Section G: The Balance of International Payments, International Investment Position and Foreign Trade

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B.W. Wilkinson, University of Alberta

Canadian Balance of International Payments (Series G1-151)
Canadian International Investment Position (Series G152-380)
Corporations and Labour Unions Returns Act (Series G341-380)
Foreign Trade (Series G381-487)

The statistics presented in this section are in three major divisions. The first of these, series G1-151, cover private and official estimates of the balance of payments on current and capital account from 1900 to 1975. This subsection is itself divided into three parts: series G1-56 contain the estimates of the balance of payments of Professors Jacob Viner and Frank Knox for the period 1900 to 1926; series G57-83 contain the official estimates of the balance of payments, current account, prepared by Statistics Canada (formerly Dominion Bureau of Statistics) for the period 1926 to 1975; series G84-152 contain the official estimates of the balance of payments, capital account for 1926 to 1975.

The second major division consists of series G152-380 covering estimates of the Canadian international investment position and the extent of foreign-ownership and/or control in the Canadian economy for the period 1900 to 1975. It has two main parts. The first one consists of a few private estimates and the official Statistics Canada estimates of Canadian foreign indebtedness and Canadian claims on foreign assets. The second one provides detail on foreign direct investment in Canada according to the Corporation and Labour Union Returns Act for the years 1968 to 1975.

The third major division, series G381-487, presents statistics on foreign trade, export and import price indexes, and import duties for the years 1968 to 1975.

The major sources are the following: Jacob Viner, Canada's Balance of International Indebtedness, 1900-1913, (Cambridge: Harvard University Press, 1924), hereafter referred to as Canada's Balance; Frank A. Knox, "Canadian Capital Movements and the Canadian Balance of International Payments, 1900-1934", in Herbert Marshall, Frank A. Southard and Kenneth W. Taylor, Canadian American Industry, (New Haven: Yale University Press and Toronto, Ryerson Press, 1936), hereafter referred to as "Excursus"; Frank A. Knox, Dominion Monetary Policy, 1929-1934, a report prepared for the Royal Commission on Dominion-Provincial Relations (Ottawa, mimeographed, 1939), hereafter Dominion Monetary Policy; Statistics Canada, The Canadian Balance of International Payments, A Study of Methods and Results, (Ottawa, King's Printer, 1939), hereafter Red Book; Statistics Canada, The Canadian Balance of International Payments, 1926 to 1948, (Ottawa, King's Printer, 1949), hereafter Blue Book; Statistics Canada, "The Canadian Balance of International Payments and International Investment Position: A Description of Sources and Methods" (forthcoming), hereafter "Sources and Methods", Statistics Canada, The Canadian Balance of International Payments, (Catalogue 67-201); Statistics Canada, Canada's International Investment Position, 1926 to 1967, (Catalogue 67-202) and subsequent issues; Statistics Canada, Corporations and Labour Unions Returns Act, Part I: Corporations, 1968 and subsequent annual issues; hereafter CALURA; Statistics Canada, Trade of Canada, Volume I, Summary and Analytical Tables, calendar years 1966-1968, (Catalogue 65-201), and other years; Statistics Canada, The 1971-based Price and Volume Indexes of Canada's Internal Trade, (Catalogue 65-001), December 1976; J.D. Randall, "A Brief Guide to Statistics Related to Foreign Ownership in Canada", Canadian Statistical Review, (January 1974), pp. 4-7 and 14-16; and M.C. Urquhart, Historical Statistics of Canada, (Toronto: The Macmillan Company of Canada Ltd., 1965), hereafter HSC I; Statistics Canada, Canadian Socio-Economic Information Management System, hereafter CANSIM.

The material in the following is taken verbatim, or in paraphrased form, from these above sources, without any further specific reference.

The tables are available as comma separated value files (csv). They may be viewed using a variety of software. You may have to create an association between your software application and the csv files. The pdf files should be used to verify table formats. For example, footnotes appear in a column to the right of the cell they reference in the csv files; while in the pdf files footnotes appear as superscript numbers.

Canadian Balance of International Payments (Series G1-151)

General note

The balance of payments is a systematic record of all transactions between residents of Canada and residents of other countries over a year, or one quarter of a year. (The historical series presented here are confined to annual data.) The main divisions in it are the current account, the capital account and net official monetary movements. The current account is presently subdivided into trade in merchandise, trade in services and transfer items. Services, in turn, consist of travel, interest and dividends, freight and shipping, and other service transactions. Transfer items include inheritances and migrants' funds, personal and institutional remittances and official contributions. Withholding taxes, although of a somewhat different nature (to be clarified below), are included under service items and transfers. The capital account has two major sections, long-term flows and short-term flows, with numerous subdivisions in each of these. The sum of the net balance of the current account, the capital account and the allocation of special drawing rights, is reflected in net official monetary movements.

The balance of payments data in this section cover the period 1900 to the mid-1970s, but they are presented in three distinct periods because comparability cannot be maintained between the different periods. Indeed, there are elements of incomparability within a single period.

In the earliest years for which balance of payments statements are reported here, 1900 to 1926, lack of recorded data for many of the items made extensive reliance on estimates necessary and indirect methods by the researchers, Viner and Knox. These methods are indicated more fully in the various Statistics Canada publications, in HSC I, Section F, pp. 142-146, and in Knox, "Excursus", and Viner, Canada's Balance. Other estimates of Canada's balance of payments back to 1868 were made by Penelope Hartland in her "Canadian Balance of Payments since 1868" in Trends in the American Economy in the Nineteenth Century, Studies in Income and Wealth, Vol. 24, Princeton, Princeton University Press, 1960. New measures are currently being produced by Professor Allister Sinclair of Dalhousie University.

A brief summary of the evolution of balance of payments methods within Statistics Canada up to the years shortly after World War II is found in HSC I, pp. 146-153, and also in Statistics Canada, "Sources and Methods", Section 1.33. Developments of more recent years are found in "Sources and Methods", and a very quick outline of them is given in the remainder of this section.

With the termination of exchange control late in 1951, extensive use of questionnaires to obtain the desired information was re-instituted. There were some difficulties in obtaining statistics on short-term items such as accounts receivable and payable, and it was during this early period that the practice of treating the balancing item 'errors and omissions' as a short-term capital flow was instituted.

Other discontinuities occurred during the post-war period, owing to the desire to break out and isolate new developments of importance such as the program of export credits and of international money market transactions. Additional changes, carried consistently back through the series, included the presentation in the balance of payments of taxes withheld on payments to non-residents, the elimination of entries with respect to mutual aid to NATO countries, and changes in 1963 in the handling of international financial agencies and Canada's official monetary reserves.

Other discontinuities could not be wholly eliminated. Pension receipts could not be isolated until 1952, and for earlier years remained with the series for services. Additional adjustments in the coverage of official international reserves introduced in 1970 led to a small discontinuity at the end of 1960, and a change in 1973 in the treatment of foreign currency operations of the Canadian chartered banks could be carried back only to 1964. The change in 1973 in the conceptual treatment of gold was carried back to the second quarter of 1968 when the two-tiered market for gold was introduced. Marked discontinuities exist between 1970 and 1971 in a number of current account series. These reflect the culmination in 1975 of a long process of evaluation and development of basic series. Revisions were made to incorporate conceptual and statistical changes arising from the reconciliation of merchandise trade and other balance of payments current account statistics with the United States. At the same time, adjustments were introduced to eliminate from merchandise trade with overseas countries transportation costs which under Canadian conventions were already included in the freight and shipping charges. The union with Newfoundland and the changes in area classifications also introduced discontinuities ("Sources and Methods", Section 1.13).

Balance of payments data are linked with the national income and expenditure accounts and with the financial flow accounts. Detailed descriptions of the relationships between the balance of payments and the national income and expenditure accounts may be found in Statistics Canada, National Income and Expenditure Accounts, Volume 3, A Guide to the National Income and Expenditure Accounts: Definitions, Concepts, Sources and Methods, (Catalogue 13-549), Chapters 3, 8 and 12. Linkages with the financial flow accounts together with details on the re-arrangement of capital flows and official monetary movements, as they appear in the balance of payments so as to conform to the standard classifications employed for all sectors of the financial flows, may be found in Statistics Canada, "Sources and Methods", Appendix 3.

Reports by Canada to the International Monetary Fund (IMF), and Organization for Economic Co-operation and Development (OECD), conform insofar as possible to international standards adopted by these institutions; see Statistics Canada, "Sources and Methods", Appendix 6, for a discussion of the main variations between the statistics normally published in Canada and the standards provided in the IMF Balance of Payments Manual.

Source: Viner, Canada's Balance, table II, p. 31; table III, p. 32; table XXVI, p. 95; table XXIX, pp. 102-103; table XXX, p. 105; table XXXI, p. 106.

Details of Viner's methodology relevant to these series are to be found in the source document and in HSC I, pp. 143-145.

Source: Viner, Canada's Balance, table XXV, p. 94; table XXXVIII, p. 126; table XLI, p. 134; table XLIII, p. 138; table XLIV, p. 139.

Details of Viner's methodology relevant to these series are to be found in the source document and in HSC I, p. 145.

Source: for series G34-45, Knox, Monetary Policy, Appendix; series G46, calculated by Herbert Marshall from Knox's data; also see Knox, "Excursus".

Details of Knox's methodology may be found in the source material and are summarized in HSC I, p. 145.

Source: same as series G34-46.

