The following text may have been generated by Optical Character Recognition, with varying degrees of accuracy. Reader beware!

_ MUTUAL LIFE UNBROKEN RECORD OF CAINS and his services will be wreatly to 1935 from 3%4% to 3%. ‘When missed by his associates. His place this business is, in the near future, on the Board has been filled by the|valued at 3%, the Policy Reserve election of Mr. James YÂ¥. Murdoch, Adjustment Fund will disappear K.C., of Toronto. from Special Reserves and Surplus The members of the Board retirâ€"\Funds and be absorbed in the Poâ€" ing this year by rotation are Messrs.|licy Reserve item of Liabilities. McCulloch, Lang. Osler. Murrin and |This strengthening of reserves is, of Somerville, all of whom are elifible]r( urse, entirely beyond legal reâ€" for reâ€"election. quirements, but is undoubtedly the Respectfully submitted on behalf prudent course to take in view of of the Board, ‘the trend in recent years to lower R. 0. MeCULLOCH, _ interest returns on investments. In President. "*addition to the Poliey Reserve Adâ€" Pxecutive Committee of the Board, | and his services will be yreatly missed by his associates. His place on the Board has been filled by the ber of the Board of Directors since his election in 1927. The late Mr. Long was also a member of the The Board again desires to record its appreciation of the highly satisâ€" factory manner in which the work of the Company has been carried on by the Officers and Staff in the Field and at Home Office. I desire to record with profound regret the passing on January 13, 1939 of our colleague. Mr. Edwin G. Long. K.C., who served as a memâ€" The Auditors‘ Report and the Reâ€" port of the Actuary on the valuaâ€" tion of the outstanding assurance and annuity contracts are submitâ€" ted herewith. General Remarks A continuous audit of the Comâ€" pany‘s books and accounts was maintained by the Auditors throughâ€" out the year. and at the end of the year all bonds, other investment securities, cash and bank balances were verified. Mortgage loans made during the year were also audited. Policy reserves, as computed on the basis set forth in the Actuary‘s Valuation _ Report, amounted to $140,650,575.00. Special â€" reserves ‘and surplus funds aggregated $14,719,949.13. At the close of the year the assets of the Company aggregated $178,â€" 977,222.71, constituting an increase of $9,090,144.52. The rate of interest earned on net ‘ledger assets was 4.68%. Surplus earnings for the year were $4,656,453.41, and after deâ€" ducting surplus paid and allotted, and making provision for special charges, surplus funds were inâ€" creased by $858,172.60. Income and Expenditures Total income for the year was $30,287,684.53. _ Payments under policy contracts amounted to $13,â€" 311,606.24 and, in addition, surplus of $3,345,366.32 was paid or allotâ€" ted to policyholders. Group annuity contracts, issued and increased, provide for future annual payments of $173,804.92. The total annuity contracts in force will provide for payments to annuitants of $2,444,855.51, an inâ€" crease of $726,771,08. Annuities 495 ordinary annuity contracts were issued and revived, providing for future annual payments to anâ€" nuitants of $175,198.22. In addiâ€" tion the 1400 contracts transferred from the assurance account provide for future annual payments of $514,052.92. The total assurance in force gained by $12,847,100, but due to the transfer of $4,315,515 repreâ€" senting policies of an annuity naâ€" ture to the annuity account, the amount of assurance in force on December 31st, 1938 was $559,109,â€" 991. Group assurances, issued and inâ€" creased, amounted to $3,955,276, while terminations were $2,072,635. Total ordinary assurances paid for amounted to 17,659 policies for $40,901,669. Policies revived reâ€" presented $3,356,319 of assurances, and _ addition through bonuses amounted to $129,950. Terminaâ€" tions from deaths, matured endowâ€" ments, purchased policies and other causes aggregated $33,423,479. Your Directors have pleasure in presenting the Sixtyâ€"ninth Comâ€" bined Profit and Loss and Surplus Account, together with the Balance Sheet of the Company for the year ended December 31st, 1938. REPORT OF THE $3,345,366 were paid to