as interest on loans made to Americans in Canada. "There are many hundreds of thousands of Omaha dollars held in Canada, and only recently a coterie of Omaha moneyed men advanced over $220,000 in cash and over half a million in credits to finance one single enterprise in British Columbia." While there may be some small basis for this report, undoubtedly it is exaggerated. Considerable money is loaned on mortgages by American financiers and mort- gage companies, but it is doubtful whether any banks in the United States, which may be compared with the Canadian chartered institutions, are lending money as indicated in the above dispatch. During recent years several Canadian financial in- stitutions have obtained capital in England, as the fol- lowing table shows : — 1906. Trust & Loan Co. of Canada £500,000 10,08. North of Scotland Canadian Mortgage Co £i75>ooo Trust & Loan Co. of Canada 200,000 £375,000 120 Capital Investments in Canada. 1909. British Columbia Development Association £61,140 igio. British Columbia Development Association £ 39,500 Dominion of Canada Trust Corporation Ltd.... 400,000 Canadian & Empire Investment Trust Co., Ltd.. 250,000 Union Life Assurance Co. of Canada 205,761 British Columbia Mines, Land & General Fin- ance Co. 200,000 British Canadian Trust Co 250,000 Dominion of Canada Investment & Debenture Co. 256,000 The Molsons Bank 100,000 £1,695,261 191 1 (to April). Trust and Loan Co. of Canada £ 300,000 Scottish and Canadian General Investment Co. Ltd 250,000 Western Canada Investment Co., Ltd 200,000 Investment Corporation of Canada, Limited 500,000 £1,250,000 The Trust and Loan Company of Canada, the head office of which is in London, has obtained ^1,000,000 during the past five years, having raised three separate loans. The British Columbia Development Association was twice a visitor to the overseas market, borrowing altogether ^100,640. Only one life insurance company and one bank sold its securities in London. In the case of the bank, the stock was purchased by a British syndi- cate and marketed by them in Great Britain. There will likely be a development along these lines during the next few years, as the tendency is to weave British-Canadian financial company relations. CHAPTER XIV. REGISTERED STOCK OR BEARER SECURITIES? The issue in London in June, 1910, of ,£453,600 4 per cents, of the city of Vancouver was only partially suc- cessful. The stock was registered instead of to bearer, and this being somewhat of an experiment with Cana- dian municipal securities overseas, there was a disposi- tion in some quarters to ascribe the comparatively poor reception of the loan to that fact. The Financial Times\, for instance, in analyzing the result of the issue, stated that the investing public "has now become educated to the point that it no longer wants a registered stock. The wideawake investing public of the present day wants bearer stock, for the simple and sufficient reason that bearer stock can be passed from hand to hand. In the case of a colonial bond, such as the Vancouver four per cents., the bearer certificate has the great additional ad- vantage that income-tax on the unearned income derived from it need not be paid so long as the interest does not come into this country. Mr. Lloyd George himself stated in the House of Commons that under the Finance (1909-10) Act, 1910, an individual is not required to in- clude in his statement of income, for the purpose of assessment to supertax, income derived from capital in- vested out of the United Kingdom, which is not at any time received, or brought, or remitted into the country." Commenting upon this article, another London journal, Canada, expressed considerable surprise at the 9 T22 Capital Investments in Canada. above statements. "We cannot allow such a statement to pass unchallenged," it said. "The veriest tyro in finance must know that in the British market regis- tered stock has greater attractions than bearer bonds possess, and, judged by the fact that a higher price is always obtainable for a stock that is inscribed, the public does not prefer the latter security. Confirmation of this -statement can be obtained by enquiring of any leading financial issuing house in London. The real cause of the comparative failure of the Vancouver loan was the fact that the market for Canadian provincial and municipal securities was suffering from congestion owing to the merely moderate success attending the flotation of the city of Winnipeg loan at 103, and the almost complete failure of the Manitoba loan at the same price. The city -of Edmonton issue was also only poorly responded to by the public. These contretemps, together with the know- ledge that the cities of Toronto and Montreal are only awaiting a favorable opportunity to appear as borrowers, were surely sufficient explanation for the non-success of the Vancouver issue, without attempting to belittle the class of security offered. It is interesting to note that the city of Chicago within the last two months, after inviting tenders for several million dollars of 4^ per cent, bonds, failed to get a single bid at over par. Cana- dian municipalities are fortunate in having the London market behind them ; the anomaly exists all the same that the city of Vancouver should be able to borrow on better terms than Chicago, one of the greatest cities in the world." So far as the Vancouver loan is concerned, the ques- tion of registered stock or to bearer probably had little influence on the reception of the loan. Market conditions appear to have been largely responsible. On the other hand, considerable difference of opinion exists amongst Capital Investments in Canada. 123 authorities as to the merits of the two forms of securities. I have obtained the opinion, on this question, of several leading London financial houses interested in the flota- tion of Canadian issues. "The question appears to us too comprehensive for the laying down of hard-and-fast principles," writes an important firm, which interestingly summarizes the situa- tion. "Each form of security has several advantages and disadvantages which must be considered concurrently with the particular character of the security to be issued, as well as with the class of investor to whom it is in- tended to appeal. The recent increase of the Government stamp duty, from y 2 per cent, to 1 per cent, on all bearer securities negotiated in this country (Great Britain), constitutes a heavy item of expense in connection with the issue of bearer bonds in London. In the case of municipal offerings, where tenders are invited and com- petition arises between houses in Canada and in London, it seems probable that the increased stamp duty will tend to outweigh other considerations involved in the selec- tion of the form of security, and have the effect of causing financial houses to make arrangements for the issue of such loans on this side in the form of registered stock. "When a new issue of registered stock is made, such stock is registerable into the first subscribers' names free of stamp duty. All subsequent transactions in the security are, however, subject to an 'ad valorem' stamp duty of y 2 per cent., payable by the purchaser, and in addition, a fee of 2s. 6d. per deed of transfer is usually charged by the registrars. "As a dealer in buying stock always runs the risk of not being able to sell it immediately, and would, there- fore, have to take it up into his own name or into that of his banker, paying thereon the above-mentioned 54 124 Capital Investments in Canada. per cent, stamp duty and fees, the result is that in regis- tered stock it is, generally speaking, impossible to have so free a market, or obtain as close a price when dealing, as in bearer securities. "A point in favor of registered stocks is that they can usually be bought in multiples of j£i, and are, there- fore, more convenient for the small investor, who can thus purchase amounts that will absorb the exact sum at his disposal. Many of these small investors do not care for the responsibility of holding bearer securities when they can have a certificate in their own names which is only transferable on a separate deed of transfer signed by them. Moreover, they prefer to have their dividends mailed direct to their registered address, instead of having to detach coupons', and have them presented at a bank for payment. "On the other hand, the higher grade of securities are very largely held by insurance companies and financial and public institutions, who would undoubtedly prefer to hold a bearer security that could be readily used for pur- poses of collateral, and which would have the more active market that bearer securities usually promote. To cater for the small investor when it is decided to issue bearer bonds, some part of the issue is occasionally made in bonds of as small a denomination as ^20, while in France it is almost the invariable custom to have all bonds in denominations of 500 francs. "The foregoing are, in our opinion, the most impor- tant points for and against each form of security that have to be considered ; but if we were to attempt to sum up the position in a general way, we should say that where the standing of the issuing authority, municipal or otherwise, is highl, and is sufficiently known to in- vestors in this country (Great Britain) to justify expec- tations of a broad market in its securities, then there is Capital Investments in Canada. 125 very little to choose between the two forms of security, the balance of favor perhaps being slightly with regis- tered stocks. In cases where the borrowing corporation is not well known over here, we should be inclined to recommend bearer bonds." Another house states that the great financial houses, insurance companies, and the continental market demand bonds', but the general English investor will not have bonds at any price. Consequently, when the demand for securities is a special one, caused by a plethora of money in the financial centres, bonds are in demand, but when the demand for securities is a general one, registered stock is required. The same firm thinks that the failure of the city of Vancouver loan was due simply to the fact that it was offered at too high a price, the securities of the greatest cities in the United Kingdom, Australia, New Zealand, South Africa, and the United States, in- cluding the city of New York, being obtainable to yield a higher rate of interest. From a prominent London house, which has inter- ested considerable English capital in Canada', comes the opinion that registered stock is likely to be more popular than bearer securities, if the price is favorable, and it is made free of stamp duty by the issuing authorities. "It is preferred to bearer securities for the reason that there is not the same danger of loss, and the interest is re- mitted regularly to the registered holder, who is not obliged to cut off coupons and pay them into a bank for collection. The issue of registered stock is perhaps a little more expensive to the municipality if the stamp duty is commuted; otherwise it is cheaper, as there is no stamp duty on the first certificates issued, and the subsequent duty is a matter between the seller and the buyer." 126 Capital Investments in Canada. The stamp duty on bonds remains at y 2 per cent, instead of being increased to i per cent., as was pro- posed. The commutation stamp duty on municipal secu- rities is at the rate of is. per ^ioo per annum, and if the stock is made duty free it adds to its value. "The cost of keeping registers of stock is also more expensive than the charges that are made by banks for the payment of bond coupons. Bearer securities are much more popular on the Continent than registered stock, and if there is a likelihood of any securities of the kind being marketed on the Continent, this fact should be borne in mind." The experience of another financial house in the world's metropolis is that investors in England infinitely prefer registered stock to bearer securities, in such flota- tions as that of the city of Vancouver. "The class of investors who buy these securities are those who are, as a rule, making a permanent investment, in which case, both from a point of security and from the point of divi- dend payments, registered stock is preferable to bearer securities." CHAPTER XV. CANADA'S CREDIT ABROAD. The heavy borrowing of Canada, during the past six years especially, causes one to examine the position as to the maintenance of Canadian credit. During the summer of 1909 many prominent English houses inter- ested in Canadian enterprises agreed not to undertake any new Canadian flotations for a period of several months. The effect was to stop the flow of British capital to Canada through its principal channel during the time of this inaction. The cause of the financiers' decision was undoubtedly the unusually heavy borrowing by Canada, its tendency to exceed due bounds, and the attempt to market a few worthless securities among the large number of good ones. It was a well-timed hint and rebuke. It is improbable that the lesson will have to be learned here again for many years, although heavy borrowing in the spring months of 191 1 almost brought about a similar deadlock. With a comparatively small population, large areas of undeveloped agricultural land, constant additions to a network of railroads, general business, commercial and industrial expansion, obviously a need exists for a con- tinual inflow of capital. Up to the present, little fault can be found with the methods adopted by Canadian financiers in catering to our monetary requirements. Few complaints have been heard from those who have 128 Capital Investments in Canada. purchased our securities. The Dominion has created an excellent market abroad for its substantial stocks and bonds. The records of its borrowing during the past twenty years have been marred by few unpleasant inci- dents. An enviable standard of credit has been made and maintained. That this should continue now that our borrowing is rapidly expanding is important. Bankers and economists are undoubtedly watching the situation, which is one that might easily become almost uncontrollable. The country is paying a very large sum annually in the shape of interest on its loans. Suppose for a moment that the welcome stream of British and other capital ceased to flow. Canada would be thrown upon its primary support, the wheat crops. Could we feed ounselves and pay our interest charges in such an event? Possibly we could, but it is a wise policy which will not allow too wide a margin to grow between our borrowing records and our agricultural production. It is comparatively easy for Canada to maintain its credit abroad in good times. Then, one of the chief necessities is to squelch the undesirable promoter and his promotions. In a period of depression, the matter is more difficult ; it becomes a question of running the economic machinery with considerably less monetary oil than usual. At this point, the strength of the banking system and the foresight of bank managers are tested. If, prior to depression, credit was extended too freely, when dull times arrive, unwisely granted credit is likely to bring a crash, and consequently a severe blow to Canadian credit abroad would be sustained. In 1907, when the United States was suffering from industrial depression and stock market panic, Canada escaped a similar fate. But mistakes had been made in this country, foolish speculation had been allowed to go Capital Investments in Canada, 129 beyond bounds, with the result that the Dominion learned an important economic lesson with the minimum of eco- nomic suffering. The growth and development of Canada is a pleasing task. No necessity exists for forcing that growth. If we borrow too heavily, absorb new popula- tion too rapidly, and assume generally a fast gait, trouble will follow. Fortunately, the men at the helm are steering a good course and appear] to have thoroughly studied the chart. In 1910, the unpleasant incidents in connection with the affairs of the Atlantic, Quebec and Western Rail- way, the Western Canada Cement Company and the Quebec and Lake St. John Railway (the last named has now been settled satisfactorily to the English bond- holders) created some misgivings in England and in Scot- land. The advice of Mr. F. W. Taylor, London manager of the Bank of Montreal, that Canadian promoters who have the interests of their county at heart, should ex- ercise restraint, is good. Otherwise they will kill the goose which lays the golden egg. It is only within the last four or five years that the investing public in Great Britain have shown an inclination to purchase securities of Canadian public utility and industrial companies ; the former, now extremely well regarded, were previously looked upon askance as being ultra-speculative in char- acter. It is only fair to Canada to add that a good many of the Canadian schemes recently seeking capital over- seas, which invited criticism, were hatched in London. Mr. Taylor has said that there is little to fear from the competition of the securities of other British colonies and overseas dependencies, so long as Canadian securities already placed on the market meet their interest obliga- tions without question and avoid criticism. An important phase of our borrowing has been referred to by Mr. H. V. F. Jones, the London manager 130 Capital Investments in Canada. of the Canadian Bank of Commerce. This is the terms upon which Canadian government and municipal secu- rities are offered in the London market. "It is the natural tendency," he says, "on the part of all bor- rowers to endeavor to secure the very highest rate ob- tainable for their issues, regardless of the consequences which this attitude may eventually have upon their future borrowings ; and, while this is a spirit which will always exist, it is difficult to say that it has been over- done, except in a few instances. In regard to high- grade issues, such as those under discussion, the value of money governs the price which the market is willing to pay, and those who ask too much for their securities usually end in having to witness them depreciate in value and become unpopular with the investing public, but such matters tend to right themselves in the long run, especially so if a government's or, municipality's securities are supported by the active operations of a good sinking fund." Canada, as we have seen, holds a prominent posi- tion upon the British market, and during brief periods of reaction its securities of various kinds have suffered less than almost any other. The advice is still given to those anxious to secure capital there to go slowly. It is the duty of those interested in such matters in Canada to see that only first-class propositions are taken over- seas, and, as far as industrials are concerned, that they will bear the fullest and strictest investigation. The railroads of Canada should continue to be a popular, and, indeed, an improving form of investment. The near future must see the lines of the Grand Trunk Pacific and the Canadian Northern Railways progressing yearly towards completion, and the ever-increasing grain areas of the West must of necessity largely increase the Capital Investments in Canada. 