February 25, 1937

CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

Have you the figure without the treasury bills ?

Topic:   QUESTIONS
Subtopic:   LOAN FLOTATIONS
Permalink
LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

That includes the treasury bills.

Topic:   QUESTIONS
Subtopic:   LOAN FLOTATIONS
Permalink
CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

Have you the figure without the treasury bills?

Topic:   QUESTIONS
Subtopic:   LOAN FLOTATIONS
Permalink
LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

I have not that figure in this statement, but I will get it.

Loans were floated in both the domestic market and in the United States. The issues in Canada, exclusive of treasury bills, amounted to $267,996,000. The first issue was made in June, 1936, to an amount of $134,703,000. This issue was essentially a conversion loan, only $20,000,000 being issued for cash, the balance being made up of conversions of 1J per cent bonds due September 15, 1936, 2 per

cent bonds due October 15, 1936, and 5 per cent bonds due November 15, 1936. The new issue was comprised of two maturities, 1J per cent four year bonds yielding 1-63 per cent and 3| per cent thirty year bonds yielding 3-30 per cent. Cash subscriptions were accepted only in respect to the latter maturity.

The other major operation in the Canadian market was undertaken in September when a $100,000,000 issue was offered. This loan was also in two maturities; $45,000,000 1 per cent four and one-half year notes sold to yield 1-40 per cent and $55,000,000 3 per cent bonds (callable in thirty years) sold to yield 3'll per cent. The issue of perpetual bonds in the Canadian market represented a new departure in dominion financing. It was intended as the initial step in a program which is designed to provide for the consolidation and simplification of our public debt structure. Another purpose which we had in mind was to facilitate the setting up, as soon as the condition of our national finances make it practicable, of a general sinking fund to provide for the gradual amortization of our long term debt on scientific lines. The response of the investing public to this experimental issue indicated that perpetual obligations might prove as popular in Canada as they have long been in the United Kingdom. In this connection, I believe that the house will approve the policy which we have been following of taking advantage of the present period of low interest rates to get as large a proportion of our debt as possible into the form of long term obligations.

The $33,293,000 5 per cent school lands debentures due July 1, 1936, and held by the provinces of Manitoba, Saskatchewan and Alberta were renewed for a further period of one year at an interest rate of 4 per cent.

Topic:   QUESTIONS
Subtopic:   LOAN FLOTATIONS
Permalink

LOAN FLOTATIONS 1936-37


Price Yield Maturity Date Where Payable Amount IssuedIssue Date Rate To Public To Govern- ment* At Public Price At Price to Government 1936 % % % June 1 June 1, 1940 u Canada 99.50 99.25 1-63 1-70 $ ''0,000,000June 1 June 1, 1966 31 Canada 99.00 98.25 3-30 3-34 54,703,000July 1.... Sept. 15 July 1, 1937 Mar. 15, 1941 Canada (School Lands) Canada 100.00 4-00 33,293.4711 98.25 98.00 1-40 1-46 45.000,000Sept. 15- Perpetual 3 Canada 96.50 95.75 3-11 3-13 55,000,0001937 Jan. 15 Jan. 15, 1944 21 New York 99.50 98.25 2-33 2-52 30,000,000Jan. 15 Jan. 15, 1967 3 New York 98.00 96.00 3-10 3-21 55,000,000$ 352,996,471Increase in short term treasury bills outstanding March 31, 1937 over March 31, 1936 30,000,000 $ 382,996,471 Price to public, lees commission to underwriters or dealers. [Mr. Dunning.) The Budget-Mr. Dunning


THE NATIONAL DEBT


As at March 31, 1937, the outstanding unmatured funded debt and treasury bills of the dominion, less sinking funds, will amount to $3,275,574,000. Adding to this amount $255,- 419,000 of other liabilities, consisting chiefly of annuity, insurance and superannuation funds, post office savings deposits and certain trust and contingent accounts, we arrive at gross liabilities of $3,530,993,00. Active assets, including cash on hand and investments, amounted to $437,498,000. After deducting the latter figure from the gross liabilities, we reach an estimated net debt of $3,093,- 495,000 as at the close of the fiscal year. The increase over last year of $87,395,000 represents, of course, the amount of the over-all deficit to which I have previously made reference. I now place on Hansard a statement showing the assets and liabilities of the dominion as estimated as at March 31, 1937.


