Winnipeg Free Press

Winnipeg Free Press (Newspaper) - June 29, 1968, Winnipeg, Manitoba Winnipeg free press saturday june 29, 1968 15 Canadian markets hit highest level since last fall by Gerald Clarkson Canadian press staff writer shares in Canada s major industries broke through to their highest Levels since the autumn in brisk trading this week. With the exception of election Clay prices moved up continuously in a surge of optimism which dates Back to the beginning of june. Although brokers said a Strong majority government was Welcome news in the Market they thought Domestic politics were not the main influence on the trend. Leading groups were paper and Forest issues beverages chemicals communications and steels. Trust and loan stocks Oil refiners and Banks also advanced. Among seasoned issues at their Best this year Thomson newspapers jumped 5 to 44v4, Texaco 2% to famous players 3% to Seagram 2 to Macmillan Bloedel 2v4 to 25 and Bank of Montreal to 14. Investors Are hoping for even higher prices later in the sum Mer and there real feeling that Canadian markets have shaken free from the restrictive influence of Wall Street. The major indexes at Toronto and Montreal were Independent of new York All through the week. Throughout North american markets great store was Laid on the passage of the . Tax increase spending Cut Bill. But after the event Canadian stocks responded with a much sharper spurt than . Shares. With the Bill signed brokers expect an Early reduction in and Bond prices have moved up in anticipation of an official move. The drop in yields on Short term Treasury Bills for the third week running was another Pointer. Hopes have risen rapidly in the last two Days and analysts talk of Bank rate being Cut to or 7 per cent from the cur rent per cent. This will Al most certainly mean action by the Bank of Canada Well before any similar move by the . Federal Reserve Board. In the United states observers Are becoming scornful of the tax Bill. The Wall Street journal called the scheme at Best a palliative. Indeed it is a warn ing How far the authorities have yet to go to find the cure for inexcusable financial Irres Ponsi Andrew Brimmer a Federal Reserve Board governor said there were no immediate plans to reduce Bank rate. And prospects were further clouded by the publication of the . Trade deficit for May the second this year. These deficits broke a five year record of exports exceed ing imports. Gold shares the most volatile indicator of the world s Mone tary problems posted Small Campbell red Lake Rose 1 to Dickenson 20 cents to and giant Yellowknife la to 11. Dome slipped to 67. The status and value of Gold is still in the air although Bro kers believe the situation in France and South Africa should keep the Price from rising. Reports Early in the week that. French Gold reserves were still largely intact turned out to be false. The Bank of France revealed a total loss of Gold and foreign Exchange amounting to for the four weeks ending june 20. This was matched against the amassed since general de Gaulle took office ten years ago. French Gold was sold to european Central Banks at the official rate of . An ounce so the transactions did not affect the free Bullion mar Ket or Gold stocks. However Jacques Reuff author of the French plan to Dou ble the Price was still promoting his scheme last week. And another Factor was South Afri Ca s bid to sell Gold to the International monetary fund in Exchange for badly needed for eign currency. In a merger of Richardson securities of Canada and East Ern securities co. Ltd. Was announced Friday. To operate under the name of j Richardson securities of can Ada the amalgamation gives the Winnipeg based organization broader representation in East Ern Canada. Eastern s presi Dent James. A. Macmurray has been named senior executive officer for the Richardson organization in the maritime provinces. Eastern had offices in Saint John m o n c t o n Fredericton Halifax Dartmouth Charlotte town Summerside and Mont real. Before the Union Richard son securities had one office in the maritime. Richardson securities is part i of the James Richardson and sons Ltd. Organization a Finan Cial Empire with interests rang ing from Grain to real estate. Toronto up there Are no revolutionary changes in the offing for the supermarket Busi Ness t. G. Mccormack presi Dent of Dominion stores Ltd., told the c o m p a n y s annual meeting today. At this time with emphasis on lower prices it would hardly make sense to adopt revolution Ary changes which would Send prices blasting off into outer he warned that the food Industry will not be Able to keep prices Down unless civic prov j Uncial and Federal governments curb their expenditures and j run their affairs in such a Way i As to keep the Economy in bal j i a. Text of his remarks was re leased in Advance of delivery. Tokyo a nine regional japanese electric Power Compa Nies approved in principle tues Day a proposal by Denison mines Ltd. Of Toronto to launch a joint uranium prospecting and mining venture in the United states. Denison mines is one of the world s largest uranium mining enterprises. The proposal has been Pend ing since the Power companies purchased tons of uranium Ore from Denison mines on a Long Range Supply basis last year. The companies led by Tokyo electric Power co., already Are building or preparing to construct nuclear electric Power stations in various parts of Japan. They need Large supplies of uranium Ore for producing the necessary fuel. Their official acceptance of the proposal is expected around the end of this month. The proposed joint venture would be launched in a Large Concession owned by Denison mines in Colorado. A Survey team was recently sent there by the japanese electric Industry and