for settlements to be made by clearing house certificates instead of legal tenders, and emergency currency was issued. Gradually, however, things began to adjust themselves, and while conditions are yet far from normal, the Cotton Exchange has been reopened, there is restricted trading in bonds and stocks on the Stock Exchange, the clearing-house certificates have been retired, and the redemption of the emergency currency continues very satisfactorily. The present unhealthy feature of a surplus of money, both here and in London, appears to be duly recognized as an artificial condition for which allowance is being made. The Federal Reserve Banks, under strong control, came into existence on Nov. 16th, and while the effects of the new system, other than the releasing of vast sums hitherto held as reserves, will probably not be evident for some time, yet much good is hoped for from it. The greatest impulse to trade activity in many and diverse lines just now is from foreign demands growing out of the war, and without doubt this phase of the situation will be of incalculable value to the country. The South, however, has on its hands probably the largest cotton crop in its history, with a demand at present for only a small proportion of the amount. As in the past, also, this country must borrow enormous sums abroad to continue its normal development, and with the continuance of the war the lack of such available capital will be a very serious handicap. On the whole, while the situation seems to be gradually improving, there is still so much that is doubtful and uncertain that any attempt at the present time to draw conclusions regarding the future would, in our opinion, be futile. Imports and exports for the eleven months ended Nov. 30th last, and for the corresponding periods in 1912 and 1913, are as follows: The following estimates of the leading crops of 1914 recently appeared and are compared with those of 1913: For the eleven months to Nov. 30th, failures numbered 14,555, with liabilities of $296,522,000, as compared with 12,885 failures and liabilities of $253,422,000 in 1913. In the Pacific Coast States where we have branches-Washington, Oregon and Californiathe general condition of business, apart from the lumber trade, has been such as to furnish no serious ground for dissatisfaction. In Washington, while we have no statistics this year of the fruit production, the season has been somewhat unfavourable to growers, because of the prevailing low prices; soft fruits suffered to some extent because of the dry weather; a large crop of apples was produced, but a considerable portion was not even boxed, and under the present market conditions will remain unsold. For salmon the prices all round have been higher, the marked improvement being in the lower grades, which have been largely disposed of, but the better grade have been to a considerable extent carried over. The production in the Puget Sound district fell from 2,390,000 cases to 715,000, the reduction being mainly in the sockeyes, for which the present has been an off-year. In 1913 1,000,000 cases of pinks were packed, but this year none have been put up. In the lumber market, demand and prices have been literally demoralized, and the condition of this industry is now reported to be so unfavourable that any change cannot fail to be for the better. In reporting upon the grain crops in Oregon, we shall include the States of Washington and Idaho, in which the production of wheat amounted to 57,000,000 bushels, less by 7,000,000 bushels than the figures of 1913. Washington produced rather more this year than last. The great bulk of this product, for which farmers are getting the abnormal price of $1.22 per bushel, has gone to Great Britain. At date of writing over 75 per cent. of the crop has been sold, and a larger acreage will be planted for 1915. Barley and oats have been about the same in quantity as last year, but prices show some improvement. In Oregon and Washington 155,000 bales of hops have been packed, a reduction of 11,000 bales as compared with the pack of last year. The price, 10 cents per pound, is low, owing to the heavy crop in Great Britain, and at this figure there is practically no profit to the grower. Real estate has been fairly steady and fruit growing in Oregon continues to be on the increase. Oregon contains one-fifth of the standing timber of the United States, and stands fourth among the States in the production of lumber. Owing to business conditions, saw-milling has, as elsewhere along the coast, been at its lowest ebb. Good results are, however, expected next spring, following the opening of the Panama Canal, inasmuch as vessels going by this route can save sufficient to pay the cost of the tolls in the space otherwise required for their bunker coal, and the saving in time and cost of fuel will be entirely profit. California has a population of somewhat less than 3,000,000, spread over an area of 155,000 square miles, but its products are valued at $500,000,000, of which minerals, including oil, contribute $150,000,000, orchards $100,000,000, and the products of agriculture and cattle the remaining $250,000,000. Lumber is not taken into the above figures; the production usually runs from $35,000,000 to $40,000,000 in value, but shipments, both domestic and foreign, have been enormously reduced. The production of petroleum has been 100,000,000 barrels, approximately the same as that of last Owing to exceptional rainfall, crops on agricultural lands have been much increased, and fruit-growers have done extremely well; the production of cotton and rice in this State is steadily increasing. Balances due to other Banks in Canada. Balances due to Banks and Banking Correspondents elsewhere than in 11,163,568 73 3,924,151 28 181,508,809 74 933,800 59 Canada.. 2,746,016 07 $215,218.904 09 2,731 28 525,000 00 Capital paid up... $15,000,000 00 Rest Account. Balance of Profits as per Profit and Loss Account. 