The sun. [volume] (New York [N.Y.]) 1916-1920, 1918-09-10

CANADA ADOPTS NEW
GRAIN FINANCE PLAN
Guarantees Purchase Of All
Surplus Merchantable Wheat
Raised There.
FIXED PRICE TO BE RATE
Government to Supervise Dis
tribution and Export Of
the 1918 Crop.
FIXED PRICE TO BE RATE
Special DespdfcA TO Tnr srx.

Special Despdfch to Tue srS.
TORONTO, Canada, Sept s.-The an
nouncement made at Ottawa the other
day regarding the new arrangement that
IS to apply to the financing and export
Ing Of the Canadian wheat crop Of 1918
has given general satisfaction to the
dealers and shippers at Western and
Eastern centres. Last year. It will be
remembered. the Wheat Export Com
pany had virtual control OF the whore
operation. The company. representing
the British Government. had large
credit placed at its disposal in New
York. and the Canadian banks also GRE
ated for 1t a special credit OF 100000
900 to apply to British purchases OF
Canadian wheat. As a matter Of fact,
some of the Canadian wheat was bought
through using the credit in New York
this being done on several occasions for
the purpose OF alleviating the exchange
difficulties. AS the recent Ottawa des-
patch states. under that arrangement of
last year. "the normal and usual Cana
dian agencies for purchasing. selling and
forwarding wheat across the lakes and
by rail to the seabOard were practically
excluded from doing business" and 1.-The
business Of internal distribution to the
mills and the control Of shipping ton
mage across the lakes gradually fell
under the control Of the same company"
Thus last year the Canadian banks
financed the grain movement largely by
means Of the one central credit to the
Wheat Export Company. Their regu-
lar customers in the grain business. who
ordinarily required extensive credits to
buy and carry the grain. were not ac-
tive. and such grain as they did buy
had to be sold at once TO the Export
Company. So the accounts of the deal
ers consisted principally OF sight or de-
mand drafts with bills OF lading at
tached, instead OF a combination OF
drafts and loans on warehouse receipts
as was the case before the war The old
arrangement practically put out of bust
ness number Of companies and indi-
vidual dealers who had built up extern
sve and efficient organisations for pur-
chasing and handling grain, and the
representations made by these and al
lied interests were strong enough to
cause the Dominion Government to pro-
vide an entirely new plan for the han
ding OF the 1918 crop.
Government Guarantee . Market.
The Ottawa Government guarantees
the purchase Of all surplus merchant
able wheat raised by Canadian farmers
In the year 1918 at the nxed price APP
parently tho regular dealers and ship
pers are to he allowed reasonably
free hand clause Of the arrangement
provides that the purchase OF wheat and
grains for export and for internal de-
n IA :
before the war, subject. however, to 81.
pervision and control by the Govern. |
ment. This looks as II the banks dur.
ing the present season would resume the
practice OF granting important credits
10 their individual customers in the
grain trade. In many respects this will
be more satisfactory to them than
merely to have a participation with
other banks in q huge central credit to
Government concern. Rates Of dis
counts will be slightly higher-as pri-
yate borrowers do not as q rule get the
nnely shaded rates which governments
insist upon. Also there may be more
profits in the way of exchange and COM
missions on drafts.
The ultimate purchaser for most Of
the grain Of course will be the British
Government: and the price to be paid
by this purchaser will be based on the
price fixed for the domestic market. |
'anadas fixed price must necessariiy |
correspond with the price fixed for the |
United States; and as that is tho same
~ last years. the recent increases in |
freight rates in both countries will serve !
10 cut down to a slight extent the net |
amount received by farmers for their !
grain. Financing of the grain trade |
ms year Is thus likely to take the |
shape OF expansion OF the commercial |
loans and discounts rather than increase |
OF the banks holdings Of Government |
ecuritiea These commercial loans and
discounts can be better controlled by |
me bankers than can the Government |
Ioans: In case Of which the banks to a |
certain extent must do as directed.
How Exchange IL Affected.
There Is considerable speculation "a 10 !
now the exchange situation between the |
.hited States and Canada will be af- !
.ected by the new plan OF crop financing. |
nat Will depend of course upon the |
FORM In which the British Governments |
purchasing agents make their payments |
10 canadian dealers and shippers. II the |
paEments are made wholly or largely in |
Jew York funds ono would expect to see |
me premium on American funds en-
urely disappear In October and Novem-
'hc hcoNy OIIcTiHBS OF export
o''ls or exchange. Ono the other hand |
Great Britain pays for a considerable !
part OF Canada's crop temporarily by
means OF credits obtained from the Do |
nlihlon Treasury then the effect on the !
stchanse market will not be SO imme- |
uiate. On receipt OF the news regarding !
.'e crop financing plan the exchange |
market sold of slightly. the premium |
oropnlng below the 2 per cent. level.
when Sir Thomas White, thee Do |
m'hion Minister OF Finance, returned |
rom his visit TO Washington some |
months ago he stated he had succeeded /
~ making certain financial arrangements |
"a the United States which were favor
Sole TO Canada. At that time Canada's
..1pectations were for n loan or credit |
nom the United States Government to |
ectity the exchanges. The loan was |
not forthcoming but the Canadian MIN |
Ster was apparently we'll satisfied with |
he other arrangements to which he |
ieierred. The impression here is that |
we other arrangements had to do with |
.ne crop financing and that they included |
an Undertaking on the part Of Washing
ION 10 allow England to pay for her |
purchases OF Canada's wheat in 1918 |