131 earnings of the Canadian Pacific and other roads under favorable circumstances. The trade between Canada and the Motherland is expanding, and doubtless will continue to do so. British manufacturers and producers have, perhaps, been slow to use the advantages offered them by Canadian prefer- ence, but a better knowledge of the country and its resources is resulting in a deeper interest being taken. There seems no doubt that Canadian propositions, properly verified and supported, will continue to receive the same sympathetic consideration in the future as in the past, when financial conditions are suitable. The basis of the whole business is the maintenance of the reputation and confidence which Canada has been for- tunate enough to inspire among British investors. But discretion must be shown in selection of propositions that are suitable for the market, and, above all, care must be taken to see that the thing is not overdone. The proportion of capital available from local sources in Canada is slowly increasing from year to year, while the general wealth of the country is making rapid gain. Comparatively little permanent capital needed, however, is as yet supplied by Canadian in- vestors. This factor will not have any important bea r ing upon Canadian borrowing in Britain for many years. Neither does Canada obtain many funds from the United States aside from industrial investments. The Ameri- cans are still large borrowers abroad, and consequently give little patronage to Canadian bonds. On Mr. E. R. Wood's conservative optimism we can base a hope for the maintenance of good Canadian credit in Great Britain. "Nothing has occurred," he says, "to check the steady advance of settlement, the extension of the area of cultivation, or the proportionate 132 Capital Investments in Canada. development in transportation, and in general industry and commerce. Our waiting prairies and other farming areas still attract the industrious as our enterprises attract investors. Both have an assurance of adequate returns in the extent and character of our natural re- sources, the substantial nature of our general develop- ment, and the stability of our governmental institu- tions." CHAPTER XVI. CANADIAN PROVINCIAL SECURITIES AND THE BRITISH TRUSTEE LIST. The treasurers of Canada's nine provinces are de- sirous of having the provincial securities included in the British Trustee List. Despite representations to the Imperial Government from many quarters, this desirable innovation has not yet been granted. The Imperial au- thorities are not yet inclined to extend the privilege to the Canadian provinces. They also refuse to include in the Trustee List securities which, if there be any differ- ence at all, are of a higher class; that is, securities which bear the guarantee of the Federal Government. Their action is taken, it is assumed, not because of any lack of faith in the securities, but because for reasons of their own they do not wish to broaden the Trustee List. During recent years, investment conditions have changed materially. The investor has become more dis- criminating in regard to stocks and bonds of value and those which are worthless. Investors who once confined their operations to a narrow range, drawing interest at a low rate, are now working in a far larger field, obtaining greater interest with practically the same security. A small Trustee List might once have had the effect of protecting British Government securities, and particularly Consols. The Trustee List, however, now includes colonial securities offering a much higher rate 134 Capital Investments "in Canada. of interest than Consols. It seems doubtful that any very desirable end can be attained by unduly limiting the scope of the British Trustee List. Trustees are not permitted to invest in bonds to bearer of any kind — only in registered or inscribed stocks, including debenture stocks. The following self- governing colonies, and Crown and other colonies have passed the necessary legislation, have given the assur- ances required under the Treasury regulations, and their securities are consequently available for Trustee invest- ments : — (a) Self-Coverning Colonies: — The Dominion of Can- ada ; Cape of Good Hope ; Natal ; Newfoundland, New South Wales ; New Zealand ; Queensland ; South Australia ; Tas- mania ; Victoria ; and Western Australia. (b) Crown and other Colonies: — Barbadoes; British Guiana ; Ceylon ; Gold Coast ; Grenada ; Hong Kong ; Jamaica ; Lagos ; Mauritius ; St. Lucia ; Sierra Leone ; and Trinidad. Under the provisions of Section 2 of the Colonial Stock Act of 1900 any colonial stock which forms part of the public debt of any colony may become available as an investment for Trustees in the United Kingdom on the following terms : — (a) It must comply with the regulations as to form laid down by the Colonial Stock Acts, 1877 to 1900, and must be registered in accordance with the provisions of those Acts. (b) Subject to certain restrictions as to price mentioned in Section 2, sub-section 2, of the Trustee Act, 1893. (c) It must comply with the conditions laid down by the Treasury by order promulgated in the London Gazette. This order is as follows : — "The Lords Commissioners of Her Majesty's Treasury, in virtue of the power bestowed upon them by section 2 of the Colonial Stock Act, 1900 (63 and 64 Vict. c. 62), are pleased to prescribe the following conditions under that sec- tion. Capital Investments in Canada. 135 Conditions. "1. The Colony shall provide by legislation for the pay- ment out of the revenues of the Colony of any sums which may become payable to stockholders under any judgment, de- cree, rule, or order of a Court in the United Kingdom. "2. The Colony shall satisfy the Treasury that adequate funds (as and when required) will be made available in the United Kingdom to meet any such judgment, decree, rule or order. "3. The Colonial Government shall place on record a formal expression of their opinion, that any Colonial legisla- tion which appears to the Imperial Government to alter any of the provisions affecting the stock to the injury of the stock- holder, or to involve a departure from the original contract in regard to the stock, would properly be disallowed." Canadian Government securities may, for our pur- poses, be divided into four classes: — 1. Securities issued by the Government of Canada which form part of the public debt of the Dominion of Canada. 2. Securities issued by any of the Provinces of Canada which form part of the public debt of the issuing Province. 3. Securities, payment of which, both as to principal and interest, is guaranteed by the Dominion of Canada, but which are not included in its public debt. 4. Securities, payment of which, both as to principal and interest, is guaranteed by any one of the Provinces of Can- ada, but are not included in the public debt of the guarantee- ing Province. No difficulty is found in complying with the neces- sary requirements in the case of securities issued by the Dominion of Canada (Class 1). The Dominion Govern- ment has complied with the conditions under heading (c), and its securities, subject to the provisions of (a) and (b) are available for trustee investments. In the case of Class 2 no difficulty arises except in complying with Clause 3 of the Treasury Order. In fact, 136 Capital Investments in Canada. several of the provinces have already complied with all the requirements except those of this clause. As the legislation of the Provinces of Canada is, by the pro- visions of the British North America Act, not subject to ratification by the Imperial Government, and, as the Treasury Order must be held to have been promulgated with a knowledge of the provisions of that Act, the Pro- vinces of Canada are held to be precluded from the possibilitiy of complying effectually with this clause of the Order. Classes 3 and 4, namely, securities guaranteed by the Dominion or by any of the Provinces of Canada are excluded from coming under the provisions of the Colonial Stock Acts, because they do not form part of the public debt of any colony. Were this obstacle removed, Class 4 would still meet with the same difficulty as Class 2 ; that is, it could not comply with Clause 3 of the Treasury Order for the reasons given above. The question of admitting railroad bonds guaranteed by the Dominion Government has been before the Im- perial authorities on several occasions, and so far without success. There are, therefore, several obstacles to the inclusion of Canadian provincial securities in the British Trustee List. On the other hand, it should be possible, sooner or later, to induce the Imperial Government to give our progressive provinces that privilege. It is hardly fair that the securities, for instance, of the states of Aus- tralia, of New Zealand, the West Indies and the Crown colonies should have a privilege extended to them which is denied to the provinces of Canada. While it would to some extent affect the securities of the Dominion Government, help from that quarter to secure the desired Capital Investments in Canada. 137 change would be welcome by the Canadian provinces. After all, the good standing of provincial securities assists to a large extent the maintenance of the high credit of the entire Dominion. The inclusion of the provincial securities in the Trustee List would be of great value to Canada as a whole. It would be pleasing to see the Imperial authorities give a willing ear to the proposal. 10 CHAPTER XVII. NEW CAPITAL FROM IMMIGRATION. The stream of immigration to Canada from Europe and America has not only helped to solve the labor ques- tion, but a large amount of new capital has also been brought in in this way. Before discussing the amount, it will be interesting to note the countries which are best supplying our population needs. The following table shows the total immigration to Canada by nationalities ifrom July ist, 1900, to March 31st, 191 1 — Nationality. Totals. English and Welsh 505,157 Scotch 138,909 Irish 41,001 Total British 685,067 South African 437 Australian i»649 Austro-Hungarian 121,001 Belgian 8,583 Bulgarian 4,484 Brazilian 28 -Chinese 11 ,324 Dutch 4,895 French 16,236 German 21,145 West Indian i,534 Greek 3,997 Hebrew 48,675 Italian 63,817 Japanese 13,128 Newfoundland 13,496 New Zealand 534 Portuguese 28 Capital Investments in Canada. 139 Polish 9.391 Persian 124 Roumanian 4,888 Russian, N.E.S 38,950 Finnish 13,498 Doukhobors 281 Mennonites 101 Spanish 410 Swiss 1,487 Servian 270 Danish 3,493 Icelandic 3, 589 Swedish 19,349 Norwegian 13)798 Turkish 2,456 Armenian 1,473 Egyptian 53 Syrian 5,229 Arabian 441 Maltese 2 Malay 5 Negro 383 Hindoo 5,200 United States citizens (via ocean ports) .... 846 Total continental, etc 460,708 From U.S.A. (direct) 618,700 Total immigration 1,764,475 N.E.S. = Not elsewhere specified By far the largest immigration movement in the past decade has, therefore, arisen in Great Britain, and next in the United States. Among the countries of Europe, Italy contributed more than 63,817. The Italians are largely employed on '■ailroad construction work, as also the Galicians. Our Hebrew population was increased by more than 48,675, while almost 38,950 Russians and 13,128 Japanese also listed themselves as newcomers. What new capital did these 1,764,475 individuals bring into Canada during the past ten years? An ap- 140 Capital Investments in Canada. proximately accurate estimate can be made. Mr. Bruce Walker, the Commissioner of Immigration at Winnipeg, has stated that settlers from the United States would probably bring into Canada during 1909 new capital to the extent of $70,000,000. In one instance, a prospective Canadian settler brought with him $25,000, an excep- tionally heavy amount. In most cases the sum is con- siderably smaller. United States cattle has also been changing our prairie census figures. A fair estimate of the value of these particular possessions is perhaps $350 per head and a cash allowance to each new citizen from the United States of $500. From 1897 to 1909, 43 per cent, of the arrivals from the United States made homestead entry in the Western provinces. They brought with them during the fiscal year 1907-8 alone, more than $52,000,000 in cash and settlers' effects. Here are a few names taken from the monthly reports of one of the Dominion Government's agents, Mr. E. T. Holmes, St. Paul, Minnesota, showing the State from which each immigrant came, and the amount of cash and effects in his possession : — 1909 (October), L. B. L., Illinois $10,000 " " J. H., Iowa 20,000 " " C. H. S., Iowa 40,000 " " H. G. H., Illinois 10,000 " " J. P. H., Illinois 45.000 " " J. M., Iowa 50,000 " • " J. J. B., Kansas 20,000 " " J. D., Nebraska 25,000 " " J. F. B., Illinois 30,000 . " " H. S., Illinois 10,000 11 " J. V., Illinois 50,000 " " G. B., Illinois 12,000 " " M. M., Illinois 50,000 " " F. B., Illinois 50,000 The above shows an average of about $30,000 for each head of a family. Capital Investments in Canada. 141 Mr. B. Davis, State agent for Montana, reported for the month of September, 1909, 93 settlers collectively, $212,697, an average for each man, woman, and child of about $2,287, and for March, 1910, 194 souls with $344,460 in money and goods, an average of $1,775 each. The cash and value of settlers' effects' entering Canada from the United States appears to be growing larger year by year,. The following are the comparative immigration figures for the months of March, 1910 and 191 1, at North Portal, Saskatchewan. While there was a slight decrease in the numbei of persons, the money and effects in 191 1 had a greater value than in the pre- vious year. North Portal is taken just as one example : — March, '10. March, '11. Inc. or dec. Total immigration . . 5,672 4,409 — 1,218 Cash value $5,810,000 $6,288,000 + $478,000 Value of effects 1,059,000 1,585,000 + 526,000 Settlers' cars 450 599 + 149 As to British immigration, neither the cash assets nor the effects are as large perhaps as those of United States immigrants. The farmers, with life-long savings, leaving the States for new Canadian lands, contribute largely to Canada's revenue. Our money from Britain comes chiefly through other channels, in hundreds of millions. A fair estimate, perhaps, is that every British immigrant brings into Canada with him $100 and set- tlers' effects to the value of $50 per head. From Europe the amount is smaller, but it would be at least $10 per head, with few settlers' effects of value. The effects might be estimated at the small sum of $5 per capita. Therefore, the estimate of cash and settlers' effects en- tering Canada during the past five years may be sum- marized as follows : — 142 Capital Investments in Canada. 685,067 British — cash, $100 per head $68,506,700 685,067 British — settlers' effects, $50 per head 34,253.35° 619,546 United States — cash, $500 per head: 216,841,100 619,546 United States — settlers' effects, $350 per head 309,773,000 459,862 Continental — cash, $10 per head 4,598,620 459,862 Continental — settlers' effects, $5 per head 2,299,310 $636,272,080 The flow of immigration from the United States to Canada is not always regarded favorably in the former country. The American land loses good farmers ; the American manufacturer, purchasers ; the American bank, customers. At the same time, Canada gains what the United States loses. This phase has beeen ably treated by Mr. H. M. P. Eckardt, the well-known Canadian financial author. He thus explains the cash transfers through immigration and their effect upon the finances of the Republic and of the Dominion : — "In the first place it is to be noticed that when the United States farmer sells out and goes to Saskatche- wan or Alberta his place is taken by another farmer, who may have nearly as much of this world's goods as he had himself. Although the lure of the cheap lands is drawing American farmers northward by tens of thou- sands, the immigrants are arriving from Europe at the Atlantic ports at a rate of about 30,000 per week in the height of the immigration season. These, however, come mostly from Southern European ports, and they show a strong disposition to congregate in the cities and in the great industrial centres. Man for man, they are not equal in value to the farmers who are leaving. "So far as the cash movement is concerned, it does not appear that it is of a nature to embarrass New York or the other United States financial centres ma- Capital Investments in Canada. 14J terially. Indeed, it is just possible that the whole- movement of immigrants into Canada has not served to decrease the aggregate of capital of which New York has the use. As soon as the settler from the Western States gets located on his new farm he deposits his United States currency and his draft on New York in the branch bank in his neighborhood which is most conr veniently located. The draft goes to New York and operates to swell the balances and loans owned by the Canadian banks there. "The fund or deposit represented by the draft is in. fact transferred on the books of the New York banking institutions from the account of the Western United States bank which issues it to that of the Canadian bank which cashes it. Later the moneys, or a part thereof, may be put out at call on Wall Street. The United States currency is sent by express to St. Paul, Minne- apolis, or another American centre, for credit of the- Canadian bank. This also finds its way to New York and is carried there as a deposit or as a call loan. No doubt the constant repetition of transactions of this kind in the past couple of years helped to bring about the heavy increase in balances and loans carried in New York by the Canadian banking institutions. "Then there are the cash receipts from the British immigrants to take account of. These will usually con- sist of letters of credit or drafts issued by a bank in the United Kingdom, gold sovereigns and half sovereigns, and Bank of England notes. The letters of credit and drafts operate, of course, to give the Canadian banks credits in London. Also the Bank of England notes are usually sent to London for credit of account or sold in New York. The credits thus acquired in London are commonly utilized through selling sterling bills in New York, and the proceeds of the bills may lie on deposit 144 Capital Investments in Canada. with New York banks or they may be lent at call to New York Stock Exchange houses. "The British gold coins are sometimes paid into the Dominion Treasury in exchange for large legal tender notes, and sometimes added to the gold reserve carried by the banks in their own vaults. A certain amount goes back to Europe each year in the pockets of Canadian tourists or of Englishmen who have been visiting the Dominion- Thus it can be seen that New York often gains funds from Canada as a result of the British immigration movement, and it also retains the custody of a considerable part of the funds moving to Canada with the Western farmers. Of course, the ownership of the funds is transferred to Montreal and Toronto, and the prospect is that they will be gradually drawn upon in one shape and another as the occasion for their use in the Dominion presents itself. But it is also probable that a continuation of the immigration move- ment will result in a constant replenishing of the balances and loans carried in New York." From the continent of Europe we have drawn the largest proportion of our population in recent years. A French statistician recently summarized the changes in population in Europe during the past half century. The following figures show the changes among the leading powers since 1883 : — 1883. 1908. Inc. % England 35.753 ; °oo 45,057,000 26 France 37,900,000 39,278,000 4 Germany 46,201,000 63,379,000 37 Russia 86,121,000 129,798,000 51 Austria-Hungary 38,834,000 50,583,000 30 Italy 29,011,000 33,910,000 17 Spain 16,429,000 19,713,000 20 Capital Investments in Canada. 145 The most striking facts in comparison with 25 or 50 years ago are the growth of Germany and Russia and the relative decline in France- In 1858, France and Ger- many were almost equally balanced. England then lagged behind both and has since failed to keep pace with Germany, but her population now surpasses France by about 5,750,000. Germany falls short by only about a quarter of the populations of France and England combined. Austria-Hungary, which was only 3,500,000 behind Germany in 1858 has now fallen behind nearly 13,000,000, but France, which formerly was slightly ahead of Austria, is now weaker by more than 11,000,- 000. It will be observed from the Canadian immigration list at the beginning of this article that a comparatively small number of French and Germans are coming to Canada. One of the dominating facts in the balance of popu- lation in Europe is the growth of Russia, which country sent us in the five years period under review 19,471 im- migrants. Her population has substantially doubled in Europe within fifty years, surpassing even Germany. She now possesses a population substantially twice that of Germany, nearly three times that of England, more than two and one-half times that of Austria-Hungary, and mone than three times that of France. When it is considered that to this may be added tens of millions, in Asia, the offspring of nomadic and military tribes, her. potentialities as a military power loom large. Canada is finding little difficulty, by means of immi- gration, in increasing its population at a rapid rate. The economic difference between new and old countries is sharply marked when making a comparison with France, where in 1909 a series of measures designed to stimulate the birth rate was introduced in Parliament. They in- clude the imposition of additional military service upon 146 Capital Investments in Canada. bachelors over twenty-nine years of age ; making obliga- tory the marriage by State employees who have reached the age of twenty-five years, with supplementary salaries and pension allowance for those with more than three children, and the repeal of the law requiring the equal distribution of estates among the children. CHAPTER XVIII. THE RELATION OF TRADE TO BORROWED MONEY. The enormous sum of money invested by Great Britain in Canada was not placed there solely for the immediate interest return, but also with the hope that the railroads of Canada would foster internal trade east and west, and draw more closely the ports of the Mother Country to the growing ports of Canada. The Dominion must and does recognize London as the centre of the world's monetary system. The question arises, however, whether or not Canada has given serious thought to the moral obligation of borrowing in its relation to trade. Addressing the London Chamber of Commerce, Mr. Edgar Crammond recalled that ever since the resumption of specie payments in 1819, London had been the only free market for gold, and every buyer of a draft on London knew that if he wished it he could always obtain payment in gold. The influences which had contributed to the establishment of London as the centre of the inter- national financial system included, inter alia, the income from British investments abroad (which he estimated to amount to not less than ^175,000,000 per annum), the magnitude of the shipping industry (which brought in at least ^100,000,000 per annum), the magnitude of the foreign trade (which amounted to over ^1,212,000,000), the earnings of British banking and mercantile houses engaged in the conduct of international trade and finance (which amounted to at least ^50,000,000 per annum), the economy and soundness of British banking 148 Capital Investments in Canada. methods, the stability of political institutions and the British reputation for fair dealing. But above all British credit had been established by, and was dependent upon, the unchallengeable supremacy of the British navy, and upon confidence that military strength could maintain order within the Empire and resist attacks from without. We have the assurance of authorities that Canada will continue to benefit by British capital so long as it does not offend the sensitive chords of capital. When Sir Edgar Speyer was in Toronto he noted that Canada's great wealth, the practically unlimited supply of capital from the home country at preferential rates, the free markets and good prices for produce, the increasing supply of skilled farmers and the free supply of labor, rendered Canada's future assured. Nobody would rejoice more in this, he stated, than the Mother Country, which had given,, and will give, to Canada all the financial and moral support which she can expect and which she fully deserves as long as her affairs are conducted in the spirit of to-day by wise and far-seeing statesmen and business men, who know how to appreciate the value of the trust and confidence Great Britain is showing in the Dominion. What is the present relation of British capital and Canadian trade? Great Britain and the United States are the Dominion's best markets. Figures extracted from the Ottawa blue books give the following results: — Canada sold to Creat Britain. 