LIABILITIES MARCH 31, 1937


(estimated) Bank Circulation Redemption Fund S. $ 7,020,000 Insurance and superannuation funds- Government annuities 87.092.000 10.800.000 15.770.000 8,782,000 53.651.000 Insurance fund, civil service Insurance fund, returned soldiers Retirement fund Superannuation funds 176,095,000 Trust funds- Indian funds 13,890,000 2.676.000 1.250.000 5.595.000 Common school funds Contractors' securities deposits Other trust funds 23.411.000 6.340.000 2.814.000 9.624.000 21.800.000 Contingent and special funds Post Office money orders, postal notes, etc., outstanding Province accounts Post Office savings bank deposits Funded debt- Unmatured less sinking funds 3,275,574,000 6.565,000 Matured but not presented for payment 3,282,139,000 1,750,000 Interest coupons matured but not presented for payment $ 3,530,993,000 ASSETS MARCH 31. 1937 (estimated) Active assets- Cash, working capital advances and other current assets S 16,018,000 5.100.000 2.200.000 Bank of Canada, class "B" shares Gold Bullion account Loans to Provinces- $ 4,730,000 108,654,000 113,384,000 Loans to foreign governments- 6,525,000 23,969,000 Roumania 30,494,000 Loans to National Harbours Board- 59.446.000 23.755.000 83,201,000 275,000 1,300,000 12,000 New Westminster Harbour Commissioners Loans under Dominion Housing Act Bond holding account The Budget-Mr. Dunning



ASSETS MARCH 31, mi-Concluded (estimated) Railway accounts- . , . . Advances under financing acts, Canadian National Railways 41,399,000 555.000 789.000 1.270.000 6.748.000 5.662.000 56.423.000 28.684.000 42.656.000 2,370,000 15.749.000 39.632.000 Loans for betterment or repair of railway equipment- Purchase of equipment leased to- Deferred debits- $ 437.49S,000 $ 3,093,495,000 Net Debt represented by- A. Expenditure and non-active assets, March 31,1937 (estimated). Capital expenditures- Public Works- 242.727.000 443.124.000 267.963.000 12,035,000 9,896,000 $ 975,74.5,000 655,527,000 88.399.000 14.008.000 18.765.000 61.453.000 491,000 16.514.000 3,536,000 1,259,057,000 Loans non-active- National Harbours Board- 26.293.000 3.796.000 9.503.000 15.467.000 3.447.000 2.947.000 Montreal (Jacques Cartier Bridge) B. Consolidated fund- Balance, consolidated fund, brought forward from March 31,1936.. Excess of expenditure over revenue, fiscal year ended March 31, 1,194,183,000 64,874,000 $ 3,093,495,000 Note.-The above Balance Sheet does not take into account any loans that may be made to provinces between February 15, 1937, and the close of the fiscal year. It does, however, take into account the proposed write-off of certain Treasury Bills of the provinces of Manitoba and Saskatchewan. [Mr. Dunning.t The Budget-Mr. Dunning The following table which I also wish to place on Hansard gives a statement of the unmatured funded debt and treasury bills of the Dominion outstanding as at March 31, 1937, and the interest charges thereon:


