1923-06-18

Volume I:: Pages 1-1025	Volume II: Pages 1027-2045
Volume 111: Pages 2047-3044	Volume IV: Pages 3045-4005


Volume V:: Pages 4007-4756



VOLUME CLIX


[Stage Direction]
House of Commons Oebntes
[Stage Direction]
Monday, June 18, 1923
[Stage Direction]

Fifth Report of the Special Committee appointed to inquire into Agricultural conditions -Mr. McMaster.

Mr. G. H. BOIVIN (Shefford) moved:: That the First and Final Report of the Joint Committee of both Houses of Parliament, appointed to consider:-
1.	The forms of Bills and the best means of affording information and assistance in the consideration thereof at aill stages of legislation in both Houses of Parliament;
2.	The better distribution of the work of legislation between the two Houses;
3.	The practical operation of the provisions of The Senate and House of Commons Act, Revised Statutes of Canada, 1906, chapter ten, respecting the attendance of Senators and Members of the House of Commons, and the expediency of making any alterations in those provisions,-which said report was presented to the House of Commons on Thursday, June 14th, 1923, be now concurred in.
He said: Before the motion is put to the House, I should like to say a very few words concerning the report which was presented on Thursday last as the unanimous finding of the Joint Committee of both Houses of Parliament concerning the matters which were referred to us. Let me say at the outset that this report is nothing more than a recommendation to parliament and to the government concerning the matters therein mentioned and that any action which the House may take to-day will be merely a direction to the government, and will have no effect in changing the law as it now stands upon our statutes until it is implemented by legislation introduced by the government.
The first matter referred to the committee was the form of bills and the best means of affording information and assistance in the consideration thereof at all stages of legislation in both Houses of parliament. I do not desire to take up much time in my remarks on this subject, because the report is very complete and any hon. member reading
it in the Votes and Proceedings of Thursday last will see that the committee recommends that when an opportunity presents itself, the rules of the House of Commons be amended for the purpose of altering the form in which bills are now printed for presentation to the House. At the present time, bills merely show enactments and amendments which it is proposed to have approved by parliament, and there is no explanation whatever of the changes which are made in amending acts. The committee unanimously considered that, if it were possible to print on the opposite pages of the bill, the full section or subsection which it is desired to amend, showing in brackets or in italics the changes to be made, and also to print in a parallel column the section or subsection as amended, it would be a great time-saver and would avoid the necessity of many members asking the minister in charge of the bill: What is the present form of the section?

What is the nature of the change?-Why is the change being made? -and a great many questions which are very essential to a proper understanding of the bill, but which could be dispensed with if all this information were included in the bill when it was presented to the House. However, this is merely a recommendation. The rules of the House of Commons, as we all know, are made by the House itself, and it was not thought by the committee that the rules should be amended at this late stage of the session, but it was hoped that our recommendation might be given consideration and that the rules might be amended at the opening of the next session of parliament.
The second matter referred to us was the better distribution of the work of legislation between the two Houses of Parliament. There was a long discussion concerning this matter in committee, and while some members thought that rigid rules should be enacted to the effect that all private legislation should be divided equally between both Houses, it was pointed out by the majority of the committee that this might work a hardship upon senators and members of the House of Commons who might be requested by

Legislation Committee

their constituents to take charge of a bill at the time of its introduction, and to see that it was safely piloted through its initial stages in that house in which the hon. member occupied a seat. For that reason, in order not to deprive any member of parliament or any senator of the right of introducing a bill which might be specially confided to his care, it was decided merely to recommend that the distribution of all Private Bills be regulated by the Speakers of both Houses jointly, so that as far as practicable, all private legislation should be divided equally between the Senate and the House of Commons. The hon. members of the Senate who were members of this committee seem to be very anxious to do their share of work. They claim that during the opening weeks of the session they are often obliged to adjourn the Senate while waiting for legislation from this Chamber, and that if private legislation was introduced equally in both Houses-with the exception of divorce bills, which of course must be introduced in the other House-the time of parliament could be saved and that many days which are now devoted to private bills by the committees of this House could be better devoted to such government legislation as is sometimes referred to special committees.
The third, and perhaps the most important natter which was referred to the committee, is the practical operation of the provisions of the Senate and House of Commons Act 1906, respecting the attendance of senators and members of the House of Commons, and the expediency of amending these provisions. Let me say at once in this connection that I would not have considered it necessary to make any reference to the report had it not been for certain statements and editorial articles published in the press on Friday and Saturday of last week intimating that it was the desire of the committee to make it easier for senators and members of parliament to earn their sessional indemnities. This idea was far from our minds, and our only desire was to correct certain inconsistencies and anomalies existing in the present act. It will be found that section 32 of the amended act provides that
For every session of parliament which extends beyond fifty days there shall be payable to each member of the Senate and the House of Commons attending at such session a sessional allowance of $4,000 and no more.
Section 38 provides:
That in each session of parliament of less than fifty days there shall be allowed to each member of the Senate and House of Commons attending at such session $25 for each day's attendance.

This means, if the law is to be strictly interpreted, that in the event of a session lasting exactly fifty days, no indemnity whatever shall be paid to any member of parliament. This anomaly can be corrected by amending section 32 to read:
For every session of parliament which extends over a period of fifty days or more,
Another anomaly which we desire to have corrected is the following condition which now exists. If a member of the House of Commons is called away from the House on Thursday afternoon and does not return until the following Monday, he is penalized for three days' absence. If he leaves on Friday afternoon and does not return until the following Tuesday, he is penalized for only one day's absence. We believe this to be unfair and we recommend that in both cas'es, the member should be treated in the same manner.
Another inconsistency requires correction. If a member from western Canada is called home in the month of March owing to the serious illness of a member of his family, and is absent for fifteen days, but is regularly in attendance throughout the remainder of the session, he receives his full sessional indemnity. If an hon. member for some distant constituency is obliged to return home during the month of June by reason of family sickness, even if he has not been absent during the preceding months of the session, he is fined $25 for each day that he is absent. We recommend that in both cases, the member should receive the same treatment.
The press in some of its articles has led the public to believe that our desire was to allow any member to leave this House during the last fifteen days of the session without being fined. That is not the spirit of our recommendation which is merely to extend the same rule from the beginning to the end of each session. We consider that important legislation may be introduced in the first part of a session as well as in the last days, and that a member who is called away by any matter of urgent importance in his constituency or for any well recognized personal reason should be treated in the same way whether he is absent during the first or the last days of the session.
There is only one other important change proposed. It has been pointed out that under our resolution we have done away with the clause in the amended act which provides that a member must be present for at least three-fourths of the sitting days of the session in order to be entitled to his full sessional indemnity. It is stated that in certain sessions this may operate to the advantage of

Fisheries Act
a member. It must also be said that in many other sessions it will operate to his disadvantage. In the ease of a session lasting eight or nine weeks, under the law as we propose to amend it, every member must have at least fifty days of attendance in order to receive his full sessional indemnity. If not he receives only $25 for each day of attendance. Under the old law if the session lasted more than fifty days, and the member was present for three-quarters of the sitting days, he received his full indemnity. We did not find this to be absolutely just and right, owing to the fact that the entire membership cannot receive its indemnity unless the session extends over a period of fifty days, and we considered that like under the old act, the individual member should be treated the same as the entire House. This amendment would certainly not relieve a member from any hardship in earning his sessional indemnity and in many instances, it would necessitate a longer attendance than that which is necessary under the present law.
May I be allowed to repeat that the finding of the committee in all these respects was absolutely unanimous. I submit the report to the House in the firm hope that it will be adopted with equal unanimity. When concurred in, this report will not be binding upon the government but I feel sure the government will be directed by the unanimous voice of the House, and that as requested by the committee the required legislation will be introduced during the present session to correct and do away with the anomalies and inconsistencies to which I have briefly referred.


Mr. SHAW:: What were the reasons given
in parliament for the legislation which it is now proposed to amend?


Georges Henri Boivin: I have before me the debates of the House of Commons of June 28, 1920, when the amending bill was introduced by Sir Robert Borden. That was one of the last sittings of the session, and no detailed reasons for all the amendments were then given, except that the sessional indemnity was being increased from $2,500 to $4,000 and that it was desired to make the rules concerning the attendance of members in the House more rigid than they had been under the then existing act. This intention is carried out by the amending legislation now proposed. Under the old law, the attendance of a member and the length of session necessary to enable him to receive the full indemnity was only thirty days; that has been extended to fifty days. Under the old law the absence allowed a member was fifteen days; that has been maintained in spite of the fact that
sessions are now much longer. Under the old law the penalty for every day of nonattendance was only $15; that has been increased to $25.


Mr. GAUVREAU:: Just a word as the
seconder of the motion. It has always been the rule in this House not to oppose the unanimous report made by a committee to the House. I hope that in connection with the present report, no departure will be made by the government from this very commendable custom.


Mr. LOGAN:: I would point out that there is another anomaly that has not been rectified. If a member is ill and confined to hospital in Ottawa, he may come in on the last day of the session and draw his full indemnity of $4,000, whereas if he is so unfortunate, as I was, to be confined to a hospital in Montreal, he is penalized, as I understand I am, to the extent of something over $1,000.


Charles Arthur Gauvreau: No.


Hance James Logan: Yes, because I was not in
hospital in the city of Ottawa.


Mr. LEWIS:: It seems to me there is
another anomaly. If a member from the West goes home because of illness in his family, it takes him fifteen days to get there and back. If the House sits only fifty-five days, under the new rule that member will lose his right to get the full sessional indemnity. Moreover, the House has to be forced to sit sixty-five days before any member who has taken fifteen days leave of absence can get in his full time. I do not know that it is wise always to force the House to sit sixty-five days if the business to be transacted does not call for it.


[Stage Direction]
Motion agreed to.

[Stage Direction]
Hon. ERNEST LAPOINTE (Minister of Marine and Fisheries) moved for leave to introduce Bill No. 223, to amend the Fisheries Act, 1914.
He said: This bill provides that the annual fee for salmon canneries shall foe $20 a year. It is to follow the recommendation of the committee on Marine and Fisheries.
Mr. MEIGHEN:: Instead of what?


Mr. LAPOINTE:: Instead of $500; but they are paying in addition to that a fee for every case of 48 one-pound cans.
Motion agreed to and bill read the first time.
Forest Fires



FOREST FIRES


[Stage Direction]
On the Orders of the Day:
Charles Arthur Gauvreau: I would like to place before the government what I consider to be a case of urgency. The county of Temiscouata, which I have the honour to represent in this House, is passing through a severe calamity. Bush fires have already swept away more than six villages; churches, homes, bams, implements, cattle and crops are in ashes. I have in my hand a wire which I received last night from the parish of Sully, asking the government for support and relief for the unfortunate settlers in that part of the country. I am told by the press that over six hundred families are without shelter, food or clothing. May I ask the government, may I ask this House, if it is possible to vote forthwith a sum of money for the relief of these settlers? It is true that as yet there is no loss of life, but the loss of property certainly runs into millions of dollars. I appeal to the right hon. Prime Minister and his colleagues to come to the rescue of these poor people who have lost in a few hours all that they had in the world. I appeal especially to the Acting Minister of Defence (Mr. Macdonald) to do as was done for Ontario last year, namely, to send food, clothing and supplies, and especially to send all the tents that are available in order that temporary shelter may be afforded to the settlers, their wives and children, in the devastated area.


Right Hon. W. L. MACKENZIE KING (Prime Minister):: I might say to my hon. friend that I received a wire on Saturday night along somewhat similar lines to that which he has received, and immediately I got in touch with the Department of National Defence, and word was sent that the department would be very glad to render assistance such as was rendered in former cases where there has been suffering through fires. It was pointed out, however, that in these matters the federal government has generally proceeded in co-operation with the provincial governments, and it was suggested that the parties affected should immediately communicate with their provincial government, and have the provincial officers communicate with us. The matter will be followed up.


Hon. CHARLES MARCIL (Bonaventure):: I would like to support the application made by the hon. member for Temiscouata (Mr. Gauvreau), and as the Prime Minister is in-

quiring into these fires I would point out that great damage to property has been done by fire in other constituencies. I understand that the county of Gaspe, represented by His Honour the Speaker, is suffering in that respect, as well as the county of Bonaventure and other counties in that region. So, if the matter is to be investigated, I hope^hese constituencies will not be overlooked.


Mr. PIUS MICHAUD (Restigouche and Madawaska):: I should like to say a few words on behalf of New Brunswick, one of the smallest provinces of the Dominion, but the one that has practically suffered the most. Conditions there, judging by the morning papers, are very regrettable. A great many families there are without shelter, and, as the hon. member for Temiscouata has said, without food and clothing also. I hope the Prime Minister will take into consideration not only that part of the province of Quebec where assistance is asked at this moment, but also the province of New Brunswick.



PRIVATE BILLS


[Stage Direction]
Bill No. 221 (from the Senate), respecting The Calgary and Fernie Railway Company.- Mr. Hudson.

[Stage Direction]
Bill No. 207 (from the Senate), for the relief of Abraham Brooks.-Mr. Baxter.
Bill No. 209 (from the Senate), for the relief of Clara Welleena Bristol.-Mr. Duff.
Bill No. 210 (from the Senate), for the relief of Emma Jean Walker.-Mr. Hocken.
Bill No. 211 (from the Senate), for the relief of Ella Maude Gee.-Mr. Church.
Bill No. 212 (from the Senate), for the relief of Enid Louise MacDonald.-Mr. Porter.
Bill No. 213 (from the Senate), for the relief of Mary Theresa Maclsaac.-Mr. German.

[Stage Direction]
(Questions answered orally are indicated by an asterisk.)

Mr. MAYBEE:: What was the amount of the regimental funds at the end of the war, and what was the disposition of same?


Hon. Mr. MACDONALD:: In the case of units of the Canadian Expeditionary Force other than those of a draft producing nature or which had a constantly changing personnel, the regimental, canteen and other funds were, upon the unit being

Questions
depleted, handed over to trustees appointed by the unit, to be used for the benefit of exmembers of the unit and their dependents, in accordance with the terms of Order in Council P.C. 1445, dated 29th May, 1917. No information is available in the department as to the amount of the unexpended balances of these funds held by the trustees at the end of the war. In the case, however, of units of a draft-producing nature or which had a constantly changing personnel, the regimental, canteen and other funds were, upon the unit being depleted, transferred to the Receiver-General in accordance with Orders in Council, P.C. 1856, dated 6th September, 1919, and P.C. 3144, dated 18th December, 1920.
According to the records of the Department of National Defence, the amount held by the Receiver-General in the special trust account created under Order in Council No. 1856, was $102,663.69, as at 31st August, 1921, the official date of the end of the war. According to the records of the Department of National Defence, the amount held by the Receiver-General in the special trust account created under Order in Council No. 3144, was $313,764.94, as at 31st August, 1921, the official date of the end of the war.
There have been no withdrawals except to satisfy claims received after deposits had been made and which claims were properly chargeable to the units' funds.


TORONTO VIADUCT
Mr. CHURCH:: 1.	Does the government intend to carry out a certain contract and agreement regarding the erection of a viaduct at Toronto, dated 1913?
2.	If not, why not?


William Lyon Mackenzie King: The Toronto
viaduct question will be dealt with, not by the government, but by the Board of Directors of the Canadian National Railways in conjunction with the Canadian Pacific Railway and the city of Toronto. It is understood that the present management is giving attention to the question of terminal arrangements at Toronto, and that the matter will be dealt with in due course.


BANK OF VANCOUVER
Hon. Mr. STEVENS:: 1.	What was the date of the failure of the Bank of Vancouver?
2.	Was the government a creditor? If so, for how much?
3.	What was the amount of the preferred claims, and have they been paid in full?
4.	What was the amount of claims by depositors, what per cent of their claims have they received up to date, and are any further payments being made to depositors?
5.	Do depositors in this case rank as ordinary creditors?


Hon. Mr. FIELDING:: 1! 14th December, 1914.
2.	No.
3.	$463,388.60, not paid in full.
4.	$349,590.46, on which no payment has yet been made. The liquidation has not been completed.
5.	Yes.


TRAFFIC, HUDSON STRAIT
Mr. KNOX:: 1.	How many trips were made by tramp steamer, lighters and other craft carrying construction materia! through the Hudson bay straits to Port Nelson in each of the years 1913, 1914, 1915, 1916 and 1917?
2,	Was the cargo successfully delivered at Port Nelson in each case?


William Lyon Mackenzie King: Table showing the number of trips made by steamships, sail ships, lighters and other craft carrying construction material through the Hudson Straits to Port Nelson in each of the years 1913, 1914, 1915, 1910 and 1917, with particulars as to the successful delivery of the cargo.
	Number of Trips				
Season	Steam- ships	Sail ships	Department tugs and lighters	Total trips	Particulars as to successful delivery of cargo1913	9	2	11	Two steamships under ton rate charters (Cearense and Alette) grounded in the Nelson Estuary, but cargoes were partly salvaged by the Department's forces at Port Nelson. Both steamers were a total loss. Ten per cent of the cargo of the steamship Alcazar was not delivered through lack of facilities for quick discharging at Port Nelson. All other cargoes were successfully delivered. All cargoes successfully delivered. All cargoes successfully delivered. All cargoes successfully delivered. Cargo successfully delivered.1914	9	2	4	15 11	1915	10	1	1916	4	4	1917	i	i	
Questions



QUESTIONS PASSED AS ORDERS FOR RETURNS


Mr. PARENT:: 1.	Does the government intend to send an expedition to the Arctic Inlands during this year? If so, for what purpose?
2.	Has the government at its disposal, for the said purpose, a vessel by the name of Arctic?
3.	Has said vessel ever made trips into Arctic regions ?
If so, (a) On what dates;
(b)	Who were the members of the crew;
(c)	How many government departments were represented on said vessel, and what are the names of said representatives and their respective salaries;
(d)	What was the cost of said expeditions, and expenses incurred by each department?
4.	Does the government intend to specially equip one or more vessels for the Arctic regions? Is so, what amount has been agreed upon for each of these vessels ?
5.	Has the department established Mounted Police Posts in certain localities of said regions? If so, how many men are at present in said localities and what are their duties?
6. Does the government intend to send artists to above regions to take moving pictures?
7.	Has the government any knowledge of a murder being committed in those regions? If so, what measures have been taken to bring the supposed murderers to trial ?


SOLDIER SETTLEMENT-MISSISQUOI AND BROME
Mr. KAY:: 1.	How many farms have been bought by the Soldiers' Settlement Board for returned men in the counties of Missisquoi and Brome, up to January 1st, 1923?
2.	How many have been bought since that date?
3.	How many returned men are still on these farms?
4.	How many farms have been sold owing to the failure of settlers, and what are the names of these settlers ?



FEEDING STUFFS

[Stage Direction]
Hon. W. R. MOTHERWELL (Minister of Agriculture) moved that the House go into committee at the next sitting to consider the following proposed resolution:
That it is expedient to amend the Feeding Stuffs Act, chapter forty-seven of the statutes of 1920, and to provide,-
1. That no person shall import into, manufacture, sell, offer, expose or have in possession for sale in Canada, any flour mill by-product resulting from the cleaning and milling of wheat for the production of flour by the usual commercial processes, unless,
(a)	the container or tag or label attached thereto is branded or marked as prescribed;
(b)	the bran, pure shorts, middlings or feed flour are free from admixture of any foreign materials;
(c)	the bran, pure shorts, shorts and mill screenings, middlings or feed flour meet the requirements as to protein and fat content, fineness and quality established by the regulations, and contain no crude fibre in excess of the percentage by weight as prescribed;
(d)	the shorts and mill screenings are first registered as a commercial feeding stuff and contain not more
(Mr. Motherwell.]
than the mill run of screenings and scourings removed from the wheat from which shorts was obtained.
2.	That no person shall manufacture pure shorts and shorts and mill screenings at the same mill.
3.	That the sale in Canada, or the importation, of any feeding stuff found to be adulterated or incorrectly or misleadingly tagged, labelled or named, shall be a violation of the act, and the minister may cancel any registration and prohibit the further sale or importation of any such feeding stuff.
He said: His Excellency the Governor General has been informed of the subject matter of this resolution and recommends it to the favourable consideration of the House.
Motion agreed to.

[Stage Direction]
Hon. W. S. FIELDING (Minister of Finance moved that the House go into committee at the next sitting to consider the following proposed resolution:
That it is expedient to amend section seven of the Export Act; chapter fifty of the Revised Statutes, 1906, as enacted by chapter thirty of the statutes of 1914, by providing that the Governor in Council may by regulation prohibit the exportation from Canada of pulpwood of the variety, kind, place of origin or having the particulars of identification or ownership or production described in the regulation.
He said: His Excellency, the Governor General has been informed of the subject matter of this resolution and recommends it to the favourable consideration of the House.
Arthur Meighen: Would the minister say whether or not, if the legislation contemplated goes into effect, it is the intention of the government still to appoint the commission he referred to in his budget speech, and if it is the intention that the government be empowered to act by order in council on the report of that commission?


William Stevens Fielding: We may decide to take that course but I would suggest that my right hon. friend renew his question when the resolution is being considered in committee; it is not debatable at the present stage. When we take the matter up in committee I will be happy to answer my right hon. friend.


[Stage Direction]
Motion agreed to.

[Stage Direction]
Mr. Fielding moved that the House go into committee at the next sitting to consider the following proposed resolution:
Resolved, that it is expedient to amend The Canadian National Railways Act, 1919, and to provide that no securities as defined in section 26 of the said act, including in such definition equipment certificates or obligations in any form intended to be issued to the public, shall be issued, except those approved as to

Bank Act
form, terms and amount by the Governor in Council, and that such securities so approved may be guaranteed by His Majesty.
He said: His Excellency the Governor General has been informed of the subject matter of this resolution and recommends it to the favourable consideration of the House.
Motion agreed to.


[Stage Direction]
On motion of Mr. Fielding for the House to go into committee on Bill 83, respecting banks and banking.
Mr. T. W. BIRD (Nelson):: Mr. Speaker-


Mr. SPEAKER:: This motion is not debatable according to rule 17A, of the rules of the House. I had anticipated, after inquiry from some hon. members as to the procedure at this stage of the bill, that possibly there would be some proposal to move an amendment or engage in some debate. I have looked very carefully into the question and find that the present motion is not debatable-that is, the motion for the Speaker to leave the chair to go into committee of the whole, is not debatable. This opinion is based on the decision of Mr. Speaker Rhodes, my immediate predecessor, on 15th October, 1919, when Hon. J. D. Reid, then Minister of Railways and Canals, moved that the House go into committee to consider certain resolutions regarding the Grand Trunk Railway system-see Hansard for 1919, second session, volume 2, page 1012-13; also upon the decision of Mr. Speaker Rhodes on 29th August, 1917, that a motion for the reading of resolutions from Supply and concurrence therein was not debatable-see Hansard for 1917, volume 5, page 5095; also upon the opinion of Sir Robert Borden in explaining the meaning of rule 17A. I quote Sir Robert Borden's very words-see Hansard, 1912-13, volume 4, page 7406:
What we have sought to do is to provide that all substantial motions, which bring into question the propriety of passing any bill, measure, or vote, shall be debatable. . . . but that purely formal motions, which, under the existing rules, would be used only for dilatory purposes, shall not in future continue to be debatable.
I wish to draw the attention of hon. members to rule 17A, which, probably, might better be explained by its author, whom I see in his seat now, the right hon. leader of the Opposition (Mr. Meighen), which rule must be read very carefully. The rule says:
Every motion heretofore debatable made upon routine proceedings, except adjournment motions and
every motion standing on the order of the proceedings for the day, or for the concurrence in a report of a standing or a special committee, or for the previous question, or for the third reading of a bill, or for the adjournment of the House when made for the purpose of discussing a definite matter of urgent public importance, or for the adoption, in committee of the whole, or of supply, or of ways and means of the resolution, clause, section, preamble or title under consideration shall be debatable; but all other motions shall be decided without debate or amendment. As hon. members will see, there is not in the enumeration of debatable motions, made under this rule, any such motion as the present one.
There can, however, be a vote on this motion but there can be no debate. I also call the attention of hon. members to rule 28 which says:
Bills reported after second reading-
Which is the present case, the bill having been read a second time and referred to the committee on Banking and Commerce-
-from any standing or special committee, shall be placed on the orders of the day following the reception of the report, for reference to a committee of the whole House in their proper order next after bills reported from committees of the whole House. And bills ordered by the House for reference to a committee of the whole House shall be placed, for such reference, on the orders of the day following the order of reference in their proper order, next after bills reported from any standing or special committee.
The present bill is therefore regularly on its way to the committee of the whole House and the motion has been made that I do now leave the chair. It is a purely formal motion. When the bill is in committee of the whole amendments can be moved to the various clauses or sections of the measure. When the bill is reported from committee of the whole to the Speaker, and consequently to the House, the occasion again presents itself to those who may have some opposition to offer to advance their views and their grievances. And finally when the third reading comes, the opponents of the bill, or of some of the principles involved in it, can again ventilate their views. Therefore at the present stage, as this is a formal motion and being supported in my opinion by the author of rule 17A and by the precedents which apply, I rule that the present motion is not debatable. Nevertheless, as I said a moment ago, a vote can be taken on the motion that I do now leave the Chair if there is any objection to the bill.


Thomas William Bird: I would not presume to question the authorities cited in your ruling Mr. Speaker, but just to indicate the usage, or rule, upon which my action is taken I will refer to page 606 of Bourinot's Parliamentary Procedure in which that authority expresses himself as follows:
Bank Act

When the order of the day for committee has been reached and caflled in due form, the Speaker will put the question, "That I do now leave the chair". Now is the time to move any amendment to this question. Members opposed to the bill may move that the House resolve itself into committee that day three or six months; or may propose motions adverse to the principle or policy of the measure.
It has been frequently decided in the English House that on the motion for the Speaker to leave the chair, a member is at liberty to discuss the main provisions, but not to proceed in detail through the clauses nor to discuss amendments to the same until the bill is regularly in committee.
It was mv purpose not to discuss amendments of details, but rather to bring to the attention of the House certain very important principles that are involved in the recent Merchants Bank case.


Hewitt Bostock: In order to be fair to
the hon. member, I might recall to himself and to the House that when Bourinot, and later, Flint, commenting on Bourinot, expressed the views which the hon. member has just read, rule 17A was not in existence. This is a new rule. It was enacted in 1912-13. I was a member of the House when it was enacted. I opposed it strenuously, and I was defeated at that time with many others. I was aware of the views expressed by Bourinot and by Flint, but they fall to the ground when one realized that rule 17A was enacted after those views were expressed.


Mr. GOOD:: May I speak to the question of order?


Some hon. MEMBERS:: Order.


William Charles Good: Would it be possible by unanimous consent to waive the rule?


Hewitt Bostock: I have given my ruling,
and as I stated a moment ago, if it is not the wish of the House that the Speaker leave the chair, a vote can be taken. But I take it for granted that the motion is carried and, therefore, I leave the chair.



BANK ACT-IN COMMITTEE

[Stage Direction]
Motion agreed to and the House went into committee on the bill, Mr. Gordon in the chair.
On section 1-Short title.
William Charles Good: We have received no copies of the amended bill.


William Lyon Mackenzie King: It was distributed on Friday.


The CHAIRMAN:: Copies have already been distributed. If the hon. member will look at his file, he should find a copy.


William Charles Good: It is not on my file; it is not in the post office, and I have not received

any copies. I understood that we would not be expected to proceed with the bill unless we had copies.


George Newcombe Gordon: The bill was distributed on Friday.


[Stage Direction]
Section agreed to.
On section 2-Definitions.
Arthur Meighen: I do not think it is fair to the members to rush on in this way until they can locate their copies of the bill. I know I was given a copy of the bill and I put it on my desk on Friday; but I cannot locate it myself, and it is not on my file. I am quite sure that the bill was distributed, but copies are not on our files.


Ernest Lapointe: A copy is on my file, and I think a copy should be on everybody's file.


Some hon. MEMBERS:: No.


Arthur Meighen: I see it is in the middle of the file.


William Stevens Fielding: It is in the proper place having regard to its number.


