1924-07-02

HOME BANK INVESTIGATION


Mr. HERBERT MARLER (St. Lawrence-St. George):: In the absence of the hon. member for Lotbiniere (Mr. Vien) I beg to present the eleventh report of the select standing committee on Banking and Commerce as follows:
Your committee have had under consideration the order of reference from this honourable House, dated 31st March, 1924 which reads as follows:-
That, in the opinion of this House, in view of the failure of the Home Bank, and of the fact that official prosecutions and inquiries have been instituted, including the Royal Commission which has been appointed to investigate the facts alleged in the petition represented by the depositors of the bank and the affairs of the bank generally; and considering that the evidence received and to be taken before the several tribunals will be available for consideration, the Select Standing Committee on Banking and Commerce should be instructed to consider the provisions of the Bank Act with a view to recommending such amendments to the act as will better protect the interests of depositors generally and will prevent similar occurrences in the future; and also to consider the report of the Royal Commission in its bearing upon these matters and with respect to the possiblity of saving the Home Bank depositors from loss," be referred to the Select Standing Committee on Banking and Commerce for such action as the committee may deem advisable.
And also the order of reference dated 11th June, 1924, reading as follows:-
"That the Interim Report of the Royal Commission respecting the Home Bank be referred to the Select Standing Committee on Banking and Commerce."
Your committee have sat from time to time, and
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have studied the interim report on the Home Bank submitted by Mr. Chief Justice McKeown and the evidence therein referred to.
Your committee consider that the facts therein brought out and the evidence therein referred to clearly establish that the depositors of the Home Bank have no claim under the law the land for compensation by the country on account of any loss they may suffeT by reason of the failure of the Home Bank.
But your committee are also of the opinion that in view of the representations made to the Departmenl of Finance in the years 1916 and 1918, the government of the time could have made in 1916 and in 191 an effective audit under Section 56-A of the Bank Act and if such an effective audit or thorough investiga* tion into the bank's affairs had been made it would have resulted:-
1.	In the immediate liquidation of the bank, or
2. Its amalgamation with another bank, and that the effect yould have been, no loss to the depositors in 1916 or 1918.
Your committee have studied the evidence given before the Royal Commission by Sir Thomas White, who was then Minister of Finance, and particularly his statements: "I would never think of putting in a special auditor in a bank and taking chances, especially at a time like that, of closing the bank," (page 345); and further: "Under no circumstances would I have allowed a bank to fail during the period in question. I had many difficult and dangerous financial situations to deal with during the war. At its outbreak, in view of the panic which prevailed, the government, at my instance, placed itself behind the banks of Canada and gave public assurance that it would loan them such sums as they might require to meet the conditions of the war, and would take all further steps necessary to safeguard the financial situation during its continuance" (page 359); and further: "The action I took was in my discretion; in exercising his discretion, a minister must have regard to conditions, because conditions have a direct bearing upon the consequences attendant on his action to the bank and the general situation. If you make a mistake in putting in an auditor, in peace time the consequences may be a run producing little effect upon the bank; if in war time, you may bring down the bank and, in addition, you may cause an unspeakable calamity to the country." (page 743).
Your committee is not called upon to question the manner in which Sir Thomas White made use of the powers given to him, or whether he exercised his discretion correctly or otherwise.
Your committee consider that the facts brought out in the interim report submitted by Mr. Chief Justice McKeown, and the evidence therein referred to, establish that the depositors of the Home Bank have a moral claim in equity for compensation by the country on account of any loss they may suffer by reason of the failure of the Home Bank.
Thomas Vien,
Chairman.


Mr. MEIGHEN:: Is the report concurred
in 'by all the members of the committee?


Herbert Meredith Marler: It is a majority report of
the committee.



OLD AGE PENSIONS

[Stage Direction]
Mr. W. G. RAYMOND (Brantford) presented the second and final report of the special committee appointed to make inquiry into an old age pension system for Canada, as follows:
Old Age Pensions
[Stage Direction]
The Special Committee appointed to inquire into an old age pension system for Canada has the honour to present the following as its second and final report:
Your committee has inquired into the systems which are in operation in England, Australia, New Zealand and certain other countries, examined witnesses, carefully considered their suggestions, and compared the information obtained from thirty-one municipalities throughout Canada, in reply to a questionnaire sent to one hundred and thirty-five mayors of cities and towns in every province.
This question has been before this House at different times since 1907, but no definite recommendation was made by any of the committees to which it was referred.
After careful consideration of the information obtained from the sources enumerated, your committee respectfully recommends:
1.	That an old age pension system be established at the earliest possible date for deserving indigent persons to seventy (70) years of age and upwards.
2.	That applicants for pension must be British subjects of at least twenty (20) years' residence in Canada, or naturalized subjects of at least fifteen (15) years' naturalization and twenty-five (25) years' residence.
3.	(a) That the maximum rate of pension be twenty ($20) dollars per month which will be lessened by private income or partial ability to earn:
(b) That one-half the amount of pension payable be borne by the federal government; the other half, by the provincial governments of such provinces as express by legislation their desire to adopt the system -the cost of administration to be borne by the provincial governments.
Your committee has estimated that under such a system there would be approximately 98,841 eligible pensioners, and that if all of these were to receive the maximum rate of pension, namely, twenty ($20) dollars per month, the federal government's portion of the total yearly expenditure would amount to $11,860,920. This amount, however, would be reduced by any private income or partial earnings.
Your committee further recommends that the government communicate with the various provincial governments to ascertain if they are disposed to adopt the above system and enact the necessary legislation.
Your committee also begs to recommend that its proceedings together with the evidence taken, be printed as an appendix to the journals of this House.
For the information of the House, a copy of the proceedings and evidence, a synopsis of the communications received from the municipalities, and a statement of the expectation of life prepared by the Department of Insurance, are appended to this report.
All of which is respectfully submitted.
W. G. Raymond,
Chairman.
Mr. CRERAR:: Is that a unanimous report .'rom the committee?


Mr. RAYMOND:: It is a unanimous report of the members present at the final meeting; all the members of the committee were not in attendance.



GROWSNEST PASS AGREEMENT

Thomas Alexander Crerar: Mr. Speaker, I desire to present a petition from George Pateman and sixty-six others praying that the Crowsnest pass rates be not further
[Mr. Raymond.l
suspended or abrogated. This petition comes from Marquette constituency.



BUSINESS PROFITS WAR TAX ACT, 1916, AMENDMENT

[Stage Direction]
Hon. J. A. ROBB (Acting Minister of Finance) moved that the House go into committee at the next sitting to consider the following proposed resolution:
Resolved, That it is expedient to provide, that The Business Profits War Tax Act, 1916, and amendments, shall be construed and have effect and be deemed to have had effect since its enactment without lapse or interruption as if section twenty-six thereof when first enacted had provided as follows:-
"The provisions of section three of this act shall not continue in force after the thirty-first day of December, one thousand nine hundred and twenty;" and anything enacted inconsistent therewith shall be deemed to have been superseded amended or repealed, as the circumstances may require, and all taxes, interest and penalties payable under the said act and amendments shall remain a tax owing to His Majesty until fully paid and satisfied.
He said: His Excellency the Governor General having been made acquainted with the subject matter of this resolution, recommends it to the favourable consideration of the House.
Motion agreed to.
Mr. ROBB:: If there is unanimous consent, Mr. Speaker, I am ready to proceed with the resolution now.


Sir HENRY DRAYTON:: I consent, Mr. Speaker.


Mr. IRVINE:: I would rather that this
resolution be discussed at some other time.


James Alexander Robb: All right.


Mr. SPEAKER:: Stands.



PUBLIC SERVICE RETIREMENT ACT EXTENSION

[Stage Direction]
Hon. J. A. ROBB (Acting Minister of Finance) moved that the House go into committee at the next sitting to consider the following proposed resolution:
Resolved, That it is expedient to provide that the operation of the Public Service Retirement Act shall be extended until the thirty-first day of March, 1925, and that the said act shall be deemed not to have expired and ceased to be in force after the first day of July, 1924, but to have continued and to be in force for all purposes thereof whatsoever until the thirty-first day of March, 1925.
He said:	His Excellency the Governor
General having been made acquainted with the subject matter of this resolution recommends it to the favourable consideration of this House.
Motion agreed to.

[Stage Direction]
On the Orders of the Day:

Postal Employees
Mr. ANDREW McMASTER (Brome):: Mr. Speaker, I wish to direct the attention of the government to the following fact, and to address to it the following inquiries in relation thereto:
Recently, at Victoria, B.C., Vice Admiral Sir Frederick Field, the principal speaker at a public luncheon given in honour of the British squadron visiting that city, is reported to have stated that he personally believed that Canada should equip and maintain four cruisers, two of which would be held on the Pacific and two on the Atlantic.
My first question is, whether the government invited this distinguished sailor to give this advice.
In the event of the answer to this question being in the negative, in view of the fact that this country is a loyal supporter of the League of Nations, is anxious to see naval and military expenditure cut to the minimum, is conscious that war has proved a dismal failure as a means of settling international disputes, is convinced that our financial solvency, if not our very civilization itself, depends on the reduction of armaments,-would the government take into consideration the advisability of communicating either directly with the gentleman in question, or through the appropriate officers of the state he serves, to the effect that such pronouncement as that delivered by the Vice Admiral on a matter of purely Canadian national policy is undesirable?


Hon. E. M. MACDONALD (Minister of National Defence):: Mr. Speaker, in reply to
my hon. friend, I desire to say that the government did not invite Vice Admiral Field to make any such statement as is attributed to him. The well-recognized principle has always obtained that the question of how much shall be spent bj/ the Canadian people on naval or other services is a matter which rests with the Canadian government and parliament alone. In the past there have been occasions, I believe, when the government of the day has seen fit to invite opinions from the authorities in the Mother Country with respect to naval matters. On this occasion there has been no request for any such opinion or advice. Naturally the statement that is attributed to Vice Admiral Field is one which should not be considered merely upon the basis of a newspaper report, but I shall take steps to verify whether he uttered the statement in question, and then take whatever course may be deemed best in order to assert the well-recognized practice in regard to these matters.


Mr. LANCTOT:: Tell him to mind his
own business.



STRIKE OF POSTAL EMPLOYEES

[Stage Direction]
On the Orders of the Day:
Arthur Meighen: Mr. Speaker, the morning papers contain reports to the effect that the former striking postmen of Toronto still cling to the opinion that the Minister of Labour (Mr. Murdock) gave them certain assurances not included in the statement yesterday of the Acting Postmaster General (Mr. Stewart). I think the House should have a statement on the subject from the Minister cf Labour direct.


Hon. JAMES MURDOCK (Minister of Labour):: Mr. Speaker, in an experience of
something like thirty years in dealing with labour disputes I have never seen the press of any city publish such misrepresentations as the press of Toronto have published relative to the postal strike and the settlement thereof. On Sunday last I discussed no question with anyone whatsoever except the one question as to whether all of the rtrikers at Toronto were to return to duty or only about one thousand for whom there were places.



LEAGUE OF NATIONS-LABOUR EMPLOYMENT OF CHILDREN AT SEA

[Stage Direction]
Hon. JAMES MURDOCK (Minister of Labour) moved that the House go into committee to consider the following proposed resolution:
Resolved, that it is expedient to bring in a measure to confirm a certain convention relating to the employment of children at sea, adopted at Genoa on the 9th day of July, 1920, by a general conference of the International Labour Organization of the League of Nations; and to provide that no child under the age of fourteen years shall be employed on any ship except as permitted under such convention; that a list of persons under sixteen years of age so employed, or a register thereof, shall be kept; that penalties be imposed for violation of the proposed legislation; and that the act shall not apply where all the crew are members of the same family, or the child was lawfully employed at the commencement of the act.
Mr. BAXTER:: I would like to ask the
Minister of Labour whether the expression "children at sea" is intended to refer to the present government?


Mr. GRAHAM:: That is prolonging the
debate.
Motion agreed to and the House went into committee, Mr. Marcil (Bonaventure) in the chair.


Arthur Meighen: The minister might advise us as to the terms of the convention. If it is not too long I think it should be read and inscribed in Hansard, and if it is too long the
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minister should say whether it has any other contents except those embodied in the resolution.


James Murdock: The object of this draft convention is merely to prohibit the employment of children under the age of fourteen years on vessels engaged in maritime navigation. The provincial school laws in Canada provide for the attendance of youths at school; the factory acts of the several provinces prohibit the employment of children under fourteen in industrial establishments; but there is no provision in the Canada Shipping Act which specifically forbids the employment of children under fourteen, and as it is doubtful if any youths under this age are employed on seagoing vessels from Canadian ports, it was thought that the proposal involved in the draft convention would be regarded as non-contentious. The draft convention has been ratified by Great Britain, Sweden, Roumania, Bulgaria and Esthonia. Ratification has been authorized by Denmark, Finland, Italy, Japan, Holland and Poland. Bills, and so forth, looking to ratification are pending in Spain, Belgium, Germany, Argentine, Chile, Cuba and Lithuania. Legislation has also been adopted on the subject in Norway and is in preparation in India.


Arthur Meighen: What have the other
dominions done in the matter?


James Murdock: We have no record of any definite action having been taken by the other dominions.


Arthur Meighen: Of course the United
States is not a party?


James Murdock: No.


Arthur Meighen: Has the United States any law on the subject?


James Murdock: Yes, I understand that they have a law dealing with the same question. I have not a copy of it with me.


Arthur Meighen: Does the minister know from recollection what its effect is?


James Murdock: Its effect is intended to be to prevent the employment of children at sea under fourteen years of age.


William Irvine: Will this law apply to shipping on the Great Lakes?


James Murdock: The intention is to incorporate it into the Canada Shipping Act, and it would apply wherever the Canada Shipping Act applies.


William Irvine: Does the Canada Shipping Act apply to the Great Lakes?


James Murdock: Yes.


Mr. CARROLL:: With reference to the last two lines of the resolution-
The act shall not apply where .... the child was lawfully employed at the commencement of the act.
Is there any law at present against the employment of children at sea under fourteen years of age?


James Murdock: No, I think not.


William F. Carroll: So that any child employed at the commencement of this act would be legally employed?


James Murdock: Yes.


Arthur Meighen: Is it in accordance with the terms of the original convention that there should be an exception in the case of children now employed under fourteen? It would seem to be an unjust exception.


James Murdock: The intent is that no prosecution shall be taken where, upon the coming into force of this act, certain children are at that time so employed. Of course, later there would have to be a compliance with this law.


Arthur Meighen: That is the point I am raising. Suppose a child twelve years of age is employed at sea at the time of the coming into effect of this act; can that child continue so to be employed?


James Murdock: I understand not. That is not the intent.


Mr. MANION:: The resolution states:
That it is expedient to bring in a measure to confirm a certaiin convention relating to the employment of children at sea.
I do not think the minister was very definite in stating that the act would apply to the Great Lakes. It is important to make sure of that, because it would be rather strange to apply the law to ships at sea and not to ships on the Great Lakes. When we are passing a law of this kind we should make it uniform for Canada.


James Murdock: The purpose is to incorporate the subject matter of this resolution and of three other resolutions that will be before us for consideration into the Canada Shipping Act, so that it will apply where the Canada Shipping Act applies, which would be, as I understand it, on the Great Lakes as well as on the ocean coasts.


Arthur Meighen: I would ask the minister before he brings in the bill to pay special attention to the point raised by the hon. member (Mr. Carroll), because as this reads it seems to make an exception of any case where

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a child is employed at the time of the coming into effect of the act and to provide that the continuation of that employment shall not be an offence.


Mr. HUGHES:: The resolution also provides :
This act shall not apply where all the crew are members of-the same family.
In some cases the captain takes his own son with him as a cabin boy, and I do not think that is objectionable, for a part of the year at all events. Perhaps the intention is to train him up and make him a seafaring man later on, and it is a very good training. There might be only one member of the family on board, the captain's own son.


Mr. MARTELL:: That is a detail of the bill.


James Joseph Hughes: Yes. but it is in the resolution and it may be well to call the minister's attention to it now.
Resolution reported, read the second time and concurred in. Mr. Murdock thereupon moved for leave to introduce Bill No. 214, to carry out a certain Convention relating to the Employment of Children at Sea.
Motion agreed to and bill read the first time.



STOKERS AND TRIMMERS-AGE

[Stage Direction]
Hon. JAMES MURDOCK (Minister of Labour) moved that the House go into committee to consider the following proposed resolution:
Resolved, That it is expedient to bring in a measure to confirm a certain draft convention fixing the minimum age for the admission of young persons to employment as trimmers or stokers, adopted at Geneva on the 11th day of November, 1921, by a General Conference of the International Labour Organization of the League of Nations; to provide that any persons under the age of 18 years shall not be employed or work as trimmers or stokers on vessels engaged in maritime navigation excluding ships of war, vessels mainly propelled by other means than steam, and school ships or training ships.
Motion agreed to and the House went into committee, Mr. Marcil in the chair.
William Irvine: I would like to ask the
minister if he would be willing to modify the resolution slightly so as to include ships of war as well as merchant ships.


James Murdock: I might be perfectly willing to do so but I do not think we could undertake to include that modification here. The draft convention which we are now undertaking to ratify did not take into consideration ships of war, and I fear that if that point was insisted upon the whole matter, so far as our ratification is concerned, would fall.


Mr. HOEY:: Canada was represented at the conference, of course?


James Murdock: Yes.


William Irvine: I see the point the minister brings out, but I do not see why those who are recommending this convention would object to our carrying out the principle underlying their recommendation a little further than they/ went themselves. I think they ought to be grateful to us.


James Murdock: I am not disagreeing with my hon. friend on that point.


Mr. GARLAND (Bow River):: Is there any valid reason why Canada should not take an independent position in this matter? We could agree with the convention as far as it goes and the general principle underlying it will oe embodied in the bill subsequently to be brought down; but speaking for Canada, and certainly we have that right, we could exempt Canadian children from serving on board ships of war.


James Murdock: My understanding is
that we would not be considered as ratifying the convention unless we ratified it in the specific terms in which it came to us from the International Labour Conference where it was adopted. On several questions, for instance on the eight-hour day, there has been a disposition on the part of some countries to adopt regulations varying somewhat from the convention that emanated from the first Washington Conference, and the result is that no action has been taken. So, if Canada is to be regarded as ratifying this convention as it came to us from the International Labour Conference of 1920, it has to be done in the specific terms in which it came to us as well as to other countries.


Andrew Ross McMaster: I would point out to
the hon. member for Bow River that what he desires could be readily accomplished by the government just declining to hire as stokers and trimmers on our ships of war any people under the age of eighteen.


William Irvine: I might point out, for the
information of the hon. member for Brome (Mr. McMafeter) that the government could achieve the same purpose by simply resolving not to allow anybody to hire anybody on other ships, without any regulations at all.


Edward Joseph Garland: I think
I see a glint of sympathy in the eye of the Minister of Labour. I would therefore ask him to consider favourably the introduction of a bill, separate and distinct from the one in which we shall be ratifying this convention, which will set forth the ideas that I think we mutually have in mind.

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Robert James Manion: I would ask the minister
what is meant by "trimmers" in the resolution.


James Murdock: It is not the minister's
term, but the minister would understand that a trimmer was in effect a coal passer, one who passes the coal up to the stoker.


Robert James Manion: I took it that it had
something to do with the stoking, but in order to avoid complications I would point out that the term "trimmer" is used on the Great Lakes to designate the men who are handling the grain when trimming the ship. We had better avoid mixing terms, and it is a fact that wherever grain is being handled from the elevators to the boats, there are large gangs of men who are hired as trimmers to level the grain and thereby trim the ship.


Arthur Meighen: I would suggest to hon. gentlemen to my left that they need not exercise themselves too much about trimmers on our war vessels. They may have some on board under eighteen years of age, but they cannot get very many, and it may be possibly nobody over that age could get on. The real point, surely, is this: War vessels are all owned by the states who are parties to this treaty. Consequently, it is in the power of the government itself to do just what it considers right, and no matter what the law, no government and no people are going to permit themselves to be annihilated rather than put on a boy under eighteen as a trimmer. There is not going to be anybody put on unless under sheer and dire necessity any way.


George Perry Graham: They might be drafted.


Arthur Meighen: I do not think the
point of my hon. friend has any great force. Why is it these conventions are only coming down now for ratification? They are three and four years old.


James Murdock: These matters were not dealt with before this government came into office.


Arthur Meighen: The convention was
only entered into at Geneva in November, 1921.


James Murdock: The subject matter of
this .particular convention was dealt with at the 1920 session of the International Labour Conference.


Arthur Meighen: In 1921, it says.


James Murdock: It was originally dealt with in 1920 but was finally adopted in 1921.


Arthur Meighen: I was just wondering
what reason there was for the delay. Is there any reason except that other countries did not follow the matter up?


James Murdock: One reason is that for
five weeks hon. gentlemen opposite were greatly concerned about the honour and dignity of parliament.


Arthur Meighen: I think there is a better explanation, although I really do not know what it is. Is it because we were waiting for other countries to take action? That might be a very good reason for the delay.


James Murdock: No, that is not the reason. As a matter of fact these conventions do not affect Canada to any great extent. Canada, I think, without very much discussion adheres to the principles that are laid down in all these four resolutions. The object is to give ratification to this convention as soon as possible and thus comply with the desire of the League of Nations and the International Labour Conference. The matter was not reached until the present session of parliament! that is the only reason for the delay.
Resolution reported, read the second time and concurred in. Mr. Murdock thereupon moved for leave to introduce Bill No. 215, to amend the Canada Shipping Act, to give effect to certain Draft Conventions adopted by a General Conference of the International Labour Organization of the League of Nations.
Motion agreed to and bill read the first time.



EMPLOYMENT OF CHILDREN AT SEA-MEDICAL EXAMINATION

[Stage Direction]
Hon. JAMES MURDOCK (Minister of Labour) moved that the House go into committee to consider the following proposed resolution:
Resolved, That it is expedient to bring in a measure to confirm a certain Draft Convention concerning the Compulsory Medical Examinations of Children and Young Persons Employed at Sea, adopted at Geneva on the 11th day of November, 1921, by a General Conference of the International Labour Organization of the League of Nations; to provide that the employment of any child or young person under 18 years of age on any vessel engaged in maritime navigation, other than vessels on which only members of the same family are employed, shall be conditional on the production of a medical certificate attesting fitness for such work and that the continued employment at sea of children and young persons shall be conditional on the reipetition of medical examination at intervals of not more than one year.
Motion agreed to and the House went into committee, Mr. Gordon in the chair.

League of Nations-Labour
William Irvine: I draw the minister's attention to the sentence "other than vessels on which only members of the same family are employed." It would seem to me that a family of children growing up on a vessel are just as much in need of protection as other children. What is the reason for the exemption? Is this following the wording adopted by the International Labour Conference?


James Murdock: I do not know that I
get my hon. friend's question. My understanding is that this exception is so as not to interfere with a family who are handling a sailing vessel, as a fishing boat, that might naturally be regarded as their home or regular place of residence. There is no intention of requiring compulsory medical examination within the meaning of this draft Convention under such conditions.


William Irvine: The minister's explanation
does not exactly meet the point. A boy who may be at sea on his father's boat may be in great need of medical attention.


James Murdock: A child might be in
need of medical attention on land or anywhere else, but the presumption is that if he is under his father's care he is receiving all the attention possible consistent with the conditions. This is only to prevent the hiring and the use of children other than one's own without proper medical examination, as I understand it.


Mr. ROSS (Kingston):: Is there any suggestion as to where and by whom this medical examination will be made?


James Murdock: The convention is short
and, perhaps, if I read the document it will afford hon. members the information they want:
Draft Convention Concerning the Compulsory Medical Examination of Children and Young Persons Employed at Sea.
Article 1.-For the purpose of this convention, the term "vessel" includes all ships and boats, of any nature whatsoever, engaged in maritime navigation, whether publicly or privately owned; it excludes ships of war.
Article 2.-The employment of any child or young person under eighteen years of age on any vessel, other than vessels upon which only members of the same family are employed, shall be conditional on the production of a medical certificate attesting fitness for such work, signed by a doctor who shall be approved by the competent authority.
Article 3.-The continued employment at sea of any such child or young person shall be subject to the repetition of such medical examination at intervals of not more than one year, and the production, after each such examination, of a further medical certificate
attesting fitness for such work. Should medical certificate expire in the course of the voyage it shall remain in force until the end of said voyage.
Article 4. In urgent cases, the competent authority may allow a young person below the age of eighteen years to embark without having undergone the examination provided for in Articles 2 and 3 of this convention, always provided that such an examination shall be undergone at the first port at which the vessel calls.
Article 5. Each member of the international labour organization which ratifies this convention engages to apply it to its colonies, possessions and protectorates, in accordance with the provisions of articles 421 of the Treaty of Versailles and of the corresponding articles of the other treaties of peace.


Mr. LEADER:: Is it the intention of the
government to hold more conventions in Geneva in the future?


James Murdock: My hon. friend refers to international labour conferences?


Harry Leader: Yes.


James Murdock: A conference is proceeding at the present time, and the formei Deputy Minister of Labour is one of the representatives. The probabilities are tha each year there will be one of these inter national labour conferences as provided for in the Treaty of Versailles, the treaty of peace. An attempt was made some few years ago to have a labour conference every two years instead of every year, and my personal opinion is that possibly that plan will be adopted in the near future; possibly not at this conference now going on, but at some future conference.


Harry Leader: The reason I ask the
question is that I think the minister should keep his eye on the expense sheet of the travelling expenses of these delegates to the convention. I have before me copies from the Auditor General's Report, 1922, where I find the following:
Expenses of the Hon. C. J. Doherty, Sir George Foster, and the Hon. N. W. Rowell, travelling expenses amounting to $16,409.22.
In the same report, and I presume relating to the same conference, I find an item:
Advanced to Sir Charles Gordon, $8,000; advanced to Edouard Montpetit, $8,000.


The CHAIRMAN:: I call the hon. member's attention to the fact that this debate seems to be getting into a discussion which would be proper in supply and could hardly come up on a resolution of this kind, regarding medical examination of children. I think the hon. member is getting beyond the point of relevancy.


Harry Leader: I have more to say, but
I will desist.
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James Murdock: My estimates will be up a little later and then the hon. gentleman will have a chance to discuss this question.
Resolution reported, read the second time and concurred in.



LOSS OF SHIP-UNEMPLOYMENT INDEMNITY

[Stage Direction]
Hon. JAMES MURDOCK (Minister of Labour) moved that the House go into committee to consider the following proposed resolution:
Resolved, That it is expedient to bring in a measure to confirm a certain draft convention concerning unemployment indemnity in case of loss or foundering of the ship, adopted at Genoa on the 9th day of July, 1920, by a general conference of the International labour organization of the League of Nations; and to provide that in the case of loss or foundering of any vessel the service of a seaman shall terminate before the date contemplated in the agreement, he shall be paid unemployment indemnity for the days during which he remains in fact unemployed for a period not exceeding two months.
Motion agreed to, and the House went into committee, Mr. Gordon in the chair.
James Murdock: This convention is very short, and if I read it, possibly its meaning will be clear to hon. members. It reads:
Draft Convention Concerning Unemployment Indemnity in Case of Loss or Foundering of a Ship Article 1. For the purpose of this convention the term " seamen " includes all persons employed on any vessel engaged in maritime navigation. For the purpose of this convention the term " vessel " includes all ships and boats of any nature whatsoever, engaged in maritime navigation, whether publicly or privately owned; it excludes ships of war.
Article 2. In every case of loss or foundering of any vessel, the owner or person with whom the seaman has contracted for service on board the vessel shall pay to each seaman employed thereon an indemnity against unemployment resulting from such loss or foundering.
This indemnity shall be paid for the days during which the seaman remains in fact unemployed at the same rate as the wages payable under the contract, but the total indemnity payable under this convention to any one seaman may be limited to two months' wages.
Article 3. Seamen shall have the same remedies for recovering such indemnities as they have for recovering arrears of wages earned during the service.
Article 4. Each member of the International Labour Organization which ratifies this convention engages to apply it to its colonies, protectorates and possessions which are not fully self-governing:
(a)	Except where owing to the local conditions its provisions are inapplicable; or
(b)	Subject to such modifications as may be necessary to adopt its provisions to local conditions.
Each member shall notify to the International Labour Office the action taken in respect of each of its colonies, protectorates and possessions which are not fully self-governing.


Arthur Meighen: There is a technical
point in connection with this resolution. 
Should not the word "if" be inserted in the fifth line? It says:
It is expedient to bring in a measure to confirm a certain draft convention concerning unemployment indemnity in case of loss or foundering of the ship, adopted at Genoa on the 9th day of July, 1920, by a general conference of the international labour organization of the League of Nations; and to provide that in the case of loss or foundering of any vessel the service of a seaman shall terminate before the date contemplated in the agreement, he shall be paid unemployment indemnity.
I think it should read: "if in the case of loss", and so on.


James Murdock: It will not hurt at all, but I really do not think it is necessary.


Arthur Meighen: I do not know what it
means. It provides that:
In tJho case of loss or foundering of any vessel the service of a seaman shall terminate before the date contemplated.
Why should we provide that the service shall terminate? If we pass the resolution as it is we are providing that the service shall terminate, and we do not want to do that. We want ito provide that if the service terminates at such a time then the men shall be paid.


James Murdock: I think my right hon.
friend is right.


Arthur Meighen: It is clear that this is
intended merely to impose an obligation on the vessel owner; that is to say, in his contract he must provide for certain payments to be made to the (men not only for any days they may be unemployed during the term of the contract but for a maximum of two months extra in the case of the foundering of the vessel.


James Murdock: Yes, that is right.


[Stage Direction]
Amendment agreed to.
Mr. SUTHERLAND:: One of the objections I intended to raise has already been stated by the leader of the apposition. I have another reason for objecting ito the resolution however; it seems to me that every provision is being made for the seamen and none whatever for the person who may sustain considerable loss through the foundering of his vessel. The vessel owner might lose his ship and be ruined, yet he becomes responsible for two months' wages to the seamen on board who survive the disaster, even although he may be utterly unable to pay them. There is too little consideration on the one hand and too much on the other.


James Murdock: Is it not reasonable
to assume that the vessel will be insured?

League of Nations-Labour


Donald Sutherland: Let us assume also
that in some cases vessels may not be insured. In any such case is the vessel owner to be responsible for the maintenance of the men for two months?


Andrew Ross McMaster: We are entitled to
take it for granted that every vessel owner will follow the usual practice and have his vessel insured.


Mr. WHITE:: How many nations have
adopted similar legislation?


James Murdock: So far the convention
has been ratified only by Bulgaria and Esthonia. Ratification has been authorized by Great Britain, Italy, Holland and Poland. The necessary procedure has been set in motion for ratification in Belgium, Denmark, France, Germany, Spain, Lithuania, Cuba, the Argentine Republic and Chile. Legislation on the subject has also been introduced in Norway.


Richard Smeaton White: Apparently, then, this legislation, in the course of four years, although contemplated by all these countries, has been adopted only by two small nations. What is the attitude of the United States to a regulation of this kind, which might seriously add to the cost of shipping?


James Murdock: The United States is not a member of the League of Nations and therefore does not hold membership in the international labour organization. I think however that its shipping laws in respect of the matters covered in these resolutions are about on the same basis as the legislation we now propose. One of the reasons why this matter has not been pressed before is Canada's reluctance to precede Great Britain in regard to such questions. I believe that only in one of the four instances we have under consideration this afternoon has Great Britain actually ratified the legislation, but in the other cases, as in this, ratification has been authorized. Of course, it will be some time before we reach the point of ratification even although these resolutions become effective in the shape of bills; there is a certain necessary form of procedure for the purpose and it has not been thought proper to try to get ahead of the Mother Country in ratifying these conventions.


Donald Sutherland: My hon. friend
opposite (Mr. McMaster) assumes that all vessels would be insured, but there are a great many small boats on the lakes and elsewhere which, I can quite understand, might not be insured at all. In some cases the insurance might lapse through some oversight,
or the owner might not be in a position to get insurance. Are we to make that owner responsible for two months' wages for the survivors of a wreck notwithstanding an entire loss on his own part? Surely the men might be expected to find employment in some other capacity within a short time after the loss of the vessel. I do not think that the fact that Bulgaria and Esthonia, two small nations, have so far adopted similar legislation is sufficient warranty for this parliament passing this law at the present time. I think we could very well allow the matter to stand for a while and see whether the other nations are going to pass this legislation. As to this resolution becoming effective when the bill is adopted by this House, it certainly will go into force when the act is signed by the Governor General, and we shall be linked up then with Bulgaria and Esthonia as three countries forming the advance guard in this matter. This legislation pays absolutely no regard to the vessel owner who might lose everything, but it makes him responsible for the maintenance of his crew after the foundering of his ship. It does not seem to be at all pressing, and in view of the stated desire of the government to get through with the work of the session as soon as possible I do not think that any serious hardship will ensue if the matter is deferred for another year, or not passed at all.


Mr. McBRIDE:: It is not often that the hon. gentleman (Mr. Sutherland) and I agree, but I am in sympathy with the statement he has'made; this legislation is not called for. I can remember an incident that occurred on the Pacific coast a little over a year ago. A widow owned a steamer which was not insured and which was lost; and that steamer was all that she had. Why should the crew be enabled to sue her for wages for two months while they go about idle? I repeat, the legislation is entirely uncalled for. Thirty days is about the limit of compensation a man can claim who is dismissed in ordinary occupations, why give seamen sixty days? Are they going to be a privileged class of people in this country?
Mr. MURDO'OK:	My hon. friend must
remember that two months is not the minimum but the maximum.


Thomas George McBride: The minister may rest
assured that the maximum will be claimed every time.


James Murdock: Let us take the case suggested by the hon. member for South Oxford (Mr. Stuherland), of a vessel foundering on any of the lakes. Is it reasonable to
League of Nations-Labour

suppose that a seaman in that case could claim wages for sixty days? That seems to me to be far-fetched, because that man could easily get around to his home in a couple of days. Sixty days is the maximum and it is intended to apply in the case of seamen who are shipwrecked at a considerable distance from home, perhaps a thousand miles or so; the provision is that such a man should be paid two months' wages to enable him to return home if he is unemployed.


Andrew Ross McMaster: I do not think the
committee need feel that sailors are going to be a privileged class. They are away from home most of the time, they are not present to urge their claims upon members of parliament and other public men, and therefore I think it behooves legislators to look after their interests. It seems to me that this is a very reasonable provision. The case cited by the hon. member for South Oxford (Mr. Sutherland) is, I think, a very extreme one, as the Minister of Labour has pointed out. The object of the convention seems very clear and plain. Sailors may be wrecked some distance from home before their agreement is up, and in that case the steamship owner, who as a rule will be insured, will be responsible for the unemployment indemnity, not exceeding two months. It is true, as pointed out by the hon. member for Cariboo (Mr. McBride), that there may be such a case as he brought before the House, of a widow woman, a ship owner, whose ship was lost and was not insured. But I think that will be found to be the exception, for it is one of the primary canons of the shipping business to have vessels insured. It is only the very largest steamship lines that carry their own insurance. I think it will be found that a very large proportion of the world's shipping is insured, as it should be. Insurance facilities are such that every reasonably practical vessel owner will have his ship insured against this contingent liability. This convention has been arrived at after careful consideration by all interested parties, and it behooves us to follow it. The argument has been brought forward that only two small nations have actually ratified the legislation. Well, the leader of the Conservative party (Mr. Meighen) stated in the House fhe other day that "Canada should lead the way." I forget exactly in what connection he made that statement, but it expresses an excellent sentiment-a sentiment that should appeal to all of us on Dominion Day.


Arthur Meighen: I used the expression in relation to the attitude of the dominions in Empire affairs, that Canada being first and

largest should lead. I do not take broad exception to the views expressed by the member for Brome (Mr. McMaster), but I really have not the same conception of the meaning of the clause that the Minister of Labour has, if I understood him rightly. He emphasized the fact that this is the maximun.


Andrew Ross McMaster: Not exceeding two
months.


Arthur Meighen: Yes. But the effect is
this, that the sailor every time, providing his own master cannot take him on again within the period before the two months expire, can always claim the whole two months' 'indemnity. I think the member for South Oxford (Mr. Sutherland) is right in that respect.


Andrew Ross McMaster: It is not likely that the sailor will be so unfortunate as to be subject to constant founderings of his ship.


Arthur Meighen: The member has missed
the point. The maximum has this effect in all cases of foundering, that unless the master of the ship can get his vessel back into service again before the two months expire, he would be compelled to pay right to the limit of the two months.


Robert Alexander Hoey: Unless the sailor found
employment elsewhere.


Arthur Meighen: The sailor has no incentive to find employment elsewhere when he is paid up to the full two months anyway. That is really what is in the minds of the member for Cariboo and the member for South Oxford.


Andrew Ross McMaster: It seems to me that
this will happen-either he will be wrecked near his home, where it is to be presumed he will be able to find employment again; or if he is wrecked away from home it will be natural for him to take service in the ship that first presents itself giving him reasonably attractive opportunities of service. I think the objections raised to this convention are not serious; there is of course something to be said on the other side, but it seems to me that the object of the legislation will appeal to everybody, namely, not to allow a sailor who has been wrecked some distance from home to be stranded without some resource that he can call upon.


James Murdock: This convention was
adopted at the International Labour Conference of 1920 without a dissenting voice from the representatives of any nation, from any of the employers' representatives, from any of the employees' representatives, Mr. Thomas

League of Nations-Labour
Robb, manager of the Shipping Federation of Canada, was the employers' representative at that conference, he also agreed to the convention.


Donald Sutherland: That being the case, how is it that only those two small nations have ratified?


James Murdock: For the same reason, I think, that we have not ratified it, there is nothing so very pressing and urgent as to necessitate its immediate ratification. But when we are in the position of giving effect to some of the conventions that emanated from the International Labour Conference, it appeared to be reasonable to couple up these four resolutions so as to incorporate them in the Canada Shipping Act at one and the same time. Practically the conditions proposed are in effect now, except this one, and I have not heard any complaint in this respect. But it is merely a question of proceeding not too hurriedly but in an orderly way to give effect to some of these conventions, if we can, because my hon. friend from South Oxford knows that at times questions are asked, such as: Why has Canada not given effect to some of the conventions emanating from the International Labour Conference? We are trying to do so on matters that are not seriously handicapping to Canada and are not of very serious moment to Canadians, but which will show that we are at least ready to take a step in the right direction.


Thomas George McBride: Would this act apply to coastwise shipping or only to ocean-going vessels?


James Murdock: My understanding is that should this be incorporated in the Canada Shipping Act it would apply only to such vessels as come within the provisions of that act. I am of opinion that the widow's vessel which my hon. friend referred to a short time ago would not be covered by this convention because it would not be of sufficient tonnage.


Thomas George McBride: But I want to know definitely whether this applies to coastwise shipping or only to ocean-going vessels.


William Irvine: I would suggest that it
ought to apply to coastwise shipping.


James Murdock: It applies to all shipping that is covered by the Canada Shipping Act.


Henry Lumley Drayton: I should think the question was covered by the former answer of the Minister of Labour, that he thought the convention covered lake shipping. If that be the case, it is perfectly obvious that coastal shipping is also covered by this convention.


Mr. NEILL:: No doubt the Canada Shipping Act does apply to coastwise shipping. But in that case the principal complaint of the hon. member for South Oxford will disappear because men on coastal boats-and I presume on lake boats also-are paid by the month. Therefore in the event of their ship being wrecked they would get a month's notice, and consequently their unemployment payment would not extend beyond that period, because the resolution provides:
That if in the case of loss or foundering of any vessel the service of a seaman shall terminate before the date contemplated in the agreement.
The owner of the coastwise vessel would therefore be liable only for a month's indemnity.


Donald Sutherland: I am inclined to
think, if that is the case, that even though the seamen were employed monthly they would be entitled to two months' indemnity. The Minister of Labour himself admits that inside of two days a sailor on the Great Lakes ought to be able to obtain other employment. I cannot see the wisdom of providing two months' holidays for any one who sees fit to take advantage of this legislation. If the bill goes into effect, as stated by the hon. member (Mr. McBride) it wall enable men employed monthly to draw two months' salary after a wreck takes place.


James Murdock: I suppose they will get
wrecked regularly in order to get some easy money.


Donald Sutherland: I can imagine the
hon. member for Brome as the advance agent for the insurance companies when he points out that the large steamship companies carry their own insurance.


Andrew Ross McMaster: I said only the largest, and I think I am right.


Donald Sutherland: Only the largest
carry their own insurance. Well, if the large owners can carry their own insurance surely the same thing should not be denied the smaller owners.


Andrew Ross McMaster: The large companies
have enough ships to ensure that the law of average shall apply, and they can carry their own risks, and sometimes do with safety. The small owner who owns only one or two ships cannot afford to run the risk, so he has to pay an insurance premium to cover the risk. I submit that the legislation sought is highly proper and highly desirable. Surely no one in this House wishes to deprive a sailor who is wrecked of a chance of being protected in his livelihood for a maximum
League oj Nations-Labour

of sixty days. If some vessel owners do not insure their vessels, this is an added reason why they should. If it induces them to insure where otherwise they would not, then we are conferring a benefit, not imposing a hardship upon them.


Mr. CALDWELL:: The inference seems
to be that the vessel owner who is insured loses nothing if he loses his vessel. It is well known, however, that you cannot insure a building or a vessel or anything else on the basis of its full value, so that in addition to the amount paid in premiums, which has to be added to overhead, the owner is possibly out the equivalent of one-third the cost of his vessel. I cannot help agreeing with the hon. member for South Oxford (Mr. Sutherland) and the hon. member for Cariboo (Mr. McBride) that the time is too long. As I understand it, even if a man is employed by the month, if his employment ceases before the end of the month he can still claim two months' pay.


Andrew Ross McMaster: I think he can, if he is actually out of work. The sailor as a rule is not the most provident of men; he has not made savings; and he is doing some of the most hazardous and necessary work of the world, exposing his health and very life in the service of humanity. Surely he is entitled to get sixty days' unemployment insurance at the expense of the owner if he is out of a job for that length of time. I think we are balking over something which really ought to appeal to all of us.


Thomas George McBride: All I can say is that the
hon. member (Mr. McMaster) does not know what he is talking about. If he was in the shipping business for some time he would think differently. I have had a good deal to do with sailors. I have been a sailor myself, and I say that the sailor often has a mighty good time when out at sea, much easier than he would have if he were working on a farm.
I think the period should be cut down to thirty days.


James Murdock: Can we not deal with
this matter when the bill is taken up?


William Irvine: I have no doubt that if the hon. member (Mr. McMaster) were a ship owner he would not say what he has just said.


Andrew Ross McMaster: Now, why impute such unworthy motives?


William Irvine: I am agreeing with what
my hon. friend has just said.


Andrew Ross McMaster: There is no reason to
be wrong just in order to be polite.


William Irvine: I am not sure I am wrong
in coming to that conclusion, because naturally in that position my hon. friend would be looking after his own personal interests. But a ship may be wrecked through the carelessness of the owner, who may not have attended to the vessel or kept it in proper condition. Further, when the sailor is wrecked he may lose all his clothing, all his belongings, in fact, and be set ashore with nothing but what he is walking in. I think that the resolution ought to pass without further discussion.


Donald Sutherland: The minister has
pointed out that this legislation is not urgent. In view of the fact that we are in the month of July and that the session will in all probability run for a considerable time yet I must protest against the introduction of legislation at this time that is not urgent. Not only that, but it is another form of this nursing legislation that we are continually passing, making people do something that the government should not interfere in at all. We are continually passing restrictions and regulations, a little here and a little there as to how people shall carry on their business,-* in other words, putting a premium on laziness and inefficiency and a penalty on enterprise and energy.


Mr. BANCROFT:: Is the hon. member
referring to protection or to this bill?


Donald Sutherland: Only the other day a measure was introduced by the Minister of Justice (Mr. Lapointe) to enable lawyers to charge about three times what they had been charging for entering notices of protest. These are some of the things that tend to bring law into contempt, in this country. The hon. member (Mr. McMaster) has referred to our passing legislation of this kind on Dominion Day. It is an unjustifiable offence that this parliament should be in session on our great national holiday, when we ought to be doing something towards the development of a national spirit in our people instead of dealing with trifling legislation of this kind for which the minister says there is not the least urgency. So far only two countries, Bulgaria and Esthonia, have passed legislation in accordance with the draft convention of the 1920 conference. That was four years ago. Yet on Dominion Day this House must sit to deal with a trifling resolutions of this kind to suit the Minister of Labour.
Resolution reported, read the second time and concurred in. Mr. Murdock thereupon moved for leave to introduce Bill No. 216,

Refunding Loan
to amend the Canada Shipping Act to give effect to certain draft conventions adopted by the International Labour Conference of the League of Nations.
Motion agreed to and bill read the first time.


Eight Hon. W. L. MACKENZIE KING (Prime Minister):: Mr. Speaker, the bill
which has just received its first reading includes, I understand, all the provisions based on the first two resolutions we have passed. Bills were introduced by error with respect to the first two resolutions, and I therefore move, seconded by Mr. Murdock:
That the first readings of Bills Nos. 214 and 215 based on the resolutions adopted in committee of the Whole this day and standing as Nos. 31 and 37 of the Orders of the Day be rescinded.


[Stage Direction]
Motion agreed to.

[Stage Direction]
Hon. J. A. ROBB (Acting Minister of Finance) moved that the House go into committee to consider the following proposed resolution:
That it is expedient to introduce a measure to provide authority for the raising, by way of loan, under the provisions of the Consolidated Revenue and Audit Act, by the issue and sale or pledge of securities of Canada, in such form, for such separate sums, at such rate of interest and upon such other terms and conditions as the Governor in Council may approve, such sum or sums of money as may be required, but not to exceed in the whole the sum of three hundred million dollars, for paying maturing loans and obligations of Canada, and to provide that the principal so raised by way of loan and the interest thereon shall be a charge upon and payable out of the consolidated revenue fund.
He said:	Mr. Speaker, this is the usual
method when the government requires authority to take care of maturing obligations or to provide for new obligations. This is entirely to take care of maturing obligations up to and including 1927. The situation is this. On 1st November, 1924, we have $107,955,650 of the 1919 victory loan falling due. In 1922, the Minister of Finance (Mr. Fielding) introduced a bill which was passed, authorizing the raising of loans up to $350,000,000 for refunding purposes. The renewal loan of 1922 was for $114,464,150. The refunding loan of 1923 was for $200,000,000. This leaves a borrowing power from the 1922 bill still available of $35,535,850. The purpose of this bill is to provide borrowing powers in the future for maturing loans and obligations.
I will give hon. gentlemen the maturing loans and obligations for the next three years.
On 1st November, 1924, there is due a victory loan of $107,955,650; and in October and November, 1924, outstanding treasury bills going back to the war date amounting to $4,680,000; §41,060,000; $19,325,000; $26,250,000.
Arthur Meighen: When were those issued?


James Alexander Robb: They are treasury bills issued
during the war period. They have been renewed from time to time, as my hon. friend will recall. Then, on May 1, 1925, we have a bond issue due in London of $24,333,333.33.


Arthur Meighen: What is the total of the treasury bills?


James Alexander Robb: Calculating it at the moment, they amount to over $91,000,000. In 1925 there is maturing on 1st May, $24,333,333.33; on 1st July, $60,800; and on 1st December, -this is the war loan of 1915-$42,014,500. In 1926 we have maturing on 1st April, $25,000,000; on 1st November, 1927, $29,068,400; and on 1st December, $63,437,250. The total is $382,184,933.33. We are asking for authority in this resolution to take care of these maturing obligations.
Motion agreed to and the House went into committee, Mr. Gordon in the chair.


Mr. MACLEAN (York):: What official of
the government keeps a record of the public debt, and what sort of ledger is it kept in?
I would like to have a little information about that, having in view that the time may soon arrive when we could have a better consolidation of our public debt, and on a broader plan than has been pursued in the past.