policyholders in dividends during the year, $3,943,285 were paid in Death and Disability Claims, and the total payments to policyholders and beneficiaries, which includes dividends, death and disability claims, maturities, etc., totalled $16,656,972. New assurances paid for in 1938, excluding annuities and revivals, were $44,855,000 and brought the total insurance in force to $559,100,000. Assets were increased by $9,090,000 to $178,977,000. Policyholders from many parts of the Dominion were present and filled the large auditorium to hear the President, R. 0. McCulloch, of Galt, and General Manager, W. H. Somerâ€" ville, of Waterloo, report, that the company experienced a very successful year in 1938 and continued unbroken the 69 year record of gains in assurances in force and in assets. The 69th Annual Meeting of the policyholders of The Mutual Life of Canada was held at the Head Office at Waterloo at one o‘clock, Thursday, February 2. $78,000,000 Insurance In Force in 1912 Increased to $559,000,000 in 1938.â€"New Addition to Head Office Ready in June. Gralifying Reports Presented At Annual Meeting Show Total Insurance in Force Now $559,100,000â€"Assets Increased By $9,090,000 And Company‘s Reserves Materially Strengâ€" thenedâ€"Assets Mow Total $178,977,000 PolicyholdersImpressed With Splendid Record There was a continued strengthening of the Company‘s The full reports presented follow : BOARD OF DIRECTORS Assurances Reserves Assets |__Our Company has now entered its seventieth year of operations, and coincidental with an unbroken record of gains in assurances in force and in total assets has gone Jthe building up of special reserves ‘and surplus funds in keeping with |expanding _ responsibilities. From \the operations of 19388, we have again increased Special Reserves and Surplus Funds (excluding Proâ€" "vision for Staff Pensions) by $917,â€" |729.26, to a total of $14,719,949.13. (In previous statements, Provision for Staff Pensions has been included in Special Reserves and Surplus Funds, ”and although they are not all conâ€" tractual" liabilities, it is preferable ‘that they be excluded from Surplus ‘Funds. ‘ Free Surplus of $5,722,909.02 has been increased by $558,172.60 as compared with an increase of $379,014.04 in 1937; and the Poâ€" licy Reserve Adjustment Fund has been increased $300,000 to $1,500,â€" 000. The purpose of this fund is to strengthen the Company‘s Policy Reserves by changing the basis of valuation of the business written in the years 1870 to 1902 and 1926 The conditions which have had to be met in the past decade have imposed severe tests on the steadiâ€" ;ness and strength of life insurance companies; but their stability has lbeen taken for granted to such an extent that policyholders interested in a company‘s annual report direct their attention not so much to the evidences of the company‘s ability to meet its contractual obligations, as to the excess of earnings and inâ€" dications of growth in assets and asâ€" surances in force. | _A fitting preface to the discussion of a life insurance company‘s anâ€" nual report is provided in two senâ€" tences from an address of the Hon. J. L. lisley, K.C., before the Assoâ€" ciation of Life Insurance Presidents, when he said: "No going concern amounts to much in this world unâ€" less it has at least two qualities, not always found together, but both of great importanceâ€"the quality: of ‘progressiveness, and the quality of stability. Without progressiveness it will disintegrate through disuse of its capacities and neglect of its opportunities; ‘without stability it will cripple or destroy itself by the reckless running or risks, by sudden or frequent changes in policy, or by excessive experimentation". Address of the General Manager, Mr. W. H. Somerville Who was reâ€"elected first viceâ€" president of the Mutual Life Assurance Company of Canada. LOUIS L. LANG Government, Canadian Foreign Government Subsidized Municipal and Parochial Public Utilities Railway a Institational Industrial Other Corporation Ronds Saskatehewan .................... Commonwealth of Australia Kingdom of Norway United States ... Dominion of Canada and Dominion Gtd British ColumbiA ...........c.lslcls. is Manitoba and Manitoba Gtd............... New Brunswick and New Brunswick Gtd Nov® BEOUI â€".......