1906 $133,094,937 *I907 105,135,801 1908 134,484,156 1909 133,745.375 1910 149.634.107 Total $656,094,376 *Nine months. Capital Investments in Canada. 149 Canada sold to United states. .;*£ $97,806,552 ig °i 79.021,480 1908 "3,520,500 IOOQ 92,604,357 lgi ° 113,150,778 Total $496,103,667 Canada purchased from Great Britain. 1906 $ 69,317,150 *'9°7 64,819,972 '9o8 95,855,887 1909 70,556,738 : 9io 95,679,877 Total $396,229,624 Canada purchased from the United States. 1906 $180,726,111 '1907 158,603,250 1908 220,791,209 1909 192,661,360 191° 239,070,549 Total $991,852,479 *Nine months. In the five-year period, therefore, while we sold to Great Britain $160,000,000 worth of goods more than we sold to the United States, we purchased from Great Britain $596,000,000 less than we purchased from the United States. In other words, Great Britain is giving us the better deal in its markets, and in return the 150 Capital Investments in Canada. United States is getting our best markets. This despite the fact that our borrowings in Great Britain have exceeded $1,500,000,000. The situation may be more closely analyzed by taking the figures for the year 1910, when we sold Great Britain $149,000,000 worth of goods. In exchange, we purchased only $95,000,000 worth, leaving a difference in favor of Canada of $54,- 000,000. During the same year we borrowed $177,- 000,000 from Great Britain. Taking our British trade and capital together, we were indebted to Great Britain, after equalizing the trade balance, to the amount of $231,000,000. In the meantime we purchased from the United States $239,000,000 worth of goods and sold them only $113,000,000, We may again, with advantage, quote the recent report of the British Tnade Commissioner in Canada, who, writing of the relation of trade to capital invest- ment, says: "If we turn from the statistics of trade to consider the various factors which may aid in their inter- pretation, not the least important consideration is that of the investment of capital. It cannot be doubted that invested capital and import trade tend to run in the same channels. Investment, whether it takes the form of pur- chase of securities or that of the foundation of branch manufactories, agencies, etc., establishes something more than a merely monetary connection. It necessitates, and indeed creates, a personal knowledge of the local circum- stances of the country concerned. The lines of purchase and sale, other things being equal, tend to follow those of personal knowledge and acquaintance. Manufacturers who have come from outside the Dominion to establish industrial plants within its limits very naturally prefer to deal with those with whom they have been connected in their own country. The lines of communication thus established ramify in all directions, and opportunities Capital Investments in Canada. 151 for further investment and opportunities for trade that would otherwise remain unsuspected are thus brought to light. "It is only reasonable, therefore, to infer that in i the present struggle between the British and American \ competitors for the Canadian market the relative invest- \ ment of capital from either country must count for much. \ It is true that from both these sources vast amounts of j capital have poured, and are pouring, into the Dominion. [ But an impartial survey of the field would seem to indi- cate that American capital has been more particularly 1 directed into enterprises such as are connected with the \ import trade of the country. The purchase of Govern- ment securities and municipal bonds, and even of the ; bonds and shares of the great Canadian railroads — the ) forms which British investment has hitherto principally taken — operates less directly and immediately to stimu- late trade than the investment of capital in varying amounts over a wide range of industrial concerns, to- gether with the establishment of branch factories and agencies of all sorts, which has been characteristic of the form of American interest in the development of Canada." Canada does not appear to be fully recognizing its financial obligations to Great Britain by unduly encour- aging British trade. It is becoming more obvious that the questions of trade and loans should be considered somewhat in conjunction. This matter was raised by the loan which the Japanese government sought in February, 191 1, from British bankers. Sir Edward Holden, a leading banker, would have made the raising of this loan conditional upon the promise of more considerate treat- ment of free trade England's exports under the new Japanese tariff. Four millions sterling of the total loan of six millions were required for the following works in 152 Capital Investments in Canada. connection with the South Manchurian Railway, improve- ment of harbor works', increase of locomotive and rolling stock, extension of electric works, extension of gas works, etc. ; that is to say, mainly for the purchase of engineering plant. The British bankers did not depart from their usual procedure in this instance, and the six millions of British money was lent without so much as a bare word that British industry should be remembered when the plant required for those works was bought. Early this year, a Canadian industrial company went to London and borrowed several millions of dollars. On being requested to allow British firms to tender for the new plant required by the company, the reply was that "our directors are prejudiced in favor of American firms." This matter was recently discussed by the editor of Commercial Intelligence, who thought a slowly approach- ing combination of financiers with manufacturers was a most promising development for the future of British trade abroad. He said : — "The scope for their joint enterprise is wide, as we have frequently pointed out, although, at the present stage, it seems to be limited in the minds of the manu- facturers to their immediate necessity. It is a somewhat humiliating reflection that this necessity has been imposed upon the manufacturers by the foresight of their rivals, who already practise extensively the investment of capital in foreign undertakings upon condition of their obtaining the orders for plant required by the borrowers. It is to meet this kind of competition that certain manufacturers in the electrical industry are endeavoring to form a regu- lar alliance with financiers. Callender's Company have secured an important contract from the Tata Hydro- Electric Company, of Bombay, and in part payment they have accepted shares in the undertaking, which- is an Capital Investments in Canada. 153 important one, with most favorable prospects of success, according to all accounts. But clearly no ordinary manu- facturing company is able unaided to make a regular practice of doing business on these terms, and, as finan- cial participation in important undertakings abroad is often a sine qua non of obtaining their orders for plant, regular means must be provided in our commercial organization to enable manufacturers to meet these con- ditions, as their competitors are doing. If the electrical manufacturers' proposed bank is successfully started, we have no doubt it will prove to be the forerunner of similar institutions in connection with other engineering industries which have as great need of them. Much sound business has certainly been lost to British indus- tries in the course of the last ten years for want of them. "Valuable, however, as these banks will be as feed- ers of British industries, they will by no means exhaust the possibilities of mutually profitable co-operation be- tween financiers and manufacturers, if they are designed only to meet such cases as Messrs. Callender's contract with the Tata Company. These cases are important, of course, but comparatively rare. For one company that seeks to raise capital through manufacturers competing for its orders, hundreds go to the financial houses, or with their prospectuses direct to the British investing public, and, having obtained the money they require, British manufacturers may not even have an opportunity of tendering for their contracts. Granting that a good investment is its own reward, it is an open question — if only because the matter has never been put to the test — whether the country is making the best possible terms with the borrowers in all such cases, which represent many millions annually. If a lien on the contracts of these industrial undertakings could be secured for our manu- facturers, it would multiply many times the value of our 11 154 Capital Investments in Canada. investments abroad to British industries, and in these days of the keenest international rivalry our manufac- turers have need of every advantage that British money power can bring them. "Before such a principle could be fairly tried, every financial house would have to be in touch with groups of the leading manufacturers in the various industries, and goodness knows we are far, enough from that. But we believe that manufacturers by the offer of a suit- able commission to the financiers for any business they might introduce from their financial clients could enlist the financiers' support, and if any inducement to the borrowers to accept the lien proposed were necessary the financiers would be able out of the commission from the manufacturers to undertake to raise the money on more favorable terms than they would otherwise offer. There need be no doubt that the scheme proposed is practicable, when German bankers have repeatedly adopted it with success, even with an important British client like the Victoria Falls Power Syndicate, which, as a condition of obtaining German capital for its works had to buy Ger- man machinery. For the success of the scheme it is important that the borrowers should be able to obtain plant in England as good as could be obtained anywhere, and of that there is happily as yet no doubt. The German contractors for the Victoria Falls plant had, after all, to obtain part of it in England." For Canada there may have been a moral in the new and recent Japanese treaty. Japan as a borrower was quite awake to the danger of the English money market being rendered less cordial by resentment arising out of the tariff. Although capital is essentially self-regarding, "it is curiously susceptible to gusts of popular sentiment, as may be seen from a study of the monetary relations of France with Russia, and England with Canada and Capital Investments in Canada. 155 Japan. In both of these latter cases the position of the creditor nation is the chief restraining factor which Britain retains upon her side in facing the prospect of tariff injuries. It is emphatically to Canada's interest to- avoid any injury to public feeling in the country to which she may have to come repeatedly for fresh drafts of capital. Canadians may, therefore, with advantage*, give more attention to the relations of their British borrowing to trade. On the other hand, British financiers can pro- bably do more work than they are doing to pave the way for their industrial colleagues. An interesting phase of Great Britain's exportation of capital and its relation to trade was treated in an address this year by Sir Edgar Speyer in London. In the period from 1894 to 1905, he said, Great Britain spent a great deal of money in unproductive purposes, and did not provide capital needed to increase the world's supply of food and raw materials ; the consequence was that the supplies of these essentials became relatively deficient in proportion to the increasing demand. This was the reason why an unusually large investment of capital was needed to restore the balance. Experience had proved that the exports of British manufactured goods expanded whenever foreign investments were made, and contracted when foreign investments ceased. Since 1905 Great Britain had again begun to invest in foreign securities, and the consequence was that its foreign trade had grown by leaps and bounds, that the export of manufactured goods and the imports of food- stuffs and raw materials needed for Great Britain's in- dustries had vastly increased, while the import of foreign manufactures had been checked. He claimed that foreign investments assisted home Investments in those industries on which the wealth of 156 Capital Investments in Canada. the country primarily depended, and that it was untrue that Great Britain was stinting her own industries by sending capital away. There was plenty of capital avail- able for all sound home enterprise, the proof of which was that the credit of British industrial companies — a very good barometer — had always beert, and still was, higher than that of any other country in the world. It was obvious to all observers that the investment of a portion of Great Britain's annual savings in the colonies and elsewhere was one of the chief causes of the growing prosperity of the Empire. Dealing next with the question, "What good do foreign investments do?" he said that the industries of Great Britain could not expand if the people's supply of food and raw ma- terials did not grow with the increasing requirements. It should be remembered that Great Britain produced a supply of food only sufficient for a small fraction of her great population. The British people had realized that their existence depended on supplementing their small quantity of raw materials and other things by encour- aging other nations to produce what they stood in need of, and an instinct of self-preservation had told them that they must get all the things they needed from the lands which could furnish them. They had, therefore, not only to stimulate their own productions, but had of necessity to encourage others to produce those things they were naturally capable of producing in quantities sufficient not only for their own requirements, but for Great Britain as well. In 191 1 Great Britain would receive, estimated Sir Edgar, about ^180,000,000 for interest on her foreign investments, and this income would come to her almost entirely in foodstuffs and raw materials. The more capital Great Britain invested abroad the more capital was available for investment in its own industries. By Capital Investments in Canada. 157 sending capital to another country the purchasing power of the country was increased, and it was exercised in buying goods from the countries which could supply its needs. The greater demand for goods resulting from this enhanced purchasing power of the new country increased the demand for goods of all kindSj and brought about an increased demand for British goods, thereby increasing the income of the wage-earners and the profits of the traders. By lending capital to other countries Great Britain manufactured the additional goods needed to pay for the securities subscribed for by British investors and to ex- tend her own works and plant. The export of British capital developed the natural wealth of the world, and was the direct cause of the great expansion of the pro- ductive industries of Great Britain. Of the ^3,500,- 000,000 invested outside England, half went to the colonies and half to foreign countries. Great Britain had always been willing to supply all the capital that the colonies needed and could profitably employ ; in fact, she had at times supplied too much, and had caused inflation in some parts of the Dominions and thereby caused financial disturbance. APPENDIX I. CANADA'S SHARE OF BRITISH CAPITAL. One is often asked what proportion of British capital invested abroad has come to Canada. Great Britain has loaned ^3, 192,000,000 to its overseas dependencies and to foreign countries. Of that sum Canada and New- foundland obtained ^372,541,000. These figures have been compiled by Mr. George Paish, one of the editors of the London Statist. They were contained in a paper read to the Royal Statistical Society in London and throw interesting light on British investments and their relation to Canada's borrowings. "In ascertaining the large amounts of capital that Great Britain has supplied to individual colonial and foreign countries," he said, "one is compelled to recog- nize the powerful influence which Great Britain has exerted in developing the world's natural resources by supplying other countries freely with funds for railway construction, for mining, and for the production of every kind of natural wealth. It is no exaggeration to state that Great Britain's enterprise in placing her supplies of new capital wherever they could be profitably employed has been one of the great forces which has made for the increased prosperity of the human race in modern times. In the seventeenth and eighteenth centuries Great Britain supplied money for the development of the sugar, to- bacco, and other plantations of the Indies and of America ; but it was not until the invention of railways Capital Investments in Canada. 