Details of Knox's methodology may be found in the source material and they are summarized in HSC I, pp. 145-146.

G57-83. Canadian balance of international payments, all countries, current account, 1926 to 1975, and by major areas 1946 to 1975

Current Receipts:

Current Payments:

Source: for all countries, the United States and the United Kingdom: Statistics Canada, The Balance of Payments, 1975 and subsequent years, (Catalogue 67-201), table 2; for all other country relationships, CANSIM, numbers as indicated in The Balance of Payments, table 36.

G57 and 70. Commodity trade. Statistics based on customs data are tabulated on a 'statistical month' rather than a calendar month. For example, motor vehicle trade with the United States for any calendar month actually refers to shipments from the 26th of the previous month to the 25th of the current month. Again, because of reporting time lags, statistics on electricity, trade and exports of petroleum and natural gas via pipeline for one calendar month are reported in trade statistics in the following month. Adjustments are made where possible to correct the timing of these data in the balance of payments series.

Trade flows in the balance of payments exclude 'Special transactions, non-trade'. Even before 1960 when this new category was first established in the commodity trade statistics, its components were removed from the commodity totals when arriving at the values of merchandise trade in the balance of payments. However, up to that date, the treatment of the various import and export items in the series was not uniform. This weakness was rectified with the introduction of the new category. Items in this subdivision include settlers' effects, private donations and gifts, identifiable commodity shipments by tourists, current coin, imports and exports by foreign and domestic diplomats and armed services personnel, temporary shipments for exhibition or competition, film processing abroad, and gold and gold products shipments. Gold has been added back to merchandise trade since 1968, and is not excluded for balance of payments purposes from the merchandise account as are the other 'Special transactions, non-trade'. For more detail of the changes introduced in 1960, see Statistics Canada, Review of Foreign Trade, Calendar Year 1959, (Catalogue 65-205), Chapter IV.

The Trade of Canada statistics exclude entirely several specific types of merchandise transactions. These are temporary exports or imports (other than contractors' equipment, items for exhibition, etc.), ships of British construction and registry imported for use in Canada, and ships and aircraft (until 1966) purchased abroad for use as international carriers but not used to carry goods between points in Canada, and goods exported or imported on a lease or rental basis. Also excluded from merchandise trade figures are bunker supplies and ships' stores sold to foreign vessels or aircraft in Canada, or purchased abroad by Canadian vessels or aircraft, although these items are covered in the balance of payments series for freight and shipping, or, in the case of military vessels and aircraft, for 'other' services (government).

Commencing with 1964, trade statistics have been tabulated on a 'general trade' basis, that is, according to when they crossed the national boundary. Until then, since 1917 for imports and 1920 for exports, statistics were collected on a 'special trade' basis, that is, measured at the 'customs frontier', the point at which imports leave, or exports enter, customs supervision. The statistics in series G57 and 70 back to 1951 and 1946 respectively, however, are on the general trade basis. Until 1962, when temporary surcharges were levied and some inducement existed to leave merchandise in customs warehouses until the surcharges were removed, there was little difference between the two series. For details see Statistics Canada, Review of Foreign Trade, Calendar Years 1960-1963, (Catalogue 65-205), Chapter IV.

From 1940 to 1949, when Newfoundland entered Confederation, Canadian exports to and imports from Newfoundland were not included in the commodity trade figures used for balance of payments purposes. The only item entered in the current account from Canada-Newfoundland transactions during this period was the surplus of United States dollars earned by Newfoundland. This was included under miscellaneous receipts (from the United States) in the Canadian balance of payments. Since 1949, Newfoundland transactions with other nations have been included in the appropriate parts of the balance of payments.

Exports are classified to the country to which they are consigned at the time the goods leave Canada, that is, to the furthest known destination. Imports are generally classified to the country from which goods are consigned to Canada. However, since July 1946, goods originating in Caribbean, Central or South American countries yet consigned to Canada from the United States have been classified to the country of origin in Trade of Canada statistics. For balance of payments purposes, adjustments have been made, beginning in 1971, to reverse this procedure and show such imports as coming from the United States.

Most exports are valued at 'f.o.b. (free on board) place of lading', that is, at the point of production. But for grain, oilseeds and iron ore, valuation is f.o.b. Vancouver or St. Lawrence ports. Most imports are valued at the 'selling price f.o.b. point of shipment' reported by importers. Thus, inland freight from the point of consignment to the foreign point of exit, transportation, insurance, handling charges and duties are excluded. For shipments valued under $50,000, or transactions between affiliated companies (other than automotive imports from the United States), the value recorded is the 'fair market value' determined according to the Customs Act. It is generally the wholesale value at which equivalent items could be sold for domestic consumption in the country of origin, less any excise, purchase or sales taxes by the exporting country on domestic sales. All goods are normally valued at their full value, but in the case of repair and improvement trade, only the value added of the repair work is counted.

A valuation problem exists with respect to commodity exports up to 1968, the year when Statistics Canada began requiring exporters to indicate in what currency they were denominating their exports. Prior to that time, it was often not clear to those tabulating the export documents whether exporters were using Canadian or United States dollars. This problem became evident in the early 1960s when the depreciation of the Canadian dollar occurred and the trade series did not behave as was expected, if all shipments abroad had been reported in Canadian currency. The effect of exporters using United States currency on their reports and the statisticians interpreting the numbers as though they were in Canadian dollars meant that when the Canadian dollar was worth more than one American dollar, as in the 1950s, Canadian exports were overstated, and when the Canadian dollar was worth less than one American dollar, Canadian sales abroad were understated. The magnitudes of the annual errors that may exist in the statistics until 1968 are unknown. Unofficial estimates vary from very small to perhaps several hundred million dollars annually.

Adjustments to Trade of Canada statistics for balance of payments purposes for the years 1946 to 1975 are discussed under series G443-472. For adjustments covering earlier years, see the discussion in HSC I, under F57 and F64, pp. 146-147.

G58. Gold production available for export. Until 1968, the convention was that new gold produced and sold to the monetary authorities was treated as a current account receipt and the offsetting entry was to augment the nation's official international reserves. But in March 1968, the governors of the central banks of the members of the international Gold Pool (which had been formed to stabilize the price of gold) ceased sales of gold to the pool and created two separate markets for gold: an official one in which the gold price remained at U.S. $35 an ounce, and a free market in which the price would move in response to market pressures. As the free market price of gold rose well above the official price, Canadian producers found it increasingly advantageous to sell their production on the open market and forego assistance from the government under the Emergency Gold Mining Assistance Act. From the second quarter of 1968, sales and purchases of non-monetary gold between Canadians and non-residents were included with other commodity transactions, while resident holdings of gold in Canada, apart from those of the Exchange Fund Account, were no longer considered a foreign asset. Hence, series G58 is blank from 1969 onward. And even though the international arrangement of March 1968 was terminated in November 1973, the same method of handling gold transactions in the balance of payments has been continued.

G59 and 71. Travel. Receipts and payments on travel account include all expenses incidental to travel in Canada by non-residents and travel abroad by residents of Canada respectively. These include international fare costs (Canadian payments to foreign carriers and Canadian carrier receipts from foreign travellers), plus outlays on lodging, food, entertainment, local transportation, gifts and goods to be exported or imported for the personal use of the travellers.

The international travel series used in Canada are basically of a 'frontier-check' type, involving collection at the border of numbers of border crossings together with some information on lengths of stay. Expenditure surveys carried out mainly by questionnaires, but supported occasionally by more intensive 'auto-exit' surveys, are then used to derive a variety of averages which are applied to particular segments of travel. The Canada-United States components of the estimates are derived from a co-operative effort of the statistical authorities in Canada and the United States, with each country assuming responsibility for those elements which it can most effectively and economically produce.

G60 and 72. Interest and dividends. Interest receipts include interest on bonds and debentures held directly by residents of Canada, interest on intergovernmental loans and advances, and earnings on Canada's net official monetary assets. But they do not include any interest on export credits, bank deposits, treasury bills and other short-term claims on non-residents, and revenues from non-residents of Canadian banks and insurance companies.

Interest payments comprise, primarily, payments on bonds and debentures held by non-residents. Excluded are interest on bank deposits, treasury bills, commercial and finance paper and other short-term claims on residents of Canada, interest on bank loans, mortgages, and on all other forms of long-term debt apart from bonds and debentures, as well as net revenues in Canada of foreign insurance companies and the net expenses abroad of Canadian banks, rentals and other payments on foreign investments such as estates, trusts, management and safekeeping accounts, and other items under the administration of Canadian financial intermediaries. All these excluded items are recorded under the 'miscellaneous income' component of series G62 and 76, 'other service receipts and payments'.

No allowance is made in the balance of payments for interest foregone under the concessionary rates applicable to the 'soft' development loan program, nor is any entry recorded for deferrals of interest under the terms of the 1946 loan to the United Kingdom under the United Kingdom Financing Agreement Act.

Dividend receipts are those actually remitted to Canadian shareholders of foreign corporations as well as the profits, both distributed and undistributed, of unincorporated branches abroad of Canadian companies, except banks and insurance companies which are recorded as miscellaneous income under 'other service receipts and payments'. Dividend payments are those remitted to foreign shareholders of Canadian corporations plus the distributed and undistributed profits of unincorporated branches of foreign companies, except insurance companies. An entry offsetting the undistributed portion of branch profits is made under direct investment in the capital account. The undistributed profits of all other foreign operations in Canada or Canadian operations abroad are excluded entirely from dividend payments and receipts and from official balance of payments data. Thus, an inconsistency exists between the way undistributed profits of branches and separately incorporated direct investment establishments are handled.