â€" c intiornvineccienmeeieantivaimsasrorane Ontario and Ontario Gtd.................. Prince Edward Island and Commeon .............. Due and Deferred Premiums Due and Accrued Interest.... Other Assets Fremireveriense ____ (All Canadian) .......cclcllll0.. Other Bonds .........cccl.ll. Mortgages and Sale Agreements Loans to Policyholders................. Renl EeHie.msimi00000.0ieeininieriinres Stocks, Preferred ... Government and Municipal Bonds Of our total bond holdings of $98,001,861, Canadian Government Bonds constitute 61.8% of the total; Foreign Government, oneâ€"fifth of 1%; Government subsidized, fourâ€" fifth of 1%; Municipal and Paroâ€" chial, 19.7%; â€" Public Utilities, 10.0% Railways, 1.5%; Institutionâ€" al, .7%; Industrial, 3.2%; and Other Corporation Bonds, 2.1%; ard a further distribution of our Government Bonds, totalling $60,â€" 754,446, shows that the major holdâ€" irgs are $37,843,839 of bonds of the Dominion of Canada or guaranteed by the Dominion; $11,866,077, Proâ€" vince of Ontario or Ontario guaranâ€" teed; $3,893,516, Province of Queâ€" bec; $2,763,640, Province of Nova Scotia; with lesser holdings in the other provinces. . â€" Bonds and debentures are taken into our Balance Sheet at book vaâ€" five, bringing out the net increase of $9,090,144.52; of whith the main items of increase are $7,050,157 in Government and Municipal Bonds; $1,142,041 in Other Bonds; $952,â€" 817 in»Casg; and $1,161,821 in Preâ€" ferred and\Common Stocks. The main decreases occturred in Mortâ€" gages and Sale Agreements, $597,â€" 403; and in Loans to Policyholders, $593,888. _ Holdings of Government and Muâ€" micipal Bonds (All Canadian) were 44.1% of the total Assets on Decemâ€" ber 31, 1938; Other Bonds, 10.7%, Mortgages and Sale Agreementsâ€" City, 15.7%, Farm 4.3%; Loans to Policyholders, 15.0%; Real Estate, 2.8%; Cash, 1.0%; Stocksâ€"Preâ€" ferred .8%; Common 2.7%; Due and Deferred Premiums, 1.6% ; Due and Accrued Interest, 1.3%. The Total Assets amount to $178,977,222.71, an increase of $9,090,144.52, as compared with an increase of $8,780,870.37 in 1937. Of the twelve types of Assets, as compared with 1937 there are inâ€" creases in seven and decreases in Dividends and other Amounts on Deposit with the Company of $19,â€" 546,618.16 increased $2,444,602.53 during the year, and consist of Diâ€" vidends Left to Accumulate, $8,â€" 1777,615.83; Amounts Left on Deâ€" posit arising out of group assurance contracts, $280,385.68; Future Preâ€" miums Discounted, $1,247,845.77; and Sums Assured Left on Deposit at death or maturity, $9,240,770.88. Dealing with the Company‘s Asâ€" sets, it will no doubt be of interest to present a summary ‘of them, with further analyses of bond holdings indicating the changes which have taken place since December 31, 1937. & justment Fund and the Free Surâ€" plus already referred to, the Comâ€" pany has the General Investment Reserve of $2,000,000, a specific Depreciation Reserve on Mortgages and Sale Agreements of $1,383,â€" 728.37, and has followed the pracâ€" tice of preceding years by setting up at the end of 1938 $3,500,000 as provision for dividends payable to policyholders in 1939. Thus a wide margin of safety is provided above all the obligations of the Company in the interests of security to policyholders, and continued staâ€" bility. _ _ i . â€" W. H. SOMERVILLE, A.1.A., A.A.S., Prince Edward Island Gtd General Manager of The Mutual Life Assurance Company of Canâ€" ada, who reviewed the company‘s statement at the annual meeting. Distribution of Government Bond Investments Analysis of Bond Holdings Summary December 31, Dece. 81 1938 1028 % of Total December 31, Dec. 31 $178,977,223 $60.524.655 220,591 197.871 19,817,936 9,766,675 1.526.314 Dec. 31. 198# $60,754 .446 On the basis of the dividend payments made in 1938 the yield on our Common Stock investments was 4.83% as compared with an average yield of 4.99% obtained in 1937. The American stocks yielded an avâ€" erage rate of 4.63%, and the Canâ€" adian, an average rate of 4.95%. The investment is made up of apâ€" proximately $1,444,000 in Canadian $37,843,839 43,200 1,429,597 1,040,240 1,124,882 2.763,640 11,866,077 of Assets 672,585 §.187.217 2.028,817 l The rate of interest earned on mortgage investments for the year 1938 was 4.82%, and the rate earned on mean ledger assets, 4.68%, the latter being only oneâ€" tenth of one percent. less than the 4.78% earned in 1937. Interest earnings have held up remarkably well, especially since the average yield obtained on new bond purâ€" chases in 1938 was only 3.55%. 