James Alexander Robb: The Chief Accountant is Mr. Macfarlane, in the Department of Finance. That is all under the administration of the Deputy Minister of Finance. I quite agree with my hon. friend that we should look forward to the time wThen the interest rate may become so favourable that we might consolidate our debt obligations.


William Findlay Maclean: Have you that
always in view? Hitherto it seems-I know very little about it-that a rather slipshod practice has been followed. There ought to be a broad policy in dealing with the national debt. There ought to be a ledger showing the national debt and the due dates. I do not believe any member of this House ever saw that ledger; I do not know whether there is one or not; I do not know whether anybody has ever seen the diary in which these due dates are entered. Somehow I have the impression that there ought to be a better
Refunding Loan

organization for dealing with this question, and it may come up in this House this week. The time will come when there should be a reorganization of the Finance department with a responsible officer at the head, with the present branches of the department consolidated under one high official of the government, say a Comptroller of the Currency, or an officer of that kind.


Mr. SPENCE:: Where does the minister
intend to float this loan?


James Alexander Robb: In the best market available.


Arthur Meighen: The minister should not answer the question that way. What is in his mind as to the best policy, whether to endeavour to float in Canada or out of Canada; and if out of Canada, whether in England or the United States? The main question, though, of interest for hon. members is whether the minister really contemplates a domestic loan or not.


James Alexander Robb: I propose to get the money wherever it can be procured to the best advantage of the taxpayers of Canada.


Arthur Meighen: What is the minister's idea?


James Alexander Robb: We will have to look into
that. There will be lots of time between now and November to study the condition of the money market.


Arthur Meighen: I do not think it is a matter of the market at all; it is a matter of policy. There are different opinions as to the wisdom of floating a loan in Canada or in other countries.


James Alexander Robb: I should like to have my right hon. friend's views right now. I am looking for advice on the subject.


Arthur Meighen: Your right hon. friend does not pretend to be much of a financier. His opportunities of learning from this government in that respect have not been very great; but I am sure we will be enlightened by the minister's experience in the last year. What is the minister's view on the subject?


James Alexander Robb: I have just given my views. Now I am looking for advice. I agree with my right hon. friend. There are people who come to you and say you should float this loan in Canada; and there are others who say you should get more new money into the country. I have not been able to make up my mind on the subject.


William Findlay Maclean: My suggestion is that the Acting Minister of Finance should take up in a broad way the question of the public debt of Canada-that is to consolidate the debt and perhaps get money at a lower rate of interest than has been possible in the last thirty years. To-day in New York money is at a lower rate than it has been for many years, and if we approach the question in the broad way I have indicated the results may be most advantageous to Canada. If this question is discussed as it should be the minister may get valuable suggestions even from hon. members on this side; the subject is worthy of adequate discussion and the getting of full information in regard to it. It would certainly appear to be the proper time to consolidate the public debt when the rate of interest in New York is as low as it is to-day. Let us take a broad view of the question and see if we cannot save some of the money we now pay in our annual interest charges.


David Spence: I do not see why the minister does not welcome expressions of opinion as to whether this loan should be floated in Canada or in some other country. My own opinion is that we have floated too many loans in this country; and if we now place another loan of three hundred millions in Canada it will tie up money that would serve to keep the wheels of industry rolling. There is too much money locked up as it is, and people are finding it hard to collect their accounts. If the minister insists on raising this loan in Canada there will be no money available for commercial or industrial purposes. If you go to a bank to-day you cannot get money; you are told it is all tied up in victory bonds or other war loans, and if you are now going to float another three hundred million loan you are only going to aggravate the situation.


James Alexander Robb: Oh, no.


David Spence: That is the intention, I understand.


James Alexander Robb: That is a misunderstanding. This is to take care of bonds that are now outstanding, of loans that were floated in Canada by the government which my hon. friend supported.


David Spence: I am opposed to such a policy. I do not see how you are going to raise such a loan and pay 5 or 5i per cent.
I understand that money is available in New York at 3 or 3J per cent. It is much better to get the money there than to raise a loan in this country.


James Alexander Robb: I cannot raise a loan anywhere until this bill goes through.

Refunding Loan


David Spence: The minister ought to be frank enough to give the committee some information as to what he is going to do in this matter.


James Alexander Robb: Perhaps my hon. friend was out when I made the statement a few moments ago that I am going to raise the money in the best market available.


Arthur Meighen: Is the minister going to get the money in the cheapest market-that is taking into account the cost of commissions and so forth-or is he going to raise the loan irrespective of general economic considerations?


Herbert Meredith Marler: The question raised by the right hon. leader of the opposition and the hon. memiber for Parkdale is a very important question indeed, one which I think is sometimes lost sight of in general policies of government. In the past we have been frequently told that the raising of money by way of a loan in Canada is the best thing to do. We have also 'been told on many an occasion that owning our own debt is a very excellent thing for the people of this country.
I must say that I have not particularly shared that view at all. I think it is very much better, if it is possible to do so on similar terms or nearly similar terms even, to borrow the money by way of external loan and bring that money into the country. It is a question of policy. It is also a question of negotiation, but there is a very important question of policy involved in the floating of any loan by Canada-as to whether that loan should foe an internal loan or whether it should be an external loan. The reason- and it is seen on all sides by those who are interested in industrial concerns, by those interested in securing money by way of mortgage and other matters of that description-is that these loans, floated in Canada as they are and as they have been to a very large extent in the past, simply make the money market in Canada exceedingly tight and, if anything, instead of depreciating really increase the rate of interest. I know very well what has happened in Montreal in connection with financial matters. By reason of victory loans and other loans floated in Montreal it is exceedingly hard at the present time on certain occasions to get mortgage money at a reasonable rate of interest and this applies to city property and to country property also. The taking of more money out of the banks and the savings of the people for the purpose of floating these internal loans means that the rate of interest for mortgage money and other investments is 245
bound to keep up. I am glad to have had this opportunity of impressing the importance of this question upon the House. I agree with the leader of the opposition that it is a very distinct question of policy on the part of the government, as to whether these loans shall be floated internally or externally.


Andrew Ross McMaster: It seems to me that
the Acting Minister of Finance is eminently wise in refusing to commit himself as to what policy he will follow four months hence.


Herbert Meredith Marler: No one is asking him
to commit himself if I may contradict my hon. friend.


Andrew Ross McMaster: I do not know that I
was saying anything which traversed in any way the observations of previous speakers. I was, for what it was worth, giving my feeble support to the cautious, I might almost say the Scottish attitude taken by the Acting Minister of Finance. It is a question of policy, it is a question of the rate of interest.
I conceive it to be quite possible for the minister to imagine that he would follow one line of policy and then, after a very considerable lowering of an interest rate in one of the great money markets of the world, consider himself justified in making a change and placing his loan somewhere else. It does seem to me that it would be unwise for the minister to declare here and now: I am going to try and raise this money in London, or 1 am going to try and raise this money in New York, or I am going to try and raise it by domestic loan. It is a policy which has to be determined upon by the actual conditions of the money market here and elsewhere, as well as other business considerations at the time the advance has to be actually obtained.


Herbert Meredith Marler: Quite true.


Arthur Meighen: No doubt that is very
wise but it does not preclude the minister from giving his own views just as has been done by the hon. member for St. Lawrence and St. George (Mr. Marler). That is all anybody has been trying to get him to do. I repeat that while I have not had much experience as a financier the minister is having quite a lot, and if this government keeps up its present rate of expenditure we shall have a lot more in the borrowing of money.


James Alexander Robb: So far we are only taking care of the ddbt that was incurred by my right hon. friend and his colleagues.

Refunding Loan


Arthur Meighen: Has the minister considered taking care of it by guaranteeing the bonds of the National Railways? In that way he would not add to the national debt at all. It is true it is a debt incurred in our time but it was handled and financed properly. Under similar conditions I would strongly advise the minister to adopt our method, to adopt the method of domestic loan. At that time there was sufficient money for all legitimate purposes in Canada. There was courage and confidence, and business was buoyant and expanding. Conditions to-day are entirely different. It is difficult to get money for industrial enterprises in this Dominion, and under such circumstances it seems the minister should give great weight to the consideration advanced by the hon. member for St. Lawrence-St. George. To further drain the supply of capital in Canada would, in my opinion, be doubtful wisdom. Of course conditions may improve in the next six months, but conditions at present are not at all exhilarating. I think when the minister has to face similar conditions at a future time he would be wise in my judgment to be guided by these considerations, as well as the probable fact that the money rate will be lower in other countries than it is here. It is to-day considerably lower there than it has been in the past. Advantage should be taken of it to refund all early maturing loans, but the minister cannot refund a loan until it is due.
I ask that these considerations be given such weight as the minister thinks they merit, and that he shall not merely be guided by the rate of interest here or the rate there, or the cost of getting the loan Times are very different to-day from what they were when earlier loans were incurred.


Mr. GOOD:: The discussion which has taken place so far on the item seems to take for granted that there is a more or less fixed amount of money in existence either here or in .the United States or in the world. I question whether that can be assumed; and if it is not true the discussion on both sides, on the side of those who favour getting money in the United States and on the side of those who favour getting money here is certainly, to say the least, not very illuminating. I noticed in the Ottawa Journal a few days ago a leading editorial headed, "Where better borrow", and the argument was much the same as that presented to-day. If, it says, we take three hundred million dollars out of the supply of Canadian money by floating bonds and so on, we shall have three hundred million dollars less in Canada for other purposes. If we go to the United States and get the money
	I
there we will not take it out of the Canadian supply. I want to submit to hon. members that the assumption which has been made and which underlies the argument on both sides is decidedly questionable. It is only true of such money as costs effort to produce. The argument did apply and could apply to gold, which is supposed to be the basis of most currency at the present time, but in regard to all other kinds of money which indeed constitutes the largest part of the money supply of to-day, it does not apply. To some extent it applies to paper money which is limited in its volume by the. metal basis, but it certainly does not apply to the largest volume of money which does the business to-day; that is bank credit.


Arthur Meighen: Does the hon. member argue that we have in Canada an unlimited amount of money?


William Charles Good: Yes; but that statement might be misunderstood. I am afraid it would take a long time to explain the matter fully, but I would suggest to my right hon. friend that if he analyzes the money which is in existence to-day, and which is doing the business of Canada he will find that it consists of three different parts, first gold-the gold basis, if you like-perhaps we had better restrict it to our gold basis, our standard. In addition and secondly we have token money, which consists of copper, nickel and silver coins, and paper money, both Dominion and bank notes. Thirdly we have what constitutes about ninety-five per cent of the money in use, namely bank credits.
Now in regard to the money which costs something to produce, the law of supply and demand applies, and the ordinary argument as to interest rates going up where the supply is limited and going down where
5 p.m. the supply is abundant is quite in order. But in regard to deposits subject to cheque, as my right hon. friend will find if he reads the books on the subject, the argument of supply and demand scarcely applies at all, and it seems to me that that is the point of view that has been and is being entirely lost sight of in the ordinary discussions on this subject. In regard to the money supply in Canada, I might point out to my right hon. friend and other mem-mers of the committee that as between the year 1917 and the year 1920 in Canada we brought, into existence wholly without effort and without cost, so far as the production of money was concerned, about one billion dollars.


Andrew Ross McMaster: That is one of the
reasons why prices went up.

Refunding Loan


William Charles Good: Yes. It was one of the
reasons why prices went up. I do not wish to go into the matter exhaustively. I only rise to point to the moral and to suggest the propriety of looking a little deeper into the question than we have done to-day.
There is of course this further consideration that has to be kept in mind: That there is a danger in the creation of that part of money which is known as bank credits. That process was engaged in during the war years and after the war with very distinct disadvantages and disaster to this country and to other countries. It ought to be very apparent to us, if wTe look into it, that there is no effort or cost attaching to the increase of that kind of money, and it is purdly a question of whether or not it is wise policy to deliberately write so much more money into our national money volume. It can be done without effort, has been done by our banks time and again, and is being done constantly. The banks are doing it constantly in conjunction with their customers, they are increasing or decreasing the amount of money in the country, and that has definite consequences on the price level. I would like the House to consider whether or not in these particular circumstances and under existing conditions it might not be wise to adopt an entirely different method from any that has been adopted up to the present in the funding of this debt, or in the floating of this three hundred million dollar loan. I do not know that this is the time or place to go into it in detail, but I am absolutely satisfied that there is a point of view that has so far escaped hon. members in this discussion. I think that is worth considering very seriously, and I wish to urge its very earnest and very serious consideration by hon. members of this House. I do not propose at the moment to say anything further than to emphasize the need of looking at this particular aspect of the case.


William Findlay Maclean: I would like
to make a suggestion along the line of the statement of the hon. member who has just spoken (Mr. Good). I would suggest that we have a committee of the House to deal with matters of this kind. I believe the time has come in the history of Canada when we ought to have a standing committee of this House to deal with the public debt that has been contracted, and to consider how it can best be discharged. It is pre-eminently a question of responsibility which attaches to the government and the Department of Finance to take care of the public debt and choose their own time to either pay it off 2451
or incur new obligations. I agree with what the hon. member has stated, and it has been hinted more or less that there should be a study by this House of our commitments which are existant, when they are coming due and how they might be consolidated. We have not had that in the past. It is a matter for parliament to study, but we have not come to it yet. Our obligations are getting very large, and the question of interest is one of very great concern. If we had a standing committee of the House to deal with the national debt and to investigate the situation at every session, out of the consideration of those questions by that committee there might come some suggestions which might be worthy of the attention of the Minister of Finance.


Mr. MacLEAN (Prince):: Is it a fact that Great Britain and the United States have consolidated their national debts under some co-ordinated system whereby they have a very low rate of interest? And is it not true that at the close of the war Canada could have done the same thing?


William Findlay Maclean: I am not prepared to answer that question at the moment.


David Spence: It does not matter just
how much the amount may be, but there is no doubt in my opinion that we are oversubscribed. I am interested in several little industries and I know that to-day people are sacrificing industrial bonds since they have learned that a loan is to be floated by the Dominion government. It is a fact that at the present time people are peddling industrial bonds which were considered good security some time ago; they are anxious to trade these bonds for vacant lots and every other form of tangible property that they can get hold of. That looks decidedly bad for the country, and I am afraid that if the government affords the people an opportunity of tying up much more money by offering a decent rate of interest, there will be no investments in industry at all. The money market should be left to the municipalities; but the municipal field will not be free so long as Dominion government loans are floated, because everybody will buy Dominion bonds first, and afterwards provincial and municipal bonds in that order. I have here a statement showing that Edmonton 44, per cent bonds are selling at 93.60, to mature in 1929; they have sold even as low as 90. Toronto bonds have been selling at 98.38, and Toronto Harbour bonds at 90.90. The government must realize how badly industry in this country needs money at this time, and if further funds are to be tied up in govern-
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ment bonds it will simply mean the decline of industrial activities. Dominion government loans simply encourage the people to tie up their money instead of taking a chance with others in the business world, and this can only be detrimental to the interests of the country at large.


Mr. SPENCER:: We have heard a good deal about these future loans if issued in Canada tying up money. The minister might tell us how much money is locked up in government bonds, and whether in his opinion these bonds are not excellent security for the banks. It is entirely with the banks themselves if they tie up money, because having gilt-edged security there is no reason why money should be tied up simply as the result of the floating of bonds. I want to refer to certain securities that have come to our notice in the Banking and Commerce committee. When the bankers want money they submit certain securities to the Treasury Board, amongst which are Dominion bonds and treasury bills. Against such securities the Dominion government advances to the banks Dominion notes at 5 per cent. When the government wants money for a short time it goes to the banks and gives treasury bills as security, and I understand that the government owes to the banks to-day upwards of $90,000,000 for which it is paying 5i per cent or i of 1 per cent more than the banks pay for the money they get from the government. It is interesting to note that these same treasury bills which the government gives to the banks for a loan can, when the banks want money, be brought back to the Treasury Board and be pledged in return for Dominion notes at 5 per cent. In other words, We may call this looping the loop in finance.
I might refer the committee to a lecture given oy such an orthodox economist as Dr. Adam Shortt as far back as 1919 to the students of a college in Manitoba. On that occasion Dr. Shortt stated, what was admitted last year by bankers of eminence who appeared before the Banking committee, that whenever a loan was made from a bank it created a deposit of the same amount. It was simply a matter of the security being good enough whether the bank would lose or not. He said that in regard to government loans the same thing took place; the loan to the government by the bank creates a deposit of exactly the same amount, against which are drawn various cheques by the government to meet payments. Naturally the cheques are paid back to the bank and therefore, according to the professor, a government loan from a bank of even five, fifteen or twenty million dollars means not the

slightest strain on the entire circle ol banks and very little strain on the individual bank.
This is only following up the statement of my hon. friend (Mr. Good), who referred to so much money-95 per cent I believe-being created in this country entirely by book entries. A loan to the government by a bank is created on the assets of the country; it is a gilt-edged security and it is impossible for the bank to lose, the government having the power through taxation to pay back the loan. At the same time, for the book-keeping that is done-because that is all it is, no appreciable currency passing-we pay at the present time 5-} per cent, or } of 1 per cent more than we charge the banks for the money we give them.


William Charles Good: When I spoke first I felt under obligation to make my remarks very brief indeed, and perhaps I did not make myself quite plain. Let me add a word or two to clear up what may be somewhat obscure in the minds of some hon. gentlemen. The function of our banks to-day is to give currency to the credit of the individual or the corporation. It makes current not only the visible wealth of the country, but as well the invisible wealth in the form of human character and potential wealth as the bankers see it in the future. Banks and bankers may give currency to a larger or a smaller amount of that actual or potential wealth and in that way may increase or decrease the amount of money in the country. They may also in doing so indirectly either increase or decrease production, and that too is a very important aspect of the question. Supposing this government goes over to the United States and secures a loan there of $300,000,000. That may absorb a certain amount of the money already in the United States; if so, it absorbs a certain amount of purchasing power already in existence, and has no tendency to increase the price level. On the other hand it may simply be a book entry in the books of Morgan and Company or of some other large financial house that undertakes to float the loan, and increase by that amount the total money volume in the country. Usually such flotations do both to a certain extent. They absorb a percentage of the purchasing power already in existence and also to a certain extent result in the issuing of fresh purchasing powei or fresh money. If we are going to pay J. P. Morgan and Company 5 per cent for the money, which they create by merely writing it ;n their ledgers, I say it is a mighty big price, and we ought to know just how far that is taking place.
If we look back over the last few years we see our banks, as I have said before,

Refunding Loan
issuing nearly a billion dollars of new money.
It costs them nothing but their book-keeping expenses. They expected to collect 6, 7 and 8 per cent on that new money. They relied upon the ability, actual or potential, of the people of Canada, their customers, to pay that interest. The results are quite apparent, the process having been very damaging, but we seem not to be able to avoid it. However, Mr. Chairman, I do not want to labour the point just now. What I want to impress upon the Acting Minister of Finance and the House is that this is an aspect of the question which seems to be almost totally lost sight of. A number of economists emphasize it, Irving Fisher and others, whose books I have quoted on several occasions when addressing the House.


Andrew Ross McMaster: Does Reginald Mc-
Kenna belong to that school?


William Charles Good: I shall quote Mr. McKenna
on the subject when the occasion arises, but I do not think it is necessary to do so at the present time. He is absolutely in agreement with what-1 say in regard to the underlying principles. A perusal of the editorial in the Journal shows the popular and fallacious point of view, that we have a certain amount of money, just as we have a certain amount of wheat, and that if we buy so much of this money there is so much less left; which may or may not be true. That is something which we have to keep in mind. I am not here today to make any definite suggestion to the Acting Minister of Finance about floating this particular loan, but I think that between now and the time when he will float it he would be well advised to get in touch with somebody outside his department who knows more about the subject than his deputy does.


Robert James Manion: I must confess that I do
not quite understand the reasoning of some of my hon. friends. It certainly would appear to the ordinary man who does not pretend to be an economist at all that if the small investor puts $1,000 in a victory bond or some other loan which the Minister of Finance puts out, he cannot very well invest that money in anything else:	It is true that if a big
business man buys $50,000 worth of bonds he can and does use those bonds as collateral to borrow more money at the bank. But in view of the fact that to all government loans there are some hundreds of thousands of subscribers, most of whom are small investors, men, women and even children who invest $100, $200, $500 or $1,000, it is apparent that to that extent they tie up their capital, and therefore once the savings of the country are invested in government bonds they cannot
very well be available for investment in industrial securities, which is the point that my right hon. leader (Mr. Meighen) and the hon. member for St. Lawrence-St. George (Mr. Marler) were referring to. Undoubtedly it would not appear that one need be a specially bright economist to realize that tha1 is the actual fact, and that therefore there is a corresponding restriction of capital available for industrial and other enterprises which the country should develop.


William Charles Good: My hon. friend is quite right
in so far as that particular class of purchasing power is concerned.


Robert James Manion: And that is the large class.


William Charles Good: It may or may not be. My
hon. friend is quite right in saying that the savings of any individual or group of individuals tied up in that way is so much purchasing power tied up, and therefore it cannot go out into the market as purchasing power for other purposes. But I would again draw to his attention the fact that that is only part of the process,-if that word may be used,-by which such bonds are floated.
I may also call to his attention this further fact, which was very obvious some years ago, that after these bonds are purchased by the individual saver or investor they are used as a basis for the extension of bank credit, in other words, they are used as collateral for bank loans, and to an unknown extent.


Robert James Manion: They are by the big business man, but not by the small bondholder or stockholder, who has his small savings tied up in government bonds. A very large proportion of such small investors do not know how to use their holdings as collateral.


William Charles Good: About $1,700,000,000 worth of bonds are already outstanding in the hands of Canadians. How much is left in the hands of the small savers?


Robert James Manion: I think I am correct in
saying that some hundreds of thousands of small savers hold government bonds.


William Charles Good: Two years ago I tried to get
some definite information on this point from the Finance department but found it impossible to make even a guess yet it is asserted on all hands that during the last three years a tremendous number of our small investors, our average citizens, have had their bonds squeezed out of them, so to speak, under the stress of economic conditions; and since those bonds are not purchased by outsiders, the inference is that the large financial houses
Refunding Loan

and rich people generally of the Dominion have secured the bonds under pressure from our poorer citizens. I do not know how much they have secured. I wish I did.


Mr. CAMPBELL:: Mr. Chairman, I admit that this whole financial question is largely an enigma. I should like the Acting Minister of Finance to satisfy me on this one point: Our banks to-day are permitted to obtain Dominion notes ' against the security of government bonds. What difference would there he between this policy and the government hutting its bonds in the treasury and issuing ts own notes against them?


James Alexander Robb: That would not be very sound hanking.


Milton Neil Campbell: Why not? If it is sound for the government to do that for the banks, surely it is sound for the government to do it for itself.


James Joseph Hughes: Why not issue the money?
_ Mr. CAMPBELL:	Certainly, but I mentioned 'bonds in order to complete the analogy.


James Joseph Hughes: That would be fiat money.


Edward Joseph Garland: Not at all.


Mr. MARCIL (Bonaventure):: How much of the $300,000,000 worth of bonds referred to is held in Canada and how much is held outside?


James Alexander Robb: I could not tell my hon.
friend exactly, but I imagine that the greater part of these bonds are held in Canada.


Charles Marcil: Previous to the war it was the custom in Canada as far back as I can remember to float all our large loans on the London market. Temporary domestic loans were negotiated by the banks.
I have heard many speeches in this House in favour of the idea of placing Canadian government issues on the Canadian market, so the Canadian people would have an opportunity of investing some of their money in such loans. This was resorted to when the war came on. The bonds were placed on the market; they were taken up patriotically and at the same time proved to be a very wise investment. I know of some insurance companies who took out large blocks of these bonds running into several millions of dollars. This method of financing answered the purpose at the time, but there is no doubt that a great deal of the money of Canada is at present tied up in these loans, and what may be a good thing sometimes may not always be good if it is overdone. I think the 
minister is unable at this time to decide upon a definite policy, but he certainly should look at both sides of the question. Canadians should be given an opportunity of investing their money to a limited extent, but the interests of Canada surely require that foreign capital should be brought into the country. I know of no more fitting occasion to refer to the financial state of Canada than on this Dominion Day, the fifty-seventh anniversary of confederation. Glancing at the paper today I noticed that the net debt of Canada has risen in fifty-seven years from $70,000,000 to $2,400,000,000. It is true that the population has increased from over 3,000,000 to about 9,000,000. The newspapers are filled with the ideas of financial experts in London and elsewhere based on the suggestion that Europe can only recover its normal position when it gets back to the gold standard. Canada is practically there to-day. The Canadian dollar is slightly under 100 in the United States; therefore our financial condition should be studied very carefully in this connection.
The suggestion has been thrown^ out that this is perhaps an opportunity for the Acting Minister of Finance to see that we begin the funding of our debt, because the greatest problem we have to face is the enormous weight of debt now resting on the Canadian people. I have full confidence in the administration and in the Acting Minister of Finance that he will give this matter all the consideration it deserves and, if necessary, call in outside financial experts. That was done in the case of France and Germany, where valuable assistance was gained by calling in Mr. Dawes, an American. The Acting Minister of Finance would be well advised to see that before this question is finally dealt with a complete review is made of the financial circumstances of 'Canada with a view to seeing that while Canadians are given an opportunity to invest some of their money in the public debt of Canada, we shall not lose the opportunity which is offered of funding our debt and also of introducing foreign capital into the country.


Edward Joseph Garland: Will the
minister reply more informatively to hon. members in this corner of the House in connection with the question put by the hon. member (Mr. Campbell)? Perhaps I had better repeat it. He has asked the minister why Canada would not be in a better position if she were to finance her own fundings-we will call it that-through the issuance of Dominion bonds to its own treasury and the issue thereon of the necessary credits. The minister replied that it would be poor financing.

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James Alexander Robb: Poor banking.


Edward Joseph Garland: Poor banking? All right; I am glad the minister differentiates between poor financing and poor banking. I think there is something in that.
I would like the minister to tell us in what way it would be poor banking.


James Alexander Robb: I do not want to be discourteous to my hon. friends, but that is a subject altogether foreign to the issue now before us.
I do not propose at this stage to enter upon a discussion of the different theories of the values of money.


Edward Joseph Garland: If that is the only answer the minister has, or the only one he is willing to give, I shall have to accept it, but it is not an explanation of an exceedingly interesting and most important aspect of the financing of Dominion requirements. When a Dominion bond issue is made, say, of $100,000,000, as was done two years ago, it is sent to a bond house in the United States-in that case, the J. Pierpont Morgan firm-and they underwrite it consenting to float the issue. They hand back to Canada a credit of $97,500,000; the $2,500,000 they put in their pockets for commission and for expenses in connection with the flotation. The bonds are then sold; they are extensively taken up by large financial houses, insurance companies and banks, and no doubt, as the hon. member (Mr. Manion) would say, by some private investors also. Inevitably, under our present economic system, which is becoming increasingly severe in its pressure on the large lower strata of society, these bonds drift back into the hands of the financial interests and rich investors. I venture to say that if the figures could be accurately surveyed it would be found that 70 or 80 per cent of the bond issues of Canada are in the hands of the larger interests, not in the hands of the common people. What have we given these bond houses? What have we given to these insurance companies that hold the bonds? We have given them an asset backed by the credit of the whole of Canada, a prime asset. And what have we accepted in exchange? A,book credit, or perhaps notes-bank notes, promises to pay on the part of the banks. A bank is only part of the assets of the whole country; an insurance company is only part of the assets of the whole country. It is only an asset to the extent that it performs a service. The Dominion then has accepted an inferior asset in exchange for a prime asset, and has paid for the privilege of doing it. That is a simple statement of a theory that appeals to my imagination and to my sense of logic. The
minister answers rather indefinitely; in fact he does not answer at all. What is wrong with a system of financing that would remove this evil? Could we not save tremendously in interest charges? Surely there is sufficient sanity in our government, in our men of business, to prevent any unwise inflation. We have learned the lesson. Would the minister explain this business from his own point of view? He simply disposes of the whole thing as bad banking and lets it go at that; now, I am not content to take that answer.


Herbert Meredith Marler: My hon. friend has left out a very important step in his argument. He spoke of the Dominion going to the J. P. Morgan Company or some other banking firm and receiving a certain amount of money. He forgets that there are other obligations outstanding and maturing and that part of the money so obtained is used to retire those obligations. The money brought here is not kept in banks; the obligations outstanding are called in and paid with that money. If the hon. member intended to explain that, he did not explain it clearly.


Edward Joseph Garland: That is
simply the retirement of bonds now due.


Herbert Meredith Marler: By other creditors, not by the same creditor. There is no confusion of the same debt at all, as my hon. friend suggests. There is another debit which has to be dealt with.


Edward Joseph Garland: Well, the
suggestion is made that there should be an attempt on the part of this government to consolidate the whole national debt and fund it. Imagine that situation,-the Dominion funuing its own debt. W^ould that not remove some of the difficulty? What argument is there against that?


Herbert Meredith Marler: It would not remove it at all.


Edward Joseph Garland: I cannot see the hon. member's viewpoint. If he will deal with the point I have made and argue against it, I shall be only too pleased to listen to him.


Herbert Meredith Marler: I simply raised the point that the hon. member had not made it clear that there were other creditors outstanding who have to be satisfied. There are creditors outstanding at present who have $300,000,000 of the Dominion's obligations in their hands, and the money has to be procured to meet the demands of those creditors. Now those creditors are not the same people that the money is to be procured from at all, but a totally different set of creditors.
38S0
Refunding Loan


William Charles Good: Not necessarily.


Herbert Meredith Marler: Not necessarily, but they
are in this case. My hon. friend is pre-sup-posing an ideal case, and in the matter of debits and credits you very seldom get such a case. The minister is taking authority to borrow from someone else to pay an entirely different set of creditors; in other words, the fund procured from this new credit is to pay off an old credit. I cannot follow the argument of my hon. friend from Bow River at all.
( Mr. McMASTER:	It seems to me, Mr. Chairman, we are quite beside the point, but the discussion is so interesting I beg the indulgence of the House just for a moment in order to make some observations concerning it. What .the hon. member for Bow River asks the Finance Minister of this country is this:	"iou have a country here with enormous potentialities and enormous wealth' why not pay off the debt falling due by issuing directly to the people of Canada your own promissory notes, instead of giving them to some broker and getting the money from him? That is really the question which has been propounded.


Edward Joseph Garland: I would
like the hon. member for Brome to keep in view this one particular point:	The only
suggestion I made that would change the present system is that we eliminate the bond house as such.


Andrew Ross McMaster: Exactly, that instead
of giving -the bond house the promissory notes of this Dominion-for that is all our bonds are, our promises to pay-and getting the bond houses to purchase our promises to pay and then disposing of them and making a profit out of the transaction; why should we not go to the people of Canada directly with our own promises to pay? His question is whether we could mot take our own promises to pay and pay off all our domestic creditor^one debt which is due by us to them-by contracting with them a further debt, due by us to them at a more distant date of maturity. That is the question, and I may say that when you ask that question you delve into the most difficult and abstruse questions of banking. I do not think it is a subject matter foir risibility. I consider it a matter of extreme difficulty. I know that a man like Reginald McKeinna takes one view, and a man as sound in economics and as statesmanlike as Asquith takes another view. I am inclined to the view of Mr. McKenna, but I do not hold myself out as an
rMr, Marler.]
economist, though I have, I believe, devoted some little time and attention to the study of this matter. The minister is proceeding by the orthodox method and it seems to me we have got to do a little more investigating and come to much more definite conclusions before we can depart from the orthodox method. I think the minister has this to say in his own defence, that from the time of the French Revolution onward, where governments have attempted^ to issue money solely on the credit of their" own country, down to the present day, disaster has always followed that course. Take the French assignats; they were babked by the whole wealth of the French people; France was not a republic, but a kingdom, when the assignats were issued in the first place. The trouble is, once governments have attempted to issue currency based merely on the solvency and credit of their country, rarely have they been able to resist the temptation of issuing more currency and more credit than was required.


Edward Joseph Garland: There has been no suggestion made here that the currency of the country should be based upon that asset only. This is simply a consolidation and funding of the national indebtedness.


Andrew Ross McMaster: It seems to me that
exactly the same principle applies. What is proposed is that instead of going through this roundabout method, and I frankly admit it seems open to serious objections, and that we are paying very heavily for the financial assistance which bankers give us-nevertheless, the experience of humanity has been that where governments have attempted to create great credit, let us say, which will pass either m the form of currency or in the form of bonds, merely on their own credit, they have been unable to resist the temptation of issuing more currency or more credit than was required, and as a consequence we have had inflation and all the evils which inflation brings in its train. We have only to look at Russia to begin with, and at Austria-


Thomas Alexander Crerar: And Germany.


Andrew Ross McMaster: I think I am followig the method in its chronological order. I think Russia started the wholesale printing of fiat money.


Henry Elvins Spencer: Would the hon. member
consider it greater inflation to float a loan of say $50,000,000 and pay $1,000,000 commission

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and 5 per cent interest on it, than to issue that loan direct as suggested by the hon. member for Bow River? Which would be the greater inflation?


Andrew Ross McMaster: I do not think there
would be any real difference in inflation at all; it would be six of one and half a dozen of the other, except in so far as the first method might, what I might call, marshal the savings of the people. If .by the issue of a government loan you merely marshal the savings of the people and apply them to a certain purpose, removing them from other purposes, then I think you avoid the pitfalls of inflation. Whatever the theoretical soundness of the view urged by hon. members opposite may be, the history of mankind shows that so far governments have been unable, when they took those steps, to resist the pitfalls which lay before them. WTe have the example of Russia, of Austria, Germany, aye, and of France, and for a time during the war, of Great Britain and the United States, showing us the evils of inflation. Once a government undertakes to create large amounts of credit you get inflation, and one of the brakes -it should, not be necessary perhaps to have this brake-on the creation of credit under our present system is that the state has to pay for this credit by paying to these organizations which manage credit now very handsome profits for whatever assistance they give to the state.
It seems to me that is the defence of the minister. I think we cannot very well depart horn the traditional orthodox method at the present time without a great deal of further study. I am far from saying that our present method is perfect. I believe, though, that the people in this country who have devoted attention to this financial question, who have been directing their minds to the study of the very bases of credit, which in certain instances were quite unknown to the bankers themselves, have been conferring a very great benefit on this country; but it seems to me that the study has to be pursued a little further, and more definite conclusions arrived at before we can depart from the traditional methods of financing.


Henry Elvins Spencer: Does my hon. friend contend that the only way to stop governments from inflating their credit is by having them pay an interest charge?


Andrew Ross McMaster: I do not say that is the only way but I say that from the time of the French Revolution downward the governments which have attempted to create credit without doing something of that sort have dropped into the pitfall of inflation. I think that is true; I do not think it can be gainsaid.


Mr. CHAPLIN:: The position taken by some hon. members from the West is, that in respect of this sum of $300,000,000 that is falling due we should issue government notes for the payment of it, thereby avoiding commissions and interest charges. If that is a fair proposition and if it can be carried out why do we not pay our entire debt by that method?


An hon. MEMBER:: Hear, hear.


James Dew Chaplin: Somebody says "hear,
hear", indicating that is his view. In reply I say that if we did that we would depreciate our currency and be in just the position that Russia, Germany and Austria are. As the hon. member who has just spoken has said, that is what would happen.


Mr. COOTE:: I hesitate to voice my opinions in regard to 'this matter, but a good deal has been said about the wisdom of floating this loan in Canada, in the United States or in Great Britain; and several hon. members have argued, I think, that the loan should be floated outside of the Dominion so as to make more money available in Canada for the purchase of industrial securities and of goods, and thus to speed up or improve business conditions in this country. We seem to have departed from the old traditional idea of encouraging thrift among the masses. We do not wish them to hold these bonds; we would like them to spend their money either in the purchase of goods or in the purchase of more questionable securities.
I want to refer particularly to a statement which was made by the hon. member for Parkdale (Mr. Spence) in regard to bringing outside money into Canada. I am not going to give my own opinion on that policy because it might not carry much weight, but I should like to quote briefly from a speech delivered by the Right Hon. Reginald McKenna, chairman of the Midland Bank, Limited. This speech was reported in the Toronto Saturday Night some time ago, and I would be glad if hon. members who attach weight to the opinion of Mr. McKenna would secure the article and read1 it. It might enable them to form some new ideas in regard to the volume of money which is available in any country for the carrying on of business. I am only going to quote very briefly from the article because I do not wish to take up an undue amount of time, more especially in view of
Rejunding Loan


James Alexander Robb: We are following the usual
procedure in anticipating the requirements of the country. I have not the rate of interest before me, but I imagine most of the obligations are on the 5J per cent basis excepting the treasury bills, *which are issued at 5} per cent.
At six o'clock the Speaker resumed the chair and the House took recess.

United Church of Canada
38S3
After Recess
The House resumed at eight o'clock.



UNITED CHURCH OF CANADA

[Stage Direction]
Mr. ROBERT FORKE (Brandon) moved the third reading of Bill No. 47, to incorporate the United Church of Canada.
Mr. WILLIAM DUFF (Lunenburg):: I
move:
That the said bill be not now read a third time but that it be referred back to the committee of the whole House for the purpose of amending the said bill by substituting the words "United Church in Canada" for the words "United Church of Canada" wherever the said words appear in the said bill.
I think it is wise for the House to amend the bill in this way. I have received a great many letters from people in different parts of Canada, members of various denominational bodies, objecting to the words as they appear in the bill as it stands. It is contended that the words "United Church of Canada" are too broad in their significance and that such a title savours a good deal of a national church. It is well known that in Great Britain the Episcopal church is known as the Church of England and the Presbyterian church as the Church of Scotland; and we know that in Canada the Church of England is known as the Church of England in Canada. There would seem to be good reason therefore for amending the bill in the way I have suggested. It may of course be argued that this matter should have come up when the bill was before the Private Bills committee. It is true that the proposed amendment might have been offered there, but I presume that the hon. member who introduced the bill overlooked the matter for the same reason as did other hon. gentlemen in the Private Bills committee. It would make no difference to the hon. member for Brandon (Mr. Forke), and it would not in my opinion alter the effect of the bill, if the change I have proposed were adopted, so that the new church should be known as The United Church in Canada rather than The United Church of Canada. There is .another argument that may be advanced against the change, and that is that five legislatures in Canada have already passed legislation embodying the term "The United Church of Canada". But there are four legislatures that have not passed on this bill, and consequently it would be very easy, in those legislatures at any rate, to have these substituted words take the place of the term at present in the bills which are and have been before the respective provincial legislative bodies. As regards the five legislatures which have already passed on the bill, it would be a
simple matter when they met next year to have the various attorneys general of the provinces make the necessary alteration. It seems to me that this amendment is in the best interests of the country; it does, not interfere with the principle of the bill and the hon. member who introduced the bill should I think accept it and allow the bill to go back to committee to have the change made.
Mr. J, L. BROWN (Lisgar):	We must
take exception to the amendment. It is true that on one phase of the question there may not be much difference between the two prepositions, "of" and "in", and either name would probably be perfectly acceptable were we now at the beginning of the discussion. But as the mover of the amendment (Mr. Duff) has pointed out, a bill to incorporate "The United Church of Canada" has been already adopted by certain provincial legislatures, and were we not to adopt a similar name now the difference would undoubtedly lead to inextricable confusion and possibly legal difficulties might arise the extent of which might not be foreseen at the present time. We would therefore respectfully urge the House to vote down the amendment and to ratify the name as agreed upon.


Hon. HUGH GUTHRIE (South Wellington) :: Mr. Speaker, it seems unfortunate that this bill comes before parliament after having previously been before five of our provincial legislatures, because when we seek to amend the bill in any way we are met with the answer at the hands of the promoters:	"We
cannot change it now; it is too late. If the bill had originally been introduced here we might have done this, that or the other thing, but as it first went to the provincial legislatures, and as a number of them have pronounced upon it, therefore our mouths must be closed, our hands must be tied." That is the only answer made on this occasion to the motion of my hon. friend from Lunenburg (Mr. Duff). So it was when we proposed that the vote to be taken in the various churches should be taken by ballot The only objection cl' substance offered was that as five legislatures had already passed upon this or that clause, therefore this parliament must not interfere. Surely it is a strange situation that the federal parliament's power must be circumscribed in respect to an important measure simply because some of our provincial legislatures have seen fit to take action before the bill was introduced into this parliament at all. I for one dissent most emphatically from
United Church of Canada

that position. The legislature of Ontario has
not yet passed on this measure. I think that province represents probably wellnigh a third of the population of the Dominion. The legislature of the province of Quebec has not yet passed on this measure. The province of Quebec represents, I think, about a quarter of the population of the Dominion. But by reason of the fact that five of the less populous provinces have, through their legislatures, seen fit to pass a bill to which a number of the members of this House do not agree, that is urged now as an answer why we cannot change the terms of this bill.
To my mind the situation is ridiculous. This parliament should be free to act as it sees fit. If it is proper to change the title, let us change it; if it is proper to introduce any other clauses, let us do so before it is too late. I especially desire to point out that in the two most populous provinces, where I think more people reside who are interested in this very bill than in any other part of Canada, the legislatures have not yet acted, and if this House sees fit to amend the bill it is perfectly free to do so. Then the promoters of the bill can go back to the various legislates which have passed similar bills and have them amended to bring them into accord vsith what legislation we see fit to pass. I think the House should pause before it allows t.i>
objection of the kind urged by my hon. friend from Lisgar (Mr. Brown) to have any effect at all. If that objection is good in regard to this bill, it may be good in regard to a hundred other bills in the future. The fact that a provincial legislature has passed legislation upon an involved question must not be permitted to tie the hands of this parliament. We must be free to act as we see fit.


Mr. ROBERT FORKE (Brandon):: Mr. Speaker, I do not think any member in this House wants to tie the hands of parliament. Parliament is perfectly at liberty to take what action it pleases in regard to this bill, as the hon. member for South Wellington (Mr. Guthrie) knows very well. There is no attempt on the part of those who are in favour of the bill as it now stands for third reading to press for any undue favours. Had this title been introduced in the Private Bills committee at the commencement, had the bill been so considered all through its course as "an act incorporating the United Church in Canada", I am sure no one would have objected to the title. The bill was before the Private Bills committee for weeks and the

hon. member for Lunenburg found no fault with the title, and it seems strange that now it strikes him that this is an opportune time to move his amendment.


William Duff: I brought it in yesterday.


Robert Forke: Well, yesterday. The hon.
member for South Wellington has stated that we object to the amendment because six of our provincial legislatures have passed similar legislation under this title. That is one of the reasons, but it is not the exact reason, although it is certainly a valid reason. I do not remember the exact phraseology of the legislation as it was passed by those provincial legislatures, but it reads something like this: This act shall come into force when the United Church of Canada has been incorporated by the Dominion parliament. Consequently the whole bill will fall to the ground if we adopt this amendment. So, Mr. Speaker, it is in no spirit of factious opposition that we object to the amendment. I am sure that were it possible to accept it without creating confusion we would do so. But really I do not think the amendment amounts to anything. No one in Canada but knows that there is no national church in this country. No Canadian parliament would ever think of attempting to establish a national church. That this was an attempt to do so might appeal to some prejudices, but really there is no thought of establishing a national church by using the title of the bill. We have adopted the name of The United Church of Canada, the bill has gone through the Private Bills committee and it has been before this House for days under that title, and no objection was raised until last night. I do not think it would be in the interests of the bill that the name should be now changed.


Mr. G. H. BOIVIN (Shefford):: Mr. Speaker, since the inception of this legislation in this House I have been, in the lobbies, in the Private Bills committee and in the House a strong supporter of church union. I voted for it in committee because I consider that Canada is a land of religious tolerance, of religious liberty, and that those members of the different churches who desired to unite and who asked parliamentary sanction for church union should receive, as they did receive, the approval of a majority of this House. When it comes to the title of the bill I think we should pause and consider whether it is proper or not. I remember that in my short parliamentary experience legislation has often been amended in connection with banking and other financial institutions whose promoters have asked for incorporation under a

United Church of Canada
name which would convey an erroneous impression. I remember a particular instance where the late Sir Rodolphe Forget, if I am not mistaken, applied to parliament for the incorporation of a bank to be known as the Bank of Canada. His application was refused and the name was changed.
To-day three different churches ask parliament to incorporate them as "The United Church of Canada." It is true that there is a qualification of the word "church" by the word "united", but if this word were deleted the title would remain "The Church of Canada," and I do not think that any church should be established in this country as the Church of Canada. I know I would not ask that for the church to which I am proud to belong, and I do not think that our good friends of the Anglican church would ask to have their church established as "The Church of Canada." I am sure that if our friends had given this matter sufficient consideration when they introduced the bill they would, as the hon. member for Brandon (Mr. Forke) says, have used a different title and perhaps it would have been "The United Church in Canada."
I understand that the acceptance of this amendment would cause some slight inconvenience. I understand that the promoters would be obliged to apply to the provincial legislatures for a slight amendment to bills that have already been introduced and adopted. But what is that in comparison with the sanction by this parliament of a title which to those who do not know Canadian affairs, may convey the idea that we have abandoned our ideas of religious liberty and that like some other countries we have accepted the idea of having an established church? I do not think the majority of the Canadian people would ever consent to any church being the established church in Canada. The title may not have been chosen to convey that impression but for the outsider, for the immigrant, it is certainly a misleading title. There are in other countries established churches. They have the Church of England in Great Britain, which we all respect as the established church in that country but we have always felt that in this country there never would be one church with more rights or privileges than another. If we object to financial institutions taking a title of this character we should also object to religious institutions doing so.


Mr. BROWN:: Have we not the Union
Bank of Canada?


Georges Henri Boivin: Yes, we have the Union
Bank of Canada, the Canadian Bank of
Commerce and -the Royal Bank of Canada. But we have no Presbyterian Church of Canada, we have no Catholic Church of Canada and we have no Anglican Church of Canada. Why should we have a United Church of Canada? I do not want to go further and say ithat the adoption of that title might result in an interference with the excellent missionary work that these united churches have been doing in the past in foreign countries. I am not going to enter into that, but I realize that it might be difficult for their missionaries to go to foreign lands and ask people who never desired to establish themselves in this country to join, a church which would have the name "United Church of Canada." I merely mention that for their own consideration. But as a citizen of Canada, proud of the religious liberty we in this country have always en-jhyed, I do, say that I would not like to see any legislation adopted by this House which would enable any church to sail under the false colours of being the established church in this country. I do not think the title should be adopted. I therefore will vote for the amendment.


William Charles Good: The matter
might be one of no importance if there were not possibly involved in it the setting aside of provincial legislation. I think we ought to be very clear as to what may be the possible effect upon provincial legislation. Personally I do not think anybody in the House would object to the use of the word "in" instead of "of". Buit under the circumstances what does it mean? The hon. member for Brandon (Mr. Forke) has stated that it would involve the setting aside, temporarily at least, of the provincial legislation, and that might be a serious embarrassment.


Some hon. MEMBERS:: Oh, no.


William Charles Good: WouLd it not therefore be
worth while to pass the legislation under the existing name, trusting that if the name is not suitable or not exactly what is desired it may subsequently be changed by concurrent action in the Dominion and the provinces?


James Dew Chaplin: Mr. Speaker, we have heard a good deal both in the committee and in this House regarding the effect that any change in this bill might have upon provincial legislation. I agree with the hon. member for South Wellington (Mr. Guthrie) that too much stress has been laid upon this matter. We have been de-
United, Church of Canada

barred from debating the question, in a great many instances because, forsooth, it was going to affect provincial legislation. My contention is that this bill should have come to the House first so that we could have passed upon it and there would not have, been these continual references to what has been dons in the provinces. If things have been done, wrongly, let them go back and have them done right.
In respect to the particular point in question, my attention has been frequently called by many people to the name of this church. The matter was not officially brought up, but t has been brought to the attention of those promoting the bill. It has been referred to .n the press of the country and there has oeen a good deal of talk about it, yet we are told now the bill cannot ,be changed on account of the effect any change might have upon provincial legislation. I have had dozens of letters upon the subject. I have refrained from referring to the name in committee because personally I was not particularly concerned with the name; I was more concerned with some other features of the bill which I considered objectionable. Some of these we have rectified in committee; others we tried to get rectified in this House. A few nights ago the hon. member for Vancouver Centre (Mr. Stevens), who was not in the committee and who, had not heard the discussion so far as it went in the. House, told us that so far as he was concerned-and he thought he voiced the opinion of all those in favour of the bill-if anything came up in connection W,ith which ifiairness should be shown to those who were more or less opposed to the bill, he would be quite willing to act in that way. But even with that promise of his, the House did not change one syllable or one sentence of the bill. We asked for only a small thing the other day in respect to the voting, and what did we get? We just got the steam roller. The Minister of Agriculture (Mr. Motherwell) told us what we should do in the interests of harmony. What a wonderful harmonizer he is! I have only to refer to the letter he wrote to members of this House, which also appeared in the press, to show what a. harmonizing influence the minister is in the House.