159. that the investments of British capital abroad assumed large proportions. A statement of the existing amounts of capital employed abroad by Great Britain gives prac- tically no indication of the valuable assistance rendered by Great Britain to the Continent in the construction of railways in France, Belgium, Austria, Italy, Spain, and in other countries inasmuch as Continental countries have now repaid the greater portion of the sums with which Great Britain supplied them for railway construction. Nevertheless, even Continental countries owe the increase in their prosperity in no small degree to the enterprise of Great Britain in building railways for them when their own supplies of capital were inadequate for the purpose. "The country which has received the largest amount of British capital is the United States, where we have been placing capital from the days of Queen Elizabeth. The War of Independence and the war of 1812-1814 caused but a temporary halt in the flow of British capital to America, but the amounts that were invested in that country prior to the days of railways were insignificant in comparison with the great sums which have been pro- vided by investors since they began to find a large portion of the capital needed for the construction of railways in the young countries. There have, of course, been periods in which the States have been in a position to repay some of the capital obtained from this country, but these periods have been short, and from decade to decade the amount of our investments in the United States has shown large expansion until at the present time it reaches the great sum of about ^688,000,000. It should, of course, be recognized that a part of this sum, and no inconsiderable part either, has resulted from increment or from the employment of profits by the undertakings in which the capital was placed to such good purpose, and that the value of the original sums invested has im- 160 Capital Investments in Canada. mensely increased. Of this great sum nearly ^600,- 000,000 is in railway securities. "With the exception of the United States, our greatest investments are in the daughter States of the Empire, and in our great Indian possessions. Excluding the United States — to which, however, we are also attached by ties of blood and of language — Great Britain has provided more capital to Canada than to any other country, and the rate at which the British people are now increasing their investments in Canada is so rapid as to be phenomenal. The amount of visible capital our investors have placed in Canada now reaches the great sum of ^373,000,000, and new supplies of visible capital are flowing to Canada at the rate of over ^30,000,000 a year. Including the invisible capital, that is, the capital privately supplied for loans on mortgage, the purchase of land for the conduct of private businesses, etc., the amount is probably nearly ^40,000,000 a year. The amount of visible capital we have sent to Canada in the last three years has reached ^100,000,000. "Canada still needs a large sum of money for the completion of the railways now under construction, and, inasmuch as the Mother Country is proud of the great progress of her daughter and is willing to supply her with all the capital she needs to develop her resources, it is evident that our capital investment in Canada will reach a much greater total in a few years. Practically the whole of the capital which has been spent upon rail- way construction in Canada has been provided by the investors of Great Britain. In the nineties, when our investors were suffering from a feeling of distrust of other nations, including the colonies, the progress of Canada was very slow, and the increase in her popula- tion relatively unimportant ; but in recent years the ability of Canada to obtain all the capital she needs for the Capital Investments in Canada. 161 development of her natural riches has stimulated the growth of her population in a wonderful manner. "The British people have provided their kinsmen in the Australasian colonies with rather more capital than they have supplied to Canada, the visible amount reach- ing the great sum of ^380, 000,000. Of this total, ^301 ,- 500,000 has been supplied to the Commonwealth, and ^78,500,000 to New Zealand. A few years ago the amount of capital supplied to the Australian colonies was very much greater than that invested in Canada, but the rapidity with which Canada is developing, and the relatively slow progress of the Australian colonies have materially changed the situation. In the eighties there was a great flow of British capital to Australasia for railway construction, and population increased at a rapid rate ; but in the nineties the country fell upon misfortune, firstly, because British investors were not willing to find much new capital in consequence of their distrust of colonial and foreign investments at that time ; and sec- ondly, because Australia was visited by a series of droughts which seriously checked her progress. "In recent years the credit of Australasia has been fully restored, and the measures that are now being taken to increase the productive power of the country and to develop its natural resources will doubtless bring about the influx of a greatly increased amount of capital from this country, and thus stimulate the growth of popula- tion and of wealth. In 1909 the amount of new capital raised in London for Australasia was about ^10,000,000. In a statement of the amount of capital invested by the British people in Australasia it is noted that about two-thirds of it has been provided by loans to the various governments. The object of these loans was railway construction and other public works. The cir- cumstances of Australasia were such that it was more 1 62 Capital Investments in Canada. desirable for the country -to use its own credit in order to secure the necessary capital for railway construction than to leave railway extension to private enterprise. In Canada the circumstances are different, and the Cana- dian people have been able to get all the capital they require for railway construction by means of companies and by private enterprise ; but, although the methods of obtaining the capital have differed, the railways both of Canada and of Australasia have been almost entirely constructed by means of the capital supplied by the Mother Country." Here are the details of the amount obtained by Canada and Newfoundland : — Government £74,621,000 Municipal 17,327,000 Railways 223,740,000 Banks 4,180,000 Commercial and industrial, etc 14,357,000 Electric lighting and power 3,272,000 Financial, land, and investment 12,613,000 Gas and water 743,000 Insurance 246,000 Iron, coal, and steel 7,331,000 Mines 7,396,000 Oil " 907,000 Shipping 200,000 Tramways 5,808,000 Total £372,541,000 1 "It will be realized that railways are the instruments mainly needed to develop the natural agricultural wealth of the young countries, and that, if the capital provided for railway construction be regarded as a part of the total capital we have found for developing the riches which Nature has bestowed upon the world, it is evident Capital Investments in Canada. 163 that almost the whole of the capital provided by Great Britain for other countries has been used for increasing the world's productions of food, minerals, lumber, oil nitrate, rubber and other natural products. To show the amounts of capital we have supplied to the various coun- tries of the world I give the following statement : — The Colonies and India. North America — Canada and Newfoundland £372,541,000 Australasia — Australian Commonwealth 301,521,000 New Zealand 78,529,000 Africa — South Africa 351,368,000 West Africa 29,498,000 Asia — India and Ceylon 365,399,000 Straits Settlements 22,037,000 Hong- Kong 3, 104,000 British North Borneo 5,131,000 Other British Possessions 25,024,000 Total British Colonies and India £1,554,152,000 Foreign Countries. United States ■. ■ £688,078,000 Cuba 22,7oo;ooo Philippines 8,202,000 Argentina 269,808,000 Mexico 87,334,000 Brazil 94,440,000 Chili 46,375,000 Uruguay 35, 2 55>*>o Peru • 31,986,000 Miscellaneous American countries.... 22,517,000 Russia 38,388,000 Turkey 18,320,000 Egypt 43,753,000 164 Capital Investments in Canada. Spain 18,808,000 Italy 11,513,000 Portugal 8,134,000 France 7,071,000 Germany 6,061,000 Miscellaneous European countries 36,319,000 Japan 53,705,000 China 26,809,000 Miscellaneous foreign countries 61,907,000 Total foreign countries £1,637,684,000 Grand total, all countries £3,191,836,000 "Of Britain's total colonial and foreign investments 53 per cent, is in the Americas, 16 per cent, is in Asia, 14 per cent, is in Africa, 12 per cent, is in Australasia, and 5 per cent, is in Europe. The geographical distri- bution of British investments over the various continents is shown by the following statement : — £ Per cent, of total. Americas 1,700,000,000 53 Asia 500,000,000 16 Africa 455,000,000 14 Australasia 387,000,000 12 Europe 150,000,000 5 Total .£3,192,000,000 100 "This great sum of ^3, 192,000,000 of capital which Great Britain has supplied to the nations is not the total sum her people are employing in other lands. I have taken no account of the large sum of what is termed private capital employed abroad by the British people in a variety of ways, such as the purchase of land, loans on mortgage, deposits in banks, branch manufacturing, mercantile, and trade undertakings, etc., etc. If allow- Capital Investments in Canada. 165 ance be made, on the one hand, for the foreign capital employed in British companies both at home and abroad and in British loans, and, on the other, for the vast amount of private capital which the British people have placed abroad I think the net total of British invest- ments in other lands would be not much short of ;£3, 500,000,000." APPENDIX II. IS CANADA OVER-BORROWING? Quoting the original figures respecting the invest- ment of British and foreign capital in Canada, The (London) Standard of Empire said: "These figures make a gigantic total for so short a period, and it is perhaps scarcely surprising that Mr. Field, as the result of his exhaustive survey, with its almost sensational finding, should utter a note of warning as to the need for judicious restraint on the. part of the Dominion with regard to the financing of its enterprises from sources outside the country. It can certainly be doubted whether any country could point to such a marvellous display of confidence on the part of foreign investors as that which has been exhibited in Canada during the past decade, while the amount contributed by the United Kingdom within the short space of five years is a sufficient testi- mony to what is thought of the possibilities of that country by the leading monetary centre of the world. "In spite of the extraordinary character of the figures already quoted, the question of whether Canada is or is not overborrowing is a rather difficult one to answer. Judged from the standpoint of her enormous natural resources, and the possibilities which lie ahead, we believe that even the borrowing up to date of this portion of the Empire is comparatively moderate. The borrowing, in fact, has to be judged in the light of the Capital Investments in Canada. 167 enormous strides which have been made in the actual productive power of the country. Even if, during the next few years, there should be no abatement in Canada's loan operations, there would probably be ample oppor- tunity not only for the safe, but for the profitable em- ployment of all the capital raised, and certainly within the next decade we look for even more striking financial and commercial developments in Canada than those which have characterized the past decade, wonderful as they have been. "There is always another standpoint from which the development of a new country must be considered, namely, the probability of occasional setbacks in the rate of progress and the necessity for occasional periods of comparative quietude, during which there usually takes place that useful consolidating of prosperity which makes for permanent growth. It is this aspect of the situation which was evidently present in the mind of Mr. Field when he referred to the vast increase in the amount which is now being paid abroad annually by Canada in the shape of interest. This task is easy to perform when large crops are the order of the day, and when, more- over, fresh capital is still streaming in from the leading countries. The strain comes when there is a lull in pros- perity, and when the fresh capital comes in less rapidly. "Fortunately for the Dominion of Canada, there has grown up side by side with the great advance in agriculture and industrial prosperity an equally rapid extension in what has been proved to be one of the soundest banking systems established in any country. Not only is the banking system of Canada sound in itself, as regards what may be termed its machinery, but even in the article referred to above, it is easy to detect that healthy note of internal criticism which may doubtless be considered as indirectly reflecting the finan- 168 Capital Investments in Canada. cial views of banking interests in Canada. In other words, the criticism has come from within rather than from without. That in itself is an excellent symptom, and it is one which strengthens the opinion abroad that up to the present moment Canada has not overborrowed. In the first place, so far as can reasonably be ascertained, the money obtained from abroad has been invested in the soundest possible enterprises, and, in the second place, the material wealth of the country has increased in even greater proportion than have the loans which have followed. "But if it be true, as we believe it is, that the amount at present borrowed by Canada is amply justified by the results which have followed, and that a charge of over- borrowing cannot be justified, there is, none the less, reason to believe that the highest financial quarters are themselves thoroughly ready to recognize that the best interests of the country will be served by checking rather than forcing the pace in the immediate future. The man- ner in which, during the crisis year 1907 in the United States, it was found that Canada had shown a greater restraint, and had, moreover, managed its banking affairs in a far better manner than its neighbor — a much older country — made a profound impression on the Lon- don money market, and so enhanced the credit of Canada as to greatly facilitate the further borrowings which took place immediately afterward. At the present moment, the Home Country, with its possibly somewhat old- fashioned ideas, with regard to the rate at which enter- prises of new countries should be developed, will be the first to note evidences of restraint in borrowing by Can- ada, and will be the more ready at no distant date once again to pour money into what has proved to be so pro- fitable a channel. It is certainly highly suggestive that, at a moment when the United States is still feverishly Capital Investments in Canada. 169 borrowing huge sums in the London market to adjust its adverse balance of trade, Canada is showing a tendency of her own accord to call a halt. "In connection with the schemes already in pro- gress, money will dpubtless be wanted from time to time in the near future, by the Canadian railways and by other leading industrial concerns, while the maturing of Cana- dian debt will, of course, have to be dealt with. It is also equally certain that within measurable distance the enormous resources of the country will continue to attract, in natural fashion, both labor and capital, but, so far as purely fresh enterprises are concerned, it would not be surprising if there should be for a time some slackening as compared with the extraordinary activity of the past few years. "On the other hand, it has to be remembered that the resources of Canada are now so widely known that there is an increasing tendency for capital to seek em- ployment in that direction, quite apart from any direct appeal, either by the Canadian Government or by Cana- dian enterprises. It will be noted from the figures quoted that the United States came in a good second to Great Britain, in the amount of capital contributed, and there can be no question that if the pace is 'forced' in Canada it will, to a large extent, be by United States capitalists themselves. As President Taft said only quite recently in an address to Congress : 'To-day more than ever before, American capital is seeking investment in foreign countries, and American products are more and more generally seeking foreign markets. ' In the sense in which Mr. Taft was speaking, the word 'foreign' included the Dominion of Canada, and if for some months to come there should be an apparent slackening in Canadian activity as reflected in her loan operations, it might be well for investors in the Home Country, and still more 170 Capital Investments in Canada. for those who are able to visit the country itself, to remember that those in close geographical proximity to Canada are keenly alive to the fact that any pause in Canadian progress will be of the briefest character, and will prove merely a prelude to still greater activity and prosperity in the years to come." Discussing the same matter, the Montreal Gazette says : ' ' Figures recently compiled have caused some observers in England as well as in Canada to ask if it would not be well that some restraint should be put on the borrowings on behalf of Canada by governments, municipalities, railways and commercial enterprises. To a large number of people in Canada, the idea of doing anything to check the inflow of capital is akin to treason. They have been taught to think only of what may be obtained by the expenditure of money, and think not at all of the day of paying back. So we have demands for the laying out of a hundred and fifty millions on the Ottawa and Georgian Bay Canal, of tens of millions on a new Welland Canal, of tens of millions more on a rail- way to Hudson Bay, and of many millions more on a variety of enterprises of greater or less inutility, the chief benefit from which would be local and temporary, ending practically with the final payment of the con- tractor. There may well be too much of this. There has, in the view of many, been too much of it already. Huge sums have been borrowed by government and laid out on railways, that in a series of years have not a dollar of net revenue to their credit, or will not become revenue producers for years to come. "The provinces also have been free borrowers, and some of them have given the benefit of their credit to uncommercial enterprise that may yet cause them serious inconvenience and loss. Some, too, have aided enter- prises, which in operation will likely be destructive of Capital Investments in Canada. 171 private capital legally invested in works of public utility. The lenders, however, so far as the present is concerned, are sure of their interest and capital, and from the in- vestor's point of view that is the important thing. It can be believed that, as a rule, the municipal borrowings have been justified on good business lines. The case of Montreal is in point. It has borrowed largely in recent years, and it will, in the order of things', borrow largely in the immediate future. It has spent much on improving its water supply, and paving and street works, including sewers, on necessary widening of leading thoroughfares, etc. It is being made a better and healthier city in con- sequence. Its growth in population and trade and wealth is warrant for saying that its reputation on the money market will be maintained, no matter how great!, within reasonable limits, of course, its debt may become. "The case with Montreal is generally the case with other municipalities. They have borrowed, as a rule, for proper municipal works and only in a minor way for experiments in municipal trading. It is doubtful if any securities in the strong boxes of the English investor are safer than those of established Canadian cities and towns. When the field of commercial investment is taken up, a great variety of conditions arise for consideration. There are Canadian railway bonds and shares among the best that can be bought. There are utility company issues of unquestioned soundness. There are loan and mortgage company debentures and stocks that are fit for trust investments. Then there are a host of miscel- laneous issues, of transportation companies, of mergers, of mines, and of many other things, varying from good to bad. It is only in connection with these that danger can be said to lie; and as a guard against it nothing is likely to be more effective than the commonsense of the investor or the investor's banker or broker. It has foiled 172 Capital Investments in Canada. some recent attempts to get money on questionable enter- prises, and has even given a lesson to those who have sound securities to offer to the effect that the market -does not take kindly to too much of what is a reasonably good thing. This common sense, saving the investor, also saves the too eager borrower from the effects of his optimism. It gives really the only check upon a country borrowing too much, and it may be left to find out the -*ime when a check is needed." APPENDIX III. CANADA AND INTERNATIONAL FINANCE. One of the most enlightening of the analyses of" compilations respecting the investment of British, American and foreign capital in Canada has appeared in Mr. W. R. Lawson's latest volume, "Canada and, the Empire." The following extracts are quoted, and will be interesting. The figures cited by Mr. Lawson are those which appeared first in 1909, and are revised: and brought up to date in the foregoing pages : — "Any estimate," says Mr. Lawson, "that can be formed of the amount of borrowed capital in Canada must necessarily be little more than guesswork. But even if exact results cannot be arrived at, the attempL to reach them is in itself beneficial. It is in the highest degree educative — first, as regards Canada ; and sec- ondly, as regards the ever-widening science of inter- national finance. It fosters, both among lenders and bor- rowers, a healthy spirit of caution. It furnishes an indis- pensable basis for national finance. All conscientious- borrowers, whether public or private, intend to keep within the limits of solvency, but few of them are able- to judge correctly what these limits are, even in their private affairs. How much more difficult must it be to ascertain and observe the limits of national solvency ! "Not- many borrowing nations have yet begun to- trouble themselves seriously about such questions. They prefer the cynical view of Sheridan, who, when asked if the thought of his debts never kept him awake at nights, replied: "Why should they? It is my creditors 174 Capital Investments in Canada. that they should keep awake." As a rule, colonial gov- ernments have not been of Sheridan's sort. They have appreciated the inestimable value of good credit, and have done their best to maintain it. What an advantage that was for them in their early days they are only now beginning to realize. It was no less advantageous to the Mother Country, because it formed a bond of union between them. When all other influences, and political influences in particular, tended to push the colonies out of the Empire, the fact that London was the only place which could finance them held them to their old allegiance. "It is hardly too much to say that in the first quarter of a century of colonial self-government, Lom- bard Street was the chief centripetal force in the Empire, while St. Stephen's and Downing Street were almost entirely centrifugal. In those days the colonies might have drifted apart but for the financial ties, which grew stronger and stronger as the political ties relaxed. In course of time, commerce came to the help of finance, and between them they gradually grew too strong for the anti-imperialist policy. Though Lombard Street is no longer so absolutely necessary as it was to the col- onies, it is still their best friend. As borrowers they have been systematically favored, and the exceptionally good credit they enjoy in the City has its sentimental as well as its purely business side. "A magnificent illustration of that truth is to be found in the recent financial history of Canada. She has had millions of British capital heaped upon her while other borrowing countries, with as good security to offer, have had difficulty in obtaining a third as much. But the money actually lent has been only a small part of the financial benefit she has received. In addition, she has had the use on special terms of the world-wide Capital Investments in Canada. 