28,007,383 7.667,5677 26,796,139 5,059,742 1,826,820 1,500,865 4,924,451 2,850,765 2,249,558 2.067 78,898,496 19.103,365 ‘ Although the demands for mortâ€" gage loans was limited, the Comâ€" pany accepted new applications in 1938 for $2,065,876.09, which was $327,152.59 more than accepted in 1937, and of these, $1,175,417 were loans granted under the Dominion and National Housing Acts. ‘ Another interesting subdivision of our total mortgage investments of $33,106,540.79 shows that we have $20,403,485.44 invested in cities in Ontario, Quebec and the Maritime Provinces, 40,4783,638.68 in Western city loans, including $2,â€" 943,774.09 in Pritish Columbia; and $6,074,155.51 in Western farm loans in Manitoba, Saskatchewan and Alberta. Sale Agreements on properties throughout Canada total $2,658,418.84, making the grand total of Mortgage Loans and Sale Agreements $35,764,959.63. _ _ Our total of Mortgage Investâ€" ments, Sale Agreements and Real Estates, excluding Head Office, is $40,084,961.80 as against $40,799,â€" 474.38 at the end of 1937; and of the total, the investment in City properties is $31,091,299.08; and in Farm properties, $8,993,662.72. The distribution of our investment in City properties is as follows: In Ontario, $18,545,150.88; in Quebec and the Maritime Provinces, $5,â€" 100,518.29; in British Columbia, $3,464,582.27; and in the Provinces of Manitoba, Saskatchewan and Alâ€" berta, $1,553,546.11, $1,411,140.â€" 05, and $1,016,361.48 respectively. The investment in Farm properties is principally in Saskatchewan, $4,â€" 797,828.40; in Manitoba, $2,152,â€" 813.21; and in Alberta, $1,868,â€" 047.96. . “ues which are amortized> values, with the exception of a few securiâ€" ties which may have been written down. Stocks are shown at the purâ€" chase prices, unless in the excepâ€" tional c-ie written down. Compariâ€" son of the book value of our seâ€" curity holdings with the market vaâ€" luations furnished by the Departâ€" ment of Insurance indicates an exâ€" cess of market values over our book values of approximately $7,691,â€" 820.94. 231,485 3,893,516 288,179 53,653 27,045 79,098 1938 _ In addition the following are members of the board : W. G. W Toronto, T. A. Russell, LL.D., Toronto, Isaac Pitblado, KC., D., Whflm. Fred Fraser, Halifax, J. E. Perrault, K.C., D., Arthal , Que,, C. F, Sise, Montreal, C. H. Houson, Chatham, G. Blair Gordon, Montr al, and James Y. Murdoch, of Toronto, who was elected Thnisdny. L. L Lang, First Viceâ€"President, and Hon. S. C. Mewburn, KC., CME. nd Viceâ€"Presideat. Mutual Life Directors Reâ€"Elected Total Total 100.0 % of % of 100.0 61.8 At a meeting of the board held subsequently to the annual ing, Mr. R. O. McCulloch was reâ€"elected President, Mr. 19.7 10.0 The i members of the Board, Messrs. R. O. Mcâ€" uehz_}m Glyn Osler, W. G. Murrin and W. H. Dec. 31. 1987 1938 44.1 10.7 15.7 15.0 2.8 $53,356,180 $35,610,005 43,200 1.141.515 2.1 1.6 1.3 601.660 1.040,075 2,867,6 58 9,017,957 105,116 2,0809,585 207,890 58,840 98,004 79,280 , were reâ€"elected. 100.0 22.1 9.2 ec. 81 1987 % of Total 3.4 22 42.3 10 6 16.7 4.4 16.1 e. 31, 1937 2.3 1.6 1.4 3.0 + §7,898,816 1 $2.283.834 _ it e e nent s ,_55;_’6{;'ing regard for the fact that busiâ€"‘ Municipal borrowings have been â€" 48916 |ness generally was not as active as wisely kept at a minimum and muniâ€"| f 9:-3:; in the preceding year, it is a tribute }cipal corporations have only infreâ€". ~___""__/to our agency force that they were quently entered the market for new’ â€" $9,090,145|able to better than maintain their money. Consequently the bulk of| / volume of sales. investable fundsâ€"not only of life| |_ _A year ago reference was made insurance companies but of other | ‘to the percentage of total Net Terâ€" financial institutionsâ€"has _ been| nd fminations to Insurance in Force. )plnced in Governments and securi-‘ This ratio in 1937 was 5.71%; the|ties of industrial and other comâ€" f-vernge for 38 years was 5.86%;|panies and the percentage of our and the corresponding figure last assets represented by this form of Net ch....kyeur was 5.62%. The reduction is ’investment again shows an increase. 