[Stage Direction]
Section agreed to.
On section 5-Bank charters continued to July 1, 1923, as to some particulars.
Mr. SPEAKMAN:: I think the time has come in the discussion of this bill, when I may with perfect propriety make a few remarks; also probably at the close of my remarks, I may find occasion to move an amendment. During the discussion of this bill before the Banking and Com4 p.m. merce committee, I took occasion to bring forward a resolution asking for postponement of the revision of the act and asking that charters should be extended for one year. This proposal was not acceptable to the committee. As a matter of fact, the proposal itself was ruled out of order in the committee as not being within our powers at that time. My reasons for bringing forward that motion were several, but I shall state them very briefly. I am speaking now, not for purposes of obstruction, or simply because I wish to be contradictory to the action of the committee or of this House, but because, rightly or wrongly, I have come to the conclusion that the best interests of the country will not be guaranteed by passing this particular clause in this particular shape.
In the first place we have had a great deal of discussion in committee and have taken an enormous mass of evidence. I think the committee has worked faithfully and has tried

Bank Act
fairly to bring out all the information along most, but not all, of the points which have been suggested. During the course of that discussion several points came up in my mind very strongly. The main points that impressed me-or amongst the main points- were these: Throughout the evidence, throughout the statements made by the leading bankers of this country who were there to testify it became so evident as not possibly to be gainsaid that the present banking system, as carried out under the present Bank Act, did not wholly meet all the financial requirements of the various industries in this country. It became apparent, in fact it was admitted, that, in regard to the principal mdustry of this country, that of agriculture, the Bank Act was not functioning satisfactorily. Statements were made and evidence was adduced which covered that point, and I think it was established to the satisfaction of the majority of the committee that one industry at least, that of farming, was not able to take full advantage of the provisions of this act, and was not able to secure the credit requisite to the carrying on of their business under the present banking system It was shown that the system which was embodied in the act, and carried on under the provisions of this act, was adapted very admirably for the purposes of commercial banking, for the carrying on of the ordinary classes of industry; but, by reason of the fact that advances could only be made under the provisions of this act by our present banks as at present constituted for a short term, it became absolutely ineffective for the needs of agriculture. That, I think, was admitted. It was admitted by many of the bankers, though contradicted by others, and I think it was the consensus of opinion, not only in the committee among the experts, the financial men themselves who gave evidence before that committee, that, under the way in which the banks were carried on, under the methods by which they secured the funds with which they carried on their work, they could not make provision for the mdustry of agriculture on any general scale. It was shown that, whereas in ordinary commercial life, a loan for three or six months might be amply adequate by reason of the fact that the turnover occurs three or four times a year, the case with the farmer was absolutely different. It was shown, and had to be admitted by everyone cognizant of the conditions under which farming was carried on, that a loan, in order to have any effect, to enable farmers to carry on under any system of credit, should be at least for
one year; and in the case of a farmer engaged in the cattle business, should be extended for three years. I am not speaking of long loans for capital outlay, but for current loans to carry on the yearly operations of the farm. I think that was distinctly proved.
The point of controversy then came up, could this be carried out, or could these loans be made by the banks at all, and could it possibly be comprehended within the Bank Act? And there is where the difference of opinion occurred. I think I am correct in my first statement that the general need was admitted, and the general inadequacy of the banks to fulfil that need was admitted, and the difference of opinion arose as to whether, under any act or Any circumstances, the banks could supply that need. I may say that it was on that point that I personally was not at all satisfied with the attitude of some of the witnesses who appeared before the committee, men who were fully familiar with the details of the banking profession, who had, for many years past, the handling of the savings of the people of this country and the use of those savings as applied to the various industries of the country. They acknowledged in many cases that the banks as at present carried on were inadequate. They acknowledged that in many cases the banks did not and could not meet the requirements of agriculture in particular; and yet at the same time, although those men were supposed at least to have full knowledge of their subject, and to have given a full and complete study of banking, the business of their lives, they were not prepared to accept any responsibility for this failure or to bring forward any suggestion [DOT] of value in order to meet the needs. In that respect I was dissatisfied, and I may say I was disappointed in their attitude.
We do not come here speaking for farmers simply, we do not come asking for anything which would be to the public detriment, and we do not come advocating, at the present time at least, any violent departure from any stable system of banking or economics. Those ideas were brought forward and discussed, though not given the consideration that I think was due them. But at the present time we are not advocating, and I am not advocating, the establishment of any system of banking which would not be for the public good and which would not be founded on sound and sane business principles. But we do look to these men who have taken the place in the commercial life of this country, as being the men most
Bank Act

familiar with finance, to offer some remedy to meet the obvious conditions which prevail. But they did not. They absolutely failed, and I, for one, am not prepared to absolve them from responsibility in the matter. I am not prepared to say to them: The system under which you have been working is perfect, and the method under which you have carried it on is absolutely beyond reproach. I am not prepared to say to them: We will give you the power to carry on under the same act, in the same way, until you are able to show we can get relief in some other way. At the present time-and, of course, this was brought by way of objection to any discussion of this point in our committee-the subject of rural credits is being examined into, and is under discussion before another committee. That committee has not yet reported. Until that committee does report, and until we know what the suggested remedies to meet that existing condition may be, we do not feel-many of us in this corner of the House at least-that the present banks should be given a charter extending over ten years, enabling them to tie up and utilize practically all of the available capital in the country, all the savings of the people, some of which would have to be applied to any system of rural credits. We ask first to be told what the suggestions are and what the legislation may be to bring those suggestions into effect, and to what extent, if any, it will affect our present banking. These are reasons why I object to passing this clause at the present time and in its present shape.
There is another reason, a supplementary reason. When this act came up for discussion, we received, and the Minister of Finance no doubt received, communications from many public bodies in this country. We received communications from the legislature of Alberta, asking that the final revision of this act be postponed for one year, and that the present charters be extended for one year, and one year only. The reasons they gave were the reasons I have mentioned. They are confronted in that province with a serious situation as regards financing their agricultural conditions. Agriculture is the one great outstanding industry of that province, and not only is that industry of outstanding importance there, but we believe-and I do not wish to speak sectionally-that agriculture in those western provinces is, and must be of paramount importance, to the whole industrial life of the country. They are faced with the condition that they are being continually requested to establish provincial banks to provide some way of financial relief, some system under which agriculture can receive
[Mr. Speakman.l
its due quota of the money of the country, and they feel that they should not be tied up for a term of ten years until they have had time to study the points brought forward in the Banking committee, until they have had time to confer with the government and with the bankers to see whether they can jointly bring forward some change in the present Bank Act which will enable our banking system to adequately meet that condition. The government of Manitoba made a request on similar lines. They requested that the charters should be extended for one year only, in order that the provincial government might be able to weigh the evidence which has been adduced before the committee and have an opportunity, in consultation with their financial experts, with the bankers, with the Finance department and with the Dominion government, to suggest such amendments as they might deem necessary. The Canadian Council of Agriculture, representing agriculture as a whole throughout the Dominion, made the same request from the same point of view exactly, recognizing the inadequacy of the present system to meet the needs of the farmer, recognizing the paramount necessity of prosperity among the farmers in its relation to the national welfare, and recognizing that in the short space of time at their disposal they could not possibly make the suggestions which they thought might be made to the bankers and to the Dominion government. Therefore, they asked that the revision of the Bank Act be postponed for one year to give them an opportunity to take the necessary action in the meantime. The same request has come from our labour organizations. Of course, they are not treating the subject from exactly the same point of view. They point out that the banks have failed to some extent in their functions, that they are not financing the exchange of goods in a manner satisfactory to the people.
I am simply speaking for the people I know. We have no objections to a sound banking system being put into effect, a system that stands foursquare and sound from every point of view-from the point of view of industry, of commerce, of agriculture. We believe in a banking system which is sane, but which also, as I say, is equitable and will function satisfactorily for the benefit of all people requiring banking assistance. This, I think, the present banking system was proved before the committee not to be doing today.
There are other points of view which I might take into consideration and discuss, and one of the most important to my mind is this. It is a fact well known to members of parlia-

Bank Act
ment, and particularly to members of the Banking committee, that great dissatisfaction with our banking system has arisen throughout a large part of the Dominion. It is a dissatisfaction which is not based on absolutely accurate knowledge, and it has given rise to all kinds of suggestions for improving the system. The people are demanding improvements with the nature of which they are not altogether familiar; they are asking for things which may not be sound; they are following men who may not have made a thorough study of the subject. I am not discussing whether that is so or not, but the fact remains that the number of people looking for relief in this way is increasing daily. Consequently, one of the reasons why I am so strongly in favour of having a thorough investigation into the whole system of credits is because I am convinced that, if the people were given an opportunity of having these men before the committee and having their ideas criticized by those who at least are supposed to be capable of criticism, and the people at home might read the evidence and judge how those ideas might or might not work out in practice, then if they came to the conclusion that they had been following false gods, that the theories placed before them were not sound, they would turn their attention to better and sounder ideas.
But what is the fact now? The people amongst whom this dissatisfaction is growing know that this subject has been under discussion most thoroughly before the committee; they know that the men in whom they have come to believe in great measure have submitted their suggestions to the committee, and that those suggestions have been criticized; but the people are not aware of everything that has been brought forward by way of suggestion or criticism. And if this act goes through now for a term of ten years, what will they think? They will simply say: What is the use of reading the evidence, what is the use of studying the various systems proposed, what is the use of the committee cm Banking and Commerce working for three or four months upon this Bank Act if parliament ties everything up for another ten years before we have an opportunity of studying the matter? It seems to me they will think that all these weaknesses which have been stated to be inherent in the Bank Act actually exist. I am not taking that view, but I do know that a great many people will think as I have indicated.
But it has been said, and said rightly, that the foundation of every good banking system lies not in its gold reserve but in the unshaken confidence of the people, and that
this is the only way in which any such system can function satisfactorily. I think the best way to secure that unshaken confidence is to have the people thoroughly acquainted with everything that led up to the granting of these charters. Let them know exactly what the Bank Act means, let them know exactly what suggestions were made and why they were not acceptable. If our banking system is sound, the best way to convince the people of the fact is to let them study the Bank Act before it is crystallized for another ten years. That is one of my strongest reasons for opposing the passing of the act in its present form. As others, no doubt, desire to speak on this subject, and as I only wished to bring forward what to my mind were some of the strongest points against this proposed revision, I shall simply move, seconded by the hon. member for Brandon (Mr. Forke):
That section 5 of Bill 83 be amended by striking out the words "thirty-three ' in the fourth and eighteenth lines thereof, and substituting the words "twenty-four'' therefor.


William Stevens Fielding: Mr. Chairman, the views presented by the hon. gentleman who has just spoken (Mr. Speakman) and by others along the same lines and in relation to various other aspects of the banking question, were put before the committee very fully and in many cases, I can say, with great zeal and great ability. The whole matter was fully considered with the utmost care, and I doubt if any measure submitted to the House has received more careful consideration than was given by the committee to the bill now before us. The best judgment of the committee, after hearing witnesses, after doing all that could be done for the intelligent discussion of the subject, was that the objections raised by these gentlemen were not very well sustained. There is a condition of affairs in the West which has alarmed some hon. gentlemen. I am largely of opinion that one good crop in the West-let us pray Heaven that it come this year-will remove very much of the irritation that exists among our western friends. At all events, after the discussion before the Banking committee, after the publication of the evidence-for every word was printed and is available, the newspapers have printed it very largely and the whole question has been threshed out in the light of public opinion-I believe that to-day the people of Canada are fully informed of all the essential questions involved in this present motion.
I think no good purpose can be served by our engaging in an extensive discussion
Bank Act

of the question. I am going to presume- it may be presumption-to offer a suggestion to my hon. friends opposite. It is their right and their duty to place themselves on record against a measure of which they do not approve. But I point out to them that in committee they cannot reach any very satisfactory result, because they cannot get their names recorded in a vote. May I suggest, if it be not inconsistent with the general purposes of my hon. friends opposite, that they facilitate the passing of this bill through Committee of the Whole and let it come as quickly as may be to third reading? Then they will have the right to discuss, not a particular clause but the whole bill; they will have the right to make any motion they wish to offer by way of postponement, or in any other form, and they will have the right to get then what they cannot get in committee, a recorded vote. I can only make the suggestion to my hon. friends. I want, if I can, to put myself in their position, to see things from their point of view; and I think that would serve their purpose better than an extended discussion in committee. I recognize, however, the fact that it is the right of these hon. gentlemen to pursue the course they think best. But I repeat that in view of all the discussion that has taken place, in view of the printing of all the evidence; in view of the widespread publication of the discussions of the committee in the public press, I do not think the people will expect us to engage in a very protracted discussion of the subject in the House.


Mr. WOODSWORTH:: by Labour and Progressive members suggested that they were merely tomfool amendments. Well, what are some of these amendments that have been urged? One was that in view of the near-failure of the Merchants Bank-I think we were told that it was not a failure, that we must call it a "fiasco that in view of the fiasco of the Merchants Bank it was well worth studying what were the weaknesses of the banking system that made that fiasco possible, and how those weaknesses could be remedied. Another amendment related to keeping down the exorbitant rates of interest, and that surely is a matter of tremendous importance when some people in the West at least are required to pay nine and ten and even a higher per cent of interest. Another amendment that occurs to me was that a government auditor or inspector be appointed so that the whole of the statements of the banks would be brought under definite supervision. Other amendments related to the question of ensuring that the statements as made by the bank should be accurate statements. We were told that at least with regard to real estate holdings the statements as at present given to the government were not at all accurate. This was asserted by Sir Edmund Walker. Other amendments related to providing for small banks and co-operative banks. As we all know these exist in large numbers and have proven themselves very successful in other countries. Why should we not at least have the opportunity of establishing these banks in this country? We did not plead that the government should immediately proceed to establish the banks but we did ask that provision be made in the Bank Act that if men wanted to start small banks they should have a chance to do so, that if they wanted to establish co-operative banks they should have a chance to do so. There is no such opportunity in the Bank Act as it now stands.
I should like very briefly to summarize my conclusions with regard to some of the facts that were brought before us by the various witnesses who appeared before the Banking and Commerce committee. It was clearly shown that money was to-day the measure of all things and quite properly; that this was so much the case that in many instances money has been confused with capital. I think most of us recognize that capital after all consists of the natural resources and the equipment for working them, and it is only by an extension of the term that it is applied to include credit. To-day the title deeds to the great natural resources and the equipment by which they are worked are

in the hands of a comparative few. I submit, though, that ownership itself is an empty thing unless there are some means by which a man can exploit those things which he owns, whether they be mines or water-powers or anything else. Yet under modern industrial conditions it is impossible even for the owner of these natural resources to exploit them without having to go to the banks in order to obtain credit. Money, then, is the key that opens the door to capital. Give me the key and you give me practical ownership. The bankers, I submit, hold to-day the key that admits us to the capital of this country.
Again, we are told that money is the medium of exchange. Since the discontinuance of the system of barter, it is quite necessary that we should have a recognized medium of exchange. But that means that the men who control this medium control the whole of our commercial operations, and this control, under present conditions, is centred in the hands of a comparatively small group. I am not going into an academic discussion to-day as to what money is. I think it was clearly shown by the various witnesses that Walker was right when he said years ago that "money is that money does." It does not make much difference whether money is coin, or paper, or various kinds of cheques, or victory bonds. Any of these things is really money if it performs the functions of money. So that to-day we find that money has come to occupy a monopolistic position as a medium of exchange. Exchange to-day has passed beyond the earlier stage of barter; it has become an impersonal thing We need some clearly recognized medium. Money has come to take that place and hence it is all-important that this medium of exchange should be understood, because the men who control the medium of exchange control, as I have said, our commercial life of to-day.
Let me pass to one more conclusion in this connection and that is this. It appears to be true, as the economists have told us for a great many years, that the quantity of money determines its value. We were told by some of the leading bankers that they had never heard of the quantitative theory of money; and yet, when questioned they had to admit that the amount of money in circulation, together with the rapidity of the circulation, had a very decided effeet upon the value of money itself. Now under this act you give certain institutions the right to circulate a large amount of money. It is true that their circulation of gold is very limited indeed, it

Bank Act
is true that the circulation of their bank cheques is limited; but the greater part of money to-day is not gold, is not bank cheques, it consists of credits and these can be extended or limited by the action of the banks. Hence, to no small extent, they control the value of money itself. The money that buys one bushel of potatoes to-day may buy tomorrow two bushels of potatoes, or only half a bushel; and I submit that the people who control the money situation can very largely decide the value of that money. Or to put it the other way about: The value of money really means the price of other things. If we decide to issue a larger amount of money we cheapen money, and send the price of commodities soaring. That, at least, is the accepted view of political science. I submit that no such power as this should be placed in the hands of any groups of private individuals. It means that they control the whole life of every individual, it means that we cannot buy a single box of groceries, we cannot buy a suit of clothes, we cannot live in a house, we cannot go abroad to enjoy ourselves, without paying out money the value of which is determined by a group of people over whom we have no control whatever.
We were told, of course, by some of the bankers that we could not get away from the gold standard. And yet they had to admit that since the war we have no gold standard. I do not intend to enter at this time, at any length upon this question of the gold standard. I can remqmber in my college days we used to debate at considerable length the whole question of bi-metallism, but I submit that in the last few years we have learned a great deal more about the gold standard than we knew before the war. The fact is that Canada is not to-day on a gold standard. I have my own suspicions that all along the gold standard has been, after all, nothing much more than a barometer which recorded certain changes in the financial conditions. But to-day all that is passed. We know perfectly well that although our bank notes call for payment in gold, no gold is forthcoming. The bankers say that we are going to return to the gold standard. That may or may not be; it is altogether another matter. So wo are faced with this situation: That not being on a gold standard and the banks having no obligation whatever to pay in gold, they are still coming to us and asking for a franchise that will extend for ten more years. Without considering the advisability of a return to the gold standard, I would suggest that the bankers might well offer to return to this standard before asking for a renewal of charters that
are so valuable. On the question of the gold standard I was rather interested in a little illustration of how very ridiculous the gold standard is in actual practice. D. H. Robertson in his book on "Money" gives the following:
It is said that there was once a mine manager in Johannesburg who had a glass eye. When business called him away he would take his eye out and leave it in a prominent place; and while the master's eye was on them the workmen continued to work like blacks, as indeed they were. But one day one of the workmen, more daring than the rest, stealthily approached the all-seeing orb and covered it up with an inverted cigarette tin: whereupon he and all his fellows promptly went away and got drunk.
Some of my Progressive friends and my colleague here (Mr. Irvine) would like to use inverted cigarette tin and cover up the glass eye. I would submit there is a great deal bigger question involyed than the cigarette tin and that is, if the gold standard is no more than a glass eye, a bogey to frighten people with, we may well ask ourselves what is its stability as the very basic of our whole financial system to-day. Let me give you still another illustration which, I think, will do more to drive home this point than anything of an abstract character that I might advance. This is quoted by Mr. Robertson from the Economic Journal of June, 1915, page 281:
There is among the Caroline Islands an island called Uap, whose money consists solely of huge stones called fei, many of them so large that they cannot be moved, so that even when they change hands in the course of business their physical location is left unchanged. . . . Some time ago the natives allowed the roads of the island to fall into disrepair, and steadily refused to mend them; and the Germans, who were at that time in possession of the island, had to devise some means of inflicting a fine. It was clearly useless to attempt to remove any of the stones from the island. "At last," so the account runs, "by a happy thought the fine was exacted by sending a man to every failu and pabai throughout the disobedient districts, where he simply marked a certain number of the most valuable fei with a cross in black paint to show that the stones were claimed by the government. This instantly worked like a charm; the people, thus dolefully impoverished, turned to and repaired the highways to such good effect from one end of the island to the other that they are now like park drives. Then the government despatched its agents apd erased the crosses. Presto! the fine was paid, the happy failus resumed possession of their capital stock, and rolled in wealth.' Just so gold is a fetish, if you will, but it does the trick.
That is a plea for the gold standard by a man who clearly recognizes how little it really amounts to if one could understand its real meaning.
Now, my main reason for pleading for delay in the granting of these charters is that we have developed in Canada a financial monopoly, and that by granting the charters we
Bank Act

legalize this monopoly. The banks are reservoirs for the collection of deposits from the people from the Atlantic to the Pacific. The banks have the right to issue currency, a very valuable franchise, and they have the giving of credit. Perhaps these powers would not be so bad if they were very widely distributed. But the fact is that in the last few years we have seen merger upon merger taking place, and bank managers, according to their evidence, are inclined to think this amalgamation will continue. One of them at least said that he thought it was a very good thing to eliminate weak banks. But until such time as mergers actually take place, we have a Bankers' Association, formally recognized, that more or less accomplishes the same purposes as a merger, because we are told that the rates of interest were fixed by an arrangement made within the Bankers' Association. Thus you have a little group, practically a combine, that determines rates of interest and the terms upon which credits can be given. But, more serious perhaps than that, is the system which has grown up of interlocking directorates, by which men who control banks also control a considerable number of subsidiary financial institutions as well as various industrial concerns. I do not know if this is any discovery to some hon. members; but if we had not known of this fact before, it was very clearly brought to us as the investigations of the Banking committee proceeded.
Just recently I have been looking through the Annual Canadian Financial Review, and I should like to call the attention of the committee to some facts as revealed by a study of that publication. I quote from the issue of June 1922. I notice a large number of the gentlemen whose names are prominent in banking affairs, are also prominent in governmental circles. Perhaps that is to be expected. I notice a good many of them have the title "Sir" prefixed to their names. Under the old regime they were regarded as the most honourable and most worthy of honour amongst our Canadian citizens. I notice that a number of them are very prominent in educational work, in military activities, in all the social life of the country. That too, perhaps, is to be expected. I am not laying any blartie upon those individuals because of the prominence that they have attained; but I should like to show that these men, because of acquiring a monopoly of the finacial credit of the country, have been able to dominate many of our industrial and commercial affairs. Let me take the Bank of Montreal, as an example. That bank is generally known as the government bank as it does a good part of the business of the government. The president is Sir Vin-
[Mr. Woodsworth.)
cent Meredith, of Montreal. I notice he is also a director of the Canadian Pacific Railway Company-a rival, by the way, of our own Canadian National Railways-he is president of the Royal Trust Company and a director of the Guarantee Company of North America. Thus the committee will see the group of companies in which one man can exercise a very large measure of control. Let me in this connection quote a paragraph from a book published some years ago by Judge Brandeis, of the United States Supreme Court. He says:
Directors, officers and employees of banking institutions should, by a similar provision, be disqualified from acting as directors, officers or employees of life insurance companies. The Armstrong investigation showed that life insurance companies were in 1905 the mo3t potent factor in financial concentration. . . . and now instead of the life insurance companies controlling the banks and trust companies the latter and the bankers control the life insurance companies.
Again he says:
Combination and control of other people's money and. of other people's businesses are the main factors in the development of the money trust.
A few weeks ago I took the trouble to glance through the lists of shareholders of a number of the leading banks in Canada. It is quite true that there are no very large holdings by wealthy men. It is quite true that a very considerable number of the shares are held by comparatively poor people. That is the very point I want to make-that the savings of comparatively poor people are all pooled in the banks and then the control of these institutions is put into the hands of a very small group.
I see that the next name on the list of directors is Sir Charles Gordon, GJB.E., vicepresident, Montreal. He is also a director of the Royal Trust Company-I might note in passing that the names frequently occur in groups; certain group domination is evident. He is also president of the Dominion Textile Company, president of the Montreal Cottons, president of the Montreal Cotton
5 p.m. Company, president of Penman's Limited, that is of companies manufacturing many articles which every household in the country requires and which more or less receive certain privileges through the tariff from the government of Canada. Further, he is a director of the Ogilvie Flour Mills,-that brings us to what we eat. He is also director of the Tuckett Tobacco Company, manufacturing one of the luxuries. He is also director of the Canadian Consolidated Rubber Company, president of the Dominion Glass Company, director of the Provincial Paper Mills, and president of the Hillcrest Collieries. I do not think any hon. member

Bank Act
would claim that one individual, even Sir Charles Gordon, has any expert knowledge of these various industries of which he is direc tor or, in many cases, president. I think we can clearly see that the only reason why he should be on those boards is because of his financial ability. That is, we have had the division of labour go on until the financial men form a group by themselves, and the people who actually do the manufacturing, whether the employees or the employers, the organizers and managers, do not really own the factories. The real ownership is with the financier. He controls, not merely one line of industry, but a host of industries widely varying in character. We have been told recently in the papers of the danger in Germany of such men as Stinnes getting control of a very large number of industries of different classes, not merely perpendicular control, but horizontal control; yet we have that selfsame system prevailing in Canada. Perhaps it is not without significance that this director of the Bank of Montreal who is director of so many other companies should have been last year appointed by this government as a member of the Canadian Economic Commission.
Again let me quote a paragraph from Judge Brandeis. Speaking of other people's money and how the bankers use it, he says;
The control of these institutions means the ability to lend a large part of these funds, directly and indirectly to themselves; and, what is often even more important, the power to prevent the funds being lent to any rival interests.
He further says:
But far more serious even than the suppression of competition is the suppression of industrial liberty, indeed of manhood itself, which this overweening financial power entails. The intimidation which it effects extends far beyond the banks, trust companes and other institutions, seeking participation, from this inner group, in their lucrative undertakings, and far beyond those interested in the great corporations directly dependent upon the minor group. Its blighting and benumbing effect extends as well to the small and seemingly independent business men, to the vast army of professional men and others directly dependent upon "big business", and to many another.
And he goes on to elaborate his argument. I think it is hardly necessary to comment on the criticism of Judge Brandeis on the system which had grown up a few years ago in the United States, and which is so rapidly developing here in Canada.
The next name on the directorate of the Bank of Montreal is R. B. Angus, of Montreal, director of the Royal Trust Company, a director of the Canadian Pacific Railway, a director of the Minneapolis, St. Paul and Sault Ste. Marie railway company, a director of the Laurentide Paper Company, a director
of the Canada Northwest Land Company. Thus we see the organization extended not merely to Montreal and its vicinity, but away to the western country. The next name i3 that of Lord Shaughnessy, K.C., V.O., Montreal, director of the Royal Trust Company, director of the Canadian Pacific Railway Company, director of the Minneapolis, St. Paul and Sault Ste. Marie Railway Company, director of the Canada Northwest Land Company. The next is C. R. Hosmer, Esquire, Montreal, director of the Canadian Pacific Railway, director of the Commercial Cable Company, director of the Sun Life Assurance Company, director of the Royal Trust Company, director of the Canadian Cottons Company, director of the Dominion Textile Company, president of the Ogilvie Flour Mills Company, president of the Consolidated Mining and Smelting Company, director of the Canada Paper Company, director of the Laurentide Company, vice-president of the Kaministiquia Power Company, director of the Montreal Light, Heat & Power Company.
Let me quote another paragraph from Judge Brandeis:
Senator Owens, chairman of the Committee on Banking and Commerce said: "My own judgment is that a bank is a public utility institution, and cannot be treated as a private affair for the simple reason that the public is invited, under the safeguards of the government, to deposit its money with the bank, and the public has a right to have its interests safeguarded through organized auditors.
And he goes on to point out that the practical difficulty is that these men who are at the head of these industrial concerns are not fitted by their training to conduct industrial enterprises successfully. He says the failure of bank management is due mainly to two reasons: First, that no man can serve two masters, and, secondly, that a man cannot at the same time do many things well.
I return to the list of directors of the Bank of Montreal. The next name is Huntley R. Drummond; he is also vice-president of the Royal Trust Company. The next name is that of D. Forbes Angus, Esquire, Montreal. I am not aware how closely he is related to R. B. Angus who was a member of the Canadian Pacific Railway group. It is strange how some of the old family names crop up. I am reminded that two generations ago in this country a fight had to be made against what was then known as the Family Compact, I am reminded that there are those in this House whose forebears took a very active part in that fight. I srubmit we have, in the financial oligarchy of to-day, a far more serious menace to the welfare of this country than was the Family Compact in our grandfathers' day.

Bank Act

The next name on the list is William Mc-Master, Esquire, Montreal, also a member of the Royal Trust Company, a director of the Guarantee Company of North America, the president of the Montreal Telegraph Company, a director of Penman's Limited, a director of the Belding Corticelli Company, a director of the Asbestos Corporation of Canada, the vice-president of the Dominion Glass Company, a director of the Dunlop Tire and Rubber Company, director Sherwin Williams, director Tooke Brothers, director Canadian Car and Foundry Company.
Here let me quote a further paragraph from Louis D. Brandeis:
The compelling reason for prohibiting interlocking directorates is neither the protection of stockholders, nor the protection of the public from the incidents of inefficiency and graft. For even more important than efficiency are industrial and political liberty, and these are imperilled by the money trust.
I submit that, side by side with the governments of this country, there are growing up other rival powers that have an immense influence, and that our so-called political democracy is valueless if we allow these institutions to develop which have such a large power over the life of every man, woman and child in the country.
I go back now to the list of directors, and the next one is Lieut.-Col. Herbert Molson, C.M.G., M.C., Montreal, director of the Royal Trust Company, director Canada Paper Company, director Canadian Consolidated Rubber Company, director Goulds Manufacturing Company. The next is Harold Kennedy, Es>-quire, Montreal. I think he is the only one who is not a director in other companies. I have no idea at all as to whether he is devoting his attention to the work of the Bank of Montreal, or whether he is one of those who are frequently described as dummy directors, who would carry out the policies of others more powerful outside. The next is H. W. Beauclerk, Esquire, Montreal, director of the Brompton Pulp and Paper Company, a director of the Canadian Car & Foundary Company, a director of P. Lyall & Sons Construction Company. The next name is G. B. Fraser, Westmount, Quebec. Yes, here is another who is not listed in the Financial Review as a director of any other institution outside of the Bank of Montreal. The next is His Honour Henry Cockshutt, Esquire, Brantford. He is a director of the Cockshutt Plough Company. I presume when the Labour representatives a few weeks ago were accorded the honour of shaking hands with the Lieutenant Governor of Ontario, they were in reality shaking hands with a director of the Bank of Montreal. No doubt His Excellency was

there as representing some of these financial and industrial interests. His Honour is also a director of the National Life Assurance Company.
The next is J. H. Ashdown, Winnipeg, Manitoba, the only western name on the list. He is director of the Ashdown Hardware Company and director of the Northern Trust Company. Those of us who happen to know Winnipeg recognize very clearly that in the case of Mr. Ashdown-as I have no doubt whatever in the case of all these other men whom I have named-he is also prominent in provincial matters, in civic matters, in the board of trade and in the educational, religious and philanthropic life of the city. I am not saying this in any disparagement whatever of these men, but merely to point out that they who secure such great financial power have also a very dominating influence in every concern of the entire community.
The next name is that of E. W. Beatty, Esquire, K.C., as we all know, president of the Canadian Pacific Railway. I am afraid that if I started in as a western member to speak of the Canadian Pacific Railway and its power it would take a very long time to exhaust what might foe said on the subject. We in the West know the strength of that great corporation. I think in one of the songs which were sung by members of the Press Gallery last year there was one which went something like this:
God save the C.P.R.
Long to reign over us,
Happy and glorious,
God save the C.P.R.
Well, I am inclined to think that we have in these great corporations rival institutions that stand in power side by side with, if not superior to, those which are recognized as governmental institutions. Mr. Beatty is also a director of the Royal Trust Company.
The next name on the list is that of Sir Lomer Gouin, K.C.M.G., of Montreal, who is not only a director of the Bank of Montreal but also of the Royal Trust Company, of the Mount Royal Assurance Company, of the Mutual Life Assurance Company, of the Cockshutt Plow Company, of the Laurentide Company, of the Montreal Light, Heat and Power Consolidated, of the Shawinigan Water and Power Company. I am sure that a good number of the Progressive members will feel satisfied that the interests of the West are being well looked after by the director of the Cockshutt Plow Company in the person of the Minister of Justice. A few weeks ago the member for Cape Breton South and Richmond (Mr. Carroll) objected to the Mayor of Glace Bay having taken action officially in connec-

Bank Act
tion with some trouble there because he was a labour man. The hon. member stated that the mayor was an official in a labour union. That, I believe, is not in accordance with the facts, but it was implied by the hon. gentleman that a man connected with the labour movement could not dispassionately perform his duties as mayor. Now, if that is true, I am not quite sure how the Minister of Justice or any other member of the cabinet can adequately perform his duties when he is so closely connected with big financial and industrial corporations. Again I am saying this not in disparagement of the Minister of Justice, but merely to point out the actual conditions that exist to-day and to emphasize the need for careful consideration lest we perpetuate and aggravate these conditions. In a recent discussion respecting closed towns on the west coast the member for Skeena (Mr. Stork), I think it was, pointed out that very frequently the men were so held down that no one was even allowed to land from a boat until a company policeman standing on the gangplank had decided in his favour. I have seen standing beside the company's representative a mounted policeman, and I remember that he is responsible to the Minister of Justice. The Labour people across this country cannot forget that the Minister of Justice is also interested in paper companies and other big industrial concerns. I say this simply to drive home-


George Newcombe Gordon: I draw the attention of the hon. member to the fact that the section under discussion is "that bank charters continue to be granted to July 1, 1933, as to some particulars," and that he is not given the same freedom in committee as when discussing the principles of a bill on the second or third reading. Rule 13, section 5, provides that:
Speeches in Committee of the Whole must be strictly relevant to the item or clause under consideration.
I am merely drawing this to the hon. member's attention so there will not be any danger of his wandering from the point.


