Having presented the revenues and expenditures under the appropriate classifications, we are now in a position to indicate the met results of the dominion's accounts for the year. Minor adjustments have yet to be made before the accounts are closed, but the figures given are believed to approximate the final balances for the year.
With ordinary expenditures totalling $364,-
425,000 and revenues of $310,817,000 it will be observed that the resulting deficit on ordinary account is $53,608,000.
When the budget was brought down last year, it was expected that the taxation proposals then submitted would increase the receipts to such an extent that there would be at least a balancing of the budget on ordinary account. The actual expenditure, as has been indicated has closely approximated the estimate. The explanation for the deficiency on ordinary account is therefore found in the failure of the revenues to attain the expected yield due to falling prices and shrinkage in business activity.
Special expenditures, including $37,400,000 for unemployment relief and wheat bonus, amounted to $42,483,000. If against this sum there is applied $4,473,000 received in special revenues, there remains a balance of special expenditures not provided from income, of $38,010,000. In addition there are the capital expenditures of $9,123,000 and net loans and advances non-active of $1,959,000. The resulting increase of debt on government operations for the year is therefore $102,700,000, as compared with a corresponding figure in the previous year of $114,234,000.
To give effect to the assimilation in our accounts of the deficit of the Canadian National Railways, tihe increase in debt of $102,-
700,000 on government operations will be augmented, as previously referred to, by the addition of a special charge of $53,422,000, resulting in a total addition to the debt, after taking into consideration the year's operations both for government and the railways, of $156,122,000.
In the balance sheet, effect will be given also to the transfer from active to mon-active assets of $41,000,000 of advances to the Canadian National Railways in 1931-32, and of $26,000,000 of loans to harbour commissions, as already referred to.
The dominion has been able to arrange for the orderly financing of all requirements during the year, including provision for maturing securities and the financing of the Canadian National Railways.
External borrowings in 1932-33 were for the purpose of meeting maturing obligations in New York. An issue of one-year 4 per cent treasury notes dated October 1, 1932, for the amount of $60,000,000, was sold to a New York banking group at 99-28 and accrued interest. From the proceeds of this issue a 5 per cent temporary bank loan, then standing at $13,000,000 but originally negotiated in 1931 for $19,000,000, almost entirely for railway purposes, was paid off and the cash balances of the dominion held in New York were restored to the extent that they had been utilized in making periodic payments on account of this indebtedness. The other maturing Obligation paid from the proceeds of this sale was the issue of $40,000,000 two-year 4 per cent notes which fell due December 1, 1932.
In Canada $85,000,000 was raised by the sale of treasury notes to the chartered banks. The first issue dated August 1, 1932, was for one year at 4J per cent and was sold at par and accrued interest. The other issue of two-year notes, dated November 1, 1932, was for $35,000,000 at 4 per cent and was sold at par and accrued interest. In addition, for temporary financing, $12,000,000 of 90-day 4 per cent treasury bills dated October 15, 1932, were sold to the banks at par. These were called for redemption on November 3.
A public issue of securities was made in Canada at the end of October. The offering was for $80,000,000 4 per cent bonds dated October 15, 1932, divided into two maturities:-$25,000,000 of three-year bonds and $55,000,000 of twenty-year bonds. The three-year bonds were sold at 99-20 and interest, yielding 4-28 per cent; and the twenty-year bonds at 93-45 and interest, yielding 4£ per cent. The .three-year maturity was immediately over-subscribed about three times, and all subscriptions in excess of $25,000 were allotted on a percentage basis. The twenty-year maturity moved more slowly but the books were closed shortly before the date set with a slight over-subscription, the total amount of the issue being $56,191,000. The whole issue is payable in Canada only, and the twenty-year bonds axe subject to redemption at par after fifteen years.
The sale of the 4 per cent loan of 1932 was in charge of a committee representing banks and investment houses, under the chairmanship of Sir Charles Gordon, president of the
The Budget-Mr. Rhodes
Bank of Montreal, and operated along lines similar to that employed in -the national service and conversion loans of 1931.
The expense of raising the loan, including commissions, advertising, printing, and delivery of securities, was about three-quarters of one per cent.
The proceeds of the issue were used for the purpose of paying off $34,449,950 of 5J per cent renewal loan bonds which remained outstanding after the conversion loan of 1931, and the balance of the proceeds was devoted to the general purposes of the government.
It is well to record that with this issue new ground was broken and for the first time -there
was offered for public subscription in Canada, a dominion security bearing a 4 per cent coupon.
While this factor produced some sales resistance, notwithstanding that the yield to the investor on -the twenty-year maturity was actually 4? per cent, it speaks well not only for the organization which conducted the sale of the loan, but also for the responsiveness of investors to the prime security of Canada that the issue met with success.
The direct -obligations of the dominion in the form of unmatured funded debt are listed in the following statement:
Unmatured Funded Debt as of March 31, 1933, and Annual Interest Charges
Date of maturity Rate Where payable Amount of loan Annual interest charges% $ cts. S cts.1933-Aug. 1 4 2 50,000,000 00 2,250,000 001 4 60,000,000 00 2,400,000 001 (a) 5£ 169,971,850 00 9,348,451 751 3| 23,467,206 27 821,352 22July 1 5 33,293,470 85 1,664,673 541 4 35,000,000 00 1,400,000 001 5| 226,138,350 00 12,437,609 251935-Aug. 1 (a) 5 Canada and New York... 874,000 00 43,700 004 25,000,000 00 1,000,000 001936-Feb. 1 40,000,000 00 1,800,000 0015 5 79,535,200 00 3,976,760 001937-Mar. 1 (a) 5 Canada and New York... 90,166,900 00 4,508,345 001 (a) 5£ 236,299,800 00 12,996,489 001 3 8,071,230 16 242,136 901 3 18,250,000 00 547,500 001 3 10,950,000 00 328,500 001 3 \ 15,056,006 66 526,960 231 4£ 75,000 000 00 3,375,000 0015 5 141,663,000 00 7,083,150 001943-Oct. 15 5 147,000,100 00 7,350,005 001944-Oct. 15 4a 50,000,000 00 2,250,000 001 4* 45,000,000 00 2,025,000 001947-Oct. 1 2| 4,888,185 64 122,204 641 3 \ 137,058,841 00 4,797,059 431 5 100,000,000 00 5,000,000 0015 4 56,191,000 00 2,247,640 001 4f 43,125,700 00 1,940,656 001957-Nov. 1 4 \ 37,523,200 00 1,688,544 001958-Nov. 1 (b) 4i 276,688,100 00 12,450,964 501 (c) 4 \ 285,771,800 00 12,859,731 001 4 93,926,666 66 3,757,066 671 4 100,000,000 00 4,000,000 002,715,910,607 24 127,239,499 13Payable in Canada
Payable in Canada and New York
Payable in New York
Payable in London $ 2,013,201,570 85
311,668,136 39 74-13% 3-35 11-05 11-47Less bonds and stocks of the above loans held funds S 2,715,910,607 24 as sinking 100-00%(a) Tax free in Canada. $ 2,649,908,882 73
(b) Tax free to Nov. 1, 1933, 5j% to Nov. 1. 1933 (e) 51% to Nov. 1, 1934.