Mr. MOTHERWELL:: My hon. friend has nothing to do with that letter.


James Dew Chaplin: I have nothing to do
with it? Well, the House has something to do with it, and it seems to me I have some right to refer to it when an hon. member 
from his place in this House referred to the writing of that letter as like a billy-goat butting up against a billboard.


William Richard Motherwell: I took it, didn't
I?


James Dew Chaplin: I am glad to know the
hon. gentleman took it; that means he took something. At all events the harmonizing influence of the minister from the point of view of his letter writing capacities does not count for very much. My objection to this name and also to the method of voting is based upon statements and requests made to me from my own people. This House passes a bill telling the members of the Presbyterian church in Canada how they are to vote. An hon. gentleman says I am not in order, but I think I am entitled to speak of that, because it is one of the things the House decided the other night by the steam roller process to which I have referred. We asked to have our people vote by ballot, and we were told: You have to vote in a certain way. Then when we demonstrated to the House the fairness of our request we were told: Oh well, the provinces have decided it that way. It all comes back to what the provinces have done, and the mistake that was made in carrying the bill to the provinces first, and then coming here afterwards. This parliament has been cramped in the discussion of this measure, in the framing of it and in the amending of paragraphs and sections of the bill, simply because of taking the bill to the provincial legislatures first. WTe are told tonight that this matter was not brought up in the Private Bills committee. That is so. It was referred to several times; there was no motion made in reference to this particular matter, but I do not see that that is any valid reason why it should not be brought up here. I agree with the member for Shef-ford (Mr. Boivin) who has just spoken. I think the points he has made are well taken, and that we should not give any name to any church from which it can be inferred that that church has any connection whatever with the state. For that reason I am opposed to the name, and although the bill has practically passed the House in many of its features, I am still strongly opposed to the manner of voting that was forced upon the Presbyterians of this 'country.


Lewis Herbert Martell: I am not very much concerned as to the fight between different denominations in regard to this matter, but I must put myself upon record as being absolutely opposed to the title of this bill. I happen to be a member of the Anglican

United, Church oj Canada
church. True. I may not be a man that prates my religion all the time. Nevertheless, I happen to enjoy the rights and privileges of that church, as all my forebears did, and I do not apologize for it. The title of this bill in itself is insulting to me, and it is insulting to a great many other people in this country. They call it the United Church of Canada. We of the Anglican church are united, and by parliament putting its imprimatur upon that particular title it is saying to the Baptists, to the Homan Catholics, and to the Anglican Catholics of this country: You are not a united body. What I say is this: Call this church the United church or any other term you like, but do not say it is the United Church of Canada because that carries the implication that' the rest of us are not united. Some hon. members may say to me: In your particular denomination you have the high church, the low church, the broad church-and some people even say no church, but we do not listen to any slurs of that sort. We always fight these things out internally among ourselves. We have our synod and our bishops and we decide these things among ourselves. But whether my political life be long or short, whether or not I am going to be met with my attitude on this particular question, I will not as a member of this House vote to put my imprimatur on a bill which I say is a slur upon the particular denomination to which I have the honour to belong. Therefore, I shall vote for the amendment which is proposed.


Arthur Edward Ross: A preposition in a name may not mean very much. For example, those who did not concur in the union of these churches would have preferred to have the name the Presbyterian Church " in " Canada. That is much preferable to saying the Presbyterian Church " of " Canada, which will exclude any other part of the Presbyterians from seeking incorporation with them. The preposition " of " always carries with it the idea of possesion. We have this particular method of showing possession, and anything to which we add " of Canada " means it is Canada's. So that to call this church the United Church of Canada means that it is Canada's united church. It cannot mean anything else but that, and for that reason it would prevent the union of any other bodies. There are many other bodies in this country which might possibly unite. The Baptist church and the Roman Catholic church might unite, but they are prevented by this bill from becoming the United Church of Canada. The Free Methodists or the Hornerites might unite with the Christian Science church, and they would be prevented
by this bill from calling themselves the United Church of Canada. It would be much preferable to give this church a name which would not prevent any other union such as I have mentioned. The Presbyterian Church of Canada, which is one church that we have now as a result of this bill, might wish to unite with another body, but they could not call themselves the United church, and so with other bodies. It seems very important to me that the correct name should be given, so that the possibility of further unions will not be prevented, as they will be by this name.


Donald Sutherland: Before this amendment is disposed
of I would like to remark that I think those who are objecting to the name are a little late in the day in taking that stand. It is a matter which has been discussed1 for weeks past, whether the name was a proper one or not, and now that we have reached this stage objections are being raised to the name-


Arthur Edward Ross: What is wrong in
correcting a wrong at any time?


Donald Sutherland: It has been contended all along that it was wrong to use the name which it had. Strong exception has been taken to the name, although no open discussion took place in the House so far as I know, with regard to that feature of the bill. It is with very much regret that I have listened to the discussion that has taken place in connection with this, to me, most unfortunate matter. I have refrained from taking part in the debate which has taken place, and would have much preferred that even this discussion to-night should not have taken place. I thought when I came into the House to-night and heard the hon. member for Shefford (Mr. Boivin) pointing out his objections to the name, that this matter surely should have been remedied long before we reached this stage. I listened to the hon. member for Lincoln (Mr. Chaplin) referring to what took place here yesterday, when, he said, the steam roller was applied to a very reasonable request on the part of those who belonged to a church which was being submerged by this legislation. I think every one must admit that request was a very reasonable one, yet it received no consideration at the hands of a considerable proportion of the members of this House, particularly my hon. friends to my left, -ndm were here
United Church of Canada

almost to a man in order to see that a snap verdict might be obtained in certain instances rather than that a fair expression of opinion should be obtained in regard to this matter.


Some hon. MEMBERS:: Order.


Hewitt Bostock: The hon. gentleman must not use such an expression. The debate has been characterized by moderation and courtesy on both sides and the hon. member is not justified in using an expression which would suggest that there has been a lack of fair play on the part of some hon. gentleman in the discussion of this question. I would therefore ask my hon. friend to refrain from using such an expression.


Donald Sutherland: May I ask to what
expression exception is taken?


Hewitt Bostock: The hon. gentleman is
imputing unfair motives in suggesting that many hon. members united in an effort to obtain a snap verdict; to stifle discussion and prevent any proper amendment being made to the bill. I would ask the hon. gentleman to kindly refrain from using language of that character.


Donald Sutherland: I would be sorry to violate the rules of the House, but it is quite evident that I have been misunderstood. The snap verdict to which I referred was not in this House but outside of it. I referred to the vote to be taken of the congregation as to whether they were willing to enter into union or not.


Georges Henri Boivin: A very good figure eight.


Donald Sutherland: I did not have the advantage of listening to all the evidence which was submitted to the Private Bills committee, but I heard sufficient to convince me that some effort was being made by the leaders of the union movement in the church to which my people and I have always belonged which it was not desired should be ventilated openly; there was a determination that the old church should be submerged and cease to exist. Under the circumstances I am not at all surprised that hon. members should rise here and object to the name "United Church of Canada." I am inclined to think that a more suitable name, perhaps, would be the "Disunited Church of Canada." I regret, more deeply than most hon. gentlemen possibly realize, to have to refer to this question in this way. I was never more ashamed of the effort that was put forth than 
when I witnessed what took place here yesterday with a view of preventing a fair and honest expression of opinion on the parts of the churches affected.


Some hon. MEMBERS:: Order.


Donald Sutherland: Some hon. gentlemen are very careful about the observance of order. Evidently they do not understand the rules of the House or they would not ' have interjected the remark. I wish to say that the method of voting which those criticizing the bill sought to bring into effect was one that would have enabled all those belonging to the Presbyterian church to give a fair and honest expression of opinion on the matter. The bill in its present form does not enable that to be done and consequently, in my opinion, the name "United church" is not an appropriate one in this instance. It is quite apparent that many congregations-I am referring particularly to the Presbyterian denomination-do not intend to be submerged even although they are not permitted to retain the old name with which they have so long been associated and in which they took such a justifiable pride. Notwithstanding the lateness of the session parliament found the time to devote to much legislation such as should not have come before it. This union, if it is a union, could have been accomplished without all this legislation that we have been passing. I referred this afternoon to the habit we have contraoted in Canada of passing legislation defining and restricting the operations of the people in business and in every other way. If there is one thing that we have a surfeit of in this country at the present time it is legislation. If we would out out a lot of our legislation and exercise a little more common sense I am inclined to think it would be better for all concerned. I regret that this issue of the name should have been delayed through all the proceedings tnat have taken place in the several legislatures and in the federal House of Commons up to this stage. I rose with a good deal of reluctance but I thought it was my duty now to speak in view of the fact that I abstained from speaking during all the days and weeks this bill has been before the Private Bills committee and before the House. There is something verging on the ridiculous in the fact that we are only dealing with this matter at this late, stage when it should have been remedied long ago; but rather than allow this name to go into effect I am prepared to support the amendment which has been moved.

United Church of Canada


Some Hon. MEMBERS:: Question, question.


William Findlay Maclean: I think parliament o-ugbt to have some respect for itself. Parliament is passing an act providing for a church union, and as far as I can see it is the greatest church union that has ever occurred in this country. It may be a point that will mark great progress in Canada. Perhaps we have too many churches in Canada, and it might be better if we had fewer of them and more union. Having taken the stand it has I do not think parliament should, by this amendment, impugn the legislation that has already been adopted.


Lewis Herbert Martell: I am satisfied with the
membership I have in the church of my forebears.


William Findlay Maclean: Never mind,
perhaps the hon. gentleman would like to have a pew in it. I say that as we have virtually passed this foil which unifies three great denominations in this country

the Presbyterian, the Methodist and the Congre-gationalist-I do not see why we should be called upon to adopt this amendment. I am not questioning the right of those who are supporting the amendment to vote for their own proposal; but I think it would be better to let this measure which brings about unity go into effect. The hon. member for Shefford (Mr. Boivin) having made allusion to the appropriateness lof the titles of banks, and pointed out that parliament has been very critical in the matter, let me say that there is a bill now before parliament-it is in the Upper House and will doubtless find its way here in due course-which proposes to bestow upon a bank the title of Banque Canadienne Nationale.


Georges Henri Boivin: That sounds more like a
railway than a church.


William Findlay Maclean: Nevertheless
there is such a bill before the Senate at the present time and I suppose it will shortly reach this House. Here is a case where a private bank in this country is seeking authority to call itself Banque Canadienne Rationale.


James Dew Chaplin: We can change it.


William Findlay Maclean: We can change
it. Perhaps my hon. friend will introduce legislation of that kind into this House. We have adopted union in th'is country. It is a great union, a credit to the country and a prediction perhaps of something greater to 246
come. The hope of the world to-day is that Christianity is to be stronger and more united. The argument against Christianity to-day is that it is too much united perhaps, and yet it lacks union. It preaches unity and does not practise it in all cases. In this instance we are trying to practise it. Certain denominations have got together and have tried to unify themselves as far as this measure can unify them. I hope they will get unity. I hope this tendency towards union will grow rather than diminish.


Mr. G. C. WILSON (Wentworth):: I wish
to enter my protest against the use of the words "United Church of Canada." I cannot see that the name is anything but a misnomer. I cannot understand why this House should pass such legislation. The hon. member who just addressed the Chamber (Mr. Maclean, York) said it referred to the act of union. Is it not a fact that the Presbyterian church as a denomination has a proud record? It has done great work. Denominationalism is not a detriment to any country but is a benefit. I cannot for the life of me understand how parliament can approve of these words "United Church of Canada." I regret I was not there in the early part of the debate. What about the Anglican church or the Roman Catholic church? There are other denominations in this country, and when you speak of United church you give the impression that all the churches in Canada are united, which is not the fact. In my opinion this could be the most disunited church that had ever been known, speaking from the standpoint of the Presbyterian church. If we say to the Presbyterians who wish their church to remain as the Presbyterian Church in Canada that they cannot have the title, and then turn around and incorporate there applicants as the United Church of Canada and try to insist that that is in the best interests of thi3 country, T must say that I cannot see it, and I certainly think that parliament should not adopt any measure that will perhaps grant a special privilege to any organization. I certainly hope and trust that parliament in its judgment will not agree to any such action.
Amendment (Mr. Duff) negatived on the following division:
++YEAS
Messrs.
Arthurs,	Boivin,
Beaubien,	Bouchard,
Beland,	Boucher,
Benoit,	Bourassa,
Binette,	Bristol,

United Church oj Canada

Cahill,	Mclsaac,
Cardin,	McKay,
Carroll,	Marler,
Casgrain,	Martell,
Chaplin,	Michaud,
Chisholm,	Motherwell,
dAnjou,	Papineau,
Dechene,	Pelletier,
Denis (St. Denis),	Power,
Deslauriers,	Prevost,
Dickie,	Putnam,
Duff,	Raymond,
Duncan,	Rinfret,
Elliott (Waterloo),	Robichaud,
Ethier,	Robitaille,
Fontaine,	Rcss (Kingston),
Forrester,	St. Pere,
Fournier,	Sinclair (Queens, P.E.I.),
Guthrie,	Stewart (Hamilton),
Lanctot,	Stork,
Lapierre,	Sutherland,
Lapointe,	Tobin,
Macdonald (Pictou),	Wilson,
McDonald (Timiskaming),	Woodsworth.-58.
++NAYS
Messrs.
Baldwin,	King (Huron),
Bancroft,	King, Mackenzie (York),
Bird,	Knox,
Black (Halifax),	Leader,
Black (Huron),	Lewis,
Black (Yukon),	Lovett,
Brethen,	Lovie,
Brown,	Low,
Caldwell, .	Lucas,
Campbell,	MacLean (Prince,P.E.I.),
Charters,	Maclean (York),
Clark,	McBride,
Coote,	McCrea,
Crerar,	Me Murray,
Denis (Joliette),	McQuarrie,
Doucet,	McTaggart,
Drayton (Sir Henry),	Maybee,
Drummond,	Meighen,
Evans,	Millar,
Fansher,	Milne,
Findlay,	Morin,
Forke,	Morrison,
Gardiner,	Murdock,
Good,	Neill,
Gordon,	Preston,
Gould,	Reed,
Graham,	Robinson,
Grimmer,	Sales,
Halbert,	Senn,
Hammell,	Sexsmith,
Hatfield,	Shaw,
Hodgins,	Sheard,
Hoey,	Simpson,
Hopkins,	Speakman,
Hudson,	Spence,
Hughes,	Spencer,
Humphrey,	Steedsman,
Hunt,	Stewart (Humboldt),
Jelliff,	Stewart (Leeds),
Kelly,	Thompson,
Kellner,	Thurston,
Kennedy (Edmonton),	Wallace,
Kennedy (Glengarry &	Ward,
Stormont),	Warner,
Kennedy (Port Arthur &	White,
Kenora),	Woods.-90.


(The list of pairs is furnished by the Chief Whijps.)
Messrs:
Tolmie,	Johnston,
Malcolm,	McConica,
Carruthers,	Clifford,
MacLaren,	Logan.


Hewitt Bostock: When shall the bill be
read a third time?


William Duff: I rise to a point of order, Mr. Speaker. It is now 9.15 and the time allotted to the consideration of private bills has therefore expired.


Some hon. MEMBERS:: Oh, oh.


Georges Henri Boivin: The point of order is well
taken.


Hewitt Bostock: As the hon. member for
Shefford (Mr. Boivin) has properly observed, the point of order is well taken unless the House will give its unanimous consent to the third reading of the bill. The first hour from 8 to 9 is devoted to private bills and I must therefore pass to the other business of the day unless it is the unanimous wish of the House that I put the question. Apparently the House is not imanimous on the point.


Some hon. MEMBERS:: Carried.


Hewitt Bostock: Is it the unanimous wish
of the House that the bill be now read a third time?


Some hon. MEMBERS:: Yes.


William Duff: No.


Hewitt Bostock: Is there an objection?


Some hon. MEMBERS:: Carried.


Some hon. MEMBERS:: No.


Hewitt Bostock: Am I to understand that the House concedes its unanimous consent to the third reading of the bill now?


Some hon. MEMBERS:: Yes.


William Duff: No.


Hewitt Bostock: The House not being
unanimous, and the hour for the consideration of private bills having been exhausted, the House will now resume in committee of the Whole on the resolution under discussion before recess standing in the name of the Acting Minister of Finance (Mr. Robb).


William Richard Motherwell: I beg to state, as
a matter of record only, that I voted for the amendment in mistake.

Refunding Loan
3S91


Mr. SINCLAIR (Queens):: I desire also to state for the same purpose that I voted for the amendment in mistake. I regret having done so through a misapprehension as to the question.


Hewitt Bostock: At page 21 of Beauchesne's Parliamentary Rules and Forms it is provided in paragraph No. 73:
If a member who has heard the question put should vote inadvertently, contrary to his intention, he cannot be allowed to correct the mistake, but his vote must remain, as first recorded.
Again, according to No. 79:
A vote, once given, cannot be withdrawn.
May, at page 343, deals with the matter of the recording of votes in England, where the practice is different from that of the parliament of Canada; in England each party goes to its own lobby when the division is taken. May says:
If a member goes into the wrong lobby, through inadvertence, it is the rule in the Commons, in opposition to the practice of the Lords, to hold the member bound by the vote he has actually given. On the 21st June, 1864, Sir Caiman O'Loghlen, in committee on the Court of Chancery (Ireland) Bill, went into the wrong lobby, and carried, by his vote, the question that the chairman do leave the chair. He stated his case to the Speaker, when the House was resumed, but was told that, having heard the question put, there was no remedy for his error.



REFUNDING LOAN-$300,000,000

[Stage Direction]
The House resumed, in committee, consideration of the resolution standing in the name of the Acting Minister of Finance (Mr. Robb) to provide for the raising by way of loan of the sum of $300,000,000.
Milton Neil Campbell: A short time before the House rose at six o'clock I asked the minister a question to which I did not receive a complete answer. At present, the banks are permitted to take certain securities, among them Dominion bonds, to the Minister of Finance and to secure in return Dominion notes. I asked the Acting Minister of Finance why, under these circumstances, the government itself could not deposit its own bonds with the Finance department and secure in return the Dominion notes which ordinarily are handed to the banks. An hon. member, I believe the member for King's, P.E.I. (Mr. Hughes) suggested that this would cause inflation. I do not think it would increase the inflation; as it stands at the present time, these Dominion notes are issued not against gold but against bonds or other securities, sometimes industrial bonds, commercial bonds and notes from business houses. To-day there is inflation to the same extent in so far as the bank is concerned, and I should like the minister to 246i
explain in what way he considers my suggestion unsound from the banking standpoint. If it is unsound for the government, surely it is unsound to permit it in the interests of the banks.


James Alexander Robb: We debated this question all afternoon and I said I did not believe it was sound banking to Russianize the securities of Canada.


Milton Neil Campbell: I am not-


George Newcombe Gordon: I think the hon. member is getting away from the resolution, the purpose of which is to provide the means of raising a loan of $300,000,000. He is entering upon a discussion of banking systems generally and it seems to me that the debate is going beyond the point of relevancy to this particular resolution.


Thomas Wakem Caldwell: If this is made a domestic loan, there is no thought of making the bonds tax exempt?


James Alexander Robb: Some recent issues of bonds have not been tax exempt.


Thomas Wakem Caldwell: I understand that. I thought that possibly the strongest criticism of early victory loans was that they were made tax exempt. It has been stated in the House this afternoon that a great deal of Canadian money is tied up in victory bonds, and therefore is not available for the business needs of the country. I think possibly there is something in this statement. But the more serious aspect is that we have immense sums of Canadian capital tied up in victory bonds on which we do not and cannot collect any tax; therefore the poorer people must to that extent bear a heavier burden of taxation. I commend the government for the recent issues of government bonds without tax exemption, and I am glad to hear that there is no thought of reverting to the old system.


James Joseph Hughes: If we could ascertain
whether or not there is a surplus of liquid capital in this country at the present time, we could decide fairly well which would be preferable, a domestic or a foreign loan. I think the people of Canada are pretty well agreed upon these principles: That our natural resources are very extensive; and that we want population and capital to develop them. If these principles are sound, and if there is a shortage of liquid capital, then unquestionably it would be better for us to float a foreign loan. If, on the other hand, there is an excess of liquid capital over and above what is required to carry on the nation's business, to meet all local demands, then to that extent,
Refunding Loan

and to that extent only, a domestic loan would be advisable. Now, it has been stated here by men who are in control of financial organizations that there is a shortage of capital. The Acting Minister of Finance has access to avenues of information that are not [DOT]available to the ordinary citizen, and he is therefore in the best position to decide this question. He is able to consult the bankers, the capitalists of the country, who can furnish him with reliable information on this point. Consequently we must under these circumstances leave the matter to his decision, for if he is capable of filling the position he occupies, he is capable of deciding this question in the best interests of the Dominion.


Mr. WOODSWORTH:: If I remember correctly, Mr. Chairman, some years, ago the Canadian Northern Railway was financed by ;he direct extension of the credit of the gov-jrnment to the amount of $25,000,000. Do I understand that discussion of that manner of financing is precluded by your ruling on the question asked by the hon. member for Mackenzie (Mr. Campbell)?


George Newcombe Gordon: I do think that we are limited to the question of expediency, and as to whether the money should be obtained in certain markets. I think the debate which developed this afternoon was more or iess on the question of the system of banking.


James Shaver Woodsworth: As I understood
the question of the hon. member for Mackenzie, it was not relevant to the system of banking but had reference solely to whether we would go to the banks for accommodation or whether the government itself could issue notes.	.


George Newcombe Gordon: I think that would
>e in order.


Milton Neil Campbell: Your ruling then, Mr. Chairman, would leave my question perfectly n order. The question resolves itself into whether the government proposes to use the means for obtaining money that at present is the special prerogative of the banks. I am quite ready to agree with the hon. member for Brome (Mr. McMaster) that there are very grave dangers in inflation, that it is very difficult to tell where any government would stop once it embarked on such a financial policy. But I submit that we have that very system in effect to-day. If our currency were entirely based on gold, if there were behind our note circulation dollar for dollar of gold, I submit that the question of the dangers of inflation would be quite pertinent; but we have that condition of affairs in Can-
ada now, and I do not think we will ever see a return to the gold standard. When the banks take to the Minister of Finance industrial, municipal and Dominion bonds and the notes of private business men, and against the deposit of those securities receive an issue of government notes, why, that is nothing but fiat money; there is direct inflation every time that occurs. It is not a question of deciding whether inflation itself is right or wrong; I think we all must admit that it is wrong; but we have that very system in operation to-day, and we have to decide whether we are going to use this means ourselves or leave it as the special prerogative of the banks. I should like the minister to explain a little more fully his statement that it is unsound for the government to use the Very system that has been created for the use of the banks to-day. If it is unsound for the government to use the system, then the system must be equally unsound when used by the banks.


Andrew Ross McMaster: Mr. Chairman, I would answer an observation made by the hon. member for Mackenzie. He states that whenever under the Finance Act the banks take securities and deposit them with the government there is inflation. I do not agree with that statement. Inflation is where you increase either the actual money or the bank credit of the country beyond the actual needs of the country. An increase in credit, whether it is in the form of dollar bills or in bank credit, which merely keeps pace with the increase of the business of the country is not inflation. One of the factors which tend to prevent inflation under the Finance Act is that banks are obliged when they borrow money on the securities which they deposit with the government to pay the interest upon them. It is true they borrow the money for the purpose of lending it again at a profit, but they have always got the interest to pay; and then of course they have the solvency and the soundness of their institution to bear in mind-considerations which should operate to prevent them from making undue use of this advantage.


Mr. SHAW:: Is it not true that one of
the chief complaints against the federal reserve system has been that the member banks have been able to get money at a cheap rate and loan it at a high rate? Consequently it is to their interest to borrow; there is inflation and the evils which inflation causes. Is that not true? In Canada the rate which the banks pay under the Finance Act is 3 per cent; they readily get 8 per cent. Does that not create inflation in Canada as it did in the United States?

Refunding Loan


Andrew Ross McMaster: With any system that
involves elasticity in the currency of the country, whether that currency be bank credit or ordinary currency, you have a country exposed to inflation or deflation because inflation or deflation will depend on the attitude of mind of those who are in control of the credit facilities of the country. We have heard the Federal Reserve Bank very severely criticised for inflation; we have heard it just as strongly criticised for a process of deflation when the Federal Reserve Bank called in the loans it had made to the different banking institutions of the United States and they in turn had to call in the loans they had made to their customers. You will find no infallible rule in any system of banking or of credit; mistakes will be made. But the value of such a discussion as this-and I am doubtful whether this is the proper time and place for it-is to attract public attention to what are the real bases of the credit of the country. We have been too much accustomed to regard money as consisting in the mere dollar bills or ten or twenty dollar bills which happen to be in the pockets or the tills of the people. But I think I am right in stating that not more than 10 per cent of the business transactions of the country are conducted with currency; 90 per cent are conducted through the credit system which really comes down to nothing more nor less than entries in the books of the bankers of the country. What I wanted to point out when I rose in the first place was that for bankers to take sound securities to the government and in exchange for them to get currency which can be used in the business of the country is not of necessity inflation. If it is for the purpose and is limited to the object of creating enough credit instruments to keep pace with but not to run ahead of the business of the country it is not necessarily inflation.


Thomas Alexander Crerar: I rise to a point of order.
I submit that this whole discussion for the last ten minutes has been out of order.


George Newcombe Gordon: I agree with the hon.
member; I think it is.


Thomas Alexander Crerar: There are some, at any
rate, in the House who want to get on with the business of the House.


Joseph Tweed Shaw: I submit that the discussion
is entirely in order. The hon. member (Mr. Crerar) must have misunderstood the question at issue. The question is whether or not the government in floating this loan might not issue its own credit instead of going to a
foreign country or some place else to get credit through bond houses. That as I understand it is the issue that is under discussion by the hon. member for Brome.


George Newcombe Gordon: If that was the issue it would b#in order, but I did not so understand it.


Milton Neil Campbell: A few moments ago, Mr. Chairman, you ruled this very question in order. I asked a question of the Acting Minister of Finance, but the hon. member for Brome undertook to answer it.


Andrew Ross McMaster: I must apologize to the hon. member if I interfered with any answer he was seeking from the Acting Minister of Finance. I hadi no intention to obtrude myself into the discussion and I Ib.eg the committee's pardon if I in any way transgressed.


Milton Neil Campbell: I would like to have the answer from the Acting Minister of Finance, but I wish to put a question to the hon. member for Brome and I will ask him to answer it after I have received the answer from the minister. He spoke about the money secured through the issue of Dominion notes, issues directly against securities, as not being inflation. There is a good deal of difference of opinion about that. Does he consider money secured in that way as fiat money? Fiat money, as I understand it, is money behind which there is no gold, and when there is no gold behind money then, according to the orthodox view, there must be inflation. Perhaps the hon. member for Brome will reply to that after I have obtained the minister's answer to my question.


James Alexander Robb: It is so long since my hon. friend put the question that I have lost sight of it.


Milton Neil Campbell: I pointed out to the minister that at present the banks are permitted to deposit with the Minister of Finance certain securities, among them Dominion government bonds, against issues of Dominion notes. Would it not be just as sound for the government to issue its own bonds and deposit them with the Minister of Finance, secure the Dominion notes in return for those bonds and put them into circulation?


James Alexander Robb: I think if we undertook to follow that system of financing the credit of Canada would not be where it is to-day.


Joseph Tweed Shaw: Why?


James Alexander Robb: I have given my answer.
That is my opinion.
Refunding Loan


James Shaver Woodsworth: Would the minister regard the method of financing adopted in the case of the railways some years ago as unsound?


Arthur Meighen: Perhaps the hon. member (Mr. Campbell) would now be glad of an answer from the hon. member for Brome.


Milton Neil Campbell: I am not entirely satisfied with the minister's answer. It is not a question whether this is sound banking or not. I am ready to admit with the minister that it is not sound banking, buit the relative unsoundness of it is what I am trying to get at. If it is unsound to do it in regard to the banks then it is unsound for the government to do it. But it is considered orthodox; it is considered sound banking today. Why, then, is it unsound for the government to take to itself the rights and prerogatives^ and privileges that it gives to the banking institutions.


James Joseph Hughes: Since you have ruled
this discussion in order, Mr. Chairman, I would like to say a few words more. Let us bring it back to the simplest elements so that we may understand it more clearly. Take, for instance, a farmer in good circumstances. He has horses and cattle, farm implements, grain and land. He is known to be a reliable man who meets his obligations. He issues a note, say, for $100. Anybody who has money to lend would take that note if it had a reasonable time to run. But suppose he issues a similar note every day in the week for months, or every hour in the day-why, the notes would very soon be far below par; a little later they would be worth very little, and finally they would be worth nothing at all. A nation could do the same thing by issuing its paper to excess. We have seen Russia, Austria and Germany do it until their paper became worthless.


Henry Elvins Spencer: Has any one in this
House to-day suggested issuing paper to excess?


James Joseph Hughes: I am not stating that, but I think that is implied in the arguments of some hon. gentlemen on the other side. The government of Canada issues paper currency; the banks of Canada issue paper currency, and between the two issues the full requirements of the people are met. If the government decided upon issuing a much larger quantity of this paper than is now in circulation there would be no room for it unless the privileges and the powers the banks have in respect to the issuing of currency were taken away, and that would raise a very big [Mr. Robb.l
question. If those privileges and powers were taken away the government could issue its own paper without inflating the currency, without reaching the danger point. Suppose the government issued all the currency the country demanded, all that it could absorb. At some seasons of the year more currency is required than at other seasons, and the government would have to be in a position to take care of the excess currency as it was presented by giving for it something that would have an international value-for instance, gold. The government evidently could not redeem its own excess issue by another issue. That is the full limit to which the government could go. In my judgment the government could not issue any more notes than are now in circulation, because the people of Canada could not absorb them; they are not needed in the daily business of the country, and could no-t therefore be issued unless the government withdrew from the banks the power and privilege they now possess. That is a very big question, and one that would involve other considerations altogether.


Mr. GARDINER:: Representations have
have been made in the committee this afternoon with reference to the possibility of floating a loan, say in the United States or Great Britain, to meet our maturing obligations. We floated a loan in New York two years ago for $190,000,000, and I would ask the minister what consideration did Canada receive in exchange for our bonds? Did we receive gold? Did we receive United States currency, or did we receive banking credits?


James Alexander Robb: I have heard this question
argued very often in this House and different theories are advanced as to what is received in exchange. I have heard some hon. members argue that it would be goods. There is a great difference of opinion on this point.


Robert Gardiner: I asked the minister
what we actually did receive for the $100,000,000 of bonds that we sold in the New York market. We must have received something. Did we receive gold for those bonds. United States currency, or banking credits?


Henry Lumley Drayton: We did not
receive goods. The government does not receive goods.


James Alexander Robb: But the country does. We
received a credit in. the banks that was worth gold if we had demanded it.


Henry Lumley Drayton: I am afraid we will never get anywhere to-night discussing this question, but I am just going to take

Refunding Loan
a direct ratio between commodities and currency. It is the amount of commodities, of wealth produced, and the ratio which exists between them and the currency itself which in fact determines whether there is inflation of currency or not. And there is one good thing about the present system which is in fact a recognition of our currency on a commodity basis. Take the gold; there is one good thing about it. The whole of that redundant issue automatically came in. automatically was cancelled, and automatically disappeared Why? Because in the case of every bank that had it, it just meant that, they were paying out 5 per cent if they held it. It came back, it passed in, and the obligation of the country disappeared. So I am not very much afraid of currency inflation so long as I know that that inflation is something which is in proper relation to the average commodity movement in the country. That is what we need it for.


Andrew Ross McMaster: It is partly inflation in
that case.


Henry Lumley Drayton: I do not think it can well be inflation so long as the currency of the country is merely sufficient to do what, currency is meant for, namely, not only to allow our business activities to 'be carried on in the ordinary sense but also to permit the full exchange of commodities, using the currency itself for a basis. Of course there are other matters of inflation and they are somewhat connected with the subject I have just alluded to. Take for example government bonds. One of the greatest causes of inflation in every country was the issue of government bonds, and the re-issue of them and the use in different re-issues of practically the original dollar with some enlargement of the principal. That alone of itself does not make inflation. Hon. gentlemen talk about loans being made by banks to customers, and treat that fact as if it creates inflation. It does not so long as it is proper business. Supposing, for example, that those government loans had been for the purpose of enlarging our agricultural and industrial activities, costing 5 to 6 per cent but bringing in as a result i f the enlargement of those activities a return of 10 per cent? There is no inflation there. On the contrary, instead of inflation you have a very useful investment. But these government loans were not for any of these useful things. Why, there was not one victory loan that had anything really useful lor its purpose except enabling business to be carried on for the time. We were simply paying the cost of maintaining our men over-[Sir Henry Drayton.}
seas. Everything was being blown up, our money was being dissipated, and therefore there was inflation.
Now, I am afraid I am coming back to my preliminary thoughts in talking as long as I have, but there is another thing we have to think of in connection with these loans. In the first instance hon, gentlemen are not quite right when they think that all of the bonds of this country are held or very largely or almost exclusively held by the big corporations. They are not. There are heavy holdings of bonds by corporations that the people as a whole are tremendously interested in. I think I would be safe in saying that the holders of life insurance policies in this country have larger holdings of these bonds than they have of any other security. I think I would be quite safe in saying that, and it means that there is practically one in almost every family. They are very directly interested. I do not know what the proportion of holders is now but I could have told once. I remember in the old times the hundreds and thousands of applications which we had, and I was very completely familiar also with the tremendous amount of accounts there were in connection with those loans. That is one of the reasons for the cost of managing such a loan, why it is so great. Not only were hundreds of thousands of cheques issued bu't there were millions of coupons. If these registered bonds were held by just a few concerns it would be very much cheaper to carry on the management of such .a loan. I do not know what the number of cheques is to-day, but I have no doubt the minister can tell us. There is a real interest in this, apart from some large bank or some other large institution.
Further than that there is a very real interest outside of the country. Never mind all we could do to our own banks if it were wise to do it; and frankly I do not think it would be wise to put them out of business. But apart from that there is a very large interest out of the country. There is a very large proportion of our bonds held out of Canada to-day and we have got to pay them. They have got to be paid, and I know that when that time came there would be a great deal of difficulty in paying them by simply telling the foreigner "We have opened a credit for you in our books." The foreign creditor would not like the mere idea of being told " The Dominion is worth billions of dollars and a credit has been opened for you on its books." He would say " Yes, but what am I going to do with that credit? What can I do with it. In other countries I am going to get

Refunding Loan
gold." A mere photograph of that entry on the credit side of the ledger showing his name at the top of the ledger will not help him very much. It will not help our
10 p.m. credit very much to say that the credit is his. And what is more, the foreigner is not going to be content with the picture of even these beautiful buildings with a promise to pay underneath. He is entitled to payment. How are we going to do it?
An hon member put a very proper question when he asked the Acting Minister of Finance what we got for the hundred million loan in New York. There is no mystery about it. I do not know whether at that time the government had to look after obligations in New York. If they had to do so, all that happened in the case of the hundred millions was that the New York obligation was discharged by the cheque of the people who bought those bonds. But assume that none of it was paid in New York and that it was all paid here. Hon. gentlemen of course know that the Canadian creditor would be no more satisfied with a ledger entry in the books of the New York banker in his favour than the foreign creditor would be satisfied with a picture of the entry in his favour in our ledger here. There is no mystery as to what happens. The government buys Canadian dollans. It gets money, or credit, or whatever you like to call it and turns it into Canadian dollars.


James Shaver Woodsworth: What is the security which the Canadian government puts up in order to get this credit?


Henry Lumley Drayton: The security of
the country-no question about it.


James Shaver Woodsworth: Whether this credit goes through the bank, or whether it is given directly by the government, the security is the same in either case?


Henry Lumley Drayton: Yes, but the
position is entirely different, having regard to the method in which payment is made. The hon. gentleman is a close thinker and can follow me easily enough. We have a debt, we will say, of $2,400,000,000. Suppose we say we will get rid of the whole of it-and it is all payable in Canada-by simply using the printing press. If you say you are going to do it for part, then if it is good for part, it is good for the whole. If it is honest to pay one cent to the bond-holders with paper, it is honest to pay the whole. Therefore, we would have to consider paying $2,400,000,000. I do not know the amount of currency out today. I have not been able to attend the sittings of the Banking committee, because I was a special subject of investigation before a commission which was sitting at the same time. Therefore I have not heard the up-to-date statistics, but hon. gentlemen know it is a mere fraction of that amount, and it is enough to-day. Put it that way, and what use is it to the people? It is certainly of no advantage to them unless they can use it. On the other hand, if they cannot use it, if you have a great deal of money that cannot be used and if it is not redeemable, then of course you have the Russian or German situation. It could not be redeemable. Just follow up the thought that is thrown out. We pay these obligations by issuing paper. That paper cannot be redeemed.


James Shaver Woodsworth: I have made no
suggestion of issuing paper. I simply asked whether the credit was not the same whether the government borrowed through the banks or re-issued creditory notes or bills. The credit is the same in .either case, I think, and there would be no more inflation in the one case than in the other.


Henry Lumley Drayton: Suppose you
take this view of it; suppose we do not use the banks or the underwriters at all, and do just what we did in the case of the victory loans, it is quite all right. In reference to that loan we looked after our own business. We made our own agreement and did our own advertising. We negotiated with ino underwriters. We raised the money ourselves. I did not know this matter was coming up; I am speaking from memory, and hon. members will bear with me if my figures are not quite accurate, but they are substantially correct, and I say that the victory loans cost us 0.7, 0.9, 1.3, and 1.1, if I remember rightly. We did all the work ourselves. The department itself looked after it, but hon. gentlemen will see what that meant. That meant absolutely no change in the underlying principle. What is that principle? The principle is that the country as a country gives the security which is a redeemable security, and it makes no difference whether the security is a bond, a bill or a lien, so long as we have to redeem it, and if we issue bonds to-day and say to these gentlemen, "Here we will give you bonds, -whether you want them or not, or we will give you a legal, whether you want it or not"; we are not paying them, and we can very well say that that is something that is going to be redeemable when we are treating these existing obligations as not redeemable. This is a matter in which we want all the
Refunding Loan

light we can get. I am afraid at present the only practical method is to do business either ourselves directly upon the recognized basis of values, or else deal through the banks.


Edward Joseph Garland: I wish to make a suggestion in all seriousness to the minister, and I deal with this subject in no flippant or purely academic fashion. I look upon this matter as one of the most serious problems facing not only Canada but other nations. I say that this government, in common with other governments, are absolutely in the power of financial interests at the present_moment, and are unable-to-frec-them..-selves from the shackles of those interests.
I have before me statements from prominent gentlemen in regard to this matter. I have under my hand a statement from the Prime Minister of England, Ramsay MacDonald, in which he declares that all governments were helpless in the power of the financial classes.
I have Lord Milner's similar statement in that connection, and a further quotation that deals directly with this particular problem. He says: .
As a matter of fact some of the greatest fortunes have been made and are being made to-day by the mere manipulation of financial counters for which the chaos of exchange affords such exceptional opportunity. That is interception in the grand style.
By giving the minister permission to float this loan of 3300.000,000 we are proposing, I understand, that the minister shall forthwith adopt the orthodox practice of issuing bonds through the regular orthodox channels. In short, we are continuing the practice of the past, in still recognizing the financial machine that exists and are using that machine without always taking into consideration just what it means in cost to the people. If the minister has to float three hundred million dollars' worth of thirty-year bonds at five per cent interest, what does it involve? This is a consideration that should be thoroughly impressed on the public and also on the minister.
It means that if the bonds run to maturity we in Canada and our children after us-because we will not all live thirty years longer -will have paid four hundred and fifty millions in interest for the use of about two hundred and ninety-two million, and we would still owe the three hundred million to the bondholders whoever they may be. I term that frankly a most insane system of financing in this age and generation. I therefore urge the minister to take into consideration some alternative method, not with a view to immediately adopting it-I do not attempt to suggest I could induce him to do that.,-but I ask him and the ministers that may follow him

in his department, to take into consideration this appalling cumulative debt that is pressing upon the backs of nations to-day, 265 billions of international debts, the result largely of cumulative interest on bonds. Wheie is it going to stop? How will we pay it? The industrial machine is cracking to the breaking point at this moment. That is the situation.
Mr. \ IEN:	Has the hon. member any
alternative to suggest?


Edward Joseph Garland: We have
suggested one very carefully this afternoon, -and-that-is-that-the-government might Aake-into consideration the possibility of accepting its own real credit, a real credit which J. P. Morgan will accept, and issue thereupon judiciously and wisely its own financial credit.


William Findlay Maclean: Would the minister not consider the question of appointing a permanent committee to study the national debt? Probably they could extend the powers of the committee on Banking and Commerce, and have it reconstructed as the committee on Public Debt and Banking. Every session that committee could review the public debt, as to its location and the interest to be paid on it, and propound a scheme for the refunding of it. If that were done, the result would be that gradually an active and an informed committee in connection with public debt would be developed in this House, and that committee would accomplish some of the things that this House now as a committee is trying to do to-night. I have never known of any real parliamentary study by this House of the public debt in relation to the rate of interest and consolidation later on. Perhaps the minister will make a statement in regard to the suggestion which has come not ;only from myself but from several hon. gentlemen who have spoken to-day.


William Charles Good: The suggestion that has come from the hon. member for South York (Mr. Maclean) has I think very considerable merit. It is a singular and very significant fact that, connected with a number of our departments of government, particularly the Department of Agriculture, we have some really expert and well qualified men to guide us. And while I wish to say nothing disparaging about the estimable gentlemen who are associated with the Acting Minister of Finance (Mr. Robb), I think I state only the bald truth when I say there is no one in that department who is in any sense qualified to advise the minister in matters of this sort.

Refunding Loan
(Mr. MARLER: Why does the hon. member say that? Does he mean to impugn the ability of the officers of the Department of Finance?


Edward Joseph Garland: The hon. member (Mr. Good) is referring to their knowledge of financial affairs.


Herbert Meredith Marler: The officers of the Department of Finance are in my opinion an exceedingly able and intelligent lot of men.


George Newcombe Gordon: I desire to remind hon. gentlemen that the present trend of the debate is out of order; this is not a question of appointing a committee.
Mr. 'GOOD: Perhaps the discussion from that standpoint is out of order, and I do not know whether I am permitted to answer the question put to me by the hon. gentleman.
I am expressing my opinion however, not without due consideration and considerable inquiry from people who are much more competent to form an opinion than I am myself. It is high time that, associated with the Minister of Finance and his deputy, there should be one or more persons who have extensive training in this particular branch, training altogether different from the kind which the present Deputy Minister of Finance has had.


Herbert Meredith Marler: The people the hon. gentleman has in mind are no better judges than some others.
Mr. 'GOOD: I have expressed my opinion; let it stand for what it is worth.


Herbert Meredith Marler: It is not worth very much.


William Charles Good: I want to refer particularly to a criticism offered by the hon. member for Lincoln (Mr. Chaplin) of what he supposed was a suggestion emanating from this quarter of the House as to the payment of our debts and the settlement of the $300,000,000. The ex-Minister of Finance (Sir Henry Drayton) referred to the same matter. The question is asked:	"Why do we not issue our own
promises to pay or Dominion notes for the amount of the debt and wipe it out that way?" And that suggestion is ridiculed. I admit that generally speaking such a practice is a very foolish one, but there might be conditions under which it oould be carried on not only with impunity but with profit. I discussed this matter last year with Professor Irving Fisher, one who, probably, has made a closer study of it than any other person on the American continent. I asked him particularly as to the propriety of such a practice, because I could see very serious disadvantages in it, as no doubt everyone else can; and he said that the advantage of it depended wholly on conditions. I do not wish to go into the matter any further than to say that while the practice is not always a wise one, there are nevertheless certain conditions under which it might profitably be indulged in under proper regulations.


Mr. VIEN:: Did he define the conditions?
Mr. 'GOOD: Yes, but that is a matter which I shall deal with in another debate.


Herbert Meredith Marler: What practical knowledge had he of the situation? Had he any practical interest?


William Charles Good: I believe so, yes. At any rate, I quote the opinion as that of a man of authority who has studied the question.


Herbert Meredith Marler: Theoretically.


William Charles Good: There is only one other matter I want to deal with in this connection. If we were to present to any of our bankers what is admittedly a questionable method of financing, they would hold up their hands in horror.


Herbert Meredith Marler: Because they know their business.


William Charles Good: They would say, "Let us do it in the regular, orthodox and proper way". I want hon. members to figure out how the banker does it in the orthodox and proper way. Here is a loan of $300,000,000. How much of that will be inflation?-if we use that term, as it has been used, perhaps improperly. How much of it will be new money and how much the absorption of purchasing power already in existence? Let me suggest what the banker might do-and I submit that he often actually does it; it was done during the war time and time again as can be proved. He may take $100,000,000 of that sum out of existing purchasing power and put $200,000,000 of new money with it, and the country will not see the $200,000,000 of new money because the other is put up in front of it, as was said last year, as a smoke screen; and that will be done not necessarily deliberately but perhaps unconsciously. Here is the very practice we object to, and rightly, in the printing of paper money without limit or regulation; and yet we allow our bankers a free hand in this matter, to inflate or deflate credit without regulation. That is the trouble and that is what may happen.
In conclusion, I would again urge upon the Acting Minister of Finance that he seek
Refunding Loan

expert advice in this matter and consider the situation very carefully before he launches out this fall on a programme of floating loans. And I would emphasize once more the importance of his obtaining competent outside advice. In saying this I wish to cast no reflection whatever upon the personal character, the integrity or the faithfulness of those who are associated with the minister; but I am satisfied, and I say it in the kindliest spirit, that his deputy is quite incompetent to advise him in a matter of this nature.


James Alexander Robb: First of all, let me say in reply to my hon. friend from South York (Mr. Maclean) that there is no question affecting our Canadian life that deserves so much attention as the consideration, when the time is opportune, of the question of consolidating the public debt and reducing if we can the interest we have to pay. I will keep the hon. gentleman's observations in mind. As to the remarks of my hon. friend (Mr. Good), I want to disclaim any pretensions to the expert knowledge of a financier; as hon. gentlemen know, I am carrying on the work of this office in the temporary absence of the Minister of Finance (Mr. Fielding) whose illness we all regret. However, in justice to the Deputy Minister of Finance I must say that I have never found any more loyal or willing public servant than the gentleman who serves this country in that capacity. He has been in the service of Canada since he was a boy.


William Charles Good: I did not say otherwise.


James Alexander Robb: He has grown up in it and is conversant with all its details. He is a most careful public servant and he could not look after the finances of the country more carefully if they were his own; every penny he has charge of is a prisoner. He is honest, he is sincere, he is loyal to his chief, no matter who that chief may be; and he works during the session fourteen, fifteen and sixteen hours every day.


Mr. PARENT:: Like members of parliament.


James Alexander Robb: Perhaps. I would add this
on behalf of -the deputy minister. I believe there is no department where more free advice is handed in than the Department of Finance. Every day some person comes along telling us how to run the finances of the country, and the deputy minister gives a very sympathetic ear to all suggestions, and is always ready to listen to better methods of financing our national affairs.