Stock dividends paid by wholly owned subsidiaries to their parent companies are shown as investment income (dividends) in the current account with an offsetting entry under direct investment in the capital account.

All amounts, whether receipts or payments, are recorded net after deduction of any applicable withholding taxes.

For details on special problems and early sources of information for the series up to 1960, see HSC I, pp. 145 and 147-149, and references cited there. For a discussion of contemporary methodology and sources, see Statistics Canada, "Sources and Methods", Section 2.15.

G61 and 73. Freight and shipping. Receipts in this account arise from Canadian-operated carriers transporting exports (both inland and beyond the borders of Canada) and foreign-owned goods both in transit in Canada and between foreign ports, and from the expenditure in Canada of foreign carriers (other than airlines). Payments arise from the transportation by non-resident carriers of imports to Canada (including inland freight charges in other countries) and of Canadian commodities (in particular oil and natural gas) in transit through the United States or in Canada, expenditures abroad by Canadian carriers (other than airlines), and payments made to non-residents for chartering vessels. The account does not, however, include passenger fares, for these are in the travel account. International airline expenditures and railway expenditures such as rental for freight cars are included with other service transactions, series G62 and 74.

For detailed notes on the measurement of these items, see Statistics Canada, "Sources and Methods", Section 2.21.

G62 and 74. Other service receipts and other service payments. These accounts include three broad groups: government transactions not included elsewhere, miscellaneous items and business services, and related transactions.

The receipts side of government transactions include the estimated costs of foreign governmental diplomatic, military and commercial representation in Canada, international postal revenues and taxes (apart from withholding taxes), military and civilian pensions paid to residents of Canada by foreign governments prior to 1952, some expenditures related to Canadian aid abroad such as the outlays of foreign students in Canada financed under aid programs, and amounts paid to Canadian teachers and experts serving abroad which were not spent there, and settlements received by Canada in the post-war period on account of military relief supplied to European countries at the end of World War II.

Payments with respect to government transactions include costs of Canadian diplomatic, military and commercial representation abroad, international postal payments, and assessments for Canada's memberships in international organizations such as the United Nations, Organization for Economic Co-operation and Development (OECD), North Atlantic Treaty Organization (NATO), Food and Agriculture Organization (FAO), International Civil Aviation Organization (ICAO), etc.

Miscellaneous income comprises all those transfers of earnings on investment not included under series G60 and 72, 'Interest and dividends'. Hence, on the revenue side it covers net revenues resulting from the transactions of Canadian chartered banks with non-residents, interest on private non-bank holdings of foreign exchange and other short-term claims abroad, interest on export credits either financed by or guaranteed directly or indirectly by the Government of Canada, and net revenues of Canadian insurance companies from insurance operations abroad. Payments cover net expenses paid to non-residents by head offices and Canadian branches of Canadian chartered banks, interest on long-term debt such as intercompany and bank loans, mortgages, etc. and on short-term debt such as intercompany and bank loans, money market instruments, income remitted to non-residents on assets in management (including real estate), safe custody and agency accounts, including estates and trusts, and net revenues of foreign insurance companies from operations in Canada. From 1940 to 1949, any current account surpluses Newfoundland earned in United States dollars were also included here.

Business service receipts and payments relate to management and administrative services, consulting and other professional services, insurance premiums and other insurance transactions, scientific research and product development, commissions, advertising and sales promotion, royalties, patents, copyrights, trademarks, equipment rentals, franchises and other similar rights, film rental payments, special tooling and other automotive payments, receipts and payments of Canadian railways and airlines abroad and of foreign railways and airlines in Canada, and some other services. The tabulating in this account of local expenditures of international air carriers is not consistent with the classification of corresponding expenditures of ocean and lake carriers in freight and shipping. But the practice arose during World War II when U.S. operations in Newfoundland and Labrador became important and it was difficult to separate such expenditures from other military receipts.

Business service items also comprise other receipts and payments such as commissions to agents, net earnings in the United States of Canadian resident commuters, other insurance transactions, and a host of miscellaneous services relating to union operations, telecommunications, transportation of migrants, miscellaneous engineering and consulting services, magazine and other such subscriptions, professional society membership fees, payments to foreign correspondents, and education by correspondence and in foreign schools. But by far the largest components of business services, at least on the payments side, are those between branches, subsidiaries and their foreign head offices. For the detailed results of a special survey on business service transactions for 1973, and licensing agreements for 1972, see Statistics Canada, The Canadian Balance of International Payments, 1973-1974, (Catalogue 67-201), pp. 63-78.

Mutual aid to NATO countries was shown as a separate item from 1950 through 1967. It involved mainly transfers of military equipment, provision of aircraft training in Canada, and contributions toward the NATO military budget for infrastructure represented by fixed defence installations used by the armed forces of more than one country of the alliance.

Two entries were normally made for this aid: the credit, or export, item was a measure of the real resources provided, whereas the debit item was the transfer itself. On security considerations, no bilateral or quarterly detail was published. By the mid-1960s, the amounts involved had become relatively small, and a growing proportion was duplicated in current estimates of Canadian military expenditures abroad. On the basis of these considerations, the two series were eliminated from balance of payments statistics, but continued to be made available annually in the form of a footnote.

In 1970, a restructuring of 'other service receipts' and 'other service payments' was undertaken and transfers were separated from service transactions. Accordingly, personal and institutional remittances, which in earlier presentations were included under 'all other transactions', were segregated and carried back to 1926 on an annual basis. But receipts of pensions for 1926 to 1951 were included with other service transactions, although from 1952 onward they are tabulated with personal and institutional remittances.

Information on sources and methods of gathering the data for these series is to be found in "Sources and Methods", Section 2.23.

G65 and 78. Inheritances and migrants' funds. These are primarily the transfer of accumulations of capital. But if they were entered in the capital account, where their offsetting entries would normally be found, the capital account would then not reflect any net acquisition or disposition of international claims, as there should be.

For immigrants to Canada, the measure used, insofar as possible, is the total of cash and similar claims brought with them at the time of migration, plus the amounts they intend to transfer later. Since notes and specie will likely appear in due course under various banking transactions, the balancing entry under inheritances and migrants' funds is necessary to explain the financial change. There will be some cases where holdings abroad of immigrants' unregistered securities or real estate will not be picked up as inflows at the time of immigration. Subsequently, therefore, their disposition and the resulting transfer of funds to Canada will show up as an increase in Canadian holdings of foreign exchange, that is, as a capital inflow.

Estimates of immigrants' funds data are, in general, much superior to those for emigrants. The former are based upon data provided by immigrants at the time of entry into Canada while the latter are based upon a per capita figure applied to the number of emigrants. See "Sources and Methods", Section 2.30.

Personal and household effects are classified as non-trade transactions and do not enter into the balance of payments under transfers.

G66 and 79. Personal and institutional remittances. These series cover most private transfers other than inheritances and migrants' funds, and government transfers other than official contributions. Examples of receipts are pensions paid by the U.S. and U.K. governments to Canadian residents (since 1952), indemnification and restitution payments by the Government of Germany, estate taxes received by Canada, gifts, alimony, and institutional remittances for relief, charitable, religious, educational or research purposes. Examples of payments are pensions by governments in Canada to non-residents, remittances similar to those described under receipts, and support for relatives abroad. The series do not cover gifts in kind which are non-trade transactions excluded from the balance of payments.

G67 and 75. Withholding tax. The balance of payments series have historically been constructed on a net basis, or after deduction, of taxes withheld. However, explicit series covering withholding taxes received by the Government of Canada on account of non-residents were introduced in the current account with the report for the first quarter of 1972, at which time, the series back to the introduction in Canada in 1933 of withholding taxes on payments to non-residents, were provided to establish historical continuity. The entries appear on the receipt side among transfers, and on the payments side among imports of services. The data are derived from the financial records of the Government of Canada, adjusted to take account of remittance and accounting lags.

G80. Official contributions. While the institutional arrangements for Canada's official contributions have varied over the years, the activities are now largely concentrated in the Canadian International Development Agency (CIDA). They currently include such programs as international development assistance, international food aid, grants to international organizations for multilateral assistance programs, contributions for overseas projects of Canadian non-governmental organizations and contributions to Canadian firms for feasibility and related studies to establish or expand operations in developing countries. The work of the International Development Research Centre established in 1970 with funding from CIDA is included here too. The administrative costs of these two organizations are not counted among the official contributions. The goods and services provided as part of this aid, such as exports and outlays by educational trainees in Canada, are in turn recorded on the receipt side in the current account.

Country classification used in series G57-83 is as follows: the European Economic Community (EEC) includes, from 1973, Belgium, Denmark, Federal Republic of Germany, France, Ireland, Italy, Luxembourg, and the Netherlands. The United Kingdom is also a member of the EEC, but is shown separately.

'Other OECD' countries include, from 1973, Australia, Austria, Finland, Greece, Iceland, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland and Turkey. Japan, although a member of the OECD, is shown separately.

'Other OECD Europe' comprises, from 1946 to 1972, Austria, Belgium and Luxembourg, Denmark (with Greenland), Federal Republic of Germany, Finland (from January 1969), France, Greece, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and Turkey.