13,500,000 00 29,617,763 27 $245,364,398 64 ASSETS 3,295,411 87 1,791,071 90 16,104.763 57 Balances due by Banks and Banking Correspondents elsewhere than in Canada... Dominion and Provincial Government Securities not exceeding market value. Railway and other Bonds, Debentures and Stocks not exceeding market Call and Short Loans (not exceeding 30 days) in Canada on Bonds, De- Call and Short Loans (not exceeding 30 days) elsewhere than in Canada. Other Current Loans and Discounts in Canada (less rebate of interest) Liabilities of Customers under Letters of Credit, as per contra. Overdue Debts (estimated loss provided for). Real Estate other than Bank Premises (including the unsold balance of former premises of the Eastern Townships Bank). THE GENERAL FINANCIAL SITUATION IN 1914 ANNUAL ADDRESSES AND REPORTS of THE ROYAL BANK OF CANADA Annual The 46th annual general meeting of the shareAddress by the holders of the Royal Bank of Canada was held at the Head Office of the Bank in Montreal on Jan. 14th, 1915. The President spoke as follows: President-Sir Herbert S. I now have the pleasure to move that the report and balance sheet be adopted. Considering the very exceptional circumstances under which we meet this year, your Directors are specially gratified in being able to present such satisfactory results. In point of liquid assets, the financial statement is the strongest we have ever submitted. Profits have fallen off somewhat, compared with the previous year, but in these unprecedented times your Directors deemed it wise to consider strength before profits. The usual facilities to clients have been continued without interruption, as indicated by the slight change in the amount of our commercial loans. The thing of paramount importance which agitates us all to-day, is the lamentable fact that Great Britain is at war. Needless to say, Canada intends to aid the Mother Country to the utmost of her ability, and will accept the consequent sacrifice of men and resources in the high spirit which the cause demands. As a result of the liquidation which has taken place since the culmination of the boom two years ago, the country is now in a better position to bear its share of the Empire's burden. The outbreak of war was followed by a convulsive derangement of international exchange and general trade. Stock exchanges were closed, in many countries a moratorium was proclaimed, and a financial catastrophe of world-wide proportions was only averted by the wise and timely action of the British Government in providing through the Bank of England, powerful machinery for sustaining and protecting credit during the war, and for twelve months after peace is concluded. Much credit is due to the Canadian Minister of Finance for the emergency measures so promptly introduced to protect the situation in Canada. The efficacy of these is demonstrated by the fact that the business of the country has pursued its ordinary course, and we enjoy the distinction of requiring no recourse to a general moratorium. A limited moratorium applying to real *NONE. For preceding Annual Reports and Addresses see Supplement of THE CANADIAN ANNUAL REVIEW 1913 and 1914; Historical Sketch in 1910 Supplement. estate payments is in force in the provinces of Manitoba, Saskatchewan and Alberta. Having no misgivings regarding the final outcome of the war, we venture the prediction that its economic effect upon Canada will be beneficial, although the magnitude of the struggle is without precedent. Previous wars during the past half century (namely, the war of Prussia against Austria in 1866, and against France in 1870, the South African War and the Russo-Japanese War) were all followed by active and expanding trade; but in each case, only two countries were engaged, as against the inclusion of nearly all Europe on the present occasion, and the scale of expenditure cannot be compared with that of to-day. If the present war be long continued, the European nations involved may become financially prostrated for many years. Even if the war is not long continued, the flow of capital from Great Britain to this country is not likely to be resumed for a considerable time, and new constructional work will therefore be retarded. On the other hand, we reap distinct commercial advantages from our geographical position and remoteness from the scene of warfare, which permit us to prosecute our farming and manufacturing industries unmolested in spite of our participation in the conflict. Britain is buying from us all the war supplies we can produce many factories are working twenty-four hours a dayand we are securing for our crops and foodstuffs generally, the highest prices in our experience. The importance of increasing our productive powers is obvious. Only by so doing and by the exercise of rigid economy can we dispense temporarily with the aid of foreign capital. In the interval we must pay the formidable annual interest charge of approximately $140,000,000 on our foreign obligations. We cannot continue to add this amount to our indebtedness, and the only way we can meet it is by increasing exports and reducing imports to the barest necessities, in order to convert the customary adverse trade balance into a favourable one. As it is, we shall probably find that we have borrowed more than we can comfortably carry, especially as much of the money expended is yet unproductively employed. I believe, therefore, that a pause in our borrowings will not prove an unmixed evil. Address by Our President has referred to the policy adopted by your Directors on the sudden announcement of the great European War, namely, to further strengthen the ready resources of the Bank. The financial statement submitted to-day reflects this policy. Cash reserves, which stand at $39,688,000-equal to 25 72 per cent. of our total liabilities to the public-show an increase of approximately $5,000,000. This was accomplished without hardship to our borrowing clients, by the curtailment of international operations. Our liquid assets amount to 46'17 per cent. of our total liabilities to the public. Profits, which decreased from 18.5 per cent. to 163 per cent., permitted the payment of the usual dividend of 12 per cent., the writing down of Bank Premises by the sum of $250,000, the transferring of $100,000 to the Officers' Pension Fund, and the con |