reported promising find Toronto up g. M. Maclachlan president of Maple Leaf oils Ltd. Of Toronto said wednesday compulsory arbitration of labor disputes is becom ing necessary. Or. Maclachlan told the com Pany s annual meeting that Al though Union members usually receive Large wage increases following a strike it takes years to catch up on lost wages. He also estimated that at the current rate of Price increases a loaf of bread will sell for 40 cents in five to 10 years. Maple Leaf Mills for the Fis Cal year ended March -31, showed a net profit of or si.72 a share. Montreal up the advertising Industry must make sure it helps solve social arid economic problems and not Cre ate them especially in the cur rent trend of violence in North America c. Warren Reynolds chairman of the Board of the audit Bureau of circulations said today. Speaking at a luncheon meet ing of the Board of directors or. Reynolds said advertising had a responsibility to society to provide guidance through effective sight and sound communications. Communications in this sense meant both sending and receiving. " everybody s any body he said. The Grin on Laurie Mckibben s face is just for the photographer. The Bird he is holding is a mexican fighting rooster and according to or. Mckibben the noise the rooster begins to make about every morning is nothing to smile about. Or. Mckibben a Salesman with world wide distributors was awarded i he Bird by his firm for being Low Man on the office totem pole. Or. Mckibben must carry the Bird with him 24 hours a Day until he works himself up from the Bottom of the Heap and is Able to turn the Bird Over to the new Low Man. Acklands9 bid successful Ackland limited a Winnipeg based wholesale distributor firm has taken Over the j. H. Ashdown hardware company also of Winnipeg. The takeover which has been considered for some time by the Ashdown family who control 53 per cent of their company s Stock was ratified Friday at the annual meeting of Ashdown shareholders. Acl Dands offered to buy the issued and outstanding common shares of Ash owns for a share payable in whole by issuing on a share for share basis shares of a new class of six per cent cumulative redeemable convertible p r e feared Stock of Ackland Par value per share. A release issued by a Klaus said these new preference shares will be by Gordon Arnold 9 convertible after june 1, 1970, into common shares with out Par value in Ackland at per share such conversion to be effected by tendering one new preference share plus in Cash for one common share of Ackland. Redeemable in whole after june 1, 1970, on 30 Days notice at Par plus accumulated dividends and a Premium of 9 non voting except to alter the terms thereof in which event two thirds vote will be required. In his report to the share holders h. C. Ashdown presi Dent of the firm said that despite attempts to streamline operations the company has been operating in the red for j the last several years and that further economies and improvements Are Only available if the company is sold to or its operations merged with those of a larger last year sales totalled the company s but they still showed a loss for the year of while the sales volume for Ackland limited for the same period was million. The Board of directors unanimously recommended the take Over by Ackland in preference to Gamble Mcleod an Ameri can based company who was also bidding for the takeover. Gamble Mcleod offered to Purchase Ashdown s net assets on a basis whereby Ash owns would have held a capital note for five years with no dividends being paid during this time. Canadians this week went to the polls and elected a majority government for the first time in a. Decade and while this has no bearing on the Market action of grains it is stimulating to know that some sort of stability has returned to this country after years of indecision. Politics aside the sales of wheat overseas have been min Imal this week following heavy bookings before the International grains arrangement was ratified by the . Senate and total sales in parcel lots would probably not be More than tons. Other business included about tons of rapeseed to Japan about 3.000 tons of flax to the continent and a Small parcel to the United kingdom and tons of Rye to Norway. Japan rejected All offers of Barley both French and Canadian this week apparently because of the cheap prices of alternate feed grains mainly Corn. Crop prospects Here have deteriorated this week in All Prairie provinces. Rainfall has been spotty and Large areas Are suffering from drought conditions. Cool weather has been a saving Grace but an indicated return to More Normal temperatures is causing concern and if hot weather prevails Over the Prairies the crop As a whole could be in danger As surface and subsoil moisture is Short in Many districts. Nevertheless with the assured outturn of Winter wheat in the . Of Over million bushels and the excellent out look for their Spring wheat the Prospect is for supplies exceed ing 3 billion North America this fall which is anything but bullish and the Chicago and Kansas City markets have taken cognizance of this moving to the lowest Levels in 26 years. There has been a great Deal of talk about drought in Eastern Europe which encompasses the Southern Ukraine and this May or May not result in Good sales in the future in that direction but until something develops in a Concrete Way we prefer to discount that Factor. Offsetting this is the fact that India and Pakistan garnered Large crops of food grains and seem to be on the Way to becoming somewhat self sufficient at the foreseeable future and the All important Monsoon Rains arrived on schedule this year which enhances their Outlook for the next crop. Latest advices from the Argentine confirm the fact