'Other sterling area' comprises, from 1946 to 1972, the Commonwealth countries, United Kingdom dependencies, Burma (from 1948 to 1966), Iceland, Iraq (until 1959), Ireland, Jordan (from 1950), Kuwait, Libya (from 1952 to 1971), Rhodesia (until 1965), Republic of South Africa and People's Republic of Yemen.

'Other non-residents', from 1973 to 1975, and 'All other non-residents', from 1946 to 1977, cover all countries in Africa, Asia, Oceania, Central and South America (not otherwise included in the sterling area), as well as Sino-Soviet countries, international financial agencies and all other countries not specified above. International financial agencies consist of the International Bank for Reconstruction and Development, the International Monetary Fund, International Finance Corporation, the International Development Corporation and corresponding institutions.

From 1971, merchandise trade with Puerto Rico and the U.S. Virgin Islands is included with the United States. From 1973, all other current transactions with these areas are included with the United States.

G84-115. Canadian balance of international payments, all countries, capital account, 1927 to 1975, and by major areas, 1946 to 1975

Long Term Capital Flow:

Short Term Capital Flows:

Source: for all countries and the U.S. and U.K., Statistics Canada, The Canadian Balance of International Payments, 1975, (Catalogue 67-201), table 2; for other country relationships, CANSIM numbers as in The Balance of Payments, table 36.

A description of development of the methodology used to collect and tabulate the data up to 1960 is found in HSC I, pp. 151-153. For information on recent changes or adjustments in data gathering techniques and an evaluation of the reliability of the series, see Statistics Canada, "Sources and Methods", Part III. All subsequent discussion of the meaning of individual series and the components of them is also taken from this same source unless specific reference is made to other sources.

Many of the series in this section are largely self-explanatory in their titles so that, unlike the discussion of the current account, not all series will be separately defined.

G84 and 85. Direct investment in Canada and abroad. These items cover flows of capital leading to changes in net capital invested by controlling groups of non-residents in direct investment enterprises in Canada, and of Canadian residents in direct investment enterprises abroad.

Direct investment means investment motivated by the desire to create or expand some kind of permanent interest in a particular enterprise. It normally implies, if not the actual exercise of control, a degree of potential control. Enterprises in which there is direct investment are classified as 'direct investment enterprises'. This classification is normally assigned when the proportion of voting stock held by an associated group of non-residents exceeds a certain level (generally 50 per cent). 'Direct investment enterprises' need not be incorporated and therefore include branch operations of non-resident companies in Canada and branches of Canadian companies abroad.

Transactions recorded under direct investment are restricted to those of a long-term character with principal owners only, rather than with all residents of the controlling country. Estimates do not reflect the large sums of undistributed earnings of incorporated companies. Only the retained earnings of unincorporated foreign branches in Canada are included under dividends declared in the current account and again as direct investment inflows in the capital account. The former amounts omitted from the accounts are much larger in magnitude than the latter sums. The series also include stock dividends paid to parent companies by wholly owned subsidiaries.

The direct investment category covers foreign investment in realty companies but excludes real estate held directly by non-residents which is classified under series G97, 'Other long-term capital transactions'. In addition, companies established to make portfolio investments in Canada, even though perhaps largely foreign-owned and controlled, are counted as portfolio investments, not direct investments, because their holdings are widely diversified and not for controlling or entrepreneurial purposes. Again, Canadian-owned firms essentially controlled by foreigners via processes other than investment, such as licensing, franchises, supply contracts, etc. are not counted with foreign direct investment.

The definition of long-term as opposed to short-term capital is based on the probable behaviour of the capital flows rather than its strict form. Hence, what may be in the form of a short-term capital flow may nevertheless be included with direct investment if it is believed that it will essentially be a long-term loan of working capital. To illustrate, working capital lent by a parent abroad to a domestic subsidiary, although perhaps in the form of a demand obligation or open-account claim, if intended or expected to be outstanding for more than one year, would be classified as a long-term obligation.

G86-89. Portfolio transactions in Canadian securities. These series cover international movements of capital relating to new issues, trading and retirements of portfolio holdings of long-term Canadian securities. An exception occurred from 1963 through 1973 with regard to Government of Canada direct issues with an original term of over one year for which 'buy-back' transactions under sale and repurchase agreements were treated as short-term money market transactions. In the latter part of the period, few such transactions were reported, and the distinction was abandoned. Other exclusions, apart from those transactions more appropriately classified as direct investment, are transactions in mortgages or export finance paper. Transactions in the securities of Canadian companies counted for statistical purposes as non-residents of Canada (for example, foreign business corporations) are treated as transactions in foreign securities.

Values used in the series are net amounts received by, or paid on account of, residents of Canada.

In 1954 and continuing through 1964, a group of special Canadian diversified management investment companies, controlled by residents of the United States, were established to provide a medium for portfolio investment in Canada attractive to United States investors. They were treated in the Canadian balance of payments statistics as non-resident companies, representing, collectively, United States portfolio investors. For a discussion of them, see Statistics Canada, The Canadian Balance of International Payments, 1963, 1964 and 1965 and International Investment Position, (Catalogue 67-201), pp. 44-47, and Canada's International Investment Position 1926-1967, (Catalogue 67-202), table IV.

G90-92. Portfolio transactions in foreign securities. These series cover international movements of capital relating to new issues, trading and retirements of portfolio holdings of long-term foreign securities. Items excluded from the series are similar to those excluded from series G86-89, with the addition of official holdings of medium-term, non-marketable United States government securities acquired under the Columbia River Treaty arrangements, or securities held as part of Canada's official holdings of foreign exchange.

G93 and 94. Loans and subscriptions of the Government of Canada. These series cover extensions and repayments of credit to non-residents by the Government of Canada (except post-war credits directly related to the financing of specific exports) and the provision of capital by the Government of Canada to international investment agencies such as the International Bank for Reconstruction and Development. Details of the government loans made since 1942 are found in Statistics Canada, "Sources and Methods", Section 3.40.

For repayment information see the same publication, Section 3.44.

G95. Columbia River Treaty. This series covers receipts from the United States of payments under the Columbia River Treaty, including related investment and disinvestment by the Government of Canada in medium-term non-marketable United States government securities.

G96. Export credits directly or indirectly at the risk of the Government of Canada. The series covers all medium-term and long-term export credits extended by Canada directly or indirectly at the risk of the Government of Canada, whether financed by public or private sources. The main agencies involved in this series are the Export Development Corporation and the Canadian Wheat Board.

G97. Other long-term capital transactions. This series covers such items as medium- and long-term borrowing from foreign banks and other unrelated entities; loans by agencies of foreign governments to Canadian corporations generally associated with long-term commodity supply contracts or the financing of Canadian imports; movements of capital between branches and head offices of insurance companies; purchases by non-residents of, and repayments to them on mortgages on, Canadian real estate; transfers of capital from abroad for administration by Canadian trust companies and the repatriation of such capital; loans in Canadian dollars to non-residents by the head offices and Canadian branches of Canadian chartered banks, and their repayment; international transactions in real estate; and, commencing in 1972, allowances for the initial deferral and subsequent transfer to Canada after migration, of capital of immigrants. Also, in the period immediately following the termination of exchange restrictions in Canada in 1951, an estimate was included for the liquidation and transfer from Canada to the credit of emigrants, of capital they had not previously been permitted to take with them. Also, until 1962, the series covered medium- and long-term export credits extended directly or indirectly at risk of the Government of Canada. (These are now shown under series G96.)

G99 and 100. Resident holdings of foreign currencies. The first of these series covers changes in net (spot) foreign currency positions, or net claims, with non-residents and net transactions in foreign treasury bills and any other foreign paper of the head offices and branches in Canada of the chartered banks. It was introduced in the second quarter of 1973, retroactively to 1964. The second series covers other resident holdings of foreign currencies abroad as well as gold- gold-denominated claims on non-residents held by offices and branches in Canada of Canadian chartered banks. Although these gold claims are not 'non-bank' holdings, they are included in series G100 instead of series G99 so as to preserve the consistency of the latter series with those published regularly by the Bank of Canada which, after the introduction of banking guidelines in 1968, excluded gold bullion and gold-based claims. Series G100 also includes non-bank and non-monetary authorities holdings of foreign treasury bills and other foreign short-term funds.

For additional information on these series prior to 1964 when they first began to be published separately, see "Sources and Methods", Sections 3.601, 3.602 and 3.611.

G101. Non-resident holdings of Canadian dollar deposits. This series comprises changes in two items: Canadian dollar deposits of non-residents with Canadian banks and other deposit-accepting institutions, and net Canadian dollar liabilities of the head offices and branches in Canada of Canadian chartered banks to their branches, agencies and subsidiaries abroad. Canadian dollars accepted from abroad by the Bank of Canada are counted here too, as are some of the changes in 'money employed' accounts (these are securities the Bank of Canada sets aside, the interest from which is used to compensate the party leaving a balance with the bank).

G102. Non-resident holdings of Government of Canada demand liabilities. These are largely notes that bear no interest payable on demand to international investment agencies. They usually represent parts of Canadian capital subscriptions and advances to the agencies which have not yet been utilized. (The Canadian subscriptions and advances are themselves a component of series G93.)

G103-106. Non-resident holdings of Canadian treasury bills, commercial paper, finance company paper and other short-term paper. These instruments comprise the main ones in the Canadian short-term money market which began, essentially, in 1954 when the Bank of Canada set up special facilities to encourage trading in treasury bills.

