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7 Money

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WASHINGTON (CP) —
Top U.S. money managers
say it will take “a minor
miracle” to avoid economic
recession in 1979 while the
Carter administration
struggies to get a grip on
spiralling price rises.

The frank admission from
Willlam Miller, U.S, federal
reserve chairman, wun-
deriines the seriousness of
the problems facing the U.S.
economy,

Troubles south of the
border are hound to have far-
reaching effects in Canada.

The United States now is
entering a period of
‘moderate growth," Miller
said in New York,
deliberately planning to
squeeze out inflation by
restrictive policies: over as
muchas a five-to seven-year

It means a less buoyant
market for trading part-
ners—2 blow for cana
growth hopes— an nota
prospect that sits well with
either the U.S. business
community or its labor
leaders.

Federal surveys show
businessmen, saddled with
sharply higher interest rates
that make borrowing coatly,
plan no net increase in 1978

investments in new
production operations, after
allowing for inflation.

Labor's mood is growing
more militant, with such
leaders as AFL-CIO
president George Meany
charging the Carter
government has led the U.S.
‘economy ‘face-to-face with
recession and mass
unemployment.”

The warning signs on the
economic horizon began to
appear early in 1978. As
quarterly economic growth
consistently falled to meet
federal targets, the inflatlon
rate started rising and the
dollar's value sank sharply
on international markets.

For the full 1973 year, the
country’s grogs national
product—a measure of gocds
and services output
generally taken as the key
indicator of economic
health—rose by only 3.5 per
cent. This compares with
five-pe-cent growth inl977
after allowing for inflation.

But for 1979, ad-
ministration officials now
concede, growth may slide to
less than three per cent—too
little to prevent jobless rates
from rising.

Fora second straight year,
the dollar took a pounding on

currency markets arend the

world. it lost about 40 per-
cent of its value against the

Japanese yen in 1978 and -

about 30 percent of its value
against the German mark
and the French franc.

The dollar's sinking worth
was partly a reflection of
steadily rising prices tha hae
recacee a 10-per-ce annual
tate by year-end. But also to
blame was the continuing
string of deficits in monthly
foreign trade.

The 1978 trade deficit will
be close to $30billion, an
increase from $26.5billion in
1977. The continuing swath of
red ink in tree accececetcu
tsppedzoretners’ confidence
in the dollar’s strength,

Tt all led to Carter's an-
nouncement on national tele-
vision Nov.1 of a sweeping
economic program to try to
prop up the dolar and enlist
the voluntary co-operation of
business and labor to slow
inflation.

Carter said the U.S. was
borrowing up to $3billit in fif-
eig currency, using it to buy
up unwanted U.S. dollars
and so keep their value up.
Unions were asked to follow
a5-erce limit on demands for
pay and fringe-benefit in-

creases and companies to
hold price rises to about 5.75
per cent.

Theprogram either works,
Carter sald, or the UES.
faces the alternatives of
recession or mandatory
controls,

The president also com-
mitted himself to tight
gornment spening reaints.
The budget he presents when

returns Jan.15 will

_cut $8billion from the ad-

ministration’s current $39-
billion annual spending
deficit, ush in the era of
moderate growth,

There was some eveence
byear-enf an easing of
selling pressure against the
dollar, and even a few signs.
that economic managers
claimed show continuing
strength for the ecnomy.

Disposable income—
money in consumers’
to spend— rose by nearly 10

r cent in 1978. New-
using starts in 1979 are
expected to reach nearly two
million again. — 7

U.S, officials are working
on a plan to make the
inevitable increase in prices
for imported oil—a major
factor in the fereign trade
imbalance—less: of an

Grain backlog is causing —
further handling problems

WINNIPEG (CP) —
Supplies of grain stored on
farms in Western Canada
are putting added pressure
on & grain-handling system
that already is strained to
the limit.. —~

The Canadian wheat board
estimates Prairie farmers
are holding a ‘ record
30.16million tonnes
(1.dbilion bushels) of
deliverable grain this year.