1 During 193§ |accounted for by lower preventable|The concentration of demand on $8,102,198 $7.309,649 1,833 48,983 871,849 1.818,257 326,820 15,863 11.170 88,837 Change from 1937 Change 236,467 360,986 593, 888 27,114 952,817 152,796 1,009,025 48,916 98,337 $,093 288,082 | ssa.s80 | £3.9007 s95.987 | 248,120 | 126,369 903,981 80.789 187 959 187 from 1937 050,157 142.041 CHRONICLE o iiaiin dn eA eanbrtiinitd sns iche AIG: s |excluding Reassurance and Group, ments presented indicate subility'“hich they may happen to live, I "52.6!% is in force in the Province in a very high degree; also, that in |believe we would be a long way on |of Ontario; 17.57% in the Province |the amount of Surplus Earnings, |the road to the solution of our probâ€" of Quebec and 8.08 in British Coâ€"|the increase in Assets, the lowness lem. lumbia. The volume of these three of death rate, and the gains in Asâ€" That it is possible to retire debt |provinces is thus 78.26%. In Sasâ€" surance. and Annuity â€"Accounts, without having to issue new bonds 'lk.ughew.n, Manitoba and Alberta, there is evidence of a satisfactory lin its stead is shown by some muniâ€" ,,we have 14.69% of our total volâ€"|combination of stability and PrOâ€" |cipalities which, despite their reâ€" ume, almost equally divided beâ€" gressiveness. If we were to go fArâ€"|stricted ‘ax base, have decteased tween the three provinces, the balâ€" ther afield there is no doubt that the |their outstanding indebtedness by j.m-e, 7.05%, being mainly in the amounts of new business could be repayment of as much as oneâ€"third Maritimes and Newfoundland. ‘m‘fllfly increased; but any expanâ€" |ir the last five years. This would The Company‘s Reassurances toâ€" sion of this character might involve seem to be due to the fact that tal 320.27({318. of which abaut the sacrifice of some of the benefits when a municipality borrows, it is $13,000,000 are Reassurances reâ€" derived by restricting our Oper®â€" legally required to make provision ceived from American companies, tigns, for the most part, to Canada. at the same time for the payment the balance being from Canadian It is believed that the territory to of interest and the retirement of companies. ’which our operations now extend the loan by the levying of additional In order of importance, our presents reasonable opportunity for taxes, It is also due to the realizaâ€" greatest increases in Insurance in further expansion, and steps BAVC top by the taxpayers in these forâ€" Force came from Ontario, Quebec, been taken to invigorate our many }um.u municipalities that these Newfowndland, Nova Scotia and organizations from comst to COM8t monies are paid by them and to British Columbia. [if the confidence that the Comâ€"‘their dirR%gg concern in secing that l It is, I believe, not an exaggeraâ€" pany‘s usefulness will be more wideâ€" tion to say that the Financial gtt:te ly extended. t (Continued on Page 5y Ia! 220,210,718, oi which abaut |813,000,00l! are Reassurances reâ€" ceived from American companies, the balance being from Canadian companies. ' Of our total Ordinary Insurance, excluding Reassurance and Group, ’52.61% is in force in the Province |of Ontario; 17.57% in the Province ‘of Quebec and 8.08 in British Coâ€" lumbia. The volume of these three |provinces is thus 78.26%. In Sasâ€" lkntchew-n. Manitoba and Alberta, Iwe have 14.69% of our total volâ€" ume, almost equally divided beâ€" tween the three provinces, the balâ€" lanre, 7.05¢, being mainly in the \Maritimes and Newfoundland. termination from surrenders and lapses because there were incre#sed nonâ€"preventable terminations such as f[om denth_ and maturity. s Ldilironldiad Pepmuntdiiniadiiet uiith at Gadedcinnditâ€" Als Poctic tA Iniletiiietnts dbidh ch d wA 1 1. ie i c 0 lR 5745 0 ‘but owing to reduced reassurances taxes and the hesitancy of individâ€" from other companies the total uals to undertake long term obligaâ€" Paidâ€"for Business