G107. Non-resident holdings of other Canadian finance companies. These are obligations not covered explicitly elsewhere. They are primarily bank borrowings abroad by finance companies and the funds to them by parent companies through open-end intercompany accounts.

G108. Other short-term capital transactions. This series consists of such items as foreign accounts receivable and payable (including inter-company accounts), short-term loans and similar claims and the 'net errors and omissions' which embodies all unidentified transactions (that is, the balancing item) in the Canadian balance of payments. For change in treatment of net errors and omissions, see Statistics Canada, Quarterly Estimates of the Canadian Balance of International Payments, First Quarter, 1978, (Catalogue 67-001). The main identifiable component in this series is tied in with 'leads and lags' or the differences in timing between the provision of goods and services and the financial statement for them. The 'net errors and omissions' component has usually been attributed to transactions with the United States. See "Sources and Methods", Section 3.82.

G111. Balance settled by exchange transfers. In the balance of payments, certain movements of capital are allocated by country or area on the basis of the residence of the foreign creditor or debtor rather than that of the foreign party to the transactions. To bring each bilateral statement into balance, it is necessary to record the relevant multilateral settlements. A negative figure in the account indicates the extent to which the account in which it appears has been settled by transfers in Canada's favour, while a positive figure in another account indicates the application of these receipts. Settlements occur between bilateral sectors but cancel out as a whole and consequently do not appear in the statement between Canada and all countries.

G112. Allocation of special drawing rights (SDR). Member countries of the International Monetary Fund (IMF) participating in the Special Drawing Account receive supplements to their reserves in the form of SDRs. These are reserve assets created by the IMF to increase the total level of world reserves. A liability is created for a country when it accepts the allocation, and its official international reserves are correspondingly increased. The liability is of an unusual nature in that repayment of it would be necessitated only if the entire SDR arrangement was terminated.

G113-115. Net official monetary movements. In February 1970, changes were made in Canada's international reserve reporting to the format shown in series G113-115. The new series were extended back to 1961. Series G113 now includes changes in convertible foreign currency holdings of the Exchange Fund Account, the Receiver General for Canada and the Bank of Canada, gold, SDRs, and Canada's reserve position in the IMF. Adjustments to values are made to eliminate the effects on the Canadian dollar values arising from changes in exchange parities between the Canadian dollar and foreign currencies (including SDRs). These do not appear as flows in the balance of payments.

No distinction is made in practice or for statistical purposes in Canada with respect to the types or terms of United States government securities in which Canada's official international reserves are employed.

For many years, gold holdings were valued at their realizable value, that is, after allowance for the potential cost of moving them to other financial centres for sale. In 1972, this practice was discontinued, and gold was valued at its then newly established price of U.S. $38 per ounce rather than U.S. $34.90 as previously. In October 1973, it was raised to U.S. $42.22 per ounce. But neither these adjustments nor subsequent ones have been reflected in the flows recorded in series G113.

Canada's reserve position in the IMF, its SDRs and its monetary gold holdings have been designated in SDRs, whose value was linked to a 'basket' of 16 currencies since July 1974.

Official monetary liabilities cover transactions related to the level of Canada's official international reserves, such as the use of IMF credit, foreign exchange deposit liabilities of the Bank of Canada to non-residents and the reported use of central bank reciprocal credit facilities. However, long-term debt issues placed abroad specifically to enlarge Canada's official international reserves are not included as official monetary liabilities.

Source: Statistics Canada, Blue Book, pp. 168-170, and HSC I, series F104-145, with amendments as in footnote 2 of series G116-151.

For discussion of methodology, see the write-up under series F91-103 of HSC I, pp. 151-153

Canadian International Investment Position (Series G152-380)

General note

The international investment position shows Canada's situation as both a creditor and debtor. Changes in this position stem both from capital flows recorded in the balance of payments and from numerous additional factors. The most important of these other factors is undistributed earnings, primarily of Canadian subsidiaries of foreign corporations in Canada, but also, to a much lesser extent, of foreign subsidiaries of Canadian corporations abroad. Such earnings in the early 1970s equalled or exceeded all new net capital inflows as a contributor to Canada's rising international indebtedness. Other items affecting Canada's net international investment position include undistributed earnings on portfolio investment, revaluation of assets and liabilities (including the write-off of exploration and development expenses), untransferred inheritances and capital of migrants insofar as it has not been allowed for in capital flows, reclassifications and similar accounting adjustments.

The absolute and relative importance of foreign capital to Canada's economic development is unique among advanced nations and accordingly deserves some comment. By the end of 1974, Canada's gross liabilities had reached $72.8 billion, while assets amounted to $37.5 billion, so that net international indebtedness was $35.3 billion, or 8.8 times greater than its post-World War II low of $4.0 billion in 1949.

Although foreign capital has frequently been an important source of financing for Canadian development, it is sometimes overlooked that since 1926, the year when the balance of payments was first tabulated on a reasonably consistent basis, Canada has had a current account surplus in 21 of the 50 years. That is, excluding undistributed earnings and the other adjustments to the balance of payments necessary to arrive at the annual balance of international indebtedness, Canada has been a net lender 42 per cent of the years since 1925. If the entire period 1900-1974 is considered, Canada has a current account surplus in 26 years, or 35 per cent of the time.

Until the end of World War II in 1945, the statistics on Canada's international investment position were not revised to a basis comparable with current methodology, with the exception of 1926, 1930, 1933 and 1939. Hence, a gap of 15 years exists for this period. Unrevised statistics for years omitted up to 1937 are to be found in the Red Book, but similar data do not exist for 1938 to 1944.

The periods of most rapid increase in foreign capital invested in Canada were from 1907 until 1913, when the annual average expansion was 13.6 per cent. The pace slackened thereafter and during the depression of the 1930s foreign capital invested in Canada actually declined. Not until 1949 did the magnitude of such investment once again exceed what it had been in 1930. The pace of such investment quickened again in the 1950s when annual increases averaged 9.9 per cent for the decade. The early 1960s saw a drop in the size of annual increases, but in the late 1960s and even more so in the 1970s, these increases again began to reach a rate approaching, and on occasion exceeding, that of the 1950s (see series G190).

In the early portion of the 20th century, the United Kingdom was the major supplier of capital, mostly in the form of bonds. But even during these years, the yearly rate of increase of capital invested by the United States (with the exception of 1908 and 1909) exceeded that by the United Kingdom and it was increasingly in the form of direct investment. Consequently, by 1922, total investment in Canada by the United States exceeded that by the United Kingdom and has done so ever since. In the early 1970s the magnitude of U.S. investment in Canada was over 8.5 times greater than that by the United Kingdom. Investment by the United Kingdom in Canada diminished absolutely during World War II and through 1948 as the British sold off Canadian government and railway bonds (series G199). The United Kingdom negotiated loans in 1942 and 1946 to assist them in financing their war effort and post-war readjustment (series G338). Canada's net liabilities to the U.K. reached a low of $0.2 billion in 1947-1949, rose to a high of $2.0 billion for 1960-1962, diminished again to a low of $0.1 billion in 1969, and rose subsequently in 1973 to $1.5 billion (series G182).

Canada's total liabilities to the United States rose from $3.5 million in 1926 to $49.9 billion in 1974, with over 70 per cent of this expansion occurring after 1960. Concurrently, Canadian investment in the United States also grew, and amounted to $8.4 billion by 1974. Canada's net indebtedness to the United States, exclusive of net official monetary assets and short-term payables and receivables which are not classified geographically, totalled $41.4 billion in 1974 (series G159, 174 and 181).

Canada is also, on balance, a net debtor to the nations of the world other than the United States and the United Kingdom, although until 1955 she was a very small net creditor of them. The growth in liabilities since 1970 has been the result of a large influx of direct investment and portfolio capital, with the latter mainly in provincial and municipal government bonds. Over the same period, the advance in assets has been mainly due to Canadian direct investment, export credits and the reduction in net foreign liabilities of the Canadian chartered banks to this group of countries.

As net foreign investment in Canada has expanded, foreign ownership and control, especially of the manufacturing, petroleum and natural gas and mining and smelting industries, has enlarged considerably. Since 1951 for mining and smelting (including petroleum and natural gas until 1954) and 1952 for manufacturing, foreign control has exceeded domestic control. Foreign control of manufacturing and petroleum and natural gas has been quite stable at around 60 per cent and 75 per cent respectively since the early 1960s. For mining and smelting, it rose fairly steadily until 1971. Thereafter, some sizable shifts in the classification of control reduced the proportion to a level prevailing in the mid-1950s of about 56 to 57 per cent. Concomitantly, the importance of foreigners in other sectors such as railways and utilities has remained small and is less than in the period up to 1951 (series G291-294).

Canadian short-term assets abroad have been growing steadily since the early 1960s, and beginning in 1970 exceeded long-term assets in value (compare the sum of series G158, 163 and 164 with series G157), although the effect of the treatment of errors and omissions should be noted (see series G164 and 178). Short-term liabilities, however, although growing modestly, have become a significantly smaller proportion of total liabilities. If net official monetary reserves are included, short-term assets exceed short-term liabilities for all years since 1926. Even if net official monetary reserves are excluded, this is still true for all years since 1967.

A number of general comments to assist the reader in interpreting the statistics follow. For greater detail on methodology and sources of particular series, the reader is referred to the Statistics Canada publication, "Sources and Methods".