175 credit system centred in London. Tangible commodities and securities are nowadays but a small part of human wealth. Banking credit is a separate and distinct asset, which, in course of time, may overshadow the other two. In this respect London has been an unspeakable bene- factor to the world in general, and our colonies in par- ticular. Having created a great banking system for itself, it helped Canada, Australia, South Africa, and nearly every other outlying part of the Empire to connect themselves with it. "The actual money lent to the colonies, however huge our estimate of it may be, is a secondary matter compared with the means and the machinery with which the colonies were supplied for creating capital of their own. That is the first and greatest of the financial debts which they owe to the Mother Country. It cannot be measured or expressed in figures. Special financial in- telligence is needed even to realize it. But though it cannot be made either visible or tangible, it may form a good background to our estimates of money lent and capital invested in the Dominion. In the opinion of one of our most skilful and painstaking statisticians, these now amount to about three hundred millions sterling. "That will serve well enough for a starting-point from which to measure future progress. It may be that further tests will lead to its modification, but it can be provisionally accepted as a working hypothesis. The next step in our inquiry will be to find some reliable measure of the rate at which our Canadian investments are growing. On this part of the problem the Canadians themselves are the best authorities, and it is satisfactory to observe that they are working on it most diligently. Several experts are endeavoring to make a regular record of the new capital entering the Dominion from all quarters, British and foreign. Their figures, like 176 Capital Investments in Canada. those of Mr. Paish, have to be rounded off with esti- mates and approximations. Nevertheless, they have practical value both for the student and the man of business. The most detailed calculation of Canada's recent borrowings has been made by Mr. Fred. W. Fields the editor of The Monetary Times of Canada." After quoting the figures, Mr. Lawson says: "No colony or foreign state has ever been so liberally treated in London. No other borrower, colonial or foreign, has ever obtained such a predominant share of our new capital creations. Even greater favor appears to have been shown to Canada in our private and indirect invest- ments. These aggregated in five years $124,392,000 — about a fourth of the public issues on Canadian account, and fully a fifth of the entire capital invested. "The six and a half millions sterling which has been handed over to about a dozen Canadian munici- palities gives us occasion to think, if not, as a French- man would say, furiously, at least seriously. These municipal issues may easily be overdone 1 , and they are the most difficult of all to keep a vigilant eye upon — the more so as they are brought out in a rather bewildering variety of ways, and not all of them above board. The same municipality may be borrowing at home, in To- ronto or Montreal, and in London simultaneously. Some of them have even tried New York. The effect of the above new issues has been to nearly double the muni- cipal indebtedness of Canada to London. "Even that was not the whole tale of Canada's municipal borrowing. In Mr. Field's summary of British investments in the five years ($605,453,852) it will be observed that there is a separate item of $10,000,000 for municipal bonds sold privately. This indicates a new method of placing Canadian securities on the British market, which has some obvious drawbacks. It deprives Capital Investments in Canada. 177 dealers and investors of the necessary means of watching the supply of such securities and the amount of them outstanding at a given date. When they are openly issued, all interested persons can keep track of them and form their own opinion as to the state of the mar- ket. But when large blocks are placed privately, or, worse still, when they are pledged in London banks, the situation may be to that extent misleading. "The whole amount of Canadian municipal bonds now officially quoted on the London Stock Exchange is under fifteen millions sterling. The above ten million dollars, or two millions sterling, placed privately is, therefore, a comparatively large addition. If further pri- vate issues are still being made at a similar rate, say, two million dollars per annum, the concealed issues might soon become larger than the public ones. Any judgment as to the value of such bonds based on the amounts officially quoted would then be quite unreliable. Here the very superiority of Canadian credit may become a danger to itself and others. Its securities are in such favor that they are readily bought or financed without coming on the open market. There is no knowing what quantity of them may have been already distributed through the various private channels open to them — banks, insurance companies, investment trusts, finance houses, and capitalists. "To have secured in five years nearly a hundred million sterling of British money by public issues should have been fairly satisfactory to the Canadians. It should not have left much occasion for private financing at the same time, especially of the class of securities least suit- able for keeping out of sight. The Canadians frequently reproach us with sticking too closely to investment secu- rities, and impress on us the example of the American capitalists, who prefer the higher yields and greater excitements of industrial ventures. 178 Capital Investments in Canada. "The one line of enterprise in which British capi- talists have allowed themselves to be beaten by the Americans in equal competition is industrials. There they have doubtless been slack and shortsighted, but of late a marked waking up has taken place among them. In land and lumber deals they had never much chance against the Americans and Canadians, who have made these their peculiar privilege. Into such deals there has generally been a large infusion of politics, not always above suspicion. They demand local knowledge and familiarity with all the technical intricacies of land laws and timber licences. It is doubtful if Englishmen, who hate details, and like to keep politics out of business, could ever have been much at home among timber limits, and they may be as well out of them. "Years ago some Scottish companies experimented very unsuccessfully in Canadian timber, and that warn- ing may have been taken too much to heart. It cer- tainly damped Scottish ardour, and may have had a sympathetic effect in England. But the great distinction between British and American investors with regard to Canadian land and lumber deals is that the American can combine them with everyday business, while for Englishmen that is very difficult. An American specu- lator in land, timber, pulp, coal, or other natural pro- ducts-, is continually in touch with the markets for such commodities. With him land and timber deals are not outside speculations; they are all in his day's work. On the contrary, a British speculator who has no special knowledge of Canada must go out of his way for such deals, and in default of special knowledge he has to trust to experts, real or pretended, in handling them. "On the whole, he may be better, as well as safer, in concentrating himself on investments yielding fixed returns. If they offer no prizes like those of the Ameri- Capital Investments in Canada. 179 can lumber kings and land boomers, neither do they entail any disastrous risks. In twenty years' time a steady average of 4 per cent, on the British $605,000,000 may amount to quite as much as the net result of the big gains and big losses which the Americans will make on their $279,000,000. "Another point in favor of the British investor is that he will excite less political jealousy than the Ameri- can millionaires, who may emerge from the $279,000,000. Canada has not yet had time to develop socialistic senti- ments', but already rich men have been given in various ways to understand that they are not popular. Municipal bodies, 'eager to emulate their success as traders or financiers, are plunging into competition with them. Large sections of the Canadian press pander to that unhealthy prejudice. . It is so strong and so widespread that the foremost bankers in the Dominion have uttered grave warnings against it. Three or four years ago Sir Edward Clouston', the president of the Bank of Mont- real, on returning from a visit to Mexico, compared the political ethics of the Republic and the Dominion in a style far from flattering to his own countrymen. Reply- ing to a question about the safety of foreign investments in Mexico, he said : — " 'In every instance in Mexico in which a corpora- tion acts in good faith — desirous of giving a good service and, at the same time, earning a profit upon investment the whole resources of the State are at the disposal of such corporations to guarantee security in the enjoyment of their franchise. This is not the case in Canada to-day, he added. It is certainly not the case in Ontario, where you see a disposition to apply socialistic theories to the operation of public utilities.' " "To a Canadian journalist such sentiments sounded incredible, and another question was put to make sure. 180 Capital Investments in Canada. Sir Edward repeated his anti-socialistic warning in more emphatic terms: 'That is just it. Investments are secure in Mexico. There is nothing to alarm capital. But in our own country we can see that the application of socialistic theories might well produce the gravest con- ditions with respect to the investment of capital.' " " 'Canada has another eminent and respected banker who is listened to with respect on all financial and eco- nomic subjects. About the same time that Sir Edward Clouston was praising Mexican honesty, Sir Edmund Walker, the president of the Canadian Bank of Com- merce, addressed an important assembly at Halifax. In doing so he emphasized the importance of safeguarding the financial credit of the Dominion : ' If (he said) we desire to maintain the splendid credit we now enjoy, and if we reflect on the quantity of new capital we shall require year after year as we build up our country, then it behoves every good citizen to see that the incipient hatred of success, which is being encouraged every day by hundreds of inexperienced writers in our daily press, be stopped, otherwise we must certainly suffer severely in our credit. " 'Canada has doubtless immense natural resources, but, on the other hand, they have been pretty heavily mortgaged. Her indebtedness to Great Britain, which some time ago Mr. Paish estimated at ^300,000,000, may now be nearer ^400, 000,000, and it is growing at an average rate of ^20,000,000 to ^25,000,000 a year. In addition, she owes about ^300,000,000 to the United States, and that is also increasing rapidly. Mr. Field estimates the other foreign capital invested in the Do- minion at $77,889,650. The grand total of her external obligations is not much, if any, less than five hundred millions sterling (£500,000, 000), a tidy sum to earn interest upon year in and year out.' " APPENDIX IV. EDITORIAL COMMENTS. The following newspaper comments are based on the author's first two articles on British and American capital in Canada, published in 1909, and revised in the present volume. This accounts for differences in the figures quoted : — The Toronto Globe thinks that the simple and obvious lesson of the record of our British borrowings is the absolute dependence of Canada on foreign capital for development commensurate with her natural oppor- tunities. Canada's vast areas of agricultural land will be a perpetual source of wealth, but they require com- mensurate railway development to make them economi- cally available. For the capital necessary in extending transportation facilities there is no source except the world's financial capital. All the corporate or individual enterprises, it adds, have necessarily been accompanied by proportionate Governmental and municipal necessities. New populous centres have sprung into existence, Provinces have been •created, and a new Dominion has awakened to new needs. The resultant demand for capital to be per- manently invested in public projects has been met by Federal and Provincial borrowing aggregating $149,- .497,000, and municipal borrowing to the extent of $31,770,000. Large as these aggregates seem, they are required to start the wheels of wealth production in Canada, and the resources of the Dominion are sufficient 182 Capital Investments in Canada. to insure good returns to both borrowers and lenders. The lesson of this necessary dependence on British capital is the need of keeping Canadian credit above suspicion. While British investors are fully assured that their con- fidence is not misplaced, the certain needs of future years will be met as in the past, and Canadian development will continue, concludes The Globe, in proportion to her endowments of natural and potential wealth. That Canadians have no ground for complaining that British capital has not favored our industrial development particularly, is the opinion of The Toronto Star, which says that the British investor has a right to place his money wherever he thinks it will yield the best return. But it might pay the British manufacturer, as well as the investor, to pay a little more attention to the Cana- dian field. Many American manufacturers have decided that it is more profitable to establish industries in Can- ada than to ship their products from the United States. The British manufacturer, one would suppose, has still stronger reasons for setting up establishments in Canada and studying the requirements of the market at close range. It is gratifying to know, adds our contemporary, that although our borrowings are heavy, our credit is good. There is general confidence in our resources 1 , and our future. It is a good thing for Canada to be eldest son in his father's house and master in his own, says Mr. H. F. Gadsby, in Canadian Collier's Weekly, referring to Great Britain's loans to Canada. London is still the greatest loaning centre, he continues, • and British capital the greatest adventurer in the world. And Canada stands high in that money market — our credit good, our re- sources boundless, our future dazzling. John Bull's appetite for gilt-edged securities is enormous. Being at a distance from his enterprises, he favors bonds. He Capital Investments in Canada. 183 lets the common and preferred stockholders do the direct- ing and worrying. Government and municipal deben- tures he absorbs with relish. He is working up a taste for Canadian industrials, and he also likes land and timber. His Canadian mining investments, to the tune of $56,000,000, are a sort of a hot sauce with a flavor of danger. His mouth begins to water at our import trade, in which the United States, having studied the whims of our market, is his great rival. The United States has sixty per cent, of this trade. The commercial map of Canada is written on Uncle Sam's heart as Calais was on Queen Mary's. The day approaches when the Cana- dian North-West will grow a billion bushels of wheat. We are going to have a lot to spend. John Bull should not rest content with lending us money. He ought to have a bigger share of our import trade. If he gives us style, in addition to quality, he will get it, concludes Mr. Gadsby. A new line of argument is taken by The Toronto Telegram, which thinks that Canada is to be congratu- lated on the receipt of the $605,000,000 which Britain has loaned to Canada in five years, and that Britain is also to be congratulated on the certainty that the $605,- 000,000 loaned to Canada is much more profitably em- ployed than the billions of dollars that are now stored in the Old Country banks bearing little or no interest and awaiting investment. If Canada is fortunate, it reasons, in having such a lender as Britain, surely Britain is also fortunate in having such a borrower as Canada. Money-borrowers, on good security, are almost as necessary to Britain's prosperity as money-lenders are to Canada's develop- ment. The only market so far open to meet Canada's needs, which are likely to be greater in the future than in the 184 Capital Investments in Canada. past, is that of London. So says The Manitoba Free Press. Canada will have some large demands to make, and, if her loans continue to be as well received as have those of the last two years, and the price paid for them continues to remain favorable, she will be fortunate. To retain the high estimate which Britishers at present have of Canadian securities ought to be the object, thinks that journal, of the greatest care and vigilance. Nothing could be more satisfactory or promising, from the point of view of national development, is the sentiment voiced by The Halifax Chronicle, than the assured position which Canada has attained in London, the greatest loaning centre of the world, which, on the testimony of eminent financiers, has a practically inex- haustible supply of capital for investment abroad. Discussing the question of the trade balance, The Moncton Daily Times fears that our borrowings are building a large future debt. Canada's imports of foreign merchandise during 1909, it says, represented the value of $375,000,000, while our exports of domestic products were of the value of but $279,000,000. Thus the adverse balance of trade against this country in one year is nearly one hundred million dollars, and it be- comes a question how much of the new capital remains in the country and how much goes to meet the large adverse balance of trade. If the capital investment is largely taken up by this adverse balance of trade, as seems inevitable, we are simply piling up debt against the future. Great Britain is able to stand a large adverse trade balance because of her enormous income from foreign investments, but this is not the policy that has made the United States and Germany the great rivals of Britain in commerce and industry. It would seem that a fiscal policy, continues the Moncton journal, that would lead Capital Investments in Canada. 