for the year at{tions have retarded the volume of $44,856,946 only â€"slightly exceeded ‘new building and it has by no means the Paidâ€"for Business of 1937. Havâ€" reached the preâ€"depression level. ing regard for the fact that busiâ€"‘ Municipal borrowings have been ness generally was not as active as wisely kept at a minimum and muniâ€" in the preceding year, it is a tribute |cipal corporations have only infreâ€" to our agency force that they were quently entered the market for new able to better than maintain their‘nmnvy, Consequently the bulk of volume of sales. investable fundsâ€"not anlv af Nif. If calculated on the same basis more secure through the passing as in 1937, the gain in our Assurâ€" ?[yc-ars due to principal repayments, ance Account is $12,847,100; but are being renewed. certain pension contracts providing| To supplement mortgage renewâ€" for return of premiums, which were ‘als, the National Housing Act is formerly in Assurance Account to now providing a substantial though the amount of $4,315,515, were at |relatively small amount of good the end of the year transferred mortgage loans, of which our Comâ€" from Assurance to Annuity Acâ€" |pany is securing a fair share. This 'count. The gain in the Insurance in not only affords a sound investment Force, $559,109,991, was thus reâ€" for some of our funds, but has sucâ€" ,duced to $8,531,585. The Annuity |ceeded _ in stimulating â€" building Contracts in force call for annual |trades generally and is providing 'Annuity payments at maturity of |Canadian citizens of moderate inâ€" $2,444,855.51. ;come with well built homes of their _ The‘total Paidâ€"for New Business own at a monthly cost/less than the from our agency force was $685,441 ’usual rental of similar accommodaâ€" Ereatcr than in the preceding year;|tion. However, high real estate in excess of our valuation rates in the contribution they make towards a surplus distribution to policyholâ€" ders which is keeping our Company in the front ranks in the furnishing of low cost life insurance protecâ€" tion. _ The careful selection of risks, both at Head Office and in the Field, has again given the Company a favorable mortality experience. In view of the prospect of reduced interest earnings, the ability of the Company to maintaain these morâ€" tality savings is very gratifying. It is not always recognized that these mortality savings are a factor equal in importance to interest earnings The ratio of Expense to Total Income, excluding from Income Amounts Left on Deposit with the Company is 12.96%. A calculation on a similar basis in 1937 given an expense ratio of 13.15%. The agâ€" gregate of Amounts Left on Deposit is liable to considerable fluctuation from year to year, and on this acâ€" count it is preferable to exclude them in calculating an expense raâ€" tio. PETTEITY F TERHC The increase in Head Office t'o the Eo;;':,:; Ce eea e Premises aceount is due to PAYâ€"| _ ‘The report of the Directors on ments for the addition to our buildâ€"‘;ne business of the past year which ing now under construction. has just been presented to you must, During the year, 126 real estate |I am sure, be considered very satisâ€" sales were made for a total of $472,â€" factory. 594.97. This compares with salesi As the General Manager has givâ€" of 165 properties for a total of en a clear analysis of the Company‘s $831,203.22 in 1937. The net profit annual statement, I shall not comâ€" realized over book value on the proâ€"|ment on it and, as last year‘s busiâ€" perties sold was $43,744.59, and the |ness conditions have been recently sales made indicated that Real reviewed on many occasions, my refâ€" Estate Acquired is being carried on |erence to them will be very brief. the Company‘s books at a conservaâ€"| The year 1938 was one of uncerâ€" tive valuation.