that heavy general Rains fell on practically a 11 Grain growing areas and the situation there is completely changed with seed ing of wheat going on Pace and an expanded acreage of flax a definite possibility. Australia Al so has been blessed with heavy Rains Over previously drought areas and they Are talking about an expanded acreage planted to wheat and a possible record outturn which could further complicate sales from this direction. There is very Little change in the labor situation in this country. The Seaway workers Are still out on strike tying up shipping and it remains now for the newly elected government to reach some sort of a solution. The threatened rail strike has been averted temporarily by the ruse of reconvening the govern ment appointed conciliation Board and if the Grain handlers at the Lakehead do not come to terms with the terminal opera tors the earliest strike Date is in the first week of july. There has been no Progress made Between the Canadian Marine officers Union and the Canadian Lake carriers association As far As we know and if any one of these comes to pass we will be out of business completely. Ottawa do the Cana Dian government s Cash bal ances fell in the week ended wednesday As Sav Ings Bond redemption continued at a High rate and the Bank of Canada used Large sums to Purchase . Dollars in foreign Exchange markets. These balances funds used to pay for the expenses of state were to be swelled Friday by the proceeds of Ottawa s special one year Treasury Bill Issue. Savings Bonds outstanding fell As investors cashed them in with the apparent intention of putting their Money in higher yielding securities. But As continued to fall a slowdown in the savings Bond Cash ins was expected. The extent of Bank of Canada purchases of . Funds in june should become Clear next tues Day when the finance depart ment published its monthly foreign Exchange statement. Interest rates declined in the week ended wednesday the Bank of Canada reported. The sensitive interest rate on Banks Day Loans averaged 5.50 per cent in the lates week Down sharply from 6.30 per cent in the prior week. These Loans to investment dealers were sold at five per cent at the close of bidding. The average yield on 91-Day Treasury Bills declined to 6.56 per cent at thursday s auction i from 6.66 per cent the week before the average yield on Long term government of Canada Bonds fell to 6.62 per cent from fi.68 per cent a week earlier. Chartered Banks Cash re serves tightened in the latest week after being extremely easy the prior week. Reserves averaged 6.25 per cent of deposits Down from 6.33 per cent the previous week but still above the 6.23 per cent mini mum required for june. Swapped deposits Rose in the week ended wednesday. These deposits involving the Sale of Canadian dollars for repurchase after a fixed period were permitted again by the government two weeks ago after a three month ban. Banks bought of Treasury Bills and of other securities in the latest week. In other Bank of Canada statistics for the week ended june 19 Canada s Money Supply increased As general Loans to businesses individuals and institutions Rose the increased Money Supply defined As the total of chartered Bank deposits and currency outside Banks resulted from a Rise in personal savings deposits and a Rise in demand de posits. T e r m deposits fell and currency fell Loans to provinces were Clown conventional Mort Gage Loans Rose Washington up Canadian government s Promise last March to invest most of its holdings of . Dollars in non marketable american govern ment securities resulted in the Purchase of of such securities in May the monthly Federal Reserve Board bulletin reports. The Canadian Promise was a condition for Canadian exemption from the . Squeeze on the flow of capital into foreign countries. Canada agreed that its foreign Exchange reserves invested in marketable . Government securities would be invested in securities which do not constitute a Cash on the . The Reserve Board s table shows that Canadian purchases of such securities amounted to last d e c e m b e a in january in february in March and in april. Ottawa new 91-Day government of Canada Treasury Bills auctioned thursday at an average Price and yield of 98.390 and 6.56 per cent. Last week same amount and term .98.366 and 6.06 per cent. 182-Day at 86.856 and 6.51 per cent. Last week same amount and term 96.805 and 6.62 per cent. Detroit Retreat seen Toronto up buyers of 1969 Model cars from the big four North american makes this fall May find the five fifty Power train warranty no longer part of the Deal. The can motors Canada Ltd., Chrysler of Canada Ford motor co. Of Canada Ltd. And general motors of cagey on the subject. In fact they Are scarcely saying a word. But Rumor in the Industry is that confusion in present warranty servicing plus higher than expected repair costs under warranty May push manufacturers out of Long term High mileage warranties altogether. Already the called because it guarantees free repairs on key car components for five years or Miles since Chrysler introduced it five years been cur tailed. Starting with 1968 models it applies automatically Only to the first owner. A second or subsequent owner must pay to take Over the warranty. In most cases he also must pay the first of any repair Bill. The War Ranty May be the Only one provided on new car models. Another report is that Many pieces of equipment once option Al but now Standard such As bucket seats and Centre con soles May become optional again. Manufacturers Are said to be Lieve this a Good Way to keep new car prices steady. Any announcement on warranties will be made on an Industry wide basis when the 1969 models Are announced at the end of August spokesmen say. For the car owner