185 to the production in Canada of a proportion at least of the merchandise now imported would seem to be neces- sary if this country is to reap the full benefit of the influx of people and the large investment of capital from Britain and other countries. Gratification regarding Canada's fame as an invest- ment field is expressed by The Medicine Hat News, which cites capital and population as our two greatest needs to secure the fullest realization of its great and varied resources. The capital is coming in rapidly, and so is the population. Every dollar spent in development creates the power for the creation of other dollars. Every productive individual added to our population, it concludes, does similarly. Discussing what it terms, "Canada's extraordinary borrowings," The Toronto News cites the fact that the Dominion is an attractive field for investment, and the capitalists of London recognize the fact. There is no doubt also something in the circumstance that this country is part of the Empire, it adds. We get more free advertising in England for that reason than we otherwise would. For our part we must maintain our credit at the world's capital. To that end we should offer nothing but sound securities in Great Britain, is its concluding advice. In a lengthy reference to the subject, The Vancouver News Advertiser lays particular stress upon the main- tenance of good credit. If we look to that, it says, it will be difficult to put any limit on the amount of capital that will be available for Canadian projects of various descriptions. Other countries are eager to attract capital to themselves, and it will only be possible for us to secure the capital required for all the enterprises we desire to carry out, if the owners of that capital are assured of the sufficiency of the security and satisfied 13 i86 Capital Investments in Canada. with the return yielded by their investment. Doubtful or reckless projects should be condemned and every pre- caution taken to prevent British capital being invested in them. If war should inflict great loss upon Great Britain, or, in other words, great destruction of capital, what would be the effect upon Canada? Where would our Government float their loans? Where would our railways sell their bonds? These questions are asked by The Nelson News, which also replies that the required funds might with some difficulty be secured from foreign countries, but it would be at increased rates of interest, which would be a tax upon the prosperity of the Do- minion. Merely for this reason, if for no other, Canada is vitally interested in the maintenance of the military and naval strength of the Empire. Capital knows no creed or nationality, states The Canadian Century. It turns to the countries of oppor- tunity, and just now Canada is offering opportunities. The same journal points out that if one were to interpret Great Britain's $600,000,000 loans to Canada, it would mean that the Englishman had advanced Canada $100 per head of her population, although that, of course, is not just what took place. Nobody rejoices more than the Mother Country, says The Montreal Witness, that Canada's great natural wealth, the practically unlimited supply of capital from the home country at preferential rates, the free markets and good prices for produce, the increasing supply of skilled farmers, and the free supply of labor render her future assured. Great Britain, it adds, has given and will give to Canada all the financial and moral support which she can expect. A total and a record of which both borrower and lender may justly feel proud, is how The Standard Capital Investments in Canada. 187 Empire Supplement describes Great Britain's Canadian loan statement. It tells, on the one hand, of truly remarkable progress in a young country, while it speaks with scarcely less eloquence of remarkable vitality in the lending power of the parent concern. To those of our readers overseas who may be in- clined still to dwell upon the vast sums loaned by the Home-country to foreign nations we would commend two facts, continues The Standard. The first is that it has to be remembered that the financing by London of foreign nations is, after all, a custom which goes back to a period long before there were oversea Dominions of our own to finance, and it is only natural that this older portion of our business as a lending centre should continue to be a leading feature. The other fact, however,, to be noted is that just as trade between the Empire is ex- panding in much greater proportion to that of our trade -with foreign countries, so there are abundant indications that of the sum total invested by Great Britain outside purely Home securities the amount employed in the various parts of the Empire is, proportionately, steadily increasing as compared with the sums lent to foreign countries. It is a fact which can scarcely fail to be wel- come to those who appreciate all that is involved in the rapid development of the resources of Greater Britain, and who realize how greatly that development must add to the strength and power of the Empire as a whole. The astonishing railway development of the Do- minion from east to west has only been possible because of the faith of the British investor, and how could suc- cessive Canadian Finance Ministers have pursued their large-handed policy of expansion but for the co-operation of the oft-maligned John Bull? Thus reasons The Cana- dian Gazette, of London. We are glad to think that Canada has more than justified his good opinion of her, 1 88 Capital Investments in Canada. but do not let us forget the hand that "helped us over" and is helping us now with an almost unbounded confi- dence in the far greater things that the future has in store. Every day adds to the lesson, the same journal advises, that, be the investment large or small, there is only one profitable Canadian attitude towards the British investor — the policy of straight dealing and fair sharing. Noting our estimate that British investors have placed $605,000,000 in the Dominion during the past five years, and the estimate of Mr. Paish, that existing British investments in Canada totalled $1,500,000,000, The Springfield Republican draws attention to the inter- esting fact that thus more than a third of the British- owned capital located in Canada has been placed there within half a decade. This is strikingly reflective of the extent and rapidity of the material development which is taking hold of the country to the north of us, concludes that journal. Although Britishers have not invested in grain, lum- ber and manufacturing businesses to the same extent as Americans, notes The Manitoba Free Press, they have supplied capital for other primary needs of the country, and in volume the British investments are very much greater than those of the Americans. In so far as the three prairie provinces are concerned, there can be no question that the money and wealth being brought in by immigrants from the United States is one of the factors of the present progressive movement, but what would the sum total of their efforts accomplish without the opportunities provided for them by the expenditure of British money, procured upon the guarantee of the whole people, in the building of new railroads? The particular merit of the average United States settler is that he knows how to utilize Canadian opportunities and does Capital Investments in Canada. 189 not hesitate to seize the opportunity to become a Cana- dian as soon as he can. The figures are at once a standing testimony on the one hand to the benefits accruing to Canada from the importation of capital, and on the other hand to the enor- mous profits which have resulted to those in the United States who have been quick to discern the great possi- bilities which Canada affords for the profitbale employ- ment of capital. These are the conclusions of The Fred- ericton Gleaner. Both The Hamilton Times, Ontario, and Commercial West, of Minneapolis, comment upon American fore- sight. The United States investors are shrewd enough to appreciate the advantages Canada offers, says the former, the latter remarking that in the United States there is a keen appreciation of industrial opportunities in the Dominion. Commenting upon the small number of consular agents maintained by Great Britain in Canada, as compared to the United States, the same paper says that it is not too late for Great Britain, as the Canadian West is only just getting fairly started. There is still plenty of room and opportunity for a long time to come in the United States, says The New York Journal of Commerce, but that will not prevent an overflow into a land of similar character separated only by a political line where room and opportunity are still greater in the line of new development. The lower part of British America stretches across the continent, even wider than the United States, with only about 7,000,000 inhabitants, and with space and means of life for ten times the number. American capital and American blood are likely to invade Canada with an increasing current and have an effect upon its character and destiny. It will not interfere with its independence, perhaps not with its loyalty to the great Empire of which it is a part, but it 190 Capital Investments in Canada. ought, concludes our New York contemporary, to bring the two countries into more harmonious relations in their material interests, which cannot be antagonistic, and ought to be mutually beneficial. The reason why American capital goes to Canada is the same reason which prompts our farmers and miners to go there, says The Chicago Record-Herald, and that reason is opportunity. Canada is sound, prosperous and largely undeveloped ; she needs plenty of muscle, brain and gold. She is getting these things, and will continue to get them for decades. There is nothing strange, regrettable or marvellous about the phenomenon, and we are not disposed to think that any sensible American does regret it. Canada is a good neighbor and excellent customer, and the richer she is the better for our pro- ducers and traders. Under any policy our capital and our land-hungry farmers would find Canada alluring. Still, it is true that a certain or uncertain proportion of American capital has been forced into Canada by our high tariff, and that liberal reciprocity with her would tend to keep such capital at home. Here is, in truth, a good argument for reciprocity, though not a new one. There are other good pro-reciprocity arguments, as there are for such complete freedom of trade between the United States and Canada. The barriers between the two peoples are purely artificial, finally comments that journal. Competition for Canada's trade makes it incumbent upon many American manufacturers to establish plants over the border line, taking advantage of the lack of tariff restriction, points out The New York Financier. The incentive to erect these establishments will be given a new impetus within the next year, through the negotiation by the Dominion Parliament of preferential treaties with one or more foreign countries. The United Capital Investments in Canada. 191- States has never been known as a nation which uses its^ surplus money for outside development, the simple reason being that there has always been an opportunity within our boundary lines for whatever surplus existed. Still, between Mexico, Canada, and in a lesser degree some other parts of the world, United States capital to the extent of at least 1,000 million dollars is employed in industrial enterprises and ventures of like nature, esti- mates this New York authority. Another view is taken by Canada, of London, which considers the effect of this American enterprise, and why it is a matter for regret. At first sight there seems nothing to regret in it. The money has helped the de- velopment of Canadian resources, and the men who have brought the capital into the country are keen business men who would help the prosperity of any country in which they settled. Where the trouble lies is in the fact that nearly all American capital invested in Canada is brought in by the investor personally, and, as there is no corresponding investment of the kind made by British investors, there is an increasing predominance in Can- ada of powerful American influence counteracted by no similar enterprise on the part of the British investors, concludes our English contemporary. Lessons for Great Britain are also drawn from the statistics by The Canadian Gazette, which thinks that the relations between Canada and the United States are undergoing a remarkable transformation, and whatever may be our opinions on Imperial and fiscal questions, this transformation is worthy of the closest attention. From it we see at once Canada's growing importance among the industrial nations of the world, and we can realize the consequent changes in her relationship with the British Empire and with the leading industrial coun- tries of Europe, such as Germany and France. It will 192 Capital Investments in Canada. be seen that it is especially in the Western sections of Canada that the United States capitalist is reaping profits which, we must assume, are greater than those available to him in his own country. It is unnecessary to dot the i's of this remarkable total. Obviously, it indicates an enormous influence constantly and increasingly at work in Canadian public life, and it would be unreasonable to expect that influence to be opposed to Continentalism and in favor of Empire unity, unless substantial reasons exist for the Empire as against the Continent. The moral is directed straight at the British business man and investor, concludes The Gazette. Go in and possess more of the good things that Canada offers. Capital Investments in Canada. APPENDIX V. i93 LIST OF CANADIAN FLOTATIONS IN LONDON, JANUARY, 1905, TO APRIL, 1911. 1905 Company Amount Security •a CO ™ tn Feb. Canadian Northern Ry £ 600,000 4% perpetual consolid- ated debenture stock 92 11 Grand Trunk Pacific . . 3,004,000 4% sterling bonds. . . . 99i Mar. Canadian Northern Ry 1,923,287 3% 1st mortgage de- 95 ii Grand Trunk Pacific. . 3,200,000 3% 1st mortgage ster- 95 11 Imperial Paper Mills of Canada, Limited 60,000 par April Montreal Light, Heat Shawinigan Water & 150,000 92 11 5% consolidated 1st 500,000 mortgage bonds .... 6% cumulative prefer- 98 May Western Canada Pulp & Paper Co 300,000 ence shares of £\ ea. par June Canada Atlantic Ry. Co 1,025,000 4% 1st mortgage con- solidated gold bonds 99 11 78,000 3\% consolidated stock 93J Aug. Nova Scotia Eastern Ry 940,000 5% 1st mortgage gold Western Canada Ce- 92} 11 ment & Coal Co 225,000 6 % 1st mortgage bonds par Oct. Northern Sulphite Mills 100,000 6% 1st mortgage bonds i% perpetual deben- par Nov. Canadian Northern Ry 1,240,000 British Columbia Elec. 90 Dec. Ry 185,000 5% cumulative perpet- ual preference shares Total, 1905 0-10 13,530,287 i 9 4 Capital Investments in Canada. 1906 Company Amount Security T3 U Feb. Canadian Gener'l Elec- £ Common stock of £100 220,000 H2J It Dawson, Grand Forks 6% consolidated deben- & Stewart River Ry. Western Canada Land 125,000 par H Co 300,000 1st mortgage sinking 1 -5-0 Mar. Electrical Developm'nt Company of Ontario 500,000 fund 5% gold bonds. 96* (i 1,000,000 4% guaranteed stock. . par a Province of Ontario. . 1,200,000 3}4 % registered stock . 98} May Western Dominion Col- 200,000 In £l shares par 100,000 6% 1st mortgage de— Canadian Pacific Sul- 75,000 48 June "A." shares of £l ea. par 7,500 " C." shares of £l ea. par J«iy Atlantic, Quebec & 5% 1st mortgage de- 750,000 benture bonds 95 (i Temisucouta Ry 50,000 5% prior lien bonds. . . par Oct. Canadian Northern Ry 1,000,000 4% perpetual guaran- teed debenture stock 98 << Southern Alberta Land Co 400,000 par c Trust & Loan Co. of i% perpetual deben- 500,000 par Total, 1906 6,427,500 Capital Investments in Canada. 195 1907 Feb. Mar. Apl. n May June July it tt Oct. tt Nov. it Dec. Company Grand Trunk Pacific. . British Columbia Elec. Ry Canadian Estates, Ltd, Vancouver Copper Co, Canadian NorthernOn- tario Ry City of Winnipeg England's Premier Co- balt Mining Co Annapolis Iron Co .... Shawinigan Water & Power Co Bluebell Gold Mines.. City of Regina Western Canada Tim- ber Co Canadian Gener'l Elec- tric Co City of Edmonton .... Mexican Light and Power Co , City of Vancouver. . . , British Columbia Elec, Ry- ; Dominion of Canada. , Canadian Pacific Ry. Total, 1907 Amount £ 1,000,000 300,000 215,000 80,000 793,869 327,642 220,000 140,000 4J % perpetual consolid- ated debenture stock 7% participating pref- erence shares of £l In £\ shares 3J£% 1st mortgage de benture stock 4 % debentures 200,000 20,000 111,000 75,000 400,000 139,400 480,000 244,900 1000,00 1,500,000 4,857,200 11,203,711 Security In ^1 shares 5% 1st mortgage 30- year gold bonds. . . . 4|% perpetual consoli- dated mortgage de- bentures In shares 4%% debentures. ..... 6% 1st mortgage de- bentures 7% cumulative perpet ual stock 5% debentures 7% gold cumulative convertible prefer- ence shares 4% debentures Pre? d ordinary shares of £\ each i% debentures Ordinary shares .... par 98 par par 914 par par 90 4/2 par par par 91 par par par 1 96 Capital Investments in Canada. 1908 Jan. Feb. Mar. April May June Company July Grand Trunk Pacific . Penmans, Limited . . . Dominion of Canada . Grand Trunk Ry Montreal Light, Heat i. Power Co Montreal Street Ry. Richelieu & Ontario Navigation Co Grand Trunk Pacific. North of Scotland Can adian Mortgage Co. City of Regina Canadian Northern Ry City of Edmonton. . . . Kaministiquia Power Co City of Montreal Province of Manitoba City of Winnipeg. . . . Amount British Columbia Elec. Ry Dominion of Canada. . City of Quebec City of Saskatoon. . West Kootenay Power & Light Co C ity of Calgary Penmans, Limited. . . Toronto Power Co. . . £ 1,000,000 300,000 3,000,000 1,000,000 80,000 460,000 200,000 2,000,000 Security 4 % debenture stock. . . 5 % first mortgage gold bonds 3J% redeemable stock 4% guaranteed stock. 4J£% first mortgage bonds 4J^% sterling deben tures , 5% 30-year mortgage debentures 4% mortgage sterling bonds 175,000 In £10 shares 113,700 5% debentures 2,000,000 4% perpetual con soli. dated debenture stock 187,400 5% debentures 265,000 1,000,000 308,500 1,500,000 200,000 5,000,000 71,000 42,921 100,000 240,000 133,000 170,000 500,000 5 % gold bonds 4% stock 4% debenture bonds. . 4% consolidated regis tered stock Preferred and deferred shares of £1 each. . 3^% stock 4% debentures Consolidated stock... 5% debentures 1st mortgage 6 % bonds 4%% debentures. 6% cumulative prefer ence shares 4%% debenture stock 94 97i par 92£ 96J 96 par 944 £12 par 92 101 97 99 99 96 par par par 911 101 par £1 98 Capital Investments in Canada. i97 1908— Continued Company Amount Security •0 v 3 IS M ™ in 1— 1 July City of Vancouver Western Canada Flour Mills Co £ 405,000 225,000 159,800 5,000,000 364,000 1,027,400 598,400 410,900 102,700 600,000 200,000 115,000 200,000 4% sterling debentures 6% 1st mortgage bonds 4% sterling debentures 3i% redeemable stock 6% 1st mortgage ster- 97 par 98J par 99J 95 93 99i 104 Sept. Oct. If Dominion of Canada. . Canada Iron Corp. . . . Canadian Northern Ry Prov. of Saskatchewan City of Sherbrooke. . . British Columbia Elec. Central Ontario Ry. . . City of St. John Trust & Loan Co. of Nov. 4% 1st mortgage land Consolidated 1st mort- gage 4% gold bond of the Canada At- Dec. i% % perpetual conso- lidated debenture 11 11 5% 1st mortgage bonds 99 par Total, 1908 29,354,721 ig8 Capital Investments in Canada. 1909 Company Amount Security Cfl » CO i— < Jan. Alberta Provincial Gov Montreal Water & £ 411,000 100,000 400,000 200,000 6,000,000 144,032 1,000,000 300,000 300,000 120,000 200,000 500,000 20,000 61,140 124,800 1,028,806 820,000 1,000,000 170,000 156,900 15,000 450,000 174,600 4 % sterling debentures l}i% prior lien bonds i% sterling registered 99} 94 it Montreal Cotton Co. . . Dominion of Canada . . British - Canadian As- 103 n 1st mortgage 5% de- 97} 99J 95 n 3^& bonds Feb. 5% gold bonds i% debentures *%% perpetual conso- lidated debenture stock 6% cumulative 1st pre- u n it Grand Trunk Pacific. . Winnipeg Electric Ry. National Drug & Che- mical Co. of Canada East Tilbury (Canada) Oil Fields 90 97 par f> Mar. City of Winnipeg British Columbia Deve- lopment Association City of Calgary Lake Superior Corpor- 4% consolidated re- in 400,000 ordinary par *t 5% mortgage deben- par 103} 90 April u 4%% debentures 1st mortgage 5% col- lateral trust bonds . . i% registered stock.. May Province of Ontario. . . Grand Trunk Pacific. Canadian Mineral 102 97 6% 1st mortgage de- 1% 1st mortgage de- 98 if ii Dominion Mica Co. . . . Province of New Brunswick British Columbia Fruitlands, Limited. 103 par ii Shares of £\ each. . . . par Capital Investments in Canada. 199 1909— Continued Company Amount Security June tt 11 Southern Alberta Land Co City of Toronto Canadian Northern Ont. Ry £ 300,000 394,100 800,000 411,522 1,200,000 286,400 1,200,000 100,000 187,300 2,000,000 6,500,000 156,500 360,082 6,000,000 514,403 175,000 1,520,550 648,148 850,000 51,440 60,000 5 % debenture stock . . 4% general consoli- dated loan debentures 4% perpetual conso- lidated debenture par 102J Northern Light, Power & Coal Co 92 f» 5% 1st Mortgage 20- year gold bonds 4% guaranteed 1st mortgage debenture 90 1st mortgage de- bentures 100,000 105,100 924,600 770,000 150,000 2,000,000 par 924 95 99i par 97J 103 100i $100 shares £24- £\ shares i% % debentures .... 