UNMATURED FUNDED DEBT AND TREASURY BILLS AS AT MARCH 31, 1937 AND ANNUAL INTEREST CHARGES


Date of Maturity Rate Per Cent Where Payable Amount of Loan Annual Interest Charges $ cts. $ cts. 1937, July 1 4 Canada 33,293,470 85 1,331,738 83Dec. 1 (a) 5$ Canada 236,299,800 00 12,996,489 001938, July 1 3 London 8,071,230 16 242,136 90July 1 3 London 18,250,000 00 547,500 00July 1 3 London 10,950,000 00 328,500 00July 1 3* London 15,056,006 66 526,960 23Oct. 15 2 Canada 90,000,000 00 1,800,000 001939, Jan. 1 2 New York 40,000,000 00 800,000 00Oct. 15 4 Canada 47,269,500 00 1,890,780 00Oct. 15 21 Canada 7,933,000 00 198,325 00Nov. 15 2 Canada 20,000,000 00 400,000 001940, Mar. 1 3 Canada 115,013,636 82 3,450,409 10June 1 Canada 80,000,000 00 1,200,000 00Sept. 1 41 Canada 75,000,000 00 3,375,000 001941, Mar. 15 1 Canada 45,000,000 00 450,000 00Nov. 15 5 Canada 141,663,000 00 7,083,150 001942, Oct. 15 3 Canada 40,409,000 00 1,212,270 001943, June 1 21 Canada 20,000,000 00 500,000 00Oct. 15 5 Canada 147,000,100 00 7,350,005 001944, Jan. 15 21 New York 30,000,000 00 675,000 00Oct. 15 41 Canada 50,000,000 00 2,250,000 001945, Aug. 15 21 New York 76,000,000 00 1,900,000 00Oct. 15 4 Canada 88,337,500 00 3,533,500 001946, Feb. 1 41 Canada 45,000,000 00 2,025,000 001947, Oct. 1 21 London 4,888,185 64 122,204 641949, Oct. 15 31 Canada 138,322,000 00 4,841,270 001950, July 1 31 London 137,058,841 00 4,797,059 431952, May 1 5 New Yrork 100,000,000 00 5,000,000 00Oct. 15 4 Canada 56,191,000 00 2,247,640 001955 May 1 31 London 48,666,666 67 1,581,666 67June 1 3 Canada 40,000,000 00 1,200,000 00June 1 3 Canada 55,000,000 00 1,650,000 001956, Nov. 1 41 Canada 43,125,700 00 1,940,656 501957, Nov. 1 41 Canada 37,523,200 00 1,688,544 001958, Sept. 1 4 London 73,000,000 00 2,920,000 00Nov. 1 41 Canada 276,687,600 00 12,450,942 001959, Nov. 1 41 Canada 289,693,300 00 13,036,198 50I960, Oct. 1 4 London 93,926,666 66 3,757,066 67Oct. 1 4 New York 100,000,000 00 4,000,000 001961, Jan. 15 31 New York 48,000,000 00 1,560,000 001966, June 1 31 Canada 54,703,000 00 1,777,847 50Perp.Sept. 15 3 Canada 55,000,000 00 1,650,000 001967, Jan. 15 3 New York 55,000,000 00 1,650,000 00Treasury Bills due April 1, 1937... [DOT]745 Canada 25,000,000 00 186,250 00Treasury Bills due April 15, 1937.. [DOT]747 Canada 25,000,000 00 186,750 00Treasury Bills due May 1, 1937 [DOT]758 Canada 30,000,000 00 227,400 00Treasury Bills due May 15, 1937... [DOT]776 Canada 25,000,000 00 194,000 00Treasury Bills due June 1, 1937 [DOT]776 (est.) Canada 20,000,000 00 155,200 00Treasury Bills due June 15, 1937... [DOT]776 (est.) Canada 25,000,000 00 194.000 003,337,332,404 46 125,081,459 97Payable in Canada... 2,478,464,807 67 74-27%Payable in New York 449,000,000 00 13-45%Payable in London 409,867,596 79 12-28%3,337,332,404 46 100 %Less bonds and stocks of the above loans held as sinking funds (estimated) 61,758,481 68 3,275,573,922 78 (a! Tax free in Canada The Budget-Mr. Dunning