The total, which includes
grain from the 1978 crop and
catryover from 1977, is about
1smillion tonnes or
600million bushels more than
the transportation system
has shown it can handle In
any one year.

Projecting the trend into
the future, farmers could
have twice as much grain on
their farms than the system
could handle in one year by
the 1990-1991 crop year.

The only developments
that could change this pic-
ture are a crop failure,
reduced production or a
dramatic increase in the
capacity of the delivery
system.

Transportation
inadequacies were the most
contentious issue in the
farming communily in 1974.
They underacored all other
major concerns including

low quotas, a dwindling farm
population and the latest in a
series of assaults on
statutory freight rates.

Prairie premiers view the
situation with such concern
they have asked for a
federal-provitcial con.
ference on the subject to
include the presidents of CP
Rail and the CNR as well as
Prime Minister Trudeau.

The wheat board has taken
more direct and immediate
action, moving to purchase
up to 2,000 new hopper cars—
using farmers’ money for the
first time.

During 1978, the wheat
board had to defer grain
sales valued at between
$350million and $500million.
The board has nat given a
precise ‘accounting’ of ‘the

total,

Added to that figure is the
millions of dollars lost
because of demurrage
charges that resulted from
ships waiting for long
periods in ports for loads.

Canada’s inability to meet
its commitments or to
guarantee delivery on some
new sales opportunities
apparently has turned
traditional customers like
China to other countries.

The Chinese became a
major grain customer of the

- however,

United states in 1978 for the
first time in three years. So
far, they have purchased 3.9
million tonnes of U.S. wheat
and 2.7million tonnes of corn.

The need for improved
Canadian performance in
the export market was
highlighted. when Bob
Bergland, U.S. secretary of
agriculture, sald he, was ad-
vised that China will import
10 to 12million tonnes of
grain a year on a regular
basis over the next several
years. Five to six milllon is
expected to be supplied by
the United States.

One of the most en-
couraging developments for
Canadian farmers in 1978,
has been the
relatively high: price of
whéat despite higher world’
stocks,

Agriculture Canada says

the reasons for firm prices

could be the decline in the
relative value of the
Canadian dollar, higher U.S.
loan rates and a 20-percent
“set-aside'' plan for the 1979
U.S, wheat crop.

Another favorable
development was the over-
all quality of the Prairie crop
in 1976. .

For the second consecutive
growing season, farmers
faced adverse weather

A grain controller
mighi he appointed

WINNIPEG (CP) — A
‘grain transportation
controller" with wide powers
to direct Western Canada's
grain handling system may
be established if the industry
fails to achieve cooperative
solutions to transportation
problems, says Transport
Minister Otto Lang.

Lang, who also is the
minister responsible for the
Canadian wheat board,
unveiled the alternative last
week at & special meeting of
the board’s senior tran-
sportatlon committee in
Ottawa.

He said It ls preferable for
each segment of the industry
to work together to find
solutions to grain hauling
delays and backlogs. But
should cooperation fail, he
would “seriously consider
the idea of a grain tran-
sportation controller."

“The controller would

" assume all powerful contro!

over the system to, in effect,
govern and coordinate the
day to day operations of each
sector of the industry."

Included on the committee
_are the heads of grain com-
panies, senior represen-
tatlves of the railroads, the
Dominion Marine
Association and the chtet
commissioners of the wheat
board and Canadian Grain
Commission.

The meating was called to
discuss current grain han-
diing and transportation
problems and examine ways
to erisure more orderly flow
of Prairie grain to export
markets over the difficult
winter period.

“Looking into the future,

we have in mind building a
system capable of exporting
30 million tonnes of grain by
the mid-1980s,"’ Lang said in
a statement following the
meeting.

‘More ‘immediately,
however, the challenge is to
get the maximum out of the
present system,

“The primary con-
sideration in every regard
must be how the system is
serving the producer who is
totally reliant on it. It is
incumbent upon wus to
maximize the value of grain
movement this year.”

Reports from the meeting
aiso indicate consideration is
being given to temporarily
reducing the number of
grain grades to increase
volumes handled through
terminal elevators.