a cutback in warranties Means he pays his own repair costs once his Spee Dometer has clocked off Miles. But he will also be less confused about what his warranty prime cause of and aches for dealers and manufacturers. One automotive executive says that cars should Cost customers less in the Long run with out the Long term warranty. The problem of handling warranties in relation to what the customer was getting out of it is one reason for a possible the executive said. The weekly Bond letter by James h. Claydon Money Market analyst Royal securities corporation Bank of Canada operations throughout june have kept the banking system in a very liquid state. The actual ratio of Cash reserves to deposits averaged 6.33 per cent to june 26 or .10 per cent higher than the required minimum monthly aver age. The actual spot ratio is closing out the month at 6.25 per cent As the Banks activated Cash reserves this week by buying million Bills and million Canada Bonds. Of equal importance the Bank ing system enters july with More than adequate Cash re serves. The required average ratio of Cash reserves to deposits drops from 6.23 per cent to 6.13 per cent leaving the system with approximately million in excess reserves. This is significant for the rear term Outlook for Short term . The Banks Are in the Comfort Able position of being Able to satisfy loan demand cup million last week and add to their Security Type assets at the same time without straining their resources. Of course the stepped up Bank activity is reflected in the renewed growth of Money sup ply most noticeably personal savings deposits which have risen 10 per cent this year and now represent 51.3 per cent of Money Supply As compared with 50.5 per cent this time last year. Total term and demand de posits still represent 37.8 per cent of the Money Supply bul the mix has shifted towards the former Over the year. Term deposits have increased 20 per cent this year and now represent 16.7 per cent of Money Supply while demand deposits dropped eight per cent and now account for but 21.1 per cent Over All versus 24.2 per cent last year. With the continuing strength shown by savings deposits it is difficult to reconcile the steady redemption of cab s which declined a further million this week. A concomitant turn Down in personal savings deposits and cab holdings might signify an attempt by the general Public to maintain or disposable income for consumption purposes but this does not seem to be the Case. It simply appears to be a Natter of competing Short term vehicles offering a More attractive rate of return than the older issues of cab s. Government Cash balances declined million this week As a result of the aforementioned cab redemption million late redemption of matured 2% and 4% june 15, 1968 Bonds and the monthly Transfer payment to provinces. The receipt of million Friday from the proceeds of the special one year Bill auction and increased 91-Day tender will offset this loss. A lowering of Bank rate has been expected since mid june and now seems imminent. The Cut most Likely would be a modest one to seven per cent but could be As much As a full Point. With three month six month. And one year Bills All trading 6.50 to 6.55 an argument could be made for a Compromise Cut to per cent. This would be de Juro recognition by the Central Bank of a de Facto situation already existing in the Money Market. Confidential investment dealer inventory figures cannot be revealed but it is no real secret dealers have been loading up on chartered Bank bearer Deposit notes and finance company bearer notes in anticipation of a general downward shift in those vehicles to reflect the 50 basis Point improvement in Canada Bills and Short term Bonds. Finally the International financial situation continues to ferment with the vortex shift ing from the .a. To France and now South Africa. The latter two countries of course Are now experiencing Short run balance of. Payments problems and have been forced to Avail themselves of the Back up facilities of the if. I it is becoming clearer As time passes neither country will be free to dispose of their Gold holdings on the volatile Premium free Market if they wish to retain the right to sell in the inter Central Bank Market at the stable official Price for Settle ment purposes. One result is that Market yields should be subjected to fewer Cash flow disturbances of the magnitude experienced earlier this year in the . And Canada and Bonds should reflect this fact in narrower Price swings. The us principals Oyjer these Bonds subject to prior Sale and change in Price if As and when issued Tut accepted and subject to Ike approval of counsel. New Issue the Manitoba Hydro electric Board 4% sinking fund Bonds due August 1, 1993 guaranteed unconditionally As to principal and interest by the government of Manitoba Price 98.75 and accrued interest to yield about 7.36% a copy of the circular is available an Wood Gundy securities limited Dominion securities corporation limited Bell Gouinlock company limited Mcleod Young Weir company limited greenshields incorporated Gairdner company limited j. L. Graham company limited Richardson securities of Canada a. E. Ames co. Limited Burns Bros and Denton limited Royal securities corporation limited Nesbitt Thomson securities limited Pitfield Mackay Ross company limited Cochran Murray co., limited Wah Vyn Stodgell co. Limited 1 Midland Osier securities limited equitable securities Canada limited Mills Spence co. Limited Harris partners limited Bankers Bond corporation limited j. L. Levesque l. G. Beaubien Peter d. Curry co. Ltd. Ltd. Herrndorf securities Ltd. The Royal Bank of Canada Canadian Imperial Bank of Commerce Bank of Montreal the Bank of Nova Scotia the Toronto Dominion Bank june 28. 1968 ;