6 % 1st mort'ge and col- lateral Trust bonds. 5% 1st mortgage 50 year gold bonds . . . , 6% 1st mortgage ster- ling bonds 3% 1st mortgage ster- ling bonds par 95 12-0 par 101£ 110 90 82J 202 Capital Investments in Canada. 1910— Continued July -Aug. •Sep. Oct. Nov. Company Dec. British Columbia Gold- fields Co. of Canada, Ltd National Drug & Chem- ical Co. of Canada, Ltd.. Noiseless Typewriter Co City of Regina British Columbia Elec- tric Ry City of Montreal. Lake Superior Iron & Chemical Co Canadian Mills & Tim- ber, Ltd Price Bros. & Co., Ltd Moose Jaw City City of Saskatoon Canadian North Paci- fic Fisheries, Ltd. . . Hawthorne Silver and Iron Mines, Ltd .... British Columbia Elec. Ry. Co., Ltd Anglo Canadian Land Co., Ltd Province of Saskatch- ewan Western Canada Bag & Envelope Co Amount 40,000 49,370 20,000 93,600 600,000 1,000,000 616,420 100,000 1,000,000 101,300 88,600 400,000 100,000 600,000 476,500 1,000,000 12,000 Security 6 % cumulative 1st pref- erence shares 7% cumulative prefer- red stock carrying bonus of 75% com- mon stock 4%% debentures.. . . 200,000 5% cumulative preferred shares. . 200,000 preferred ord- inary shares 200,000 defer'd shares. 4% sterling registered stock 6 % 1st mortgage gold bonds 5% 1st mortgage bonds 4% % debentures 4%fo bonds 5% 1st mortgage de- bentures 5% cumulative prefer- ence shares £1 shares 4% registered stock. Si- par 101 21s. 22s. 20s. 101} par par 87 101J 101J 86 par par 101 Capital Investments in Canada. 203 1910 - Continued Dec. Company British Canadian Trust Co Dominion of Canada Investment & Deben- ture Co BritishColumbiaMines, Land & General Fi- nance Co Dominion Sawmills & Lumber Co Total, 1910 Amount £ 250,000 250,000 100,000 800,000 38,453,808 Security 0) a? 204 Capital Investments in Canada. 1911 Jan. Feb. Mar. Company Canadian Wheatlands, Ltd Alberta Province Grand Trunk Railway City of Westmount, Que Town of Maisonneuve, Q«e City of Victoria, B.C. Trust & Loan Co. of Canada Minnesota & Ontario Power Co Scottish and Canadian General Investment Co Port Arthur, Ont Canadian Steel Foun- dries Grand Trunk Pacific. . Canadian Northern Ry Bell Telephone Co. of Canada, Ltd P. Burns & Co., Ltd. . Lake Superior Paper Co., Ltd Spanish River Pulp & Paper Mills Standard Chemical Iron & Lumber Co. of Canada Amount 350,000 1,400,000 750,000 500,000 879,000 117,500 300,000 100,000 250,000 110,700 410,900 696,000 358,888 250,000 200,000 719,000 267,000 200,000 Security 4 % 6 months Treasury bills i% perpetual consoli- dated debenture stock 4% debentures. i% % debentures . . . 4% sterling debentures 6% 1st mortgage gold bonds i%% debentures Guaranteed by Canad- ian Car & Foundry Co i% mortgage sterling bonds 3%% guaranteed 1st mortgage debenture stock 5% bonds 6% 20 years sinking fund bonds 6 % 30 year gold bonds 6% 1st mortgage sink- ing fund gold bonds 7% cumulative prefer- ence stock 3* par par 101J 1024 984 par 92 944 102 97 984 100 Capital Investments in Canada. 205 1911— Continued Mar. April Company City of Hamilton Western Canada In vestment Co., Ltd.. Canadian Northern Ry North Saskatchewan Land Co., Ltd Investment Corpora- tion of Canada Ontario Porcupine Goldfields Develop- ment Co City of Vancouver. . . . Canadian Cottons, Ltd Anglo Canadian Tim ber Co. of B.C Columbia River Lum- ber Co City of Quebec British Columbia Elec- tric Ry. Co Total 13,945,997 Amount £ 204,100 200,000 1,543,209 4% debenture 5% cumulative prefer- ence shares 5% convertible deben ture stock 450,000 500,000 600,000 579,000 370,000 225,000 600,000 215,700 600,000 Security 50 year sterling' bonds £\Q shares £\ shares 4% bonds 5% 1st mortgage gold sinking fund bonds. 6% 1st mortgage de- bentures 5% 1st mortgage bonds 4% bonds 1004 par 98 97J par par 1001 93 95 89 1001 206 Capital Investments in Canada. The following list of Canadian Flotations in London was compiled as this volume was going to press: — 1911 Company Amount Security T3 4) tfl « May Canada Provident In- £ 5% cumulative prefer- 400,000 par «( British Canadian Lum- 6% cumulative prefer- ber Corporation. . . . 800,000 par tt British Canadian & General Investment Co., Ltd 350,000 900,000 par n City of Winnipeg .... 4 % consolidated re- gistered stock 100 11 Cocksbutt Plow Co. . . 750,000 7 % cumulative ") preference \ £20-11-6 shares J • t Ames - Holden - 6% 30-year first mort- 205,500 gage sinking fund Canadian Timber In- 101 (i vestment Co., Ltd. . 150,000 par 3' INDEX II. COMPANIES AND INSTITUTIONS. A PAGE Adams, Burns & Company 27 Algoma Central & Hudson Bay Railway.. 39, 43, •84, 87, 201 Algoma Eastern Railway Company 207 Alberta Societe Anonyme Beige du Nord Quest Canadien 36 Alberta & Great Waterways Railway 84, 89, 199 Amalgamated Asbestos Corporation -. . 107, 200 Ames-Holden-McCready, Limited 206 Anatolian Railway Company 62 Anglo-Canadian Land Company, Ltd 100, 202 Anglo-Canadian Timber Company 101, 20s Anglo-French Exploration Company in Annapolis Iron Company 91, 195 Atlantic, Quebec & Western Railway 84, 89, 129, 194, 199 B Bank of British North America 65 Bank of England 143 Bank of France 44 Bank of Montreal 66, 129, 179 Banque de Paris et des Pays Bas 41 Banque Internationale du Canada 45, 1 16 fielding, Paul & Corticelli, Ltd 206 Belgo-Canadian Fruit Lands Company 37 Bell Telephone of Canada, Ltd 93, 204 Berlin Stock Exchange 51, 54 Bewick-Moreing 1 1 1 Bluebell Gold Mines 106, 195 Bourse, The Paris 44, 46 Capital Investments in Canada. 213 PAGE British-Canadian Asbestos Company 92, ig8 British-Canadian & General Investment Company 206 British-Canadian Lumber Corporation 206 British-Canadian Shipbuilding- & Dock Company 98 British-Canadian Trust Company 120, 203 British Columbia Development Association .... 120, 198, 200 British Columbia Electric Railway 19, 30, 85, '93. 19S, 196, 197. 200, 202, 205 207 British Columbia Fruitlands Ltd 100, 198, 200 British Columbia Goldfields of Canada 107, 202 British Columbia Marine Railway Company 97 British Columbia Mines, Land & General Finance Company 120, 201, 203 British Columbia Steel Corporation 26 British Empire Timber Company , loo, 201 Brunner Banking: House 60, 88 Burns & Company, Ltd 93, 204 Calgary Power Company 92, 200 Calender's Company 152 Canada Atlantic Railway Company 84, 85, 193 Canada Cement Company 106, 107, 199, 200 Canada Iron Corporation 92, 197 Canada Mortgage Bank 37 Canada Provident Investment Company 206 Canadian and American Mortgage and Trust Company 207 Canadian and Empire Investment Trust Company.. 120, 201 Canadian Bank of Commerce 102, 130, 180 Canadian Car and Foundry Company . . 72, 199, 200 Canadian Collieries (Dunsmuir), Ltd 107,201 Canadian Cottons, Ltd 93. 2 °5 Canadian Estates, Ltd 100, 195 Canadian General Electric Company 91, 194, 195 Canadian Locomotive Works, Ltd 94 Canadian Mills and Timber, Ltd 100, 202 Canadian Mineral Rubber Company 106, 198 Canadian North Pacific Fisheries, Ltd 92, 202 Canadian Northern Ontario Railway 84, 195, 199 214 Capital Investments in Canada. PAGE Canadian Northern Railway S3, 84, 193, 194, 196, 197, 199, 200, 204, 205 Canadian Pacific Lumber Company, Ltd 207 Canadian Oil Producing- and Refining Company... 107, 201 Canadian Pacific Railway.. 12, 46, so, 84, 88, 19s, 199, 207 Canadian Pacific Sulphite Pulp Company 30, 91, 194 Canadian Steel Foundries 93, 204 Canadian Timber Investment Company, Ltd 206 Canadian Vickers Maxim Company 97 Canadian Western Lumber Company 29, 100, 200 Canadian Wheatlands, Ltd 101, 204 Cascade Water Power and Light Company, Ltd 206 Central Counties Railway 84, 200 Central Ontario Railway 84, 197 Central Railway of Canada 207 Charing Cross Bank 89 Chase National Bank 33 Chicago, Milwaukee & St. Paul Railway Company, 48, 54, 56 Cockshutt Plow Company 206 Columbia River Lumber Company 101, 205 Compagnie Francaise d'Etudes au Canada 36, 37 Consolidated Goldfields of South Africa 'in Consolidated Mining and Smelting Company 30 Credit Foncier Franco Canadien 37 Credit Lyonnais, The 54 Crows Nest Pass Coal Company 29 D Dawson, Grand Forks & Stewart Railway 84, 85, 194 Deere Plow Company, John 31 Deutsche Bank 56, 57, 62 Dickie Timber Limits 103 Dominion Atlantic Railway 20 Dominion Dry Dock Company 98 Dominion Iron and Steel Company 3g, 43, 199 Dominion Mica Company 106, 198 Dominion of Canada Investment and Debenture Com- pany 120, 203, 206 Dominion of Canada Trust Corporation 120, 200 Dominion Oil Company 106, 198 Dominion Saw Mills & Lumber Company. . 100, 201, 203, 207 Capital Investments in Canada. 215 page Downing Street i 74 Dresdner Bank 50, 114 Duluth, Winnipeg- and Pacific Railway 84,' 201 Durham Collieries, Ltd 25 E Eastern Railway 87 East Tilbury (Canada) Oil Fields 106, 198 Electrical Development Company of Ontario 91, 194 England's Premier Cobalt Mining Company 106, 195 Esquimalt and Nanaimo Railway 29 Esquimalt Graving Dock and Shipbuilding Company 98 Fir Lumber Company 29 Fraser River Lumber Company 29 G German Development Company 36, 40, 53 Grand Trunk Pacific Railway 68, 84, 97, 193, 195, 196, 10$, iQg, 200, 201, 204 Grand Trunk Railway 84, 85, 88, 194, 196, 197, 204 Great Northern Railway 29 Grenfell, Morgan & Company 41 H Halifax & South Western Railway 70 Halifax & Yarmouth Railway 70 Hamburg Stock Exchange 54 Hawthorne Silver & Iron Mines Company 107, 20a Heaps, E. H., & Company, Ltd., 207 Holland-Canada Mortgage iCompany 37, 40 Hudson Bay Railway 170 I Imperial Paper Mills of Canada 91, 193 Inglewood Pulp and Paper Company 27 International Harvester Company 31 Investment Corporation of Canada 205 Irondale Smelting Company 26 216 Capital Investments in Canada. J PAGE John Deere Plow Company 31 K Kaministiquia Power Company 92, 196 Kapatachawan and Rupert Bay Railway 45 L La Caisse Hypothecaire Canadienne 37 Lake of the Woods Milling: Company 31, 39, 43 Lake Superior Corporation 87, 92, 198 Lake Superior Iron and Chemical Company 107, 202 Lake Superior Paper Company, Ltd 93, 204 Land and Agricultural Company of Canada 37 Lazard Brothers 41 Le Roi Mining - Company 30 Lombard Street 174 London and British North America Company, Ltd 206 London Stock Exchange 116 M Manitoba and Saskatchewan Coal Company 106, 199 Mexican Light and Power Company 91, 195 Middleton and Victoria Beach Railway 71 Minnesota and Ontario Power Company 95, 204 Miramichi Lumber Company 27 Molsons Bank, The . .... 115, 201 Mond Nickel Company 207 Montreal Cotton Company 92, 198 Montreal Light, Heat and Power Company, 91, 92, 193, 196 Montreal Power Company 43 Montreal Street Railway 43, 84, t g6 Montreal Water and Power Company 92, 198 Moreing-Bewick in Morgan, J. P., & Company 50 Capital Investments in Canada. 217 N PAGE National Drug- & Chemical Company of Canada. 92, 198,202 National Land Fruit and Packing Company, Ltd 206 National Monetary Commission 42 National Transcontinental Railway 67, 68, 87 Nederlandsch Canadeesche Mortgage Bank 37 Netherlands Canada Mortgage Company 37 Netherlands Transatlantic Mortgage Company .... 37, 58 Noiseless Typewriter Company 92, 202 Northern Light, Power and Coal Company 92, 199 Northern Pacific Railway 29, 57 Northern Sulphite Mills of Canada 106, 193 North Saskatchewan Land Company ioi, 205 North of Scotland Canadian Mortgage Company.... 119, 196 Nova Scotia Eastern Railway 84, 83, 193 Nova Scotia Steel & Coal Company, Ltd 107, 201 O Ocean Falls Company, Ltd 92, 200 Ogilvie Flour Mills Company 31 Oklahoma Oil Company 107, 201 Ontario Porcupine Gold Fields Development Co. . . 107, 205 P Paris Bourse, The 44, 46 Penman's Limited 92, 196 Pennsylvania Railway 87 Prescott Company 26 Price Brothers & Company, Ltd 92, 202 Prince Rupert Hydro-Electric Company 207 Pryce Jones (Canada), Ltd 92, 201, 206 Q Quebec and Lake St. John Railway 129 Quebec Railway, Light, Heat & Power Co. 38, 43, 60 !5 ,2 1 8 Capital Investments in Canada. R PAGE Revillon Brothers, Ltd 37 .Richards Company 27 Richelieu & Ontario Navigation Company 92, 196 Rotterdam Canadian Mortgage Company 37 Royal Bank, The 90, 1 16 Royal Statistical Society 158 S Saskatchewan Flour Mills Company 32 Scottish and Canadian General Investment Company, 120, 204 Shawinigan Water and Power Company 91, 193, 195 Societe Financiere pour l'Industrie du Canada 36, 41 Societe Generale 41 .Society Hypothecate du Canada 36 Societe Immobliere des Fermes Canadienne 37 Southern Alberta Land Company 100, 194, ig9 South Manchurian Railway 151 Sovereign Bank of Canada 50, 114 Spanish River Pulp and Paper Mills 93, 204 Spitzer & Company ' . . . 41 Standard Chemical Iron and Lumber Company 93, 204 Standard Chemical Company 92, 199 Standard Oil Company 62, 200 Standard Oil Company of Canada 107 Steel Company of Canada, Ltd 92, 201, 206 Stock Exchange, Berlin 51, 54 Stock Exchange, London 116 .Swanson Bay Forests, Woodpath and Lumber Mills, 100, 201 T Tata Hydro-Electric Company 152 ' Temiscouta Railway 84, 194 The Molsons Bank 115 Toronto Power Company 92, ig6 Toronto Street Railway 43 Toronto Suburban Railway Company 207 ^Trust & Loan Company of Canada .. 119, 120, 194, 197, 204 Capital Investments in Canada. 219 U PAGE Union Bank of Halifax 116 Union Life Assurance Company of Canada 120, 201 United States Rubber Company 48 United States Steel Corporation 29, 51 United States Tariff Commission 103 Utah Copper Company 48 V Vancouver Copper Company 106, 195 Vancouver Dry Dock and Shipbuilding Company 97 Victoria Falls Power Syndicate 154 Victoria Lumber and Manufacturing Company 28 w West Canadian Collieries, Ltd 107, 200 Western Canada Cement and Coal Company . . 106, 129, 193 Western Canada Flour Mills Company 31, 92, 197 Western Canada Farm Lands Company 36 Western Canada Land Company 100, 194, 200 Western Canada Investment Company, Ltd 205 "Western Canada Timber Company 100, 195 Western Canada Pulp and Paper Company 91, 193 Western Canada Bag and Envelope Company 92, 202 Western Dominion Collieries, Ltd 106, 194 West Kootenay Power and Light Company 92, 196 Winnipeg Electric Railway 84, 198 Wisconsin Central Railway 84, 190 Y Ymir Gold Mines 106, 198 INDEX III. SUBJECTS. A PAGE Africa's Share of British Capital 164 Agents, Banks willing to act as 16 Agricultural Implements, Distributing Houses of 24 Agricultural Production and Borrowing 128 Alberta and Great Waterways Railway Bonds 89 Alberta, Coal Lands in 40, 53 Alberta, Foreign Companies in 38 Alberta Government's Bond Guarantee 89 Alberta Government Loans 63, 64 Alberta Irrigated Lands 100 Amalgamations, Investments in 171 American and French Shares 48 American Branch Companies in Canada 24 American Capital in Turkey 62 American Consuls in Canada 23 American Farmers in Canada 25, 14"! American Industrial Investments 24 American Insurance Companies' Investments 32 American Investments in Canada 24 American Investments in Canada Defended 33 American Investments in Lime Business 26 American Loans in Canada 1 ig American Lumber Investments 24, 27, 28, 29 American Methods of Investment 16, 20, 22 American Packing Plants 24 American Personal Influence 191 American Railways and Canadian Coal 29 American Settlers 140 Capital Investments in Canada. 221 PAGE Americans are Still Large Borrowers 131 America's Share of British Capital . 164 Ammunition Plant, Proposed British 94 Area of Wheat Sown 115 Asbestos Industry, German Interests in S 2 Asbestos, Investments in 52, 107 Asia's Share of British Capital 164 Attractions to Foreign Capital 10 Attractive Investment Field, Canada is 12 Australia's Share of British Capital 161 Austrian Investments in Canada 61 B Balance of Population 145 Balance of Trade, Adverse 33 Balance of Trade, Canada, the States and Britain .... 1 50 Balance of United States Trade 168 Bank Branches 11 5 Bank, Canadian Bonds Held by Turkish 61 Bank Capital 115 Bank, German Investment in a Canadian 50, 114 Bank, in Canada, Proposed Dutch 59 Bank Loans, Accumulated Municipal 77 Bank Managers, Foresight of 128 Bank, Possibility of German-Canadian 118 Bank, Proposed Manufacturers' 153 Bank Shares, London Bought Canadian 1 is, 1 16 Bank Shares Purchased 9, 114 Bank Sold British Consols, Canadian 65 Banks, Effect of Immigration on Canadian 143 Banks, Foreign Holdings in Canadian 114 Banks, French 39 Banks' Reserve, New York 33 Banks Willing to Act as Agents 16 Bankers, Scheme of German 154 Bankers Watching Canadian Situation 128 Banking, British Capital and Canadian 115 Banking System, London's 175 Banking System, Strength of Canadian 128, 167 Bargain Counter, the Dominion as a 39 222 Capital Investments in Canada. page Bearer Securities i2r Bearer Shares 48 Beet Sugar Industry 54 Belgium Has Over-Supply of Money 60 Belgium's Interest in Canadian Pacific Stock 88 Belgian Investments in Canada 58 Berlin Stock Exchange 51. 54 Bond Preference of the Britisher 78 Bonds, Alberta and Great Waterways Railway . 89 Bonds and British Trustee List, Railroad 13S Bonds at Discount, Par or Premium 78 Bonds, Equipment 93 Bonds, Instalment School 47, 78 Bonds, Merits of Provincial Government 73 Bonds, Municipal, Sold Privately 9, 24, 176 Bonds Quoted on London Stock Exchange, Municipal.. 177 Bonds, Redemption of 47 Bonds, Sinking Fund 78 Bonds, Straight Term 78 Bonds, Tramway, Light and Power 95 Bonusing of Industries, Municipal 32 Borrowed Money and Trade 147 Borrowers, Americans are Large i3r Borrowing and Agricultural Production 128 Borrowing and Plant Required 152 Borrowing Countries, and Advantage of Importing Capital 10 Borrowing, Is Canada. Over ? 165 Borrowing, Moderate, Canada's 166 Borrowing, Moral Obligation of 147 Borrowing, Municipal 14 Borrowing of Financial Companies 14 Borrowing of Governments 14 Borrowing of Industrial Companies 14 Borrowing of Land and Lumber Companies 14 Borrowing of Loan and Mortgage Companies 14, 17 Borrowing of Mining Companies 14 Borrowing of Railroads 14 Bourse, Canadian Municipal Bonds and Paris 80 Bourse, The Paris 44, 46 Branches Abroad, Canadian Bank 1 iff Capital Investments in Canada. 223- PAGE Branch Companies in Canada, American . . v 24 British-Canadian Trade 131 British Capital and Canadian Banking- 1 1 S" British Capital and Canadian Dock Schemes . 97 British Capital and Municipal Bonds 78 British Capital, Canada's Share of 158 British Capital, Check to Flow of 127 British Capital, Five Continents' Share of 164 British Capital in Canada 9 British Capital, Outright purchases by 12 British Capital Throughout World 159 British Capital, Various Countries' Share of 160, 163 British Columbia, Coal Properties in 30 British Columbia Fisheries, Capital for 9j British Columbia Fruit Lands 60 British Columbia, Investments in 25, 28, 38 British Columbia Mills, American Investments in.... 28 British Columbia, Resources of 31 British Finance Act 121 British Financiers and Industrial Colleagues 15J British Industrial Investments 9, 19 British Industrial Investments Increasing- gi British Income Tax and Canadian Securities 121 British Insurance Companies' Investments 9, 19 British Investment is Needed, Why 155 British Investor, Caution to 178 British Investor More Speculative 65 British Land and Lumber Purchases 9, 99 British Manufacturer in Canada, Points for 97 British Methods of Investment 16, 22 British Mining Investments 9 British Money Power 153 British Real Estate Purchases 9 British Savings, Investment of 156 British Settlers 140 British Stamp Duty 123 British Trade Commissioner in Canada 23,150 British Trustee List and Provincial Securities 133 British Trustee List, Provisions of 134 British Trustee List, Securities Admitted to 134 Brokers, Money for Stock 117 224 Capital Investments in Canada. C PAGE Calgary Loans 74 Canada, American Branch Companies in 24, Canada, American Investments in ' 24 Canada, An Attractive Investment Field 12 Canada and International Finance 173 Canada and United States Panic 128 Canada, British Trade Commissioner in 23, 150 Canada, Consular Agents in - 23 Canada Defended, American Investments in 33 Canada, Diversion of Capital to 12 Canada, Industrial Outlook in 14 Canada Overborrowing ? Is 165 Canada, Pulp and Paper Manufacturing Costs 103 Canada, Safety of Capital in 13 Canada, Settlement in 140 Canada's Advertising in France 45 Canada's Borrowing is Moderate 166 Canada's Capital, Creation of 175 Canada's Credit Abroad 127, 168 Canada's Future as Manufacturing Country 97 Canada's Industrial Progress 15 Canada's Interest Charges, Payment of 128, 167 Canada's Mineral Production 105 Canada's Municipal Indebtedness 176 Canada's Natural Resources 166 Canada's Share of British Capital 158 Canada's Wheat Area 115 Canadian Banks, Effect of Immigration on 143 Canadian Bank Shares 9 Canadian Banking System 128, 167 Canadian-British Trade 131 Canadian Coal and American Railways 29 Canadian Conditions, Ignorance of 13 Canadian Credit 11, 12 Canadian Credit, Possible Danger to 177, 180 Canadian Factories, Establishment of 90 Canadian Finances, Effect of Immigration on 142 Canadian Flotations in London 9, 11 Canadian-German Bank, Possibility of 118 Capital Investments in Canada. 