Mr. SPEAKMAN:: Mr. Chairman, I
agree with everyone who has spoken on the subject in describing this as perhaps one of the most important subjects, if not the most important, which has come before us, and particularly before the Acting Minister of Finance this session, because it is very evident that year by year we are not only finding it difficult to repay our indebtedness, but that indebtedness is gradually increasing. This condition of affairs cannot go, on indefinitely. I would suggest that in refunding our indebtedness we should take into consideration the purchasing value of the money at the time the loan was made. Undoubtedly a large part of our indebtedness was contracted when a. dollar would buy a very limited quantity of goods, that is, when goods were at a very high price level; the debt is being repaid when goods are at a comparatively low price level. The result is that the individual or the country that made the original loan is receiving practically double the amount of money in repayment. This applies within the nation, and it applies internationally. As debts are refunded on the old basis, the creditor is receiving greater and greater value with the receding price level of goods. I believe that is our difficulty. Eventually I presume most of our indebtedness must be repaid in goods in one form or another, if it is to be discharged at all. When we find that at the time the money was borrowed $100, for example, would buy 100 units of goods, and that now we have to pay 200 units of goods in discharge of that $100, it is evident that the situation becomes almost impossible.


William Charles Good: Under those conditions might it not be advisable to have such an inflation as would lead us back to. the price level existing at the time when .the debt was incurred?


Alfred Speakman: I have considered that point a little. I do not pose as a financial or economic expert, I simply see the problem, and I concede that if you could bring about inflation to that extent, and could then pay off your indebtedness, it would undoubtedly be an advantage to you. Whether that would be possible or not is a very different matter. As I understand it, many of the debts were contracted in purchasing credits, especially as between one country and another, so that the loan was actually paid in goods. Therefore the individual or country that loaned the money originally is actually being repaid twice over. I am quite aware that it is impossible for every government to say:	"We will reduce the refunding amount so that it equals in

Refunding Loan
approximate value the value of the loan at the time when we received it," because that amounts practically to repudiation of the obligation. But I do believe that in the interests of ourselves, and in the interests of the nations, the time will come, and the sooner it comes the better, when a real economic conference will have to be called together to study suggestions for the refunding of indebtedness. This conference should be composed of representatives of the various interests concerned, of those who loaned the money and those who, through taxation, must repay the loan, and these representatives would eventually, I trust, be in a position to recommend an equitable basis of settlement. Because, frankly, Mr. Chairman, as I study the subject year by year-and I admit that I have studied it much more closely during the last three years than I ever did before- I am concerned as to what the future holds for us in that respect. I am no alarmist, but I am alarmed when I consider what must be the inevitable outcome of this continual refunding with its corresponding increase of our indebtedness. I believe that the grave importance of this problem will be borne in upon every business man in this country sooner or later. I believe that eventually we will have to state our terms of repayment in the value of goods and not in the face value of dollars, so that the lender will receive back the same purchasing power which he loaned. There is nothing unfair in such a proposition. If a man loans enough money to buy a suit of clothes, in equity if he is paid back a sum of money sufficient to buy him the same quantity of goods he is fully repaid. This may be considered bad financing but to my mind it is sound financing, and I believe it is the only system of financing that is going to stand up in the future, the only system that will enable us to discharge our obligations. I am not suggesting that the Acting Minister of Finance should attempt to put my suggestion into practice now, but only after consideration by a conference on the lines I have indicated. I am convinced that this problem will have to be taken in hand, and the sooner it is dealt with and solved the better it will be for us and for our future.


Henry Elvins Spencer: Mr. Chairman, my sympathies go out sincerely to the Acting Minister of Finance. I appreciate that he has probably the most trying portfolio in the gift of the government: he is responsible for all moneys paid out and for all moneys coming in. It is for that reason that such debates as we are engaged in to-day are, in my opinion, the most important that can come
before this House, and I was very sorry indeed to hear the hon. member for Marquette (Mr. Crerar) say that we were wasting time. All over the world debts are growing very rapidly. Europe to-day is in an awful condition economically and financially, and only two countries are realty holding their heads above water. France, as we know, with a national wealth of sixty billion dollars, has a national debt of sixty-eight billion dollars.
There has been some criticism of what are termed the unorthodox suggestions put forward in the course of this discussion. When similar suggestions were put forward two years ago many members walked out of the House. To-day I am glad to see greater interest in these suggestions, and I congratulate those members who have given them a very fair hearing. We can make a great mistake in being too orthodox; there comes a time when you have got to be a little unorthodox and explore new means and ways of doing things. If five hundred years ago people had discussed in parliament such things as the flying machine, the telephone, the gramophone, radio and the other wonderful discoveries which we now have, they would have been placed in asylums or in prisons. We have been following on certain lines of orthodox finance for a long time; to-day there is a very large school of thought throughout the world which realizes that the orthodox school of finance has got to go.
There is not the slightest reason why when this matter is brought forward even the Acting Minister of Finance should refer to r.ur suggestions as Russianizing our currency, nor is there any reason why other hon. gentlemen should refer to them as wildcat schemes. The minister does not seem to realize that thu small group in this House who are putting forward these suggestions are his best friends. Unfortunately he does not appear to think so. But coming back to the main question. I understand that to-day the annual interest on cur national debt amounts to just about as much as the entire yearly cost of running the country previous to the war! That is something we have to recognize as a very serious subject to consider. I was much pleased with the way the hon. member for Red Deer ''Mr. Speakman) handled this subject a few minutes ago. This country is suffering under a tremendous load of taxation, and one of the reasons is that we have to-day bonds issued exempt from taxation to the amount of $931,312.900. It is because of these things that we are very anxious to help the Acting Minister of Finance cut down expense and get money cheaper if possible. The Acting Minister of
Refunding Loan

Finance may not wish to accept some of the suggestions put forward this afternoon and this evening, and I do not blame him for not accepting them right off. But I have something to suggest which is along more orthodox lines which I trust he will consider. He led the House to believe this afternoon that the loan that is going to be made will carry interest at 5 to 5h per cent.


James Alexander Robb: No.


Henry Elvins Spencer: I shall be glad to be
corrected if I am wrong.
' Mr. ROBB:	I made no such statement
as to the rate of interest.


Henry Elvins Spencer: Does the minister expect
to get it at less than 5?


James Alexander Robb: Ido.


Henry Elvins Spencer: I am glad to hear that.
Possibly he does not expect to get it at less than 31. I was therefore going to suggest that we have an excellent way of getting money at 34 per cent, probably as much as the government wishes. If he cared to offer 3i per cent-or, if the minister wishes, 4 per cent

through the post office savings. Why not throw the gates open as it were, and let the money come in, with the guarantee of the government, thus obviating the necessity for issuing bends, the country would be saved many thousands of dollars in interest, perhaps millions.
I was glad1 to see the ex-finance minister (Sir Henry Drayton) take part in this debate to-night. He has seen fit not to take part in these debates in the last two years, though he knows a great deal more about this subject than I think he cares to give the House. I regretted the suggestion he made that any one thought for a moment of issuing paper to pay for a two billion dollar indebtedness at once. The whole thing is absurd.
I would like to quote just a few lines from a speech made by the Hon. Reginald McKenna, of London, England. He said:
If banks increased their loans and investments, the results would be to increase the aggregate amount of their deposits but to add nothing to their cash resources.
I quote that because the statement I made this afternoon was not accepted, I think, by some hon. members. Referring to the meaning and importance of monetary policy, he said:
One man may tefll you to increase it indefinitefly, and keep trade booming, but if you do, prices will soar indefinitely. You will first suffer innumerable social evils, and finally the extreme depreciation of your currency will greatly impair your power to trade. fMr. Spencer.]
That, of course, was the case in some of the European countries.
Someone else may urge you to reduce the amount of money, and bring down prices to the pre-war level, or to such other arbitrary level as he happens to think the right one.
That was done in this country, with this result-I quote from Mr. McKenna again:
Yes, and trade will remain depressed, and unemployment will be with you all the time. Moreover, the burden of the national debt with the higher value of money will become intolerable, and no chancellor of the Exchequer will be able to balance his budget.
I think it will be generally accepted that if the price level be unchanged, an increase in the volume of trade will require an increase in the volume of bank credit and currency, that is to say, of money.
I quote these few words because I think it is just as well when hon. members deal with this subject in a rather unorthodox way that we should be able to place before the House quotations from men in such high positions as the Hon. Mr. Reginald McKenna as one supporting the views that we hold.


William Irvine: It is very gratifying to
note the interest that has been shown by the discussion of this resolution. I am aware that the House is not prepared to listen to any academic discussion of the finance question. I have tried that before on one or two occasions and I am satisfied that most hon. members are not even interested and are pretty well convinced that the finance system in vogue throughout the world is the best that is possible. They are just as much convinced of that as they were that the Bank Act was the best bank act in the world last year. Fortunately for them and for the world a revelation of the weakness in the case of national finance has not been brought about so speedily and in as clear a manner as it was in the case of the Bank Act, but I believe that a similar awakening is just as surely coming. There is no evidence that the Acting Minister of Finance anticipates anything different in the way of financing from that which has been in vogue ever since Canada had any financing to do, the road being followed must lead directly to disaster not only to Canada but to all nations following the same course. What is the end of the road? The end comes when you cannot tax your people any longer to pay the interest on the bonded indebtedness, not to speak of paying the bonded indebtedness itself. A number of nations are almost at the end of the road now. We are fortunate in having been a new country with tremendous natural resources, so that perhaps we may on paper look a little better than other nations. But we are following exactly the same road and in proportion to our ability

Refunding Loan
to pay we are not so very far behind some of those European nations which have brought themselves to a state of bankruptcy. While I am not going to follow that point to any length, I think it is necessary to emphasize the fact that this parliament is complacently launching another $300,000,000 loan on the same old) basis, and in the same old way, in spite of all that has been presented to this House, in spite of all the evidences pointing to the wisdom of taking another course that come from other nations which are approaching financial catastrophe. I know it is a popular thing to say, "It is all very well to talk like that, but what do you suggest?" One or two of us make a suggestion, and then you laugh. I am prepared to say that it is very unwise for any one to make a detailed suggestion on the floor of the House in the circumstances in which we are now placed. Are we simply to go on blindly because no individual member can stand up here and give a detailed outline of a new financial system that will carry us into safety? Is there nothing we can do? Have we reached the last resort, and that to continue with a system that every one knows to be wrong? I want to make two suggestions, Mr. Chairman, both of which I believe to be practical. The first suggestion is for the appointment of a committee, which suggestion has been made, I believe, by another hon. member.


George Newcombe Gordon: I would draw the hon. member's attention to the fact that the question of a committee is not before the House.


William Irvine: But the question of raising $300,000,000 is before the House.


George Newcombe Gordon: That is true, but not the question of a committee to deal with that matter.


William Irvine: I am not going to argue your ruling at this moment, Mr. Chairman. I was just going to point out that the manner in which that $300,000,000 is to be raised might be in order, but if I am ruled out of order I will abandon the discussion of it.


George Newcombe Gordon: The manner and expediency of raising the loan is in order, but not the question of the advisability of appointing a parliamentary committee to deal with the matter.


William Irvine: Being ruled out of order
in presenting another possible means of raising our debt, I am practically shut off and must look for another opportunity to put that practical suggestion before the House. However, let me point out one or two other things since I have been stopped on that angle. I
was glad to hear the hon. member for Red Deer press a very interesting and I believe a very important point. Surely if we are going to attempt to pay back our debts-of course it is impossible to pay them back, but as long as hon. members think we can do it I have no objection to their holding that joyous opinion-but if there were any serious attempt to pay our debts, then the point raised by the hon. member for Red Deer when he urged inflation so as to bring the purchasing power of the dollar to what it was when the debt was contracted is surely a practical one. I notice that the ex-Minister of Finance attempted to answer a suggestion made from this side of the House and in doing so held that the government could not issue its own credit or recognize its credit in monetary form, because in paying back their debts that way they would have so much money they would not know what to do with it. It seemed to me that the ex-finance minister actually thought he had cleared the field when he had made that remark, that there was nothing else to be said. I am sorry he is not in his seat, and I shall not in his absence say all I wanted to say of his reasoning on that point.
I will be satisfied to say that in my opinion it was not an argument at all, and if I did not believe that the hon. member who made it knows far better than that, and can do much better, I would not have as high an opinion of 'his statesmanship as I have.
I regret, Mr. Chairman, that what I rose to say has been ruled out of order, but I believe nevertheless that there is a better way, and a more practical way, of raising this $300,000,000 than by the method that is suggested in this resolution. I believe that to follow the old method of piling up interest and pyramiding our debts must lead ultimately to a crash. I believe that it is possible to avoid that, but that it is only possible to avoid it by adopting a method that has never been used before; and the necessity for adopting a method that has never been used before arises because of the fact that we are face to face with a situation that never confronted Canada, never confronted the world before. I say that to go on in the same way, ignoring a new set of conditions, ignoring the piling up of debts that never can be paid, is to acknowledge the inability of this parliament to face the problem that stands before us.


Mr. ARCHAMBAULT:: Is my hon. friend referring to a method that has never been tried anywhere before?


William Irvine: Certainly.
Refunding Loan


Joseph Archambault: Nowhere in the world?


William Irvine: Exactly.


Edward Joseph Garland: It has to be started somewhere.


William Irvine: That brings to my memory the fact that the finance question is no longer a Canadian question; it is an international question. We are following exactly the same method that Russia is following. Russia is thoroughly orthodox in her financing. She is on a gold basis, if you please, only she is much more reasonably on it than we would be were we to announce our return to that shibboleth. Russia's financial position is set forth in the financial papers.


Georges Parent: Where does the hon. gentleman get his information?


William Irvine: From Russia. Where did you get yours, if you want to controvert it? There is no doubt in the world that Russia is on the gold basis. The point I want to make is that it is very difficult for any one nation to take a new course except all the nations, or the most important nations of the world, are ready to help and take that course also. Finance is an international problem, and that leads me to the point I wanted to suggest when I was ruled out of order on the second head and that was the calling of an international conference to deal with this matter.
Resolution reported, read the second time and concurred in. Mr. Robb thereupon moved for leave to introduce Bill No. 217, to authorize the raising, by way of loan, of certain sums of money for the public service.
Motion agreed to and bill read the first time.



MINES AND GEOLOGICAL SURVEY

[Stage Direction]
The House in committee of Supply, Mr. Gordon in the chair.
Mines and Geological Survey-for organization and equipment of the Explosives Division under the Explosives Act, chap. 31, 4-5 George V, *10,000.
Milton Neil Campbell: Would the minister
explain this vote?


Hon. CHARLES STEWART (Argenteuil) (Minister of Mines):: This is for the purpose of inspecting the manufacture of explosives and testing them to see if they are up to standard, so that the purchaser when he buy3 explosives that have been inspected will know 
that he is getting value. This branch also inspects the premises where explosives are manufactured. Those are the two chief duties of this particular branch.


Milton Neil Campbell: That would be explosives used in the mining industry?


Charles A. Stewart: Yes.


Arthur Meighen: Where does the reduction apply?


Charles A. Stewart: We proposed purchasing a cannon for testing purposes, but we did not purchase it on account of not having a suitable building in which to instal the machine, and we have cut the vote $2,000 on that account.


Arthur Meighen: I do not understand the explanation.


Charles A. Stewart: We have
to have various machines for testing purposes. In this particular case there was a building in- which we were testing explosives. We are unable to go on with the work this year, and for that reason we are dropping $2,000.


Arthur Meighen: Is it the case that a
certain type of testing has been going on, but it is not being gone on with now because the appliance is not suitable?


Charles A. Stewart: We have not been going on with that type of testing.


Arthur Meighen: Plow much was spent
last year of the $12,000?


Charles A. Stewart: We spent
$7,881.38 last year. We need a certain amount of money because prosecutions are frequently necessary, but we do not propose to spend any more money than we have to. We are asking for what we think will be a sufficient sum to enable us to carry on the work of the department.


[Stage Direction]
Item agreed to.
Mine branch-.for investigation of mineral resources or deposits: of the mining and metallurgical industries and of mineral technology; wages, expenses of testing and research laboratories; investigations by, including salaries and all other expenses of, Dominion Fuel Board, $200,000.
Arthur Meighen: Has any progress been
made in testing any new fluids for ores. That is to say, in order to avoid the necessity of submitting to the exactions of the combine which has command now of the oil separation system, has any progress been made in getting a new system of separating ores? I know there were some tests made. That is mainly what this is for.

Supply-Mines


Charles A. Stewart: There have been various tests, but I do not follow my right hon. friend's direct question.


Arthur Meighen: As I understand it the
mineral separation business is pretty well under an American combine. They have the patents on the oil separation system. It is an oil fluid that is used in l#ad ores and other ores. These are all ground
11 p.m. up very fine like flour and then *they are put through this process which separates the metal. The department was testing the value of certain other combinations or compounds to take the place of oil with the view of getting cheaper separation in Canada and relief from the American combine. Has any success attended the efforts?


Charles A. Stewart: Yes, the
tests are going on and pamphlets have been issued setting out what has been accomplished in this connection.


Arthur Meighen: I remember particularly
that the late Sir William Mackenzie was interested in another plan for separating metals which it was hoped would give us relief against the oil separation system. I know that his scheme was being tested out. What has been the ultimate result of all that?


Charles A. Stewart: Is my right hon. friend under the impression that the system was being tested here in the laboratory?


Arthur Meighen: I know it was because I went down to see it once.


Charles A. Stewart: I confess I never heard of Sir William Mackenzie's scheme and I have been down to the laboratory half a dozen times.


Arthur Meighen: The late Sir William
Mackenzie was interested in it, I forget the name of the inventor. No oil was used, it was a new system. It was rather promising at one time and I was wondering if it had succeeded.


Charles A. Stewart: I cannot get any information from the deputy with respect to the particular test that my right hon. friend has referred to., Of course we are testing everything that comes to light as well as trying out improvements right along.


Arthur Meighen: The testing that is done under this vote is testing as to the gold content or the silver content of an ore, and so 247
on. This was another test that was being *made, and I 'thought the deputy would know about it. How much of the $200,000 was spent last year?


Charles A. Stewart: We appear
to have only spent $148,756 last year, but it is partly accounted for by the fact that our Fuel Board did not get under way until nearly half the year had passed, and this year our estimates are made up as follows:
For investigation of mineral resources or deposits, of the mining and metallurgical industries, and of mineral technology; wages expenses of testing and reasearch laboratories, $200,000.
Summary
Division of Mineral Resources	 $37,000
Ore Dressing and Metallurgical division..	..	40,000
Fuels and Fuel Testing division including special investigations to be undertaken under authority of Dominion Fuel Board..	70,500
Salaries and expenses of technical executive officer and clerical assistants under the
Dominion Fuel Board	 5,000
Ceramic and Road Materials division	 14,500
Contingencies	 3,000
Dominion Fuel Board investigations	 30,000


Mr. McQUARRIE:: Is the minister aware
of the proposal which is being discussed in the United States to impose a duty of six cents a pound on copper ore entering that country? The minister is no doubt aware that the entire copper production'of British Columbia goes to the United States, and if this duty is imposed it will have the effect of practically closing down all the copper mines of British Columbia. I understand at the present time the total production is something like 50,000,000 pounds a year, and that in order that a refinery could be carried on profitably it would require a production of at least 100,000,000 pounds a year. Does the government propose to do anything to meet this situation? I suppose I should not use the objectionable word "retaliation". I got into trouble for using that on a previous occasion, but it seems to me if this kind of thing continues the government will have to do something. I will be very glad to hear from the minister in this connection, because the people of British Columbia are very much interested in the subject.


Charles A. Stewart: I am aware that there is a discussion in certain circles in the United States with reference to the imposition of a six cent tax on copper. However, that has not gone into effect, and it is not likely that it will go into effect, because I do not think under the provision in the tariff which permits the President to take action anything will be done with regard to a matter of this kind. One could not help realizing that it would be a very serious blow to the

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mining industry in Canada, not only in British Columbia, but other places where a good deal of copper is taken out. We hope to secure on the continent a market for our product of copper, but my hon. friend knows that it would not be well to be too hopeful at the moment on account of conditions there. A private member of course may talk about retaliation, but I fear that a minister had better keep away from the subject.


Henry Lumley Drayton: Does the minister really think he should talk in that way, no matter what happens? We have had a multiplication of taxes against Canadian industry and against Canadian agriculture; but the answer is that it makes it all the easier to trade here. Instead of any talk of retaliation on the part of Canada, if my hon. friend runs true to form, he will come down with a proposal to still further reduce duties on American importations into this country. I would never think that if he were a private member he; would talk that way. If we can sell no copper ore whatever in the States, and if my hon. friend will simply carry on in the way we are carrying on at present, that will be an additional reason for further reduction, and for further paens of praise to my hon. friend that another death knell to protection has been sounded.


Mr. SIMPSON:: I notice that a portion of
the item is for the purpose of investigating mineral resources or deposits in the particular sections where the investigations are being carried on.


Charles A. Stewart: The sum of $37,000 is for the investigation of mineral resources. That does not mean that we only spent $37,000 out of the total vote of the Mines branch, because all the geological work was being carried on by the department in the interests of the mineral resources.


Arthur Meighen: Is the minister ready to
announce the new Canadian national fuel policy to-night?


Charles A. Stewart: No.


Arthur Meighen: The session is getting
on pretty well.


Charles A. Stewart: It will have to be a separate matter.


Arthur Meighen: I do not want the government to overlook [DOT] this matter. The hon. member for North Toronto (Mr. Church) early in the session moved a resolution calling upon the government to put into force this new national fuel policy for Canada, and the
/Mr. C. A. Stewart.1
government in order to get rid of the resolution accepted it; so that it is for them to announce it. I have not bothered the government on the subject since. We have waited patiently in daily expectation of hearing the national fuel policy announced. We are asked to vote $200,000 more to the Fuel Board without any policy.


Charles A. Stewart: It is not the Fuel Board.


Arthur Meighen: The Fuel Board is being paid out of this. Surely we should have the policy, especially when the government promised to bring one down.


Charles A. Stewart: I may say
for the information of my hon. friend that this vote has nothing to do with this policy. It is for investigating fuels which we have in Canada, and the use to which they can be put. A national policy, of which my hon. friend speaks, is of a different character altogether. We are testing our own fuels here to ascertain the best methods of adapting them for use in Canada.


Robert James Manion: What has been the outcome of the peat investigation, about which we used to hear so much? Is there any possibility of peat being used?


Charles A. Stewart: That investigation was carried to the point where peat was manufactured and sold on the Alfred bog; a type of machinery was developed which could manufacture it quite economically. That investigation was carried on in conjunction with the government of Ontario and both that government and this department felt that the point had been reached where peat might be manufactured with facility. I will not say however that the work has been completed because I am afraid that some engineers would suggest that better methods might be used; there is one engineer in this city for instance who thinks that we are not on the right track. The method adopted at Alfred was air-drying, spreading the peat on the ground and allowing it to dry in that way. The manufacture of peat at Alfred was accomplished to the satisfaction of both governments and now it is a commercial possibility if any one wishes to take it up. At the moment there is a company trying to float bonds to go on with the industry on the Alfred bog.


Robert James Manion: I have not heard much
about the matter in the past couple of years. In this government's opinion is it a success or a failure?

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Charles A. Stewart: The production costs were about $3.50 per ton at Alfred. The freight charges are fairly high and I doubt whether peat could be shipped more than 100 miles to come into competition with coal. As a substitute for coal however for the fall and spring season in Canada it is quite good and burns freely, and it sells at about the same price as coal.


Robert James Manion: Has it been used in Ottawa at all?


Charles A. Stewart: Yes. There has been, manufactured a quantity of about 15,000 tons at that plant.


Robert James Manion: There has been a good
deal of discussion about the settlement of the coal question, and there is evidence on the part of the people generally a desire to use Canadian coal as far as possible. I know that at the head of the lakes, from Winnipeg east to Fort William and Port Arthur, we have been using for a long time with satisfactory results coal brought from the western provinces. The question arises as to the possibility of shipping that coal to eastern Ontario, and rather strangely, ,1 have hardly heard it suggested that the coal might be transported, not by rail entirely, but by water east from Fort William. I know of course that most of the boats that come from the head of the lakes carry grain, but I think there are seasons in the year when these boats might be employed carrying some of the coal of the western provinces to eastern Ontario. I should think that in discussing the question of the route by which this coal should be transported from the prairie provinces to the East there should be considered the possibility of conveying it by boat from the head of the lakes. To-day most of the American coal is carried part of the way to the western country by boat. Take for example the Canadian Pacific Railway; for a long time they have been using Pennsylvania coal which has been brought by boat to the head of the lakes and then carried by rail west. Why not reverse the process in the case of our western coal and carry it to the head of the lakes by rail and then by water transportation east. I do not know whether this possibility has been discussed but certainly I have never heard it mentioned; I have always heard the matter treated as though there were no chance of using that coal in the eastern provinces unless it were carried by rail all the way. The minister might very seriously consider the question of arranging for the carriage of western coal in the way I have suggested.
247J


Charles A. Stewart: I doubt whether we can point to any shipment that has been made in that way; but nearly all the men who profess to know anything about the shipping of coal, particularly of lignite which is desirable for domestic uses in Ontario, are agreed that transhipment would break up the fuel very materially. It is held that the transportation of this grade of coal in the one conveyance throughout tends to popularize the coal inasmuch as it retains its original quality; all the experts are agreed that to tranship it on boats would break it up to such an extent that it would become slack and would deteriorate too much. However, the method suggested by my hon. friend has not yet been tried, and one cannot speak with authority until that has been done.


Robert James Manion: That is true no doubt as regards lignite. But surely in the hundreds of millions of tons of coal which we have in the western provinces-our deposits taking second place, in the coal supples of the whole world, only to those of the United States

we have a coal which will not deteriorate to any appreciable extent in transhipment. Do I draw the conclusion from the minister's remarks that we have not in the prairie provinces a coal that can stand transhipment at the head of the lakes?


Charles A. Stewart: I am merely saying that in all the discussion that has taken place so far with respect to the bringing of coal from Alberta to Ontario-I am speaking of the domestic supply-the two main fields that have been exploited are Drumheller and Lethbridge as well as, to some extent, Saunders Creek, west of Red Deer. The bituminous coal could be shipped anywhere in any kind of way; you could dump it as many times as you liked without destroying it. But the coal which the Ontario people are anxious to secure and which the Alberta people are desirous of disposing of is the lignite which is burned in domestic furnaces; and if that coal is broken up or slacked to any extent it is not so valuable. There is no doubt that the ideal method of transporting it is to ship it in the same conveyance from point of loading to destination. However, until the other method is tried one can hardly speak with definite authority as to how far deterioration will take place.


Robert James Manion: In view of the minister's remarks it might be well to ascertain how far it is desirable to handle some of that coal by rail and water.


Charles A. Stewart: The traffic, as hon. gentlemen know, is all moving in the same direction. If the coal were going in the
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opposite direction to the wheat our problem would be an easy one, but the difficulty is increased a hundredfold by the fact that it has to be moved in the same direction as the wheat. There is a time, from the middle of May until the first of September, when there is a diminution in the rail haul of produce from the West and when consequently there are more cars available. Fortunately that is the time when the mines are at their lowest point of production on account of market con-tions. But would that apply to the lakes?


Robert James Manion: I agree absolutely with the suggestion of the minister. It is exactly what I am pointing out, that there is a time in the middle of the summer when, it seems to me, it would be possible to make such an experimental test as we are suggesting. We have our Canadian Government Merchant Marine, and a number of the boats are laid up. It appears to me therefore that it would be a worthy project for the government to take one or more of these ships to load western coal from the head of the lakes for Ontario points. Surely some of those western coals would stand transhipment. There must be a time when it is profitable for such coal to be brought east by rail to the head of the lakes, because to-day we are using much of this western coal as far east as Fort William and Port Arthur. All the coal dealers at the head of the lakes advertise western coal, and a considerable quantity of it is used locally. I believe that we have been too much oppressed with the belief that we must have anthracite coal for our stoves and furnaces. But in the last few years when there has been difficulty in getting Pennsylvania anthracite, and consequent high prices for it, the people at the head of the lakes and west have been using soft coal from the prairie provinces and from Pennsylvania. For example, Pocahontas has been used very much during the last year or two with very satisfactory results. If I may be excused for reciting my own experience, I had always used Pennsylvania anthracite, but last winter I used Pocahontas, with much more satisfaction than I ever got out of anthracite. Pocahontas is, of course, an American coal, but I believe that in the western prairie provinces we produce coal at least equal in heating value to Pocahontas, and it is claimed that we produce practically an anthracite coal. So it .would appear to me to be a very worthy proposition for the minister to take into consideration the feasibility of bringing forward some of our western prairie coal by rail to the head of (he lakes for transhipment by boat to easivn Ontario points.
rMr. C. A. Stewart.]
It would also appear to me to be worth while considering the advisability of bringing coal from the section familiar to my hon. friend the Minister of National Defence (Mr. Macdonald). Nova Scotia coal could be shipped by boat to central Ontario points. During the past year or two we have been using Welsh anthracite, which is a very satisfactory coal from what I have heard, and surely if we can afford to bring over Welsh anthracite for profitable use by the people of Ontario, it must be feasible to supply the same market with Nova Scotia and western prairie coal. I submit that the minister would be acting very wisely as a representative of the government if he used some of our government mercantile marine ships for trial shipments in the way I have suggested, with a view to our being able to dispense with American coal which we are importing in such large quantities at the present time


Edward Mortimer Macdonald: Mr. Chairman, I am very sympathetic with the views expressed by my hon. friend from Fort William and Rainy River (Mr. Manion) in regard to utilizing our own coal supplies as far as possible. Curiously enough, our coal fields are placed at either end bf the Dominion, and for years the central part of Canada has relied on the United States for its fuel supply. The stringency that has arisen of late years in the anthracite supply from the United States has given rise to the idea which my hon. friend has expressed. I hope it will be found possible to carry out his suggestion, but I want to point out to him a difficulty in respect of the proposition which he makes to my hon. friend the Minister of the Interior (Mr. Stewart) to bring coal to the head of the lakes for transhipment by boats of the Canadian Government Merchant Marine for central Ontario points. The cost of carrying coal in steamers which are not specially fitted for the purpose becomes so great that the price of the coal to the consumer will be prohibitive. The Nova Scotia coal which supplies the St. Lawrence river market is shipped in boats specially fitted for the reception and discharge of the cargo by the most modern equipment, so that the cost is reduced to a minimum. I understand that the subject has been gone into by those in eastern Canada who are interested in the cheap transportation of Nova Scotia coal, and their opinion is that none of our government merchant marine boats have the requisite facilities for the carriage of coal.


Robert James Manion: What is the difference
in their build that makes them unfitted for this traffic?

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Edward Mortimer Macdonald: It is not
so much a question of build as of equipment. The steamers which carry coal fron: Nova Scotia up the St. Lawrence were all constructed in England and are equipped with the most modern facilities for loading and discharging their cargo. This results in reducing the cost of operation to a minimum. The whole thing is a question of cost; unless you can put your coal into a boat and take it out again at a figure so low that the consumer is not going to be taxed abnormally in the price he pays, then water transportation ceases to be a factor. Then again there is the difficulty of bringing coal two thousand miles to Fort William, dumping it into ships and taking it out again, which means three or four handlings of the coal before it reaches the consumer. But if it be possible to work out a system by which coal could be dumped into a freight car at Alberta and brought direct to the point of delivery in Ontario, you would have a feasible proposition.
Mr. MANION. I appreciate the remarks of the hon. minister. At the same time I have been watching coal handled at the head of the lakes for the past twenty-five or thirty years and I have noticed nothing very difficult about it. All it amounts to is this,-the freighters carry wheat east as a rule and coal west, and they are simply large boxes, with no special apparatus except a derrick operating clam buckets. Any steamer may be used for shipping coal so long as it has open holds. Take for example the American coal which is shipped from the Pennsylvania mines to the head of the lakes and west, even up to the present time much of that coal is taken up in the large freighters which come east with grain


Edward Mortimer Macdonald: That is
anthracite.


Robert James Manion: Not only anthracite, but
a great deal of soft coal, too. It is dumped into these boats for Fort William or Port Arthur, taken out by the clamshell buckets, dumped on the docks and there transhipped to trains and carried west. A Canadian Pacific official told me one time that it had been taken west quite a few miles past Winnipeg to be used by the Canadian Pacific.


William F. Carroll: They do not use
anthracite.


Robert James Manion: No, the engines use the
bituminous coal, but it is Pennsylvania coal, and there is no reason why western coal should not be dumped into these same shell boats and shipped east, or why Nova Scotia coal should not be brought by the same type of
boat to central Ontario. The only difficulty would be in the canals, and there are small boats of the scow type which could be used for that purpose. During certain seasons of the year, as suggested by the minister himself, when the coal mines are working at their lowest and the steamships have the least to do, coal might be shipped from the prairie provinces to the head of the lakes, dumped into some of these boats such as the ones that now handle coal, and unloaded at Toronto or other points where they have the appliances for unloading. It might be worth while considering the possibility of doing something of this kind so that we can use our own Canadian coal instead of the large quantities of American coal that we have been importing during the last few years.


Edward Mortimer Macdonald: I am very
much in sympathy with my hon. friend's idea, but the whole difficulty is one of cost. American coal can be delivered on board ship at lake Erie ports at $2.50 a ton and carried to Fort William; it can stand the extra handling and the extra cost of handling.


Robert James Manion: What is the answer about Welsh coal?


Edward Mortimer Macdonald: That comes from England, and on account of the depreciated currency there it is produced at a lower figure than coal can be produced in Alberta or Nova Scotia.


John Livingstone Brown: Does that come as ballast
too?


Edward Mortimer Macdonald: It frequently comes as ballast. On the other hand the initial cost of the coal that comes from Drum-heller or Lethbridge, put upon the cars, is at least $4.50 a ton as compared with $2.50 on board ship at lake Erie ports. My hon. friend's idea is a good one if he does not want to break bulk at Fort William. If some assistance could be given, as was asked by the Alberta government, so that the coal could be transported to London, Toronto or Ottawa by one continuous passage in a car, we might accomplish what my hon. friend desires. But the extra cost of two or three handlings is such that the ultimate price to the consumer is very high. My hon. friend and I do not disagree; we aim at the same thing, except that I do not think the Alberta coal would stand the extra cost and the extra handling at Fort William.


Robert James Manion: I am told that coal can be handled from the Pennsylvania mines right up to the Great Lakes at a boat freight of 50 cents a ton.
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Charles A. Stewart: The boat
freight is less than that.


Robert James Manion: Well, say 50 cents; it is
a small amount anyway. I see no reason why the same rate should) not apply eastward, because many of these boats during the summer go, one way or the other, light. Since that coal be hauled to the head of the lakes at this rate, it might very well be considered whether it could not be handled at a dollar a ton and transhipped east. The whole discussion of this coal question seems to be based upon the possibility of the handling of coal east entirely by cars, but it is claimed by those who have studied the question much more than I have that freight rates by water are about one-sixth to one-tenth the rates by rail. From the head of the lakes east is a thousand miles and that would make quite a difference in the cost of handling the coal east.


Charles A. Stewart: That has all been under consideration.


Robert James Manion: I have never seen it discussed. I have heard the whole rail haul discussed, but if we can get traffic going from Nova Scotia to central Ontario and from the prairie provinces to central Ontario we could handle that coal in such quantities that the cost of handling might be very materially reduced.


Mr. TOLMIE:: Will this Alberta coal not
stand shipment as well as the coal produced on Vancouver Island? We ship bituminous coal from Vancouver down to tidewater, a distance of 10 or 14 miles, where it is dumped into bunkers and shipped to San Francisco. That business has been carried on for quite a number of years. British capital is very much interested in the Alberta fields and is ready to invest provided this coal can be placed in Ontario at reasonable cost. Has the department been carrying on; experiments along this line and can we expect any information as to whether that is possible in the near future?


Charles A. Stewart: There is
10 information to be had, it is simply a question of freight rates, the cost of carriage. The coal we have been discussing is lignite, vhich breaks down rapidly under exposure or otherwise, and that is the coal that is taking the place of the Pennsylvania anthracite. Bituminous coal can be shipped and transhipped fifty times without its being destroyed, but it cannot be used for domestic purposes.
[Mr. Manion. 1


Simon Fraser Tolmie: We use it entirely in British Columbia.


Charles A. Stewart: I know, but it is not used here. In Ontario we have been experimenting-in fact, we have almost passed the stage of experiment-in the converting of bituminous coal into coke. In this coke you have an ideal fuel to take the place of anthracite. Transportation costs are a very important consideration in the production of coal. As has been pointed out, coal can be landed at lake Erie ports at $2.50 a ton, and that coal will readily convert into a high grade coke at about $12 a ton. So that coke may in central Ontario very largely take the place of anthracite. Nevertheless I think there is quite a market for the high grade lignite fuel of Alberta as far east as and even east of Fort William, possibly into the Sudbury region and northern Ontario.


Robert James Manion: And Toronto?


Charles A. Stewart: I doubt
whether the transportation costs would make its use in Toronto possible. However, that remains to be seen.


William Findlay Maclean: Years ago I
heard the then Minister of Railways and Canals say that a solution of this problem would be through the canalization of the country from lake Superior to the foot of the Rocky mountains. That is a very big proposition, but he had it all worked out. He said it was feasible and that it would be applicable to the transit of grain. If it is applicable to the transit of grain and would save money, it would be much more applicable to the transit of coal from the prairie provinces. I think the minister would not be going out of his way if he took that matter up with the Minister of Railways.


George Perry Graham: That was the Minister of Public Works.


John Babington Macaulay Baxter: I quite appreciate what has been said with reference to the coking of coal. In my constituency, and in many parts of New Brunswick, there is unfortunately altogether too much use of anthracite coal, which is imported. We have large quantities, some in our own province, but on the whole a better quality in the province of Nova Scotia, of soft coal, which, of course, is not so desirable for use in homes, but which as the minister suggests is really the remedy if we could have something done in the way of coking that coal. We would then have a material quite equal to anthracite, and above all, it will be our own material, employing our own people,

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and our money will be kept within our own Dominion. What I would like to ask is whether the government has any definite policy with reference to inducing the undertaking by any person of this process of coking. I can well appreciate the fact that many people will say:	Oh, that should be left to private initiative; let it be a commercial experiment. I am inclined to think it needs something more than that, and I would like to see the activities of some department of the government back of it in order that something will be done to induce people to undertake the coking enterprise and get it on its feet. All it needs, I believe, is to get a start and it will be successful, and I believe one of the purposes for which government exists is to give a start to get a development and really to point the way to opportunities. I would like to be assured that something of that kind is being done or will be done.


William F. Carroll: I am glad to hear the hon. member for St. John (Mr. Baxter) take up this question, which has been more or less near to my heart for the last three or four years. I think there should be some governmental assistance, by bonus or otherwise, for the purpose of initiating in this country the process of manufacturing coke to take the place of American anthracite, which has been dominating the coal market in this country for many years. I am rather of the opinion that we have passed the experimental stage in this country. We know what coke is, and how it compares with anthracite. I would like to point out to the committee that we are being asked to-night to vote $10,000 for transportation charges from outlying provinces on ore shipments which may be sent to the Ore Dressing Plant, I presume here in Ottawa. In the same vote, we are asked to vote an item of $40,000 for publications, English and French, regarding coke and coal. I think we have had all the experiments we need, and it strikes me as very peculiar that we should spend on publications and literature on a question on which there has been much education already, four times the amount that we are spending on transportation charges from the outlying provinces, for the testing of ore shipments.
My hon. friend from Fort William and Rainy River has brought up the question regarding the transportation of coal in our merchant marine. I happen to know something about the transportation of coal, and I feel certain that the boats of the merchant marine will not be able to transport coal at fair freight rates, as they are not equipped for that purpose. They are equipped for carrying various kinds of freight and wheat, although I am not sure they are equipped for even that.


Robert James Manion: They are equipped for
carrying both wheat and coal. To carry coal it is only a matter of having holes to dump it in.


William F. Carroll: I rather disagree.


Robert James Manion: I have seen it carried that way for thirty years.


William F. Carroll: I have seen them carry
coal for thirty-five years, and a certain equipment is required on coal carrying boats. Equipment is necessary, for instance, to unload the coal from the boat to the pier.


Robert James Manion: You are not up-to-date
down1 there. We do not handle it that way at all.


William F. Carroll: We are so up-to-date that we are carrying coal from Sydney to Montreal cheaper than any other transportation company; by "we" I mean those interested in coal.


Robert James Manion: You should bring it further
west.


William F. Carroll: I agree that something should be done to bring Nova Scotia coal into central Ontario and Quebec.


William Findlay Maclean: What about the St. Lawrence improvements?


Mr. CARRUTHERS:: And the Georgian bay canal?


William F. Carroll: I must leave my two hon. friends to discuss the relative merits of those two projects. As a matter of fact, we have no Georgian bay canal, and we have no deep waterway on the St. Lawrence as far as Toronto at the present time.


William Findlay Maclean: The United
States have a big prqposal before us now.


William F. Carroll: But it is not effective at the present time. We have all the coal we need in this country, East and West, more than we can use for three or four generations to come, and I think the government should grapple with this question in a broad and statesmanlike manner. It has been in the forefront of Canadian politics, for it is more or less a political question, for the last several years, and we have had experiments until I am getting tired of them. I want to see something done now. I want to see the Department of Mines, and if that department is not strong enough to take a forward step in this direction, I want to see the government of this country make this a national question. We are sending hundreds of mil-
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lions of dollars out of this country into the United States every year for the purpose of bringing in anthracite coal, and we have in this country all the coal we need, and if this coking process was adopted, we could use our own coal instead of anthracite without much disturbance in this country, and I say that after having given this question some consideration. I think it is up to the government to take a forward ktep in this direction. I happened to be the chairman of a committee that took up this coal question last year, and we made a report to the House which was concurred in, but I have never heard anything about it since. I am not so very much concerned about that. Perhaps the report was wrong, but I want to say to the government of this country that so far as western coal is concerned there is only one solution to the problem and that is the question of freight rates. I have always taken the position, since we have had a Canadian National Railway, that it should carry that coal from the Alberta mines, or any other mines at cost in the West, to the central markets of Canada and in my opinion it would be good business if they did that. The present rate is $12 per ton but the railway granted a special rate of $9 or perhaps a little lower.


Robert James Manion: What about the possibility of boats carrying coal from the head of the lakes to eastern points?


William F. Carroll: The gentleman who did more towards developing a market for Alberta coal, especially in Winnipeg and points west of that city, stated in the committee that it would be impossible to compete with American coal on the basis of $9 a ton. The committee also went into the question of transhipping 30al which came from the Alberta mines at ;he head of the lakes. There is a certain kind uf coal in Alberta that will stand this transhipment; there is another class of coal that will not stand it. I believe the hon. member for Bow River (Mr. Garland) suggested at the last meeting of that committee, that notwithstanding the cheaper rates that might he had on the Great Lakes the cost of transhipment, would far exceed the rate of $9 a ton that the Canadian National Railways offered. That is all I have to say as regards the transhipment of coal.


Arthur Meighen: Could we not depend on ;he Lake Freights bill to keep that rate down?


William F. Carroll: I have heard considerable discussion as to that but I believe in the long run the cost of transhipment would be greater.


George Perry Graham: Wait until we get our new bill through.


William F. Carroll: Coming back to the question of supplying the Canadian market with Canadian coal I consider there is only one solution of the question. First of all there is the problem of supplying the western area from the Alberta mines. In my opinion that is absolutely a question of the cost of transportation. I am one of those who believe that the railways of this country should carry that coal at cost; and if it is necessary to supply the Canadian market with domestic coal I would say the government should give them some assistance either by paying the extra cost that would permit competition with American coal-


Robert James Manion: That is good protectionist argument.


Lewis Herbert Martell: It is not protectionist argument.


William F. Carroll: I am not particular what my hon. friend calls it. I am a Canadiian and I want to see the markets of this country supplied with Canadian coal. I care not what my hon. friend calls it; whether it is a question of protection or a question of lower freight rates.


Robert James Manion: Nor am I very particular what my hon. friend calls it. We will let the hon. member for Hants (Mr. Martell) name the policy.


Lewis Herbert Martell: The hon. member for
Hants, if the hon. gentleman will permit him to say so, is of opinion that it is a question of looking after the interests of the people of Canada. We are satisfied, if hon. gentlemen opposite will agree to cutting the duties off everything else, to let coal come into the country free. You people up here want all the protection leaving us in the Maritime provinces to be hewers of wood and drawers of water. Give us agricultural implements and other things free and we will be satisfied to have free coal.


Robert James Manion: The only protection my hon. friend wants is in Nova Scotia.


William F. Carroll: Well, we have not asked
for any protection in Nova Scotia.


Lewis Herbert Martell: Would my hon. friend (Mr. Manion) recommend an increase in the duty on coal?


Robert James Manion: No, I recommend the use of Canadian coal.

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Lewis Herbert Martell: Would you recommend an increase in the duty? Answer the question specifically?


Robert James Manion: I am willing to try any plan that will result in Canadian coal being used instead of American.


William F. Carroll: Now, so far as our eastern coal is concerned-


Mr. HATFIELD:: Will my hon. friend tell me why it is we pay more for Sydney coal in Yarmouth than they do in Ottawa? To-day I am paying $12 a ton for Sydney reserve coal and in Ottawa it sells for $10.50.


William F. Carroll: My hon. friend is absolutely wrong. There is no Sydney Mines coal being sold in Ottawa to-day.


Lewis Herbert Martell: And there is no Sydney
Reserve coal.


William F. Carroll: There is no Sydney Reserve coal and no Cape Breton coal is being sold in Ottawa to-day.


Paul Lacombe Hatfield: Mr. Dawson of the
Purchasing branch of 'the Public Works department told me this session that he could get Ca.pe Breton-


William F. Carroll: That he could? Has he
got it?


Paul Lacombe Hatfield: -coal for $10.50 a ton
but down at the Rotary dinner the other day a gentleman told me he was getting Cape Breton coal for $9.50.


William F. Carroll: I am thoroughly familiar
with the coal proposition in Nova Scotia.


Lewis Herbert Martell: There is no such coal
as Sydney Reserve coal. There is Reserve Mine coal and there is old Sydney coal. "Sydney Mines Reserve" coal is commonly advertised by western coal merchants but it is a misnomer.


William F. Carroll: In answer to the hon.
member for Yarmouth and Clare let me say there is no Nova Scotia coal being sold in the city of Ottawa to-day. The coal that he has reference to is the Minto coal from the province of New Brunswick and that coal is being brought here at a little cheaper rate than the ordinary bituminous coal. The mine is practically on the line of the Canadian Pacific railway and I am told that in older to get freights from the mine to Montreal and Ottawa that the company carry the coal at a rate below cost and therefore successfully
compete with the bituminous coal from the the United States. That is the only way it can be done. I hope my hon. friend (Mr. Hatfield) will take my word for that.


Paul Lacombe Hatfield: The statement was
made to me by Mr. Johnston. And I cannot understand why the hon. gentleman insists thait nobody said so.


William F. Carroll: The man who said so
has been wrongly informed.


John Babington Macaulay Baxter: I should like to ask my hon. friend (Mr. Carroll) a question because I think he knows the coal situation pretty well. It is quite evident that the cost of producing bituminous coal in the United States must be lower than the cost of producing bituminous coal in Nova Scotia. Can my hon. friend say why that is so, or if anything can be done to remedy the situation?


William F. Carroll: I can explain that to
my hon. friend. Although I halve worked on the surface I have not sufficient knowledge of coal mining to explain the technical details as to the cost of coal production. I may tell my hon. friend, however, that the reason why the production of coail in the Virginia mines costs about 33 per cent less than it does in the Nova Scotia mines-


Charles A. Stewart: More than
that.


William F. Carroll: -is 'because there are some mines in West Virginia where miners are not used to mine the coal. Machines are employed to, burrow into the mountain side and convey the coal to the cars. In the province of Nova Scotia in some instances we have to go two miles under the sea in order to get coal at the present time, and I presume it is the same in British Columbia.


