The Directors record with deep regret the death in March last of Mr. W. R. Allan, who had been a member of the Board since September 1, 1925, the date of the purchase of the Union Bank of Canada, of which bank he was President. Your Directors desire to express their appreciation of the efficient manner in which the officers of the Bank continue to perform their respective duties. Address by I wish to refer in the first place to the loss which the Bank has sustained through the death of our late Director, Mr. W. R. Allan. He came to us through amalgamation with the Union Bank, of which institution he was President. His services to our Bank, though brief, were of exceptional value owing to his wide knowledge and long experience of western conditions, and with our more extensive interests there we shall feel his loss very greatly. The Report and Balance Sheet of the Bank, which it is my duty to present to you to-day, disclose a most satisfactory position. The statement will be dealt with in detail by the General Manager. In order to take care adequately of our steadily broadening business and to continue our traditional policy of maintaining a conservative ratio of capital and surplus to deposits, your Directors have considered it advisable to increase the paid-up capital of the Bank by the amount of the unissued balance of the authorized capital. This additional Capital Stock had been allotted pro rata to shareholders of record on the 17th December last for subscription at the price of $200 per share. In accordance with custom, the premium realized in respect of this issue will be credited to Reserve Fund. When payments are completed the paid-up capital of the Bank will be $30,000,000, with a Reserve Fund of equal amount, and substantial undivided profits. A resolution increasing the authorized capital of the Bank to $40,000,000 will be submitted for your approval to-day. You will be interested to learn that the erection of our new Head Office Building, which was announced last year, is being proceeded with as rapidly as possible and we expect that it will be ready for occupancy by May 1st, 1928. The foundations have been completed and the steel structure should be finished during the early summer. The building will cover the whole block bounded by St. James, St. Peter, Notre Dame and Dollard Streets, and will rise nearly four hundred feet above the street level, and will have two basements. The design of the building combines dignity and beauty with utility, as the receding upper storeys ensure the utmost in light and ventilation. The building has been planned to yield the maximum possible revenue from rentals and, at the same time, provide the Bank with offices suited to its present and prospective needs. Situation in Europe. It is satisfactory to note that there is a steady improvement in European conditions and that the admission of Germany to the League of Nations marks a further step in her re-habilitation, both financially and politically. The balancing of the French and Italian budgets, and the return of Belgium and Denmark to the gold standard, have been outstanding events which justify confidence in the future re-establishment of Europe on a sound basis. In Great Britain the recovery has been checked by the paralyzing influence of the protracted coal strike. The economic losses inflicted on the community by industrial disputes, under modern conditions, are tremendous, and since the largest proportion of earnings from industrial output is distributed in wages, the heaviest share of the loss inevitably falls on the workers. This stoppage of coal production seriously affected export trade and dislocated international shipping, with the result of higher ocean freight rates the world over. Notwithstanding the adverse visible trade balance, there is evidence that England is still paying her way out of current income; moreover, the severe lessons of the strike have not been lost and there is hope that more harmonious relations will go far toward enabling the great basic industries to recover their export markets. The amalgamations of coal mines and manufacturing industries that have been started is a step in the right direction and should result in increased efficiency, production and profits. Shipbuilding yards are working to capacity so far as steel production will permit, and the most noteworthy development in this field is the rapidity with which internal combustion engines and oil are replacing coal. The past two years have been a period of unsurpassed prosperity in the United States and in spite of a few unfavourable factors, such as a slight recession in building, a minor decrease in demand for automobiles, and a reduced income for the farmer as a result of the low prices of cotton and corn, there is no reason to look forward to more than a slight recession in the general level of business activity. The financial structure of the country is exceptionally strong and the practice of hand to mouth buying has kept supply and demand so well balanced that the steady demands on all types of industry will keep production at a high level in spite of sectional difficulties and minor mistakes in the direction of overproduction. Conditions in Canada. The record of Canadian external trade in the past three years reflects both the increased buying power resulting from increased stability abroad and the recent growth of Canadian production. For the twelve months ending November 30, 1926, the total foreign trade of Canada amounted to $2,309,201,000 as compared with $2,094,083,000 in 1925, and $1,870,363,000 for the same period in 1924. The relatively large increase in imports is a direct reflection of the improvement in our exports, our larger purchasing power, and outside capital investment. The greater volume of manufactured goods coming into the country, however, indicates another aspect of the situation which may legitimately suggest some misgiving. This increasing volume of foreign trade has been attended by an expansion in the facilities offered by our principal ports. Since the war the Port of Vancouver has been recognized as the logical shipping point for goods entering and leaving British Columbia and Alberta and rapid strides have been made in improving its facilities. The new bridge to North Vancouver has made available additional waterfront and the Harbour Commission is proceeding with the development of this new area. The Ports of St. John and Halifax, it is expected, will be taken over shortly by a government commission and their further immediate improvement is contemplated. The elevator facilities at Montreal have proved inadequate and additional funds have been applied for to make the necessary extensions. The new Wolfe Cove Harbour at Quebec at present under construction will not only double the facilities at this point, but will provide the very latest of equipment for the efficient despatch of cargo. The returns of the Chartered Banks reflect the betterment of trade and general business conditions. In the field of credit, current commercial loans are $76,424,000 higher than a year ago, while public deposits have increased no less than $17,112,000, If the prosperity of a country can be measured by the aggregate of its bank balances, then the savings accumulated in Canada indicate an extraordinary degree of thrift and well-being. The latest available figures place the total amount of savings on deposit with the Chartered Banks, Trust Companies and Government Institutions at $165 per capita, a figure which should afford excellent encouragement to intending settlers. Exchange has been steady during the year. Canada's dollar has been at gold parity since the middle of 1924 and the resumption of gold payments, unnecessarily long delayed, was given legislative sanction on the 1st July last when the Act covering their suspension was allowed to expire. As was expected, there has been no depletion of the country's metallic reserves and our ability to maintain a free gold market has been firmly established. War and post-war experience alike have shown that currency stability depends primarily upon sound finance, rather than upon the existence of large gold stocks. With the improvement in trade there had been a steady betterment in Federal Revenues during the year and some reduction has been effected in our national debt. The last fiscal budget wrought a measure of relief to certain classes of taxpayer through the revision of the basis of assessment and extension of the system of double taxation. It is the natural tendency of governments to follow the lines of least resistance and impose taxation where it can be most easily exacted, whether it results in the punishment. of thrift or the discouragement of productive enterprise. What Canada needs is to follow the example set by the United States |