James Shaver Woodsworth: Mr. Chairman, I shall bear this in mind. I think I have not wandered very far. It seems to me that these remarks are very pertinent indeed when we are considering the advisability of extending the franchises to the companies represented by these very individuals.
The next name on the list is that of General Sir Arthur Currie, G.C.M.G., of Montreal. I do not think he is a director in any of the industrial companies listed, but we all know he is president of McGill University; and it is rather interesting to find that our universities also are so closely tied up with the financial interests. The trouble is that in the Canadian Financial Review we do not have the educational institutions listed, or else we would find that the universities, as also the newspapers, are more or less controlled by these same individuals.
Now that is the list of directors of the Bank of Montreal. Just a few minutes more with regard to one or two other prominent bank directors. I notice that the vice-president of the Bank of Commerce, Sir John Aird, is also a director of the British America Insurance Company, of the Imperial Life Insurance Company, of the Western Insurance Company, of the National Trust Company, of the Cockshutt Plough Company, of the Western Canada Flour Mills and of the Brazilian Traction, Light and Power Company. This reminds me that in the Financial Review there do not appear foreign investments. The fact is, as brought out in the Committee on Banking and Commerce, our banks are more and more going into foreign investments, and no doubt many of these gentlemen are privately interested in these foreign concerns. I note that there is the very closest co-operation between the Canadian Bankers' Association and the American Bankers' Association. I also note, by reference to some of the English publications, that the British Empire Producers' Association has as one of its units the Canadian Manufacturers' Association. Thus we see that these concerns are linked up very closely with American institutions and those of other foreign countries, and also to the big financial and industrial corporations of Great Britain.
I am not going to more than mention some of the other outstanding financial figures-Sir Thomas White, vice-president of the Bank of Commerce; Sir Joseph Flavelle, vice-president of the Bank of Commerce; Sir Herbert S. Holt, a director of some nineteen financial and industrial enterprises; Sir Augustus Nanton, a director of a large number of enterprises, including the Canadian Pacific Railway and the Winnipeg Electric Railway. I need not do more than mention the Wolvins' and J. W. Norcross, who have come to the front in connection with the investigation into lake freight rates. I need not mention American capital, which is coming from Boston into Nova Scotia and up through Detroit into western Ontario, to be used in the operation of the mines, timber limits and fisheries of northern Ontario and British Columbia-one of the more recent developments is the sale of our bonds in New York. I would note in passing that although we have
Bank Act

had the near failure of the Merchants Bank, those who were prominent officials and directors of that institution are still directors in important financial and industrial companies in Canada. Not only have they not been punished, but they are proceeding to carry on their work. Whether or not the near failure was owing to anything culpable or to inefficiency, the fact is that they still occupy prominent positions in financial and industrial affairs. According to the statement made by the hon. member for Brome (Mr. McMaster) last year in connection with some figures that he presented, sixteen corporations through interlocking directorates control over $4,000,000,000 of Canadian capital. May I quote a paragraph to show how this concentration of capital is proceeding in the United States? Mr. Roger Babson, of Babson's Statistical Service, says:
We said that the employing class was immensely more powerful thq>n in 1914. There is more money at its command. Eighteen thousand new millionaires are the war's legacy. This money capacity is more thoroughly unified than ever. In 1914, we had 30,000 banks functioning in a great degree in independence of each other. Then came the Federal Reserve Act and gave us the machinery for consolidation and the emergency of five years' war furnished the hammer blows to weld the structure into one.
The war taught the empfloying class the secret and the power of widespread propaganda. Imperial Europe had been aware of this power. It was new to the United States. Now, when we have anything to sell to the American people, we know how to sell it. We have learned. We have the schools. We have the pulpit. The employing class owns the press. There is practically no important paper in the United States but is theirs.
That was published in the Grain Growers' Guide of June 30, 1920. The most serious indictment against the present banking system is summed up in a sentence by Louis D. Brandeis: "The bankers control the people through the people's own money." In this great money trust which has grown up we have, as I have pointed out, a monopoly of the collecting of deposits, a monopoly of the issuance of credits, a monopoly of the issuing of our currency. Through this means the bankers have it very largely in their power to say what shall be produced, where it shall be produced, and at what price it shall be produced. This great money trust levies tribute on everything required by the consumer. As I read that long list of directorates one could not but be impressed by the fact that these companies represented the control of almost all the commodities that were commonly in use by the people. Further than that, this great money trust, in the judgment of some of us at least, to no small extent controls the governmental machinery. Men in high government positions are men who
IMr. Woodsworth.]
are prominent in these banking concerns. There is at least a very close interrelation, and I think we may say assuredly that it i3 the same group that controls in both cases: hence the policies adopted are very largely the policies of the great money trust.
And lastly, this money trust seeks as well to dominate the educational agencies. That to me, is the most serious of all, because it means that in time we are not going to be free. I do not mean for one moment to insinuate that these moneyed men go out deliberately to buy people; I do not mean to say that they go out deliberately to threaten people. But we do know that a very large number of those in the employ of all sorts of private concerns are afraid to speak out their minds because, when they desire to carry on business they may be denied credits or otherwise be forced to succumb to the power of the financial men.
I would point out that this group resists even the most moderate reforms. I think there was not a single resolution introduced in the committee-well, possibly with the exception of one that I recall at the moment- that was generally considered to be in the interests of the people when that interest seemed to conflict with the interest of the bankers-not a single resolution of that kind that was not voted down. We were pleading for public inspection; we were pleading for the prevention of usury, for the formation of small banks, and so on; for limiting the period of charters, as we are to-day; but these moderate resolutions were resisted. How can we claim that we are doing our duty by our constituents if, in the face of their expressed dissatisfaction with the present system, in face of the widespread discussion that has gone on in the newspapers, showing that the public generally are in favour of these reforms-how can we, I say, proceed to grant charters for a ten-year period on practically the same terms on which these charters have been held in the past?
In closing, let me say just a word from the point of view of labour. Labour is not consciously and definitely interested in this question, but generally takes the attitude that all these questions belong to the capitalist, that all this is part of the present system, which they desire to see superseded. I urge however that when we touch the financial system we touch the very nerve centre of our present system. We understood its operations a little better, I think, as we observed how things were managed in the Banking and Commerce committee. I think of one little amendment that I should like to reintroduce on the floor of the House-it shows how

Bank Act
far this group goes-asking on behalf of the bank clerks the recognition of their right to organize for any legitimate purpose, a right guaranteed to all employed people under the Treaty of Versailles; yet even an innocent little resolution like that is voted down. It is obvious that we cannot hope to get much through this House; the most we can do is to protest. Let me say, as has been said elsewhere, that either we as a people must own and democratically control these great financial institutions, or they will absolutely own and control us.	.


Mr. WALLACE:: Mr. Chairman, several sound reasons have been advanced in support of the amendment moved by the hon. member for Red Deer (Mr. Speakman) and seconded by the hon. member for Brandon (Mr. Forke). These reasons have been elaborated, and I do not propose to go over the same ground, but I do wish to register my support of the principle of the amendment, namely, that we extend the charters of the banks for one year, thus allowing further time for the consideration of the mass of evidence taken before the Banking committee. To my mind the Banking committee have done excellent work in the taking of evidence. There is a large amount of material available for the consideration of the members of the House, but unless the members have ample time to give it their considered judgment I feel that the evidence will not reach its full value to us as a parliament. Probably a great many of the members of that committee feel that they have had time to consider the evidence, but I know that a number of them do not; much less have the members of this House who were not on that committee had time to consider it. The Minister of Finance has said that the evidence has been before the country in the publications of the committee and in the press, but I do not feel that the country has had sufficient time to give it the consideration that is required. A number of letters have been received by many members of this House urging that the consideration of this act be postponed for another year. The hon. member for Red Deer has referred to the requests of the Alberta and Manitoba governments for postponement of consideration, and I think that these requests should carry considerable weight. Organized agriculture through the Canadian Council of Agriculture has also asked for a postponement of consideration, and I believe that organized labour is also of the same opinion. I think, Sir, that this weight of opinion should not be passed over lightly.
We are not in this amendment asking for anything for which there is not a precedent. I believe the same course was followed in May, 1911, and also in April, 1912. I feel that there is no sound reason why we should hurry this thing through unduly. I do not see why there is such a terrific rush to consider this act and get it out of the way. The banking system of this country is one of the most vital questions that we have to consider and I cannot help feeling that we should have further time to consider the evidence. I cannot see how any public interest will be prejudiced by a postponement of consideration of the act. I do not think that the banks themselves have anything to fear from that. We are men of reasonable judgment I think in this House, and I believe that the public interest will best be served by a postponement of consideration of the act for one year. For this reason and for the reasons that have been given by the hon. member for Red Deer I propose to support the amendment.


Mr. KELLNER:: In rising to support the amendment which has been moved I desire to make a few comments on the continuation of our banking system as we now have it. I think all members will agree that conditions at the present time are very unstable. There is a good deal of dissatisfaction throughout the country at large and I think it would be a very unpopular thing to renew these bank charters as we now have them. It would almost be a proclamation that we had decided that our banking system was as good as we could hope to make it, or that we had decided that we would not go to the trouble of studying it and investigating other systems which have been proposed.
May I also call attention to the fact that at the present time marketing conditions from a world standpoint are almost an impossibility. We find many countries that are badly in need of the produce we are able to grow in Canada, but we find that their currency is so depreciated that they are unable to buy our produce. On the other hand, our banks are making a very strenuous effort to get back to the gold standard. I do not think that anything could be done that would so much retard the development of Canada as that, for if we get back to the gold standard and some of the countries to which we hope to sell have a greatly depreciated currency it would mean that those countries already debt-ridden would have to pay three and four times the ordinary price to buy what we have to sell, and we would have to take less. It is
Bank Act

an impossible position, and I do not think it can be continued.
There have been placed before the Banking committee three different proposals for a banking system which might give better satisfaction than the one we have at the present time. I venture to say that there is not a member of this House or a member of the Banking and Commerce committee who fully understands any one of those three systems, and surely there could be no objection to renewing these charters for another year in order to give us time to study these systems and find out if there is not a possibility at least of adapting one of them to our needs.
I would also add that in practically every country there are students at present studying the financial problem. Now if we renew our bank charters I should think it would discourage those students who are making a study of the banking system of Canada. I would almost think that they would interpret it in one of two ways: They would either say that we have a banking system and banking institutions in this country which cannot be improved upon in the opinion of this parliament, and that therefore there was little to be gained from a study of our system, or they would say that this government has taken an arbitrary stand, and therefore even if they study our system with a view to trying to improve it there would be no prospect of bringing an improved system into force.
I am also convinced that if we pass this act renewing the bank charters and the banks continue to function as they have been in the past, some of .our industries will be forced to seek other sources to enable them to carry on their business. I do not know that I would be prepared to suggest what might happen in that line, but it would almost seem that they will have to devise something to take the place of money. It is possible that our agriculturists instead of selling grain will go out and sell bonds. It might be a good idea to encourage that, but I do not believe that we should actually make it necessary for them to do so by the imposition of a banking system which evidently has never met their demands at least.
I should also like to make a few remarks about the inefficiency of our present banking system, especially in regard to the banks carrying on their own business. We have very recently had what has often been referred to as the Merchants Bank catastrophe. We have seen some of the managers of that bank tried, and we have seen them whitewashed. We know that that bank lost sev-
(Mr. Kellner.
eral millions of money and the courts have proclaimed that no one was to blame. Now, if there is something the matter with our act so that when a man who has not used due discretion or honesty in handling the funds of the public cannot be convicted under it, I think we should know what it is, and I very much doubt if any member of this House does know wherein the weakness of the act in that respect lies. If it is our criminal code that is at fault, an investigation into that, which we shall probably never have if we renew these charters now for more than one year, would probably give us very valuable information.
It would be still better if an investigation were held to see if our juridical authorities might not be persuaded to at least consider the law in the light that parliament intended. Where the law is ignored entirely you have occurrences like the Merchants Bank catastrophe. If we were to go through another period of stress and some of the other banks were to get into a similar condition, I am a little afraid the managers of those banks would feel they were quite entitled to go ahead and make such disposition of the funds at their command as they saw fit; that there would be no punishment coming to them if they did so. The impression is going abroad that where a large sum of money, well up into the thousands or even into the millions of dollars, is involved there is little need for a man to fear the law; in some way or other he always seems to evade it. On the other hand it is held there is no escape for the offender if the amount lost is insignificant.
One other argument, I think, can be advanced against an extension of these bank charters for ten years, and it can be based on the statement that domination, in the end, will be eliminated. I do not believe that as matters stand we are getting very close to the elimination of that domination. I am convinced that the vast majority of the money which the banks have lent in the last few years has gone to pay interest on debts. Now, I ask you where are matters going to end if it is going to take our entire production to pay the interest on our borrowing? I do not think that anyone will argue that we can keep making fresh loans if it takes more than it is possible to raise in this country of ours to pay the interest on those loans A good deal of evidence was given befoie the committee on Banking and Commerce showing that many of our industries, and in particular that of agriculture, have found it impossible to pay the rate of interest which the banks claim they require in order to

Bank Act
be able to operate. It would seem to me, under all the circumstances, that we have leached this stage: We must either find a better banking system or we are faced with the elimination of agriculture. I believe that is one of the things we should consider veiy seriously before we decide to give the banks a new lease of life for ten years. Personally, I am convinced it would be much more important to the country to have a prosperous farming community, or at least have that community carrying on under decent livable conditions, than to have a dominating banking system in Canada. The present conditions, in my opinion would be greatly ameliorated if the government would only be brave for awhile and see if it were not possible to, at least, bring about a reduction in the interest we are compelled to pay. It is all very well to talk about a safe banking system, or a safe monetary system, but if that system gets "too safe" it is liable to become very weak. I think that fact was pretty well demonstrated at some of our committee meetings.
Now, the Bank Act, as I understand it, is in reality a contract between the banking institutions and the people and, I suppose, it is more or less assumed that this agreement is reasonably fair to both parties. But many hon. members will recall that there were quite a number of lobbyists operating in connection with the Banking and Commerce committee, and I think, perhaps, it is not too strong a statement to say that these lobbyists were encouraged, and probably paid for their attendance, by the banking institutions. It therefore seems scarcely possible-when one party is represented by active lobbyists, and the other party is left unrepresented-that the agreement arrived at can be absolutely fair. In conclusion I desire to say that I shall support the amendment, and that in my opinion it would be a fatal mistake to renew these charters at the present time for a longer period than one year.
At six o'clock the committee took recess.
After Recess
The committee resumed at eight o'clock.


Thomas William Bird: Before I proceed to the few
general remarks I am about to make, I should like to pay a moment's attention to the remarks of the Minister of Finance (Mr. Fielding), and I do so very deferentially because of the unfailing tolerance that the hon. gentleman always shows towards opinions that differ from his. But in his remarks he showed
himself to be under some misapprehension as to our motives in taking up the time of the committee in further debating the Bank Act. I do not think we are anxious for publicity; at least we are not more anxious for it than other people are to avoid it. Our motive is pretty straightforward, and it is simply that due attention should be given to a very critical matter, I might say matters. I was referring more particularly to the one I had personally in mind. The hon. member implied that the Bank Act had already received a very thorough and searching revision, but I wish to take exception to that. The investigation into the Bank Act up to the present time has been of a rather perfunctory character with the exception of the part played by the small group representing this corner of the House. The word "revision" is almost a misnomer. What we have had has been a rather monotonous re-affirmation of the sanctity, inviolability and general unimpeachability of the Bank Act of this country.
I do not think we have had a very earnest and whole-hearted inquiry into the weaknesses and the failings, the demonstrated failings, of our present Bank Act; that in spite of the fact that in the last decade we have had one of the most unprecedented bank failures in the history of our country. The fact that we have had such a failure seems to have had very little influence upon this House. This House, or at any rate, a large section of it, is counting upon the shortness of the memory of the public. It is adopting the wisdom of the proverb that instructs us to "let sleeping dogs lie." I believe the memory of the public is short. I think it all too soon forgets the wrongs and injustices that take place from time to time. The lessons go unlearned. The people are unprofited by these things that hurt their interests, that inflict serious wounds upon the body politic. They forget them all too soon, and I am sorry to say that our statesmen and members of parliament exploit that weakness with regard to the public. I am not saying this on the strength of my own judgment, for it is well known that the press of this country, after the trials in connection with the Merchants Bank case, were clamorous for some kind of public inquiry, some efficient investigation. Those demands were widespread and unequivocal. Yet here we are almost at the end of this session; this matter has been smoothed over, passed over, and the proposition is to let it go.
I do not intend to take up the time of the committee, but I wish to make my earnest protest against this action of the House. Some one will say that attempts have been made to remedy the act so that these things
Bank Act

will not occur again. I want to give the Finance Minister, who is responsible for the amended act, due credit for a sincere attempt to remedy the act, so far as it can be remedied by words; but I do not think the act can be remedied in that way. One scrap of paper cannot amend another scrap of paper. The old section was just as plain, as explicit and as watertight as ingenuity could make it. You can pick out any one of the Ten Commandments, and you will find that it is not more explicit than the old section, but in spite of that fact $10,000,000 disappeared. It seems to me, Mr. Chairman, that an act of parliament that has a hole in it big enough to allow $10,000,000 to slip through needs, not merely to be tinkered in the gingerly fashion we have attempted to amend it, but requires a new bottom, and an overhauling through and through. I do not think we have attempted to learn from the things that have befallen us. We have been bitten once, and we are still as bold as ever. We have not only left the stable door open but it seems to me we are about to open the paddock gate too. By our passivity we are inviting a recurrence of this affair.
Just a word on another phase of this question. I imagine that the side of the Merchants Bank question that is most interesting to the public has to do with the transactions that occurred previous to the false returns that were the basis for an action in court. It was not so much the lending as the borrowing that interested the public. One paper, I remember, came out very boldly in this regard, and made the suggestion that behind the Merchants Bank case there was all the sinister evil of stock exchange gambling. I think it was the Finance Minister who assured us some time ago that there was no mystery about the Merchants Bank case. It was just bad loans-injudicious loaning. I wish to say that I think he has left out the most important phase of the question. It was not the injudicious loaning that was the important thing, but it was the judicious borrowing-the very judicious borrowing, I would say-and the public has a right to know something at any rate of the influences that so worked upon our bank officials as to make them commit the error which they committed, f you like to call it an error. I would not characterize this borrowing as being in any sense criminal, although some of the public papers went so far as to suggest that it was almost verging upon criminality. I do not want to go so far as that. It reminds me of the reproaches that Reynard, the fox, made when the cat charged him with stealing a goose. He said, "Do not say 'steal' pussy, 
that is not courteous or kind; but say that I obtained it through my superior ability." Well, there is a lot of that kind of acquisition going on unknown to the public, and I think the public has a right to know the methods by which people can get into the inside of our banks and get away with astounding sums of money, as they did in this case. We have heard a lot about the business acumen of our bank presidents and our bank directors; but how can they hold up their heads again before the world and claim that they are supermen in all things that pertain to sound finance when, under their very noses, people entered into their institutions and took out $10,000,000? I am sometimes amazed at the futility of the ordinary bank robber, the man who undertakes all the risk attached to an ordinary bank robbery, where he breaks into the bank in the dead of night, fully armed, ready to take all the consequences. I wonder at men being content to go on in the old-fashioned way doing these things and taking all the risk, when this other kind of thing goes on, and when men go into financial institutions and take out all this wealth, get away with it and nothing is said.
With reference to those false returns, the courts of this country-and we do not need to reflect upon their decision-said that these returns were not false, but that they were involuntarily misleading. The disappearance of all this money occurred in a fit of absence of mind. It was done without anybody being consciously blameworthy. It was not a fault, or a criminal action. It was an involuntary action, misleading, it is true, but misleading in an involuntary sense. Now the public's interest in a thing of that kind is clear. It does not matter to the public whether it was voluntary or involuntary. It is dangerous just the same. It makes no difference whether it was done wilfully or not, the same amount of money is missing. And this is what we are concerned about. It seems to me that the only way of preventing a recurrence of such a scandal is for parliament to see to it that in future the government make its own returns. I am not going to enter into all the threadbare arguments against outside inspection-arguments which appeal only to those who represent our big financial interests and who are jealous of having their privileges inquired into. The view taken by the average man in the street is that the government should be able to make certain that this sort of thing does not go on in our banks. The evidence before the courts showed that two government officials after only two days' inspection of the books of the

Bank Act
Merchants Bank discovered that millions of dollars were missing. We are not asking for any elaborate inspection and audit, we are not asking that all the petty accounts of the myriad branches should be investigated. We are simply asking that an efficient man in the pay of the government should have the right to scan the ledgers at the main offices of these banks and at their more important branches and so ascertain the actual condition of affairs. Common sense would dictate that such a man, almost by a single glance, could tell if there was serious mismanagement. I think that is what the public expects and what it would demand if this question could only be kept before the public mind, for, as I said before, the public has a knack of forgetting these important things and waiting until the next financial disaster occurs before rousing itself to renewed action.
Now, a word in regard to the merger of the Merchants Bank with the Bank of Montreal. In announcing this merger the Minister of Finance regretted the trend of the concentration of financial control in a few hands, and yet he saw no alternative but to impose this merger upon the country. He proposed to cure one evil by inflicting another. Our banking system had been affected, so to speak, with scarlet fever, and he straightway inoculated it with typhoid in the hope of eradicating the first disease. He stated that we were passing through serious times, that the public mind is fickle, and therefore we must not hesitate or delay but must plunge into this recognized evil in order to escape another. Some of our newspapers strongly criticized-not the action of the Minister of Finance, but the action that instigated the merger, and one prominent journal called it a cowardly action not justified by the circumstances.
Now, Mr. Chairman, I do not think the Minister of Finance-and he is about the only spokesman for the forces of hurry in this House; there are not very many others who are bold enough to stand up and plead for rushing the Bank Act through-I do not think the minister advances any other argument but that of stability. And to stabilize has become characteristic of him. We know that he has stabilized our tariff. Now he proposes to stabilize our financial system.
We have seen a very significant combination of forces brought about in this House to prevent us in this quarter securing what we consider to be a very reasonable delay in the revision of the act. It is said that trouble makes strange bed-fellows. Well, sometimes even the unfounded anticipation of trouble
has the same effect. We have had the spectacle of Liberal members joining hands with Conservative members in trying to thwart the very reasonable desires of the Progressive party. The other night I saw what I thought was the extreme of incompatibility -a lion riding on the back of a mule; but during the progress of this act through parliament we have seen an equally strange sight-the Conservative party in an "unholy alliance" with the Liberal party in an attempt to block free discussion of the Bank Act.


Charles Arthur Gauvreau: That is a shame.


Thomas William Bird: The trouble is you do not feel the shame. To me it is strange how enthusiasms evaporate in this House. Last session when the Progressives were not saying very much about inadequate discussion of the Bank Act, we had some very eloquent speeches from the Conservative side urging a thorough discussion of the act in view of the Merchants Bank fiasco, and the House will pardon me for reading at length a few extracts from last year's Hansard because I know hon. members will find them very interesting. At that time a prominent member on the Conservative side said:
Let me turn to another subject that has not been mentioned in the Speech from the Throne. I refer to the Bank Act. I understand tliat next year is really the time for the amendment of that act. I was of the opinion that it should have been amended this year to conform with the practice of the past, but in that perhaps I am mistaken. Whether that be the case or not, however, I think that the Banking and Commerce committee might very properly make a careful examination this year into the workings of the Bank Act, that is to say, into some of its evident weaknesses. I am not one of those who subscribe to the statement that our banking system has not proven workable, or that it is an unsuccessful system which is not in the best interests of the people. I am not ready to endorse the remarks of the hon. member for East Calgary (Mr. Irvine) made this afternoon-statements which seemed to me with great facility and despatch to dispose of this great problem with a complacency that one might well envy, if, indeed, the remarks of the hon. gentleman could bring about a solution of the problem. I believe that our banking system is, in the main, a sound one; it is one of the best systems in the world. Nevertheless, we have to consider the incident of the Merchants Bank during the past few months to realize that there are weaknesses, or, shall I say, loopholes in the Bank Act, and that it is necessary, if not to reconstruct, at least to amend it, so as to render impossible a recurrence of the failure of the Merchants Bank.
And the word "failure" is not mine.
Perhaps that word is too strong; at all events, let me say the incident of the Merchants Bank. For instance, the Merchants Bank directorate or management must have made false returns to the Department of Finance for several months before the crash came. I do not see how the returns that they did make could approach accuracy in view of the sudden collapse, or partial collapse that confronted us. If it
Bank Act

is true, as I surmise-and I think the evidence strongly supports the assumption-that the bank made false returns, then this parliament ought to know it, and I believe that the Banking and Commerce committee should summon before it the management, the president and any other officials of the Merchants Bank, who might throw light on the matter, in order that parliament might be fully seized of all the steps which led up to this very regrettable incident in the banking life of this country. Furthermore, the Banking committee could very well make this examination for the purpose of preparing amendments to the Bank Act, when it comes up for general revision next year.


William Charles Good: Whose speech is my hon. friend quoting from?


Thomas William Bird: The hon. member for Centre Vancouver (Mr. Stevens), I think. I might supplement that by a quotation from another hon. member on the Conservative side of the House, just to show that we on this side are not doing anything at the present time that need be taken as unwonted or extraordinary; we are taking an attitude which was taken by others last session. Another hon. member said:
In conclusion, I want to refer to three or four other matters which I think should be mentioned in this debate, because this is the only opportunity we have of doing so under the rules of the House.
This is the utterance of a member for Toronto-one of the greatest financial centres in Canada-who was specially interested in this subject.	[DOT]
'If there ever was in this country an act that needed overhauling, it is the much-heralded Bank Act. Some newspapers are beginning to wonder whether there is to be one law for the rich and another for the poor in this country.
I think it is necessary for me to say again that this is the utterance of a Conservative member, otherwise the committee might think I was quoting from the speech of one of the representatives of labour.
I have read, in some very reputable newspapers, in Canada, articles referring to some people who stole $8,000 out of a bank, and some other poor fellow who took $1.25 out of a postal envelope. The people who stole $8,000 got a life sentence because they robbed the bank with violence; the poor postman, on a small salary without bonus, who took $1.25 out of an envelope, was sent down. This matter of the Merchants Bank should not be left to any superior or high court judge of the province of Quebec; or the Appellate division either; there should be an independent inquiry by the High Court of parliament and no whitewash. We should find out whether we have a Bank Act, whether it is a mere scrap of paper or not, and whether the monthly returns made by the bank to the minister are scraps of paper or not. I believe the losses will run to twelve or thirteen million dollars before they get through. What protection has the investor, the stockholder? I know one man in my city who has started to sell out every dollar's worth of stock he has in some small banks. When I asked him the reason, he said that he was very doubtful if, in some of the smaller banks, the shareholders have the protection which they should have. This parliament should be big enough to go into the whole

question of the Merchants Bank. The banks have been allowed to increase their note circulation; they have been given many special privileges, and a thorough inquiry should be made into the whole matter. The House and the country expect us to do our duty in this matter. Where do the Progressives stand upon it?
I notice that the hon. gentleman is not in the House to-night to say where he stands.


Mr. CAMPBELL:: Whose speech was that?


Thomas William Bird: I have difficulty in remembering where these hon. gentlemen come from; that was the hon. member for North Toronto, I believe. Well, why has this enthusiasm evaporated to such an extent that the battle is left entirely to us? I can understand why hon. members on the other side have not expressed themselves, but I cannot understand why the enthusiasts to my right should have dropped this matter and left us to wage the fight alone. Now,-


Mr. STEVENS:: Will my hon. friend permit me? He has quoted at some length from a speech I made last year. May I point out to him and to the committee that that speech was delivered before the prosecutions were launched against the officials of the Merchants Bank, and it was with the distinct understanding that these prosecutions were going on that I dropped a motion that I put on the order paper last year. Any further discussion would have done a grave injustice to those who were being prosecuted in the criminal courts of the country. If, as is common to a committee of parliament, evidence were brought forward in a loose manner while this case was pending, the parties would hardly have a. fair chance in the courts; accordingly, this matter was not proceeded with last year. The prosecution having been held and a very complete threshing out of the whole problem having taken place, the needs presented there do not stand this year as they did at that time before any prosecutions were commenced.


Thomas William Bird: The hon. gentleman's explanation is all right but I think he must have been aware that the prosecution was pending while he uttered those words.


Henry Herbert Stevens: It had not been launched; and the Minister of Finance if he were in his seat, would bear me out, I am quite sure. It was subsequent to that speech and subsequent to the placing on the order paper of a resolution to refer the whole question to the Banking and Commerce committee that the knowledge, even the preliminary intimation, that the prosecutions would be launched was brought to my attention.

Bank Act


Thomas William Bird: My point is that the hon. gentleman must have known that this thing was going to the courts.


Henry Herbert Stevens: I beg to correct my hon. friend; I have done so once. I knew absolutely nothing about it until it was conveyed to me subsequent to both the speech and the placing of the resolution on the order paper. I consented to let the resolution stand for the reasons I have mentioned.


Thomas William Bird: Well, I am bound to accept the hon. gentleman's word in regard to his lack of knowledge, but in regard to the prospective action in the courts, if my memory is correct the knowledge was pretty well diffused throughout the country that the Finance Minister had decided that this thing should be investigated in the courts. However-


Henry Herbert Stevens: I must correct my hon. friend. I cannot allow him indirectly to impute lack of accuracy to my statement. What I say is this, and I state it again most positively; that the prosecutions were not launched, there were no intimations to the public that they were to be launched, until subsequent to both the speech and the resolution going on the order paper. If the Minister of Finance were in his seat I would appeal to him for permission to make a statement that would prove that beyond per-adventure. I ask my hon. friend not to impute inaccurate statements to me, even indirectly.


