The Waterbury Democrat., 1931-02-17

Montreal, FeU l7.-We are racing the dawn of new era of, I hope, great prosperity" So spoke T. B Macaulay, eminent Canadian fi- nancier, head of the Sun Life Assur- rance company, of Canada, to the He drew a vivid word picture of de- precision conditions which this con- tinent faces at the present time, be- lieving that the first stage in the comeback has passed, that the re- turn to prosperity will be gradual, and that the federal reserve sys- tenn has 1t in it's power to hasten that return.
 What of the future? Even if no action be taken by those in control to stabilize the dollar, this depres- sion like all others. will slowly, pain fully work it's own cure, as is, in fact, now happening. That cure comes through the accumulation of the combined savings of the people of the continent" Mir Macaulay then told how the savings are de- posted in the banks and of the great increase that has been shown by saw ings deposits during the past year, with the result that the banks have a steadily increasing amount of money which they may be required to pay out at any moment, but which they can lend to brokers and others on call. Call money is now re- markedly cheap in New York. He told of the increased number of shareholders of the great corpora tions of the country. The lists have been growing steadily for the past year.
 ol,< T a peak of over $6,3O0,OOO,00O in the autumn of 1929 are now down to a total of $1,716,000,00O, and every week sees further reduction. This means that stocks are passing more and more into the hands of people who do not need to borrow to pay for them. It also means that the great New York banks must look for other investments to replace those paid off, and these institutions have to buy more and more government bonds, which they can, if necessary, convert immediately into cash. This creates an improved bond market such as has been taking place during the past few weeks. This in turn means that the great railway, utility and other corporations that need ca pital for extentions begin to realize that the time has arrived when they can finance their requirement. through issue of bonds to the pub- lie. We are now in that stage. Every bond issue means more capital ex- penditures, the beginning of new | work and the lessening of unem- ployment. It also means tha repay | for work already done, and this puts further sums into the hands oi the banks for the purchase of high grade bonds.
 | Gains in Bonds.
 | ''With every depression the i'm provement is first seen in the bono market, and that improvement i certainly now here. While those il authority could do much to hasten ii prosperity is gradually returning
 without their help. The great cor
 porations can now look forward t
 improved earnings. They have ac formulated raw materials at low pric es; the shelves of their customer are comparatively bare; neither the
 nor their customers have large in ventories to liquidate, and with tn gradual return of purchasing powe their outlook is good. During all thi depression the earnings of the light ing departments of the great electri companies have been remarkabl, we'll maintained, and the earning of their power departments will in crease as soon as their business be comes normal. The stock marke generally discounts an improvement in earnings several months ahead and, personally, I am inclined to be lieve that it will be found that tn, nIh r,f hN ok~ 1tr ~1y passed on December 16" Mir Ma cauley further declared that he doe not think the recovery will be spec tacular, but he is one of those wh, believe that you cannot keep thi continent down.
 Referring to the fact that mort gages can be carried on face values but stocks must be shown at price. prevailing on the last day of tn, year, he hits straight from the shoul der and makes a good case.
 The drop in the market values o all securities has, of course. been ; feature of the year. "None have es capped, not even the soundest ant most seasoned. The stock exchang, is but a vast auction mart, and ir a time of depressed business, whel l everybody has been short of cash even the choicest securities have a times almost gone begging. It is O course an absurdity that securitie bought for permanent holdin; should have been valued at tn
 prices which may happen to be bic on any one day of the year. One can not but wonder what would happel if all mortgages had to be put Ill to auction and valued block afte
 block at the prices which might b.
 bid on December 31 by group o people who at the time happened t, have but little money to invest. / mortgage may even be in arrear bu
 it can still be carried at its fac
 value. It is only in regard to stock that the auction basis of valuation
 prevails, but even this unfair systen
 has done us one good turn, for
 has accentuated the quality of tn
 company's holdings. Even in thi year of depression the dividends ac tually received on the shares of com
 con stock owned by us, were in 193