Venturing Capital

The U.S. owns a big piece of Canada. According to the Dominion Bureau of Statistics, U.S. citizens have invested more than $5 billion north of the border. Better than half of that amount--an estimated $2.7 billion--is in the U.S.-controlled companies, subsidiaries and branches that make up 37% of the investment in Canadian industry.

DBS had just finished its compilation last week when Phillips Petroleum's President Kenneth S. Adams announced in Calgary that his company had bought an interest in 4,800,000 acres of oil rights in Alberta and Saskatchewan. In its northern venture, Phillips was following the trail of such giants as Standard Oil (N.J.) and the Texas Co. They and other U.S. firms were turning out 66% of all petroleum products made in Canada.

Oil was not the only field for the Yankee dollar. Last year, Chrysler, General Motors and Ford* turned out automotive products worth $183 million, 95% of Canadian production. Firestone, U.S. Rubber, Goodyear and Goodrich did 60% of the rubber business, and other well-known U.S. manufacturing names were familiar throughout the provinces. In the latest DBS report Coca-Cola has 22 bottling works, Borden Co. 23 dairy processing plants, Swift 26 packinghouses.

As they skimmed off $275 million annually in dividends and interest, many U.S. investors wondered why more Canadians didn't get in on a good thing. Was there a lack of Canadian capital? Up to a point, there was, but the shortage was partly due to a shortage of Canadians (12.8 million v. 148.5 million U.S. population). Moreover, many a Canadian in the chips wanted to play it safe. He put his money in the more conservative wood pulp, paper and textile industries, left such speculative fields as oil to gambling Americans with specialized know-how.

* Ford Motor Co. of Canada, Ltd. is not a subsidiary of Ford Motor Co. of Detroit, but the Ford family controls the voting stock.

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