Thomas William Bird: I assure my hon. friend that I have no intention of doing that. But I quoted from his speech in good faith rather to show his enthusiasm in the matter last session, and I think that part of his speech shows that he had great enthusiasm. The point of his interruption is valuable only if the action in the courts fulfilled the earnest desire he expressed in that speech and I think it will be very hard for him to contend that it did.
Now, I want to refer again to the course which the Minister of Finance has taken. I wish to make the charge of inconsistency against the Finance Minister with as light a hand as I possibly can, but in the light of his actions when the revision of the Bank Act was up some ten or twelve years ago I think it will be difficult for him to escape that imputation at least to some slight extent. The revision of the Bank Act was up before this House in the sessions of 1909 and 1910, when our present Minister of Finance occupied that same office. Early in the session in answer to Mr. Borden, the Minister of Finance (Mr. Fielding) said with respect to the Bank Act revision, "This matter was very well advanced," and would be presented "early this session."
Later in answer to a question he said, "It is contemplated to provide a Bank Act this session." On February 14 of the same session, in reply to Mr. Foster, the Minister of Finance (Mr. Fielding) said that he was bringing forward an act which "would not be much longer delayed." In reply to Mr. Foster later on he said that the act was in an advanced condition but that all would depend on other business. If the session was protracted, it would be that session; if not, the next session. Towards the end of the session, in reply to Mr. Emmerson, he said that there would not be sufficient time that session. The next year the opposition got very clamorous and the bill was introduced on December 15,
1910,	in the early part of the session, but was not proceeded with until March 31 the following spring, when Mr. Lennox asked for action. The contention of Mr. Lennox was that some very serious bank failures had taken place during the decade. The Minister of Finance (Mr. Fielding) replied:
If circumstances make it necessary to bring in a temporary bill carrying the banks over for another year, I think no harm would be done. A little further time will not be to the disadvantage of any interest concerned. ... I do not think that any great public interest will suffer.
Mr. Foster also urged strongly that the government proceed with the bill. On April 4,
1911,	the Minister of Finance (Mr. Fielding) further put off the matter, and on May 11 of that year he announced that a bill would be introduced for extension of the bank charters for one year. But they were not fated to proceed with the bill, for the next session found others in possession, and in the Hansard of that next session I find that the new government adopted the same delaying tactics. Mr. Lemieux early in the session inquired whether action would be taken that session, and Mr. Borden replied that it was simply a matter of time. Later on Mr. Macdonald also inquired, and he too was put off. So I think that the House cannot claim that this group on this side of the House is asking for anything that is unprecedented. We are asking for a course that was pursued at the last revision of the Bank Act, and the delay that we are asking is only for one session, and for a very good reason. On that former occasion the revision was delayed from session to session without any good reason except the urgency of other business. Now as a young member of this House, as a politician very much in the green, I find we have to go back
Bank Act

at least ten years in the lives of our prominent public men to find out what is proper to do to-day. We find out what they did about ten years ago, and then we go and do the opposite and we get the unanimous approval of this House. I wish to put that on record, not to charge the Finance Minister with any grave inconsistency because he may have justified himself, he surely will have justified himself in his own mind for the transformation of his conduct between now and then, and again I want to allude to the distinct courtesy and tolerance of the Minister of Finance as exercised towards us as we have endeavoured in our inexperienced way to put these objections of ours before him. The hon. minister kicks us downstairs with such infinite grace that you might think he was helping us up, and I for one have no objection to the way in which he has met our objections. I am sorry he should be such a lone mouthpiece in this unjustifiable policy of rush and hurry. I am sorry there are not more articulate exponents of that mystical doctrine of "get this thing through as quick as you can," for no ascertainable reason. I think it is very significant that he should be left alone to bear the burden of this contention.
I want to say in concluding that although we may have gone about this thing in a somewhat unrestrained manner at times, yet we have been acting in good faith and with the belief that we were carrying out the dictates of public opinion, and I believe that public opinion will sustain us in the action we have taken. I think it will be very hard for both the other parties to explain to the public why they carried this thing through as they have done against the reiterated protests from the group on this side of the House.


Mr. BLACK (Huron):: Mr. Chairman,
I rise to protest not so much against the Bank Act, for I was not a member of the Banking and Commerce committee, but for the purpose of protesting against extending without further consideration the bank charters for another ten years. Hon. gentlemen on this side of the House have mentioned the muddle into which the Merchants Bank got, and most of us here, particularly those from the province of Ontario, will remember that it was only a few years before that the Farmers Bank failed, and I really believe that that bank was in a bigger muddle than the Merchants Bank. Some of the managers of that institution although they had condemned themselves were let go by the courts. One of them skipped out of this country just as soon as the failure took place

and was hounded round and found at last in the city of Chicago, I believe. He was brought back to this country and haled before the courts, and a verdict of not guilty was brought in about one minute before the man passed into the other world, and no man in this House or any other house can make me believe that he was not guilty.
The same kind of thing took place in connection with the Merchants Bank, and I rise to protest against extending the charters of these banks for another ten years until those men are brought before the bar of this House. My hon. friend from Nelson has covered the case of the Merchants Bank pretty fully, and I shall detain the House only for a few minutes to ask the Minister of Finance if he thinks the people of this country are going to stand for seeing millions of dollars squandered by these institutions and the men responsible let go scot-free. Do the bankers of Canada think they have special privileges entitling them to squander that money? Let me cite a few of the items showing the manner in which the money has been squandered. Loans to the extent of two millions were made to the officers of the bank for the purchase of automobiles and fancy homes. Little of this money came back. Advances to the total of four and a half millions were made to one stock broking firm that engaged in gambling and exploitation, and only $500,000 of it came back. To protect a debt, owed by one of the manufacturing firms amounting to $65,000 a total of $1,300,000 was advanced and $1,000,000 was lost. This accounts for probably only one-half of the total amount that was squandered, I do not think I am using too strong a term when I say "squandered." The details of the other half are probably even more shocking than the ones I have mentioned, but I do not see any advantage in enumerating any more of them and occupying the time of the House unduly. Now, Mr. Chairman, I should like to enter my protest against making such advances. As I have not studied the Bank Act, not being a member of the committee, I shall merely enter my protest on that phase of the subject and leave the matter there.


William Charles Good: I should like to make just one observation as to the point raised by the hon. member for Nelson. He drew the attention of the House to a statement made by the hon. member for Vancouver Centre (Mr. Stevens) last year in which he distinctly recommended that some of the officers of the late Merchants Bank should have been brought before the House, or before one of its committees, to give information. When

Bank Act
this fact was brought to his attention by the hon. member (Mr. Bird) he defended himself on the ground that at that time the prosecution had not been taken. Subsequently it was undertaken and therefore he sees no reason to make the same request this year. Now, I want to submit to him, and to the House, that the information which was elicited during the trial is entirely irrelevant to the purposes for which we would wish to have that information in this House. Therefore, I contend that the defence which my hon. friend put in is entirely outside the point. The information that we wish to get is not that connected with the particular indictments brought at the trial, it is information of a very much wider character. I consider the defence of the hon. member for Vancouver Centre in that respect is very weak, and I am sorry that he has not joined with us this year in renewing the demand that he made last year.


Mr. BANCROFT:: As one of the western representatives I want to take this opportunity of placing myself on record in favour of the amendment. A very significant feature in connection with the consideration of the Bank Act this year, was the fact that thousands of representative citizens throughout the country were consulted by letter and asked for their opinions as to the revision of the act. The replies received would indicate that people throughout Canada believe there is a direct relationship between the credit system or the banking system of this country and the recovery of the agricultural industry. I think it is only fair to Canadian agriculturists to state that they have put forth almost superhuman efforts in an endeavour to solve this problem, apart from federal aid. In this regard it is well to remember what has been done in several provinces of Canada. Farm loans, rural credits, and provincial banks have been established in an effort to meet the situation and, as far as western Canada is concerned, have proved inadequate only because of the limit of capital at the disposal of these institutions. It is owing to the fact that the people have realized their limitations in this respect that they now appeal to the federal government to come to their assistance. And Mr. Chairman, even though a more adequate system cannot be evolved in the immediate future a free and frank discussion of the whole situation would tend to allay suspicion, and would also tend to strengthen the hands of the banks themselves. It would restore the confidence of the people in the banks, and great institutions such as these cannot be carried on successfully
for any length of time unless they enjoy the confidence of the people. For the reasons I have given I intend" to support the amendment.


Mr. MACLEAN (Halifax):: I wish to say
a word or two with respect to the remarks that have been made by hon. gentlemen since the committee commenced the consideration of the bill. It is not necessary for hon. gentlemen opposite to defend their motives in criticizing the measure. I am sure ample opportunity will be given to every hon. gentleman to make any observations he desires on the bill, or to suggest any amendment which he wishes between now and the time the measure will come from the committee. I do say however that when hon. gentlemen undertake to say that the revision of the Bank Act should not have been proceeded with they should give reasons for that statement, and the reasons should be substantial, they should be reasoned, and they should be based upon something, whether that something is strong, weak, or indifferent. Hon. gentlemen who have spoken this afternoon have not, in my judgment, given reasons for a delay in the revision of the Bank Act.
One hon. member, just a moment ago, referred to the fact that in 1911 a bill for the revision of the Bank Act was introduced and was deferred. Hon. gentlemen need only to recall the political incidents of that year to appreciate what happened. It was the session of parliament in which the Reciprocity treaty with the United States came before the country as a political issue. The session of parliament closed rather hurriedly, and the whole country was en-9 p.m. gaged in a political contest over that particular issue. The government of the day was defeated and in 1912 the new ministry asked for a delay in the matter of the revision of the Bank Act. That was quite natural because the new government, with the many duties which constitutionally devolved upon them, would expect the country to justify them in asking for an extension of time. Accordingly, in 1912 an act was passed extending the term of the Bank Act. The reason for not proceeding with the revision of the Bank Act then was a very good reason, and it proved satisfactory to the country at the time.
Hon. gentlemen say that many demands have been made for delay in the revision of the Bank Act during the present session. I heard it said this afternoon that there was a body of men in my own province of Nova Scotia favourable to delaying the revision of the act. I venture to say that if you can-
Bank Act

vassed the entire population of the provinces you would have difficulty in finding twenty-one out of the whole half million who had so expressed themselves. I believe a resolution was passed at some farmers' convention. I had the privilege of inquiring of two prominent persons who were present at that convention and they could not even recall that it was considered. That resolution must have come before the convention in the most informal and perfunctory manner.


Mr. DUFF:: There were only fifteen there anyway.


Alexander Kenneth Maclean: My hon. friend from Lunenburg suggests that there were only fifteen present, but I think there were more. But I venture to say that in the Maritime provinces there was no body of public opinion favourable to a postponement of the revision of the Bank Act. They desire reasonable, fair and proper amendments to it, of course, as do the people of every other section of Canada. There is no reason for asking for a delay in parliament doing its duty, namely extending the bank charters of this country when such charters expire at the end of the decennial period. The duty rests upon parliament and upon every hon. member to extend those charters, and they should be extended except for some strong, substantial reasons which as yet have not been given to parliament, nor to the Banking and Commerce committee. Again I venture to give as a reason why parliament should insist upon the renewal of the charters at the present time, the fact that the whole banking system has been challenged and foolish, dangerous substitutes have been suggested. I think it is wise that parliament and the country should express their disapproval of those suggestions. Hon. members say that we are rushing this *bill through parliament.


Mr. GARLAND (Bow River):: Hear, hear.


Alexander Kenneth Maclean: An hon. member opposite in very subdued tones says "hear, hear," and I fancy that the tone in which that interjection was uttered is an indication that he did not feel very strongly in that direction himself. So far as I know, no effort on the part of the government, or of the committee, or of any hon. member has been made to rush this bill through the House. It was a long while in the committee. The Bank Act itself was well considered, and before it went to the committee it has had the consideration of the Department of Finance. Important amendments appeared in the bill before it went to the committee, and the House approved the bill as amended before
]Mr. Bancroft.l
it was sent to the committee. It was considered in the committee, section by section, and clause by clause, and no very important amendments were suggested by any hon. members opposite. I commend them for their energy and the attention they gave to the bill while it was being considered by the committee, but I say in all frankness and kindliness that they did not propose any amendment of a substantial nature to the bill. It is true that other important questions came up; but as regards the Bank Act itself, members of the Progressive party who were members of the Banking committee, made no very serious and important suggestions, and if amendments of that character were made, the committee gave ample and due consideration to them. How long do hon. members think a bill of this character should be considered in parliament or in committee? Are we going to sit month after month, year after year, decade after decade? How long is it going to take hon. members to make up their minds as to what a bill means, and what their decision will be about the matter? We would have no laws anywhere if hon. members engaged in legislative halls were to say: "You must not rush; we must have time to consider." Everybody, I think, has had ample opportunity to make any suggestion and to propose any amendment that was of any value.
We have in Canada a banking system which has been in existence since confederation and which is known as the branch bank system I think it has functioned well and successfully in this country. Like everything else it may have its weak points, and it is our duty as parliamentarians to eradicate those weak features if we can put our fingers upon them. But we must have a Bank Act, because if we did not have some banking system under the authorization of the statutes of our country, commerce and trade could not be carried on and everything in this country would stop. I think, speaking generally, every hon. member feels that our banking system on the whole is a pretty sound system, and that it has operated pretty well in the past. It stood the strain of the war test as well as any other banking system in the world. I think our' bank managers and directors deserve credit for the management of Canadian banks during the war period, and it should be said of them, that they came through that ordeal in as good shape as did banks of any other country in the world.
Hon. members have referred to the Merchants Bank failure, and they spoke of money having been lost. They talk as if by some act of parliament, the recurrence of such a

Bank Act
thing should be prevented. Bank failures cannot be prevented by legislation any more than the commission of crime can be prevented by criminal laws. Even the Ten Commandments to which one horu member referred this evening are violated though they came to the sons of men amid the lightnings and thunders of Mount Sinai. It is perfect nonsense to think that you can eliminate human weakness, errors in human judgment, by acts of parliament. Of course we must do everything we possibly can to prevent bank failures in the future, but I do not hesitate to say that they will occur in the future. After all a bank is in essence no different from a crossroads country grocery store. The country store sells general groceries, or something or another, and the bank merchandisers' credit. There is quite a contrast, it is true, as to the exact character of the businesses, but after all each buys and sells something. As long as human nature is what it is, we shall have failures at the country cross-roads store and in banks in Canada. To say that because the Merchants Bank of Canada failed, we should delay re-enactment of Canadian bank charters, is reasoning that I cannot understand.


William Stevens Fielding: The Merchants Bank did not fail.


Alexander Kenneth Maclean: The Minister
of Finance reminds me, and it is true, that the Merchants Bank of Canada did not fail. They decided to go out of business, as many concerns and corporations are deciding to do to-day and will to-morrow in these distressing days in commercial life the world over. The Merchants Bank extended their loans too freely. Somebody made a mistake; the management made mistakes, and in my judgment some of their mistakes are not very easily condoned.


Mr. IRVINE:: Will the hon. member say
whether he knows or does not know why the Merchants Bank failed?


Alexander Kenneth Maclean: Because in the course of business they lost a certain amount of their assets by weak loans. They became weak, just in the same manner as ordinary business concerns become weak and fail.


Mr. SPENCER:: Will the hon. member
admit that they failed?


Alexander Kenneth Maclean: There is not
much use in discussing that. I said a moment ago that they did not fail, and as a matter of fact and of law, they did not fail. The noteholders were paid. The depositors were paid. The shareholders possibly suffered a loss in
the value of their shares, but by their vote they agreed to the sale of the assets of the bank. The Department of Finance instituted criminal proceedings against two officers of that bank. After trial in the courts of the province of Quebec these men were acquitted. What more could be done? How ineffective it would be to have an investigation in the Banking and Commerce committee. Would there be any tribunal as ill-fitted in all Canada as parliament to investigate a failure of that kind? We have had bank failures in the past and the country was satisfied with the public inquiry or the investigations in the courts concerning these particular failures. I think in connection with some of the bank failures preceding that of the Merchants Bank some bank managers went to penitentiary. That did not happen in the case of the failure of the Merchants Bank. But I ask hon. members, what more could be done, and why is it made the basis for the suggestion that we should postpone the further consideration of the Bank Act.
I said a moment ago that very important amendments had been made to this act, and I particularly refer to the new clauses in respect of the shareholders' audit, and to the provisions which require the shareholders' auditors to bring to the knowledge of the directors all the facts which should come before them in connection with the business of the bank. The latter I regard as an important amendment, for if by any audit system you can bring to the attention of the directors the important facts in connection with the business affairs of an institution, particularly its weak and doubtful points, I think you have gone just about as far as you can go in the way of legislation to give security to depositors and shareholders. But if these amendments are not sufficient, further amendments can be made upon the suggestion of any hon. member, and that is our business here while the bill is before the committee.
Reference has been made to the financial conditions of the country, and it is said the present banking system is not of a character to meet effectually the present situation. Many hon. gentlemen in this House fail to distinguish between banking institutions and credit institutions. It was felt by many hon. members in the committee, and I think in the House, that there was possibly a field for some finangjal institution operating between the banks and mortgage corporations which might be filled by some financial institution, call it what you will. We generally refer to them as rural credit associations. This particular form of credit is being tried in the
Bank Act

United States to-day. In Europe we find they usually operate under the name of some cooperative association, and splendid things have been done there, and I do hope that some day soon we may have them in Canada. The conditions in western Canada, I admit, are deplorable. Therefore, the minds of many hon. members opposite belonging to the Progressive party are centred upon the conditions prevailing in their own particular section of Canada. We all appreciate that. In some sections of the province of Alberta, where they have had a failure in crops for three years, the conditions are particularly distressing, but that is not due to any economic law or any weakness in the banking institutions of this country. Nobody on earth is to blame for that condition, and if blame is to be attached, hon. gentlemen opposite will have to go into another sphere to find who is to blame. The chief difficulty in the western country to-day is that many farmers overborrow. That is admitted. That has been admitted by pretty nearly every hon. member from the western provinces who took part in the deliberations of the committee on Banking and Commerce. I understand this admission was made frequently by western men before another committee. The real problem in the western provinces to-day-at least in one of them, and possibly in two of them-is to devise some scheme by which the present indebtedness to banks, to mortgage corporations, to merchants and others could be lifted from the shoulders of the people and spread over a long period of years. That probably concerns the farmers of the West more to-day than the question of rural credits for the future. The member for Centre Winnipeg (Mr. Woodsworth) said to-day that several schemes were presented before the Banking committee which are not to be found here. Well, there were some schemes presented to the Banking and Commerce committee, and some of them were very fantastic.


William Irvine: May I ask the hon. member a question?


Alexander Kenneth Maclean: Yes.


William Irvine: Does the hon. member think it is fair for him to make a lot of statements about what was presented in committee, but were never considered in committee? He is only offering his opinion, which is as good as anybody else's, but no better. He is not speaking for the commitfee in that regard. The committee came to no conclusion on that question.


Alexander Kenneth Maclean: Why did the hon. gentleman not make his remarks to the

hon. member behind him (Mr. Bird) when he was stating to the committee that these suggestions were not incorporated in the bill, and urging that as a ground for delaying the consideration of the bill?


William Irvine: If the hon. member who spoke on this side of the House made a mistake in referring to them, does the hon. gentleman think he is doing any better by making these statements concerning matters which were never considered in committee?


Alexander Kenneth Maclean: I do not think 1 have made any mistake in the statements I have made, and I am not apologizing to the hon. gentleman at all. I was perfectly within my right in making the remarks I did.


William Irvine: The hon. member has not answered my question.


Alexander Kenneth Maclean: I do not propose to discuss the schemes of Mr. Douglas, or Mr. Bevington, or Mr. Fisher, because this is not an opportune time. I think the opportunity will come later. A great many other remarks have been made since this bill was taken up by the committee this afternoon. I thought it desirable to make a few observations regarding some of the criticisms which were made, but I do wish to say that I think, if hon. gentlemen are serious in urging a postponement of the consideration of this bill and its enactment, really some more substantial reasons should be given. I am not objecting to the discussion or criticism. I have been merely attempting to answer some of the criticisms, and I trust the committee will soon see fit to proceed with the bill.


Mr. HOEY:: Mr. Chairman, I was not a member of the Banking committee, nor did I attend the sessions of that committee with the regularity that would entitle me to pose as an authority on the subject matter in the discussion of which we are now engaged. However, there is an impression in my mind that the revision of the Bank Act this year received consideration equal to, if not greater than, the consideration accorded any previous revision. The members of the Banking committee met regularly, worked strenuously, and I think the House as a whole is indebted to them for what they have already accomplished.
And yet it seems to me that the demand embodied in the amendment is reasonable- a demand supported by several representative organizations throughout the country, a demand made upon myself by at least twenty or thirty correspondents who have written to me from various sections of the Dominion.

Bank Act
403S
If we penetrate beneath the surface of things in an attempt to answer the question put by the senior member for Halifax (Mr. Maclean), I think we will discover that this demand is based, first of all, upon a growing tendency in the minds of the Canadian people to-day that our electoral system-that is, the mere mechanical process of holding an election-does not place at the disposal of the people in parliament a sufficient number of specialists to undertake to pass upon a subject so technical, so involved, so abstruse and so far-reaching in its effects as the revision of the Bank Act undoubtedly is. Not only do they lack faith in the ability of their elected representatives, but they are frequently reminded of the limited time at our disposal to undertake and carry to a successful conclusion this Herculean task.
But the senior member for Halifax will remind me that on this occasion specialists were summoned, authorities on banking were brought before the committee and gave evidence, which evidence has been published verbatim. I want to be honest with myself and with hon. members. How many members of the Banking committee have read through that evidence? And of those who have read it through how many fully understand it? But in the last analysis it is not the members of the Banking committee before whom that evidence was taken who are going to be responsible for passing this legislation, it is the hon. members of this Chamber; and again I want to be honest with myself and with hon. members. How many members of this Chamber have read that evidence through? And of those who have done so how many fully understand it? How many could get up here, or before a public audience, and give an intelligent lecture of one hour's duration on the evidence submitted? Has the Prime Minister read that evidence? Doubtless the Minister of Finance (Mr. Fielding) has. But, if so, is it not a reasonable request to make of him that he present to this House a brief synopsis of the evidence, showing that in the light of the knowledge that has come to us from the evidence the present measure is the best possible act that can be evolved in the next decade? Again I say, if we penetrate beneath the surface we find that while the people may hav'e faith in the honesty of their elected representatives, they have grave doubts as to their specialized knowledge. That is to say, Democracy's ability to return members to parliament at this time has outdistanced Democracy's ability to discover and return to parliament the right type of man. Hence we have to-day the demand for government by commission. We have a Railway Commission. We have a Civil Service Commission. We have a Board of Grain Commissioners. Last year we had a Royal Commission on Pensions and this year a royal commission inquiring into lake freight rates. I do not know but what the time is rapidly approaching when we shall, in response to this growing demand, have to appoint a commission on banking-a commission on finance. Now, I say to the senior member for Halifax-and I say it in all kindness-that in my humble judgment no government, if it is wise, can afford to treat with impunity and with contempt such tendencies on the part of one people they are seeking to govern. A wise government, a government that is well advised, will take note of such tendencies and attempt to reconcile them with the theory of responsible government.
Turning to the banks for a moment, it would be too much for us to expect that our banking institutions could escape from the storm of criticism, the force of which has been felt by almost every institution within the circle of our national life. The fact that there has been a tendency towards the centralization of financial control, coupled with the fact that our banks have been paying dividends on a normal basis during a period of the most acute financial stringency in Canadian history, has created an impression in the minds of many people that these institutions enjoy advantages and privileges not enjoyed by other institutions in this country.
Then I want to say that this demand is inseparably bound up with the demand for a rural credit scheme. Some scheme or proposal for an extension of rural credits is, in my judgment, indispensably essential if we are to stimulate production in the western sections of this country, which production when stimulated will enable us to meet our financial obligations. Representations have been made to the hon. Minister of Finance with regard to a commission on taxation; it is proposed to hold a conference to which will be invited all the provincial treasurers. It seems to me that that would be an opportune time not only to discuss taxation, it would be an opportune time to discuss the whole problem of rural credit, the funding of farmers' obligations and a thousand and one questions related to that subject. What could be more appropriate than that the present Minister of Finance, after years of service, after his splendid devotion to the cause of duty in this country-what could be more fitting, than

Bank Act

that he, in co-operation with those who are willing to assist him, should in the immediate future evolve some system of rural credit, not a slavish imitation of systems already existing in other countries, but something new, something original, something worthy of Canadian statesmanship, something that will meet our present needs?
So much for the mere economic aspects of the question. When the senior member for Halifax (Mr. Maclean) suggests that we are opposed to this bill, he is, not deliberately but unintentionally, misrepresenting our position. We are prepared to support this bill for at least a year, but we are not prepared to support it for a period of ten years, with the information at our disposal. Then, there are other considerations, the least worthy of all-what I would call political considerations. It would scarcely be fair to say that the demand for this postponement comes wholly from western Canada, but I think it is the case that the demand is more pronounced in western Canada, because of the peculiar economic conditions prevailing there. As I listened to the speeches this afternoon 1 thought of the effect those speeches would have upon the present government.


Alexander Kenneth Maclean: Is the hon. gentleman worrying much about it?


Robert Alexander Hoey: I am not worrying at all. But I wondered if those speeches, broadcasted from one end of this country to the other, would have the effect of rousing the Canadian people and sending thousands to the polls who up to the present have refused to vote. If I thought such speeches had that effect, I would encourage them, but I am inclined to think, and I say it in all seriousness, that utterances of this kind will have a tendency to embitter the Canadian people, to set class against class, to set one section of the country against the other, and to undermine the faith of the Canadian people

that is, the little bit of faith they have left-in political institutions as they exist. I am not persuaded that the present leader of the government has decided to scrap western Canada so far as his future political plans and ambitions are concerned. A gentleman told me to-day he was convinced that the present Prime Minister had pulled down the curtain so far as western Canada was concerned. I am rather inclined to think that the Prime Minister-and I have considerable faith in his sincerity; I wish I had the same faith in his political sagacity-is still willing to make an attempt to unite the different sections that go to constitute the Canadian nation. I do not believe that the Prime 
Minister extracts pleasure from the division that at present exists. But what are the facts? I should be out of order here if I referred to a budget for the creation of which and for the adoption of which the present administration was responsible this year, but I do not think it is an exaggeration to say that that budget, for weal or for woe, caused dismay in the minds of the government's most loyal and devoted followers in the western section of this country. And then they come along with a proposal, the psychological effects of which are going to be tremendous, a proposal and an attitude on the part of the government which if persisted in, and coupled with the speeches that are going to be made, will definitely line the present administration up with the eastern interests. But the Prime Minister says: We have taken a certain position, and we cannot, and maintain our dignity, give way to an irresponsible minority in this House. But I want to remind the present government that if they do not seriously consider the advisability of giving way to a so-called irresponsible minority in this House they are going to be accused oi lining up with an irresponsible minority outside this House.


William Lyon Mackenzie King: Is my friend quoting me when he uses the expression that he has just employed?


Robert Alexander Hoey: I think the Prime Minister misunderstood me. I have not quoted him to-night. I was speaking rhetorically when I said: The present government may say that it cannot, and maintain its dignity, give way to an irresponsible minority in this House. I can only say that if the government do not seriously consider the advisability of giving way to a so-called irresponsible minority in this House they will be accused, they are being accused now, of being dominated by, an irresponsible minority outside this House, namely, the eastern interests. If I were interested in the triumph of mere political parties-and I do not give a continental for the growth or triumph of any party-I would not ask for a better basis upon which to build up the party to which I am attached than the present attitude of the government on the revision of the Bank Act. I do not mean to say that it is a great thing in itself; there is a lot of merit in the argument of the hon. member for Halifax. But if you exercise your imagination and think that men in the paralyzing grip of economic necessity to-day are willing to blame almost anybody in the present crisis-exercise your imagination in that sense, and then think of the future political result.

Bank Act
I am interested in the attitude of the right hon. leader of the Opposition (Mr. Meighen) on this question; I will await his speech with considerable interest. He has much less political sagacity than I give him credit for if he supports the government in putting through for a ten year period this Bank Act, in view of the state of public opinion throughout the country. I have tried to br fair in my remarks; I have tried to be conciliatory; I have no desire to stir up bitterness or to awaken hatreds. I simply submit these considerations to the government for what they are worth, and I wonder if ever yet some compromise could not be reached that would be satisfactory to all concerned, some compromise that would awaken hope in rural Canada that the present administration is at least making an honest, a sincere, a supreme attempt to come to their rescue and to help them out of their present difficulties.


Mr. LUCAS:: I shall not delay the committee at any great length, but I wish definitely to place myself on record in support of the amendment moved by the hon. member for Red Deer (Mr. Speakman) this afternoon. I was not a member of the committee which considered this bill, but I took advantage of any opportunity that presented itself to visit the committee and see it in action. Yet in spite of all that has been said here this evening and what I heard in that committee the hon. member for Halifax (Mr. Maclean) says that no substantial reason has yet been given for postponing the revision of the Bank Act. I want to say, Mr. Chairman, that one of the reasons why the Conservative party went down to defeat in 1921 was because they did not have their finger close enough upon the pulse of public opinion in this country, and the result was that the people placed in office in their stead a new government thinking that it would respond more readily to public opinion. I would like to ask the government now what good reason they can give why this Bank Act revision should not be postponed for another year. Are we asking for anything unreasonable in view of the widespread unrest prevailing throughout Canada to-day?
I might say that our demand is backed up by resolutions from organizations from almost every part of Canada. I shall not weary the House by reading them, but I have _ here resolutions from the government of Manitoba, which is no small organization but represents the people of that whole province, from the government of Alberta, and from the Canadian Council of Agriculture, which represents thousands of organized farmers throughout the
whole of Canada. I have also a letter here signed by Tom Moore, president of the Trades and Labour Congress, which I propose to read:
Dear Sir,-Communications received from a number of our affiliated organizations, including the Trades Councils at Victoria, Vancouver, Calgary, Edmonton, Toronto, London, Montreal, St. John and Halifax, all indicate that there is a widespread interest amongst the organized workers regarding the Banking Act.
Labor opinion is strongly favorable to a thorough revision of the Banking Act and entirely opposed to hasty action on such an important matter. It is strongly felt that the mass of evidence submitted to the Banking Committee during this session should be thoroughly analyzed before final decision is reached as to what amendments of benefit to the public could be properly made to the Banking Act and that the present session of parliament is apparently too far advanced to admit of this being done.
We would therefore respectfully urge that the revision of the Banking Act should be postponed until the next session of parliament and would greatly appreciate any assistance you can render to bring about such action.


Mr. JACOBS:: Is the writer of that letter a director of the Canadian National Railways?


William Thomas Lucas: The letter is signed by Tom Moore, president, and P. M. Draper, secretary-treasurer, of the Trades and Labour Congress.


Alexander Kenneth Maclean: Mr. Moore was before the committee and he never suggested that the revision of the act be postponed. Furthermore he said he had nothing to propose by way of an amendment.