John Babington Macaulay Baxter: There are some places in
New Brunswick where you would not have to go that far.


William F. Carroll: I do not know much
about the mainland mines, but outside of the new mine just developed, at a cost of $2,000.000 or $2,500,000, by the British Empire Steel Corporation, the haulage is in the vicinity of one and a half miles and in some cases three miles. So that hon. members can see immediately why the cost of the production of coal in the Maritime provinces-and I am speaking of Cape Breton particularly-is so much in excess of the cost in places like West Virginia. I was informed a few days ago that they are developing a mine in West Virginia
Supply-Mines

where the cost of production at the mouth of the pit is 75 cents per ton. If that coal is on a line of railway similiar to those lines equipped by certain American interests, it is almost an impossibility to compete so far as Canadian industries are concerned with that coal in the city of Montreal or in any market as far east as Three Rivers or Sherbrooke. I am referring of course to soft coal. To my mind, if we are going to do anything towards supplying the Canadian domestic demand for Canadian coal, the question is one of coke. I think the experimental stage in connection with coke is passed. We know exactly what can be done in this country, and know exactly what coke plants will cost. We know exactly how many tons of coke may be manufactured from so many tons of coal, and, having knowledge of the cheapness of production in the United States, if we are going to have this question properly settled, we should have governmental assistance, and I am not particular in what shape it is given. I am speaking for the West as well as for the East. Recently I made a few remarks in this House, and suggested, after having given the matter some consideration, that the question for the West was cheaper freight rates, and the question for the East a matter of coking. I have always supported this government, and I am not criticising them in any steps they have taken; they probably know more about the situation than I do; but I am speaking from the standpoint of one who thinks that we have sufficient coal in this country to fill all the Canadian demands, and I ask why should we not utilize it? I believe every true Canadian in this House hopes that the day will come when we will not be sending $100,000,000 a year into the States, but that we will keep it in Canada; and make coke take the place of anthracite coal in domestic hearths in Ontario and Quebec. I think every fair-minded man will say that it is up to this government to take action; and perhaps it was up to late governments to do the same. Let us hope that the time will come when future governments will deal with this question in a national and broadminded way. If the government will do what I have suggested, I feel that they will have the support of every member in this House who thinks that we should have a Canadian market for Canadian coal and coke, instead of sending out of the country $100,000,000 a year, plus the exchange which we have to pay on American money. It might involve an expenditure by this country of $75,000,000 towards the maintenance of that market for Canadian coal. But even so, if that object can be attained, those of us who have in the 
last three or four years tried to proclaim this policy and to give the government some knowledge of it, will feel that we shall not have lived in vain.


John Babington Macaulay Baxter: I will give the House a
concrete illustration. I am living in St. John, New Brunswick. I would like some coke. I can get an occasional load from the gas works, but they do not produce enough coke to go round. The hon. member for Cape Breton vMr. Carroll) has shown us that it is a feasible proposition to make coke. We know that. At the same time nobody is manufacturing coke commercially. Has the government any thought of putting a government stimulus behind the coke producing proposition in the Maritime provinces? If they will translate their scientific knowledge into practical action, I think they will be doing a good thing for the country, and I will have no difficulty in supporting such a proposition.


William Findlay Maclean: I thoroughly
agree with the hon. member for Cape Breton (Mr. Carroll) and the hon. member for St. John (Mr. Baxter) in reference to the advisability of having coke plants in Canada. The method has been worked out and found feasible. It would be a great benefit to Canada if we had it as the corollary of the St. Lawrence waterway proposition. The Minister of Railways and Canals (Mr. Graham) is here. Let him tell this House if that St. Lawrence waterway is not the solution of the proposition of carrying western coal to Ontario, and of carrying eastern coal to western Ontario via the St. Lawrence waterway. I ask the minister to tell the House and the country *what headway is being made, and what are the hopes of an early solution of the transportation question by the St. Lawrence waterway.


George Perry Graham: It is pretty late at night
to start a discussion of the St. Lawrence waterway.


William Findlay Maclean: It is the solution of this proposition.


George Perry Graham: If the St. Lawrence waterway were deepened, it would be a solution of the question; but it would not be a subject of discussion at this time of night.


Mr. GOULD:: I wish to carry the discussion back into Saskatchewan for a few minutes, because after you leave the Maritime provinces the first coal you strike is in the electoral district I have the honour to represent. I do not see any money being voted in the main estimates for carrying on experimental work at Bienfait, and I anticipate

Supply-Mines
that the item will come down in the supplementary estimates. I rose to ask the government just what attitude they are taking concerning the plant at Bienfait.


Charles A. Stewart: I have so
many questions to answer now, that I do not know that I can remember them all, but I will deal with the question of the hon. member for St. John City (Mr. Baxter) first. There is no question, as the hon. member for Cape Breton (Mr. Carroll) says, that the experimental stage in regard to the manufacture of coke is passed. Nobody denies that, and I would like to say that the S40.000 vote which has been mentioned is not for the purpose of advertising the coke, but to advertise to the outside world our mineral resources, and to provide for research work, investigation and geological surveys. We put an expert on this work last year and he made a study of the situation in Port Colbome, Hamilton, Toronto, Montreal and Ottawa; I am not sure whether he did any particular work in St. John but I know from advice I have received thait there is a possibility of a moderate plant being operated there. But the first consideration, which is a difficult one, is the question of disposing of the by-products. My hon. friend speaks of the gas coke, but it is not to be compared with the product made for the domestic market which we are speaking of. Before that plant can be successfully operated it must be hitched up with the gas companies, because the reduction in the cost of conversion is largely consumed by the amount you receive for your gas byproducts. I think I may safely say that the conversion will be paid for by the sale economically of the by-products. So that where there is a population of 75,000 or thereabouts it is no longer a question of experimentation to establish a coking plant: if the community is equipped for the use of gas the other byproducts can be used acceptably. My hon. friend speaks of encouragement. Last year we spent a portion of this money carrying on the investigation, not for the purpose of proving that you could make coal but for the purpose of ascertaining certain facts and giving needed information to those who would invest money in the enterprise; because it must be carried on as a private or a municipal enterprise. All that information is available; no one needs to search for it. People know what the problem is in the various centres because we have made a 3tudy of the question. I may observe that there is a plant at Hamilton where a contract has been entered into for the supply of gas. There are
now before the government requests for encouragement, and the matter is receiving consideration; and assistance is also asked for in connection with transportation. I think the solution of this acute fuel difficulty lies in the conversion of bituminous coal into coke. Coke manufactured at Hamilton to-day, I will guarantee, is equal in value to anthracite coal; a ton of coke is equal to almost a ton and a quarter of anthracite in heating value. So that you have an additional value. I think it is safe to say that anthracite sells at $16 a ton, generally speaking, in Toronto and other Ontario points, and coke can be delivered at the door of the consumer at $12 a ton. You have therefore a reduction as compared with the price of anthracite, and in this respect you have done something very much worth while for the consumer. After all we must keep the consumer in mind; for hon. gentlemen who represent the city of Toronto would be the first to kick if you increased the cokt of fuel to that city. And that is the practical difficulty that we meet whenever we begin to talk about an all-Canadian fuel supply for Canada. An hon. gentleman says that the cost of coal in Nova Scotia at the pit mouth is $4.50 to $5 a ton. Well, similar coal 250 miles from lake Erie ports is produced at the pit mouth at less than $2.25 a ton to-day f.o.b., and that coal is placed in Toronto in the yards at less than $7.


Lewis Herbert Martell: If the United States produces the same sort of coal so much cheaper than we do, and if we are going to maintain a protective policy at all, why do you not put sufficient protection on coal and let us have the market for that commodity? We have to pay a duty on automobiles and other things to maintain the industries in Ontario,


Charles A. Stewart: I am not discussing the question of duties.


Lewis Herbert Martell: But it is absolutely apropos.


Charles A. Stewart: Taking
Toronto as a central point in Ontario, bituminous coal sells at less than $7 a ton; if that is the case and if you have to bring the same product from Alberta 2,200 miles either by rail alone or by both rail and water, you will see the difficulty that presents itself. And I do not see how you could bring coal from Nova Scotia except by water if it is to compete at all with the coal that is landed in Toronto to-day at less than $7 a ton. So that if there is to be a national policy for the
Supply-Mines

supplying of this country with an all-Canadian coal, with conditions as they are in the mining industry in the United States at the present moment, you will have to impose upon the consumer in Ontario a considerably higher rate than he is now paying for his fuel. We might as well face the question at once. I will be frank about the matter and say that in my opinion there is no way I know of by which an all-Canadian supply can be maintained except by making the consumer in Ontario pay more for his fuel than he is now paying. Perhaps he is willing to pay more, but we must face the question and tell him honestly that he will have to pay more. I am just as desirous as any one else, if you can show me how it is to be done, of creating an all-Canadian market for Canadian coal. But I do not know whether you will put the consumer in a good frame of mind by making him pay two or three dollars a ton more for his fuel than he would pay with the American product available. That is the problem we have to face in connection with a national policy of this kind. I do say however that so far as Canadian fuel can be used without increasing the cost to the consumer, and where transportation can be reduced to the absolute minimum, I am prepared to recommend assistance for our friends in the East who have a serious problem of their own. In the East they have deep mining which is expensive; and the same is true of Alberta.
I said to the coal miners there that if they were going to get down to a minimum cost in transportation they would have to reduce their production cost, which at the moment is $4.50 a ton. That is the coal situation in a nutshell ; you cannot secure an all-Canadian market for Canadian coal unless you make the consumer pay more than he is paying now. With respect to coking operations, I would have anything that might be done in that direction confined to Canadian production.


Mr. LOGAN:: I have discussed the coal question before this session, and, as far as I could, exhaustively; and I rise now to make a statement with regard to the cost of coal in Nova Scotia. My hon. friend from Yarmouth and Clare (Mr. Hatfield) states that coal costs in Yarmouth $12 a ton. In behalf of the collieries of my county which produce as good coal as can be got in Cape Breton I will undertake to supply all requirements in Yarmouth and all the western counties of Nova Scotia at $5 a ton f.o.b. their vessels. I do not know where the difference between $5 and $12 lies; it may go to the middleman for all I know. I do know however that we are

mighty glad in Cumberland to get $5 a ton for coal; and in many cases we do not get $4.50 a ton at the mine. Why to-day we are selling coal to the Canadian National Railway Board for a maximum of $5 a ton-good coal, steam coal for use in locomotives on the fastest trains.
Mr. STEWART (Argenteuil); That is f.o.b. railway?


Hance James Logan: Yes. In Cumberland we
are prepared to supply a minimum of 400,000 tons of coal a year f.o.b. ship.


Lewis Herbert Martell: About what would the
freight be to Yarmouth?


Hance James Logan: Coal is conveyed from Cape Breton to Montreal for less than $1 a ton. I would say that the cost in small steamers or schooners should not exceed $1.50 a ton.


Lewis Herbert Martell: Say 90 cents.


Hance James Logan: Well, putting the rate at
even $1.50 a ton, it means that the whole county of Yarmouth could be supplied with good coal at not exceeding $6.50 a ton. As I said before, it is a remarkable circumstance, and we have it even within a few miles of the collieries in Cumberland, that coal which is sold at the mines for $4.50 and $4.75 a ton costs the consumer $9 and $10 a ton. But do not let us blame the producer of coal, because I will undertake to say that there is not a single coal operator in Nova Scotia to-day who is making $1 on his investment.


Oliver Robert Gould: I should like an answer to
my question.


Charles A. Stewart: We have
some money still available for experimental work at Bienfait.


Oliver Robert Gould: Last year I think we came
to the conclusion that it was not commercially feasible to handle lignite coal of which we have so many deposits in southeastern Saskatchewan, and I advanced the suggestion to the minister, and he seemed to coincide with me, that it would be well to convert this coal into electricity at central points and distribute it throughout the country for auxiliary heat and power purposes.


Charles A. Stewart: I shall be
very glad to discuss this matter with my hon. friend on another occasion and give him full information as to what we have done in the briquetting of lignite. It is feasible to briquet this coal.


George Newcombe Gordon: Briquetting is included in another vote.

Reserve Bank


Oliver Robert Gould: I was simply speaking on
the subject of research work, which is mentioned in the item under discussion, as I wondered if the government had taken into consideration the potentialities of central electrical stations.


Charles A. Stewart: I will deal
with that on another occasion.


[Stage Direction]
Item agreed to.
George Newcombe Gordon: What about the
second item, publications, English and French; purchase of books, laboratory supplies, instruments, miscellaneous assistance and contingencies; shall that carry?


[Stage Direction]
Item agreed to.
George Newcombe Gordon: The transportation item has been adopted.


Mr. HUMPHREY:: No, Mr. Chairman, I
should like to get information on the last item.


Charles A. Stewart: Let that
stand, then.


George Newcombe Gordon: The last item stands.


Charles A. Stewart: I move that the committee rise and report progress.
Progress reported.
On motion of Mr. Graham the House adjourned at 12.30 a.m. (Wednesday).
Wednesday, July 2, 1924



RESERVE BANK


[Stage Direction]
Mr. ARTHUR L. DESAULNIERS (Champlain) : Mr. Speaker, I move, seconded by Mr. Gervais:
That the sixth report of the select standing committee on Banking and Commerce be concurred in.
Thomas Vien: Mr. Speaker, the sixth report of the select standing committee on Banking and Commerce reads as follows:
Your committee recommend that the order of reference be enlarged so as to embrace the study and consideration of the purpose, organization and operation of some type of properly administered central or reserve bank.
The minutes of proceedings of the committee have been laid on the Table of the House, and therefore we can refer to them in the discussion of this motion.
The order of reference, the enlargement of which is now sought, reads as follows:
That the select standing committee on Banking and Commerce should be instructed to consider the provisions of the Bank Act with a view to recommending such amendments to the act as would better protect the interests of depositors generally and prevent similar occurrences in future.
The hon. member for West Calgary (Mr. Shaw) in committee moved the following:
That this committee is of the opinion that the purpose, organization and operation of some type of properly administered central or reserve bank falls within the scope of the reference; and that a subcommittee be hereby instructed to suggest to this committee the names of competent witnesses to give evidence on this subject.
As chairman of the committee, I had to rule this motion out of order as not falling within the scope of the order of reference. Whereupon the hon. member moved:
That the order of reference be enlarged so as to cover the study and consideration of the subject matter referred to.
This question is by no means a new one. Last year before the select standing committee on Banking and Commerce, and also before the committee on Agricultural Conditions, it was studied at length and a vast volume of information was collected, the evidence being afterwards printed and distributed to all members of this House. The federal reserve system of the United States has been in force since 1913, and in the interval many books have been written on the subject, a number of these volumes being available in the library of parliament. Therefore if the purpose of those who seek to enlarge the order of reference is to collect more information, I think it is futile, because such information is now available in the evidence which has been printed and distributed and in the numerous books on the subject in the library of parliament.
On the other hand, if the purpose of those who seek to enlarge the order of reference be the immediate consideration of the creation of a federal reserve system in Canada, I think it is altogether inadvisable. There are in this House and in the country to-day a certain number of people who find everything wrong with our banking system, and who would like to reform it, not by the ordinary course of evolution, but by drastic measures which would be in effect an actual revolution of the system. This frame of mind is understandable. Some of these gentlemen have attributed the unsettled conditions prevailing in their particular section of the country to the fact that there is no federal reserve bank in Canada. They have also noticed that several banks have got into difficulties. We
Reserve Bank

had the failure of the Farmers' Bank a few years ago. The Bank of Hamilton had to be absorbed. The Quebec Bank was amalgamated with the Royal Bank. La Banque National was absorbed by La Banque d'Hoche-laga. And the Home Bank failed. Hon. gentlemen say that if we had a federal reserve board or a federal reserve bank such difficulties as these would not occur. I say, Sir, it is a mistake. It is an error of principle; it is a wrong way of reasoning. The difficulties confronting my hon. friends in their particular sections of the country are by no means peculiar to those sections. The financial and economic difficulties that confront the western farmers prevail also in all the agricultural centres of the United States, and if I read aright the information appearing in the United States press the condition of the farming classes in the western states is even worse than that of the farmers in western Canada. Nor are these difficulties peculiar to the farming class. In the industrial centres of the eastern provinces, Ontario and Quebec, and in the eastern states, these same problems have arisen. Quite a number of firms other than banks have gone by the board on account of the contraction of credit and the shrinkage in value of various commodities which is part of the aftermath of all great wars.
When the question of establishing a federal reserve system first arose in the United States is was to meet conditions quite different from those which prevail in Canada. They had the unit system of banking, independent banks with no branches. These banks had neither an elasticity in their currency, nor the facilities of rediscounting and of mobilizing the surplus assets centred in a few cities for use in other parts of the country where they were more needed. Let me state the objects which were put forward last year as the main reasons why a system of rediscounting should be established in Canada. Before the Banking and Commerce committee last year the question was agitated, and it was moved that we should create in Canada a federal reserve bank the purposes of which would be as follows:
(a)	It is a hank of re-discount for other banks, or a bankers bank; available for credit to banks, either when there is a financial depression and heavy demands on a bank or on the other hand elasticity of credit when there is business expansion and prosperity. In this way very large banking capital is less important in the banking system and there is greater stability of credits.
(b)	Open market operations to check too sudden expansions or too sudden contractions, by the use of bank discount.

(c)	As a credit agent in international trade and commerce for a broader discount market for commercial paper.
(d)	To act as a bank of note issue for the government instead of, for example, the Dominion government handling its own note issue.
(e)	To act as the fiscal agents of the government.
(f)	To be constituted in such a manner as to enable the people of the country by the government and to the government's appointees on the board of directors, to have due regard to the best interests of the people's prosperity and financial welfare.
Cg) To act, through its board of directors, as a disciplinary body on banks which might be disposed to engage in questionable undertakings on a large scale.
(h) To exercise, through its board of directors, inspection in a general way for unusual financial operations of the member and other banks.


Mr. LADNER:: The hon. gentleman is
reading from the proposal which I submitted to the Banking and Commerce committee last year, but it is important for the House to note that the proposals he has stated here refer generally to the federal reserve bank system as operating in other countries. If he will look further on in the report he will see the functions stated as they can be applied to Canada by co-ordinating some of the existing functions of a federal reserve bank which the government actually carry on. It is hardly fair to read that section, because it refers to other countries.


Thomas Vien: When my hon. friend introduced his resolution in the Banking and Commerce committee last year he said that these were the main functions of the federal reserve system that it was desired to introduce in Canada. Of course he did not mean that the system exactly as it prevails in the United States should be adopted, but the suggestion was that some organization should be created at least to discharge some of the functions which the system discharged in the United States.


Leon Johnson Ladner: I do not think the hon.
member wishes to read the wrong part of the proposals. If he will look at page 255, under the heading "Operation" he will see a statement of the actual functions that such an institution should exercise in Canada.


Thomas Vien: My hon. friend is quite correct, but I do not believe that the quotation I have made conveys the wrong impression to the House. However, my hon. friend has made the correction, and I shall not enlarge on the subject.
The question was put in the committee last year to several banking authorities, who were asked to express their opinion. Sir John Aird, Sir Frederick Williams-Taylor, and several others were examined by the committee, and gave their opinion. May I be

Reserve Bank
permitted to quote Sir Frederick Williams-Taylor's opinion, in respect to the advisability of introducing a federal reserve bank into our banking system in Canada? In reply to the hon. member for Vancouver South (Mr. Ladner) he said:
Mr. Ladner, there is no necessity for a federal1 reserve bank in Canada in our opinion. It has been suggested before and the proposal apparently arose from the contemplation o>f the federal reserve bank of the United States, the main reasons for the establishment of which were the absence in the country of means whereby: banks could obtain temporary assistance to meet seasonal or other special requirements. Second: The banking resources of the country could be transferred freely throughout the year to the part where the need for temporary advances might from time to time exist. Canada is under neither of these disabilities. Under the Finance Act of 1914 banks in need of temporary assistance can and do obtain from the Dominion government that assistance, while our branch bank system insures an ample supply of currency at all times and places where it is needed for crop movement or other purposes. It has been suggested that the tendency of the Canadian banks is to borrow from the government only with reluctance. Similar conditions prevail in the United States with respect to borrowing from the federal reserve bank, and in England with respect to borrowing from the Bank of England. Is it not as it should be? The note issues of the national bank in the United States, being based on government 'bonds did not expand and contract according to the requirements of the country whereas we have as you know a very flexible currency under the Canadian banking system. This expansion is covered entirely and absolutely by the needs of business and works automatically and perfectly. It is safe to say if the present Canadian system had for the past half century obtained in the United States the federal reserve system would never have been established. I remember in 1907 I think it was a great banking authority in Europe saying the United States banking system was uncivilized and the creation of the federal reserve system was an almost distorted effort to create a wrong banking system. It was in existence so long it could not be abolished any more than our banking system could be in Canada and it seems to us the federal reserve system has accomplished its purpose.
Sir John Aird gave a similar opinion in answer to the hon. gentleman's question:
Q. What is your opinion as to the wisdom of creating a federal reserve bank along the lines outlined in the proposal which was filed?
A. I think I answered that just now. I do not think the time has arrived for that. I think that if this country develops and we get the population, the time will come when we will need greater banking facilities, either by the present banks increasing their capital or by the establishment of some such bank along the lines you suggest, but I think it is not advisable at the time because it would be a great cost and risk.
This year we have had the great advantage of having before the committee as a witness Mr. Pole, the Chief National Bank Examiner in the United States. The question was put to him in the committee whether he thought the system that prevails in the United States would be of advantage in Canada. The hon.
member for Vancouver Centre (Mr. Stevens) put the following question to him:
Having them in mind, the Canadian system and the American system, and from your experience as an examiner, would it be advisable or feasible to adapt the American bank examination system to the Canadian banking system without changing the principle of our banking system to correspond with the principle of the banking system of the United States?
Mr. Pole answered as follows:
The federal reserve system has been of inestimable value to the banks of the United States in ways too numerous to mention. Primarily, with the discounting privileges which it offers to its members, it has enabled a large number of banks to carry on through periods of depression when it would have been impossible to obtain funds elsewhere, and which must have closed their doors with reluctant heavy loss to depositors; and while some members of the system have fallen by the wayside in spite of the facilities which the F.R. banks offered, the question naturally arises as to how calamitous might have been the situation had there been no such agency in existence- and to the world this will never be known, but to those who have been in close touch with conditions since its establishment, the facts are undisputed.
The federal reserve system is admirably adapted to the unit system of banking, but for a very small number of banks with a large number of branches to attempt to adjust themselves so as to fit into such a scheme would appear to ibe highly impracticable.
Under the provisions of the Finance Act it seems to be quite possible for any bank in Canada whose assets would be of such liquid character as to enable it to take advantage of any facliities offered by the reserve system, to avail itself of equal opportunity offered by the Finance Act, the operation of which is easy and inexpensive, and, judging from the manner in which it has been functioning, quite effective. [DOT] The choice in Canada then would almost appear to be between a federal reserve system coupled with a unit system of banks which change would involve untold difficulties, and a combination of the branch banking system coupled with the Finance Act, which seemingly is meeting every banking requirement.
That is the opinion of a banking expert in the United States who came to Canada, made a thorough study of our banking system and gave us the benefit of his opinion.


William F. Carroll: In effect, does the witness say it is more easy to get discount in the . United States than it is in Canada under our banking system?


Thomas Vien: He did not say whether it was more easy or less easy. He simply said that the Finance Act in its operation seemed to him adequate to meet the requirements of our banking system.


William Findlay Maclean: And did he not say that the Canadian system was therefore superior to the American system?


Thomas Vien: I do not think that question was put to him. He said that our Finance Act as it is operating at the present time was better adapted to our Canadian branch bank system than would be the federal reserve
Reserve Bank

bank system in the United States. He pointed out to the committee that the federal reserve system was opposed to the introduction of the branch bank system in the United States, and that is quite easy to understand.


William Findlay Maclean: Then it was a comparison between two systems that are not comparable, one being a branch bank system and the other a unit system, and therefore his evidence was not germane to the question we are considering.


Thomas Vien: On the contrary I think his
evidence was very germane. He said that our Canadian branch bank system was not adaptable, in his opinion, to the federal reserve system that they had in the United States.


William Findlay Maclean: There is a unit system that would be adaptable.


Thomas Vien: He speaks of that:
The choice in Canada then would almost appear to be between a federal reserve system coupled with a unit system of banks, which change would involve untold difficulties.
It did not appear to. him possible to change our branch bank system into a unit system of banking, and it seemed to him that the federal reserve system could not be introduced into Canada unless such a change were made. He also pointed out to us the expense in-3urred in. the operation of the federal reserve system. This expense is extremely great. May I draw the attention of the House to a report on the subject which appeared in the New York Times on Thursday, May 29, last, under the following captions:
Federal reserve in a " lean " season.
_ System on a non-paying basis because of the decline in business.
Loans total, $795-499,000.
Aggregate of a billion outstanding required to show a profit-shrinkage in bills discounted.
I will not weary the House by reading the whole article but will simply quote these two paragraphs:
The situation, bankers said, is not to be regarded as serious, but rather as a seasonal phenomenon which they expect will soon disappear.
To operate at a profit the system must have about $1,000,000,000 out in loans. At present its total earning assets are considerably below this mark.
That means that in order to pay, a federal reserve system must have at least a billion dollars outstanding, otherwise it cannot meet its carrying charges.


Leon Johnson Ladner: I am sure my hon. friend is not trying to mislead the House, but was not the evidence disclosed that the federal

reserve system had made a very large profit and that it had paid a very large sum to the United States government?-I have forgotten .the amount.


George Gibson Coote: The sum of $138,000,000 was paid to the federal government out of profits by federal reserve banks.


Leon Johnson Ladner: Yes, there was a profit
of $138,000,000, and my h.on. friend has quoted a newspaper article which shows there was a loss.


Thomas Vien: Oh, no. I am sorry if I have conveyed such an impression, to the House. It was not my desire ,to do that.


William Findlay Maclean: Then why not
have stated that there was a profit?


Thomas Vien: I simply said that in order to
pay, the federal reserve system of the United States had ,to have .at least a billion dollars outstanding, and that with any lesser amount of business .the system could not meet its carrying charges.


Leon Johnson Ladner: Is there an hon. member
here who contends that we should have the federal .reserve system of the United States? The chairman of the committee must know that nobody ever contended such a thing; he has built up a man of straw in order to knock him down. I would ask my hon. friend if it. is not correct that the tendency of the evidence given to .the committee was that we. should apply those principles of the United States Federal Reserve Bank, and others, that are applicable to conditions in Canada ?


Thomas Vien: I can best answer my hon. friend by reading again the motion for concurrence :
Your committee recommend that the order of reference be enlarged so as to embrace the study and consideration of the purpose, organization and operation of some type of properly administered central or reserve bank.
I did not say that what was meant was the identical system that prevails in the United States. What I did say was, that the study and consideration of any kind of central or reserve bank would be useless, because all the information was at present available, and if the purpose was the creation of such a system as prevails in the United States then, on the strength of.the evidence now before us, it is inadvisable to do that because we have already in our banking system all the facilities which the federal reserve system offers to the American bank. The head office for each Canadian branch bank is in itself a re-discounting bureau. It is a federal reserve system in

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itself because it has the required elasticity, and it can provide surpluses at any point where the bank has branches. In addition, the banks in Canada, under the Finance Act, have all the re-discounting facilities which the federal reserve system offers to the American banks. Furthermore, in the opinion of Mr. Pole, and in the opinion of the banking experts in Canada, the great bankers who were called to give their opinion before the committee, it would be totally inadvisable, very expensive, and would not result in any profit, to change our present system.
I wish also to draw the attention of the House to our system as it exists. The Bank Act, which is revised every ten years, is the charter of our Canadian banks. When the Bank Act is revised the Canadian banks at the same time receive powers to carry on for ten years, and it has been customary since confederation not to make radical changes in that act except at the decennial revision. It would tend to cause instability in our banking system if radical and fundamental changes were introduced into the Bank Act every year. We can very well amend the Bank Act year by year so as to improve it; but, I repeat, fundamental changes would be unwise and would create instability. Therefore, I for one object to the concurrence of the House in the sixth report of the Banking and Commerce committee. It would mean a loss of time for the House as well as a loss of time for the committee; it would be a useless expenditure of money to call witnesses and adduce evidence with a view to obtaining information; and it would be utterly undesirable that the fundamental principles of our banking system should be changed before the next decennial revision. For these reasons I deem it inadvisable to concur in the sixth report of the committee.
Mr. JOS. T. SHAW (West Calgary): At the outset I direct attention to the fact that the Banking and Commerce committee only seek an enlargement of the reference in order that it may have the power to study and consider the position, organization and operation of some type of properly administered central or reserve bank. I quite agree with the hon. member for Vancouver South (Mr. Ladner) that no one, so far as I know, has ever suggested the application of the federal reserve system of the United States to our present system in Canada. The motion before the House simply asks that the committee be empowered to study and consider some type which might be found applicable to the Canadian banking system. I agree also with the hon. member for Lotbiniere 248



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(Mr. Vien) that it is not necessary for us to call any witnesses for this purpose. There are mountains of literature on the subject all of which is available; and I have no doubt that the committee could come to a conclusion one way or the other simply by a careful analysis and consideration of some of the evidence at hand.
In order to determine the advisability of making any extension of our system along the lines indicated by a central or reserve bank, it seems to me, we should have a very clear impression at the outset of exactly what our situation is to-day. It is unnecessary for me to remind the House that parliament is charged with the responsibility of furnishing adequate credit facilities to the people of Canada. In its wisdom many years ago- and I do not doubt its wisdom in that regard -parliament saw fit to delegate this duty to certain quasi-public corporations, subject to certain rules and regulations. These rules and regulations intended for the guidance of the banks are laid down in the Bank Act, which is revised every ten years, and sometimes more frequently as necessity demands. Under the terms of the Bank Act the banks have been given many special and important privileges. The providing of credit to the nation has been exploited-and I do not use that word in any improper sense-by the banks for the purpose of making private profit; the banks are entitled to that privilege under the act as it now stands. We have provided by the act that from month to month, semi-annually and also annually, the banks shall make reports to the Finance department, but that department have been of little value so far as checking up or making any careful scrutiny of these returns is concerned. I do not think that anyone, not even the Minister of Finance, will dispute that statement, because I have only to call to the mind of the House that in the matter of the Home Bank the capital had been impaired for some seven or eight years while the Finance department had absolutely no official knowledge of that situation.
In addition to these returns made to the Finance department, provision is made in the Bank Act for the formation of what is known as a central gold reserve. That central gold reserve, which was organized for the purpose of allowing the banks to expand their circulation upon depositing certain specified securities, is managed by four trustees, one representing the government and three representing the banks. Furthermore, we have another alley along which our financial affairs run, known as the Finance Act. The Finance Act of

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Canada, which provides rediscounting facilities to the banks and the banks alone, is operated by the Treasury Board. The Treasury Board consists of five privy councillors of Canada, with the Minister of Finance as the chairman and the Deputy Minister of Finance as secretary. Strange to relate, this Treasury Board apparently has come to the conclusion -although I believe all modem economists take the other view-that the interest rate cannot be used as an agency in either preventing unwise inflation or safeguarding against unnecessary and harmful deflation. Another illustration will suffice to indicate that the operation of this (particular act certainly invites some criticism; I need only mention the fact, disclosed in evidence, that while the banks under this act can borrow money at the rate of five per cent, when the government goes to the banks it has to pay five and 'a quarter per cent. Surely that does not speak well for the efficiency of our rediscounting facilities. In addition to that, there is another direction in which our financial activities lead us. We incorporated many years ago an organization known as the Canadian Bankers' Association, and under the incorporating act we have given that association certain supervisory powers, delegating to them at the same time certain duties of supervision. And I need not mention that in addition to all these ramifications, unconnected and unrelated, we have a Post Office savings bank which invites savings from the people of Canada and which is operated under the Post Office Department. We have also a government savings bank; I do not know under what department it is managed but I presume it would be the Finance department. And then we have the Mint which operates under the auspices of the British government.
The Minister of Finance now proposes, and 1 think he is wise in the proposition, to superimpose upon this system an inspection plan under the direction of an officer to be known as the Inspector General of Banks. He hopes I think with some reason, to convert the Finance department from a mere undertaking establishment, in relation to banks, into something like a hospital clinic, so that the banks may receive treatment before their collapse, .with a resultant saving to the depositors whose position, it is trusted, will be one of much less peril.
That is the situation that exists to-day; and that, in combination with what the minister proposes, leads one to .the conclusion that our system has been something like Topsy; it has simply "growed." It is not properly related, it is not properly co-ordinated, if I may be

pardoned the use of that term. That being the present situation, the question is, what has any type of central or reserve bank to do therewith? In the first place I might remind hon. members that central banks are nothing new; the United States is not the only country in which there is a central bank. With all its various and diversified interests the people of the United States have undoubtedly found this central bank to be a very effective instrument to keep the country financially safe and to promote its industrial development. We find, too, that in South Africa, with the varied interests in that country, there is a central bank. The same is true of Australia and also of Japan.
We are not necessarily wedded to the United States scheme. But taking the United States system, let me just in a few short sentences indicate what it has meant, according to the authorities, to the finances and development of that country. First of all it has effectively mobilized the nation's reserves so that those reserves are available in the place where and at the time when they are wanted. One of the witnesses before the Banking and Commerce committee illustrated the situation very well, I think, in this way. He said that suppose you establish twelve water reservoirs and pipe them together, if there was a drain on any particular reservoir, naturally there would be a flow into it from the others, thus maintaining a correct balance in all parts of the entire system. Similarly, in the case of a financial system founded on that principle, a proper balance will be maintained in all parts of the country making credit available wherever and whenever it was needed. So I say, it is admitted everywhere that the federal reserve system in the United States has effectively mobilized the nation's reserves In that country it has also increased the elasticity of the note issue. That is not an important matter in this country, because some people consider that the note issue is, if anything, perhaps too elastic in Canada. In addition it has provided rediscount facilities, and that, of course, has made possible the mobilization to which I refer. Fourth, and perhaps most important of all, it has created an intelligent control, in the public interest, of the financial resources of the country. That has been achieved mainly by the use of the discount weapon. At the outset the federal reserve system in the United States was somewhat new and there was some difference of counsel as to the proper procedure. But, through a time of stress and after a period of strain, it has been found that a federal re-

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serve system can so use the discount rate that unnecessary deflation and inflation, both bad for the country, will be prevented.
These are the fundamental principles, as I understand them, which operate in connection with any central or reserve system. Can any of them be applied to the situation in Canada? Certainly it seems to me that with regard to the rediscount privilege, we should have some effective and competent machinery to regulate the discount rate in order that we may prevent the tragedy alike of inflation and of deflation. That is not done now. I am not surprised that it is not done, because I think that with political management even the best of systems will no't necessarily yield the results desired. What we need is an independent board to take charge of this situation and, indeed, of other situations mentioned; a board which will be in a position effectively to administer the nation's resources for the public? benefit.
James Alexander Robb: What does my hon. friend
mean when he refers to the discount rate?


Joseph Tweed Shaw: I am referring to the rate of
interest for rediscounting purposes. We do not propose, as suggested by the hon. member for Lotbiniere (Mr. Vien) any revolution of the system; we propose an evolution of the system. We suggest the adoption of some permanent supervisory board which will gather up all these frayed ends of all of these disorganized and incoherent parts of our financial system that we have to-day, when we shall be able to work out of that system something like coherence and develop a system which will function effectively in the public interest.
My hon. friend (Mr. Vien) has referred to several noted banking authorities who, he claims, were opposed last year to the application of the federal reserve system to Canada. Those same gentlemen last year very violently opposed any inspection system. I am quite sure that their judgment on that point was wrong; as a matter of fact, the minister is quite confident that their judgment was wrong, because now he proposes to introduce an inspection system which, I trust, will be satisfactory for the purpose.
I do not propose to labour this subject further, there are features of the federal system and of the central bank system which, I think, could be applied with advantages to the system in Canada. We could create a supervisory board-I do not care whether you call it a bank; there is nothing particular in connection with the name "bank"-of skilled, competent financial men, men who have made a study of conditions in Canada, who would 248i
be able to operate all our financial system and who could make it work intelligently in the public interest.
May I point out in conclusion that this is nothing new in Canada, because I find that a former president of the Imperial Bank, as far back as 1914 after discussing approvingly the inauguration of the federal reserve system in the United States, used these words:
The time wild come in Canada and come early when we will find it advisable, yes necessary, with our growth and development to establish a bank of rediscount under the .patronage of the dominion government anc with somewhat similar powers to those that have beet granted to the reserve banks of the United States.


Herbert Meredith Marler: Was that not quoted before the establishment of the Finance Act?


Joseph Tweed Shaw: I think it was.. This statement was made on the 28th May, 1914. I quote it for the purpose of showing that the then president of the Imperial Bank realized the importance of adopting some of the essential features of the American federal reserve system.


Herbert Meredith Marler: Precisely what the government realized itself in bringing the Finance Act into vogue.


Joseph Tweed Shaw: Yes, the government was
forced, by reason of necessity, subsequently to introduce the Finance Act as a war measure; but the president of the Imperial Bank spoke when there was no suggestion at all of a war or a pending war. Then I find that in 1918 a former president of the Royal Bank used these words:
In my opinion the question of .providing supplementary banking facilities in this country is very important and should receive the consideration of the government and the banks. If we had a bank of re-discount patterned somewhat after the federal reserve bank in the United States, it would render legitimately available millions of assets in the form of high-grade .commercial paper, now lying dormant in the portfolios of the banks, and thereby increase our financial resources. I think the government should appoint a committee of experts to investigate the suggestion.


William Charles Good: That was said after the Finance Act was passed.


Joseph Tweed Shaw: We should not close any
avenue of study or consideration which may be of profit to us in putting our banking system on a solid and safe foundation. Our banking system, if it is to function at all, must not only secure, but merit the confidence of the people of Canada.
4 p.m. That confidence unfortunately, has been sadly shaken, and it is our duty to leave no field unexplored where we may be able to find something of value which will add strength and solidarity to this system.
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James Alexander Robb: Mr Speaker, I should not like this
motion to go through without offering some views. I am very much interested in the discussion on the part of my hon. friends who have made a special study of the banking system of Canada, but there is no good reason why, at this stage of the session, we should enlarge the reference and refer this back to the Banking and Commerce committee. The committee made a very careful study of the banking situation last year; they carefully reviewed all the arguments for and against and, as has been so well stated by the chairman, the hon. member for Lot-biniere, there are mountains of information in the records. Therefore, there is no good reason why we should refer the matter back.
As regards the other argument just presented by the hon. member (Mr. Shaw) as to the advantages of a rediscount system, the present act under the Finance Act has been demonstrated to be quite sufficient for the requirements of the country. It works well and is well suited to the Dominion of Canada, even on the argument of my hon. friend. Under the Finance Act the people of Canada are getting proportionately just as much revenue as the people of the United States will under their federal reserve system. So that for that reason no good purpose can be served by referring the matter back. For all those reasons at this time I shall have to vote against the resolution.


Leon Johnson Ladner: As one who has been greatly interested in this subject, having given a little study to it, I think the report of the committee which the House is asked to adopt involves a determination of principle. The government should consider this point. The principle involved is whether parliament is disposed to allow the select standing committee on Banking and Commerce to investigate the advisability of a central or reserve bank system as now opera ted in other parts of the world; or whether parliament is to deny any such inquiry by the committee. I am not suggesting that we spend a lot of money in calling witnesses from all over the world. I quite agree that we have already accumulated much evidence on the subject and that we have an abundance of material available in the -parliamentary library, as we-ll as the experience of those hon. members who have been investigating the subject. But, in view of the conditions revealed in the Home Bank failure, the fact must be plain to all of us that unless our public men co-operate in a spirit of goodwill with those vitally interested^-our bankers

-in a thorough study of the subject, we shall be faced with such a situation ten years hence as every hon. member here will regret.
The two outstanding facts to-day in relation- to our banking system are, first, the tendency towards the elimination of our smaller banks; and, second, the .resultant centralization of the banking business in- the larger banking institutions. I do not say this by way of reflection upon our larger -banks, because I believe all Canadians should be proud of the way they have functioned, but to draw attention to the Jbald -fact that seventy per cent of our deposits are in the four largest banks, while the ten small banks have only the remaining 30 per cent, and thus are at a disadvantage in not being able to reduce their rate of overhead expense. Then there is the marked decrease in the number of our banks from 36 in 1910 to only 14 to-day. And, finally, we have the failure of the Home Bank and other incidents in- connection with our banking system which- have tended to shake the confidence of the public. Surely the mere mention of these outstanding facts is sufficient to convince any hon. member that it would be altogether inadvisable to postpone an exhaustive study of the merits of a central or reserve bank system. There is no desire to apply-in the words of the hon. chairman of the committee (Mr. Vien) -"revolutionary" methods; all we desire is that the committee be not denied the right to study this exceedingly important matter.


Thomas Vien: Does my hon. friend sincerely believe that if the order of reference were enlarged, the committee could study the question thoroughly between now and the end of the session?


Leon Johnson Ladner: No, not at all.


Thomas Vien: Then, what is the use of proceeding further?


Leon Johnson Ladner: But I do believe it would be a frank and wholesome expression of opinion on the part of hon. members that they desired to have the subject studied. In other words, the principle would be established. That is what I referred to in my opening remarks.


Thomas Vien: My hon. friend says that the
com[mittee should have an opportunity to study the question further. Any hon. member is quite free to give it further study. But the report of the committee in which concurrence is now moved is that the -o/rder *of reference be enlarged and that the committee be instructed to study -the purpose,

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organization and operation of some type of properly administered central or reserve bank. It would be almost disrespectful to this House if after a report of this kind was concurred in the committee refrained from proceeding with the inquiry, which my hon. friend admits it will not be possible for them to conclude between now and the end of the session.
* Mr. LADNER:	Let me make my point
dear. We have involved here a question of principle, whetheir or not parliament shall give authority to the committee to inquire into and study this question. There may not be time to. complete the study .now, but parliament is faced with this request from a committee which has laboured long hours and which finally decided to make this request despite the ruling of the chairman. I think, out of respect to the committee and as a declaration of the confidence of the House in that committee, the authority asked for should be granted.


Thomas Vien: The com|mittee refrained from expressing an opinion as to the advisability of pursuing the course proposed. It is now for the House to decide whether or not it is advisable to do so.


William Irvine: Is not the hon. member
for Vancouver South (Mr. Ladner) aware that on May 21 the select standing committee on Banking and Commerce asked that this motion be put before the Houss; and does he know how it is that only now have we a chance to discuss it?


Leon Johnson Ladner: I think that question
might be more properly put to the chairman of the committee. I know we made the request in good time, in fact I had the honour of moving the resolution referring the question to the House, and I have been rather surprised that iit has not been brought to the attention of the House before. But, Mr. Speaker, I wish to appeal to hon. members to consider the real issue involved as I view it. Is the banking system of this country such that the members of this House should not make any further study of it in the committee; or should this House give the committee an opportunity of proceeding along the lines requested? That, in my judgment, is the question, and I hope the House will grant the application of the committee.


Henry Elvins Spencer: Mr. Speaker, the hon. member for Lotbiniere (Mr. Vien) in criticising the suggestion of a central bank of re-discount referred to the evidence of several gentlemen who were before the
Banking and Commerce committee a year ago, and pointed out that they rather criticised the suggestions then made. These same gentlemen in giving evidence before the Banking and Commerce committee at that time also stated that Canada had the best banking system in the world; that depositors were no doubt absolutely secured and that the banks were on a sound basis. I have only to refer to the history of such banks as the Home, Hamilton, Banque Nationale, and others of which we all know, institutions that have been through very trying times since those statements were made. I simply mention that to show that if those gentlemen were wrong in the second statement they made, they probably were wrong in the first.
The Acting Minister of Finance (Mr. Robb) mentioned that a very thorough study was made of these questions a year ago. That is correct, but unfortunately, although we took a lot of evidence in the committee on various sides of this financial question, nothing has been done, no action has been taken with respect to same.


William Charles Good: Did any discussion take place in the committe last year on the proposals submitted by the hon. member for Vancouver South (Mr. Ladner)? I do not remember any.


Henry Elvins Spencer: The only evidence was
that given by the hon. member for Vancouver South.
In the remarks that I shall make this afternoon I wish largely to review the question of note issue. The issue of bank notes is referred to in section 61, subsection 2 of the Bank Act: Banks are allowed to issue up to the amount of their paid-up capital as a special privilege to those corporations. This was at one time thought to be sufficient for the means of exchange. However, the business of the country has so increased we have had to find other means of increasing the issue of notes. The first extension that I can find was made in 1908, when the banks were allowed during the crop season to issue extra notes to an amount equal to fifteen per cent of their paid-up capital and reserve between the months of October and January. Later they found that this was not sufficient and the time was extended from September 1 to February 29. This is quite a privilege to the banks. One will find upon looking up the figures for 1922 that the bads in that year had paid-up capital amounting to $125,500.000 and reserves of $129,500,000. It therefore meant that they had the privilege of issuing extra notes to an amount equivalent
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to over thirty per ce|nt of their paid-up capital. I am commenting on this only to show that as business increased in the country we had to find some means of getting a larger supply of the medium of exchange in the matter of note issue.
I would like to refer, however, to the year 1904, when the paid-up capital in comparison to the total assets amounted to 11 per cent. Twenty years afterwards we find that it only amounts to 4 per cent; in other words, as business has increased1 the ratio of capital to assets has decreased. Other means also had to be found to create a sufficient medium of exchange, and in 1913 the central gold reserve was started. The central gold reserve, according to one of the men who had a great deal to do with starting it, was never intended to be anything else than a gold reserve where gold could be placed and notes issued against it. But the use of the gold reserve has wandered a long way out of that path since that time. In 1914 the Finance Act was passed, which made it possible for the banks to bring certain securities to the Treasury Board and obtain Dominion notes against them for a charge of 5 per cent. A lot of these notes were issued in large legals to facilitate inter-bank exchanges, but a large quantity was taken to the central gold reserve and placed there so that against it they could issue their own paper. We were informed in the Banking and Commerce committee a year ago that the reason they wished to issue their own paper instead of issuing Dominion paper was because of the matter of advertising. We have to-day in the central gold reserve, in round figures, some $9,000,000 of gold and some $56,000,000 of notes or paper. In other words, as a well known banker who made his name famous in Canada some years ago stated to me, it was really more of a gilded reserve than a gold reserve.
Regarding the quality of the securities left with the Treasury Board I would like to quote an answer given to the hon. member for Bow River (Mr. Garland) in 1922:
Notes to the amount of $87,115,075 were issued to the hanks as advances under the Finance Act, 1914, and secured by the deposit of securities approved fay the Treasury Board, including Dominion of Canada bonds and treasury bills, bonds of the provinces of Canada and Canadian municipalities, British Columbia treasury bills, Canadian Northern Company notes, certain industrial bonds and stock, assignments of grain and produce and demand notes of commercial houses endorsed by the banks to the order of the Minister of Finance.
You will notice that two of the items in this list were Dominion of Canada bonds and treasury bills. It is interesting to note

that when the government wants to borrow money from the banks it issues treasury bills, and to-day we have outstanding to the banks in treasury bills no less a sum than $91,315,000. You will notice, as mentioned by the hon. member for West Calgary (Mr. Shaw), that although we charge the banks only 5 per cent on the notes issued to them against the security offered,-which security might be treasury bills-we pay the banks themselves for money lent against treasury bills 5| per cent. These treasury bills can again be brought back by the banks to the Treasury Board and the banks can obtain Dominion notes against them at 5 per cent. Otherwise you might look upon it as a sort of looping the loop.
It is rather interesting to note that this privilege of going to the Treasury Board with securities and rediscounting them is open only to the banks. It is not even open to the provincial governments. It is what you might call a bankers' bank, and I think a good deal might be done to widen the scope of the work done by the Treasury Board. It could very readily be taken over by such an institution as the central bank, which is being suggested. I would like to remind the House that these treasury bills, which the banks hold at the present time to an amount over $91,000,000, run for only the short period of six months. Does it not seem absurd that the Dominion government, in making use of its credit, should not only have to go to a third party, but pay more money for its borrowings than it charges the same parties when loaning to them, and that these notes should run for only the short period of six months?
I should like to say a few words with regard to the responsibility of note issue. The private notes are the first call on the assets of a bank in case it fails. It is true that we have what we call a note circulation redemption fund, but it does not serve the purpose that the public for a good many years have been in the habit of believing it does. It has been the impression of the public that if a bank went to the wall, all its notes would be taken care of by the note circulation redemption fund. This, however, is not the case. The fund comes to the rescue for the time being in the shape of a loan, but the entire amount that a bank which has failed can call on the fund as an asset for, is the amount it has paid into that fund. This is contrary to what has been the belief of the people of Canada generally up to a short time ago, but when the unfortunate failure of the Home Bank took place we found that the bank had outstanding some $2,000,000 of notes, and that it had only

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$100,000 in the note circulation redemption fund, and that was all it could call upon as its part of the assets of that fund. The fund was intended to be to all intents and purposes an insurance fund, but as it operates at the present time under the Bank Act, it is not an insurance fund at all, except to the extent that it is a sort of loaning agency for the time being, but the loan has to be paid back when the assets, including the deposits of the bank, are realized.
Before I sit down I would like to touch on just a few of the very interesting matters that have come before us during the last two years, in the banking committee, and some of these are rather startling, particularly when we remember that last year we were informed that our Canadian banking system was so perfect that we could not amend the Bank Act with any satisfaction to the public, and that therefore it should not be amended.
It is realized to-day that there is no government guarantee behind the deposits of private banks. It has also been discovered that it is possible for the entire deposits to be seized to meet notes outstanding. It has been the impression of the depositing public for a good many years that if they put money into a bank all they had to do when they wanted to draw it out was to issue a cheque on the bank. That is true as long as the bank is running, however bad its condition may be, as we have seen in the case of the Home Bank, which has been in a bad condition for the last seven years; but when the bank closes its doors, what happens? We find that the first lien on the assets of the bank is the notes; secondly, comes the Dominion government, together with any advances made by the Treasury Board; thirdly, the provincial government; fourthly, any secured creditors,-and in the case of the Home Bank we found that they had mortgaged their buildings to a firm in New York;-and fifthly, come the depositors, who otherwise are unsecured creditors. A bank may lend an amount equal to its paid up capital to any one concern. This was proved in the case of the Home Bank and La Banque Nationale. Under the present system that could not very readily be seen, and I hope it will be checked, by the Inspector 'General who we hope will be appointed during the coming year. The system might be made more perfect by having a central bank of rediscount, with officials working in co-operation with the Inspector General.
We find also that to-day sixty per cent of the banks'capital is in bank [buildings. To give
an idea of the way the banks have been reduced in number-very largely because the small banks under the present system, and in the absence of a central bank of rediscount- have little chance compared with the larger ones, we find that in 1919 Canada 'had 36 banks and to-day it has only 14. As the hon. member for Vancouver South (Mr. Ladner) mentioned, four of our Canadian banks control seventy per cent of the total deposits, and the other ten control only thirty per cent.
A government central bank, in the opinion of many of us, should have complete control of note issue. This not only would relieve a great liability from the shoulders of the depositors, but it would be the means of bringing in a very large revenue to the government exchequer, and would relieve some of the burden now resting on the shoulders of the Minister of Finance.