â€" Although additional|tainty and business in Canada reâ€" properties had to be taken over durâ€"|flected the prevailing conditions. ing the year, other Real Estate\ The decline which began in 1937 shows a decrease of $117,108.50. continued into 1938 and was maâ€" Bank Stocks, $1,018,000 in Canâ€" adian Public Utilities, $627,0001 in Canadian industrials, $591,000 in United States Public Utilities, $1,â€" 234,000 in United States Indusâ€" trials. Our common stock investâ€" ment has been made in 20 Canadian and 29 American companies. James Y. Murdoch, K.C., elected a Director of the Mutual Life of Canada at the Annual Meeting held at Waterloo. sales' As the General Manager has givâ€" 1 of ‘en a clear analysis of the Company‘s rofit |annual statement, I shall not comâ€" proâ€"|ment on it and, as last year‘s busiâ€" i the |ness conditions have been recently Real reviewed on many occasions, my refâ€" d on |erence to them will be very brief. {The concentration of aeml‘ndwo\n ‘this one type of obligation could ]’ha\-e only one effectâ€"high market this one type of obligation could / If our have only one effectâ€"high market the same values and low interest yieldsâ€"with ‘?Pf’n‘“nl! _ The vigorous mortgage policy pursued by our Company in preâ€" vious years now stands us in good stead as a substantial portion of mortgage loans, which have become more secure through the passing years due to principal repayments, are being renewed. Life insurance octupies an imâ€" portant place in the national ecoâ€" nomy and we are justly proud of the confidence which our people heve shown in its soundness and staâ€" bility and in the manner in which it has met its problems and disâ€" charged its responsibilities. The high place which it holds in the minds of our people is again inâ€" dicated by the fact that despite the difficulties of the year new insur: ance issued in Canada was only 2.55% less than in 1937 whereas the reduction in the United States was about 13%. In recent years various problems kave affected the trend of life inâ€" surance investmént but inherent conservatism and fidelity have preâ€" vailed among life insurance execuâ€" tives in the investment of their funds and in no single instance in our country has a policy contract not been fulfilled in its entirety. With the falling off of business activity, unemployment, which was gradually declining, again increased. It is one of the principal problems facing â€" the people of Canada. There are in Canada many thousâ€" ands of young men without emâ€" ployment or homes who, through no fault of their own, are not proâ€" perly equipped to make a start in life. A solution of this serious probâ€" lem must be found. These men must be trained to be selfâ€"reliant ard be given a chance to become useful citizens instead of â€"being alâ€" lowed to drift from place to place and lose their morale. The year 1938 was one of uncerâ€" tainty and business in Canada reâ€" flected the prevailing conditions. The decline which began in 1937 continued into 1938 and was maâ€" terially affected by conditions in the United States. Towards the end of last summer, when crops were assured, there was less timidity and confidence seemed to be returning but the fall in grain prices, the recession of business in the United States and the fear of a European war offset the expected advantage of the good crops; grain markets remained unsettled and there was no improvement until toâ€" wards the end of the year and even then it was rather an indicated tenâ€" dency than actual improvement. We are glad to welcome to the Board Mr. J. Y. Murdoch, K.C., of Toronto, President of The Noranda Mines, Ltd. His khowledge and exâ€" perience should be of great value to the Company. _ _ He was prominent in his profesâ€" sion and in the business life of the country and his death is a distinct loss to the Company and his wise counsel will be muci missed. Mr. Long was elected a director of the Company in February, 1927, and in November, 1932 was made a member of the Executive Commitâ€" tee of the Board. Before proceeding with the busiâ€" ness of the meeting, 1 desire on beâ€" half of my fellow Directors to exâ€" press our very deep regret at the death on January 13th flst of one of our members, Mr. E. G. Long, Address Of The President, Mr. R. O. McCulloch in the last five years. This would seem to be due to the fact that when a municipality borrows, it is legally required to make provision at the same time for the payment of interest and the retirement of the loan by the levying of additional taxes. It is also due to the realizaâ€" tion by the taxpayers in these forâ€" tunate municipalities that these monies