William Thomas Lucas: Here, of course, Mr. Moore is speaking for organized labour throughout Canada, and his letter speaks for itself. 1 am not going to argue with the hon. gentleman as to Mr. Moore's views, but I have his letter here above his own signature. One of the reasons we in western Canada especially have for postponing the revision of this Bank Act is the lack of confidence that a great many of our farmers have in our banking system as it exists at the present time. I have here one of our farm papers containing a lengthy article headed "Financing the Farmer." It was put out by the superintendent of the Rural Credits branch of the Merchants Bank before that institution went out of existence. I shall quote only one short sentence:
The farmer who takes his banker into his confidence at all times and under all conditions is making satisfactory progress, and he seldom finds it necessary to seek credit outside the bank to carry on his season's undertakings.
We have had advertisements in our farm papers out in that country along this line:
Bank Act

If you are sick, you go to your doctor for medical advice. If you are in legal difficulties you go to your lawyer. When in financial trouble, why not go to your banker? In this very article it says, "Place your confidence in your banker." I should just like to point out what happened through a man placing confidence in a banker. It is a case that happened in my own district involving an immigrant, one of the finest type that has ever landed in this country. He came from the Jersey islands and was worth considerable money, just the class of settler we are all anxious to see in Canada. He came over and settled in the town of Sedgewick. He went to his banker and placed his full confidence in him, and the result was that on the advice of that banker this settler placed $10,000 in a partnership which was in a very unstable condition. Just to prove that this partnership was in an unstable condition when this man invested his $10,000 in it, I wish to read a letter from the general manager of the Merchants Bank at Montreal which was produced at the trial, and just here I might say that our head bankers often claim that they are not quite responsible for all that the branch managers may do or say. This letter from the general manager of the bank at Montreal goes on to say, speaking of the condition this partnership was in at the time this immigrant invested his money in it:
The inspector suggests that J. Burn has Mr. B. mesmerized, and we think you too. This account is on anything but a satisfactory basis and we want it cleaned up without delay. You say it is impossible to confirm our figures representing wheat, oats, flax, and barley, covered by the bank's pledges, but it is your business to know that the commodities are there.
The door is wide open for perpetration of fraud, and we have seen it happen so often. On the lines of the authorized credit we shall not object, but you have given double the amount we have authorized. Bring it within $10,000 without delay and do not arrogate so much authority again. There is evidence in your liability list that Burn is getting into deep water. Send us a statement of the grain covered by the bank's pledges after you have seen it, obtain also a statement of stored grain and ask Burn to explain to you how he proposes to separate and identify the two classes of grain on hand.
I want to call particular attention to the last paragraph:
If you don't get this account into line quickly I will relieve you of the management. Note that. Now get to work.
This manager got to work, and he was responsible for getting this settler freshly landed in Canada, and who had placed his confidence in that bank manager, to invest $10,000 in that partnership which inside of one year was in such a condition that it was wound up. I want to say that this new

settler holds a very bitter feeling against the banks in western Canada in consequence. He sued the bank for fraudulent misrepresentation, and in summing up the judge said that it was not a matter of justice; he had to administer the law, and that the bank took shelter under an old law dating back as far as 1826. He said: "The advice was given verbally and not in writing, and therefore damages could not be recovered."
We heard Sir Frederick Williams-Taylor, who is head I believe of the Canadian Bankers' Association, before the committee, and when asked if there was sufficient credit to meet the demands of the country he said:
The demand for credit in Canada is less than the banks of Canada are able to take care of, substantially less, and the banks of Canada at the moment have large sums unemployed.
Now in view of the conditions the farmers of western Canada are up against at the present time it is hard to understand that statement. When we were asked to subscribe for victory bonds we were all told that those bonds were as good as gold at any time and that they would form a good basis of security if we wanted to borrow. What are the facts? We find that farmers in the West with victory bonds in their possession, who had met with losses in carrying on their farming operations, could not get loans on these bonds and were forced to sell them out and out. In view of that fact it is hard to understand Sir Frederick Williams-Taylor's statement that there is no lack of credit in Canada.
A short time ago I came across this extract from an article by Lord Milner in the London Observer:
Labour is more and more inclined to question the competence of the bigwigs of industry and finance. There is a loss of confidence in the management.
Such loss of confidence may not be wholly justified, but, in view of the extraordinary happenings of the last three or four years, it is not unnatural. Let us try to picture the impression which his experiences during those years are likely to have left on the mind of any fairly intelligent workman, a man, say, good at his own job, but with only so much information about the general affairs of the world as he could gather from the steady perusal of his daily paper. For months and months after the close of the war he had it dinned into his ears that the world was suffering from a shortage of goods, and he was overwhelmed with exhortations to him and the men of his class not to spare themselves, but to work with intensified energy to make up the deficiency. That, he was vehemently assured, was their duty to their country and the world, and at the same time the one sure road to the improvement of their own condition. Such was the unanimous appeal made to him by all the highest authorities in the world of industry and finance. And he obeyed it to the best of his ability, but only to find, a year or two later, that the warehouses of his employers were choked with goods which they could not sell, and that his services were no longer required.

Bank Act
And then, when, stung fey disappointment, he began to probe for himself into the causes of this strange contradiction, he was told that there had unfortunately been a mistake, that the activity to which he had been so fervently exhorted to contribute was "feverish," that he ought to have known, we ought all to have known, that after the war there was bound to be a big slump, because "the pool of capital had been depleted', and we had no money for making things and nobody else had any money for buying them. . .
We all remember very well, when the war was on and afterwards, the advice which was sent out by the financial institutions of this country, especially when we farmers in Canada were complaining about the conditions we have to meet, "We have all got to make our sacrifices, we have all got to be patriotic." I should like to ask the chairman and the members of this committee whether the banks of Canada have taken their share of the losses, whether they have borne their share of the sacrifices undergone by the masses of the people of this country? We found that when the great mass of the people were suffering-not only on the farms but in our cities as well-banks were holding their annual meetings and declaring their usual dividends. At the annual meeting of every bank, while other people were undergoing sacrifices and enduring suffering, it was announced that the year had been a prosperous one and the customary dividends would be paid.
One of the things we hear a great deal of in Canada to-day is the necessity for an aggressive immigration policy. We all realize that we are staggering under a tremendous burden of debt and that in order to develop this vast country we should have more people here. But what inducement can we offer to bring immigrants to Canada? We find that in New Zealand, in Australia, and in the United States they have inaugurated some form of rural credit scheme in order to assist the farmers. We are spending millions of dollars on an immigration policy in order to bring settlers to Canada and what inducement are we offering these settlers? Let me compare what is being done for the farmer in the United States at the present time with what is being done in Canada. If a farmer takes out a loan for $1,000, under the present rural credit scheme, an amortization plan they have over there, in thirty-four years he will have paid back a total of $1,870. The farmer in Canada who takes out a loan of $1,000 must pay interest at the rate of 8 per cent and I may say there are a great many loans that bear a much heavier rate than 8 per cent. Taking out a loan on that basis in thirty-four years, instead of paying back $1,870 as in the case of his American cousin,
he will pay back the much larger sum of $3,700. What inducement, therefore, is there for immigrants to come to Canada when if they settle in this country they have to compete in the same market with people who are much better situated.
I think the hon. member for Halifax admitted, I know many others have admitted, that there was a gap between our present financial system and the farmer. In view of that fact the government would give a great amount of satisfaction, especially to the members on this side, if, instead of trying to force this bill through at the present time, they would await the report of the special committee on agriculture and its recommendation in favour of some rural credit scheme, and give us some assurance that action along that line would be taken. In the absence of such assurance from the government it is our duty to protest that the bill to revise the Bank Act should not be put through at the present time.


Alexander Kenneth Maclean: Would it not be better to take some of the time now being consumed in trying to develop a rural credit scheme or some financial institution which might meet the situation my hon. friend says prevails to-day in the West? Is there any relation between commercial banking necessarily and a rural credit scheme?


William Thomas Lucas: That is what I was trying to tell the hon. gentleman. The special committee on agricultural conditions have spent practically the whole of this session in developing some such scheme, and yet this bill is being forced through in advance of that committee's recommendation.
Now, I do not wish to occupy time unnecessarily. As I said at the beginning of my remarks I did not intend to make any lengthy argument, but I do feel that it is the duty of the government, in view of the existing conditions, to try and evolve some rural credit scheme that will meet the needs of the agriculturists of Canada. One of the things that I know for a fact is this: As a result of the economic conditions that we are now struggling against the farmers are getting into a condition almost of despair, and unless we can take back to those farmers from this long session of parliament some hope-some little ray of hope-that relief is going to be given them to enable them to get out from under the tremendous burden they are carrying, there is going to be a greater exodus from Canada than has been witnessed in the past. I want to give credit to other hon. members in this House. I believe we are all sincerely desirous of building up this country, but I think that after the months we have spent in session
Bank Act

here, this government should try to establish some rural credit scheme that would afford relief to our agriculturists. We find that in practically every other country of the world some scheme of this character has been evolved. To-day the people of Canada are looking to this government for leadership in the matter, and I hope that before this session closes the government will come forward with some scheme calculated to remedy the existing situation.


Mr. FORKE:: I rather hesitate to take part in this debate feeling as I do the lack of information which other members in this group possess in relation to the question of bank revision. Before dealing with this subject, I should like to pay my tribute to those members of the Banking committee who have devoted their time so assiduously and who have studied so carefully the different phases of the banking question. I for one, reading only cursorily the reports in the newspapers, have been rather surprised at their astuteness and the careful consideration that has been given to many questions that have come before the Banking committee. I admit that the question has now become rather tedious; it is taking a long time; it has been carefully considered; but I would call the attention of the committee to the fact that a question is never settled until it is settled right, and I question very much if we have reached the place where we can say that this question has been rightly settled.
Perhaps some little trouble was occasioned at the beginning by certain theories being propounded before the Banking committee that rather alarmed some members in the committee and in this House. I might say that they were needlessly alarmed when one takes into consideration who at present occupies the position of Minister of Finance (Mr. Fielding) and the composition of this parliament. I think hon. members may rest assured that nothing very radical or serious is likely to happen in this parliament as regards the Bank Act. I have every respect for the Minister of Finance-I will take second place to no one in that regard-but, perhaps, having been in that position for a long time, he ha3 seen things working fairly smoothly; he is certainly well content with things as they are and he is rather careful that, at least, if he should err, he would err upon the side of safety. He has been very safe in this case. From what I can learn, no very great difference has been made in the Bank Act; it is substantially the same Bank Act that we have had during the last ten years.

I believe throughout the country at the present time there is considerable dissatisfaction with our financial conditions, and 1 for one wrould like to see this question carefully considered. I can speak from personal experience. I have in my room upstairs a large volume of evidence that has been taken before the Banking committee. I have not had time to read a single issue of that evidence and I am perfectly certain that, perhaps, the majority of the members of this House are exactly in the same position. They are asked to vote for this Bank Act, and they do not know what all this is about, or what all the evidence is that has been taken before the committee. I do not think in the history of parliament has such a volume of evidence been taken, or has the question been shaken up so thoroughly as during the time evidence has been taken cn the stand before that committee. I claim that as one reason why I think the members of this House and the people of this country should have time to consider this question in all its bearings. I have had requests from bankers to send them some copies of the evidence, and I am sure the bankers of Canada are not acquainted with the evidence, nor have they given it sufficient consideration to enable them to make to their members the suggestions they might make if they were familiar with all that evidence. Perhaps the people who are anxious to go too far have played into the hands of those who do not want to go at all. I do not know if hon. members will understand just what I mean. They have made people afraid, and those who might have been willing to go a little further have been afraid to move just for fear some of the 'ideas that have been propounded should be put into practice. As I said before, this revision will not be final in any case. There should be no antagonism between the different classes in our country. It should be very evident to everyone that banks can live only by the business they do with the people of the country; and if a system is adopted that is detrimental to the business of the country, it does not matter whether that business is agricultural or industrial, in the long run the banks also will suffer, so that the banks and the people after all are interested in seeing that we have a proper financial system.
I have a short extract from an article written by Colonel MacLaren in the last issue of the Financial Post. I will read this, and I want hon. members to pay particular attention. The article reads:
The proceedings before the Bankers' committefe have not improved matters in spite of the efforts of the

Bank Act
chairman, A. K. Maclean, one of the most tactful men in the House, aided by the very broad knowledge of the Minister of Finance. The financiers and the farmers across Canada are drifting into real antagonism.
I for one deplore the fact that there should be any antagonism between the different classes in this Dominion of ours. It should have been the business of the financiers of this country to come forward and give all assistance in their power to provide the very best possible financial institutions. From what I hear-I cannot speak from actual knowledge-the stand taken by the bankers has been that we have an admirable banking system and that it cannot be much improved on. Such an attitude of superiority of great knowledge should not be taken when people know things have not been functioning just as well as they really should. The writer goes on to say:
The blame does not rest with the farmers.
The farmers are not radicals.
I want hon. members to pay attention to that, because I know hon. members in this part of the House are sometimes looked upon as bolshevists and radicals who are willing to upset everything and to create disturbance in every branch and line of industry. Nothing is further from them than that. The writer continues:
They are capitalists themselves, very closely allied to and in deep sympathy with good business and sound finances, and with little real sympathy for political interference in business. They want some sound way of temporary borrowing.
I might go on to say that they want longer credits even than our banks are willing to give at the present time. I should like again to emphasize the statement that farmers as a class are not radicals, nor are they bolshevists. There are no people in this country as able and willing to stand up for the institutions and the welfare of the country as are the farmers of Canada. If you will allow me to make an interjection at this point, I remember the strike in the city of Winnipeg, when the people lost their heads, and the cry heard then was "The farmers will save them; the farmers will save them". Why was that? Because they were the most stable element in the whole population of this Dominion.
There are going to be changes in the coming years in any case. I do not care how this committee votes on the present division; I will make the prophecy,-and I am perfectly sure of it,-that within ten years there are going to be changes in the Bank Act. To my mind, one of the things of greatest importance at the present time in connection with our banking institutions is the matter of credit getting into the hands of a few men. Have
hon. members ever considered what credit means, what power it gives? If ever the credit of Canada gets into the hands of a few men, they can make and unmake industry, institutions, individuals just as they like, and I for one am alarmed to see the banking institutions of our country gradually converging into the hands of a few people. I listened with great attention and pleasure to the very eloquent speech of the hon. member for Springfield (Mr. Hoey). Like myself he hesitates to discuss currency and banking. They are intricate and rather difficult matters to understand, but I think I know enough to realize that currency and banking are really international affairs and go wider than the bounds of our own Dominion.
I do not intend to make any lengthy speech, for the simple reason that I have given this question no particular study; but I think the members in this part of the House are making a very reasonable request. They are asking nothing out of the way; they are not going to upset any industry. Business can be readily assured that this House is not going to do anything tremendously radical, and business can go on during the years to come, quite confident that nothing is going to happen that will hurt it very much.
Not very much attention has been paid by members on the government side of the House to the fact that we have had requisitions and resolutions passed by governing bodies, two provincial legislatures and a large farming association in the West, asking that the revision be held over for a year, or, at least, that charters be only granted for one year. The senior member for Halifax (Mr. Maclean) has said that he has not heard us give any reasons. I think several reasons have been given. One is the fact that we feel the need at the present time of some intermediary system of banking between short-term credits and what may be called the farm loan system of long-term credits. We need some system of rural credit, and as a member once said in the House, we have only one system of banking at present. We have no other. We do not know of any proposition the government is likely to make. I was disappointed when the Minister of Finance made his speech that he did not give some promise that the government was going to look into some system of rural credits for financing the farmers for some three or four years which could be done; and if we allow the Bank Act to go through now, I feel certain that we are not going to see a Dominion system of rural credit for some considerable length of time. I do not wish to
Bank Act

discuss the matter further, because I am not very well posted. I have not had the privilege of attending the meetings and hearing the evidence placed before the committee. I can see nothing unreasonable or out of the way in making the request that the bank charters be extended for one year only. I am sure that members on the other side of the House do not understand public opinion in the West. The statement of the hon. member for Springfield (Mr. Hoey) that the government had received one shot already is perfectly true, and the second shot might be fatal as far as the government is concerned.
Mr. EVANS. There are several reasons why clause 5 should be amended. I think it has been apparent to us now for many years that our Canadian banking system does not adequately meet the needs or the interests throughout this Dominion. I think this is particularly true as regards the basic industry of agriculture. As one of those concerned with that industry, I shall endeavour to give some reasons why the revision of the act should be deferred for another year. A mass of evidence has been secured by the committee on Banking, which, if properly sifted and digested by men capable of dealing with this question would give us a lead by which we could evolve a system which would adequately meet the needs of the basic industry, and serve the needs of the industry of this country in a fair and impartial manner, particularly the basic industry of agriculture which is now mostly suffering. Now, Mr. Chairman, some of those gentlemen who seem so anxious that this revision should take place, have in the recent past given utterance to statements and opinions which would go to show that they themselves realized, to some extent at least, that the present system does not adequately meet the needs of the interests of this Dominion. For instance, Sir Vincent Meredith realized the helplessness of the present system to adequately finance our export trade so as, he said, to keep our factories open and give employment to our workingmen. He said:
If foreign trade can be revived it will solve many of our difficulties.
In fact speaking at the annual meeting of his bank in 1920 he became emphatic and declared that sooner or later this question must be dealt with by the banks, and the fact is, Mr. Chairman, that Sir Vincent Meredith, in this speech to which I now refer, December 6, 1920, realized the helplessness of the banks, to aid the industries and take advantage of any opportunity which fate might offer. So we see that even our bankers are beginning to

realize that our much-lauded Canadian banking system has fallen down in that it fails to meet the immediate needs of the country. It is not merely agriculture that is suffering; in fact it is plain to everyone that our cities to-day are suffering, and that our workingmen have had to migrate to seek work. I think, Sir, it would be a crime to extend the charters for the present inefficient system-yes, admitted to be inefficient-for ten years, without profiting by the experience which has been furnished us by the evidence of those who appeared before the Banking committtee this session. Theoretically, our system is as efficient as it was twenty years ago when we had money to assist in the harvesting of the United States crop, according to William Long Baker, who has written a very able treatise on banking in Canada. But, I think the most interesting point of this candid confession of weakness is that, in so far as the public is concerned, no move has been made to cure the trouble. Two whole years have gone by since Sir Vincent Meredith recognized this, and our bankers who have realized their own weakness have done nothing to improve the trade of the country, and the responsibility for that certainly rests on the shoulders of such a body of men, seeing that it is they who control the circulation of the very lifeblood of industry-finance. Our factories have not been busy, and were it not for our close proximity to the United States we would, this last winter, have had an unemployment problem on our hands such as we never saw before, and indeed, it is questionable if our Acting Minister of National Defence (Mr. Macdonald) would have been able to cope with the awful disturbances that would surely have ensued.
All these conditions exist in Canada, while an unprecedented era of peace and industry prevail in the United States under a more elastic system of credit. But agriculture is not the only industry that has fallen down. If the capitalistic system of our country is all right, why are not our industries working? Now, while a patriotic minority in this House seeks to put off the revision of our banking system for another year, we find the present banking combine able to control parliament to such an extent that the representatives of the people jealously guard the present inadequate and contracting system at the expense of industry. The banks are semi-public institutions. They are joint stock companies founded for private gain, but they accomplish this end with the earnings of the public. A question which should be answered to-day is: What are our seventeen bankers doing in the public interest? It is time, in the interests of this country, that this awful monopoly con-

Bank Act
trolling industry and credit should be broken, and this House will commit a crime against the workers of the land if they renew the present system with only such minor amendments as are contemplated in the amended draft before us.
The banking system is a monopoly and has been for years until to-day it is able to entirely control industry in any way it chooses. Under this system the public have no voice in the direction in which their earnings are loaned. Taking September 30th last, the total paid-up capital of the seventeen chartered banks I find to be $125,004,717; the total liabilities $2,342,980,663; the deposits amounted to the tremendous sum of $1,648,647,555. So we see to what extent the banks are indebted to the public for the deposits on which they make so large a part of their profits. We also see to what extent the people have trusted the banks until they have become such a complete monopoly that they are bound by no law whatsoever. They take the people's deposits at 3 per cent and loan them out for anything up to 9 or 10 per cent. All renewed loans this year in the West, so far as I can find out, are made at 9 per cent, unless interest is paid in advance. In a letter from an old friend in my constituency who lives adjacent to the town of Asquith he has this to say:
I told you they had increased the rate from 8 to 9 per cent. This time I wanted to know what the rate was, and was told I could have the note renewed at 8 per cent. When the note was being made out I was asked if I intended paying the interest then. I asked why. Why should I pay interest for a period of service before the service began? He replied that I could pay at the end if I like, but it would be some more, and altered the note accordingly to 9 per cent.
And he asks:
Is it not time the paying interest beforehand, or alternately paying interest on interest, for which no service has been given was changed? Why not have a straight rate to be charged after the service has been given? The present system seems only useful to confound the average customer until we don't know exactly what we are paying.
I submit, Sir, that as things are at present the farmers cannot pay 8 or 9 per cent. I think a commission of inquiry between now and next session could do splendid work in establishing these facts, and then we could deal with the revision in an intelligent manner.
Our banking monopoly is given privileges not equalled in any other country in the world. The banks may, without making any deposits in the central gold reserve, issue notes up to the full amount of their unimpaired capital, and it is incorrect indeed to suppose, as we did in the past, that the whole of the bank notes in circulation are backed by deposits of gold. It is not so. This is a very valuable privilege, and it enables our banks to open branches throughout the whole country. They say they do this to serve the needs of the people. I am not so sure of that. Sir Edmund Walker, giving evidence before the Banking committee in 1913, admitted that it was the profits from the note issue that permitted the banks to open such a large number of branches. At present I think the seventeen chartered banks have about four thousand branches throughout the country. It is time that this privilege was curtailed and some check placed upon this free issue.
I know the banks are required to make monthly returns. The Minister of Finance, too, may call for special returns at any time. But what value we may attach to these returns in the face of what transpired in the Merchants Bank failure, when the president and other officials were exonerated from all blame, is more than I know. It is hardly to be expected that a concern of this kind would let the public know its exact condition, par-ticlarly if it happened to be on the down grade.
I think one of the chief reasons why this revision should be delayed, or granted only for one year, is the fact that our banking monopoly has the power in its hands to enhance the price of any commodity and, on the other hand, to cripple any industry by withholding credit. This is certainly a power that should not be given into the hands of any class of men. The branch banks exist for collecting the people's earnings, to be used in any other part of the country instead of for the development of the community in which those earnings were made. Now, Mr. Chairman, the trouble with different parts of our country to-day is that the branch bank system collects the earnings of the people to be used in enterprises far remote from where those earnings have been gathered, and I submit that the West in particular is suffering from this evil to-day. We have no industries in western Canada, nor are we likely to have as long as our earnings are tapped for the benefit of industries in other parts of the country. Indeed, there is only one banking concern that has its headquarters west of the Great Lakes. I say it is a real objection to our banking system as at present constituted and carried on that no profits, or practically none, are distributed in the locality where they are made. The whole monopoly is used for the benefit of the monopoly and is more and more impoverishing the rural parts of the Dominion. Indeed, Sir, it is to be regretted that to this accursed system of centralization of
Bank Act

capital and industry the Dominion to-day stands indebted for a contracted population of eight or nine million people instead of more than double that number, as we should have.
I have said that the banks are a law unto themselves. In the West they have always charged what interest they chose to exact, and they have always compelled the payment of notes at any time they pleased to name. Indeed, it is not so long ago, in 1907 in fact, when the banks took part in a great conspiracy to compel the western grain grower to ship his grain through the Grain Combine's elevator instead of using the loading platform. I think the banks went outside their proper sphere of business in taking that action. I think they should be prevented from purchas-ng agricultural products, particularly for speculative purposes. I do not think it is a healthy state of affairs for any people when they are at the mercy of a combine or of combines who dictate the methods they shall use to market their products. No one can estimate the possibilities of Canada's future. No one knows far ahead what problems we may have to solve. Our financial system is the pivot on which everything else revolves, and it is surely in the public interest that this revision should be put off until the people in the country can make their wants known along lines of experience as brought out before the Banking committee of the present session.


Miss MACPHAIL:: Mr. Chairman, I want to protest against this shoving of the Bank Act through and the granting of the charters for another ten years-which is speaking in favour of the amendment. I believe that the charters should be granted for one year only. I have not prepared a speech, but I do not feel that I should let this opportunity pass without adding my voice to the volume of voices that has arisen in protest against the undue haste of the bankers and their friends in this matter. Our request is surely a very reasonable one, and it has that which is necessary in parliament to give it an air of respectability; it has a precedent. Now, I was a member of the Banking committee

not an able one, I am willing to admit that, but at least an interested one and one who attended the meetings quite regularly. I found that it was generally the bankers who came there to give evidence; that the small manufacturer-in fact, the large one-the businessman, the representatives of basic industries, did not come to give their evidence and to tell how the Bank Act as at present constituted affected their business. To me 
this is a very good reason why the final revision of the Bank Act should be postponed and the charters granted for one year only. The attitude of members of the Banking committee and the harmony with which the two old traditional parties worked together there brought me to the position where I felt it would be well to grant the charters for one year only instead of for ten.
Now, the question of national currency is a very large one. A great many people today think we should have a national currency instead of the bank currency; others think that either the bankers or the government should go into the issuing of currency, but not both. Then, there are a great many who think that this privilege of issuing currency is a valuable one for which the banks do not pay sufficiently either in the form of taxes to the government or in the form of services to the public. That would seem to me a very good reason for asking that the revision be postponed for one year. In talking to manufacturers-not only to a few, but to many-I found that all honest manufacturers objected most strenuously to section 88 and were very anxious that it should be changed. They should be given a hearing, surely; they are usually given a hearing by the government of Canada, I think, and I do not see why they should be discriminated against in this particular instance. On the other hand, from the banks' point of view, they claim that the Bank Act is perfect. Well, if it is, it will stand being looked at for another year -because perfection will bear scrutiny. Indeed, if the Bank Act is perfect, the bankers, their eminent counsel, the government and their friends in the opposition, would gain by allowing the public to have a good look at it, because it would strengthen their position; it would show that we who are attacking it are wrong, and you would then have the club over our head. So from your own point of view, since you people who know so much about it are sure it is perfect, it would be well for you to let us have a look at it; it would, according to your argument, simply strengthen your own position.
It seems to me an odd thing for a Liberal government that stands for a fuller life and larger freedom-or is it a larger life and fuller freedom-to insist on rushing the Bank Act through this year. I am going to give you a little warning. I am not anxious to save the government, and never have been, as my course in this House has proved. But I am going to tell you this: You may unite with the official opposition; you may work with what I am quite convinced is great pressure from behind, but if in opposition to the just

Bank Act
demands of legitimate industry, not only farming but other basic industries, and not only basic industries, but the key industries that are usually called the secondary industries-if in opposition to these you insist on forcing it through, you are only bringing destruction on yourself. It is written, I believe, that "whom the gods would destroy they first make mad;" so it is your affair-and it will be your funeral, not ours. You see, the very fact that you people who stand for rushing it through are so anxious to do that makes the general public suspicious that there is some particular reason for the hurry.
Of course, bankers have ever been moral cowards; they have always been afraid. When two leading banks in England many years ago decided to give out bank books and allow people to issue cheques against their deposits, the other banks said it would be the ruination of the financial system, but as everybody knows the financial system is standing strong and steady yet. You remember what Professor Fisher of Yale University said-and we cannot discount all his statements-that bankers were natural standpatters; that they were afraid of change. Some of the people who know these bankers well ought to tell them to buck up and not be so utterly frightened; they would gain more by not being so fearful about these things. I was in the country for four days and I talked Bank Act everywhere I went. I asked everybody I talked to privately what they thought about it [DOT]-business people, manufacturers, farmers, professional men-and I met none who said they thought the Bank Act should go through this year. They were of the opinion that it had been too long a session-whether a fruitful one, at least a wearisome one; that something had to be discarded unless we were to stay here a great length of time yet; that it was reasonable to leave the Bank Act over, particularly in view of the fact that the evidence had not been considered, that it was a rushed affair.
I said, too, when this matter came up in committee, and I would like to say it again: If the rush was so great, why did the government not start sooner? It is a wonder it was left until after Easter if the rush was so great. I was willing to have come here much earlier; I was willing to have sat in committee long before Easter, and I think a great many other members were too. This hurry, I say, does seem odd, and I know it seems odd to a great many others. A large number of the people think the banking system as at present constituted does not serve productive industry; that it much more generously serves speculation. If once that idea gets fastened in the public mind it will be a
very disastrous thing for the banks and for the friends of the bankers. So, I say, why not be reasonable while you have yet the chance? At least if you are unreasonable, and if some years from now you wish you had not been, remember that I warned you.


William Irvine: I rise to support the amendment moved by the hon. member for Red Deer (Mr. Speakman), and I hope that I shall be able to give at least one reason that will be considered to be such by the hon. member for Halifax (Mr. Maclean). Of course, the debate has advanced considerably since that hon. gentleman made the remark that no reason had been offered why the bank charters should be extended for one year only instead of ten. It is difficult for me to decide what would constitute a reason for the hon. member for Halifax, for we all reason somewhat differently. I am sorry, however, that while he did not consider as arguments what were put forward as such by hon. gentlemen on this side of the House, he did not do them the courtesy of even considering their utterances as arguments at 'least from their own point of view and answering them accordingly. However, he chose to sweep them aside with a mystic wave of the hand and say, they are not arguments at ail. That is the easiest way I know out of a difficulty on the floor of this House or anywhere else in debate, simply to say that what the opponent has said is not an argument and leave it at that.
Another thing that the hon. member for Halifax said was that he did not know how long it was going to take hon. members over on this side of the House to make up their minds. Were they going to take all day, a week, a month or a decade to make up their minds, was his query? Well, I cannot speak for the Progressives in that regard. I do not know how long they are going to take to make up their minds on this question, but I would say to the committee that it would be better for us to take ten years to make up our mind and make it up right than to pass an inadequate act that will last ten years, an act that has no mind in it at all. That would be a better proposition. I would suggest, however, that it did not take the hon. member for Halifax very long to make up his mind on this matter. He did it with great haste seemingly. In fact, I think he was always ready to pass the act even before we began to consider it, judging from his attitude in committee.
I was surprised, however, when the hon. member for Halifax confessed to knowing about the Merchants Bank collapse. It has been advanced by hon. members on this side
Bank Act

of the House that an investigation should be held into the Merchants Bank failure. The reason they are asking for that is that one of the functions of the Bank Act, or at least of the act as it should have been revised, would be to prohibit any such recurrence as the collapse of the Merchants Bank, but we cannot make an act that will safeguard against a recurrence of the Merchants Bank incident unless we know why it was that the Merchants Bank failed. When we were in committee, Mr. Chairman, nobody knew why the Merchants Bank failed. The hon. member for Halifax did not know why the Merchants Bank failed. The Finance Minister declared that he did not know. Sir Edmund Walker declared that he did not know. Nobody knew in committee why the Merchants Bank failed, but now the hon. member for Halifax knows. In fact, he comes in with a huge blanket, a blanket that is broad enough and long enough to cover up every crime in history, and he places that right over the Merchants Bank condition and says that it was due to human frailty. He goes further than that. After he has told us why it failed, he proves to us that it did not fail at all. That is good reasoning. He says it only weakened a little in the joints, so to speak, and when it got wobbly it fell gently into the arms of a larger institution. Now it might be necessary for us to find out just how the arms of the other institution came to be there to receive the Merchants Bank when it got wobbly in the joints. That might be a good reason why the revision of the Bank Act should be postponed for another year. If the Merchants Bank did not fail, did not something worse happen to it than that, something far more dangerous to the people of Canada than even a bank failure?


