FOREIGN CAPITAL TRANSFERS

Press, Volume LXXXVII, Issue 26398, 17 April 1951, Page 8

FOREIGN CAPITAL TRANSFERS

FLOW INTO CANADA INCREASE IN RECENT MONTHS (By a Reuter Correspondent tn Ottawa) Canada is once again playing host to the invisible refugee—European capital that is oeing transferred here for safety or increased investment opportunities. Investment houses report that the westward movement of capital has been going on since ths end of the Secon > World War but that the pace has increased sharply in the last tew months. Swiss banks are handling the great bulk of the foreign transfers, although much of the capital is believed to be for French and Belgian account. Some of the funds are being invested in new or expanding enterprises and much more is being used to buy up Canadian securities. One investment authority reported transactions from Switzerland increased 25 per cent during January and the high level has been maintained since. The reason given for the switch is dual. First, it is believed that in the event of a third world war, Switzerland might not remain the sanctuary it was in the previous two conflicts. Second, battered Europe does not offer the lush investment possibilities that are now available in Canada. The trend is revealed in the Dominion bureau of Statistics report on the net sales of Canadian securities to other countries. These show a very heavy movement of United States capital into Canada and a net outflow of United Kingdom funds. Net sales to other countries, apart from Britain and the United States for 1950 were 5.400,000 dollars compared with 1,300,000 dollars in 1949. The quickening' of the pace >s indicated by the December, 1950, total which was 1,000,000 dollars. Investment houses point out that these totals are small in relation to 255,700.000 dollars’ ' sales of Canadian securities to the United States last year but they are triple those of the previous year, in spite of a tightening of controls in normally important investing countries such as the Netherlands. A significant fact is that a considerable portion of the United States funds coming into the country is on a strict investment, not a speculative basis. Much of it is going into property such as real estate, apartment buildings and commercial sites. Some of this type of investment is believed due to a conviction on the part of some Americans that inflation will not be so devastating here as it might become in the United States. The flow of gold into Canada apparently for safekeeping, has picked up tremendously. The Bank of Canada reports that the net increase for 1950 in bullion held for non-residents reached a peace-time record of 15,885.000 fine ounces valued at nearly 400,000,000 dollars. The total figures are not disclosed, neither is the origin of the shipments. However, it is believed much of it comes from Europe.in countries including the United Kingdom under the threat of Russian aggression. Financial experts view the movement of both capital and gold to this country from many directions as an indication of the widespread belief that Canada is not likely to become a battle ground in the event of a third world war.