225 page Canadian High Commissioner at Paris 45 Canadian Import Market, Struggle for 131 Canadian Manufacturing, Extent of 96 Canadian Northern Railway Shareholders, Number of.. 88, Canadian Pacific Railway Shareholders, Number of 88 Canadian Pacific Stock and New York 46 Canadian Pacific Stock, Belgian Interest in 88 Canadian Personality in Finance 12, 14 Canadian Railroad Mileage 82 Canadian Railroads, Financing of 82 Canadian Securities, A Second Market for 46 Canadian Situation, Bankers Watching 128 Canadian Timber and Scottish Companies 178 Canals, Ottawa and Georgian Bay 170 Canal, Welland 170 Capital and Socialism 179 Capital, Assurance of Returns to 132 Capital, Banking and British 115 Capital, Canada's Share of British 158 Capital, Check to Flow of British 127 Capital, Competition for Surplus 13 Capital, Creation of Colonies' 175 Capital, France as a Reservoir of 43 Capital from Immigration 138 Capital Importation ; What It Does 10 Capital Imports by Borrowing Countries 10 Capital in Canada is Safe 13 Capital Liability of Canadian Railroads 83 Capital, Local Supply of 131 Capital Obtains Adequate Interest 13 Capital of Canadian Banks 115 Capital Throughout World, British 159 Capital to Canada, Diversion of 12 Capital to Make New Labor Productive 10 Capital, United States Share of British 159 Capital, Various Countries Share of British 160, 163 Cash with New Settlers 141, 142 Cattle from United States 140 Caution to British Investor 178 Cement Plants, Investments in 107 226 Capital Investments in Canada. page Charges, Payment of Canada's Interest 128, 167 Check to Flow of British Capital 127 Chicago, Loan of City of 122 City Property, Purchases of 24, 101 Coal, American Railways and Canadian 29 Coal Lands in Alberta 40, 53 Coal Mines, British Investments in 108 Coal Mines, Investments in 107 Coal Properties in British Columbia 30 Cobalt, Europe's Interest in '. log Cobalt, Little German Interest in 52 Cobalt Silver Camp, Notes of 108 Cobalt, Visit of Mining- Engineers to 109 Colonies' Capital, Creation of 175 Colonization Schemes ; 30 Commercial Investment, Field of ,171 Comox Coal Field 29 Conditions in Municipal Finance 77 Consols, Canadian Bank Sold British 65 Consols, Popularity of German 56 Consols, Protection of British 133 Constantinople, Canadian Bonds Held in 61 Construction Works in New Countries 10 Consular Agents in Canada 23 Costs of Pulp and Paper Industry, Comparative 10,3 Countries, Capital Imports by Borrowing 10 Countries' Share of British Capital, Various 163 Cowichan Valley, Investments in 25 Credit Abroad, Canada's 127, 168 Credit, Canadian ri, 12, 127, 168 Credit, Canadian Municipal 78 Credit, Institutions Help to Maintain Municipal 78 Credit of Dominion Government 64 Credit, Possible Danger to 177. l8 ° Crises, Periodical Financial 43 Crop Financing :I 5 Capital Investments in Canada. 227 D PAGE Danger to Canadian Credit 177, 180 Debentures, English Arguments Against Loan Com- panies' 18 Debentures, Issue of Municipal Term 77 Debentures, Loan Companies' Limited 18 Debentures, Redemption of 47 Definition of Factory 96 Depressions, Occasional 167 Discount, Bonds Sold at 78 Distributing Houses of Agricultural Implements 24 Dominion Government and British Trustee List 135 Dominion Government Loans 63 Dominion Government's Borrowing, Details of 67 Dominion Treasury, British Gold Paid to 144 Double Liability Clause 116 Doukhobors' Land Purchases 61 Dry Dock Enterprises 97 Dry Dock Subsidies Act 98 Dutch Bank in Canada Proposed 59 Dutch Investments in Canada 58 Duty, British Stamp 123 E Earnings, Railroad 130 Eastern Bonds Readily Absorbed 79 Economists Watching Canadian Situation 128 Edmonton Loans 74 Edmonton Railway Terminals 89 Electric Smelting 52 Elk Lake, Investments in 107 Emigrants, List of 138 Fnerland, Canadian Bank Branches in n3 Equipment Issues, Liking for 93 Europe, Canada's Immigrants from 138, 139, 144 Europe's Share of British Capital 164 Exchange, Selling of 117 Export Trade, Germany's 56 Extravagance in Living 33 228 Capital Investments in Canada. F PAGE Factories in Canada 96 Factory, Definition of 96 Factory, Proposed Sugar 25 Farm Lands, German Investments in 50 Farmers in Canada, American 25, 142 Fertilizer Plant, Proposed British 94 Finance Act, British 121 Finance and Politics 179 Finance, Canada and International 173 Finance, Canadian Personality in 12, 14 Financial Companies Borrowing 14 Financial Institutions, Canada's 12 Financiers, Industrial Colleagues and British 155 Financing cf Crops 115 Financing in Open Market ■- 177 Financing, Private 177 Fire Ranging, German Opinion of 52 Fisheries, British Capital for Coast 95 Flotations, High Prices of 130 Flotations, Unfortunate 12 Floating Dock Enterprises 97 Flour Mills in Canada, American 31 Food Production, Great Britain's !5|5 Foreign Companies in Alberta 38 Foreign Holdings of Bank Shares 114 Foreign Investments Assist Home 155 Foreign Securities and Germany 54 Foreign Securities Held by French Capitalists ........ 42 Forestry Commission 28 Fort William Loans 74 France and Financial Crises 43 France as a Reservoir of Capital 43 France, Canada's Advertising in 45 France, Canadian Banks in 118 France, Canadian Municipal Debentures in 47 France, Montreal Stock Quotations in 44 France, Stock Listing in 39 French and American Shares 48 French Banks as an Investment Medium 39 Capital Investments in Canada. 229 PAGE French Capitalists, Foreign Securities Held by 42 French Holdings of Canadian Stocks 3g French Investor, Best Scrips for 47 French Investors' Preference 40 Fruit Lands, British Columbia 60 Georgian Bay Canal 1 70 Geographical Difficulties 33 German Bankers, Scheme of 154 German-Canadian Bank, Possibility of 118 German-Canadian Trading Companies 54 German Capital in Real Estate 54 German Consols, Popularity of 56 German Immigration to Canada 51, 138 German Interest in Asbestos Industry 52 German Investments in Canada 50 German Surtax 54 Germany and Foreign Securities 54 Germany and the Beet Sugar Industry 54 Germany's Export Trade 56 Gold Mines in Nova Scotia 107 Gold Mines, Investments in 107 Government Borrowings 14 Government Flotations in London 63 Government Loans, Renewal of 17 Government Owned Railroads 83 Government Securities and British Trustee List, Canadian 133 Gow Ganda, Investments in 107 Grand Trunk Railway Shareholders, Number of 88 Great Britain and World's Development 158 Great Britain, Settlers' Effects from 140 Great Britain with Canada, Trade of 148 Growth of Canadian Investments, Rate of 175 Guarantee of Obligations and Securities 11 Guggeriheims in British Columbia, The 29 230 Capital Investments in Canada. H PAGE Hamburg Stock Exchange 54 Hamilton Loans 74 Harvesting in Various Countries S 1 High Grade Issues 130 Home Investments Assisted by Foreign 155 Home Supply of Capital 131 Hudson Bay Railway 170 I Ignorance of Canada 13 Immigrants, List of 138 Immigrants, Young Country Attracts 10 Immigration and effect on National Finances 142 Immigration, New Capital from 138 Immigration to Canada, German 51, 138 Imperial Government and British Trustee List 135 Import Market, Struggle for Canadian 151 Import of Capital by Borrowing Countries 10 Income Tax and Canadian Securities, British 121 Indian Possessions' Share of British Capital 160 Industrial Borrowings 14 Industrial Captains and British Financiers 155 Industrial Investments, American 24 Industrial Investments, American Appetite for 20 Industrial Investments, British 9, 19 Industrial Investments, Increasing British 91 Industrial Outlook in Canada 14 Industrial Progress, Canada's 15 Industries and Relation to Borrowing 152 Industries and Savings 10 Industries Developed by Americans 23 Industries in Canada, Proposed British 94 Industries, Municipal Bonusing of 32 Industry, Investments in Pulp and Paper 103 Inflation from Investment 157 Insurance Companies, Investments of British 9, 19 Interest, Capital Obtains Adequate 13 Interest Charges, Payment of Canada's 128, 167 Capital Investments in Canada. 231 PAGE Interest on Investments 10 International Finance and Canada 173 Investment, American Methods of 16, 20, 23 Investment and Commodity Prices 64 Investment and Politics 179 Investment and Socialism 179 Investment and the British Trade Balance 156 Investment, British Methods of 16, 22 Investment Corporation of Canada, Ltd 120 Investment Field, Canada as an 12 Investment, Inflation from 157 Investment in Minerals, Opportunities for 112 Investment is Needed, Why British 155 Investment of British Savings 1 56 Investment, Relation of Trade to 1 50 Investments in Canada, Austrian 61 Investments in Canada, Belgian 60 Investments in Canada Defended, American 33 Investments in Canada, Dutch 58 Investments in Canada, German 50 Investments in Canada, Italian 62 Investments in Canada, Norwegian 61 Investments in Canada, Russian 61 Investments in Canada, Total 41 Investments in Canadian Orchards 102 Investments in Docks 97 Investments, American Appetite for 20 Investments, American Industrial 24 Investments in Pulp and Paper Industry 103 Investments of American Insurance Companies 32 Investments, Rate of Growth of 175 Investments, Relation of Foreign and Home 155 Investments with Loan and Mortgage Companies 17 Investor, Canada has Cultivated the 13 Investor, Caution to British 178 Investor is more speculative, the British 65 Investor, Opportunity for Small 12 Investor, Two Points for the 11 Investor's Preference, the French 40 Investor's Response to Bond Offering, Small 66 Instalment School Bonds 78 232 Capital Investments in Canada. PAGE Ireland, Money from if Iron, Investments in 107 Irrigated Lands : 100 Issues, High Prices of 130 Issues, Occasion for New 11 Italian Investments in Canada 62 Italians, Money Sent From 'Canada by 62 J Japanese Loan from Britain 151 K Kootenay District, Land Purchases in 61 L Labor, Capital to make Productive 10 Land and Lumber, British Investments in 99 Land and Lumber Loans 14 Land and Lumber^Purchases, British 9 Land Companies Considered Good Investment 54 Land Deals, American 24 Land Purchases by Doukhobors 61 Lands, Irrigated 100 Lands, Purchases of Western 60 Larder Lake, Investments in 107 Legislatures, Apparent Omnipotence 13 Liability Clause in Bank Act, Double 116 Liability of Canadian Railroads 83 Lighting- Bond Issues 95 Lime Business, American Investments in 26 Listing Stocks in France 39 Loans and Agricultural Production 128 Loans and Plant Required 152 Loan Companies' Debentures, English Arguments Against 18 Loan Companies, Investments with 9, 17 Loan Companies, Scotch Money for 17 Loan From Britain, Japanese 151 Capital Investments in Canada. 233 page Loan of Chicago City 122 Loan of Vancouver, A 121 Loans, Details of Dominion Government's 67 Loans, Dominion and Provincial Government 63 Loans in Canada, American 1 ig Loans to Financial Companies 14 Loans to Government 14 Loans to Industries 14 Loans to Land and Lumber Companies 14 Loans to Mining- Companies 14 Loans to Municipalities 14 Loans to Railroads 14 Loans to Stockbrokers 117 Local Supply of Capital 131 Lombard Street 174 London Buys Canadian Bank Shares 9, 115, 1x6 London, Canadian Flotations in q, i i London Market and Equipment Issues 93 London Market, Notes of the 130 London Stock Exchange 116 London Stock Exchange, Municipal Bonds Quoted on.. 177 London's Banking System 175 Lumber and Land Loans 14 Lumber Investments, American 24, 27, 28, 29 M Machinery Required and Loans 152 Maine Ports, Business to 27 Maisonneuve Loans 74 Manitoba Government Loans 63, 64, 72 Manufactory, Definition of 96 "Manufacturer in Canada, Points for the British 97 Manufacturers and Relation to Loans 152 Manufacturers' Bank Proposed 153 Manufacturing Country, Canada's Future as 97 Manufacturing, Extent of Canadian 96 "Market, Financing in Open 177 Market for Canadian Securities, Second 46 Maritime Provinces, Investments in 24, 27 Merits of Registered Stock versus Bearer Securities.... 121 16 234 Capital Investments in Canada. PAGE Mergers, Investments in 171 Merits of Provincial Government Securities 73 Mexico, Canadian Banks in 118 Mexico, Protection of Capital in 179 Mileage, Canadian Railroad 82 Mills in Canada, American Flour 31 Minerals. Opportunities for Investment in 112 Mineral Production, Canadian 105 Mines, Little German Interest in Cobalt 52 Mining- Investments, American 24, 29 Mining Investments, British 9 Mining Loans 14 Money and the British Trade Balance 156 Money for Stockbrokers 117 Money Market, Tight 11 Money Power, British 153 Money, Relation of Trade to ?47 Money Stringencies 117 Montreal Loans 74, 171 Montreal Stock Quotations in France 44 Moose Jaw Loans , 74 Mortgage Companies, Investments with 9, 17 Mortgage Companies, Scotch Money for 17 Mortgages, Dutch Interest in 38, 59 Municipal Bond Preference of the Britisher 78 Municipal Bonds, American Share of Canadian 80 Municipal Bonds and British Capital 78 Municipal Bonds and Paris Bourse 80 Municipal Bonds, Home Demand for 81 Municipal Bonds Sold Privately 9, 176 Municipal Bonusing of Industries 32 Municipal Borrowing in London 74 Municipal Borrowing Policy 7g Municipal Borrowings 14 Municipal Debentures in France, Canadian 47 Municipal Expenditures, Heavy 79 Municipal Finance, Conditions in 77, 176 Municipal Finance, Importance of Sound 79 Municipal Loans by Provinces 75 Mun : cipal Indebtedness, Canada's 176 Municipal Sinking Funds 77 Capital Investments in Canada. 235 N PAGE National Finances and Effect of Immigration 142 National Solvency, Limits of 173 Natural Resources, Canada's 166 New Brunswick Government Loans 63, 64, 71 Newfoundland, Canadian Banks in 118 New Issues, Occasion for 11 New Issues, Prices of 130 New York and Canadian Pacific Stock 46 New York's Banks' Reserve 33 New York, Fast Service to 29 Newsprint Paper, Manufacturing Costs of 104 Norwegian Investments in Canada 61 Nova Scotia Gold Mines 107 Nova Scotia Government Loans 69 O Obligation of Borrowing, Moral 147 Occasion of New Issues 11 0.1 Wells, Investments in 107 Old Country Buyer's Preference 78 Old Countries Finance New Countries' Construction. 10 Omaha Money in Canada 119 Omnipotence of Legislatures 13 Ontario Government Loans 63, 64 Open Market, Financing in 177 Orchards, Purchase of Canadian 101 Ottawa Canal 170 Ottawa Loans 74 Outlook in Canada, Industrial 14 P Packing Plants, American 24 Panic, Canada and the United States 128 Par, Bonds Sold at 78 Pans Bourse and Canadian Municipal Bonds 80 Paris Bourse, The 44, 46 Paris, Canadian High Commissioner at 45 Payment of Canada's Interest Charges 128, 167 Peace River Country, Railroad for 89 236 Capital Investments in Canada. page Peace River District, Investments in 25 Personality, Finance and Canada 12, 14 Personal Influence, American 191 Plant Required and Loans • , 152 Plants, Shipbuilding 97 Policy of Municipal Borrowing 79 Politics, Finance and 179 Population, Balance of 145 Population of Canada Increased by Immigration 138 Porcupine Gold Camp, Notes of no Porcupine Prospects, Prices of 112 Port Arthur Loans 74 Pcrts, Business to Maine 27 Power Bond Issues 95 Premium, Bonds Sold at 78 Price of Commodities and Investments 64 Prices of New Issues 130 Private Financing 177 Production and Borrowing 128 Promoters, Undesirable 128 Property Purchases 9, 24, 101 Protection of Capital 179 Provincial Government Bonds, Merits of 73 Provincial Government Loans 63 Provincial Government Securities and British Trustee List 133 Pulp and Paper Industry, Comparative Costs 103 Pulp and Paper Industry, Investments in 103 Q Quebec City Loans 74 Quebec Government Loans 71 R Railroad Borrowing, Summary cf 84 Railroad Borrowings 14 Railroad Earnings .' 130 Railroad for Peace River Country 89 Railroad Mileage, Canadian 82 Railroad Shareholders, Number of 88 Capital Investments in Canada. 237 PAGE Railroad Shareholders , 12 Railroads, Financing- of Canadian 82 Railroads, Government-owned 83 Railroads, Some Unproductive 176 Railway to Hudson Bay 170 Railways, Total Capital Liability of 83 Rate of Growth of Canadian Investments 175 Rate of Interest on Investments 10 Real Estate, German Interest in , . . 54 Real Estate, Investments, British , . 9, 101 Real Estate Necessary, Knowledge of 101 Real Estate, Rapid Appreciation of Values 101 Real Estate Speculation, Check to 101 Real Estate, Western 102 Redemption of Bonds 47 Refinery, American Promotion of Sugar 27 Regina, Distributing Houses at 31 Regina Loans 74 Registered Stock, Merits of 121 Renewal of Government Loans 17 Return, Capital Obtains Adequate 13 Returns to Capital, Assurance of 132 Russian Investments in Canada 61 Safety of Capital in Canada 13 Saskatchewan Government Loans 63, 64 Saskatoon, Distributing Houses at 31 Saskatoon Loans 74 Saskatoon Street Railway and British Capital 94 Savings and Industries 10 Savings, Investment of British 1 56 Savings Sent Home by Italians 62 Savings, Young Countries Need 10 School Bonds 47. 78 Scotch Money for Mortgage Companies 17 Scottish Companies and Canadian Timber 178 Scrips for French Investor, Best 47 Securities and Guarantee of Obligations 11 238 Capital Investments in Canada. page Securities and the British Trustee List 135 Securities, A Second Market for 4° Securities, British Income Tax and Canadian 121 Securities, Germany and Foreign 54 Securities Held by French Capitalists 42 Service to New York, Fast 29 Setbacks. Occasional 167 Settlement in Canada, British and Foreign 140 Settlers, Cash with New I4 1 . U2 Settlers Effects to Canada 140 Shareholders of Railroads, Number of 12, 88 Shares, American and French 48 Shares, Bearer 48 Shares, Foreign Holdings of Canadian Bank 114 Shares, Nominal 48 Sherbrooke Loans 74 Shipbuilding Plants 97 Silver Mines, Investments in 107 Sinking Fund Bonds Preferred 78 Sinking Fund, Good 130 Sinking Funds, Municipal 77 Small Investor, Opportunity for 12 Small Investors' Response to Bond Offering 66 Smelting, Electric 52 Socialism and Capital 179 Solvency, Limits of National 173 Spain, Canadian Shares Held in 61 Speculation in Land, Check to 101 Stamp Duty, British 123 Statistics, Canadian Trade 148 Stockbrokers, Money for 117 Stock Exchange, Berlin 51, 54 Stock Exchange, Hamburg 54 Stock Exchange, London 116 Stock Listing in France 39 Stock Quotations in France, Montreal 44 Stock, Registered 121 Stocks, French Holdings of Canadian 39 Straight Term Bonds Preferred 78 Stringencies,. Financial 117 St. John Loans 74 Subsidies Act. Dry Dock 98 Capital Investments in Canada. 239 PAGE Sugar Factory, Ontario 25 Sugar Industry, Germany and the Beet 54 Su?ar Refinery, Proposed 27 Sulphite Fibre 104 Summary of Investments in Canada 41 Supply of Capital, Local 131 Surplus Capital, Competition for 13 Surtax, German 54 Term Debentures, Issuance of 77 Tight Money Market 11 Timber and Scotch Companies 178 Timber Investments, American 24, 27, 28, 2g Toronto Loans 74 Total British Capital in Canada 9 Total Foreign Investments in Canada 35 Total Investments in Canada 41 Total United States Investments in Canada 24 Town Property, Purchases of 24, 101 Trade, Adverse Balance of 33 Trade and Investment 1 50 Trade Balance, British 156 Trade Balance, Canada, Britain and the States 150 Trade Balance of United States 168 Trade, British-Canadian 13 ' Trade, Germany's Export 56 Trade of Canada With United States 148 Trade of Great Britain with Canada 148 Trade Statistics, Canadian 148 Trade, Relation of Borrowed Money to 147 Trading Companies, German-Canadian 54 Tramway Bond Issues 95 Trustee List and Provincial Securities, British 133 Trustee List, Provisions of British 134 Trustee List, Securities Admitted to British 134 Turkey, American Capital in 62 Turkey, Canadian Bonds Held in 61 240 Capital Investments in Canada. U PAGE Undesirable Promoters 128 United States' Appetite for Industrial Securities 20 United States, Canadian Banks in 118 United States, Canadian Industries Developed by 23 United States, Cattle From 140 United States Finances, Effect of Emigration on 142 United States Panic and Canada 128 United States, Settlers' Effects From 140 United States' Share of British Capital 159 United States Trade Balance 168 United States, Trade With 148 Unproductive Railroads, Some 170 V Vancouver Loans 74. 121 Victoria Loans 74 W Warning to British Investor 178 Welland Canal 170 Western Canada, American Investments in 25 Western Canada Investment Company, Limited 120 Western Canada, Investments in 24 Western Canada's Municipal Bonds 79 Western Lands, Purchases of 60 West Indies, Canadian Banks in 118 Westmount Loans ._; 74 Wheat Area ^ 115 Wheat Crops, If Canada Were Thrown Upon 128 Whitewear Company, Proposed British 94 Winnipeg Loans 74 Wood Pulp, Cost of Manufacturing 104 Wood Pulp Ground 104 Y Young- Countries' Construction Work Financed 10 Young Countries Need Savings 10 Capital Investments in Canada. 241 of Cftatmim E STABL.ISHED 186 7 ^ Publishing news, comment and slatisftcs of value to all who are interested in Canada's trade, finance or insurance. 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