Samuel William Jacobs: Will the hon. gentleman permit me to tell him that the Merchants Bank did not fail?


William Irvine: I thank the hon. gentleman for restating what I had just stated, that the opinion of the hon. member for Halifax, which I think in this regard ought to be a good one, is that the Merchants Bank did not fail, it only weakened. I am saying that if it did not fail it constitutes a more dangerous situation for the people of Canada and for the industries of this country than if it did fail, because it suggests a condition which permits a fuller development of banking mergers in this country. The banking merger is growing apace. We are reduced now, I think, to seventeen banks-seventeen banks with one single

voice. They meet together in association, they fix the rate of interest on deposits, they fix the rate of interest on loans-a huge co-operative monopoly. If, I repeat, the Merchants Bank did not fail, if it was swallowed by a larger institution of the same kind, that is a menace far more to be feared than the mere failure of the bank would have constituted.
Now, I cannot speak about the Merchants Bank failure because I do not know why it happened, or if it was not a failure, I do not know what it was. All that I know is this, that the Merchants Bank, which was one of the largest banking institutions in this country, suddenly stopped doing business as the Merchants Bank, and as a result of the stoppage some $5,500,000 of the shareholders' money was lost and the whole Institution passed into the hands of the Bank of Montreal at a very, very low price indeed. It is true I believe that when the Bank of Montreal took over the Merchants Bank, the Merchants Bank had some one and a half million dollars still in reserve, and I also believe that it was considered to be in a solvent condition. If so, how did it come that the Bank of Montreal got such an excellent deal in taking it over? That is another thing that ought to be explained. Perhaps it would be wise to have an investigation into that alone. That is a matter of interest to the Canadian people; it is of interest to the shareholders of that bank; it is of interest to the shareholders of all banks because the same thing may be repeated in connection with another bank next year. That in itself in my opinion, Mr. Chairman, constitutes an argument why this act should not now be passed extending these charters for ten years. If it is not an argument I would like the hon. member for Halifax to tell me what is the weakness about it. What is the matter with the argument? I would like him to tell me and answer it.


Alexander Kenneth Maclean: I have no hesitation in telling my hon. friend that it is no argument at all. Perhaps he might inform the House by telling us what relation there is between the failure of the Merchants Bank, or the losses it sustained which later induced it to sell out to another bank, and the present act which we are considering. Can my hon. friend inform the House of that?


William Irvine: I am glad, Mr. Chairman, that the hon. member has pointed out to me that I have failed to make myself clear to him. I shall now take the opportunity of restating very briefly the relation between the

Bank Act
present act and the failure or non-failure of the Merchants Bank.


George Newcombe Gordon: The hon. member has been discussing the case of the Merchants Bank, he must confine himself to clause 5 of the bill.


William Irvine: Mr. Chairman, I quite understand that. What I am discussing is the amendment to clause 5 and that amendment asks for the renewal of the bank charters for one year instead of renewing them for ten years, and I am trying to make an argument why the renewal should only be for one year instead of ten. At the same time I am answering a question bearing upon the particular point. I am going to advance the argument that the failure of the Merchants Bank has a direct connection with this bill and with this particular clause, and I shall do it in this way: As a result of the trial which took place over the Merchants Bank nobody was punished. I presume they were not punished because it was discovered that they had not violated any clause of the Bank Act. If what happened in the Merchants Bank case transpired without violating any clause of the Bank Act then it is clear that there was nothing in that act which prevented such an occurrence from taking place. My argument then is, that seeing we are now revising the Bank Act we should have a clause or clauses which would make it impossible for that kind of thing to take place and for people who commit such malpractice to stay out of gaol.
The next step in the argument is this: It is the duty of this parliament to amend the Bank Act in such a way as to make the Merchants Bank case impossible of recurrence. We cannot do that unless we know what happened in the Merchants Bank case. We cannot know what happened there unless we investigate it, and we cannot investigate it unless the bill be referred back to committee or unless we have an opportunity which an extension for another year would give us. If we pass this bill and let the matter go for ten years, and if in the meantime two or three other banks fail in a similar manner- in such an event what argument then will the hon. member for Halifax bring forward when we confront him with the opportunity which is afforded now of amending this in a way that would render it impossible for such a thing to occur without those affected being able at least to put their hands on the guilty parties? That is the argument which connects the Merchants Bank case directly with this bill and with the particular clause under discussion.
Now, as I was saying when the hon. member interrupted me, the Merchants Bank was seemingly in a solvent condition when it waa taken over. One of two things seems to be certain so far as I have been able to gather from the evidence that was brought out during the trial, as well as from questions which were put in committee. Either there was very bad management which might have been safeguarded by legislation, and was not, which accounted for the position of the Merchants Bank, or else there was a frame-up for a merger from which frame-up the Bank of Montreal profited. Now, there are the only two possible solutions of the difficulty that I can conceive, and I do not think it is fair that the people of Canada should be left in doubt as to which of these two things was the correct reason. Again I say the only way to settle that is by an investigation, and the only way to get an investigation is to pass this amendment and to grant the charters for one year, then take the bill up again next year and revise it and pass it for ten years if desired. That is the argument. The cause is not known. We have, as I pointed out, two probable causes and I have given them to you. We have, in addition to the two probable causes with regard to the Merchants Bank case, one anticipation and one certainty. The anticipation is that under the present Bank Act some other bank might come into the same difficulty as we found in the case of the Merchants Bank. The certainty, the only certainty we have in regard to the whole affair is that the confidence of the people of Canada has been shaken in the banking system. It is all very well for the hon. member for Halifax to stand up and say, with a smile of complacency and virtue," We have the greatest banking system in the world," but when we have a banking system which allows such a thing as happened in the Merchants Bank case, we have an argument that is far more potent in the public mind that the mere statement of even such a gentleman as my hon. friend.


Alexander Kenneth Maclean: May I ask my hon. friend not to state that I said it was the best banking system in the world because the hon. gentleman must know I did not say that.	[DOT]


William Irvine: If I misquoted the hon. gentleman I must apologize but I understood him to say that. If he did not say it was the best system in the world I would like him to tell me just how good it is.


Alexander Kenneth Maclean: I would rather my hon. friend devote his time to showing why we should postpone this bill; he has not started on it yet.
Bank Act


William Irvine: As I pointed out at the
outset, as to what constitutes an argument depends as much upon the mentality of those who listen as upon the mentality of the man who is making the argument. With that remark I shall leave my argument to the judgment of the House and to the judgment of those who may some time enter the sarcophagus in which we are now to bury this argument and look at what is said on this issue.


Samuel William Jacobs: Before the hon. gentleman quits that part of his argument will he tell me whether he is prepared to state that if this delay is granted he will be able to frame an act which will prevent any bank getting into trouble in the future?


William Irvine: That question, Mr. Chairman is unworthy of the brilliance that I know the hon. member who asked the question possesses. I am not called upon to make any prophecy as to what might be the possible outcome of the investigation. True we might investigate and discover nothing but even if we did that it would be a certain amount of satisfaction. Then we might investigate and find out something wrong and not be able to rectify it, in which case our plight would amount to a defeat of the intelligence of this parliament. But to expect me to make now a definite promise that I will frame an act which will meet any difficulty we may encounter in the investigation requested is asking something that I think is altogether unreasonable.
Now, let me proceed with another argument and I do hope that the hon. member for Halifax will see there is reason in this. Just before doing so I want to go back for a minute to the statement which has been made, I think in the Banking and Commerce committee if it has not been made in Committee of the Whole, that the Bank Act as it is now is not a fixed thing, that it may be changed once a year if we so desire it. That is a very plausible argument and I want to deal
11 p.m. with it for a moment before I advance another reason why this bill should be postponed as we require. It seems to be democratic, it seems to be theoretically right, when we say that this act is not fixed at all, that it may be amended any day, that parliament is supreme in this matter. That sounds good but if we just puncture that bubble there is nothing left of it. Let us see how we would begin to puncture it. In the first place there is a moral obligation involved in this franchise, a moral obligation which I do not hesitate to say would be very speedily advanced on the part of hon. gentlemen oppo-

site if we were to bring in next year a clause to amend some fundamental principle in the Bank Act. But leaving that aside, how is it going to be amended, who is going to do it? I do not see the government doing it; I have no vision of that at all. If there was going tc be any amendment whatsoever in this Bank Act next year, or the year following, or any year within the decade we are allotting it, such amendment would have to be brought in by some private member. What opportunity has a private member to get a bill through this House? He has an excellent opportunity theoretically. Why, if I were over in the United States and boasting of the fine parliamentary system we have in this country I could say in my speech that I could pass any act. But as a private member in this House, I cannot even get one before the House. I brought in a private bill this year, the first one I think on the order paper. It is still there, and it will be there next year and I have no assurance that next year will be more favourable. Again let us not forget that there is always the opportunity of ruling it out of order because it involves a public expenditure. We cannot pass a private bill without printing it on paper, and if we print it on paper, that involves a public expenditure. If public expenditure is involved, then no private member can bring in a bill. Who is going to amend the Bank Act?


Samuel William Jacobs: The Bank Act was amended three times between 1913 and this year.


William Irvine: If the Bank Act was
amended three times, I would not be surprised if the amendments came as a suggestion from the bankers, were carried out by the government of the day and did not constitute a fundamental amendment. I think you will find Sir Edmund Walker congratulating himself and the Bankers' Association on the fact that any amendment that has ever been made to the Bank Act has been the direct suggestion of the Bankers' Association. That, to my mind, does not constitute an amendment of the character I am speaking in favour of now. I have no doubt amendments will be made, if they are in the interests of the bankers; but if they are in the interests of a new financial system, they will not be introduced, they will not be made.
Let me come to another reason, and, I think, even a more important reason why the charters should be granted for one year only than that of the investigation of the Merchants Bank case. I propose to show that, at this time the charters should not be extended for ten years by this parliament to the banks of Canada, because there must be.
I#	JUNE 18, 1923	4053
Bank Act
I believe, a readjustment of the financial system to meet modern industrial conditions if a serious disaster is to be prevented in the near future. In support of that contention, let me say to the committee that at the present time our ideas, the ideas of the civilized world, are not moving as fast as events are moving. Events are moving much faster than we are thinking. If the hon. member for Halifax (Mr. Maclean) will assure me that he is thinking in finance ten years ahead of the industrial situation, I would pass this bill with at least, a greater measure of confidence. But 1 doubt that very much; I doubt whether any of us are capable of thinking ten years ahead. In the face of the swiftness of the changing industrial panorama of the present time, we cannot think that far ahead. If we fix the Bank Act now, and five years from now changes come which might practically tie up the whole industrial system, what are you going to do? Would it not be better for us to consider this carefully as we go, to take into consideration as far as we possibly can all the factors before we fix an act for ten years? Will the present financial system last ten years? Will the government assure the committee that it will? If the government knows that the system is going to last ten years will they inform the House as to the ground for their faith; what are the reasons that this act must be passed this year? What are the reasons the government can give to assure us that the financial system will last for ten years more. It will take more than the Bank Act to stop the financial system	from falling.	The	Bank Act
is not an act which will support the financial system; it is an act which will support the bankers. It will hold up the bankers as long as the system stands, but it will not hold up the system. The system is greater than even the Bank Act and greater than even the government is. The life of the system depends, not upon the Bank Act, but upon economic conditions.
In support of my contention that in ten years some very serious problems will arise involving fundamental changes, I wish to say first that there are at least, two ominous signs that there will be great need of change before ten years are up. Let me refer in the first place in this connection to the great industrial paradox which ought to challenge the thought of all thinking people. The paradox is this: On the one hand we have a superabundance of raw material, of plant equipment and of labour, sufficient by all calculation to bring into being all the goods civilization requires for its necessities. On the other hand, we have communities in dire need of
those very commodities we have the potentiality to produce. That is the industrial paradox, and the financial system, as I shall show, has a very close and direct connection with that industrial paradox. The situation is growing worse; it is growing serious, and before ten years go by a condition may develop which will compel, on the part of those in command of affairs, speedy action which may afterwards be regretted if it is not taken after serious and careful consideration. But there are other examples of this kind. Let me give the committee a sample. Nearly all the victorious countries in the last great war. for instance, claimed that Germany should be compelled to pay; but they discovered that the more Germany paid, the worse it was for the recipients. There is another paradox. There was a time when our financial system was at such a stage of development that it was possible for one nation to pay another without making the nation that received worse off than it was before. But the industrial situation has developed to such an extent that the more Germany pays Great Britain, for instance, the worse it becomes for Great Britain. That is a fact that we have to face. What does that mean? It means that the events in the industrial world have changed much faster than the financial ideas of financiers, changed so fast that the financier is defeated in his own purpose. That is an argument, I submit, in favour of our taking time and going slowly with the revision of the Bank Act, because in ten years more serious developments may have taken place, and the financial system may utterly collapse beneath the industrial demands.
The second sign of this decay is in what I am going to call the impotence of govem-meqts and of industrial masters to deal with the developing situation. If there were in the action of the present government any assurance that it was capable of handling a situation such as I have hinted might develop, if there were any assurances given that the actions of the government would be such as to guarantee the continuation of the industrial system producing goods for human needs, no matter what might take place, I would support this bill with much less reluctance. But let me summarize the advice of governments generally and the advice of leaders in the industrial world with respect to the problem which I have just suggested to the committee. First of all, I think nearly every government, certainly our present government in Canada, consoles itself with the idea that the present industrial situation is one that grew out of the war; that similar occurrences have followed war throughout history.
Bank Act

in short that depression is the inevitable result of war. It advises the people of this country to grin and bear it. Just keep on grinning and bearing it. It will come out all right in the end somehow; we do not know just how but it is coming. I submit it is going; it is not coming at all. That is merely a more or less blind consolation. I think nearly all governments have followed that example in taking consolation to themselves from the platitudes of the centuiies past, but the platitudes of the centuries past have proved themselves entirely incapable of meeting immediate practical problems. Then the next consolation which we get from our government is that it is not so bad in this country as it is in other countries. That is the next step the present government takes, and that is what other governments say to the people who are troubled about having no work to do, or about their inability to meet the financial situation, or the tremendous percentages of bankruptcies that have occurred. They say, "We are told these things are not so bad here as they are in other countries". When you come to Great Britain they say the same thing. In the United States they say the same thing, and in Germany the same thing is repeated. I would like to know who is right in that case, but it is poor consolation and poor argument after all. It is like a man standing on the street watching a block of houses burning. His house is one of the block, and all the rest of the houses are blazing, but he turns to the man next to him and says, "Never mind, my house is not blazing nearly as badly as yours, and the situation is not so bad for me as it is for you". That would be poor consolation for a man, and so it is poor consolation for the people of this country, or the people of any other country to be told that the people of other countries are in just as bad a condition. Then the government take another step and they say "Produce more; the only solution for the present situation is more production, grow more wheat and more everything, and manufacture more, and that will help matters". But, unfortunately that advice was taken in this country after the war, and it resulted in adding to the large amount of unsaleable goods on hand, and when that great addition came in the increased production, the wheels of industry stopped and the unemployed masses walked the streets and threateningly challenged the whole basis of civilized order. The next advice which they had to give us is that we consume less.


George Newcombe Gordon: The question under consideration by the committee is the amend-

ment moved by the hon. member for Red (Deer (Mr. Speakman) that section 5 of bill S3 be amended by striking out the words "thirty three" in the fourth and eighteenth lines thereof, and substituting the words "twenty-four" therefor. I do not see the relevancy of the hon. gentleman's remarks.


William Irvine: I think I can show the
relevancy, if the Chairman will bear with me for a minute.


George Newcombe Gordon: Under the rules speeches in Committee of the Whole must be strictly relevant to the item or clause under consideration.


William Irvine: I certainly do not want to appear as not speaking to the matter under discussion, but I feel certain in my own mind that I am in order, and if the Chairman will bear with me, I would like to show him the purpose for which I wish to use the argument. I am contending that the industrial condition that is developing before our very eyes is so serious that before another ten years it may threaten the civilized world, that it has a very close connection to finance, that if we pass a Bank Act determining the disposition of money and credit for ten years, the industrial crisis that is brewing may come upon us. I am advancing arguments to show further that the government so far is not aware of the situation and I am offering their own words and opinions as proof that they do not know, I contend that my argument bears directly upon the clause of the bill before the committee. But still, as I develop the point, Mr. Chairman, if you decide it otherwise, just tell me so, and I shall have to abide by your ruling. When the government in power tells the masses of the people that the only solution of the problem is to consume less, then they find that if less is consumed, more goods are left on hand which are unsaleable. Moreover, they find it is difficult to invite people who have not enough to consume now, to consume less. So they abandon that position. Then again they say, "We will fix the situation for the farmer in Canada, not by the Bank Act, but by giving him a foreign market." That is what other governments say. All governments try to console the people by saying that somewhere they are going to find a foreign market which will stimulate trade in the particular country concerned. This foreign market promise does not merely mean the exchange of goods for other goods, but it means that we shall ultimately build up a favourable balance of trade with other nations.

Bank Act


George Newcombe Gordon: I draw the attention of the hon. gentleman to section 5 of rule 13, which says:
Speeches in committee of the whole must be strictly relevant to the item or clause under consideration.
On that clause, I rule that the line of discussion pursued by the hon. member is not strictly relevant to the item under discussion.


William Charles Good: On the point of order, it seems to me that in considering the question of whether or not the charters of the banks should be granted for one year or ten years, practically unlimited latitude is necessarily involved. I would very respectfully submit that, in considering a matter of this sort, the widest possible light that can be thrown on any aspect of the financial situation is entirely relevant.


Samuel William Jacobs: Would the hon. gentleman from Brant say whether the hon. member for Calgary East should be permitted to talk for one year or for ten years on this question?


William Irvine: If the hon. member for George Etienne Cartier (Mr. Jacobs) wishes to limit the hon. member for Calgary East to any specific time, then I would ask him to introduce his closure, but until he does that the hon. member for Calgary East is going to take advantage of the privileges which are offered to hon. members of this House. I am prepared to abide by your ruling, Mr. Chairman, but, perhaps, if I sum up the point I have been leading up to even the Chairman will admit that it is entirely relevant. Here is the summing up. Under the present industrial situation there is not enough being consumed to keep the wheels of production going round. That has transpired, because there is not sufficient purchasing power to enable the people to get all they want to consume. There is not sufficient purchasing power, because we have had a Bank Act in force for ten years, which placed the matter of public credit in the hands of a few individuals. There is the point at issue, and if the Chairman had permitted me I should have marshalled the argument so as to make that connection; but since I am ruled out of order, I leave the conclusion to the committee, and will allow members to use their imagination in developing the argument for themselves. Then, before another ten years, the conflict between science and the money system on the industrial field may possibly have come to a head. Here is the argument. There is a conflict between science as applied to production and the financial system which
should function as the distributing agent of what is produced to the consumer. If we pass an act now which fixes for ten years the financial system of Canada, or the handling of the financial system of Canada, and if during that ten years this conflict between science and the financial system should come to a head, then we are due for a collapse, and for that reason I urge that we pass this act for only one year, that we extend the charter for only one year, and that subsequently we prepare, in the light of the industrial conditions that are threatening civilization, a banking act with a view to meeting these conditions, adequately.
Apropos of that point, let me say that the conflict I have mentioned is simply that in the industrial world to-day we have two great factors which tend to displace human agency. The first is the invention of new machines, and we have the application of science in the harnessing of solar or atomic energy. These two factors, combined and applied to the producing system, take the place of human agency. Now, Mr. Chairman, before you rule me out of order, let me show the connection. When solar energy is applied to machinery, or when machines are improved, less human labour is required, and when less labour is required less money will be paid in wages. The money paid out in wages or dividends under the producing system is the extent of the purchasing power of a nation, and the more machinery is applied to the producing system the more human labour is displaced, the less wages will be paid, and therefore the less money will be in circulation. The less purchasing power the nation has in proportion to what is produced, the greater will be unemployment, the more acute will be the industrial problem. For this reason we would not be wise to pass a Bank Act to remain in force for ten years in the face of these developing conditions, so fraught with serious consequences for all the peoples of the world.


Some hon. MEMBERS:: Carried.


William Irvine: I have no doubt that hon. members opposite are very anxious to carry this measure, but I am not in such a hurry. I am quite prepared to consider the bill before we carry it. Simply because hon. members opposite do not need to give the subject consideration is not an argument for this side of the House failing to see their duty to consider the bill very carefully.
I have one more point to make, Mr. Chairman. It has been referred to already. The evidence taken before the committee on

Bank Act

Banking and Commerce in relation to the bill under discussion has not been considered by that committee. I presumed that that evidence was taken with a view to amending the Bank Act, but I discover now that it was taken merely as a gesture, seemingly to appease the public. But let me assure the public that whether the evidence was of value or not has had no effect whatsoever upon the revision of the Bank Act, indeed, it has not been considered at all in that connection. Now, from that point of view I cannot see why the proceedings should be called a revision of the Bank Act, there has been no revision. The act might just as well have been read over casually and passed. If the evidence taken is to give value for the money expended in taking it, it must at least be considered. If it is going to be considered, it ought to be considered before the act is revised for another ten years. So without belabouring that point overmuch, Mr. Chairman, I urge that as an argument why this act should not be now passed for another ten years.
For the benefit again of the hon. member for Halifax (Mr. Maclean), let me point out to him the three reasons which I have attempted to bring forward why the charters should be granted for one year only. In the first place, I have shown that until the facts are known we cannot amend this act to intelligently meet the weaknesses which must have been inherent in it when the Merchants Bank could be wrecked without anyone being found responsible. We must know what was the cause of that failure; the only way to know is to investigate the circumstances, and the only way to investigate the circumstances is to put this revision off until next year. My second point is that industrial conditions, not only in Canada but universally, are developing with such rapidity that old financial ideas are absolutely incapable of handling the situation, that if we fix our banking system now for another ten years in the face of the speedy change that is taking place before our eyes, we are inviting financial and industrial catastrophe. We ought at least to be in a position to keep an open mind on the question as the changes take place, and be prepared to meet them. In the third place, the Bank Act has not been in any way affected by the weight of evidence which was presented to the committee, that if there was any reason for collecting the evidence concurrently with the revision of the act that reason was presumably that it might in some way affect the wording or change the act. But it could not possibly affect the act in any way if not con-

sidered. Therefore I urge that it should be considered before this act is disposed of for ten years.
These are the three reasons I have presented, Mr. Chairman. I could give three more-and I probably will after I have had a rest-but I submit now that these three reasons have to be answered by the hon. member for Halifax or some other worthy representative from the other side before it is necessary for me to advance any further argument. In my estimation what I have urged is sufficient for the carrying of the amendment moved by the hon. member for Red Deer (Mr. Speakman).


Samuel William Jacobs: Mr. Chairman, in the course of the remarks made by the hon. member for Calgary East (Mr. Irvine) I had occasion to interrupt and draw his attention to the fact that the Bank Act has been amended on several occasions and in very important particulars between the revision in 1913 and the present day. The hon. gentleman, with that manner which is characteristic of him, brushed my interruption aside with a so-called or alleged joke. He stated that if the act was amended as I claimed it had been, it must have been done at the behest of the Bankers' Association and by the government, which I gathered from his remarks was considered merely a weak instrument in the hands of the Bankers' Association. Now, I should have thought that after fifty sessions, during which this Banking committee functioned-fifty sessions, at most of which the hon. gentleman was heard with great effect-he might have learned something about the Bank Act. But I find that he has not even read the act. In that respect he reminds me of the story of a famous reviewer of books, who said he never read a book before he reviewed it, because if he did it would prejudice him. Now, I would ask the hon. gentleman what he thinks of these amendments which were passed after 1913, the date of the last revision.


William Irvine: Do you ask a question now?


Samuel William Jacobs: No, I am making a statement.


William Irvine: Because I might answer it.


Samuel William Jacobs: Take the amendment passed in 1915, two years after the revision:
The hank may lend money to the owner, tenant, or occupier of land for the purchase of seed grain upon the security of any crop to be grown from such seed grain.
I should like to know in what respect the Bankers' Association only were benefited by that amendment. Again I would refer him to

Bank Act
the amending act of 1916, in which it is stated:
The bank may lend money to a farmer or to any person engaged in stock raising upon the security of his live stock.
I would imagine that these amendments were for the benefit of the party of which he is presumed to be the leader, or one of the leaders. The hon. gentleman, in his very voluble remarks to-night, as on all occasions, reminds me of a cuttlefish. The cuttlefish is a kind of fish which when closely pursued emits a murky fluid from its body, and when the water is thoroughly darkened it escapes. That is the position in which my hon. friend finds himself to-night. Now, I suggest that when he presumes to talk upon the Bank Act-


William Irvine: What is the connection between my hon. friend's remarks and the point under discussion?


Samuel William Jacobs: The hon. gentleman talks
upon the subject of the Bank Act with the same facility with which he talks on every other question which comes before this House -volubly and at great length. But, as he himself put it somewhat pointedly, when you puncture the bubble, you find there is not very much in it.
Now, the hon. gentleman gives three alleged reasons why this Bank Act should not be proceeded with this year. He spoke about the Merchants Bank and the trouble into which that institution got some time ago- he spoke about it as a failure. Well, I am not going to bandy words with him, but I would like to know what the Merchants Bank, or the failure, if he likes to call it that, has to do with the revision of the Bank Act. After all, the Merchants Bank trouble arose through what was claimed by the department to be failure on the part of the manager to make proper returns as provided in the act. That is all found within one clause of the Bank Act; why hold up the entire Bank Act in order to deal with that particular clause? If it is found later after investigation that there is something in the Bank Act that should not be there or which brought about this trouble in connection with the Merchants Bank, we can easily amend the clause in the act. But to hold up the charters of the seventeen banks of Canada, to interfere with the stability of our financial institutions because of some alleged trouble which arose in connection with the Merchants Bank, is what I would call, if I were not in this House, silly.
Then, the hon. gentleman speaks about the "speedy changes" which are taking place.
259J
He says we cannot keep up with the industrial and economic changes which are going on; therefore we should put over the consideration of the Bank Act until next year. Well, will the changes then be any slower? Shall we slow up next year? I do not think we will; but so far as I can see, the speedy changes which are taking place now have no relation at all to the revision of the Bank Act. The Bank Act is the creature of the parliament of Canada, and we can change it whenever we like. We can come here next year, and, by the introduction of a proper measure, completely change the Bank Act, if we find it is not right. But why should we be tied down to passing the law, say next year, which is going to do for the next ten years? The hon. gentleman does not seem to understand; he does not seem to realize that this Bank Act can be changed whenever we wish to change it, and to my mind it is nonsensical for him to talk about its being rigid for the next ten years. This kind of talk may have some effect in the back concessions when my hon. friend appeals to the electors at the proper time, but he cannot make it go down with the hon. members of this House.
Then the hon. gentleman gives a third reason, something which my poor mind refuses to receive. Perhaps it is because it is late in the evening; at any rate, I fail to understand what he means. He says the Bank Act as it exists now is not affected by the weight of evidence which was adduced before the committee. I do not understand that. Perhaps the hon. gentleman would enlighten us before the House adjourns, because I should like to have it go forth that all arguments which the hon. gentleman adduced this evening amounted to nothing. I have already referred to two of them, these, I hope, have been successfully answered; as to the third, I wait for further information from the hon. gentleman.


Henry Elvins Spencer: Mr. Chairman, in rising to speak on this all-important subject I wish to say that I intend to support the amendment placed before this committee by the hon. member for Red Deer (Mr. Speakman). To begin with, I would like to take the committee back to what occurred during the last three months in the Banking and Commerce committee. We held very regular sessions, and it occurred to me that any stranger going to that committee might wonder who were the members of parliament and who were the visitors, because it was usually the case that for some time after the hour was called we had as many visitors as we had

Bank Act
members. I say one might wonder who comprised this visiting class. But as we sat in that committee week in and week out we gradually got to know the faces; we realized that they represented people interested in finance. They were representatives of interested banks; they were legal advisers of the bankers-and those legal advisers were not there, I might say, for the benefit of their health. It looked strange to me that when the banking institutions of this country were on their trial, as it were, they should have so much legal support working steadily in the committee.


Samuel William Jacobs: I suggest to the hon. gentleman that perhaps they were there to explain to some members of the committee, including the hon. gentleman himself, something about the Bank Act.


William Irvine: It is a pity the hon. member himself was not there.


Henry Elvins Spencer: Unfortunately we did not hear very much from the gentlemen I speak of. They reminded me very much of picture shows; you see the movements of the actors, but you do not hear their voices. They passed from member to member; those who were supporting them gave their vote, conscientiously, perhaps, but always on the one side; and that I think, was the reason why those gentlemen who, as I say, were not there for the good of their health, were in their places in the committee day in and day out. I had heard something about an hon. member of this House being called the gramaphone of Mackenzie and Mann, but I never realized the real meaning of that term until I went into the Banking and Commerce committee. Then I realized it in all seriousness, for if there ever was a gramaphone or a continuous hum of gramaphones it was those that played for the Canadian Bankers' Association.


Alexander Kenneth Maclean: I do not think the hon. member should be allowed to make a remark of that kind with impunity; I think he owes it to the committee to withdraw it. It might very well be retorted of my hon. friend that he is the gramaphone of the United Farmers of Alberta, who directly say to their federal representatives that they must obey the directions of that organization and that they have no right to voice their own opinions in parliament. I might make that statement with truth concerning every hon. gentleman from that province, and they would not be in a position to deny it. I say, Mr. 
Chairman, that my hon. friend has no right to make the insinuation which he does against members of parliament.