Valuation

All common and preferred stocks held in Canada by non-residents are included at book values as shown in the balance sheets of the issuing or debtor companies. Book value is net worth including both earned and capital surpluses, but less deficits which may exist. The resulting value is the total of the assets less specific reserves such as those for deferred taxes, depreciation and depletion and less other liabilities which the company may have. In effect, it is a measure of the equity of the shareholders in the depreciated value of the assets.

Bonds and debentures are valued at par. All long-term liabilities in foreign currencies are expressed in Canadian dollars at the rate of $1.00 U.S. = $1.00 Canadian where denominated in United States dollars (öö1 = $4.86 Canadian for pre-World War II sterling debt), and at exchange rates current at the time of issue for all other currencies. Thus, totals are free of the sporadic changes they would undergo if converted at current rates of exchange. The securities appear in statistics of indebtedness without change in value through their lives. Changes in the amounts outstanding accordingly reflect alterations in holdings due to such factors as new issues, retirements or trading in outstanding securities.

These valuation methods may affect the statistics in a variety of ways. Several examples may be useful. First, the actual market value of corporate shares may be greater or less than book values. Hence, Canada's net foreign indebtedness may at times be somewhat understated or overstated in current terms. Second, depending upon whether long-term interest rates at the time of issuance are above or below those at the date of the published estimates, market values of bonds and debentures will be above or below, respectively, those shown in the accounts. Third, if the Canadian dollar remains below parity with the U.S. dollar, then the Canadian dollar value of long-term liabilities expressed in U.S. currency will be understated. The opposite would be true if the Canadian dollar should rise above parity with the U.S. dollar.

In contrast to estimates of Canada's foreign liabilities, Canadian investments abroad have been calculated in terms of Canadian dollars generally at rates of exchange prevailing at the date to which the estimate relates. This is because of the necessity of expressing a wide variety of foreign investments in common terms. As in the case of foreign investments in Canada, the basis of valuing Canadian direct investments abroad is the book value derived from the balance sheets of the issuing companies abroad. Canadian portfolio investments abroad, also, have been calculated at book values in the case of those stocks of foreign companies whose values could be ascertained. Holdings of foreign bonds are carried at the nominal par values converted from foreign currencies to Canadian dollars at current exchange rates.

Residency

The same concept of residency is used when measuring Canada's international investment position, as for the national accounts in general, (see Section F). It is particularly worth noting that where Canadian companies are nothing more than legal intermediaries in the ownership of assets in another country by persons or corporations resident outside Canada, such investments are, insofar as possible, excluded from statistics of Canada's international investment position.

Ownership and control

To obtain measures of the relative importance of foreign ownership and control for Canadian industry, estimates of the magnitude of Canadian-owned investment have to be made in a form as comparable as possible to the numbers on foreign ownership and control. Problems arise, however, because while estimates of foreign investment are based largely on the ownership of the capital structure reflected on consolidated balance sheets of enterprises classified according to the principal activity pursued, the primary source available for estimating the comparable aggregate capital values of Canadian industries are the summations of unconsolidated balance sheets of companies found in the Statistics Canada publication, Corporation Financial Statistics, (Catalogue 61-207) and its predecessor series in Taxation Statistics, published by National Revenue Canada. These are classified according to the principal activity of the individual company rather than of the enterprise of which it may form part. Additional problems of comparability arise from variations in accounting practices and in reporting dates, and from the inclusion or exclusion in the two sets of aggregates of non-corporate enterprises, Crown corporations, and foreign branches and subsidiaries.

The concepts of control and ownership need to be distinguished. As indicated under the discussion for series G84 and 85, an enterprise is deemed to be foreign controlled if at least 50 per cent of its voting stock is known to be held by one investor outside Canada. But if effective control is held with less than 50 per cent of the voting stock, then the enterprise is classified as controlled by the group holding the controlling block of stock. For other details on the definition of control see series G84 and 85.

Foreign ownership includes both direct and portfolio capital invested in an enterprise. Depending upon whether the control of an enterprise rests abroad or in Canada, the enterprise's total book value will be shown as under foreign or Canadian control respectively. But the value of any minority holding of such a concern, will be classified in the foreign and domestic ownership statistics according to the country holding this interest. Hence, the value of foreign ownership may exceed or fall short of foreign-controlled investment.

In all tables showing a country of ownership subdivision of investment, some investments designated as held by residents of the United States and the United Kingdom may include items held for residents of other nations.

G152-187. Canada's balance of international indebtedness, selected year ends, 1926 to 1974

Source: Statistics Canada, Canada's International Investment Position, (Catalogue 67-202), table 1.

Not all series will be mentioned individually, but working definitions of concepts are provided where it is deemed useful to do so.

G152 and 166. Direct investment. Direct investment abroad is the book value of long-term investment abroad owned by the controlling or principal shareholders resident in Canada. While investments by Canadian chartered banks via wholly owned foreign subsidiaries engaged in providing trust services or in holding real estate are considered as direct investment, their investments in foreign banking operations are covered under 'Other Canadian short-term holdings of foreign exchange', and their investments in foreign real estate not held through separate corporations were not covered anywhere in Canada's external assets until 1974 when they were included in 'miscellaneous investment'.

The equity of non-residents in Canadian investment abroad through ownership in Canadian companies is reflected in a separate series, G171, in Canada's external liabilities, 'Equity of non-residents in Canadian assets abroad'.

Direct investment in Canada is the book value of long-term investment in Canada by all residents of the country in which control is considered to lie. This differs from direct investment as used in the balance of payments which covers only flows from controlling, affiliated, or principal owners.

The capital flows altering the value of foreign direct investment in Canada are primarily those shown in the balance of payments under 'Foreign direct investment in Canada'. But on occasion, other flows recorded under portfolio transactions, other long-term capital transactions and Canadian direct investment abroad affect the totals. By far the most important item not recorded in the balance of payments but influencing the direct investment figures is retained earnings of foreign-controlled Canadian corporations. (See "Sources and Methods", Sections 4.3 to 4.5.)

G153, 167 and 168. Portfolio investment. Portfolio investment abroad is the book value of the holdings by residents of Canada of portfolio investments in foreign securities. Foreign securities are defined to include holdings by Canadian residents in Canadian companies whose activities and assets are wholly situated outside Canada. But foreign securities retained by Canadian insurance companies as a consequence of their activities abroad are not included. Such assets are deemed to be, essentially, the property of the foreign policyholders. There are difficulties, however, with attempting to distinguish between holdings of foreign securities from funds supplied by Canadian policyholders and those from funds supplied by foreign policyholders. Hence, when foreign companies have been asked to supply figures for holdings by residents of Canada, holdings of Canadian insurance companies have been expressly excluded. To this extent, then, Canadian assets abroad are understated.

Portfolio investment in Canada covers investment in corporations by non-residents, other than investments in direct investment enterprises from the countries in which control of them is deemed to lie. Government bond liabilities includes foreign investment in bonds of the Government of Canada, provinces and municipalities, including all the funded debt guaranteed by them with the sole exception of railways, which are treated differently. (See series G249-290.)

G154 and 169. Miscellaneous investment. This is a residual category. Canadian investments abroad include all long-term Canadian investment abroad other than direct investment, portfolio investment in stocks and bonds, Government of Canada credits, and Government of Canada subscriptions to international investment agencies. A large element in the category consists of medium- and long-term export credits extended by Canada directly or indirectly at the risk of the Government of Canada, whether financed by public or private sources. Other items include real estate held abroad by Canadians, Canadian claims on foreign estates and trusts, deferred receivables, and equity of Canadian members in international trade unions.

Miscellaneous foreign investments in Canada include Canadian securities, real estate, mortgages, and other assets held or administered for non-residents by trustees, agents nominees, private investment companies, etc.

Miscellaneous investments are separated from 'Other portfolio investment' because measures of them are less exact and because no industrial distribution is feasible.

G155. Government of Canada credits. These include most of the Government of Canada's long-term investments abroad including loans to foreign governments and holdings of United States government medium-term non-marketable securities acquired under the Columbia River Treaty arrangements, except those described under series G154 above and some holdings at the end of 1966 and 1967 of bonds of the International Bank for Reconstruction and Development acquired in order to lower Canada's official holdings of United States dollars, which were treated as portfolio investments.

G156. Government of Canada subscriptions to international investment agencies. These are discussed under series G93 and 94.

G158 and 173. Private short-term holdings of foreign exchange and non-resident holdings of Canadian dollars. The first of these series shows net foreign currency claims of the Canadian chartered banks on non-residents, together with deposits of residents with banks abroad and foreign treasury bills held by residents (apart from those of the Canadian banking system and the official monetary authorities). The second consists of Canadian dollar deposits of non-residents with financial institutions in Canada, Government of Canada demand liabilities, and holdings by non-residents of Government of Canada treasury bills. These series differ from 'Short-term receivables and payables n.e.s.' in that the estimates of them are more precise and can be identified by geographical distribution.

G163. Net official monetary assets. These comprise the convertible foreign currency holdings of the Exchange Fund Account, the Receiver General for Canada and the Bank of Canada, official holdings of monetary gold, SDRs, and Canada's reserve position in the International Monetary Fund, less any associated liabilities of a short-term nature.