William Findlay Maclean: I
want to say in the first place that when I undertake to criticise in any way the banking institutions in this country, my main hope in regard to them is that they make double the money they now make, and that they may give four times the service they now give for that opportunity of making profits.
I want to see the banks prosper, but the underlying principle of banking, the thing behind the banking of the country, must be, as it is in all the other countries of the world, before anything else, the credit of the nation. Banking has become absolutely a state proposition throughout the world. It is under the control of the state, it has the credit of the nation behind it, and the nation has the leadership in the banking of the country. That cannot be denied. It is the case all over the world to-day with the exception of Canada. In some way the private banks have got the leadership of banking in this country. But they have behind that leadership the national credit and they seem to control that as well as their own resources What we want to put behind our banking system is the nation. We also want the nation to have the control rather than the private banks and to give a banking service to the country at the lowest possible cost at the same time allowing the banks a reasonable profit.
Analogy is a poor kind of reasoning but let me give an analogous case. It is that of the railways of this country. Formerly private companies were in control of a great many of those railways and with the exception of one company they wrecked themselves and the country has to come to their relief, take over
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the liabilities and the railways themselves and re-organize them into a great system of national transportation which to-day promises to be successful. The same thing, or a somewhat similar process, may have to be applied to banks because the banks are getting smaller in number, as has been pointed out here today, and they are becoming more of a monopoly. But the more they grow in that direction the more they wish to dictate the banking policy of the country. That should not be. The credit of the country should be behind the national banking system.
We have an example before us, and it is the one that makes the most impression on this country, the example of the national banking system they now have in the United States. I suppose I will be charged with advocating the introduction into Canada of the United States banking system. But that country adopted their present system after years of effort, after years of experience of great losses, after years of the failure of many banks. But gradually they have evolved a system which is satisfactory to that country, and the people of the United States would not change their national banking system to-day for any private banking system they had heretofore. They believe absolutely in the state being behind their system, and they insist on a national banking currency-a thing we ought to have in this country but we do not have. They insist also over there on a national system of bank inspection. We may have the beginning of such a system as that in this country but it was denied to us at the last session of parliament, and it was denied on the evidence of the private banks of Canada who do not want bank inspection. But in the United States the system of bank inspection is proving a great success, and it is weeding out the weak banks. Under their system,-the United States bank examiner has told us and we know it is a fact,-they can find out in three weeks whether a bank is sound or not. It took us eight years to find out that the Home Bank had been a failure, had lost a lot of money, and had been conducted in an improper way. Therefore what we should do is to study the proposition and see whether we should not adopt the system they have in the United States-a system of national banks and in connection with it a national currency.
I do not know who can object to this. We have a national currency but the effort of the banks is to make that disappear and substitute a bank currency which is not always reliable, which is questioned, and the retirement of which in times of trouble becomes a grievance to the country and a source of

much complaint. There is no question of the solvency of the national currency. Hon. gentlemen say, and they said before the committee to-day, that there is a redemption fund. But how is it administered? It is not administered well. It allows the currency to be questioned, and that being so when a better example is offered us, such as they have in the United States, we ought to adopt it. That is not the only instance in which the banks over there have a superior system. Their system of rediscounting is as good as ours, in fact it is a good deal better. It allows the credits to be moved all over the country by the organization of the National Reserve Bank system. Every bank there has to be a member bank of some reserve bank system. Consequently it is always under the inspection of fellow member banks who know whether it is sound or not. It it has gone wrong they find it out, expose it, and cause a correction to be made. Under the system of bank inspection there if losses have occurred they are found out and the bank has to make the losses good; if their capital has been impaired it must be strengthened. In that way the American system is recognized as being much better than ours and is considered better adapted to the country. We ought also to make a study of these things which study should lead up to the improvement of our own banking system.


Mr. McCONICA:: Is it not a fact that
hundreds of banks have failed in the United States in the last few years?


William Findlay Maclean: Most of them were state banks.
Mr. MoCONICA:	There were national
banks also.


William Findlay Maclean: (York):	Some were
national banks and many more would have failed if they had not had such a system of national banking as now exists there. That is my point if the question comes to an issue. It is the same with private railroads in Canada: They failed and the state had to come to their rescue. Now, let me point out what the underlying reason is for a good many of the bank failures in this country. It is the permission that was given to private banks to issue their own notes. We allow every bank in this country to issue notes up to the amount of its capital. Now, if you read the history of the bank failures in Canada-the long history of bank failures-and analyse the circumstances down to the last vestige of

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evidence you will find that a lot of those banks went into business because of the temptation of being allowed to issue their own notes and put them in circulation, and in many cases they lent money to their friends. That is probably what wrecked the Home Bank and many other banks in this country-the unfortunate power that was given them of issuing bank notes up to the extent of their capital. Anything that is easy to get is easily parted with, and there was not that care in the administration of the banks that there would have been if permission to issue bank notes had not been allowed in the Bank Act. Therefore, I say it is high time that the banks should not be allowed to issue their own notes. If the banks want additional money-and I should like to see them have as much money as is necessary to lend to the business of the country-the system may have to be substituted for the present one of the country making advances to the banks up to a certain proportion of their paid up capital. That is to say advances might be made to them, perhaps at only 2 per cent, giving them government money to replace their bank note issue. There is no other country in the world where banks enjoy the privilege of issuing their own note currency. A bank has other ways of finding currency; it ought to find it out of its own shareholders, out of its own profits. Nevertheless the first thing a bank wants when it is	organized is	the	right to	issue notesto	the amount	of	its paid	up capital.In	that respect	they	are and	have always
been careless, and it is high time that the banking system of this country were placed on a basis of national notes and not on one of bank currency. We have now national inspection, which is a good thing; and certain other improvements that have been advocated in this country from time to time would undoubtedly be of considerable advantage in the stabilization of banking affairs in Canada. There is a great feeling of unrest throughout the country at the present time. In Toronto we have what is known as the Provincial Savings Office organized by the late government of Ontario. This is a high-class savings bank, with a branch in Ottawa, and quite recently I have witnessed in both places large crowds in these banks, ordinary depositors apparently being anxious to put their money in. These people were getting their own cheques marked and it seemed to me that they regarded these banks as perfectly safe. It would be a surprise to the people of Canada to know how that provincial bank in
Ontario is succeeding; and it is succeeding for the simple reason that there is throughout the country this feeling of unrest and uncertainty in regard to our banking system generally.


Charles Marcil: They pay
a higher rate of interest, do they not?


William Findlay Maclean: No, I believe it is about the same. But these particular banks are giving satisfaction to the people, and the banking public feel that their money is secure in them. I wonder how many people in Canada know that we have a government savings bank which is operating in conjunction with the Receiver-General's office. That bank in my own province, Ontario, for some time received deposits and carried1 on a large business in the city of Toronto, but for some reason or other it was chloroformed about ten or fifteen years ago, by what government I do not know. The fact is, however, that upon investigation some time ago I discovered that it was not functioning in Toronto, and I have never heard any explanation offered of its discontinuance there. Yet it was one of the best savings banks I have ever known in Canada. Certain restrictions were enforced in regard to the withdrawing of money, but it was in all respects a high-class savings bank. As I say, it is no longer in operation in the province of Ontario, although I know it is still in existence in the Maritime provinces and in British Columbia. If there were in Ontario and Quebec a government institution of that kind I have no doubt the people would appreciate it. I should like to know from the Acting Minister of Finance (Mr. Robb) why the bank has been abandoned in Ontario, while it is still functioning in the Maritime provinces and in British Columbia. The people would be interested to have an explanation in that regard.
We have another savings bank in connection with the Post Office Department,-the Postal Savings Bank. This, however, is a very poor and oldi-faehioned institution and there is no reason why it should not be modernized. If the committee on Banking and Commerce were allowed free scope to consider all these questions I believe they could profitably take up the question of modernizing the Postal Savings Bank. These banks should unquestionably have the right of receiving deposits, and of allowing the depositor to keep his bank book and have his cheques marked and accepted so that he might be able to pay out money at will. But under the present system he cannot withdraw any money without fil-
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ling in a blank and giving it to the local postmaster for transmission to Ottawa where the entry is made and permission is given for the withdrawal of the desired amount. That is not the way for the nation to conduct its banking business; if we are to have a postal savings bank it should afford the public the same advantages that are enjoyed in the ordinary banks. I regret that the Postmaster General (Mr. Murphy) has not been here this session, or at least that he has not had an opportunity of dealing with this, among other questions. I am informed that he has a plan in favour of the expansion and modernization of the Postal Savings Bank and that as soon as he returns he will bring it forward. But he is absent at present and in the meantime this unrest prevails throughout the country. The public in Ontario are now going to the Provincial Savings Office in large numbers, and as I said a moment ago I was surprised to observe the activity in connection with that institution. Someone, however, started an agitation to abandon this bank, which I consider it to the credit of the Drury government to have established. Great pressure has been brought to bear on the present government in Ontario to wipe out this provincial bank, but apparently without avail; the premier of the province evidently is not prepared just now to do anything of the kind. I know, however, that deputations have waited upon him for the purpose of getting that service in the city of Toronto extended to one section in which there were a great many depositors who had kept their accounts in the Home Bank. These people have waited on the premier of the province and requested him to open another branch of that bank in the east end, which happens to be the portion of the city which I represent in this House. So that quite obviously there is an increasing demand for the recognition and the enlargement of the provincial bank; and there is an equally insistent demand for the modernization of our Postal Savings Bank. This is simply because of the feeling of unrest which prevails throughout the country to-day; the people have seen private banks fail one after another, with considerable losses to depositors, and they desire to see something done to put our banking system on a sound basis. There was a great loss in the Home Bank, as there have been losses in other banks. It is true also there have been losses in the United States, where there is an improved banking system. But that is no reason why we should not study this question and empower a committee of this House to suggest necessary reforms. If I am to judge by the speech delivered this

afternoon by the hon. member for Lotbiniere [DOT] (Mr. Vien), that hon. gentleman apparently condemns the system of national banking based on the credit of the nation and on national notes, as well as related matters of that kind.


Thomas Vien: Let me correct the hon. gentleman. I simply said that the federal reserve system as it exists in the United States was not, in the opinion of banking experts, adaptable to the Canadian branch bank system.


William Findlay Maclean: So much the
worse for the Canadian branch bank system. We all know of course that we have in this country a branch bank system which is not perfect; but can we not make it a better system if that is possible? That is the issue. But the banks do not like to have any comparisons made that are at all to their detriment. They say, "Are we not giving you good service now? Do we not do this, that and the other?" Well, they do give us some kind of service, but that service can be very much improved. And in my opinion the branch system can be carried on successfully by the adoption of some of the improved methods which have been followed in the United States.
As regards the central gold reserve, I will not call it a humbug, because it is a substantial thing. But why should it not be in the control of the nation just as in the United States and in practically every other country? The central gold reserve in Canada is confined to Montreal, and is in the hands of the bankers, save alone that there is one representative of the government on the board. I see no reason, however, why the reserve should not be absolutely in the hands of the nation, in the national treasury, as in the United States. Once again I must apologize for advocating something which in the United States is superior to what we have in Canada; but I think we should create in this country, at Ottawa, a real treasury department, such as there is in the United States. In that country there is a highly paid national official, who has charge of the national treasury, who has charge more or less of the national reserves of the nation and of the note issue of the nation, how it goes out and how it comes in. He is a real national treasurer, not only for the nation in its organization as a nation, but for the whole country. He has control of the rediscounting of notes in connection with the federal reserve bank system. Who controls the national system? The national reserve,

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and there are billions of gold in the national reserve at Washington. This is all done by the nation and without any idea of making money out of it. The national reserve at Washington looks after the national notes, and nobody ever questions the solvency of the national notes of the United States now. I remember, as a boy, just after the American war, seeing in Hamilton American national dollar notes sold for about thirty-five cents. From that degradation of an American note to that low figure, I saw it rise gradually to par, and now it is the best note in the world. The greatest amount of credit available for the world at large to-day is concentrated in the United States, and this is the gradual result of the creation of a great national system of banking based on the nation's credit. We want to do that in our country. If they have done it there, we may be able to grow in that direction.
Hitherto, nearly every critic who has come forward in this country to pass judgment upon any one who makes a proposal such as I am making here to-day, or as some hon. gentlemen who have preceded me have made, say that we are suggesting Yankee notions. The outcome of those Yankee notions is the creation of the greatest banking system in the world. I do not place even England before it, because England has had to come to the national banking system of the United States to take care of the immense national debt she created in the war. That question was settled and arranged at Washington, and England's debt is being retired at Washington. The United States, it is true, was in the war, but not to the extent that the Mother Country was and the national banking system of the United States is the organization the world looks to now to clear up the mad condition of affairs in Europe. It is the hope of the world to-day, if war is ever to cease and we are to get on our feet. If Germany is to be redeemed and put on her feet after the war, she must do her financing by way of the United States on the basis of the national banking system.
I have nothing to say against the banks of this country, which have done good service, but they are growing into a monopoly. Where is this going to end? I am not going to make any prediction as to what will happen, but I shall be greatly surprised if you do not see, in the near future, more mergers in this country. As the system is moving that is inevitable. There are four big banks and a number of smaller ones, and I do not know that the smaller banks can get along in view of the opposition of the four big banks. What
we want is to go back to the small bank. These are the ones that have made the failures, it is true; but if they were prohibited from making note issues against their capital, as they are allowed to do now, I believe the smaller bank system is what we want. We want local banks, organized by groups of local capitalists, to collect the deposits of their localities and to put them into local industries.


Mr. LEWIS:: I rise to a point of order.
This is a general discussion on banking and not pn the widening of the powers of the banking committee.


William Findlay Maclean: I am not out of order. According to the understanding of the committee this morning, the report has opened up the whole question of the banking conditions of this country; but if I am transgressing any rule, the Speaker will call me to order. I am surprised that my hon. friend (Mr. Lewis), who is supposed to be a Progressive, does not like to hear progressive views in this House. He is sitting at present beside the leader of the Progressives (Mr. Forke), and I do not know whether the leader of the Progressives likes the fellowship. This is the only opportunity I have of discussing this subject. I was debarred from discussing it at any time I was in the committee, and I was ruled out this morning by the hon. member for Lotbiniere (Mr. Vien). The question is up now and all we ask is that a study be made by a committee of this House, just as I urged in this House that we should do in connection with the public debt. If there is anything in Canada that is as important as the committee to study matters of banking, it is a committee of this House to study the national debt. It is absolutely within the right of the Minister of Finance to create a public debt; to say of what nature the securities are to be, what is to be the rate of interest; to name the place of issue and the place of payment. But at this time, after the Great War, and in view of the enormous debt that we have incurred, this House ought to have a committee studying the national debt, just as a committee was appointed by this House the other day to study the question of the National Railways. Times have changed and we must change with them. Parliament must adapt itself to the new conditions which are far-reaching. There are no questions which are so important and which have widened so much as those of banking and the national debt. These matters should be studied, in the first place, in the committees and then in this House. All that the Banking and Commerce committee and those who are speaking here
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to-day are asking is that the powers of the committee to study banking and to suggest improvements be enlarged. We have on that committee men who are prepared to give their time, to bring witnesses, to study these questions, and where they think an improvement can be made they will make a report indicating to the House that improvements be made in the directions I have indicated.
We want a system of rediscount in this country. We have started such a system which is meeting the requirements of the country, and that is all right; but the late government gave us that improvement and I want to see it continued. So far as I can gather now I understand the parties in this House are in the same boat as regards national banking. I believe the government
5 p.m. are in favour of National Railways; the late government believed in National Railways; the Progressive party believe in National Railways. There is, therefore, no reason why these three parties in this House should not unite in favour of national banking, and I believe they are going in that direction. The only one who is holding back is the Acting Minister of Finance (Mr. Robb), who does not want to hear anything at all about it. He has said to-day that he wants suggestions and he has evidenced on other occasions a desire to hear. But while he is a good listener, he is only a limited actor. He had only a few things to say to-day, but he has come to the idea that there must be banking inspection in this country.	We now have it
and I	hope it	can	be	improved.
I believe in this system of national banking, but most of all I believe in a committee of this House having full charge of banking matters affecting the Dominion, with authority to study banking conditions and the financial and economic dislocation throughout the world as a result of the war, and the reconstruction that must follow. For this purpose there is no better body than such a committee. Therefore I trust that the government and my hon. friends to my left, the leader of the Conservative party (Mr. Meighen) and the leader of the Progressive party (Mr. Forke) will express themselves in favour of the committee on Banking and Commerce being granted the authority asked for. Despite all that may be said against the political mistakes of our neighbours, there is no doubt that they have evolved the best banking system in the world. They have no bank note currency, and yet all the banks m the United States are making money hand ever fist by using the national currency. That [Mr. W. F. Maclean.J
being so, why could not our banks do the same if we adopted a similar system. No one has ever given me a substantial reason for maintaining the disagreement between the banking systems of the United States and Canada. That subject alone is worthy of consideration and could be investigated by the committee if its powers were enlarged as requested. I hope, not because of what I have said but because of the feeling throughout the country, that we shall have from the government and from the leaders of the other parties m this House an expression of their views on this question. For instance, I should like to hear from my friend the former Minister of Finance (Sir Henry Drayton), who introduced much of the beneficial legislation which has been referred to, as to whether he is prepared to say that the Banking committee should be limited in respect to its activities; also, whether the time has not come for the creation of a committee of this House to study in co-operation with the Minister of Finance and his department the consolidation of the national debt at a low rate of'interest; and finally whether the Minister of Finance had better take example by what obtains in the United States and create here in Ottawa a national treasury which will give real leadership to our private banking organizations and protect the rights of the public against anybody who may seek to encroach on them hereafter.


George Gibson Coote: Mr. Speaker, first of all I dhould like to reply very briefly to two arguments which were advanced by the mover of the resolution (Mr. Vien) this afternoon. He seemed to think that certain members were advoca/ting the study of a central banking system because of the difficulties which confronted them in a particular part of the Dominion- referring of course to the western members. I wish to assure him that I do not approach this question from a sectional point of view. The difficulties which Canada is labouring under, so far as our banking system is concerned, affect very seriously all parts of the country. He quoted several of our prominent bankers as being in opposition to the establishment of a federal reserve or central banking system; but I do not think their opinion should carry much weight with this House, because those same prominent bankers could have been quoted a year ago as being actively opposed to any government supervision or inspection of banks, and to-day we find the Acting Minister of Finance, who is I think very conservative in his views regarding financial matters, bringing down a resolution

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for the establishment of a system of government inspection of banks. So, it seems to me, we must be prepared to study these banking question, even though opposition is expressed by our leading bankers.
The hon. member also said that it was not customary to make radical changes in the Bank Act except at each decennial revision.
I would dra.w his attention to the fact that while the act was under revision a year ago a number of members stated before the committee that they did not agree with that view and did not intend to be bound by it.
I think that is an expression of opinion which should be reiterated here. There is too much of a tendency in Canada to regard the Bank Act as being like a law of the Medes and Persians-unchangeable.
We are discussing this question to-day because of a ruling of the chairman of the Banking committee that we could not inquire into the advisability of establishing a central bank. I was under the impression when the hon. member for Pontiac (Mr. Cahill) moved his amendment to the motion made by the hon. member for East Calgary (Mr. Irvine) that we would certainly be allowed to discuss any question which was closely or definitely related to the hanking system, or which might tend to improve the system. I cannot see any reason why members of this House should endeavour to limit any inquiry which might be made by the committee, and if any members object to the enlargement of the powers of the committee the onus is on them to show cause. It seems to me there are reasons enough for widening the inquiry, in the failures and mergers among our banks during the past year, which surely have been sufficiently serious to warrant inquiry into the merits of what might possibly be an improvement on our present system. Among these untoward happenings, we have the failure of the Home Bank with a loss to its depositors of ten or eleven million dollars, which has certainly shaken the faith of bank depositors; the failure of the Banque National, with a loss which we are not permitted to know the extent of, but the provincial government of Quebec voted a bond issue of $15,000,000 to be loaned to the Bank of Hochelaga to enable it to take over the Banque Nationale; the amalgamation of the Bank of Hamilton and the Bank of Commerce, the reasons for which were not divulged; and the writing down of reserves by other banks. In view of these facts, what reasons can be advanced for limiting the scope of inquiry by the committee? If
any member of the government or any member of this House endeavours to prevent inquiry into matters connected with our banking system, it seems to me that they should be willing ,to be held responsible for any losses which may occur to bank depositors within the next year. I do not see how they can escape that responsibility.
A year ago the Bank Act was renewed for ten years, against a goad deal of opposition. We were assured at that time by many hon. members that we had the best banking system in the world; that the system had grown up under this act and that we should not make any changes because it would impair the confidence of the people in our system. But at that very time the Minister of Finance (Mr. Fielding) and the ex-Minister of Finance (Sir Henry Drayton), both of whom sat in our committee through nearly all its deliberations, knew that two of our banks whose charters were being renewed were not entitled to any confidence from the Canadian public. In view of these facts why should hon. members argue that we should not be allowed even to study the question of the establishment of a central bank, something that almost every other country has in one form or another?
The mover of this resolution, the hon. member for Lotbiniere, (Mr. Vien) argued this afternoon as to the merits of a central bank from the results of the federal reserve system in the United States. I would not advocate exactly the same system as they have in the United States, but it might be well for us to study whether or not that system has been of some .benefit in the country to the south. I have had some correspondence with a gentleman in the city of Washington who is very well acquainted both with the United States banking system and with the Canadian system, and in one of his letters to me he said:
The federal reserve banking system has been in operation for ten years, and its merits have long ceased to be a subject of debate.
He says further:
No public man in America would care to suggest its repeal or to deny that it has been of the greatest benefit to the United States.
In another letter he says:
The federal reserve bank has no selfish purpose to serve. Its profits go into the treasury. It does not favour one section of the country at the expense of another or one business instead of another.
I do not think that can truthfully be said of our present Canadian banking system, because it is charging rates of interest which
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average, I think, three per cent higher in certain provinces than in others.
It has an almost inexhaustible reservoir of money and credit because behind it are all the resources and credit of the United States. The result has been a great expansion of business, the doing away with the old (panics and money comers and a control of the currency and credits of the country by the government instead of 'by private corporations.
I have here a letter from Mr. John W. Pole, Chief National Bank Examiner, Washington, who appeared before our committee a short time ago. In regard to the earnings of the Federal Reserve Bank. He says:
The gross earnings of the federal reserve banks from their organization up to December 31, 1923, amounted to $598,845,773. Up to that date the federal reserve banks had invested the sum of $69,124,530 in bank buildings, which amount was paid out of the profits of the banks. During the same (period the government has received from the reserve banks $139,000,997 in the form of taxes, the balance of the net earnings having gone to surplus.
If the Acting Minister of Finance decides to accept the recommendation of the committee with regard to the Home Bank and reimburse the depositors, he might, through the establishment of a central bank, secure enough profits to pay for the reimbursement of those depositors, and do it within a very few years.
I would also like to quote to you from this letter Mr. Pole's figures regarding note circulation in the United States, because I think the question of note circulation is closely connected with the question of the I
safety of depositors, which our committee was supposed specially to consider. He says:
National Bank notes outstanding December 31, 1923	$ 771,566,979
Federal reserve notes at peak on December 23, 1920	 3,404,831,000
Federal reserve notes on June 4, 1924.. .. 1,884,039,000 Federal Reserve Bank notes at peak on
December 26, 1919	 261,039,000
Federal Reserve Bank notes on June 4,
I would draw the attention of hon. members to the figures there in regard to federal reserve notes, which show the elasticity of their note issue in the United States. Their note issue under this head in 1920 was $3,404,000,000, while in 1924 it has fallen to $1,884,000,000. The federal reserve system in the United States has taken care of the shortage of currency which they sometimes experienced prior to the establishment of that system.
I think we have in Canada, Mr. Speaker, the most expensive banking system in the world. They charge average rates of interest varying from 7 per cent to 8 per cent-I

quoted the exact figures in the House a year ago and do not wish to repeat them now. but they are somewhere in that neighbourhood. They pay 3 per cent to depositors. They have the privilege of issuing their own notes, up to the extent of their paid-up capital, with a tax of 1 per cent on that circulation. I have here a statement which I have received from Mr. Pole regarding the earnings of national banks in Federal Reserve District No. 4 for the year ending June 30, 1923. I asked Mr. Pole for this statement because the aggregate capital of the national banks in that district is approximately the same as that of our banks in Canada. The
statement says:
Aggregate capital: $128,290,000.
Aggregate surplus: $113,444,000.
Gross earnings	 $100,283,000
Expenses	 68,546,000
Net earnings	 $31,737,000
Recoveries	 2,916,000

Losses	 9,846,000
Net profits	 $24,807,000
Total dividends declared: $16,834,000.
Ratio:
Per cent
Dividends to capital	 13.12
Dividends to capital and surplus	 6.96
Net profit to capital and surplus	 10.26
The average rate of interest charged by the banks in this district was 6 per cent.


William Findlay Maclean: What is that
district?


George Gibson Coote: It comprises the state of
Ohio, western Pennsylvania, eastern Kentucky and northwest, West Virginia, and the banks number 764. Our banks in Canada are charging rates of interest much higher than that, and they cannot show anything like as good earnings. In addition to that, our banks have the privilege of the note issue, a privilege which the banks in the United States have only to a very limited extent and not on as easy terms as the banks have in this country.
I would like to point out one other thing before I leave this statement. In the United States the national banks are required to show their gross earnings and also their expenses. In Canada our banks are not required to show that, so we do not know why they are not able to ran their business as advantageously or as cheaply as the national banks in the United States do. My own impression is that our Canadian banks are incurring too many losses, and they are burdened' with too much overhead, too much of

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a staff for the amount of business they are doing. That is something that I think is inherent in a big branch banking system.
I want now to refer to the deliberations of the Banking and Commerce committee last year, as they have a bearing on our actions this year. Let me remind the House that the hon. member for Centre Winnipeg (Mr. Woodsworth) made a proposal in that committee for the appointment of a government auditor of banks. That proposal was turned down by the committee; in fact, it met very little support. But this year a proposal made by the Acting Minister of Finance himself on very similar lines was accepted1-showing how we have changed' our attitude in this matter. The reason for that change of attitude on the part of members of the committee was largely because of the bank failures which have taken place in the last year. I think that fact alone should influence members of this House in allowing the scope of the inquiry to be widened. I have no doubt that before the next decennial revision of the Bank Act is due we shall have to establish some sort of a central bank in Canada. I do not wish to dwell at any length on the number of banks that have disappeared in the last thirty years; that has been referred to often enough. We are down now to a very small number, and that number is likely to be further reduced. I believe the establishment of a central bank would do something to check the disappearance of the smaller banks. I believe also that the question of the safety of deposits has some connection with the establishment of a central bank, and for that reason alone I think the House should vote to widen the scope of the committee's inquiry.
In a little booklet issued by the Canadian Bankers' Association last year, it is stated on the authority of that association that the depositors have a fourth mortgage on the assets of the bank. One of the prior mortgages is the claim which the notes of the bank have on its assets. Mr. Neill, General Manager of 'the Royal Bank, stated before our committee this year that a bank could do business without -the privilege of issuing its own notes, but that it could not carry on its business, without the deposits of the public. Now if that is the case, what good reason can we give to those depositors for putting -their claim lower down in the scale than the claim of the man who holds the bank's notes? Why should a note of that bank have a prior claim on the assets of the bank, when, as Mr. Neill says, the deposits are necessary to the operation of the bank, while
the privilege of issuing notes is not? If these notes are not to. be issued by our banks, they must be issued by the -government. I agree with the hon. member for South York (Mr. Maclean) that we should have a government issue of notes in this country, that the issuing of notes should be limited to the government, and then there can be no question of the noteholder's security. We should not have to bolster up that security by giving the noteholder a first claim on the assets of the bank. If we are to have government issue of all notes, I think we should have some kind of a government bank, with offices in different centres throughout -this country, so that -these notes car^ be made available to the people for carrying on their business. At the present time the only way an individual can secure a note, even a government note, is through our chartered banks, and we are now in the hands of fourteen chartered banks, and it is possible that in the years -to come we may be down -to a very much smaller number than that, and -be in reality in the hands of one bank; and as one witness before our committee intimated this year, that might mean the control of finance in Canada by one individual. What good reason can be given to the people of this (country for not making government notes available to -them for their trading purposes excqpt through private corporations?-for that is what our chartered banks a.re, nothing more or less? This is a question which, I believe, is going to receive consideration at the hands of -the people before very many more years have passed, and I think the time to study it is now. I cannot see why we should mot be allowed to discuss this question.
Just one other point in regard to the safety of deposits:	The logical way to safeguard
deposits is to make the Post Office Savings Bank available to the people in a wider sense lhan it is now. We had a representative of the Post Office Department before our committee, and I asked him the question whether there had ever been any loss to depositors in the Post Office Savings Bank, and he assured me there had not, and never could be. Then why not make these facilities more easily available t-o the public If we are to receive any large amount of deposits through our Post Office Savings Banks we should have a national bank to handle those deposits when made, and then the deposits would be available to our banks or to our rural credit societies through rediscounting by the central ba nk.
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In 1914, when we went into the Great War, Sir Thomas White, then Minister of Finance, called the bankers together, and they decided that we needed something to bolster up the Canadian banking system, and that we had to have it in a hurry. I should like to quote a few lines from an address Sir Thomas White [DOT]gave in Toronto, referring to what he said at this meeting of the bankers held here in Ottawa :
We said to the banks: The Dominion government wild loan you in Dominion notes, which are legal tender, twenty-five, fifty million dollars; we put no limit, if you need it, you probably will not, but if you do, we will loan without limit on securities approved by the minister. You bring in high-class securities, or commodity bflls, because they represent their full value in goods, and we will lend to you at 5 per cent Dominion notes that will make you liquid, and you need not worry about your reserves. There was no more panic after that announcement was made. From that day to this there has been the utmost confidence in the Canadian banking situation, no sign of panic. That gave flexibility to our banking system, made our bankers confident that they could meet any situation that could arise, and, of course, they could give the puiblic very much more extensive credits than they otherwise would have got.
Later on he says:
It was the right thing to do, but no permanent measure followed.
In a recent issue of MacLean's Magazine I saw that Sir John Aird was quoted as saying that in his opinion the inspection of banks is not very practicable, and is not needed, but he would suggest that the Finance Act be made permanent. I would suggest to this committee that if the Finance Act is to be made permanent, surely we should have some sort of a permanent board to administer it. The act is administered at the present time by the Treasury Board, which consists of four cabinet ministers They may know something about banking, and then again they may not know very much. The next government that assumes office-and I suppose we will have [DOT]a change some day-will cause a complete change in the personnel of the Treasury Board and the new body will then have to administer the act without having the benefit of the experience of their predecessors. To show you how the Finance Act is administered, I will quote one clause from the act.
Such securities shall be deposited with the minister or with an assistant receiver general. The minister may request the trustees of the central gold reserves to make a valuation of and recommendation as to the amount which in the judgment o>f the trustees may properly be advanced on any securities offered in pledge under this act.
I am informed that the trustees of the central gold reserve are the Bank of Montreal, the Royal Bank, the Canadian Bank of Com-

merce and the Royal Trust Company, the last named being a subsidiary of the Bank of Montreal. That is practically placing the administration of the Finance Act in the hands of three banks and they are three of what are generally termed the "big four". Is that not creating a monopoly of banking in Canada? Why should the other banks of this country have to have their securities valued by three of the big four banks in this country when they come to the Treasury Board and ask for an advance under the Finance Act? Would it not seem wiser to have a central bank, with a practical banker at the head and a few experienced bankers under him, to judge the securities that are offered?
Let me also draw your attention to another veiy great failing in the administration of the present Finance Act. That act works like a machine in maintaining the rate of interest, at 5 per cent all the year round and 5 per cent every year. At the present time money can be borrowed in New York at rates as low as 2 and 2i per cent. Why would our banks wish to come to the Finance department at Ottawa and pay 5 per cent if they can go to New York, deposit securities there, and borrow money at 2| per cent? I have heard that is being done by some of our Canadian banks and I do not blame them; I think it is good business for them to do it. But I do ask that our Finance Act should be administered in a businesslike manner. If these banks can obtain advances in New York at 2i or 3 per cent why should not these trustees see to it that money is loaned to the banks at the same rate of interest? Canada has made a few million dollars from the operation of the Finance Act. In this House last year when Hon. Mr. Fielding was quoting the sums which had been made I believe the exMinister of Finance (Sir Henry Drayton) observed "Yes, and it is all clear profit". Why should we not make a little more profit from the operations of the Finance Act, and at the same time make money available to our people at a lower rate of interest than is now obtainable under the act as at present administered? Because that administration is tending to hold up the wheels of industry in this country, tending to restrict credit, and restriction of business follows from the restriction of credit.
There is one other point I wish to speak upon before I take my seat and that is the question of the rate of exchange. I have heie several charts showing the fluctuation in the rate of exchange on New York for the past three years. In 1921 the rate of exchange was fairly steady with a variation during the year of from a discount of J of

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1	per cent to slightly over 2J per cent, which point was reached in June. At the close of the year exchange was quoted at about If per cent discount. In the year 1919 the average discount rate of exchange for the first three months of the year was approximately
2	per cent. For the next three months it was
approximately 3 per cent. In July it reached a rate of 5 per cent, dropping back to 3 per cent in September, but in December reached a high	point	of	11	per	cent and at the closeof the	year was	slightly over 9 per cent. In1920 there were very violent fluctuations in the exchange rate. In January it gradually rose from 9 per cent to a high point of 12 per cent. On the 4th February it had risen to 17i per cent and with slight fluctuations gradualy fell until by the end of March it had reached 9 per cent. In April it reached a high	point	of	12	per	cent; in May it fluctuated	from	9-J	to	13	per cent; in June it
varied from 12-i to 151 per cent; in July it varied from 141- to 12 per cent; in August it varied from 14 to 12 per cent; in September it varied from 9 to 12 per cent; in October it varied from 81 to 12 per cent; in November it varied from 101 to 14 per cent. In December it was 131 per cent on the first of the month, but on the 21st had risen to 191 per cent, and closed the year at approximately
17	per cent. In January 1921 it varied from
18	per cent to as low as 10 per cent, rising again in February to about 16 per cent, then gradually declining, showing a high point of 13 per cent in April; 121 per cent in May, rising again in June to over 14 per cent. In July it reached a high point of 15 per cent, but in August it dropped back to 101 per cent. In September it had a high point of 131 per cent and a low point of 91 per cent. In October and November the rate varied slightly over 1 per cent, opening on December 1st at 9} per cent and closing December 31st at 5 per cent. In January, 1922, it rose to 7 per cent declining gradually and closing in February at 2 per cent. Variations in March were from 2 to 4f per cent; variations in April from 1 to 3 per cent, but during the balance of the year the fluctuations were not very violent. The year closed with exchange at a discount of about 1 per cent, although our exchange reached a premium of 1/8 per cent during October and November, 1922. In 1923 the rate fluctuated from a discount of 5/16 of 1 per cent to a discount of 3 per cent in the month of July, and at the close of the year was quoted at 21 per cent. I have given these fluctuations at some length to bring the matter more clearly before the House. This continued fluctuation of the
rate of exchange is a very great handicap to all our importers. We might take for instance the importer of raw cotton, who probably has contracted months ahead for his supply of cotton at a given price. He is probably obliged to make payment at the time the cotton is delivered, and between the time at which he purchased the cotton and the delivery of the same the exchange may have varied as much as 10 per cent, the result of which would be to increase the cost of his raw material to that extent, with no corresponding advantage to him when he sells his finished product, unless by that time the exchange rate has again risen. It is quite possible that between the time he paid for the goods and the time his finished product is ready for sale there might have occurred a variation of more than 10 per cent in the rate of exchange. The manufacturer never knows what the rate of exchange will be when the goods are manufactured, and that certainly must affect his business. I think it is one of the great uncertainties which our manufacturers have to contend with at the present time. It adds to the risk of their business and consequently they must enhance their rate of profit in order to take care of the risk.
I doubt whether there is a more important question affecting the business of Canada than this question of exchange. It is very seriously affecting our producers. Apparently it is not wise to return to the gold basis, because Sir John Aird, who I think is the greatest authority on banking in Canada, is quoted as having said that the Finance Act should be made permanent. If we are not to return to the gold basis-I do not think we are and I am not advocating that -the only rational way in which we can control the rate of exchange is through a national bank. At present the rate of exchange is almost absolutely in the control of the banks. I do not know whether they are working in unison to control it, but apparently they have not done so in the past whatever they may be doing now. If they are not, then the rate of exchange will have to take care of itself, with the help of exchange speculators. The speculators in exchange have been making money, sometimes losing; and any money they make is made at the expense of the business people of the country. If these people are to be reimbursed the only way in which this can be done is by their adding to the prices of their goods. A national bank could control the rate of exchange and keep it fairly constant. I think it is an open question whether it would not

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be to the advantage of this country to maintain the rate of exchange at par with Great Britain rather than with the United States. I repeat, however, the statement that the question is one which is open to question. But wherever the level of exchange is to be maintained we should have a national bank to maintain it; and it should be maintained in the interests of the country and not by private banks to their own advantage.


James Alexander Robb: If the rate of exchange just
now were at par with Great Britain, would it not add materially to the cost of coal, raw cotton, iron and other products that are used for manufacturing purposes?


George Gibson Coote: It would, and our manufacturers would increase their prices proportionately; so that possibly they would not be worse off.


Herbert Meredith Marler: Is that what my hon.
friend would like to have happen? Would he like to see the cost of goods increased to the consumer? I thought he was a free trader.


George Gibson Coote: I am a free trader.


Herbert Meredith Marler: You might answer that
question.


George Gibson Coote: I am not anxious to have
the cost of goods increased, but if the hon. member will wait until I put a question to the Acting Minister of Finance he will see what I am driving at.


Herbert Meredith Marler: The hon. member is a
protectionist in finance.


George Gibson Coote: Not at all, not that I know of. This is the question I want to put to the Acting Minister of Finance: How are our producers in this country who are producing for the British market to compete with, say, the producers of Australia, of Denmark, of the Argentine, if the exchange in those countries is practically on a par, or lower, with Great Britain while ours is at premium? I had a little clipping from an article published by our Department of Agriculture showing the disadvantage under which the Canadian producer of bacon labours in competing with the producer in Denmark. I am sorry I have not that article here to quote to the minister. However, let me put this question to the hon. member for St. Lawrence-St. George (Mr. Marler), who I know is a student of this subject:	How are we going to compete with
Australia and the Argentine in the sale of wheat to Great Britain if the producers of those countries can transfer the pounds sterling they get for their wheat into a greater amount of currency of their own than the [Mr. Coote.l
Canadian producer can? I will not say that this argument applies to articles that enter into the cost of living, but our producers are working to pay off the interest on debts contracted in a period of high prices. How then can they compete with the wheat producer in the Argentine, in Australia and in India when those people have a much lower rate of exchange than we? Almost all hon. members in this House complain because of the unfavourable trade balance between Canada and the United States; they deprecate the fact that our people are so prone to run to the United States to spend their money rather than spending it at home. They wish us to increase our trade with Great Britain rather than with the United States. But would it not be easier to trade with Great Britain if our exchange were on a par with that country rather than with the United States? I want to remind the House, however, that I said at the outset this is a debatable question, and I am not stating where the rate of exchange should be maintained. But so long as we are not on a gold basis the rate is apt to vary up to twenty per cent, as it has done in the past two or three years; and if that is the case, one of the most important questions before our business people today is the control of exchange. And I do not see how you can control it in the interests of the nation except through a national bank. Last night we discussed the question of a new bond issue, and the question was as to whether it should be floated in the United States or in Canada. The floating of bond issues is a matter that should be in the hands of a national bank. A year ago, I believe, the Minister of Finance (Mr. Fielding) told us that it cost $2,250,000 to float an issue of $100,000,000 in New York, and I have been told that one of the banks in this country received fifty per cent of that, which would be $1,125,000. Whether that is correct or not I do not know, and possibly it is not relevant at the present time. But if we had a national bank these bond issues could be floated at par and they would not cost this country more than one-eighth of one per cent, which would take care of the clerical work involved.
To sum up. We should have a central bank, first of all, for the issuing of notes, and secondly for the handling of the re-discounting privilege for small banks and rural credit societies; for I am firmly convinced that the people will not be satisfied to continue with the few banks that exist to-day. We must have some more small banks, and if these are to be established in such a way that they

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can operate successfully and compete with the big banks they must have a re-discounting privilege. That re-discounting privilege must be handled by practical bankers. There should also be some safe place for the people to put their deposits. I believe the Banking committee is opposed to the removal of the note issue privilege from the banks, and the people should therefore have some safe place for deposits provided by the government. There is also the handling of the rate of exchange. Surely the logical and the proper way of dealing with the entire situation is to establish a central bank, the profits of which I am sure would enable the government to reimburse the Home Bank depositors in a period of two years.
At six o'clock the House took recess.
After Recess
The House resumed at eight o'clock.


Herbert Meredith Marler: Mr. Speaker, in the course of
the debate this afternoon the discussion, perhaps through inadvertence, on the part of some hon. members, I had almost said through lack of appreciation of the words set out in the order of reference or the report of the committee, has covered an exceedingly wide range of subjects, the arguments embracing many questions of finance and banking not, in my opinion, intended at all to be covered by the report of the committee. Even the hon. member for West Calgary (Mr. Shaw), speaking with his usual ability, did not seem to confine himself precisely to the question under discussion. He spoke about bringing together disorganized and incoherent ends or creating a supervisory board.
The question which is before the House at. the present time is very clear and distinct. The report of the committee asks simply that the order of reference be enlarged so as to embrace the study and consideration of some type of properly administered central or reserve bank The hon. member for Vancouver South (Mr. Ladner), during the course of the debate this afternoon, I understand, stated that the principle should be that when a committee came forward with a request to enlarge its reference or for permission to study any particular subject, that request should be immediately granted by the House of Commons. I cannot admit that argument for a moment. Committees are charged by the House of Commons with certain matters regarding which they are to debate, discuss, take evidence and subsequently report to the House. There would be no object in this reference to the House
249i
coming forward for debate this afternoon if the committee itself had power to decide to go into this complicated subject. But, as a matter of fact, if I follow the argument of the hon. member for Vancouver South, twenty-two members out of a committee of ninety members, came forward and asked the House of Commons to enlarge the scope of their inquiry so as to embrace the study of a properly administered central or reserve bank. Hon. members have a right to decide and should decide whether or not this particular question should be studied at all. If they are of opinion that the matter should not be studied, this report should be rejected. If they are of opinion that the question should be studied, this report should be adopted. In estimating their opinion, in making up their minds on tliis subject, hon. members will have first of all to decide whether or not the question of a central or reserve bank is one which should be considered at all. They will want to know whether or not our banking system is adapted to the establishment of a central reserve bank, and what effect its establishment would have on our banking laws. If they come to the conclusion which I myself have reached, I think they will decide that there is no necessity at the present time for the introduction of a central reserve bank into our banking system. Holding that opinion, Mr. Speaker, I think that this report should be rejected.
In giving my reasons why I think a federal reserve bank or a central reserve bank-it does not make much difference how it is described-should not be grafted on to our banking system, it seems to me that it will be well to survey the basis of our banking system, because it goes without saying that if this system is not adaptable to a central reserve bank, it would be the height of foolishness to assert that such a bank should be established. Our banking system is based on what is known as the branch bank system of Great Britain, that is to say, a certain number of large banks each with numerous branches throughout the country. In contradistinction to that system we have the United States system, which is based on what is known as the unit system, each unit being independent and forming a banking entity. I quote the United States system because in that country they have a Federal Reserve Bank, which I will discuss later on.
Now, in the course of this debate the question has arisen as to the number of banks in this country, and this question has a bearing on the subject matter before us. We have been told, quite correctly, that we have fourteen chartered banks, and the opinion
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has been, expressed that possibly this is too small a number to handle the banking business of the country. In this connection it will be interesting to make a comparison with the number of banks in Great Britain. There 80 per cent of the banking business is carried on by five large banks having over seven thousand branches, as compared with our fourteen chartered banks with over four thousand four hundred branches. This comparison, it seems to me, demonstrates that we have a sufficient number of banks.
In determining our attitude towards the question now before us it is important to understand the United States banking system. They have 8,000 national banks and 23,000 state banks, to say nothing of trust companies, private banks, and concerns of a semi-banking character.
Let us look briefly into what are the main purposes of banks in general. These are, first, the issuance of notes, in which of course is included security for the notes; secondly, the taking of deposits, in which of course is also involved the safety of the depositors; thirdly, elasticity of circulation; and fourthly, elasticity of credits, which of course includes privileges of re-discount and such like. All these functions are inherent in our banks and are exercised by them. But before dealing with these various functions let us see what the result of our banking system has been. I think some hon. gentlemen are very apt to belittle our banking system, to say that it has not sufficiently built up the country, and that some new system should take its place, r. part of such new system to be a central leserve bank. Let us consider the failures of Canadian banks since confederation and compare the losses sustained by noteholders and depositors with similar losses which have been sustained by these two classes under the unit system in the United States. Since confederation we have had only twenty-seven bank failures. Of these two are not reported, one being a small bank called the J. C Dale Bank of Madoc, Ontario, and the other the Exchange Bank of Montreal. I might say in parentheses that two Exchange Banks failed, the one to which I refer having closed its doors in 1871. Three of these defunct banks a e in process of liquidation, namely the Farmers' Bank, the Bank of Vancouver and the Home Bank. Now, what happened as regards the other twenty-two failures? Outside of one small bank, the Acadia Bank, which had liabilities of slightly over $100,000, all the noteholders of those twenty-two banks have been paid in full. Of course, since the creation of

the bank circulation fund all noteholders of defunct banks have been paid in full.
Now let us look at the record as regards the depositors of these twenty-two failed banks. This is what appears: Of the 22, in the case of 12 the depositors were paid in full; 3 paid 90 per cent or over; one paid 75 per cent; 4 over 50 per cent; one 30 per cent, and one 17J- per cent. In other words, 15 paid 90 per cent or over It seems to me that that record as regards our banking system, although it may not be perfect, is a good and sound record, one that I think we should be proud of, one that those who built up the banks in the country should be proud of, and one that has served the country and its upbuilding exceedingly well. What was the result in the United States? Of course there are many more banks there than we have in Canada, and the population is greater. We understand, too, that some of the banks are small. But we are not comparing the size of the banks; we are comparing the two systems, the branch system and the unit system, with a view to seeing whether a central reserve or federal reserve branch, call it what you will, is adaptable to the system that has grown up in this country.
What, then, are the results in the United States as regards failures? For the year ending June 30th, 1922, the failures were 306 state banks, 35 trust companies, 12 private companies, 11 savings banks, in all 364 banks.