The wheat board said it
has determined that protein
segregation of No, 2 Canada
Western red spring wheat is
not currently necessary and
has suspended the practice.

Grain handling companies
also agreed to consider the
implications of pooling non-
board grains at: terminal

points to improve tur--
naround times af rail cars by .

reducing switching
erations.

De! Pound, chief commis-
sioner of the grain com-

mission, is to assess the

op-

pooling concept.

Lang also urged maximum
ubiliza tion of jeovernen
inland terminals, par-
ticularly if there was. a move 118 SY Oy ee BE
to unit trains of cleaned and tAarons frown Simpscn soars!
graded grain. Place fer tree

The minister said he
initlated another discussion

on equipment requirements
of the railroads, locomotives
as well as grain cars, and
again urged CP Rail to
participate in the gov-
ernment’s shared-cost
program for repairing
boxcars. The Canadian
National Railway agreed to
the program some time ago
but CP Rail so far has
refused involvement.

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conditions, particularly at
harvest time. ‘This resulted
in a lot of bleached,
mildewed, weathered or
sprouted grain.

But despite problems in
some areas, the quality’ of
the new crop was generally
better than the previous

year,

The Canadian Grain
Commission estimates that
about 62 per cent of the hard
red spring wheat crop will
grade No.l or 2 Canada
Western, while §8 pepu2nt of
the flax will be No.1 and 81
per cent of rapeseed will
grade No.1 Canada.

Meanwhile, the trend
continues towards fewer and
larger grain farmers in
Western Canada’

The wheat board says its

records indicate the average
acreage for each permit
holder increased to720 acres
in 1977-73 from 594 acres in
1969-70,

During the same period,
the number of permit
holders has dropped to
153,703 from about 190.000.

An expert

talks about.

Qne of the birthstones
for December is the tur-
quoise, The word “tur.

French “pierre turquoise”
meaning stone of Turkey.
None are found in Turkey
hut it was the tradin;

center through whie

these stones caine to
Europe from Tran.

Persian poets compare
the blue of the turquoise to
a cloudless summer sky.
Among the oldest pieces of
jewelry in the world are
four turquoise and gold
Tbracelets fround on « dead
Egyptian Queen. In 1900

they were dug and were
estimated 1o be 8.000 vears
ald,

Irritant for industry. Middle
East producers are being
urged to accept phased-in
oilprice rises, possibly
about two-percent rises to
take effect in January, April
and October,

These graduated increases
would be less of a shock for
the economy than a single
large jump.

U.S. hopes were high after
a mid-July economic summit
in Bonn, West Germany, at

ticipating countries, in-
cluding Canada, announced
agreement on strategies to
fight inflation and create
jobs,

The U.S. even won
promises from Japan to
restrain Its exports and West
Germany said it would
stimulate its economy to
make a better markel for
U.S.-made exports,

By year-end, these hopes
were growing tarnished.
Japan still was pouring its

The Herald, Tuesday,

goods Into U.S. markets and
the Germans were growing
restive about the danger of
inflation if it stlmutated its
economy too generously.

It leaves Carter and his
economic advisers walking a
thin line as they enter 1979,
trying to, manage the
economy to slow price rises
while mialntalning
production and employment.
The president said he was
ateking his hopes on his anti-
inflation program.

December 19, 1978, Page 15

managers see a recession soon

So far, It has not made a
bite into steadily rising
prices although Carter had
said that might take as much
as a year, And even though
the president and his ad-
visers were insisting there is
a danger of ‘scaring our-
selves into a recession"
when careful planning might
avoid it, most economists
were predicting hard times
are already in sight for the
U.S. economy in the new
year,

quuise” cames from the }

_' These stones are found
in the southwestern Unit-
ed States and are much
used in Indian jewelry,
The American Indians
mined turquoise before the
Spanish conquest. In addi-
tion to the aqua blue color
of the typical stone, green
stones are also found.

“IE cold December gave
you birth,” says a verse,
“the month of snow and ire
and mirth. place on your
hand a turquoise blue, suc-
cees will bless whate'er
you do.”

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