Henry Elvins Spencer: I submit that I am on perfectly safe ground. I do not mind the hon. senior member for Halifax calling me the gramaphone of certain interests that I was trying to defend in the Banking committee. I think it is a perfectly proper appellation to give anyone who is supporting a particular cause.


Alexander Kenneth Maclean: I said the hon. member had no right to take one side or the other; he has to do just what he is told, or be recalled.


Henry Elvins Spencer: The hon. member for Halifax will appreciate the fact that more independent spirit was shown by those members who come from that part of Canada from which I have the honour to come, than by those who come from any other section.


Samuel William Jacobs: You admit it.


Henry Elvins Spencer: There were many tunes, but one song seemed to be continuously played, and that song was: "Why, the system is perfect, so leave it alone." That was the song always sung to us when we tried to make amendments.


George Newcombe Gordon: I would direct the hon. gentleman's attention to the fact that what took place in the committee and the inability of some members to make amendments is not relevant to the particular amendment before the committee.


Henry Elvins Spencer: Mr. Chairman, I shall be pleased to bow to your decision. Perhaps I shall be in order if I refer for a momenc to the case of the Merchants Bank, and present that as a reason why we should not now give the banks a charter for ten years. Here is one of the largest banks in Canada which, with very short notice indeed and under very suspicious circumstances, goes to the wall. Some of the largest papers, some of the best known dailies of Canada, demand a full investigation, but no investigation is allowed. We have Sir Frederick Williams-Taylor as a witness before the Banking and Commerce committee, but he is particularly silent in regard to that collapse.


Samuel William Jacobs: Was he asked any question about it?


Henry Elvins Spencer: I will refer the hon .gentleman to the minutes of the Banking and Commerce committee.

Bank Act


Samuel William Jacobs: I was present. Let my hon. friend say what questions he was asked in that respect and what his replies were.


Henry Elvins Spencer: Another gentleman who came before that committee, Sir John Aird, denied the necessity of the Merchants Bank ever losing its identity. Sir Edmund Walker, another gentlemen who came there as a witness, claimed that somebody should have been punished. But later when the question was brought up of giving the committee an opportunity to investigate the matter further, the committee saw fit to refuse to permit that investigation. That is another reason why I am in favour of this amendment, and why I believe we should not grant the charters now for ten years, but rather for one year for the time being.


Samuel William Jacobs: Does my hon. friend propose to ask that a new clause be inserted in the Bank Act providing for an investigation into the affairs of the Merchants Bank?


Henry Elvins Spencer: No. I did not make that statement. I am going to lay something before the House which I hope will prove that the banking system as it nQW exists is not giving the required support or filling the needs of the greatest industry in this country. We all know of the vast amount of advertising this country has done in the past to try and get settlers, and settlers of a particular kind, to come to this country. When they come here one of the institutions that they have to deal with, either directly or indirectly, and they can deal with no other it they deal in money at all, is the banking institutions. I am going to bring to the notice of this House a particular case of some people who were brought to this country some thirteen years ago, and who although starting then with the very best of chances have to-day through the actions of our present banking institutions not only gone to the wall, but are willing to get out as soon as they can. I am sure the committee will be interested in hearing read a letter of introduction that I have in my hand from Lord Strathcona. It is written to Mr. J. W. Dafoe, Manitoba Free Press, Winnipeg, Canada. It is sent from 17 Victoria Street, London S. W.


Mr. CANNON:: What is the date of the
letter?


Henry Elvins Spencer: The 7th of November, 1910.


Mr. MERCIER:: Is that the original?


Samuel William Jacobs: Did you find it in the Archives?


Henry Elvins Spencer: Hon. gentlemen will probably be sorry I did find it by the time I get through. This letter was sent to Mr. Dafoe recommending Mr. T. Hicks who was coming to this country, and this is what Lord Strathcona said:
This letter will be presented to you by Mr. T. Hicks who sails by the S.S. "Montcalm" on the 9th instant to join two of his sons who are already settled at Sedgwick, Alberta.
Sir Walter Gilbey, Bart., at whose request I furnish this introduction, informs me that Mr. Hicks will prove an acquisition; that he is not only a practical farmer, but an exceptional judge of all stock, and very many thousands of all kinds of stock have been bred and sold by him.
I commend Mr. Hicks to your consideration, and am sure he will much appreciate any advice and assistance you can kindly accord him.
Believe me,
Your very truly,
Strathcona.
Mr. Hicks came over to this country with his wife, one daughter and seven sons.


Paul Mercier: Have you found anything strange about that letter?


Henry Elvins Spencer: I will show you the results of it. Mr. Hicks, as you will recognize from this letter of Lord Strathcona, was one of the very best type of settlers that we could possibly get into this country. He came here with his seven sons and started up. He was doing very well, but now I want to read a letter from the reeve of a municipality in the vicinity of Mr. Hicks' place showing what his condition is to-day. He says:
Please find enclosed letter from Mr. Hicks who is residing close to Provost-


George Newcombe Gordon: I must ask the hon. member to come within the rule of relevancy. If he wishes to read the letter of some eminent banker and apply it in his argument on this section that will be in order, but certainly not a letter of introduction.


Henry Elvins Spencer: This is not a letter of introduction, but a letter from the reeve of a municipality which shows what is happening to the people of this country through the action of the banks, and this man believes that the charters should not be extended for more than one year. He says:
This is one of the worst cases I have come across, although these last few days I have found several similar but on a smaller scale.
This man Hicks came in with money and established himself on land suitable only for raising stock. By the enclosed letter you will see what the banks have done to him. He happened to be one of the few who had property that the creditors could sacrifice. The debate on the immigration policy showed the government the state that this country is in. I do not need to dwell on that except to say that the people are leaving this district in hundreds, and the
Bank Act

chief thing that is driving them out is the debt and the banks holding a chattel mortgage on everything
they possess.
If your committee do not persuade the government to take control of credit out of the hands of private individuals who are using it for their own profit instead of for the good of the country, I tremble for the future of this country. People are freely talking of resistance to these inhuman methods of collecting debt.
I would earnestly suggest that your committee make an investigation into this particular case in the interests of this ruined man and also the balance of the farmers who will be in the same position when there is enough value in the amount of stock they have to make them worth selling.
Yours truly,
Thos. Pat ridge,
Reeve M. D. of Stewart.


An hon. MEMBER,:: Is he a banker?


Henry Elvins Spencer: He would make a very good banker. This is the letter he refers to. This is from Hicks. He says:
In August 1921,-


Lucien Cannon: I rise to a point of order. I call your attention, Mr. Chairman, to rule 16 and the decision given under number 202 in Beauchesne's Parliamentary Rules and Forms:
It is not in order to read articles in newspapers, letters or communications emanating from persons outside the House and referring to, or commenting on, or denying anything said by a member or expressing any opinion reflecting on proceedings within the House.
If we are going to hear letters written fifteen years ago by people in England commenting on the Bank Act I do not know where this debate will end.


George Newcombe Gordon: I do not understand the letter is reflecting on the proceedings in this House or denying anything said by an hon. member. I would say that the hon. member has not proceeded sufficiently far for me to give a ruling on his intention.


Henry Elvins Spencer: I will read this letter. It is from Mr. Hicks, the man referred to. This letter, I may say, is dated April 23rd.


Samuel William Jacobs: Not April 1st.


Henry Elvins Spencer: 
George Newcombe Gordon: I draw the hon. member's attention to the fact that it is doubtful whether a long recital of some difficulties a farmer had with an individual bank manager has any relevancy to the general principle of whether the bank charters should be extended for one year or ten years.


Henry Elvins Spencer: To meet your wishes I will-


George Newcombe Gordon: I am not giving a ruling at present. I am just suggesting to

Bank Act
the hon. member that there is doubt in my
mind as to whether the matter he is reading is relevant to the question.


Henry Elvins Spencer: I should like to read the following letter-


Samuel William Jacobs: The letter does not appear to be accompanied by an affidavit.


Henry Elvins Spencer: I may say, Mr. Chairman, that the letter is signed and furthermore to satisfy hon. members opposite I may say here is another letter from the same man received a few days ago. He says:
I would like the case made public. Don't put initials down or say a man in the West, but tell exact my name and address, besides the bank causing mi- to lose $3,000 in actual cash.
I hope that will satisfy my hon. friend.


Samuel William Jacobs: Is it the Merchants Bank he had dealings with?


Mr. PUTNAM:: Is the hon. member always so easily satisfied with the insolvent's own account of how he came to go to the wall?


Henry Elvins Spencer: I did not quite catch my hon. friend's question. This man was pressed absolutely unnecessarily by the bank. He had several times the amount of assets that he had liabilities with the bank, and several times they broke their promise to him. The bank saw fit to remove their manager and they have not thought fit to make good to Hicks up to the present time.


Harold Putnam: I suppose the hon. gentleman knows, as a matter of general practice that an insolvent generally gives a one-sided account of how he came to go to the wall; he generally puts the blame upon the other fellow.


Henry Elvins Spencer: I would like to say that I have had this case corroborated from five different sources and my informants are all very reliable men.


Samuel William Jacobs: Does the hon. gentleman noi think that inasmuch as it was the Merchants Bank that was concerned, the rule "Speak nothing but good of the dead" ought to apply?


Henry Elvins Spencer: With the Merchants Bank this man had very reasonable treatment. But the Montreal Bank treated him as I have stated.
I should like to read a very short account from a local paper as follows:
District court sitting held May 17th.
This is in regard to the same bank.
A very interesting ease was decided at the sitting of the district court which was held in Provost last
Thursday before His Honor Judge Lees. The case was at the suit of Lambert Haan against the Bank of Montreal.
Haan alleged that the Provost manager of the defendant bank had agreed to pay his thresh bill on some 1,400 bushels of wheat which the bank had received. The bank denied making the agreement and claimed that for various reasons Haan's threshing lien was invalid. The court, however; held both that the agreement had been made and that Haan's threshing lien was in order and gave Haan judgment against the bank for the amount of his claim and costs.


Harold Putnam: Was there any appeal?


Henry Elvins Spencer: No appeal that I know of.
I wish to draw the attention of the committee to another case to show what satisfaction, what service, the people of that particular province are getting from the banks at the present time. The hon. member for Halifax (Mr. Maclean) stated this evening that the farmers of western Canada had borrowed too liberally. Would it not be just as fair to say that the banks in western Canada had lent too liberally, and that the fault on the part of the farmers is only equal to the fault on the part of the banks?


Alexander Kenneth Maclean: Will my hon. friend allow me to suggest that he cannot prove or disprove everything by citing individual instances of what, perhaps, are real hardships suffered by a borrower on the part of a bank. We might admit that the case to which my hon. friend referred just a moment ago was one in which the borrower, perhaps, did not receive fair treatment.


Henry Herbert Stevens: That was admitted.


Alexander Kenneth Maclean: Yes, and the bank manager was suspended. Might the same thing not happen in any country in the world and under any banking system? Does my hon. friend think he is contributing anything to the debate by referring to instances of this kind?


Henry Elvins Spencer: I am very glad the hon.
member for Halifax has brought this point to my notice, because in a very few minutes I am going to bring confirmation from many other sources along the same lines.


George Newcombe Gordon: I am going to tell the hon. member that it is not relevant to the particular subject matter under discussion for him to do that. There is a definite resolution before the committee, and the debate has gone rather beyond that this evening. The question is whether the bank charters shall be renewed for ten years or for one year. Reasons may be given why they should not be, but individual instances of failures, of loans,
Bank Act

of insolvencies, cannot possibly be a reason why there should not be- a renewal of the charters for either ten years or one year.


Henry Elvins Spencer: I will try to keep- within your ruling. I am in favour of the amendment moved by the hon. member for Red Deer (Mr. Speakman) because of the notice I have in my hand, which, in my opinion, proves that there is something radically wrong with our financial system in that it has allowed the country to get into the state in which it is at present. I am reading now a few lines from the Alberta Gazette, part 2, dated Edmonton, Tuesday, May 25, 1923. It is headed:
Notice under the Tax Recovery Act, Department of Municipal Affairs, Province of Alberta.
Notice is hereby given that proceedings have been begun under the Tax Recovery Act, 1922, against the following lands in the improvement districts in the South Alberta land registration district, and unless the lands named herein are redeemed before the 14th day-


George Newcombe Gordon: How can the hon.
member contend that this tax notice is relevant to the particular amendment that has been moved?


Henry Elvins Spencer: If you will allow me
half a minute-


George Newcombe Gordon: I should like to have a reason because, in my opinion, it is clearly irrelevant.


Henry Elvins Spencer: The very fact that there are advertised in this Gazette no less than 2,207,360 acres of land for sale, is proof that something is wrong, and I contend that our financial system is wrong. If our financial system is wrong, I do not see why we should give the banks a charter for ten years.


George Newcombe Gordon: I do not think the hon. member is in order in reading a tax notice.


Henry Elvins Spencer: I will come to the last matter that I will bring to the notice of the committee. We on this side of the House have made certain statements during this session in the Chamber and in the various committees, and these statements have been, at least, very much doubted, if not denied. To be sure that the statements we were making were correct, I sent out a questionnaire in regard to banking in order to find out the relationship between the banks and the people throughout a very large constituency.
I have a synopsis of this, and I am going to read it-it is short-because it is a reason why we should extend these charges for only one year at the present time. The heading of the questionnaire I sent out reads:
I wifi be very much obliged to you if you will at your earliest convenience fill in the answers below in as [The Chairman.]
accurate a manner as possible. I would ask you to make your estimates, when in doubt rather conservative than otherwise, so that I may be sure of being within the truth in any use that I may make of the information.
The first question reads:
What bank or banks are in your vicinity?
The banks included in the answers were the Bank of Montreal, the Bank of Commerce, the Royal Bank, the Union Bank, the Bank of Toronto, and the Hochelaga Bank. The second question reads:
What is the average term of farmers' notes in months ?
The answer was: Three and a half months. Imagine an industry that has a turnover usually only once in twelve months, having to renew its obligations every three and a half months! The third question reads:
Do you consider this a long enough term?
One hundred per cent said. No, decidedly not. The fourth question reads:
What is the average interest charged?
Sir Frederick Williams-Taylor, chairman of the Bankers' Association, when giving evidence before the Banking and Commerce committee, stated at first that he thought the average throughout western Canada was 7 per cent, and later he raised that to 7 or 8. In this instance, if we strike an average, the rate comes between 8 and 9 per cent. I want to give the committee just the facts. The fifth question reads:
Does the bank charge what is usually known as bankers' discount, that is, deduct interest from a note prior to money being given to borrower?
Eighty-eight per cent of the answers were: Yes; twelve per cent were: No. The sixth question reads:
About what month are notes dated to become due?
The answers were that notes are renewed every few months, but they are forced to meet their notes in the fall, very often at the expense of having to sell their products on a falling market. The seventh question reads:
Is this beneficial to agriculture?
As the committee will understand, the answer was one hundred per cent: No. The eighth question reads:
Have many caveats been issued against grain which prevented the farmer from getting his money at the elevator ?
Twenty per cent of them say: Yes; eighty per cent say: No. I might say that in one of the answers that was "yes," they said "Yes, over one hundred caveats were issued at the local elevator." The ninth question reads:
Did the farmers borrow heavily to buy feed for the cattle during the winter of 1919-20?

Bank Act
Or otherwise the hard winter. Ninety-two per cent said that they did, and only eight per cent said that they did not. The tenth question reads:
Did the banks in the spring of 1920 encourage farmers to buy stock, because in their opinion they would rise in value?
Eighty-four per cent answered yes, and sixteen per cent answered no. The eleventh question reads:
Did your bank try to force farmers at a later date to sell cattle bought on their advice, even if said stock had to be sold at a loss?
Seventy-six per cent answered yes, eight per cent answered no, and sixteen per cent did not send a return. The twelfth question is:
Was this a general practice?
Fifty-six per cent answered yes, sixteen per cent answered no, twelve per cent answered some, and sixteen did not answer. The thirteenth question reads:
What percentage of satisfaction is the bank giving to your district?
This is rather interesting to the committee. Fifty-two per cent answered "Not very good." Thirty-two per cent say "None at all." Twelve per cent say they are getting some service, and four per cent send no reply.


William Duff: What class of people gave those answers?


Henry Elvins Spencer: The class of people such as Lord Strathcona-	[DOT]


William Duff: He is dead now. What class of people made those answers? Lord Strathcona is in heaven.


Henry Elvins Spencer: Men qualified to run a business.


William Duff: What class of people made those answers?


Henry Elvins Spencer: The clients of the bank.


William Duff: Were they business men or professional men?


Henry Elvins Spencer: Business farmers.


George Newcombe Gordon: I would like to know how the hon. member can make all these questions relevant to the particular matter before the committee. I cannot see the relevancy. I do not like to rule the hon. member out of order.


Henry Elvins Spencer: I do not wish to go against the ruling of the Chair, but I think this is very valuable information.


George Newcombe Gordon: That is no reason why it should be introduced in this discussion. It must be relevant.


Henry Elvins Spencer: This questionnaire was sent to find out the feeling between the people and the bank, and whether they were willing that the charter should be granted for ten years.


George Newcombe Gordon: That is not relevant to this particular amendment.


Henry Elvins Spencer: The answers I am giving are the reasons why I am voting that the charter be extended for one year only at the present time.


George Newcombe Gordon: These questions and answers are altogether irrelevant, with one exception perhaps.


Henry Elvins Spencer: I have a few more questions. The fourteenth question reads:
Has your bank requested payment of their clients' liabilities in full, with the promise of extension of credit?
Eighty-four per cent answered yes, and sixteen do not reply at all.


George Newcombe Gordon: I am going to rule that question out of order.


Henry Elvins Spencer: I am very sorry that that is the Chairman's ruling, but I will just give the House the last one.


William Charles Good: May I speak-


Some hon. MEMBERS:: Order, order.


William Charles Good: May I speak to the point of order. I would like to submit that if the hon. member for Battle River shows, as he is attempting to show, I think, that the banks in western Canada are not giving satisfaction, that is relevant to the question of whether or not the charters should be extended one year or ten years. It seems to be absolutely relevant.


George Newcombe Gordon: I refer to Denison's Decisions, where I find the following:
A general argument on a bill cannot be allowed on a particular clause.
Mr. Speaker rules that the question at present being whether this particular clause should pass a general argument can hardly be allowed upon the question.
I am reading from Denison, page 56. There is no question as to the rules. In committee the discussion must be relevant to the particular [DOT] question or clause or amendment under discussion, and a statement as to conditions industrially or otherwise in different
Bank Act

parts of the country have only a remote bearing on it, and not a direct bearing which would be necessary to bring it within the rules.


William Charles Good: I submit there has been no opportunity given for debating this bill in the House. It received the second reading formally. It was referred to the committee. There was plenty of opportunity for discsus-sion in committee, but there has been no opportunity in the House. Our move this afternoon was ruled out of order. We are reduced to this position: Are we going to be ruled out of order-


Edward Mortimer Macdonald: Will the hon. gentleman tell the committee why, if he had any fundamental objection to the measure, it was not brought forward on the second reading when the whole question could be discussed?


William Charles Good: I think I can answer the question frankly. The Minister of Finance stated on that occasion, if my recollection is correct, that he desired the fullest possible discussion in the committee and he hoped the second reading would go through without discussion, and it went through.


William Stevens Fielding: The motion was that it
be referred to the committee on Banking and Commerce, and I suggested that there should be the fullest discussion there, and we had the fullest discussion in that committee.


Henry Elvins Spencer: I will not go against the ruling. I will not give the House what I consider is a lot of valuable information. I assure this House and the committee, that if they are going to shut their eyes to the conditions that exist, they will wake some day to a scene that they will be very sorry to see.


William Stevens Fielding: Do not threaten us.


Thomas William Bird: I would like to raise a point of order. I refer to page 68 of Beauchesne's Rules, section 248, which reads:
Whilst a member is addressing the House no one has a right to interrupt him by putting a question to him or by making or demanding an explanation. A member will at times allow such interruptions through a sense of courtesy to another, but it is entirely at the option of the member in possession of the floor to give way or not to an immediate explanation.
Then again at page 75-
A member must not interrupt any member who is speaking by disorderly noises or in any other manner.


George Newcombe Gordon: There is no question about the rule being a correct one.
[The Chairman. [


Thomas William Bird: I think the rule I have read has the specific application at the present moment.


Henry Elvins Spencer: If I had not been interrupted I would have been through about ten minutes ago. Does the Chairman rule me out of order?	.


George Newcombe Gordon: The hon. member can answer questions put to him if he wishes, but if he does not desire to answer questions he need not do so.


Thomas William Bird: If I may be allowed to pursue that, there has been a continual fire of questions-


Some hon. MEMBERS:: Order, order.


Thomas William Bird: I draw the Chairman's attention to the fact that throughout the speech of the hon. gentleman there has been an uninterrupted fire of questions and inarticulate comments, which I think altogether unjustified, in view of the rules I have read to the House just now.


George Newcombe Gordon: I would ask hon. members to permit the hon. gentleman who is speaking to continue without interruption.


Henry Elvins Spencer: You do not rule me out of order in regard to this information I am trying to give?


George Newcombe Gordon: On the questions and answers, yes.


Henry Elvins Spencer: All right, I will abide by your ruling. I just want to say that the=e questionnaires and answers disclose conditions in the country from which we come tha t no member of the House can afford to ignore. I wish to tell the House-and this is relevant to the point at issue-that with the enormous sums of money that this country is spending year in and year out in trying to bring people to this country, that questionnaires prove that we are losing people in vast numbers, and that the few that are returning are simply lenting. I would remind hon. members that these replies show a mortgage indebtedness m the county that most of them would refuse to credit. It is because the people there have not got the sympathetic ear of the financial institutions which enjoy a monopoly, that they are crying out for relief. And when we, their representatives, put the case fairly and squarely before this House what reception do we get? We simply get ruled out of order, ridiculed, laughed at-anything but sympathy. But we are not looking for sympathy, we are looking for justice. One of the things that we are asking in justice to

Bank Act
our people is that these bank charters should be renewed for one year only, to give us an opportunity of reviewing the vast amount of evidence that has been placed before the committee.
The hon. member for Halifax (Mr. Maclean) has stated that hon. gentlemen who were putting forward amendments before the Banking and Commerce committee, were advancing something that was not of very great value. He may not have thought our suggestions were of very great value, but the hon. members who sponsored them thought they were, and put a great deal of time on their preparation. I would point out that one of the reasons why we should have these charters extended for one year only for the time being, is because of the fact that the greater percentage of the arguments we put forward in favour of our amendments were ignored, and the amendments were turned down by a silent vote. As an instance, take section 91 in regard to interest. Masses of evidence were adduced why, if we are to have a clause regulating the rate of interest, there should be a penalty for any attempt to exact anything in excess of the stipulated rate. Very few spoke against the proposal, I think only two members, yet when it came to a vote, however convincing the arguments put forward might have been, they failed t; influence the committee, and the amendment was defeated by the silent vote which never failed to function on such occasions.


William Duff: It showed their good sense.


Henry Elvins Spencer: It may have, but it showed that they had not the good sense to speak to the question. The hon. member for Halifax also stated-and I was very sorry to hear him, because personally I have a very great regard for him-that foolish and dangerous ideas had been put forward. I cannot understand why he should make that statement in view of the fact that so few of these so-called foolish and dangerous ideas were considered. At any rate, if that was his opinion as the chairman of the committee, it was natural that he would not be in favour of them. He asserted that ample and due consideration was given to all amendments. I am sorry to say that I cannot agree with him In the last few days some very important amendments were put forward, in some cases without the slightest criticism being offered against them, indeed, with several members of the committee speaking in their favour, but those amendments were solidly turned down by the silent vote.
It is for these reasons, and for many others that I could mention if I cared to take up any more time of the committee, that I am in favour of, and intend to vote for, this amendment that the charters be extended for one year only.


Mr. McBRIDE:: It was not my intention to say anything on this subject to-night, but it seems to me that a change of programme would be acceptable to the House. Now, I have been thirty-one years in this country and have been doing business with the banks off and on during that time, and I have always found them ready to do what was right. I have always got money when I wanted it, and at a fair rate of interest; and when I had any money to deposit I always got a fair rate of interest. The fault with most people at the present time is that they want to start in at llie top of the ladder. They do not want to do as men did thirty years ago,-work to get a start. The fault of many people is that they borrow all the money they can get, and instead of repaying it when they sell their crop they will go and buy an auto and run around the country. I state the facts of the case.
As I have already said, I have no fault to And with the banking system, and I think it is up to the House to give an extension of the bank charters for ten years in order to create business stability in the country. If we begin extending the charters from year to year, what confidence will any person have in the country? It is going to do harm, and, I repeat, I think it is up to the House to extend the charters for another ten years. If a certain class of people want loans there are other means of securing them.


William Duff: They have not got any security to give.


Thomas George McBride: If they have the security they can get all the loans they want without any trouble. I have always found that if you do the right thing with the banks, the banks will do the right thing with you. If I have any fault to find with the banks at all it is that they are too free with their money. 1 believe that the curse of this country today is too much borrowing and not enough production. If people would only work for what they want it would be better for the Dominion as a whole.


William Charles Good: Mr. Chairman, as there are a number of other members who wish to speak to the question, I would suggest that it might be advisable to adjourn the debate.


Some hon. MEMBERS:: Go ahead.
Bank Act


William Charles Good: I am prepared to go ahead, Mr. Chairman. It seems to me that the amendment is very reasonable indeed. We are accepting the revision so far as it has been accomplished up to date, and we are simply asking that the charters be granted for one year, so that between now and next session we may have an opportunity to study the mass of evidence dealing with the whole question of our financial and banking system. It seems to me that the government would be well advised to consent to such a fair and moderate suggestion.
I had intended to speak at some length, but there will be other opportunities for dealing with certain phases of the subject that I wish to take up, and therefore I will content myself for the present by simply pointing out very briefly the situation that faces us to-day. There is no doubt that Canada, along with many other nations, is in a very serious condition. This is doubtless partly due to the war-how much it is hard to say; but whether it is due to one cause or another the condition is admittedly serious. Now, in the face of that condition; in face of the fact that a very large volume of evidence has been submitted to the committee; in face of the fact that a number of other amendments have been suggested to the bill by members of the committee; in face of the fact that a number of further investigations, such as that into the Merchants Bank fiasco, have been demanded by members of the committee, the government apparently propose to wash their hands of the whole affair; to clean up, so to speak, and enact legislation for another ten years. I submit that that is a very dangerous procedure. It has been admitted by a good many members cf the committee on all sides after hearing the evidence that, possibly, very fundamental changes in our financial system will be necessary during the next ten years. If that is so, surely we would be well advised if we simply granted the charters for one year, meanwhile looking into the evidence so that next year we shall be in a position to decide what should be done.
I want to make one or two remarks on the Merchants Bank case. There has been a good deal of confusion of mind regarding the motion that was moved in the Banking and Commerce committee some time ago respecting this matter. The purpose of the proposed investigation is not to again try Mr. Macarow and the others. They were indicted on a certain specific charge; they were tried, and they were acquitted. So far as the wrongdoing is concerned, nobody knows who is to blame. Evidently there was some falsification of returns. We have a situation which I think

is almost without a parallel. The trial has come off, somebody must have been guilty, but we do not know who. The purpose of the proposed investigation is not to try these men over again but to get from men who know the inside of this affair information that is highly necessary if the various clauses of the Bank Act, especially those having to do with inspection, returns, and so on, are to be properly drafted so that the future may be safeguarded. I submit that the calling of Mr. Macarow, the general manager of the Merchants Bank, would be entirely in order, entirely proper; and the turning down of that suggestion in the committee created in my mind grave suspicions as to what lay behind the action, particularly in view of rumours that have been circulated regarding the affair. I do not know what truth there was in these rumours, but in view of the circumstances; in view of the mystery surrounding a number of these matters, it was entirely in order that these men should come here and give any information that members of the House should think fit to ask them to furnish.


William Duff: What are your suspicions?


William Charles Good: I do not propose to be led into that to-night.


William Duff: Because you have not any.


William Charles Good: I have.


William Duff: Why not tell us what they are?


William Charles Good: They have already been referred to in the discussion. I am not going to deal at length with the Merchants Bank case to-night.
Further there is great need in Canada for some rural credit legislation. We do not know at present how far this may be worked out independently of our present banking system or how far it may be necessary to link it up with the latter. Therefore, until we have something more definite, more concrete, more specific with regard to the whole question of rural credits, in my opinion it would be the wisest thing to give a temporary extension of the charters of the Canadian banks, and then if any changes are desirable between now and next year when we have the report of the committee on rural credits and when the matter can be gone into to some extent, we shall be in a very much better position to decide what should be done. There is no doubt that this is a matter that needs immediate attention; it has been admitted in the committee by men on all sides that that is the case. It is therefore, a very fair proposal indeed that until this matter takes shape we

Bank Act
should not give any very considerable extension to the bank charters under the present terms.
In addition to that there has been submitted to the committee, but hardly discussed at all, the question of a federal reserve bank. This is a most important question not only as it relates to our present banking system, but also as it may be linked up with the whole question of rural credits and smaller banks. We shall have to give it some consideration. I am inclined to think from what little information I have on the question that it is almost a necessary part of a rural credit system. This thing is as yet undiscussed, uninvestigated by the committee.
I submit also that the whole question of cooperative banking, which has been so successful elsewhere, is something we ought to consider before our financial system is crystallized in its present shape for another ten years.
We heard something in the committee also about the Australian Commonwealth Bank, a government bank in Australia which seems to have given a great deal of satisfaction. This, too, in its possible application to the Canadian financial system has not received any consideration; it has been mentioned once or twice, but we have not had time to look into the matter.
There is another matter which in my judgment is one of prime importance, concerning which I had intended to speak at some length. I shall only refer to it now; I will leave the discussion of the stabilizing of the purchasing power of money until we reach the clause on interest, where I think it may appropriately be brought up again. But this is one of the most vital questions in the entire field of economics. The whole world has suffered tremendously in recent years from fluctuations in the purchasing power of money. Professor Irving Fisher, of Yale University, who has evolved a plan for the stabilizing of the purchasing power of money, gave evidence before the committee. But it has not been discussed by the committee, although it is very closely linked up with our whole banking system, so far as the control of interest rates is in some degree a means of stabilizing prices. Moreover it has already been stated that a number of representative bodies throughout Canada have asked that the charters be extended for just one year so that time may be afforded for examination of the evidence which has been submitted. As the hon. member for Springfield (Mr. Hoey) said not very long ago, there are a great many members of this House who have not been privileged to attend the meet-[Mr. Good.)
ings and follow the evidence, who have not had time yet even to read it, and who, I think, should not be called upon to express themselves in a vote at the present time in any final way. I think they would appreciate very much the opportunity which a year's extension of the bank charters would give them to look into this evidence which has been placed on record. In that connection, Mr. Chairman, I want to say something that is not very pleasant to say, but I think perhaps it is necessary. I have seen some things this year that I never thought I would see in a Canadian parliament and I must say that my faith in the sincerity and integrity of people who have the control of policy has been somewhat shattered by what I 'have seen this year. I do not like to make a statement like that, but I think perhaps I had better.