Leon Johnson Ladner: How many of these were members of the federal reserve system? In other words, how many were national banks?


Herbert Meredith Marler: I do not think any of those I refer to were national banks.


Leon Johnson Ladner: Then the result so far as they were concerned has no relationship to the question of a federal reserve system, because these banks were not in the system.


Herbert Meredith Marler: That is not the point I am discussing at the moment. I am discussing-if my hon. friend will have a little patience-the question whether the federal reserve system is adaptable to our system. I was giving the record-possibly my hon. friend did not hear my remarks-as to our banking system, and I was giving the record also of the United States failures. I have the figures also as to the failures of banks in the federal reserve system, which I will take up later. But I am not prepared to say that any of these particular banks were Federal Reserve Banks, in other words, national banks. But under the unit system of banks, which is the system in the United States as distinguished from the system in our country, those were

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the failures in 1922. I was going on to say that for the nine years ending the 30th of June, 1922, 775 state banks alone failed. The hon. member for Vancouver South (Mr. Ladner) asked me a question as to federal reserve banks. That question is answered on page 133 of the evidence taken before the Banking and Commerce committee. The hon. member for Vancouver Centre (Mr. Stevens) was speaking about national bank failures. He said to the witness, Mr. John W. Pole:
I am taking six years. Take 1914: there were 19 national bank failures and 193 state bank failures, with a total loss of approximately $55,000,000 in 1915 there were 18 national bank failures and 115 state bank failures with a total loss of about $37,000,000; then there were a few years with smaller losses, and we come to 1920, which was a very prosperous year. In 1920 there were 10 national bank failures and 109 state bank failures, with an estimated liability of about $50,000,000. These figures are all in round numbers as far as dollars are concerned. In 1921 there were 47 national bank failures and 357 state bank failures with a loss of approximately $170,000,000; then in 1922 there were 35 national bank failures, and 242 state bank failures, with a loss of about $73,000,000, and in 1923 there were 77 national bank failures and 501 state bank failures, with a loss of about $200,000,000. To summarize this, since 1913-that is ten years ago-there have been 222 national bank failures and 1,664 state bank failures. I have not had the time to add up the total loss, but it runs up very high. Now my point is this, Mr. Pole, if you will permit me, in view of these increasing failures and the losses in the United States during recent years since the establishment of the Federal Reserve Bank, how can it be argued that the Federal Reserve Bank has in any very material sense contributed to the prevention of failures; I am not saying it is the cause, but how does it contribute materially to the prevention of failures?
The answer given, by the witness was:
A. I do not think it can be said that it is a criterion of the merit of a system when you take that period immediately after the war.
Then the hon. member for Vancouver Centre asked another question:
However, the facts are correct?
Mr. Pole answered:
A. I will not dispute the facts.
Q. Really the point I want to make is that there is no system that is infallible and will prevent failures.- A. Absolutely none, as far as I know; it has never been devised.
The reason I read that quotation is by way of comparing the record of the system of branch banks in Canada with the unit system in the United States, and I say advisedly and with considerable pride that our banking system has certainly stood the test of time.


Leon Johnson Ladner: Would my hon. friend's
comparsion not be fairer and sounder if he gave the figures of the total number of unit banks in the United States so that we could get the proportions, also the number which
failed prior to the establishment of the federal reserve system, so that we can note the improvement, if any?


Herbert Meredith Marler: I cannot give my hon.
friend the figures of the failures before the establishment of the Federal Reserve Bank. But as I stated in the earlier part of my remarks, there are 8,000 national banks in the United States and 23,000 state banks. But my hon. friend's question is beside the point, because the failures in the United States under the unit system have been much greater in number than the failures in this country.


William Irvine: The hon. member has
stated that there are 5 banks in Great Britain and 23,000 in the United States. He compares the failures in the United States with those in Canada where we have 14 banks. Is that fair? If we had fourteen failures in Canada, for instance, within the next ten years, we would have no banks at ail. Does he think that is a fair comparison?


Herbert Meredith Marler: Yes, I think it is a very
fair comparison indeed. As a matter of fact my hon. friend's question emphasizes the stability of our banking system, because it simply means that we have less failures. The failure of a unit bank in one part of the country may cause a great deal of suffering, whereas when one bank in Canada fails the loss is spread over the whole country.


William Irvine: That is an argument in
favour of the unit system.


Herbert Meredith Marler: No, it is not an argument in favour of the unit system.


William Irvine: My hon. friend just pointed out-


Herbert Meredith Marler: The hon. gentleman is not bearing out his argument with his usual persuasion to-night. If he follows my argument closely I am sure he will agree with me toward the end; perhaps his new financial system will have a shock or something of that description.
As I stated at the commencement of my remarks, one of the questions involved in this matter is the issuance and security of notes. That I think I have covered as regards results by quoting the failures in Canada. The same thing applies as regards deposits. The next great question that comes up is the question of elasticity of credits. I think that, if there is any reason at all, is the main reason why the committee asks an extension of its powers for the purpose of studying the question
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of a federal reserve bank or a central reserve 'bank, as the case may be. I claim that our system provides admirably for most elastic systems of credit.


William Irvine: Before my hon. friend
leaves that point, might I ask him how many branches there were of the Home Bank? Would it not be fair to say that we had a failure in Canada for eveiy branch of the Home Bank, on the same basis that my hon. friend is figuring it out in the United States?


Herbert Meredith Marler: I do not think that is an entirely fair comparison.


George Perry Graham: A number of the Home
Bank branches on their own business would not have failed.


Herbert Meredith Marler: Exactly. As regards the
elasticity of credits, under our branch bank system the credit of the country is concentrated at certain points, but at the same time it is decentralized; that is to say, although a concentration may take place at points where the head offices of the banks are situated, all the money in any bank is capable of being used in any branch or in any part of the country relating to that particular bank. By these means all the smaller communities have precisely the same effective powers over the funds of the bank and the use of credit as have the larger communities.
Now I would like to compare with that the federal system in the United States, because after all that is a comparable system with any central reserve bank or any bank of that description which might be included in the powers asked for in this extension. In the United States the local banks have, of course, few or no' branches. Money, before the federal reserve system came into vogue, *was not. centralized in any particular part of the country. When the cotton crop had to be moved there was a lack of money in the south; when the grain crop came to 'be moved there was a lack of money in the west; consequently rates in particular parts of the country went up and became prohibitive, and in some cases, in fact, money could not be procured at all. It was to remedy this condition that the federal reserve system was put into effect, so that there would be sufficient centralization of funds to enable the member banks of the federal reserve system to procure from the federal reserve bank the funds necessary for their purpose. But as I have explained in our system the question of credit is nation-wide. The credit at the head office of any bank is available for any branch [Mr. Marler.j
of that bank in any part of the country. Credit is not, and cannot be, so centralized under our system as to deprive the West of money which may be in the East. The West has precisely the same right to that money, -and precisely the same powers over it, as has .the East, although the money may be temporarily in the East.


Edward Joseph Garland: Oh no.


Herbert Meredith Marler: Why does my hon. friend say "Oh no?"


Edward Joseph Garland: Because
the directorates of most of the banks are situated in the East, and they are more interested in the development of eastern industries than of the natural resources of western Canada.


Herbert Meredith Marler: The hon. member is
stretching the point. I know that that is the Albertan theory of banking, but he knows as well as I do that capital goes wherever it will pay; there is no question about that at all. The hon. member has no reason for saying that the capital of the banks is used for the development of eastern industries rather than for the development of the resources in the West. If he will look at the loans made in the West, he will find they are quite compatible with the deposits, and he knows that as well as I do.


Edward Joseph Garland: Not at all.


Herbert Meredith Marler: If he will look at the
statistics, he will find that is true.


Edward Joseph Garland: Take the
Home Bank case, where in practically every instance the deposits far exceeded the loans.


Herbert Meredith Marler: My hon. friend is speaking with regard to one bank only.


Edward Joseph Garland: Not at all.
It is the general condition.


Herbert Meredith Marler: Does my hon. friend mean that that condition prevails in all the banks, or in simply one bank?


Edward Joseph Garland: The Home Bank must be taken as typical. It is the only case where we have definite proofs. Last year we asked the managers of the banks to produce statistics in support of their contention that they were giving us fair service, but we have never been able to get it from them; they declined to give it.


Herbert Meredith Marler: Does the hon. member
mean to say that the Home Bank is to be taken as typical of our banking system?

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Edward Joseph Garland: Not at all, but typical in the case you suggest, that branches in western Canada are extending loans in ratio to the deposits taken in. That is not the case.


Herbert Meredith Marler: Has my hon. friend read
the evidence taken before the Banking and Commerce committee this year of Mr. Edwards and of Sir William Stavert, who stated that every branch had the full facilities of the whole bank? If my hon. friend will look at the statistics, he will find that loans are made in all parts of the country, wherever loans are needed, provided the security is there. My hon. friend's statement that the loans are segregated in the East is totally without foundation, and I think he knows it.


Edward Joseph Garland: May I suggest that we have sadly needed loans for development work in western Canada, but there has been a preference shown for West Indian investments, Mexican power development, and New Orleans rails, with the money of the Canadian depositors.


Herbert Meredith Marler: Is it not true that the
West has had too much money in the past few years?


Henry Elvins Spencer: If the hon. member will
look at the Home Bank figures he will find, as I have, that the loans in each of the western provinces of Canada made by the Home Bank were outweighed by the deposits taken in.


Herbert Meredith Marler: I am not discussing the
Home Bank at all. I do not deny what the hon. member has said regarding the Home Bank, but I am discussing the general banking system of the country which the hon. member from Alberta is trying to pull down, to put a new one in its place. My hon. friend will find my statements substantiated-


Edward Joseph Garland: I must ask
my hon. friend to withdraw that last suggestion, that we are attempting to tear down the present system and substitute something in its place. Hon. members on this side with whom I have conversed have for their purpose the co-ordination of the facilities that now exist in one central banking bureau or commission. They are not attempting to interfere with the present banking facilities at all.


Herbert Meredith Marler: Then my hon. friend is
trying to merge fourteen banks in one central reserve bank and start a new bank entirely?


Edward Joseph Garland: Not at all. That is not true. May I suggest that the hon. i ember for West Calgary (Mr. Shaw) very clearly laid before the House just what he had in mind, and that is the co-ordination of the central gold reserve, the Department of Emance, the War Finance Act, the Treasury Board, and the Bankers' Association under one head. Those facilities all exist at the present time, and we are not proposing to do away with them but simply to co-ordinate them.


Herbert Meredith Marler: I do not think my hon.
friend followed me.


Edward Joseph Garland: I do not
wish the hon. member to be off on the wrong foot.


Herbert Meredith Marler: Very possibly I will get on the right, foot when my hon. friend from Bow River replies. However, to resume on this question of a federal reserve system for Canada what would happen would be the grafting on to our system of one that is totally in-*adaptable for all practical purposes. My hon. friends opposite say we want to study this question and find out if a federal reserve system of banking is practical for this country; we should ascertain whether we can have a central reserve bank. Why, the evidence taken before the Banking and Commerce committee this year is sufficient and conclusive *on that point; the evidence taken before the *committee last year is conclusive on the question that a federal reserve system or a central *reserve bank, for they amount to very much *the same thing, is not wanted in this country. J^et hon. gentlemen opposite read the evidence of Mr. Neill, given on page 278. I know they laugh at Mr. Neill's evidence, Mr. Neill being a successful man, and, of course, it is a crime to have built up a successful bank in this country and to have brought the country ahead; but there is other evidence as well. At page 278 Mr. Neill says:
Q. Would you compare the terms of our Finance Act and its facilities, briefly, with the federal reserve discounting system?-A. My opinion is that as far as tihe needs of Canada and the Canadian banks, and the Canadian public are concerned, that the re-discounting facilities granted by the Finance Act are quite satisfactory-all we need.
But in addition to that the Banking and Commerce committee brought up from the United States-it was one of the importations they are so fond of getting from that country-two bankers who gave clear and conclusive evidence before the committee. Mr. Pole, Chief National Bank Examiner at Washington, gave his reasons as regards the question of a reserve bank in Canada. Let my
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hon. friends look at page 124 of his evidence and they will find there the reasons which he gave for the establishment of the federal reserve system in the United States. He states, and he states in the clearest possible way, that the federal reserve system was established in the United States simply because there was difficulty in having sufficient money in various parts of the country. There is no difficulty under our banking system in having money in various parts of Canada when it is needed. Then if hon. members will look further into his evidence at page 127 they will see also that one of the peculiarities and one of the qualities of the Federal Reserve Bank is the question of re-discounting privileges which exist fully under our own Finance Act. He, as a matter of fact, compares our Finance Act very favourably with the federal reserve system in so far as re-discounting is concerned in the United States. Then let my hon. friends look further at page 139, where more of Mr. Pole's evidence appears, and they will find that he says this:
The system in vogue would seem to be entirely adequate inasmuch as the Finance Act offers every facility, practically, that the federal reserve bank offers at a much less expensive operation.
Then further on, as to whether a federal reserve system was adaptable to our system, if my hon. friends will look at page 142 they will see that Mr. Pole distinctly says that in his opinion the federal reserve system was not adapted to our system of unit banks.


William Findlay Maclean: Does he think it
is adapted to the United States?


Herbert Meredith Marler: Yes, it is adapted to the
United States; it is pn entirely different system. My hon. friend from South York wants to import into Canada the banking system of the United States as well as the various experts that were brought here for the purpose of giving testimony.


William Findlay Maclean: No, he does not.


Herbert Meredith Marler: But all these questions
were fully taken up by the committee; they were fully considered and they were fully decided. The best witnesses that hon. gentlemen desired to have brought before the committee one and all stated that the federal reserve system is not adapted to Canada. My hon. friend from Brant (Mr. Good) shakes his head. He is probably thinking of Mr. J. Skelton Williams, but I am coming to him in just a moment.


William Charles Good: No, Mr. Pole as I intend
to show later.


Herbert Meredith Marler: Mr. Pole also? Well,
what does Mr. Pole say? On page 144, speaking about the federal reserve system also, he says:
A. I hardly think that the federal reserve system could be substituted for the Finance Act.
Q. Why?-A. For the reason outlined in my remark that it is entirely adequate for a unit system of banking, but it is not adaipted to the-
Q. Branch system?-A. Branch system.
, Q. Why?-A. Because it would be too expensive and too cumbersome for the number of units which it would have to take care of. There being only fourteen banks, if the fourteen banks should undertake to support the federal reserve system it would be rather an expensive operation.
Q. Because of the expense? That would be largely your objection?-A. That would be one of the objections, when perhaps the same purpose could be achieved under the provisions of the Finance Act.
It seems to me that Mr. Pole's evidence on this subject is very clear and very distinct. Now, Mr. J. Skelton Williams, who was also one of the witnesses before the committee, more or less learned, I admit, to the federal reserve system, but if his evidence is studied it will be found that he knew very little about our banking system. If hon. members will look at page 170 of his evidence they will see that Mr. J. Skelton Williams had not examined the monthly reports under our system. If they will look further at page 179 they will see that the question was asked him:
Are you familiar with our Finance Act?
His reply was:
No, I am not.
How, therefore, could Mr. J. Skelton Williams-not being familiar with our banking system or with our Finance Act-say to us here in Canada that he thought the federal reserve system could in any way be used in this country? But in addition to that I would ask my hon. friend from Brant, and my hon. friend from Bow River (Mr. Garland) also, if they so desire, to look at page 181 of Mr. J. Skelton Williams' evidence in which he sums up the nine points as regards the uses and advances of a Federal Reserve Bank in the United States. Let my hon. friends look at those points and if they do so they will see that the great majority of them are all covered by our banking system. If the time of the House were not so short I would be very glad to go through each one of these points and demonstrate that our system amply and already covers each essential point that Mr. J. Skelton Williams laid stress on as being of great advantage under the federal reserve system.

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William Charles Good: And all by way of co-ordination.
Mr. MABLER,:	My hon. friend has made
a very cryptic remark. I think he gives me credit for far more intelligence than I actually have. If he will elucidate his question a little bit I will be very glad to reply to it.


William Charles Good: I shall do so later.


Herbert Meredith Marler: Well, we will leave my
hon. friend's remark in a cryptic state in the meantime.
Now, let me repeat that our Finance Act as it is now and our branch bank system as it is now fully cover all the necessities of elasticity of credit and banking in this country, and our Finance Act as it exists is quite sufficient to meet the requirements without any question of a federal reserve bank being taken into consideration at all. In addition to that hon. members will require to bear in mind the cost of the administration of any banking system based on such 'a system as the federal reserve system. They will also require to consider what profit is gained in a reserve system of that description. I know that some will reply to me that notwithstanding the fact that $138,000,000 was gained in profit by the Federal Reserve Banks the profit must have come from somewhere-the profit must have come from some interest charged or some discounting, or from the loans made, because unless the Federal Reserve Bank has a considerable amount out in loans the bank cannot function at all. Therefore the question of getting lower rates of interest, lower rates of credit, does not apply at all. Now, consider the situation under our Finance Act. The administration of our Finance Act practically costs the country nothing. The profit derived, it is true, is comparatively small; but comparing the cost of a federal reserve bank-with its various branches and its various officers-it is hugely greater than any cost under our Finance Act at all.
There is another point also, as regards the federal reserve bank, which people having an idea of that subject should take into consideration and it is this:	That the Federal
Reserve Bank cannot function at all, cannot make any profits-it will have to be run at a loss-unless there is a tremendous amount in loans outstanding. The chairman of the Banking and Commerce committee (Mr. Vien) cited this afternoon a quotation from the New York Times of May 29 stating that the Federal Reserve Bank will barely make both
ends meet this year simply because the loans are not great enough to make it pay. Precisely the same thing would happen in this country. If the banks cannot lend all their money, the Federal Reserve Bank cannot lend all its money. The bank if it has any kind of assets which it desires to re-discount can always, under the Finance Act and it is a very inexpensive operation, re-discount those assets and obtain all the money which is required.
Before I conclude I wish to re-state the question which is before the House to-night. It is this: Does this House desire to study the feasibility or the advisability of establishing a federal reserve bank? My hon. friend from Vancouver South said this afternoon that as a matter of principle the committee had a right to come to this House and ask for leave to investigate this particular subject. I do not think that the committee has any such right; it is for the members of this House to decide just what questions any committee shall study. No committee can arrogate to itself any powers and come to the House and say it desires to study this or that question and ask the House to acquiesce in its request.


Leon Johnson Ladner: The committee having
come to the House with the request that it be empowered to study this particular question, it then devolves upon the House to decide whether or not the power shall be deputed to the committee to go into the matter. The House can say to the committee: "We will not allow you to go further than you have already gone; individually you may go into the library and study the question as you see fit but as a committee you shall have nothing more to do with it." The House may take that position, and that is the point of the whole debate. My hon. friend has entered into a lengthy discussion before all the evidence is in.


Herbert Meredith Marler: Not at all. I understood the hon. gentleman this afternoon to say that on principle he thought the House should accede to the request of the committee, that it be allowed to study this question.


Leon Johnson Ladner: Certainly; and I see no
reason whatever why that privilege should not be granted the committee.


Herbert Meredith Marler: But why should the committee be given the power to go into this question?


Leon Johnson Ladner: Because it has asked for it.


Herbert Meredith Marler: Well, committees have no
right to ask for any such powers. Any com-
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mittee might request that it be empowered to study any complicated and obscure question and take up the time of parliament debating it while parliament might not desire to have that question investigated.


Leon Johnson Ladner: Does the hon. member
suggest that a committee has no right to request of parliament the right to enlarge the scope of its investigation? I have never heard any such proposition before.


Herbert Meredith Marler: The committee was not
authorized to investigate this particular question.


William Findlay Maclean: The committee
studies all questions relating to banking and commerce, and surely this particular question would be relevant.


Herbert Meredith Marler: They were asked to investigate an entirely different matter.


William Findlay Maclean: They were told to investigate the subject of banking and commerce generally.


Herbert Meredith Marler: Not at all; the committee were instructed to inquire into a particular question and the scope of their investigation was clearly defined. I do not think they have any warranty for coming to parliament and asking for further powers.


Leon Johnson Ladner: Perhaps the hon. member
does not know that the order of reference to the committee was interpreted in two ways, one interpretation being that the authority already existed in the order, and the other, that it did not empower the investigation of the matter in question. The reference was made in relation to the safety of depositors, and I think my hon. friend knows perfectly well that this question relates to that subject. The chairman of the committee having ruled that the committee had no power to investigate this particular question, the committee then voted that an appeal should be made to parliament to secure the necessary authority.


Herbert Meredith Marler: I will not debate that
question; it was discussed in the committee, and the ruling was given. My hon. friend says that this question relates to the safety of depositors; I am not of that opinion, for I do not think that the question of a federal reserve bank such as exists in the United States will add one iota to the safety of the banking public.


Leon Johnson Ladner: Does the hon. member
think that any member of the committee is advocating the adoption in this country of 
the United States federal banking system? Does he not know that what we are advocating is the 'adoption of certain principles, whether they be in application in the United States or in Timbuotoio, which will be helpful in our own system? That is the whole point.


Herbert Meredith Marler: The request of the committee is perfectly clear; it relates to a central reserve bank, and that is the question before the House. Neither the hon. member for Vancouver South nor any other hon. member can make the language any plainer, however much they may talk around the subject; it is clear and distinct enough that the committee asks to be allowed to investigate the question of a central reserve bank. The hon. gentleman has been asking half a dozen questions; he will have an opportunity of dealing with the subject when I am through. In the meantime I want to be allowed to conclude my remarks. No doubt the financial gentlemen from Alberta will take up the question in a moment.


William Irvine: Is the United States the
only country in which there is a central bank?


Herbert Meredith Marler: No.


William Irvine: Then why does the hon.
gentleman conclude that the request calls for a central bank like that of the United States?


Herbert Meredith Marler: I do not say that it calls
for the United States system; I am only taking that system for purposes of comparison. If the hon. gentleman had been listening toi my remarks he would have heard me say so a few minutes ago. Now, that is the question before the House to-night; parliament is asked to allow the committee to study the feasibility or the advisability of establishing a federal reserve or central bank, call it what you will, and I do not think that the power to go into this question should be delegated to the committee, if in the opinion of hon. members the question of a central bank is unnecessary to all our banking system as I think it is.


William Charles Good: I am aware
that a great many hon. members in this House are rather anxious now to get through with the business of parliament. I myself am suffering just as much as anyone, if not more than a. good many, in staying in this House during July; but I want to state most emphatically that on the present occasion the responsibility for whatever time may be taken up and, in the opinion of some hon. members,

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wasted, in this discussion, rests on the government, and not upon those in this part of the House who on the committee have made the request for the enlargement of its powers.
I should like in this connection to review the situation as it has developed since May 21. On that date, if my information is correct, the Banking and Commerce committee, by a vote of 21 to 7, requested this House to empower them to consider a matter which they thought pertinent to the inquiry already before them. Personally I did not think that we were going outside the order of reference already submitted to the committee in studying the matter which is under consideration to-night. Nor do I think so now; and in the [DOT]course of my remarks this evening I shall try to show that this question of the establishment of some type of central bank in Canada is very closely connected with the question of safeguarding depositors, which is the subject already referred to the Banking and Commerce committe by this House. But the contention of the chairman of the committee was that the order of reference to the 9 p.m. committee did not include the study and consideration of some type of central or reserve bank, and after some debate and after having been challenged by some members of the committee, his ruling was sustained by a very narrow vote of, I think, 14 to 12. That is the only reason why the committee by an almost unanimous vote of those present requested this House to enlarge the reference so that they might consider this matter, which in their opinion was pertinent and of great importance. That occurred
i.n May 21, and from that time until the [DOT]present moment some of us have been insistent that the question should be brought into r.hc House and settled by the House so that we could then get to work, with what time we had, to study it and make some recommendation touching it. I do not wish to review all the details, but we have not succeeded in getting the matter into the House until the present time; and it is obvious, as everyone realizes, that the committee will not henceforth be able to give any great consideration to the subject. I do not wish to make any unfair insinuations, but it would seem as though the delay had placed the government in the position of being able to say that, now the time having gone, there is no use in going into the matter. In fact, the Acting Minister of finance (Mr. Robb) said this afternoon that [DOT]it was already too late to undertake the study of a question of this sort. So it is in a sense. *Everybody admits that, but it is not too late to assert the relevancy of this question and to
insist that this House should give to the committee the right and power which the committee asks from them. That is the history or the situation, and it is just as well that those members of the House who do not belong to the Banking and Commerce committee should know just what happened, because, in my judgment, it is very significant.
Further, I made a private effort, I suppose about three weeks ago, to secure the acquiescence of the government in this particular appeal of the committee, and I did not think at that time that the government would take a position which seemed to me then and which seems to me now most unreasonable and unfair. I was amazed at that time when I learned, incidentally and indirectly, but from very good authority, that the government was likely to oppose this motion for the enlargement of the powers of the committee. I concluded that if that was the situation, if the government by what majority it might command in the House, was going to suppress the inquiry, nothing was left for me but to place myself on record in this House. I did not want to take up the time of this House. I would have preferred to present in the committee whatever information I had collected in regard to this matter, but the action of the government has forced me, very much against my will and certainly against the inclinations and desires of members at this time, to bring the matter to the attention of the House this evening.


George Perry Graham: How did the action of the government do that?


William Charles Good: The situation is plain. The
government have clearly indicated that they are opposed to granting the committee any power to study this matter. That attitude was conveyed to me three weeks ago unofficially, and it has been definitely conveyed to the House to-day by the Acting Minister of Finance (Mr. Robb). Therefore, since we cannot possibly get an opportunity on the committee of looking into the matter or of presenting any of our ideas, what option is left for me and other members but to stand up in this House to-night and proclaim our views.


William F. Carroll: Does the hon. member
take unofficial reports as being governmental information or announcements?


William Charles Good: I do not know. I hope yet
that I was wrong. I should like to see the government even at this date concede this point. If they could grant the appeal of the committee and acquiesce in their request, a good deal, at all events, of dissatisfaction would be allayed. As I said, what I
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understood to be the attitude of the government, conveyed to me, if you like, unofficially some time ago, and as I take it, fairly clearly stated in the House to-day, has placed me in the position where I have no choice other than to present the matter to-night.
I had intended to deal with one particular phase of this question of a central bank in order to impress upon the House if possible the great importance of looking into the matter. The argument which I shall present to the House is condensed in the following statement which I should like to submit:
1.	The safety of deposits and depositors depends in part on the stability of business, in the prevention of recurrent waves of feverish prosperity, with intervening periods of paralyzing depression, because such flow and ebb encourages banks first to over-loan and then, when the tide turns, subjects them to disastrous pressure.
2.	The prevention of this periodic ebbing and flowing of the industrial tide depends, largely, upon the stabilizing of the price level, -the stabilizing of the purchasing power of money.
3.	The most potent and immediately feasible method of stabilization in Canada, and also in many other countries, is the regulation of the re-discount rate, and for this purpose a central bank is the proper instrument for putting such regulation into effect.
4.	Therefore, the safety of depositors is largely dependent upon the establishment of a central bank.
If that argument is sound-and I think I could substantiate every part of it by such a mass of evidence that this House would scarcely turn a deaf ear-then the ruling of the chairman some time ago was entirely erroneous, I submitted then that it was erroneous and I contend to-night that the ruling of this question out of order-outside of the reference then made to the House-was an entire mistake and that we should have been permitted by the chairman to study this matter, having in mind only the question of the safety of depositors that had already been referred to the committee.
I have some consideration for hon. members and I am not going to present the mass of detail that I had hoped to present in this respect, but I shall submit my argument in brief. Perhaps, we ought to start out somewhat from this point of view. The banking situation, as it has developed in Canada during the last year or so, certainly has given rise to a great deal of dissatisfaction, unrest and uneasiness. Confidence is pretty well shattered. Last year the bankers who were before the committee, and the government also, 
fought inspection. They fought and defeated practically every other amendment which some of us thought necessary for the restoration of confidence. Our arguments had no effect last year and I think I know why. I have some information which I think the House and the country ought to have as to the possible reason why our efforts last year to secure anything of a fundamentally reconstructive character failed. If members want to know something about the causes, about the influences at work, I wish they would look into the minutes of the meeting of the Bankers' Association held1 at Montreal on July 9, of last summer.


William Findlay Maclean: What were they?


William Charles Good: They will find if they look
at those minutes that Sir Thomas White, for services-I do not know what services; he was not around or at least I did not see him- rendered during the Bank Act revision of last year was given $20,000 by the Bankers' Association. Mr. Geoffrion who is retained this year, on the testimony of the secretary of the Bankers' Association was paid $20,000 last year and he never opened his mouth in the committee; but he did his work quite effectively, as some of us knew and saw. Mr. Symington, who has been prior to the present time generally recognized as one of the best advocates of the western farmers' interests, was retained by the Bankers' Association for $20,000. He sat in the committee also and did not open his mouth as far as I saw, unless perhaps in conversation with private members.


William F. Carroll: Then what complaint
have you got to make?


William Charles Good: I am simply submitting these facts to the House and to the country, for I think they are significant. Other legal counsel who appeared at Ottawa last year received nearly $10,000. The cost of printing and distributing the pamphlet, "Banks and Banking", which we were all favoured with last year, as hon. members will remember, was nearly $8,000-I am giving the round figures-[DOT] and the hon. gentleman in the other House who was responsible for writing this pamphlet was granted an honorarium of $10,000. Some of us last year expressed our opinion of the quality of this pamphlet "Banks and Banking".
A companion pamphlet was published this year and circulated among members, as we all know. However, no matter what our opinion may be of the quality of the argument in "Banks and Banking," it is significant that an honorarium of $10,000-which I

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presume must be taken, out of the banks customers, possibly the poor western farmers -was granted to the writer of a little pamphlet which I think any schoolboy could have produced. There were some other expenses, not very large, the total amounting to more than $96,000.
Now, Mr. Speaker, here is the situation. Last year, as we all know, influences were brought to bear on this House and on the government which prevented the adoption of the amendment for bank inspection and of a dozen other amendments that some of us were pressing for. Our arguments were not listened to-well, they were listened to, but I remember time and again in the committee there would not be a word of argument in reply, but some hon. members would call. "Question, question", and we would be voted down. After being assured last year, as was stated in the House this afternoon, by those big bankers that everything was all right, that the depositors were perfectly safe and the banks were all in splendid condition ;- shortly after the Bank Act went through this House the Union Bank wrote off its rest account four and a quarter million dollars, the Bank of Hamilton amalgamated with the Bank of Commerce, and later on the Home Bank failed. The public know these things, and we here know what went on in the Banking committee last year. Now we discover that nearly $100,000 was spent by the Bankers' Association in defeating our efforts to amend the Bank Act. In view of all these facts what are we to conclude?
And now the bankers have conceded the necessity of inspection. Why? Because the logic of events-not our arguments-has proven that inspection was necessary and desirable years ago. I hope it has not come too late. So the government comes down, and says, "We will concede inspection." In fact the Acting Minister of Finance has introduced an amendment to the Bank Act for the purpose. It is a good amendment and I hope it will be in time to meet the situation. But as far as we can gather, the government are going to oppose everything else, and we have a dozen amendments which are perhaps just as vital as the amendment which we tried to put through last year to bring about bank inspection. I hope I am wrong, but it seems we have an announcement from the Acting Minister of Finance this afternoon that the government are not going to allow us to even consider the question of a central or federal reserve bank; they want to absolutely suppress inquiry so far as it is concerned. We are told that we can go ahead individually and
study this matter. Well, some of us have been doing so for some time, but we cannot get anywhere unless we bring the inquiry into the committee. I think it is an outrageous situation, and I could not believe my ears three weeks ago when I heard that we would not be allowed to consider this matter in committee. Here we are at the last days of the session and the government come along and say, "Oh, well, now it is too late anyway." I do not know under what pressure. The secretary of the Banker's Association says they have four counsel retained, and has named them.
Now I want to present briefly to the House a few facts on the subject of a federal or central reserve bank. Last year I received a memorandum-, which I have under my hand, from a gentleman who is now in the United States. He is connected with one of the large investment banking houses, and is a lecturer at one of the universities in the States. Before leaving Canada he was a professor of banking in one of our universities. In this very interesting memorandum there is a very definite and, perhaps, a rather novel argument to show that the time is ripe for the establishment of a federal reserve or central bank in Canada-not a slavish copy of the federal reserve system in the United States. The hon. member for St. Lawrence-St. George laboured the case this evening to show that we should not adopt the federal reserve system of the United States. Of course we should not. We never asked for that at all. As has been well said by the member for Vancouver South (Mr. Ladner), what we do think is necessary is to study and to secure in the very near future some type of central bank adapted to Canadian conditions. The writer of this pamphlet knows the United States situation, he has spent years in studying the question, and he states very definitely that the time is ripe for the establishment of such an institution in Canada. Are you going to turn that down? We might have secured the attendance of this gentleman for examination in regard to this matter if we had time. We cannot do so now, but we might have the advantage of his attendance next year. His argument, in brief, is simply along the lines of the argument that has been presented by the hon. member for West Calgary (Mr. Shaw): we have at the present time, as the hon. member for St. Lawrence-St. George admitted, all the necessary elements for a federal reserve or central bank; we have our rediscounting facilities under the Finance Act, we have our central gold reserve, we have the Bankers' Association, we have practically a centralization of financial power in this country
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in this private organization, and we have, or shall have very shortly, an inspection system, and also we have our government savings bank.


William Findlay Maclean: And national
currency.


William Charles Good: We have not yet, but we may have.


William Findlay Maclean: It is coming.


William Charles Good: We have these various elements or functions or aspects of a federal reserve system either in being or in prospect -we have everything except government notes. Now the proposition is that we should link up these elements in a co-ordinated scheme under the supervision of a board of experts and they do not need to be very many. Here, is something that can be established in Canada in the near future at practically no expense, because it means subsiantially nothing additional to what is now in existence or m immediate prospect. It simply means that these activities are to be co-ordinated and managed, if you like, by a board of experts, of bankers. We know the procedure in the re-discounting process, the Deputy Minister of Finance advises the Treasury Board. But the Treasury Board, composed of cabinet ministers, are too busy probably to look into the matter, they do not know anything about the rate of re-discount and the various considerations in connection with it, and so naturally they take the advice of the Deputy Minister of Finance. And he does not know. He admitted the other day in the committee that he had never even thought of altering the rate of interest; that the matter had never been discussed. What a deplorable admission on the part of the only man who advises the government in this matter! Why, it is recognized by all the authorities that one of the most feasible methods of checking inflation and deflation, of stabilizing price-levels and the purchasing power of money, is the adjustment of the rediscount rate. It is recognized by the Bank of England authorities, by the federal reserve authorities of the United States, indeed, by economists all over the world that this is the method which is best adapted under existing conditions-and I think it is particularly true in Canada-for the stabilizing of the price level. Yet the only adviser of the Treasury Board says the matter has never even been thought of, that he has never'looked into it. And yet the hon. member for St. Lawrence-St. George and the Acting Minister of Finance say everything is going beautifully, and the secretary of the Bankers' Association says

everything is going beautifully. Why, it is hard not to get hot over a situation like that. I shall have to get my coat off pretty soon. Now let me quote just a sentence or two from this memorandum:
Only through a central bank and a central reserve board would it be possible to exert that control over the expansion of credit and over price levels, which we discussed in a previous section of this memorandum and, if the day comes when we desire to follow out the suggestions made by the Genoa Conference or by Professor Irving Fisher, or any other suggestions designed to secure stabilization in business and commodity prices, we will be handicapped unless we have some sort of organization.
And then he goes on to speak about the organization of a board for this particular purpose.


Henry Elvins Spencer: What is my hon. friend
quoting from?


William Charles Good: 
Andrew Ross McMaster: You must not abuse a man in his absence.


William Charles Good: Oh, I certainly am not applying this expression "wicked ministers of finance" to our estimable Acting Minister of Finance; far be it from me to make any such suggestion. On page 214 of the same volume Mr. Keynes speaks about the policy of the Federal Reserve Board of the United States in regard to the maintenance of price levels. I am not going to quote it, Mr. Speaker, but the fact is that gold has been demonetized to a very large extent, and if my understanding of the situation is at all correct-and I quote Mr. Keynes as one of the real authorities on this subject; many others could be cited-we are not likely to go back to the gold standard. In fact we have arrived at a point where we are attempting to secure a managed currency. Let me emphasize that term-a "managed currency." Hitherto we have let this thing go wild. If we followed the gold standard we were at the mercy of the supply of gold, whether it was much or little, or we were at the mercy of the printing press or of incompetent bankers who in a period of inflation lost their heads and expanded credit too much and then when the turn came stifled business by contracting credit too rapidly. This has been the situation in the past, and some of the biggest bankers in the world are looking into this matter and are taking remedial steps. If the economic and industrial world is to survive we have to have a managed currency. I submit in all earnestness that there is no means of securing a managed currency in the immediate future that is more feasible and more practicable than the establishment of some type of properly administered central or federal reserve bank.
Let me repeat the argument so far:	We
have suffered tremendously from these recurrent waves of feverish prosperity and intervening periods of paralyzing depression. This is something that has faced all of us, and the cause has now been discovered in an unregulated, unmanaged, happy-go-lucky currency. It is possible by a managed currency to prevent these alternate periods of booms and depressions-what is known now among economists as the business cycle. Not
long ago Professor Irving Fisher sent me a little pamphlet, "The Business Cycle Largely a 'Dance of the Dollar.' " In this pamphlet he has worked out mathematically and by very careful means the relationship between what is known as the business barometer and the rapidity of the fluctuations in the price level. He has shown that the actual facts prove that the business cycle largely follows and depends upon the rapidity of fluctuations in the price level. It is a very interesting document that was published in the proceedings of the American Statistical Association in December of last year.
I have here another pamphlet by Professor Irving Fisher dealing with the same matter, entitled "Stabilizing the Dollar." This was published in Harper's Magazine in March of this year, and I think as the hon. member for St. Lawrence-St. George has taken up considerable time, I shall quote briefly from this very interesting pamphlet for the benefit of hon. members. He says on page I:
From the beginning of things monetary mankind has been harassed by mysterious, periodic price-floods -both ebbing and flowing-comparable to the plagues of Egypt. We have always blamed the wrong man -the "gold-bug" if prices went down; the "profiteer" if prices went up. Yet both of these alleged scoundrels have been merely carried by the mysterious tide they were accused of consciously making. Within the past three years this tide has surged up and down in such quick and bruising succession that the real truth has begun to get itself knocked into a few of us. For who can now go on believing that mere little cliques of human beings whose interests are opposed could take turns at controlling the tides in opposite ways three times within a year! When, therefore, most economists, some business men, a few bankers, and a legislator or two begin to talk "unstable dollar", the rest of us may at least feel justified in taking notice. What has so long prevented the ordinary citizen from detecting the motions of the dollar is the same thing which prevents the child on a train from detecting the train's motion. To the child the fences seem to go scooting backward when it is the train carrying him forward. Even to the grown man the sun seems to move from east to west when it is the earth carrying him from west to east. So we, who ride the tide of dollars, think the price-shore is receding when it is the money-tide carrying us out to sea.
He continues:
Naturally, then, we trust to the wrong expedient to bripg prices down. We trust to increased production. But production is already adequate. It is a fact, however, that increased production would lower prices, and therein, if we but look, we shall find the real secret of high prices. Prices are a mutual thing. If money buys goods, goods buy money. If, therefore, overproduced goods mean cheap goods, why does not overproduced money mean cheap money? It is in fact cheap money and not dear goods from which we are suffering. When the abundance of money is sudden, as in war, we sometimes come to acknowledge it and call it by the name of "inflation". But war-inflation is sudden inflation. What we fail to notice is the stealthy, slow inflation that has been the cause of the mysterious
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slow rising tide of prices through the ages (for prices have mostly risen), and the occasional slow deflations that have been the cause of the occasional historic ebb-tides of prices. Sudden deflation has also been tried, in 1921, as a counter-active against high prices, and it proved so successful that nobody liked it.
I shall not read any further from this pamplet, but I certainly think it is entirely pertinent.
Now I should like to call attention, just in passing, to some data that were placed on the Congressional Record by a gentleman we had before the committee this year, the Hon. John Skelton Williams, ex-Comptroller of Currency in the United States. Here it is,- a document entitled "The Tragedy of Artificial Deflation", showing how a contraction of credit in the United States from 1920 on led to a tremendous fall in prices, and, of course, when you get a fall like that you get it in some commodities more than in others; and showing also very definitely the connection between this tremendous slump or depression, with all the misery it caused, and the policy of the Federal Reserve Board in the United States at that time. I do not know whether I should say the policy of the Federal Reserve Board, but the policy of the financiers at that particular time.


Henry Lumley Drayton: You are quite
right; it was the policy of the Federal Reserve Board.


William Charles Good: I think the ex-Minister of
Finance is right. At all events that is Mr. Williams' contention. I do not wish to weary the House with quoting from this; I shall simply point to some figures that are significant. For instance, here is a summary of the total loans and discounts and bought paper held by twelve federal reserve banks. On May 28, 1920, it amounted to $2,938,000,000, or nearly three billion dollars; on August 31, 1921, $1,500,000,000; on January 25, 1922, $932,000,000, showing a decrease of two billion dollars in the loans of the Federal Reserve Banks in the United States in that very short time.


Andrew Ross McMaster: Within two years?


William Charles Good: From May 28, 1920, to January 25, 1922, hardly two years. The actual contraction of credits extended by the federal reserve system from May 28, 1920, to August 31, 1921, amounted to $1,410,000,000. Over the period of nearly two years that I mentioned it is slightly over $2,000,000,000, as I said before.
Mr. Skelton Williams has quoted in this document the views of a number of leading economists and bankers in regard to this par-
ticular matter which I shall not burden the House with at the moment. But I want to emphasize this; that owing to an unmanaged or a badly managed currency, in the United *States alone we had a tremendous inflation from 1917 to 1920, and a tremendous deflation following it. Now this is the situation that faces us. It may be said that the Federal Reserve Bank in the United States did not help. Well, maybe it did not, but there is this to be said, that the condition of affairs might have been infinitely worse if they had been without the Federal Reserve Bank. I passed through a good deal of that territory last summer and made a personal investigation, and I had the testimony of United States bankers everywhere to the inestimable benefit the federal reserve system had been to them in the time of stress during the war. But even supposing the results have been unfortunate, that is not due to the system; it is due to the bad management of the system. The point I am making is this, that we have arrived at a stage in the history of the world when we have got to face the problem of a managed currency, not only in this country but in all countries, and that is one of the most important economic, financial and political problems that we have to face at the present time.
Just in this connection I would like to quote in answer to a question that was asked me yesterday by one of the members of the House, one sentence from a speech delivered by the Hon. Reginald McKenna last January in England:
When the national output is below the productive capacity the policy should be to let money out. When production is at a maximum the outflow of money should be checked and if inflationary symptoms have appeared money should be withdrawn.
I was asked in the course of the debate yesterday by qne hon. member, under what conditions, if any, it might be good policy to increase the supply of money in the country. Now Mr. McKenna has set forth very distinctly the considerations that ought to weigh in a managed currency; that is, if we have a decreasing price-level, accompanied as it always is by business depression and unemployment, it should be the policy of statesmen to deliberately increase the supply of money in order to take up the slack, as it were, to get rid of unemployment, and to give encouragement to business. If, on the other hand, any inflationary symptoms appear, which will be indicated by an increasing price level, the proper policy would be to decrease the supply of money, and in that way prevent the ups and downs of business. As I said

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before, the best economists and bankers are coming to the conclusion that this is one of the first-rate problems that faces us in the immediate future. I have referred to Mr. J. M. Keynes, to Professor Irving Fisher, to the Right Hon. Reginald McKenna, and to Mr. J. Skelton Williams of the United States. I might refer to a lot of other authorities that have looked into this particular matter.


William Findlay Maclean: Are any of
them on the pay roll of the Canadian Bankers' Association?


William Charles Good: I rather think not, certainly
not on the pay roll of the Canadian Bankers' Association.
Now, I hold in my hand a very interesting document, a report of the hearings before the committee on Banking and Currency of the House of Representatives on what is known as the Goldsborough bill. This is a bill that was submitted to Congress by Mr. Goldsborough in December, 1922, a year and a half ago. The bill had for its object the stabilizing .of the purchasing power of money and the consequent prevention of these disastrous fluctuations that we are so familiar with. This bill was submitted to the committee referred to. I think it is perhaps significant and interesting that if a bill of this character had been introduced into this House some hion. members would be inclined Ito scoff at it and say "This is mere academic rubbish." But when it was brought before the United States Congress it was submitted to the Banking and Currency committee. That committee made a very exhaustive investigation into the subject and1 whom did they consult? Perhaps my hon. friend from St. Lawrence-St. George would also despise the witnesses called before that committee and say they were people who had no practical knowledge. Well, he has a right to his opinion just as I have a right to mine. The witnesses who were called before the committee at Washington were: Dr. Irving Fisher, Professor of Political Economy, Yale University; Professor James H. Rogers, Acting Professor of Economics and Finance, Cornell University; Dr. Willford I. King, Eoconomist, National Bureau of Economic Research, New York city; Mr. Robert D. Kent, President Merchants Bank of Passaic, Passaic, N.J.; Mr. Philip P. Wells, Middletown, Conn.; Mrs. Frederick Leslie Ransome, Legislative Chairman American Association of University Women, Washington, D.C.; Dr. Frank A. Wolff, Physical Bureau of Standards, Washington, D.C.; Dr. George H. Shibley, 250
Director of Research Institute, Washington, D.C.; and Mr. William C. Lee, Member National Monetary Association, Washington, D.C.
There is a lot of information in this document that hon. members ought to study. But our policy has been to go drifting along in a sort of Rip Van Winkle style, not realizing that the world has got ahead of us, talking about returning to the gold standard and a whole lot of things that are in the past. A lot of water has flowed under the bridge in the last seven pr eight years in regard to financial and economic matters generally, and if we are going to adapt ourselves to existing conditions we must realize what the situation is at the present time and not remain cognizant only of conditions as they were ten, .twenty or fifty years ago. I know that is always the tendency for every one; we are all apt to fall into that attitude of mind, of thinking that the world is what it was twenty years ago, but as Mr. Keynes has well said, the situation has absolutely changed with respect to many of these currency questions within the last four or five years. Look at the flood of gold from the rest of the world to the United States! Why, they have buried down at Washington I do not know how many hundreds of millions of dollars of gold; they were afraid of another disastrous inflation so they had to get the gold out of the way. In Europe they have very little gold. The situation is new There are therefore a number of new problems to be solved. We must face the situation that exists at the present time, and stop thinking we are still living under the conditions of ten years ago when the situation was very different from what it is at the present time, although indeed the same influences were at work then that are at work now. Some of our people in Canada are waking up to the situation. I noticed during the winter a very interesting editorial in the Winnipeg Free Press on "Hard times and the currency problem." Hard times! Have we not had enough of hard times in Canada during the last two or three years?