are paid by them and to their -livy concern in secing that | _ If our citizens were to exercise \the same vigilance over Government ‘sponding as some but, unfortunateâ€" {ly only some, of them do towards j The first and paramount question which should be answered by a prosâ€" |pective borrawer is "Where will the funds required to repay the contemâ€" ‘plnl(‘(l loan be secured?" If the |loan is effected with this question Iunanswt-rml. it is debatable whether it can be honestly and correctly !tvrmwl "Borrowing." That it is possible to retire debt without having to issue new bonds in its stead is shown by some muniâ€" cipalities which, despite their reâ€" stricted :ax base, have decreased their outstanding indebtedness by repayment of as much as oneâ€"third the budget of | _ I decry and deplore the claim of |those who contend that our governâ€" ment deficits can only be prevented 1[),\* arbitrarily cutting the interest ‘rates on public debt, and the abroâ€" gation of our pledged word coupled with a failure to even attempt to live within our National income. This is not the honorable way, nor is it the one in which the most adâ€" [vantageous solution lies. It is my !firm conviction that the greatest good will be done to the greatest number if the relations between debtor and creditor which have in the main proved not only effective but reasonable are permitted to conâ€" tinue without arbitrary interferâ€" ence, and an orderly adjustment of lfinancial obligations is arranged in ’,accordance without contract terms. _ Government financing is not difâ€" ferent in principle from that of muâ€" nicipalities, corporations, or even individuals. As long as governments continue to spend more than their revenue, and rely on borrowings to meet thi$ overâ€"expenditure, just so long must our fiscal system be conâ€" sidered unsound, and no matter to what low levels interest rates may be arbitrarily cut or otherwise reâ€" duced, debt charges will continue te be a problem. : _ Already by methods tried and found efficient through the refundâ€" ing of debt as it matures, the Domâ€" inion hasreduced the rate of interest which it is paying on its outstandâ€" ing bond indebtedness by approximâ€" ately from 4.36%% in 1932 to 3.53%. Not only this. but the rate will conâ€" tinue to decline as high coupon bonds issued in previous years maâ€" ture and are refunded at the curâ€" rent low rates. _ _In the purchase of large blocks ‘of Government securities, life insurâ€" ance companies, with other financial institutions, have been of great asâ€" sistance to public financing. These securities have been purchased on a yield basis lower than has existed for a great many years. In fact it is doubtful whether in any other peâ€" riod of the history of this country, capital could be obtained as cheaply as now. , Government securities are rightly considered the prime investment available in our country. Our Domâ€" inion has by no means reached the zenith of its development. If we could be assured of sane sound Govâ€" ernment, limiting our expenditures to: our available resources, balancâ€" ’ing our budget and aiming at reducâ€" tion of our public debt and relief from some of the taxation which is crippling the current business of our country upon which our prosperity depends, I have no doubt that our national economy, through the working of natural economic forces, will adjust itself to the changed world conditions. Certainly, with all our wealth and resources of mine, field and forest, it is well within our power to maintain our national solvency but we cannot do this if we continue to anticipate the revenues to be derived from the fuâ€" ture development of these resources by piling up an interest bearing debt. the obvious result of a progressive decline in the earning power of our assets. The strain of this reduced earning power is considerably lesâ€" sened by the sound investment poâ€" licy of former years which distriâ€" butes maturities over a long term, thus retarding the effect of declinâ€" ing interest rates. President, The Mutual Life Assurâ€" ance Company of Canada, who presided over the 69th annual meeting of the company at Waterloo. Continued on Page 6y R. O. McCULLOCH, B.A the municipl]rityriil; 10 1089