G164 and 178. Short-term receivables n.e.s., and short-term payables n.e.s. Short-term receivables cover estimated short-term claims of Canadians on non-residents apart from those represented by net official monetary assets and other Canadian short-term holdings of foreign exchange. (See "Sources and Methods", Sections 4.2-29.) The series represent the projection of a benchmark estimate constructed for the year 1956. Until that time, no estimate for these claims had been included in the measure of Canada's international investment position. A benchmark for the end of 1956 having been established, series were constructed back to the end of 1945 and the benchmark has been projected forward from 1956. See Statistics Canada publication, Canadian External Short-term Assets and Liabilities, 1945-1957, (Catalogue 67-504). Essentially, the year-end estimates are projected on the basis of the identified flows in series G108. The balance of errors and omissions is a component of this series. This balance was reflected as a liability until the end of 1966 but since the beginning of 1967 it has been included in the asset series for short-term receivables n.e.s.

Short-term payables n.e.s. consists of holdings by non-residents of the short-term paper of sales finance and consumer loan companies, bank borrowings abroad by such companies, advances to them from parent companies abroad, holdings by non-residents of Canadian short-term commercial paper, holdings by non-residents of other short-term paper, and all other short-term payables to non-residents.

G171. Equity of non-residents in Canadian assets abroad. The value of Canadian assets abroad includes the equity of non-residents in them via their ownership in Canadian enterprises. Hence, an estimate of this non-resident interest must be included with Canadian liabilities to offset, as closely as possible, the overstatement of Canadian assets abroad. This series must then be taken together with the other series for foreign investment in Canada in order to arrive at totals for foreign long-term investment in Canadian enterprises.

G172. Official SDR liabilities. This series represents the value of allocations to Canada by the International Monetary Fund of SDRs. Since it is the general practice in these indebtedness statistics to value Canada's external long-term liabilities at the exchange rates applicable when they were created, the same procedure is followed here, despite the close relationship existing between the long-term liability and the holding of SDRs in Canada's short-term external assets.

G180. Net indebtedness. This series equals series G179 less series G165, or the sum of series G184-187.

Source: Statistics Canada, Canada's International Investment Position, (Catalogue 67-202), table II in the 1926 to 1967 publication and table 10 in subsequent publications for 1926 to 1974; Knox, "Excursus", table A, p. 299 for 1913 to 1926; and Viner, Canada's Balance, p. 139 and reproduced in Knox, "Excursus", table A, for 1900 to 1913.

Statistics for 1926 and subsequent years which have not been footnoted are the official estimates compiled by Statistics Canada.

G203-226. Foreign long-term investment in Canada, all countries and by major areas, by type of investment, selected year ends, 1926 to 1974

Industry:

Industry Subdivisions:

Source: Statistics Canada, Canada's International Investment Position, (Catalogue 67-202), table V in the 1926 to 1967 publication and table 13 in subsequent publications.

Data sought and tabulated for Canada's international investment position are generally on a Canadian consolidated basis, closely approximating the enterprise, but excluding that part of the enterprise extending outside Canada. Enterprises are defined broadly as firms or aggregations of firms under common ownership and financial control. But enterprise statistics have not yet been highly developed and no satisfactory and widely accepted standard industrial classification exists for them. For this reason, the data on industries are still organized on the early classification system based upon the chief material components employed, but influenced by the character of the information available and the principal industrial activities of the corporate units from which the data are obtained. Use of this classification preserves the historical continuity of the investment position statistics back to 1926.

As a result of using the enterprise as the statistical unit, and consequently for Canadian consolidations of data inputs, all investment in Canada of a corporation, together with its subsidiaries, is normally attributed to their principal activity. Also, a company established to provide facilities for a particular enterprise is normally classified with it. Thus, for example, a railway subsidiary set up by a mining company primarily to provide transportation of its output, is included with 'other mining and smelting' investment. Again, companies established in connection with the leaseback of service station properties are shown with 'petroleum and natural gas', not with merchandising. In fact, the 'petroleum and natural gas industries' category includes a wide variety of activities such as exploration and development, refining, pipelines, wholesale and retail distribution, and some petrochemicals. The data for 1930, 1945, 1951 and all years since 1953 have followed this classification system for the petroleum and natural gas sector rather than distributing the activities among the other relevant categories of manufacturing, mining, utilities and merchandising.

A few other noteworthy characteristics of the industry subdivisions of data are as follows. 'Mining and smelting' refers only to native ores so that the smelting of alumina, for example, is included with manufacturing. The 'railway' category includes investments in rolling stock, production and maintenance, ships, airlines, trucking, hotels, telegraphs and so forth. It also includes foreign investment in the funded debt of the Canadian National Railways and of provincial railways. This procedure has its roots deep in Canadian history, and is in contrast with the fact that foreign investment in the debt of other public enterprises guaranteed by provinces and municipalities is normally included with investment in government securities. 'Other enterprises' covers a wide variety of activities such as logging, engineering services, construction, film distribution, entertainment, advertising, hotel operation, cartage, shipping agents, stevedoring, geophysical services and so on.

G227-243. Foreign direct investment in Canada, all countries and by major areas, by industry, selected year ends, 1926 to 1974

Source: Statistics Canada, Canada's International Investment Position, (Catalogue 67-202), table VI in the 1926 to 1967 publication and table 16 in subsequent publications.

Souce: Statistics Canada, Canada's International Investment Position, (Catalogue 67-202), table VIII in the 1926 to 1967 publication and table 15 in subsequent publications.

Net capital inflow for direct investment corresponds to series G84.

Source: Statistics Canada, Canada's International Investment Position, (Catalogue 67-202), table XVI in the 1926 to 1967 publication and table 26 in subsequent publications.

The figures in this table are subject to important statistical qualifications described under the note "Estimated Values of Total Capital and Resident-owned Capital in Some Areas of National Wealth" in Statistics Canada, The Canadian Balance of International Payments, 1960 and International Investment Position, (Catalogue 67-201), pp. 62-63. In particular it may be noted that in these series foreign investment in debentures associated with public enterprises in other utilities is shown in the other utilities category rather than with government. See also under the general discussion of series G341-380 how these data compare with CALURA data.

Source: Statistics Canada, Canada's International Investment Position, (Catalogue 67-202), table XVIII in the 1926 to 1967 publication and table 28 in subsequent publications.

Source: Statistics Canada, Canada's International Investment Position, (Catalogue 67-202), table XX in the 1926 to 1967 publication and table 30 in subsequent publications.

G318-340. Canadian long-term investment abroad, all countries and by major areas, by type and industry, selected year ends, 1926 to 1974

Investments located in:

Source: Statistics Canada, Canada's International Investment Position, (Catalogue 67-202), tables XXIII and XXIV in the 1926 and 1967 publication and tables 2 and 3 in subsequent publications

Corporations and Labour Unions Returns Act (Series G341-380)

General note

The Corporations and Labour Unions Returns Act (CALURA) was approved by Parliament in April 1962. This act, administered by Statistics Canada, calls for the gathering and tabulation of financial and other data on large corporations having annual gross revenues in excess of $500,000 or assets in excess of $250,000, as well as any labour union having a local and at least 100 members in Canada. (Only the corporate data is relevant for this section.)

The first annual report under this act was published in 1965 covering data commencing in 1962. Since that date the annual report has been extended both in terms of the number of corporations covered and the data provided on their activities. Information obtained under the authority of other Government of Canada statutes is also included, if relevant, in the reports. One example of this is information on government business enterprises. For additional information on the history and coverage, see Statistics Canada, Corporations and Labour Unions Returns Act, Report for 1975, Part I, (Catalogue 61-210), "Statistical Notes and Definitions". The annual reports contain a large number of other detailed series on the affairs of foreign corporations in Canada in addition to those covered here. Because foreign ownership and control of Canadian corporations has long been an important issue in Canada, the focus here is on various measures of the importance of foreign control. The remainder of this section discusses the concepts involved and differences from the foreign investment series included in series G152-340.

Control

In the CALURA data, in the absence of conclusive evidence to the contrary, a corporation is considered to be foreign controlled if 50 per cent or more of its voting rights are known to be held outside Canada or are held by one or more Canadian corporations that are themselves foreign controlled. The country of control of a Canadian corporation is ascribed to that foreign country in which the majority of the voting rights are held or where the majority of the voting rights of its Canadian parent company or companies are held. The control is assigned to Canada, however, in those instances where the holding of over 50 per cent of the voting rights is distributed among non-associated shareholders in two or more different countries, and where the voting rights held in Canada constitute the largest single holding reported by any country.

In contrast to the international investment series under G152-340 where the degree of control is measured by the capital employed in Canada (long-term debt plus net worth), in the CALURA data the extent of control is measured by the number of corporations, assets, equity, sales and profits.

Although the CALURA data has been gathered since 1962, the series on control commences only in 1968. The CALURA reports provide detail on a 34 industry breakdown, but limitations of space require that only an aggregated eight industry subdivision be presented here. Finally, whereas the series included give only dollar values or absolute numbers, the CALURA reports also provide percentages for those who desire them.

Reporting unit

The CALURA series are based on individual corporation returns whereas the international investment series deal with Canada-consolidated statements for enterprises. The latter concept eliminates certain intercorporate items between Canadian parent companies and their subsidiaries in Canada which will be retained in the CALURA material. That is, the CALURA statistics may reflect organizational changes arising from amalgamation, mergers, takeovers, etc., which might not have been reflected in statistics reported at the enterprise level. Also, the CALURA series uses the corporation as the unit for industrial classification, whereas the enterprise (the family of related companies) is used in the international investment series. Differences in industry statistics between the two series will be particularly acute in fine industry breakdowns because of diversified conglomerate enterprises, and in areas where enterprises reflect large scale vertical integration. But at the highly-aggregated level of presentation being used in the following tables, the differences will not be as great. Differences will arise as well between the two series because the CALURA data exempt smaller corporations.