Charles Marcil: If the reflection is intended for a member of the House, the hon. member's remark is certainly out of order.


William Charles Good: I will say no more, Mr. Chairman.


William Duff: Speak for yourself.


Mr. MARLER:: What does the hon. member mean? Why talk in this cryptic way? Have we got integrity in this House or in the committee or have we not?


Charles Marcil: I think the hon. member on consideration will admit that applying such a term to gentlemen who are in control of policy in this House is certainly unparliamentary. The expression had better be withdrawn.


William Charles Good: I will explain myself, Mr. Chairman, if hon. gentlemen wish me to.


Herbert Meredith Marler: Go ahead. Do not talk in innuendoes all the time.


William Duff: Explain.


William Charles Good: I want to mention one matter, Mr. Chairman-


William Duff: You could not back up your statement.


Some hon. MEMBERS:: Withdraw.


Charles Marcil: If necessary I can read the hon. member the rule of the House. I think that his words should be withdrawn.


William Charles Good: Then I will withdraw at your request, Mr. Chairman. During the hearings of the committee we learned just about enough from the accountant, Mr. Edwards, who made some partial investigation into the Merchants
Bank Act

Bank affair, to make it very necessary indeed to carry out a fuller investigation. I would like to recall the evidence he submitted in connection with his partial investigation. The hon. member for Halifax (Mr. Maclean) said during the course of his remarks that bank failures cannot be prevented by legislation. Now I want very respectfully to call that statement in question. What is the purpose of the efforts that we have made this year on the committee to stop some of the loopholes, to remedy some of the defects, if it is not to make more difficult such failures as have taken place in the past?


Alexander Kenneth Maclean: I said that.


William Charles Good: I am afraid, Mr. Chairman, the hon. member left a very different impression on some members of the committee. He did on my mind1 at all events.


Alexander Kenneth Maclean: I said it was our duty to strengthen our legislation so as to make failures as difficult as possible to occur, but I did express the view that I did not think legislation would make absolutely impossible bank failures or any other kind of failures.


William Charles Good: I am very glad to have this explanation from the hon. member because I think now he and I agree absolutely in regard to this matter. The purpose of our legislation is to make these things more difficult to occur. Of course, everybody admits that you cannot remedy the defects or frailties of human nature altogether by legislation, but I submit, Mr. Chairman, that legislation can do a great deal in many directions for assisting in that particular way.
The hon. member for George Etienne Cartier (Mr. Jacobs) wanted to know what the Merchants Bank affair had to do with this Bank Act. I would like to reply to that question in this way: If we do not know, as we do not at the present time, what lay behind that situation we cannot take the necessary precautions except in so far as we may apply general rules to provide safeguards-


Mr. CHURCH:: May I ask the hon. member a question? I have never been a supporter of Canada's banking system, but I would ask the hon. member for Brant this question. I understand he is one of the directors and vice-president of the United Farmers of Ontario Co-operative stores. Would he mind reading to the committee a report of the meeting at Toronto last fall of the shareholders of the United Farmers Cooperative stores, which have been far from a success to their shareholders, and tell the committee why he did not apply the advice he 
is giving now in the administration of these stores? We had a Farmers Bank in Toronto in which 2,690 widows and orphans lost their all. The bank was run on theory and such lines as the hon. gentleman talks of. Will he please read to the committee the press report on the row at the United Farmers of Ontario Co-operative stores meeting last fall and the result of the failure of the Farmers Bank?


William Charles Good: I am afraid that is rather a large contract for me at this hour of the night. I wish to submit, Mr. Chairman, that there is no clear idea present before the committee at this moment as to how far the Bank Act may be changed at any time. The statement has been made that it can be amended at any time. Now, how far is that true? If it is true that fundamental changes may be made at any time, if it is true that the significance of granting a ten-year charter is practically nothing at all, then of course there is no practical difference between the granting of charters for one year and the granting of charters for ten years, but I do submit that unless we are going to interpret the granting of ten-year charters differently from what we have understood in the past, it is entirely unwise and improper under present conditions, and in view of all these questions which have been presented to the committee and which the country has to solve in some way or other in the near future-it is entirely unwise, I say, to crystallize in any way the financial system by granting ten-year charters.
This afternoon, Mr. Chairman, an effort was made to move the following amendment which I would like to put on Hansard in connection with the Merchants Bank affair:
Whereas the select standing committee on Banking and Commerce decided by resolution not to hear evidence dealing with the collapse of the Merchants Bank, and its subsequent amalgamation or merger with the Bank of Montreal;


Thomas Langton Church: May I ask the hon. member if he will kindly answer the question I put to him: Why does he not apply the same principle he is advocating here to the United Farmers of Ontario Co-operative stores?


Some hon. MEMBERS:: Order.


An hon. MEMBER:: Make him speak.


Thomas Langton Church: Will the hon. member
answer the question?


William Charles Good: And whereas it is in the public interest that the conditions which led to or were connected with said collapse should be made public, in order that any weaknesses and deficiencies in the existing Bank Act may be remedied, and the interests of depositors, shareholders, and the general public may be safeguarded.

Bank Act


William Stevens Fielding: I draw attention to the fact that the motion the hon. gentleman is reading has no relation to the clause under discussion.


William Charles Good: I submit that it is entirely
relevant to the question of the Merchants Bank.


William Stevens Fielding: The Merchants Bank
case is not before the committee.


William Charles Good: Mr. Chairman, we have been
discussing the Merchants Bank and its collapse at considerable length to-night and have been urging that the investigation of the affairs of that bank is related to the propriety or impropriety of granting bank charters for one year or for ten years. I submit, Mr. Chairman, that this resolution is entirely in order as expressing the demand for an investigation. It simply states in brief form that the demand for an investigation should be granted before the bank charters are extended for more than one year.


Charles Marcil: According to parliamentary practice
a general argument cannot be allowed upon a particular clause. An amendment is now before the committee to which the hon. member must address himself and the rule as to relevancy therefore applies. The question is as to whether the words "twenty-four" should be substituted for the words "thirty-three" ia the fourth line. Argument such as my hon. friend is indulging in is altogether irrelevant.


William Charles Good: I think it has been conceded
to-night that the demand for an investigation into the Merchants Bank is debatable under this clause we are discussing.


George Newcombe Gordon: The moment objection was taken I gave a ruling. The point may not have been raised before but the moment it was raised I ruled that it was well taken.


William Charles Good: Do I understand that I am
ruled out of order in reading this resolution?


George Newcombe Gordon: It is not relevant to
the motion or to the amendment before the Chair as far as I can see.


William Charles Good: I submit it is entirely relevant.


Some hon. MEMBERS:: Order.


Mr. RINFRET:: There has been a ruling
by the Chair.


William Charles Good: I bow to your ruling, Mr. Chairman, if you so rule.


George Newcombe Gordon: I rule that it is not
relevant to the subject under discussion.


William Charles Good: As I mentioned some time
ago I intended to deal at some length, during the course of this debate, with the stabilization of the price level but I can do that under another heading. As there are a number of other members who wish to speak on the subject of granting bank charters I shall leave my remarks for a future occasion.


Edward Joseph Garland: Mr. Chairman, very much of what I desire to say had I been able to speak earlier in the evening has already been said, but I wish to join my voice with those who are protesting against the jamming through of this bill for ten years at the present session. I share the opinion of hon. members in this quarter of the Chamber who have held that a proper investigation must be made into the Merchants Bank case before the House, or a committee of the House, is competent to deal with the Bank Act in a manner that the public of this country desire as the result of the fiasco that has been witnessed. No due consideration has been given to the mass of evidence adduced before the committee. That point has also been raised by hon. members sitting round me and I share the opinion of those who have made known their views upon it.
There was a refusal during the last few daj's of the sittings of the committee on Banking and Commerce to investigate or to discuss the Federal Reserve system of the United States. I should like to call the attention of this House to the answer of the senior member for Halifax (Mr. Maclean) when this question came up. He said: "It is not worth calling witnesses half a mile, that all the evidence, all the stuff that was required, could be secured in the library." What an extraordinary statement to be made by an opponent of an investigation into the Federal Reserve system of the United States, one of the greatest and one of the most famous systems in the world, "that you could find all the information about it in the library". Why did we go into committee to deal with this matter if you could find all about it in the library? Why discuss anything if you could find all about it in the library. That is one of the chief arguments of those who seem to be particularly interested in passing the Bank Act this session. Now, the refusal to investigate the Merchants Bank case by that committee-


Some hon. MEMBERS:: Order.


Edward Joseph Garland: -has been in my opinion one of the most disastrous things the Liberal party has ever perpetrated in this country, and it will react to the
Bank Act

discredit of the Liberal party everlastingly. There will be protests by the people of this country in a short time that will astonish hon. members sitting opposite. They, perhaps, cannot yet conceive the immense feeling that is already gaining ground in connection with the matter.


William Duff: Where is it?


Edward Joseph Garland: May I read from the Montreal Star of April 28, 1923, an expression of opinion on the subject:
The sudden wreckage of the Merchants Bank shocked the people of Canada. Even yet they do not fully understand what happened. They are not convinced that, it was necessary to cUose the doors on an ancient and honourable institution and have its assets turned over to a rival. It is true that the shareholders suffered most and that there is no more reason to protect holders of bank shares than those who invest in other enterprises, but the whole banking system was put under suspicion by a collapse and an absorption for causes which are still imperfectly understood and as to which no explanation has been offered which has seemed to be adequate.
On this ground of lack of information alone, an investigation of the Merchants Bank case, in conjunction with the whole discussion of the Bank Act, should have been taken by the committee on Banking and Commerce.


Samuel William Jacobs: May I be permitted to ask the hon. gentleman a question?


Louis Édouard Fernand Rinfret: Does my hon. friend believe in the Montreal Star?


Edward Joseph Garland: May I suggest to the hon. member for George Etienne Cartier most quietly and respectfully that the very ethics of his profession ought to have been sufficient to have prevented him from interrupting me when I was discussing the Merchants Bank case, seeing that the hon. member, I understand, was attorney for one of the parties in the case.


Samuel William Jacobs: I do not take lessons in ethics from the hon. member for Bow-legged River, or whatever his constituency is.


Mr. GARDINER:: I rise to a point of order. The hon. gentleman has just made a reference to the constituency of my hon. friend (Mr. Garland), which should be withdrawn.


The CHAIRMAN (Mr. Gordon):: I did not understand the hon. member to reflect on Mr. Garland's integrity.


Edward Joseph Garland: I ask my hon. friend from Medicine Hat not to deal too drastically with the hon. member for George Etienne Cartier, but rather to sympathize with him.


Louis Édouard Fernand Rinfret: Take your medicine.


Edward Joseph Garland: In regard to the investigation into the Merchants Bank fiasco another question arose-apart altogether from that appalling collapse itself- in the minds of the public, and that was the question of mergers. But before I pass on to that I would like to quote, as another reason why the bank charters should not be renewed for ten years at the present session, a statement from the Canadian Annual Review, 1921. The quotation, I can assure hon. members will not be lengthy. I have no more desire than they have to prolong this discussion, but I do desire to put myself on record on this important question. At page 40 of the Canadian Annual Review of 1921, after a lengthy and very clearly defined statement of the history and standing of the Merchants Bank, the following is written:
On December, 16 Montreal heard with astonishment and the country with absolute amazement that the chairman of fhe Montreal Stock Exchange had received from Sir Montague Allan, president of the bank, the following letter:
"You are requested herewith to withdraw Merchants Bank of Canada stock from your list as arrangements have been made with the Bank of Montreal, subject to the approval of the Governor in Council 'and the shareholders of both banks, to take over the Merchants Bank."


Samuel William Jacobs: I rise to a point of order. Is it relevant for the hon. member to read this matter before the committee?	.


George Newcombe Gordon: I should not like to
give a ruling until the reading proceeds a little further.


Lucien Cannon: On the point of order, in justice to the hon. member for Brant, (Mr. Good), I might say that it was decided a short while ago that the hon. member for Brant had no right to discuss the Merchants Bank. If the hon. member who now has the floor has that right, the hon. member for Brant should be recalled and given an opportunity of discussing the question.


Edward Joseph Garland: (Bow River):	pear,
hear; I am very grateful to you, Mr. Chairman, for your permission to continue in the matter, and I submit that the recent failure or fiasco of the Merchants Bank, involving the question of suspicion, and it did inevitably give rise to suspicion in the minds of the people of Canada, and as a consequence of which there should be some very drastic changes in the Bank Act, changes which, in my opinion, have not yet been made, is one of the reasons why this revision should be deferred.

Bank Act


George Newcombe Gordon: Is the hon. member not anticipating a future clause in the bill which provides for forms of returns, the necessity of returns and signatures of certain officials? I am jus-t drawing that to the attention of the hon. member. I fear he is anticipating another clause.


Edward Joseph Garland: I do not
think so, for this reason:	In the discussion
of clause 5 and the amendment thereto, I frankly confess that I cannot see how any aspect of banking or the banking system cannot be made relevant to the question. It is true that on other questions some of these matters would be utterly out of order. For instance, on the interest clause, you could discuss interest ad lib., its effect on the people and conditions arising out of it; but on this particular clause which refers to the extension of the charters for a term of ten years, if I happened to be in the chair-and I am glad I am not-I would find it difficult to rule against any discussion of the banking system of Canada.
Amongst other matters that I would like to call to the attention of this committee-and as an indication of my goodwill in this matter, I will lay aside any further quotations concerning the Almanac and the Merchants Bank -is that one of the most astonishing things to the people of this country is that at that time the Merchants Bank stock was worth $157. There is involved in this question, as I said, a moment ago, the question of mergers. The people of Canada are becoming more and more satisfied that the development of a money oligarchy in this country is not in the best interest of Canada. The development of that oligarchy has gone on under this Bank Act. No provision has yet been made in the Bank Act to prevent that. There are no restrictions on mergers; everything in that connection is left to the Minister of Finance. We find that in 1904 there were thirty-four banks in Canada with about 1,100 branches. In 1920, there were only eighteen banks, and to-day there are only seventeen with fully six or seven thousand branches. These banks were absorbed, swallowed up in the most extraordinary fashion. A few failed, but most of them were absorbed by larger banks. There seems to have been a contest between the Bank of Montreal and the Royal Bank of Toronto to see which would absorb or grab up the largest number. I am quoting from a book written by Mr. Baker, called "Money Monopoly vs. The Community Dollar" at page 84:
It will be remembered that in an earlier chapter it was stated that in 1904 bank capital was equivalent to 11 per cent of total assets, while in 1920 the ratio
had been decreased to 4 per cent. Therefore, not only did the banks fail to maintain their position in this respect, but they carried on a policy of expansion until they had four times as. many branches with only a ratio of 4 per cent between capital and total assets.
This is but one of the evils that follow m the train of mergers. That question has not been properly or duly considered. Leaving aside this matter of the discussion of the investigation of the Merchants Bank, and that is one of the reasons why this amendment should carry, I should like to ask the following questions in the hope that some hon. member opposite will answer them. This would, perhaps, clear the minds of hon. members in this part of the chamber on this matter and not make them so convinced that the rights of the Canadian people are in jeopardy as their present position would indicate:
Is it a fact that the directors of the Merchants Bank were compelled to sell out for protection of creditors or shareholders? Or were there other considerations which played a part in the impelling process ?
These are questions I should like to have answered, possibly by the senior member for Halifax (Mr. Maclean) or by the Minister of Finance when he speaks:
Did the Bank of Montreal pay any more for the Merchants Bank than it was worth? If it did should the public not know how it covered up its loss? If it did not, and it is not likely that the Bank of Montreal did so, how is it that a corporation with capital intact and a surplus of 15 per cent of its capital, could be impelled to sell out to protect its shareholders and depositors? Since when have corporations become insolvent because they could pay their creditors, pay their stockholders, and distribute a dividend from surplus of 15 per cent? If the institution was strained for ready cash to meet its clearing obligations, why could it not have borrowed from the government just as other banks do when they are strained? Why did not the Bank of Montreal and other banks assist the Merchants Bank if its stock was worth 115?
In fact, it was worth more than that at one time, just prior to the merger:
Is it possible that the associated banks did not like the business methods of the Merchants Bank, such as founding and advertising Christmas clubs?
There are many other questions, but I will leave these with the hon. members, and if they can answer them they can satisfy me more than I expect to be satisfied by the members of this committee.
Perhaps the greatest reason that can be put forward for the extension of these charges for one year only at this time is that we have in this country admittedly, admitted by the greatest bankers that those who are interested could get before the committee on banking, a gap in the credit structure of Canada, a gap for which no provision is made and for which they say no provision can be made under the banking system. Yet no one of those bankers came to us, nor did the Bankers' Association



Bank Act
come to us with any proposal designed to cover the gap. As we have no suggestion offered in this regard, to whom shall we go? Hon. members opposite have suggested a rural credit scheme. All rural credit schemes in Canada to-day are based in the final analysis on the banks, and yet we know that the banks are antagonistic to rural schemes. They have shown that only too clearly in Manitoba and Ontario. Hon. members opposite say: Be calm; be quiet; we will get a rural credit scheme for you some time, we do not know just when, but some time. I ask: What are you going to do? There is no proposal in this regard before the committee. There is no justification for the statements they are making. If they have a rural credit scheme, we would be delighted to consider and discuss it.
There are in this country three great papers, in particular the Financial Post, the Montreal Star, the Winnipeg Free Press, and indeed many others that have asked that these bank charters be extended for only one year at this time. You have heard hon. members around me speak of organizations that have asked for the same thing. Mention was made by the hon. member for Victoria, Alta. (Mr. Lucas), to the effect that Mr. Tom Moore had sent him a letter embodying or containing resolutions from various trades and labour councils of Victoria, Calgary, Edmonton, and various other places. The senior member for Halifax interrupted him, and suggested that Mr. Moore had been before the committee but that he had not brought that question up, that it had not been discussed and he had no suggestions to offer. I would submit to the hon. member for Halifax (Mr. Maclean) that perhaps Mr. Moore had a few weeks in which to consider this question since he left the committee and had decided that it was in the best interests of the Canadian people, and in addition to that had secured these resolutions from the Trades and Labour Councils. May I say further, Mr. Chairman, that when the senior member for Halifax says that no good and sufficient reasons have been brought before this House for the extension of the charter for one year. I would submit that when these bodies of highly organized, and I say, highly intelligent people - labour, the farmers, the governments of Alberta and of Manitoba -have seen fit to make this request, surely that alone should be a good and sufficient reason. The people have not had time to consider the evidence. They have not had time to digest the matter properly and to come to a decision. Many proposals have been brought forward. None of them has 
received due consideration. We hope they will soon. They will have to, in my opinion some time or other.
In closing, let me emulate the example of the member for George Etienne Cartier, who is an adept at facetiousness and telling humorous stories. The hon. gentlemen likened the hon. member for Calgary East (Mr. Irvine) to the cuttlefish. May I say that the hon. member himself (Mr. Jacobs) reminds me of the story of a darkey I once read about, who lived in the cornfield country of the South. In the midst of a thunderstorm this darkey was driving a team of mules home late at night. Between the flashes of lightning there was dense darkness, and he could see nothing, not even the road, he was terror-stricken, and the mules were getting more restless all the time. When the lightning flashed he would see the road for a moment or two, and it temporarily renewed his courage. After a time the poor old darkey could stand it no longer, and then he prayed as I do, " Oh, Lord, let there be less noise and more light".


Mr. COOTE:: I regret that the government has seen fit to compel the House to sit to this late hour for the consideration of what I think is the most important subject that will come before this parliament this session. There is no subject of any greater importance to the people of this country than the revision of the Bank Act. The matter of currency and credit is one of prime importance to the people of this country. I feel that the inquiry by the committee on Banking and Commerce into the working of the Bank Act during the past ten years was very inadequate, but so far as the inquiry was carried on, it seemed to me that it was amply proved before the committee that the banking situation in this country was very far from satisfactory. If that is the case, I cannot see why the Finance Minister is so determined that the charters must be renewed for ten years. I believe that some of our own bankers are quite concerned in regard to the situation which exists in Canada to-day; yet the Finance Minister says we must put this act through and he will brook no delay. He says: "You must do nothing which will interefere with the confidence of the public", but he has done nothing to find out whether the public confidence has been misplaced. I wonder whether he has heard any rumours to the effect that one of our banks, possibly more than one, is not in very good shape to-day. I wonder whether he is expecting that before another year passes he will have applications for the approval of one or more mergers.

Bank Act


Alexander Kenneth Maclean: Two hon. gentlemen from the Progressive party told us that the whole thing is going to the bad inside of ten years.


George Gibson Coote: If one or two go each year, they might all be gone before long. I do not want to make any prediction, but those are possibly not idle rumours that we hear.


Alexander Kenneth Maclean: It does not do much good to talk about them.


George Gibson Coote: No, it does not. I wonder what would do some good about it. It might be just as well if we knew more about it, but I may say very frankly that it did not seem to me that it was the wish of that committee that we should know anything we could be prevented from finding out. I hope that is not unfair, Mr. Chairman. I do not want to be unfair. I simply said it appeared to me that way. In this country we have seen our chartered banks decrease from 34 in 1901 to 17 in 1923. In 1911, the paid-up capital of our banks was $96,000,000. In 1923, it had increased to $135,000,000. I am giving round figures. That is a very small increase, a trifle over 25 per cent, but in the same time our deposits in the Canadian banks had increased from $926,000,000 to $1,995,000,000. That is considerably more than double. In the same time our total trade in Canada has increased from $741,000,000 to $2,450,000,000, an increase of over 300 per cent. In the same time the bank loans have increased from $986,000,000 in 1911, to $1,851,000,000 to-day. That is practically double. When we consider the small amount of paid-up capital which our Canadian banks have, the amount of business they are transacting, and the amount of deposits of the public they are handling, to use a slang expression, I think we could say they are doing business on a shoestring. This large expansion in Canadian trade which has taken place in the last ten or thirteen years has made necessary a large increase in the amount of money for circulation; and to meet this demand for an increase in circulation, our banks, instead of increasing their paid-up capital, as I think they should have, had to resort to other expedients to meet the demand for the circulation. First, they got the privilege of an increase of 15 per cent-


George Newcombe Gordon: I do not want to interrupt the hon. gentleman, but it has been held -and there is no question about it-that general argument on a bill cannot be allowed on a particular clause. I fear he is getting along that line, and I am drawing his attention to it.
260 i


George Gibson Coote: I will discontinue that line of argument. Possibly, we have had enough of it, and I may be ruled out of order.


George Newcombe Gordon: I draw the hon. member's attention to it. I do not say he has reached that point yet.


George Gibson Coote: I want to lead up to this fact, Mr. Chairman; that the bank business of Canada is now in the hands of the directors of seventeen banks, and, through the Bankers' Association, the directors of three or four of the different banks are able to dictate the financial policy of this country.
I think, Mr. Chairman, it is quite relevant to bring that to the attention of the committee as one reason why it would be quite proper to accept the amendment offered by the hon. member for Red Deer (Mr. Speak-man) and see if we cannot within the next year amend the Bank Act to free the country from the control of these few men. If, Mr. Chairman, I might be allowed to use the expression of Sir John Aird before the committee on Banking and Commerce in referring to certain railway corporations, I would say we are now in the hands of a banking octopus, and if we have any more mergers the hold of this octopus upon the general public will be that much stronger.
The present state of affairs is particularly unfortunate in that the directors of some of our larger banks are controlling the board of" governors of our leading universities. Quite recently I was told by a professor that he dared not criticize the Bank Act as some members of the board of governors of his university were bank directors and he might lose his job. These directors not only control our universities but also our industries, and, indeed, it might even be said that they control our government. Our peculiar banking system has made this possible, as the whole tendency is toward centralization. The savings of the people are taken from the smaller towns and rural communities to build up a few of the large cities. The funds of the hanks are used to finance schemes under the control of the directors, and very often I imagine at a lower rate of interest than can be secured by those engaged in these industries in the smaller towns and cities, making it very hard for them to compete with the larger organizations. Right in this connection. Mr. Chairman, I might be allowed to quote two or three paragraphs from an address by Mr. Andrew Jay Fame, Chairman of the Board of Waukesha National Bank, Wisconsin, at a Bankers' Association meeting in the-
Bank Act

United States in reference to our banking system. He says:
In Canada some seventeen central banks (reduced from more than thirty some years ago) now skim the cream from over 4,000 branches, leaving only the skim milk for the rural and suburban populations. Branches have no local stockholders, no presidents, or cashiers. They practically pay no taxes and have figureheads for managers, subject to alien officers' orders. The most serious objection is practically no profits are distributed locally where they are made, thus impoverishing the nation at large for the sole benefit of monopolizers in the great centres.
Statistics clearly show that failures of banks and losses to depositors in Canada, compared with our National Banking System, exceed ours several times over. These facts are confirmed by at least one exmanager of a big central bank in Canada and by other authorities I am not at Liberty to quote. Her banking power is less than little Massachusetts alone. She is asleep compared to our progress.
He then quotes from an article in the Toronto Star of some years ago on the Canadian branch banking system.


George Newcombe Gordon: I must really stop the hon. member. I do not see how this could be relevant to the question of whether the bank charters should be renewed for one year or ten years. The quotation deals with the general principle of banking.


George Gibson Coote: I was using this argument, Mr. Chairman, because I thought the committee should investigate to see whether our Bank Act might not be improved in respect to this particular system.


George Newcombe Gordon: The hon. member knows that this committee has very limited powers of investigation. The bill was referred to this committee for the purpose of discussing these sections and reporting or not reporting it. This committee has not the powers of a standing committee.


George Gibson Coote: Mr. Chairman, if I might be allowed to quote one sentence from this editorial I will be satisfied. It says:
Monster "banking monopoly a leech at Canada's throat killing local industry, depopulating rural districts. Centralization of almost entire financial power in the hands of a few capitalists has resulted from our much vaunted banking system. Almost total extermination of local banks.
Planting of a "branch" to suck our local earnings, etc.
I should like to read a little more of this editorial, Mr. Chairman, but it will keep. The small percentage of the paid up capital of our banks compared to the deposits results, I think, in our banks becoming panic-stricken in times of financial stringency, and they close down on their customers when they think deflation is imminent. There is no doubt that in the past this has caused great loss to their borrowers and very often to
TMr. Coote.]
the banks themselves, I think, because the assets under forced liquidation were not sufficient to pay the debtors' liabilities. Our whole credit structure is built up on the confidence which the public have in the system-


George Newcombe Gordon: Surely, the hon. member is dealing with the general principle of banking and the credit system. I do not see how it is possible by any stretch of the imagination to connect this with any reason why bank charters should not be granted for ten years but for one year only. It is my duty to rule the hon. gentleman out of order.


George Gibson Coote: Mr. Chairman, I was just about to bring to the attention of the committee what I think is one of the main reasons for this postponement, namely, that the committee on Backing and Commerce absolutely refused to call a witness who was acquainted with the actual working of the Federal Reserve Banks in the United States. I wished to argue that the special committee should have called the witness.


George Newcombe Gordon: Any failure of a special committee, or a lulling of its chairman, is not reviewable by this committee, and is not an argument presentable in this committee on this particular section.


George Gibson Coote: I do not know what argument would be relevant if that is not.


George Newcombe Gordon: It is not relevant, and I have so ruled.


George Gibson Coote: I do not know what better reason could be advanced, Mr. Chairman, and if that is your ruling I have very little more to say. I wished, Sir, to put before this committee the action of the special committee on Banking and Commerce with regard to one or two other matters.


George Newcombe Gordon: This committee has no power to deal with the ruling of a special committee. If the chairman of that committee submitted the question, and it was decided in the affirmative or the negative, it cannot be reviewed by this committee.


George Gibson Coote: Then I will have very little more to say, because that was my chief reason for asking for support to the amendment moved by the hon. member for Red Deer. It does seem to me that the bill as brought down is very inadequate to deal with the situation which exists in Canada to-day. The Minister of Finance, if he had been well acquainted with the situation in this country, should have done something more to meet the situation than he has done in the legislation now proposed. I have some other in-

Bank Act
formation here that I would have liked to put before the committee, particularly in regard to the Commonwealth Bank,-how it would be applicable to this country; how it would improve, I think, the banking system of this country if it were introduced here, and the benefit it might be to this government and the country at large. But owing to the narrow limits within which we are compelled to keep by your ruling, Mr. Chairman,
I do not at this time care to say anything further except that I trust this amendment will be given honest consideration by the members of the committee.


William Charles Good: I would like again to protest against the exclusion of evidence of this sort. It does seem to me that the presentation by the hon. member for Macleod of certain matters dealing with the Commonwealth Bank of Australia, as bearing upon the question of postponements, would be entirely relevant.


George Newcombe Gordon: I have ruled that it is not relevant, and I cannot in any way see that it is relevant. The question is on the amendment.
Amendment (Mr. Speakman) negatived; Yeas, 27; Nays, 65.


[Stage Direction]
Section agreed to.
On section 8-Particulars of Act of Incorporation.
Edward Joseph Garland: May I ask the government if it is their intention to press on with the Bank Act all night?


William Stevens Fielding: No. At a very early stage, as soon as we meet a clause to which an amendment is proposed, we will let it stand over and have the committee rise We might run through these uncontested clauses.


[Stage Direction]
Section agreed to.
On section 13-First meeting of subscribers.
George Gibson Coote: I intended to move an amendment to section 20 asking for permission to establish smaller banks, and it would necessitate-


William Stevens Fielding: We may go on until that clause is reached; then I shall be glad to move that the committee rise.


Edward Joseph Garland: I submit that the hon. member for Macleod has not been fully heard. I think he was going on to explain when interrupted that this section if passed now would prevent the formation of smaller banks under section 20.


William Stevens Fielding: If the hon. gentleman desires to move an amendment to it, I will move that the committee rise, report progress and ask leave to sit again.
Progress reported.
On motion of Mr. Mackenzie King the House adjourned at 1.40 &.m. (Tuesday).
Tuesday, June 19, 1923