INDIRECT LIABILITIES


Bonds and debenture stocks bearing the guarantee of the dominion outstanding in the hands of the public at the close of the fiscal year will amount to SI,003,000.000, an increase of $9,000,000 over the same date a year ago. This increase is due mainly to the issue of dominion guaranteed securities to refund matured or called debt of the Canadian National Railways which had not been guaranteed. In addition, there are other contingent liabilities arising out of guarantees given under relief and other acts. During the year the only new guarantee was that in connection with the home improvement plan under which the government guarantees approved lending institutions against loss up to 15 per cent of the aggregate amount of loans made by each tending institution. The limit of the aggregate loans to be made under this plan will be $50,000,000 and therefore the maximum contingent liability of the government will be $7,500,000. As at January 31, 1937, the amount of such loans subject to guarantee was $1,501,000. It is difficult to estimate what the total will be on March 31, 1937, as an acceleration of lending activity is expected with the approach of the spring building season. I am glad to be able to report that as a result of the policy of orderly marketing and the rise in wheat prices to which I have already referred, bank loans which were made to the Canadian wheat board under our guarantee have been completely paid off, as well as the loans made from time to time directly to the board by the government. In a report made public on January 4, 1937, the Wheat Board stated that the total wheat and wheat contracts which had been taken over from Canadian Cooperative Wheat Producers Limited as of December 2, 1935, amounted to 205,186,980 bushels. As of that date the board also held 90,186,986 bushels of 1935 crop wheat making a total holding as of that date of 295,373,966 bushels. The wheat and contracts taken over from Canadian Cooperative Wheat Producers Limited plus the total receipts by the board of 1935 crop wheat to the end of the crop year on July 31, 1936, aggregated 355,927,206 bushels. By July 31, 1936, the board's total holdings of wheat and wheat contracts had been reduced by sales to 86,729,413 bushels. Even after giving effect, as of March 31 last, to the payment of $15,856,000 which we made to the board, the liability of the board on that date for guaranteed bank advances was still substantial. To-day the board has outstanding no loans from the chartered banks or the dominion government or from any other source. There is still outstanding the dominion's guarantee to the Winnipeg Grain and Produce Clearing Association Limited given to assure the due payment of day to day margin moneys which may be payable by the wheat board to the association arising out of transactions and trades in grain made by the board as a member of the association. These margin deposits are made daily and no liability accrues from day to day. The government's guarantee of bank advances for the purchase of oats by Canadian Cooperative Wheat Producers Limited for account of the province of Saskatchewan is also still outstanding. As at February 1, 1937, the amount of bank loans outstanding subject to this guarantee was $384,760. I now place on Hansard a table giving the principal amount of the bonds and debenture stocks and other indebtedness guaranteed by the dominion which it is estimated will be outstanding as at March 31, 1937:


BONDS AND DEBENTURES STOCKS GUARANTEED BY DOMINION GOVERNMENT AS AT MARCH 31,1937


Date of Maturity Issue Interest Rate Amount Outstanding % S cts. May 1, 1938 2 13,400,000 00Feb 15, 1943 2 55,000,000 00Feb 1, 1944 21 15,500,000 00May 1, 1944.. 3 35,000,000 00July 1 1946.. 64 24,238,000 00April 1, 1948 New Westminster Harbour Commissioners 4j 700,000 003 20,500,000 00Sept 1, 1951 4J 50,000,000 00Feb 1, 1952 3 20,000,000 00Aug 1, 1952.. 5 667,953 04Feb 15, 1953.. 3 25,000,000 00July 10, 1953.. 3 9,359,996 72Feb. 1, 1954 Canadian National 5 50,000,000 00 1237 The Budget-Mr. Dunning


BONDS AND DEBENTURES STOCKS GUARANTEED BY DOMINION GOVERNMENT


AS AT MARCH 31, 1937-Concluded Date of Maturity Issue Interest Rate Amount Outstanding % « Mar. 1, 1955 Canadian National (West Indies) Steamships Limited 5 9,400,000 00,Til tip 15 1955 4| 50,000.000 00FpH 1' 195fi n 70,000,000 00n 65,000,000 003? 7,896,546 2131 3,149,998 66Mnv 1Q* 1Qfi1 31 34,229,996 87Tnn 1 3 34,992,000 00Ton 1 ' 1 Qfi9. 4 8,440,848 005 60,000,000 00Oof 1 1QfiQ 5 60,000,000 00*NTrty 1 ' 1 QfiQ 5 19,000,000 001 ' 1Q70 5 18,000,000 002 24,205,685 53Various dates, 1937-54... City of Saint John Debentures assumed by Saint John Harbour Commission Various 1,197,641 72Serial Feb. 1 and Aug. 1, 1937-38 5 2,250,000 004 60,833,333 335 20,782,491 67« 5 13,252,322 67u 4 119,839,014 33" Northern Railway of Canada Debenture Stock. 4 1,499,979 671,003,335,808 42 Other Indebtedness Guaranteed Bank advances, re province of Manitoba Savings Office Bank advances, re government of Newfoundland Bank advances, re Dominion Steel and Coal Corporation (order for rails) Province of British Columbia treasury bill Province of Manitoba treasury bill.. . Bank advances, re Canadian Cooperative Wheat Producers Limited (Saskatchewan oats account) Reserve of chartered banks on deposit in Bank of Canada.. .. Guarantee of home improvement loans (15 per cent of aggregate loans made) Estimated principal amount outstanding March 31, 1937



144,282 (Feb. 20, 1937, 626.534 5,894,127 386,988 (Feb. 13, 1937) 192,946,716 (Feb. 17, 1937) 225,150 (Jan. 31, 1937) I now come to the budget forecast for 1937-38:


February 25, 1937