For additional details comparing and contrasting CALURA with other foreign investment series, see Statistics Canada, The Canadian Balance of International Payments, 1963, 1964 and 1965 and International Investment Position, (Catalogue 67-201), pp. 81-84; and J.D. Randall, "A Brief Guide to Statistics Related to Foreign Ownership in Canada", in the Canadian Statistical Review, January 1974 (Catalogue 11-003), pp. 4-7 and 14-16.

Source: for 1968 to 1969, the annual CALURA reports for those years, table 2; for 1970 to 1975, the annual CALURA reports, table 3.

Source: same as series G341-348.

In this report, assets identified separately are cash, marketable securities, accounts receivable, inventories, fixed assets, investments in affiliated corporations and other assets. The amounts tabulated are those shown on the balance sheets of corporations after deducting allowance for doubtful accounts, amortization, depletion and depreciation.

Source: same as series G341-348.

Equity represents the shareholders' interest in the net assets of the corporation and generally include the total amount of all issued and paid-up shared capital, earnings retained in the business, and other surplus accounts such as contributed and capital surplus.

Source: same as series G341-348.

For corporations in the non-financial industries, the figure tabulated as sales is gross revenues from non-financial operations.

Source: same as series G341-348.

Profits comprise net earnings from operations, investment income and net capital gains. The profits are tabulated after deducting allowances for amortization, depletion and depreciation but before income tax provisions or declaration of dividends.

Foreign Trade (Series G381-487)

General note

For notes on trade statistics up to 1960, see HSC I, Foreign Trade, (series F242-350), pp. 154-155. Also see the preceding comments under series G57 and 70 in this volume with regard to trade valuation, classification and other relevant topics. In this edition of the Historical Statistics of Canada, all trade figures have been adjusted to exclude 'special transactions, non-trade' back to 1926, whereas figures before 1926 still include special transactions. In HSC I, 'special transactions, non-trade' were excluded only for 1959 and 1960.

Source: for 1868 to 1965, Statistics Canada, Trade of Canada, Volume I, Summary and Analytical Tables, calendar years, 1966 to 1968, (Catalogue 65-201), tables 1 and 2; for 1966 to 1975: Statistics Canada, External Trade Division, data files. Current reference publications are Statistics Canada, Exports, Merchandise Trade, (Catalogue 65-202); and Imports, Merchandise Trade, (Catalogue 65-203).

Source: for 1869 to 1960, see notes in HSC I relating to series F357-359, and references cited there; for 1961 to 1975, Statistics Canada, External Trade Division, data files. Data are also available from CANSIM for the years 1968 to date.

Details on the indexes used up to 1960 are in HSC I, under series F298-315, pp. 156-157 and references cited there.

For 1961 to 1975, the price indexes, like those for earlier years, are Laspeyres type. That is, prices are weighted by the base year quantities, which, for 1968 to 1975, are those of 1971. For 1961 to 1967, 1948-based indexes have been linked to the 1971-based series. Although not presented in this volume, import and export price indexes are also available now on a current-weighted Paasche type basis. For more information, see Statistics Canada, Summary of External Trade, (Catalogue 65-001), 1976.

Source: Statistics Canada, Trade of Canada, Volume I, Summary and Analytical Tables, 1966-1968, (Catalogue 65-201), table 5.

Source: same as series G389-395.

Source: for U.S. and U.K., 1946 to 1965, Statistics Canada, Trade of Canada, Volume I, Summary and Analytical Tables, 1966-1968, table 5; for other country groupings, same publication, table 9, and also the same publication for earlier years; for 1966 to 1975, Statistics Canada, External Trade Division, data files.

Source: for U.S. and U.K. 1946 to 1975, same as series G401-407; for other country groupings, same publication, table 10, and also the same publication for earlier years; for 1966 to 1975, same as series G401-407.

Source: for 1946 to 1965, Statistics Canada, Trade of Canada, Volume I, Summary and Analytical Tables, 1966-1968, table 8, and the same publication for earlier years; for 1966 to 1976, Statistics Canada, External Trade Division, data files.

Source: same as series G415-428.

Source: Statistics Canada, "Sources and Methods", tables II-1 and II-2.

The basic Trade of Canada series are now constructed to reflect transfer (transactions) prices for trade of automotive vehicles. To the extent possible, adjustments are made regarding other commodities to put them on a transfer price basis for use in the balance of payments. Other adjustments are made to place trade statistics on a basis consistent with other elements of the balance of payments in terms of coverage, valuation and timing. The adjustments include the following:

G444 and 460. Non-monetary gold. Since the end of the first quarter of 1968, non-monetary gold, which has been recorded under 'special transactions, non-trade', had been added to commodity exports and imports in the balance of payments.

G445. Wheat. For balance of payments purposes, a series for the value of wheat exports is calculated by applying to the record of wheat clearances of the Board of Grain Commissioners the unit values derived from the Trade of Canada series. This resulting series is thought to be better in terms of coverage, timing and information on ultimate destination of Canadian-owned wheat held from time to time outside Canada.

G446. Energy. Additions were made to exports in the early 1960s for natural gas exported by pipeline which had not been recorded in the trade series. Also, since exports by pipeline of petroleum and natural gas are published in Trade of Canada with a lag of one month, balance of payments adjustments made in 1973 and carried back to the beginning of 1968 assigned such energy exports to the appropriate quarter.

G447 and 461. Automotive products. Deductions are made from both exports and imports for special tooling and other automotive charges recorded on trade documents as these charges are already included among service transactions. Also, export adjustments in 1967 through mid-1969, and import adjustments in 1967 and 1968, included deductions to reduce the reported values to a transfer price basis.

G448-G450 and G462-464. Ships, civil aircraft and defence goods. Additions are made to the balance of payments for both exports and imports of items not recorded in Trade of Canada, such as ships of British construction and registry for use in Canada or, until 1966, of aircraft to be used for international travel. Also, rather than recording ships, aircraft and some military equipment in the balance of payments just when deliveries are made, progress payments in connection with their construction are recorded instead. This is done because the items are often quite large, production extends over a considerable period and, on occasion, documentation lags behind delivery. The procedure eliminates the need to have any additional series in the capital account to cover progress payments made on undelivered equipment, or in the current account to cover purchases delivered outside Canada, such as deliveries to the armed forces abroad.

G451. Tourist purchases. A rather arbitrary deduction is made in the balance of payments for goods counted in recorded exports but actually purchased by tourists and already included in Canada's travel receipts.

G452 and 468. Warehousing. The adjustments represent estimates of the difference in value of goods moving across the customs frontier and goods moving across the national frontier for the years prior to 1955, the earliest year for which the trade data were adjusted to reflect the change to the 'general trade' basis mentioned earlier.

G453 and 469. Newfoundland. Exports and imports of goods between Canada and Newfoundland which appeared in trade series after 1939, until Newfoundland joined Canada in 1949, were deducted from the series for balance of payments purposes. This means that from 1940 onward, Newfoundland was treated, for balance of payments purposes, as though it were a part of Canada, even though it did not become so politically until 1949.

G454. War supplies. Payments by the United States government for war supplies and metals exported by Canada to them under the Hyde Park agreement were not initially recorded in the basic trade data, but rather in a special merchandise account. Hence, they had to be added to commodity exports for balance of payments purposes.

G455. UNRRA cash purchases. Foreign contributions used for the purchase of Canadian goods were recorded as special receipts in the merchandise account and not in the primary trade data. Therefore, like war supplies, the amounts had to be added to exports for balance of payments purposes.

G456 and 470. Other adjustments. These cover a range of items such as additions to exports in the late 1940s and 1950s to adjust the value of uranium exports recorded in the primary trade data at nominal values (for security reasons); deductions in the mid-1950s to lower to the amounts actually received from the United Kingdom, the values for exports of beef, which were recorded in the trade statistics at substantially higher support prices paid to the producers by the Canadian government; retroactive price adjustments; and adjustments relating to reporting lags. Since 1971, major revisions have been made to remove from export and import totals the value of transportation costs already covered in the freight and shipping series, and to reflect necessary changes as identified by the United States-Canada Trade Statistics Committee. For exports, the most important of these is an addition for shipments on which statistical documents were not received by Statistics Canada; and for imports, the most significant change is a deduction from imports to lower customs values to transactions values.

G465. Advertising. An arbitrary deduction is made for imports of advertising materials. Part of this material is travel promotion literature which does not involve direct outlays by Canada, and part is included in payments for advertising services.

G466. Official valuations. An arbitrary deduction is made from the value of imports with respect to valuations for customs duty purposes which are higher than the actual amounts paid for goods; the amount is a notional one, not well founded.

G467. Foreign exchange rates spread. A deduction was made during the period of fixed exchange rates under exchange control to reduce the values recorded on import documents by the amount of the spread between the official buying and selling rates which constituted a domestic rather than an international cost.

Source: for 1868 to 1918, Statistics Canada, Trade of Canada, Volume I, Summary and Analytical Tables, 1939; for 1919 to 1965, Trade of Canada, Volume I, Summary and Analytical Tables, 1966-1968, tables 2, 3 and 4; for 1966 to 1975, External Trade Division, data files.

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