Henry Lumley Drayton: Hear, hear.


William Charles Good: What relation has it to currency problems? Has it any relation? I venture to say that if I put the question to the majority of members on the spur of the moment they would say no. The only way you can get rid of hard times and the economic conditions of the last two or three years, they would say, is to get your nose on the grindstone a little bit more, work a little

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harder, economize and save money. When we asked that very eminent banker the late Sir Edmund Walker, in the Banking and Commerce committee last year what he would propose to remedy the situation, the poor man was pathetically-


William Findlay Maclean: Flabbergasted.


William Charles Good: No, I would not use such
a term as that, but he saw no remedy but to practise the old human virtues of hard work, thrift, economy and so on. That was all the enlightenment he gave us, and he was, I think, the most farseeing of all the bankers we had before us last year. Now, is there any connection between hard times and the currency problem? I contend there is. I do not want to go into all the details. I have a mass of information bearing on the subject and should like to take hon. members through it but hours would be consumed in doing so. This information would show that there is a very direct connection between hard times, that are brought about very largely by inflation and deflation, and the currency problem. Some of us are beginning to see the connection and are commencing to realize what we ought to do. Now, no means has been evolved that is more feasible and practicable and useful in the solving of that problem than the regulation of the interest rate and that can only be done through some type of properly administered central bank. There are many other things that a central bank will do, but this is one of the problems that it certainly can solve. It is one of the most important things a central bank can do.
And yet in spite of that, in spite of the information which has been submitted to the House, merely as yet in skeleton form, what does the government do? It refuses the request of the committee, passed by a vote of 21 to 7, to study this matter and to ascertain what more there is in it. And so we will go drifting on, under pressure I am afraid from the powers that be, into inevitable disaster. I said a few minutes ago that it was not our arguments of last year that brought the Banker's Association to concede government inspection No, it was disaster. But they are not going l,n concede anything else, they are not going to concede that any change of a radical nature in our banking system is necessary-nothing at all. They say "We have put this patch on and that will stop the leak. No further concessions will be made." Let me make a prediction: If nothing more is done there are going to he worse 
disasters very shortly. Then when we come back next year the Bankers' Association- after spending perhaps another $100,000 to defeat us-are going to be forced to concede something else. They will be forced to make another concession. The Bankers' Association will not come out of their trenches until they are driven out. Argument will not do it. It is a sad thing in human history that argument will not force people out of an untenable and indefensible position; they must be driven out by the logic of events.
I fear we shall have more disaster in the future. It may be said that I am talking wildly but let me say this:	A very eminent
banker now in the United States, a man who has had decades of experience in banking in Canada, told me not long ago that he had been making a year and a half's study of the Canadian situation and he predicted disaster in the near future, and he added that inspection had come too late to help. I do not know whether he is right or not, but I hope not. He is not, however, a man who speaks foolishly, and he says it is too late. And here is the government, apparently under pressure, refusing to consider a matter which is perhaps of much more fundamental importance and which will go considerably further, not immediately but ultimately, in the reconstruction of our financial system. The government refuses even the right to inquire into the matter, and I say that it is simply outrageous. It is altogether wrong, and I do hope that the government will give way. I trust I am not right in my supposition that when this motion is submitted to the House to-night the government will vote it down. But if it is voted down I can see some of the consequences that will ensue, and I predict something which the government will not like. The result may not be immediate, but the logic of events is more powerful than anything I may say to-night. We have urgent need to go further than we have gone in this little patchwork; what we have done is all right so far as it goes but it does not go very far. And if we shut our eyes to the inevitable tendencies at work now and refuse to provide for the future that which is alone capable in Canada of contributing to the stabilization of price levels, if we refuse to consider the co-ordination of the Finance Act administration, the gold reserve, the inspection systems, and all these things, I venture to predict that in a very short time we shall be sorry. I urge once more upon the government, even although they may consider it is

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not self-respecting, to withdraw their opposition to this motion and allow the committee that liberty to which I submit they are entitled.


Edward Joseph Garland: Hon. members opposite may deal with the subject lightly in their anxiety to get a vote upon it, but I wish earnestly with all the knowledge I possess to support the arguments advanced by the hon. member for Brant (Mr. Good). I desire to emphasize his last warning:	The day is past in this country, or in
any other country for that matter, when the representatives of the people can sit laughing and calling " Question ", without attempting to answer the arguments submitted in behalf of a change which is intended to improve the banking system of their own country. Let me now attempt to dovetail the few remarks I have to offer into the speeches that have already been made. I hope that hon. members who are in earnest in the matter and who are carefully studying the subject will observe that we in this corner are endeavouring as far as possible to avoid any overlapping but rather to form link by link an unbreakable chain of logical argument in support of the cause for which we stand. The hon. member for Macleod (Mr. Coote) referred to the necessity of establishing some form of central bank in order that long-term and short-term rural credit facilities might be instituted in this country. I am going to assume that the government intends establishing a rural credit system in Canada; logic compels me to make that assumption. I desire to quote from the report of Dr. Tory's commission at page 43:
A distinguished authority on agriculture, the Assistant Secretary of Agriculture in 1915 stated the matter to a body o-f bankers in the following terms: "I believe I am not overstating the matter when I say that a satisfactory system of rural credit is as necessary to the development of agriculture in the country as is a widespread application of scientific methods of agriculture. As a matter of fact, it is impossible for the farmers to make use of the latest scientific discoveries without better credit facilities". It is hardly necessary to state that the two go hand in hand.
I should like to bring to the attention of the House another statement at page 10 of the report:
One great reason why all countries have found it necessary to solve in some measure this problem is that agriculture is everywhere regarded as the fundamental industry, which if not prosperous reflects its lack of prosperity on every other national activity. This is especially true of all those countries which seek to become even approximately self-supporting. I
I feel justified therefore in assuming that this government, in spite of its evident inertia, 2501
must sooner or later establish a system of long and short term rural credits in this country. It amazes me, as it does the hon. member for Brant, that without even waiting to hear the arguments that were to be submitted in the House on this question of establishing a central bank, the Acting Minister of Finance (Mr. Robb) should in his place to-day at {he very commencement definitely state as the policy of the government that this proposal would not be accepted, the proposal to widen the scope of the banking committee for the purpose of considering and reporting upon this particular question.


James Alexander Robb: I did not say that was the
policy of the government; I said I could not support the resolution.


Edward Joseph Garland: Well, we
take it always that on a question of this kind when the minister chiefly concerned makes a definite statement such as this he is declaring the policy of the government. I am amazed too to find that the general attitude of members of the government towards the question of rural credits is, "nothing doing this year." In my opinion emergency legislation is essential at this session, but that is not the issue at the moment. I simply wish to press this point upon the government, that if they are ever to establish a rural credit system that will be really effective there must be some central banking agency, affording central discounting facilities. The present banks are regarded by all authorities, Mr. Neill himself included, as being unsuited to meet the requirements of agriculture in this country, and the question arises as to what we can devise to take their place for agricultural purposes. If we study the situation in Europe we find unfortunately there a multiplication of financial institutions, some helping one class and others assisting another. There is considerable duplication of institutions assisting agriculture, but it may be that with the denser population of these countries and the intensive nature of the farming carried on there, they can support the immense overhead. But I do not believe that in Canada we could 10 p.m. afford such overlapping. So that we shall have to centralize the thing as nearly as possible. With these systems in Europe it goes without further argument that the overlapping is expensive; we find there private, co-operative and state organizations all struggling with the problem. These systems have two objects; the first being the assembling of the community's credit. That is not the function of a central bank; it would be the business of some local organization or local bank. Their second object is the con-
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version of the collective community credit into purchasing power, that would be the natural function of a central bank; in other words, it is discounting. Hon. members may question whether a central bank is essential for these purposes. I will therefore consider for a moment or two the situation as it exists in other countries. We find that in practically every one of those places where any effective system of rural credits is in operation, it was necessary to establish a central bank. In many cases, I admit, the central bank was not necessarily an institution that did every kind of business. Let me give an example or two to illustrate the point. The mortgage credit banks of Germany are directly under some governmental authority, either a state government or a local authority such as a municipality in this country.


William Findlay Maclean: And the public
credit is behind the whole system as well.


Edward Joseph Garland: 
Andrew Ross McMaster: That is the point.


Edward Joseph Garland: The application of the War Finance Act which I have been discussing is under the Department of Finance. May I most urgently and sympathetically urge upon the acting minister that the Department of Finance is not qualified for discharging the duties imposed on it under the Finance Act in regard to re-discounting? It owes many other duties to the public which it cannot possibly perform properly while it attempts to perform the exacting requirements of a re-discounting central agency.
The hon. member for St. Lawrence-St. George tempts me to touch for a moment or two upon the Canadian banking system. I am sorry to say that I do not share the very favourable opinion which he has expressed of that
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system. But before I touch on that, let me give the House just one particular instance out of many where a central bank has been of tremendous usefulness to the people. I am referring to the Commonwealth Bank of Australia. In relation to that bank it has been said:
The private banks there have not 'been put out of business or destroyed by the establishment of the Commonwealth Bank.
That is my answer to the hon. gentleman when he suggests that we wish to tear down private banks. I have very little use for private banks, but the proposal which I am advocating does not look towards the tearing down of any bank, it looks towards strengthening the banking system and the financial fabric generally. In Australia the private banks met the keenest competition from the Commonwealth Bank, and in an article published in the Bankers' Magazine of New York in 1917, after stating that a general banking business was commenced by the Commonwealth Bank on January 12, 1913, it proceeds:
About t-his time the money market was "tight" and the ordinary trading banks were increasing their rates for overdrafts. The advent of a new and'powerful competitor, such as the Commonwealth Bank of Australia, with a maximum rate of 6 per cent on overdrafts, therefore had a salutary effect in keeping rates of interest at a reasonable level, and the commercial trading community throughout the whole country has unconsciously received a large measure of benefit from the bank's entrance into the commercial sphere.
One of the first effects therefore in my opinion, of a properly organized central bank in this country, with a flexible low rate of interest, would be to govern rates of interest throughout the country.
Let me remind the hon. member for St. Lawrence-St. George that when he refers to equal banking facilities east and west he is far from the mark. What rates of interest are charged to industrial concerns and to farmers in eastern and central Canada?


Herbert Meredith Marler: What kind of loans is my hon. friend referring to?


Edward Joseph Garland: The ordinary banking loans that are made to farmers in eastern Canada?


Herbert Meredith Marler: Banks do not make loans
to farmers in eastern Canada on real estate. My hon. friend will find the rate of interest is in all cases compatible with the security and the expense of running the bank in the particular locality.


Edward Joseph Garland: Mr. Speaker, I most emphatically deny that there is not the grossest discrimination against the agri-

cultural population of western Canada in the matter of financial facilities. I know, and the House knows, that we have to pay banks interest compounded and renewed every three months on notes often supported by chattel mortgages on cattle, at 8, 9, 10 and even 12 per cent interest. In the face of these conditions it can hardly be suggested that equal facilities are afforded to the farmers of the West; it is absurd to say so.


Herbert Meredith Marler: Equal facilities as regards
capital.


Edward Joseph Garland: I do not
understand.


Herbert Meredith Marler: The same amount of
capital is available. It is possible that the rate of interest may be more. I was not discussing the question of interest, I was discussing whether capital was sufficiently decentralized in the country, and I contended that capital was available equally both in the East and the West.


Edward Joseph Garland: Mr. Speaker, This House may be full of capital, but if one is charged a rate so exorbitant that it makes it valueless to him, it is certainly of no use and might as well not exist. Now why do I not share the very favourable opinion of the hon. member with regard to the branch banking system?


Alfred Edgar MacLean: Before the hon.
member leaves that question,-does not security influence the rate of interest, charged?


William Findlay Maclean: No, it is geography.


Edward Joseph Garland: No, I am
afraid it is just whatever can be squeezed out of the borrower. The hon. member for St. Lawrence-St. George said so himself in other words; he stated that private bankers will go wherever they can get the highest rate of interest.


Herbert Meredith Marler: I said nothing of the kind.


Edward Joseph Garland: I understood the hon. member to say this afternoon that bankers will loan where they can get the best security.


Herbert Meredith Marler: That is altogether different from saying they will loan where they can get the highest rate of interest.


Alfred Edgar MacLean: Does not the
hon. member think that competition among a number of banks has a tendency to keep down the rate of interest, and that if banking is centralized this tendency will be reversed?

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Edward Joseph Garland: It may be true that in eastern Canada in the large industrial centres where there are great speculative enterprises with friends on the board of directors there will not be competition in the business.


Herbert Meredith Marler: My hon. friend is not fair in making that statement.


Edward Joseph Garland: Turn to the records of the Merchants Bank, turn to the records of the Home Bank, and you will find out whether I am fair or not. Turn to the records of any bank that we have been able to examine under competent authority and you will find my facts are correct; they cannot be contradicted.


Alfred Edgar MacLean: I think they are
overdrawn so far as eastern Canada is concerned.


Edward Joseph Garland: I do not
think it is worth while pressing the matter further, the facts are patent in every investigation we have had that was of any value. Turning to the branch bank system, nothing illustrates better the evils of the system than the retarded growth of the western cities and the cities in the Maritime provinces where the natural riches are extensive. Canada has a great and resourceful people, and yet most of her cities and towns are farming and fishing centres, and there is a noticeable lack of industrial enterprise outside our few banking centres. The financial resources of her outlying districts are tapped and brought to a central reservoir, with the result that great centres like Montreal and Toronto profit at their expense.


Herbert Meredith Marler: My hon. friend will find
that more money is loaned in the West than is received in deposits.


Edward Joseph Garland: Can my
hon. friend produce evidence to prove his statement? We tried to get a definite statement from the president of the Bankers' Association last year in the Banking committee, and we could not. His answer was that it would hurt the banks, and that therefore it was not advisable to disclose it.


Herbert Meredith Marler: I can get it for you.


Edward Joseph Garland: Dealing
with the branch bank system of expansion, let me quote from a speech made at a meeting of bankers in Chicago, held a few years ago, with all the local bankers and many of the principal bankers of the country present. The report of this meeting was printed in the
Monetary Times of Toronto, Volume 69, No. 16, of October 20, 1922:
The branch bank system of expansion is a central-iration of money power in a few hands; the American system is one of decentralization of money power, but with organization and mobilization of reserve available to all.
I do not entirely agree with the speaker, regarding the American system, but there is an element of truth in his statement.
The one is a system of centralization, the other a method of co-operation. The one is a domination of money power by a few, the other an organization of the resources of the many, uniting all independent banks into one cohesive whole.
Again I quote from the same report:
Branch banking is monopolistic and would ultimately destroy the independent bank system. What branch banking does to the independent bank is demonstrated by the steady decrease of banks in Canada and England. The system means the elimination of the small bank and the concentration of banking power in the hands of the large banks.
Without quoting any further in this matter let me ask the House to visualize the situation. I am not going to say always they do it, but under the present banking system in Canada the few who hold control-and let us not forget that four banks hold seventy per cent of the deposits of the people, the remaining ten hold the balance-these four banks have the power of siphoning from every corner of the Dominion the savings of the people into the two great central reservoirs of credit in Montreal and Toronto. Once they have it there they have the power to do what they like with it, send it where they will, send it out of the country to New Orleans, to Mexico or to Mesopotamia if they want to. The interest of Canada is not properly taken care of under any system of that kind. Remember, Mr. Speaker, I do not blame the bankers for doing this. I blame those who sit here inert in the face of that system.


Thomas Vien: Will my hon. friend contend
that a federal reserve bank would help to relieve the situation?


Edward Joseph Garland: Certainly,
it is relieving it to a great extent.


Thomas Vien: Did it do it in the United
States?


Edward Joseph Garland: Certainly,
it has done it to a great extent.


Thomas Vien: Has my hon. friend read the
speech of Mr. Skelton Williams, who was Controller of Currency in the United States for eight years?
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Edward Joseph Garland: Yes.


Thomas Vien: Did he read the speech of
Mr. Skelton Williams at Augusta, Georgia, July 14, 1921?


Edward Joseph Garland: I should be very glad to give the hon. member another opportunity of reply. Let me tell him, however, that Professor Skelton Williams has definitely stated that under proper management, if a proper board had stayed in power over the federal reserve system in the United States, the evils which are dealt with in the speech to which my hon. friend refers would never have arisen. It is a question of getting the best men.


Thomas Vien: Does my hon. friend believe that a federal reserve system would not have to cope with the human element of any directorate in Canada just as it has had to cope with it in the United States?


Edward Joseph Garland: Certainly,
with this one element removed, the element of personal interest and greed, the most vicious element in modern civilization.


Thomas Vien: And my hon. friend believes
that under the system he proposes, that human element would be removed in Canada?


Edward Joseph Garland: I am afraid the fine faculties of the hon. member have not quite grasped my point. Under the system of a central bank we would appoint our own board, non-politicians, men of highest financial standing. You have a parallel in the case of your Canadian National Railway system, why not practise the same policy in the case of the banking system? Appoint the best men that money can get; place them there on salary, not for profit taking, but in the interests of the country.


Herbert Meredith Marler: From Alberta.


Edward Joseph Garland: Not
necessarily; the hon. member's remarks are hardly fair. We are simply making an honest effort to meet the situation that has arisen, in Canada. I may say in all fairness that I am not completely enamoured of tinkering with a privately-controlled banking system. I think this proposal however is an evolutionary step in the right direction, but I do not think it will solve the whole credit problem by any means. In countries such as the member for Lotbiniere (Mr. Vien) referred to a moment ago, the United States

and elsewhere, the establishment of a central bank, although it has relieved the situation, has not materially changed the general trend of financial control.


Thomas Vien: Or the rate of interest.


Edward Joseph Garland: Yes it has. It has tended towards equalizing the rate of interest all over the United States, especially in connection with agricultural loans.


Thomas Vien: If my hon. friend will allow me, I may point out that a farmers' bank in Alabama was charged as much as 874 per cent per annum for the money that they rediscounted at the Federal Reserve Bank.


Edward Joseph Garland: In Doctor Tory's report it is stated clearly that where a central bank is established to take care of credits there was an evening of the rate of interest all over the agricultural fields of the West and East, and that is one of the things that we recommend. However, in all these countries agricultural and general industrial conditions are almost as bad as, and in many cases worse than they are in Canada. They have not, therefore, succeeded in permanently ensuring prosperity or even costs to agriculture itself. Nor can any system of this kind do so, as long as we recognize private control of the community's credit in the ultimate. The failure has resulted in that under every known system in the final analysis the control of credit itself is in the hands of private individuals and is not being used to the advantage of nations but for profit taking. The day will come, must come, when governments and peoples will realize that money itself is not wealth and should be at the service of a nation's credit instead of, as we have it today, the nation's credit at the mercy of money and those who control it.
So far as we are concerned I do not think there should be any half way measure. The people of this country are sufficiently aroused to the situation, and nothing has so aroused them or can so arouse them as something that touches their pocket-books. They are aroused at this moment and will not rest until some government-if it be not this one, then the next, and it may not be long before there is another-has established some system of complete guarantee for depositors. There must be safety for the money of depositors in this country. The public are expecting it, and no mere inspection such as the Acting Minister of Finance proposes will in my opinion go very far to solve the problem.
So far as the control of finance of this country is concerned, it is to be observed that

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as few as fourteen men in the Dominion, general managers of fourteen banks, with headquarters in the East, through a system of inter-locking directorates, banks, trust companies, public utilities and so on, control no less than $4,286,000,000 of the wealth of this country, thus dominating to all practical intents and purposes the whole arterial system of the commercial life of Canada. That hold must be broken, if the people are to be saved from future disaster. The present unsatisfactory, expensive and unstable banking system of this country certainly requires, if it is to continue at all, some strengthening agency. Just a step toward complete control of the credit of the people would be taken if we ventured toward the establishing of a central bank-just a step, but an excellent step and one that should be taken. The central bank would be in a much better position to bring about an increase of the purchasing power of the public, a removal of unemployment and a stimulation of industry. I am, as hon. members know, a free trader. I believe in free trade, in international free trade, but I do not believe that free trade alone by any means can solve this problem. We must go further. What is most needed in Canada at the moment is to bring industrial activity to its capacity, to stimulate the buying powers of the nation, and to give employment. Hon. members may ask how this is to be done. I shall not give them my answer, but the answer of Mr. Reginald McKenna, the chairman of the shareholders of the Midland Bank, and not long ago Chancellor of the British Exchequer. He has this to say:
When national output is below productive capacity, the policy should be to let money out; when production is at a maximum, the outflow of money should be checked, and if inflationary symptoms have appeared, money should be withdrawn. . . . No trade can stand up against a continued decline in the purchasing power of the public. Less money means lower prices or leas production, or both, and orders will be withheld so long as there is an expectation that prices will fall.
Let me ask hon. members to pay particular attention to what follows:
We have deliberately to make up our minds as to what we want. If we mean to get rid of unemployment-
If we mean to give employment to the thousands of immigrants the government is bringing to this country.
-we must have more money in existence to take up the increased production. .	.	. Whatever name we
give to this expansion of credit, it is indispensable to the proper functioning of our commercial system, and is imperatively needed when trade is deferred and unemployment general.
Now, Mr. Speaker, I do not think it will be necessary to add anything further to the
speeches of hon. members who have preceded me. Let me, therefore, in conclusion, simply sum up what in my opinion are the weaknesses of the present banking system of this country-weaknesses that can readily be removed by the establishment of a central bank under proper state control.
1.	There is no guarantee of deposits. I think there should be a central bank to guarantee them.


Thomas Vien: Does my hon. friend contend
that in any civilized country in the world the government or any central bank guarantees deposits?


Edward Joseph Garland: The argument of the Bourbon! We must not move from where we arel If other countries have not done it, that is no reason why we should not. If it is good, let us step forward; I argue that it is good, and I await the hon. gentleman's answer.
2.	The Bank Act permits every cent of the deposits in any Canadian chartered bank to be taken to redeem the bank notes issued by that bank, bank notes being a first lien on all assets including deposits in the bank which issues them. The depositor, therefore, has a real interest in the "Note Circulation Redemption Fund." All the banks are required to contribute an amount equal to 5 per cent of their average bank note circulation to this fund-Bank Act, Section 64. In the event of a bank becoming insolvent and being unable to liquidate all its bank notes within two months of going into suspension, the notes are liquidated out of this fund and note holders receive interest at the rate of 5 per cent until the notes are paid. The Canadian chartered banks had in circulation in 1922, bank notes to the value of $166,466,109, while the "Note Circulation Redemption Fund," which the poor, unfortunate, gullible public believed in many cases was a real redemption fund, amounted to $6,493,593. Before the contributions of banks other than that of the insolvent bank, to the "Note Circulation Redemption Fund" can be finally applied to payment of notes of an insolvent bank, the depositors of the insolvent bank must suffer a total loss of the money they had deposited in such bank.
3.	The Bank Act gives the Dominion government a second lien and the provincial governments a third lien on the assets, including all deposits, in any chartered bank in which such governments have made deposits. In the case of the insolvent Home Bank, the Dominion and provincial governments receive their deposits in full, whereas the
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ordinary depositor will probably receive only thirty-five to forty cents on the dollar, unless he gets some support from this government. Any special borrowings under the Finance Act of 1914, still in force, also constitute a prior lien ahead of the common depositor.
4.	The Bank Act also permits Canadian chartered banks to give preferred security to any of their creditors establishing a further prior lien ahead of the depositors, so a Canadian chartered bank could give a mortgage of its assets, of its real assets at least, and leave nothing for the depositor. The Home Bank is a case in point. Being insolvent, it mortgaged its bank premises, by which act the position of the ordinary depositor was further weakened, since in the winding up of the bank, the creditor holding such mortgage on the bank's premises ranked as "Secured Creditor" whereas the depositor ranked as "Unsecured Creditor."


Herbert Meredith Marler: When the Home Bank
mortgaged their property in Toronto, where did the consideration for that mortgage go? They got money in return, and that money went into the bank and was an asset for the depositors.


Edward Joseph Garland: I think a
good deal of it went to pay dividends for the shareholders.


Herbert Meredith Marler: That is not a fair answer.


Edward Joseph Garland: I am afraid it is only too true in this case. To continue: According to a pamphlet published by the Canadian Bankers' Association recently, page 15, deposits "are a fourth mortgage" on the assets of the bank. When we go into a bank and deposit our money, we deposit it there for safe keeping, not for speculative purposes. The bank performs a service for which it charges interest, and that money on deposit there becomes only a fourth mortgage, and it is not even a fourth mortgage, because in the case of the bank becoming insolvent the depositor is only an unsecured creditor of the bank-a bank chartered by the Bank Act in which we have deposited our money in good faith for safekeeping.
5.	Canadian chartered banks are empowered to receive deposits "without limit." This permits them to incur liabilities to the public without relation to their abilty to meet such liabilities out of assets. The Home Bank opened up over thirty new branches and took in over $8,200,000 of new deposits after it had become insolvent. This is possible in any bank, under our Bank Act. There is
|Mr. E. J. Garland,]
nothing to prevent any bank from taking in unlimited deposits. It is sometimes not always convenient to do so. Mr. Ford puzzled one bank in the United States by depositing too much money with them.
6.	There is nothing in the Canadian Bank Act to prevent a bank from loaning all its funds to one concern, and cases have actually occurred where Canadian chartered banks have loaned an amount greater than their entire capital and reserve to one company. La Banque Nationale, with a combined capital and reserve of $3,400,000, loaned $5,000,000 to La Machine Agricole de Montmagny, which finally placed the bank in a position where it could not any longer carry on, and had it not been for the action of the Quebec government in voting $15,000,000 of the credit of the province of Quebec to assist La Banque Nationale in its merger with La Banque Hochelaga, La Banque Nationale might have gone under and taken La Banque Hochelaga with it.


William Findlay Maclean: That was money raised on the public credit, too.


Edward Joseph Garland: Exactly.
Again, the Home Bank with capital and reserve of $2,500,000, made loans to A. C. Frost and Company, which, with accumulated interest, reached the sum of $4,530,000, this account being one of the principal factors in bringing about the insolvency of the Home Bank with heavy loss to the depositors.
7.	The relation of share capital to total assets in Canadian chartered banks has shrunk from 11 per cent in 1902, to 4 per cent in 1924.
8.	Over 60 per cent of the share capital of Canadian chartered banks is tied up in bank premises-largely buildings, which are of little use in the event of the insolvency of the bank, because they are not suitable for general business purposes.
9.	In 1890 Canada had 36 banks; in 1900, 34; in 1913, 24; in 1923, 17; and to-day only 14. Ten years from now, interrogation? The country's credit is given free except for a tax of 1 per cent to banking corporations which are permitted to issue their notes to an amount equal to their paid up unimpaired capital and to charge the public high rates of interest on the bank notes printed by them-paper money, which cost the banks only the expense of printing and handling. Yet among the recipients of this special endowment of the public credit there are those who claim that it would be unjust to use that credit to make good the loss sustained by depositors of insolvent banks. On several

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occasions special votes of public money have been used to assist banking corporations both individually and collectively; while the depositor who creates wealth and deposits his money in a chartered bank has remained unprotected.
I have earnestly presented my views on the existing banking system and on the question of a central bank. I hope I have convinced the House that it would be the part of wisdom, that it would be the part of reason, to allow the passing of this motion to concur in the recommendation of the committee. It is my only idea that all these matters shall be properly and fully discussed so that the public, and the members of parliament who represent them, may be acquainted with all the facts in connection with them and then that the wisest action, in view of any considerations that arise shall be taken in the interests of our country.


William Irvine: We are drawing very near to the end of another day and some of us have been educated, some of us have been entertained, and some of us have been exasperated by the debate which has taken place. I have a good deal of sympathy with those who have exhibited exasperation, knowing that they look upon this question from an entirely different viewpoint and feel that much time has been wasted by the discussion of this question. So, in order not to overdo the matter, I wish now to make but a very few observations comparatively speaking. I want to remark that I consider this an epochmaking occasion in the parliament of Canada, and I would not for the world miss this opportunity of taking even a slight part in the discussion. The political life of hon. members is very uncertain indeed. It is perhaps more uncertain for me than for anybody else. I can look into the future somewhat and see the time when the question which has been debated to-night will be considered the pivotal question in the political discussions of this country; and I want to be able to turn up the old Hansards when I am not here and say "Thank God I had enough intelligence to take part on the right side of that issue". That is the first reason why I will not pass this opportunity of saying something.
This is an epoch-making occasion in that we have had this matter brought forward by the newest political group in Canada. The birth of a new economic group, which was announced in the daily press some time ago has now been announced on the floor of the House by concerted action in this debate.


Herbert Meredith Marler: Who is the leader of the
group?


William Irvine: I have been asked "Who is the leader of the group?" I do not consider myself one of the group, I am on the outside co-operating with them in great ideals.
Mr. V1EN:	Has the group been named?


William Irvine: I have not been called
upon to christen this child or else I should have solicited a name from the father of it.


Thomas Vien: What would you call it?


William Irvine: I am calling it "The Economic Group" representing economic ideals and ideas on the floor of parliament; and I say that if we can take the argument today as typical of that intelligence which will characterize the new political movement in Canada I think we may feel very much encouraged. I hope this group may be regarded as typical of that studious, virile intellectuality which-coupled with prophetic insight and devotion to duty-will mark the new political movement and constitute its greatest appeal in the coming years.


Thomas Vien: Does my hon. friend belong
to it?


William Irvine: I have just pointed out
that I have not the honour of belonging to it, but I do have the honour of welcoming it and of feeling that there are in that group minds and spirits with whom I can find at least some political affinity. It is for that reason that I have taken this occasion to refer to the splendid debate which they have inaugurated and carried forward on the floor of the House to-day.
This is an epoch-making occasion in the Canadian parliament in that the debate itself is an evidence that it is dawning on the mind of our time that finance has something to do with industry and commerce, something to do with the standard of living of the people, something to do with poverty, something to do with millionaires, and something to do with every question that touches the economic and commercial life of a nation. It is an evidence that the old political shibboleth has served its day in Canada, and that other questions much more fundamental and much more scientific will be substituted for it and engage the attention of the thinking public. The financial question is the issue, I believe, not only for Canada but for modem civilization. There can be no solution of any of the problems to which we have devoted ourselves throughout this session until we have tackled and solved the central problem
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of modem civilization which is finance. I am not, of course, entirely convinced that the mere organization of a central bank is indispensable, neither am I absolutely convinced that it, in itself, will constitute a solution of our financial problems; but I am certain it will do good to study the question, and after all that is the extent to which the new political group has gone in this debate today-that parliament might authorize, or permit if you wish, the select standing committee on Banking and Commerce to study this question in relation to the Canadian banking system. I must add that the only reply to the challenge of this group which the government has given has been a portentous silence, with the exception of the interjection of a speech by the chairman of the committee, a remark of about two minutes duration by the Acting Minister of Finance, and an elaborate effort on the part of the member for the two saints-I just forget the name of his constituency-oh, yes, St. Lawrence-St. George (M,r. Marler), there has actually been no reply to the argument that has been put forward by the hon. members on this side of the House.
Let me now turn to such arguments as have been advanced by the hon. gentlemen I have mentioned, to see whether the intelligence of this House, judging the question on its merits, will be thrown on the side of these three hon. members opposite who have spoken or whether into the scale with the reasoning of hon. gentlemen of the new political group. The chairman of the committee, speaking against the proposal on its being introduced, suggested that all the information that any hon. member could require was available in the library. I do not know whether that is absolutely true, although I am certain that we have a very fine library. But the same argument, surely, could be advanced with regard to almost any problem that might be brought forward for consideration. Let me point out that we are not merely looking for a wealth of academic information, or for any proposals or any theory; what we want to get are the actual facts surrounding the situation as it now exists in this and other countries in so far as they relate to a central banking system. We want also the facts in connection with the Canadian system of banking in order to see whether it is feasible or practicable to introduce the central banking system in this country.


Thomas Vien: In addition to the information
which is to be found in the library, I took it for granted that the hon. gentleman knew all about the subject.


William Irvine: I am flattered to be so generously complimented by the hon. gentleman, but I hasten to assure him that I have not yet managed to grasp every detail in the financial situation throughout the entire world. However, we are proceeding as fast as we are able to go in getting .such information as we need. But I have not the information that would justify me in concluding, with that same assurance that my hon. friend displays, that a central banking system is not practicable for this country. I was rather amused at the hon. gentleman's anticipation of the argument of hon. gentlemen to my right. The hon. member anticipated in leading the argument against the adoption of concurrence that these gentlemen, in arguing for the establishment of a central banking system for Canada, would submit as a reason that the people of Canada had a great deal of difficulty since the war and had experienced hard times, bank failures and unemployment, and that if we could only get a central banking system, presto!-all these undersirable circumstances, all the difficulties that we have been struggling against would disappear, and everything would be fine. That was the way in which the hon. gentleman anticipated the arguments of my hon. friends to my right. But those of us who listened to the statements that those hon. gentlemen actually made know very well that no such view is held by those who are advocating the study of this question. These gentlemen put their argument rather upon an economic basis, seeking first of all to create an agency by means of which it will be possible to obtain control of the national credit, which is the actual means by which Canada, as well as other countries, does business. Hon. gentlemen made the suggestion that through a central banking system it may be possible to get that control; and they seek to get that control by allowing this central agency to issue national currency, taking from the Bankers' Association the privilege which they have enjoyed so long of issuing their own notes to be redeemed ultimately out of the pockets of the depositors when the banks fail. That is the crux of the argument put forward by hon. members who have supported the request for the extension of the powers of the committee. One other point which hon. gentlemen have advanced has been that the control of the interest rate would be one of the means by which it would be possible to control the tide of inflation and deflation which periodically sweep with devastating force over the industrial and commercial life of the country. Whether or not the claims of hon. gentlemen can be sustained by actual facts and in practice, I

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am not prepared to say, but that is the argument at all events. Certainly their argument is not the frivolous assumption which the chairman of the committee indulged in.
The Acting Minister of Finance (Mr. Robb) gave the House the benefit of an observation which occupied about three minutes of time. I congratulate him on his brevity but certainit,ly not on any comprehensive study of the question. The hon. gentleman assured us that there was no good reason for enlarging the order of reference. He may be right, but we shall require more than a mere casual suggestion from the Acting Minister of Finance to that effect. If he had supported his statement by considered reasons, I think we are competent enough to have followed his argument and to have desisted from engaging the attention of the House; but the (minister did not sustain the views he put forward. He referred to an investigation which was held last year, but I would point out that there was no direct inquiry into this question then. Let me point out to the Acting Minister of Finance, however, that he never did anything in regard to the investigation, such as it was, which was held at that time; if was put to no use and no report was submitted; the thing was simply buried. The minister had no reasons to offer, but he concluded by informing the House that the Finance Act was working very well, and that being the case he seemed to imply that it was performing the chief function of a central bank in that it provided for discounting. Let me refer him to the gentleman who he admits is his best adviser, the Peputy Minister of Finance, and who told us in committee the other day that his best judgment was that we should get back to the gold basis. In other words, if we are to take the advice of the Deputy
11 p.m. Minister of Finance we shall do away with the Finance Act which the minister himself declares is working so admirably. It seems therefore that the Acting Minister of Finance and his chief adviser are somewhat at cross purposes so far as this particular question is concerned but even so that is no reason why this motion should be defeated. I desire now to deal briefly with the rather elaborate and detailed argument of the hon. member-


William F. Carroll: I rise to a point of order. I submit that the hon. member is not standing strictly by the rules .of procedure. As I understand it, there are two or three propositions before the House in the report which has been presented and the hon. member is discussing subjects which are removed from
any of the matters which are directly under consideration. I think the scope of the hon. gentleman's remarks should be circumscribed at least to what is relevant. I further object that the committee has no right to report on an order of reference in the manner in which it has been done. A report must first be made according to reference. Such is not the case here.


William Irvine: I am attempting to answer
the argument put forward by a representative of the government, and even if the minister was out of order I suppose the House will permit me nevertheless to reply to the points he has made. I do not say that my remarks are all strictly relevant, but a certain point having been brought forward by my opponents and admitted as argument leaves no other choice to me but to simite it.


William F. Carroll: There are two or three
propositions before the House with certain recommendations from the committee and if hon. gentlemen are to enter upon a discussion of questions relating to mining, commerce, soldier's civil re-establishment, and other matters of a like nature it seems to me that the debate is likely to get out of hand. The hon. member, I submit, should confine his remarks as closely as possible to a discussion of the report as it has been submitted, to the House. I am bringing this to your attention, Mr. Speaker, for the purpose solely of curbing hon. members like my hon. friend in their endeavours to make a speech which will go abroad rather than a speech which will be instructive to members of the House.


Hewitt Bostock: I am quite sure the hon.
gentleman will generally observe the rules. I must say that the discussion throughout the day has taken a very wide range, because the question before the House, if it were carried into effect would, from what I understand of it, affect the whole economy of our banking system. Therefore, naturally it opens very wide the discussion of the subject matter. I am quite sure, however, that hon. members in discussing the question at this late hour will confine themselves to the question before the House and not wander away too much.


William Irvine: I am glad to know that my
hon. friend is anxious about a speech that will go abroad in this matter.


William F. Carroll: I still rise to a point of
order. I am quite willing that my hon. friend should discuss the Bank Act, but I still persist in insisting that there are three or four questions before the House as a reference

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from the Banking and Commerce committee. I am going to insist now, since my hon. friend gets sarcastic about the matter, that he be confined within the terms of those three propositions.


Hewitt Bostock: As I stated a moment
ago, this is a very important question which affects the whole economy of the banking system and which naturally goes to the very root of-our whole banking organization in this country. I cannot stop an hon. member who, I am sure, is quite willing and who desires to bring forward the best arguments to support his viewpoint. I am certain he will live up to the traditions of the House, that he must confine himself to the subject matter. So far, in my humble opinion, I do not see that he is out of order.


William Irvine: When my genial and loquacious friend interrupted me, I was coming to the argument of the hon, member for St. Lawrence-St. George.


William F. Carroll: No more loquacious than my hon. friend is.


William Irvine: I am sure that the hon.
member for St. Lawrence-St. George will be as genial in listening to my comment on his arguments as I was in taking his from him. He is, of course, always very genial and honourable in debate. On this occasion, however, he reminded me of a huge Atlantic liner surrounded by a very thick fog. There was a consciousness that there were dangers somewhere ahead, but she tooted the whistle and sailed on disregarding entirely the dangers that lay ahead. He emphasized the point that 22 members out of the 90 voted that this resolution be placed before parliament. The question is:	Where were the 90-the ninety
and nine that safely played cards or were somewhere else? I do not know. Twenty-two were on their job doing their duty.


Thomas Vien: Will my hon. friend allow me
to correct him? He knows it is unfair to members of the committee to say that. Several other committees were sitting at the same time, the committee on Private Bills, the committee on Railways, and we had all the difficulty in the world to get members present at our committee because other committees were sitting. It is unfair to say that hon. members were playing cards while the Banking and Commerce committee were sitting. They were busy on other committees of which they were members.


William Irvine: I certainly do not wish to
impute anything to any hon. member that I would not take to myself. But why did the hon. member for St. Lawrence-St. George raise that point?


Thomas Vien: If I remember well, he said
that only twenty-two voted for it against 7 who opposed it. That means twenty-nine member's out of ninety who are members of the committee voted on that question. But he did not insist on the suggestion that the other members were playing cards.


William Irvine: I do not insist on it either I did not say what they were doing. I mentioned a number of things which they might have been doing. I did not say that any hon. member was playing cards.


Thomas Vien: My hon. friend is unfair in
that reference.


Mr. CHEVRIER:: I rise to a point of
order. I was a member of the Banking and Commerce committee, and it was not my privilege to vote on that question, but I deeply resent the unwarranted remark which the hon. member has just made. I was engaged on other committees. It is altogether out of keeping with the decorum which the hon. member usually keeps to make such an insinuation.


William Irvine: I have taken back twice
the insinuation that my hon. friends took from my remark, and I now take it back a third time. I would not think of imputing it to my hon. friend, although I would not say it was a great crime if he did play cards. As a matter of fact, I think we ought all to have a game after this discussion in order to get this contentious subject out of our heads. I did not mean to insinuate anything wrong to any hon. member. The twenty-two members were there, however, and this was the finding. They represented the committee at that time.
The hon. member for St. Lawrence-St. George charged, I think, that the hon. member for West Calgary (Mr. Shaw) was out of order in his discussion, because the only question for discussion was whether or not the reference should be enlarged, whereas the hon. member for West Calgary had argued as regards the whole banking system.


Herbert Meredith Marler: I did not say that the hon. member for West Calgary was out of order. He was not out of onder. We are always delighted to hear him.


William Irvine: I know he was not out of order, but my hon. friend used those words.

Reserve Bank


Herbert Meredith Marler: I never said so.


William Irvine: I was, however, glad that
my hon. friend came back to the point and said that it was a question on whether this parliament wTould authorize the committee to study the subject. If parliament is considering authorizing the committee to study the question, that opens up the whole question of the financial system of Canada and the United States and in any other country having a central bank of issue.


Thomas Vien: If my hon. friend will allow
me-


William Irvine: If the hon. members wish
me to finish anywhere this side of one o'clock, they had better let me go on. I do not object to questions, but I have a great deal of sympathy with hon. members who have to listen to me.


Thomas Vien: If my hon. friend will allow
me, he will agree to the fact that the report of the committee was obtained on a "snap" vote, on a vote which was taken at a moment when only 29 members out of 90 were present in the committee, the other members being busy elsewhere.


William Irvine: I do not know whether
it was a "snap" vote or not. I certainly do know there was not much snap shown by my hon. friend in bringing the recommendation before the House. In this regard it took my hon. friend about four weeks to "snap." I am not concerned about the nature of the vote. I had nothing to do with that, neither had this House. It was reported as a majority vote, and that is all we have to do with it.
The hon. member for St. Lawrence-St. George apparently assumed that we wanted to transplant the American banking system into Canada merely because we asked to be allowed to consider the establishment of some type of central reserve bank. Now, it might not at all be fatal to transplant the American financial system over here. I am not sure about that. I think it is absurd to claim that a system which functions to serve a hundred million people could not serve nine million. But that is not really the argument. The argument is that we are seeking to consider some type, and all types for that matter, of a central banking system to see whether we can devise one that will be suitable to this country. That is the issue. But my hon. friend went on to describe in detail the functions of a bank. As he described them they are briefly these:	First, to issue
notes; second, to take deposits; third, to give elasticity of circulation; fourth, to give
elasticity of credits. If these were the functions of a bank, our system performs them very well. That is to say, our banks issue notes-and they do it gladly; they take deposits-and sometimes they keep them; they certainly have great elasticity of circulation1- when they want to; and they have great elasticity of credits- when it suits them; and they can contract it just as easily. Yes, if that constitutes the functions of a banking system, I agree with my hon. friend that we do not need any central reserve bank to facilitate these functions. But he might just as well have described a ship as being something that functions: first, to exhibit a figurehead; second, to be driven by steam; third, to be guided by a rudder; and fourth, to toot a whistle! That is a parallel description of my hon. friend's argument respecting the banking system. These things mentioned by him do not constitute the functions of a bank, they constitute the phases of a function. The main function of a banking system was entirely missed by my hon. friend. I repeat, if these were the functions of a bank, I would consider the introduction of a central reserve bank of no assistance to do these things, because they are very well done already.
The hon. member contended that the central banking system of the United States is entirely unsuited for Canada. He has so decided already. Then he points to the report of Mr. Skelton Williams and enumerates for us the phases of a central banking system. Then he tells us that we already have that system in Canada. After he has said that that system is entirely unsuited to Canada, he turns around and proves that we have every phase of it now! I cannot follow my hon. friend's reasoning.


Herbert Meredith Marler: Let my hon. friend be
fair.


William Irvine: Yes.


Herbert Meredith Marler: Really he is acting as a
contortionist. He is very amusing, in fact he is making a burlesque of the subject, but this is a serious debate.


William Irvine: I am glad to be informed
by my hon. friend that he was not serious when he was speaking; I really did think so, and was trying to answer his argument in the same tone in which I assumed it was presented. If he was not serious, then I do not need to say any more about it. Let me hasten to conclude. All we are asking in this resolution is that parliament permit the select standing committee on Banking and Commerce to study this question. Are my hon. friends
Reserve Bank

afraid of what such a study may bring forth? If it should reveal that a central banking system is as impracticable, as dangerous, as inadequate as horn, members on the other side of the House have said it is, then surely we will not attempt to introduce it, and there can come nothing but good from seeking information. All we are asking is that the select standing committee be authorized to seek information. I trust that such authority will be given.


Thomas Vien: You have it.


Henry Lumley Drayton: Mr. Speaker, I would point out to the House the importance of really trying to ascertain what is the opinion of hon. members as to what ought to be done having regard to the absolute essentiality of some policy, some direction from the government. Surely the government now see what the result of a discussion at large is upon this matter. They see the different views presented-and many of them are reasonable-and they also see the conflict of some of those views. For example, on the one hand they see that it is the considered opinion of hon. gentlemen, supported by authority, that dear goods simply means cheap money; on the other hand, they are told, also supported by authority, that the answer to low prices and poor business is merely more money-cheap money. They see that we can get from financial authorities, from financial writers at any rate, a circle that will take this government back to just where it started. Surely the country is entitled to at least a little bit of decision from the government, for after all this is governmental business, this is not a merely idle academic debate. On May 21 this decision was arrived at; on July 2 the House gets an opportunity of debating it. What an idle opportunity it is! I do not like to see the House attempting idle things. What would happen if this resolution is today adopted? Does anyone think that in the expiring days of this session the question can be studied and settled? We all know it is nonsense to think so; it cannot be done. Hon. gentlemen wanted a discussion. They no doubt had a right to that discussion under the arrangement come to. But why did not the discussion take place when we could have done something useful with it?


Thomas Vien: Will my hon. friend allow
me a correction? Even if this motion had been discussed on May 21, the Banking and Commerce committee could not have considered a study of the question. The committee have sat for about twenty-three days, 
and they still have twenty-two more resolutions to consider before they can come to this question, even if it be referred to them by the House.


Henry Lumley Drayton: Well, Mr. Speaker, perhaps the committee might have thought this would be more important than some of the other twenty-two resolutions.


Thomas Vien: I do not believe it.


Henry Lumley Drayton: It may be that the committee are trying to do so much themselves to-day that nothing will be done in regard to this resolution. But it is only a matter of regret, if we spread ourselves out so thin as to try to cover the whole universe. It is perfectly idle to say that anything can be done to-day. I am going to vote against the report because I do not believe in parliament doing idle things. What will be the effect of the vote? To say that during the few days that remain to us among twenty-two other resolutions this resolution may be considered is tantamount to admitting the futility of instructing the committee, for the committee ceases just as soon as this House ceases.


William Findlay Maclean: When is it going to cease?


Henry Lumley Drayton: Well, I hope we are not going to stay here indefinitely and permanently. That is the last thing in the world that the country wants. I think a lot of people in the country have the idea that they are getting worse legislation from this House than they would have got if there were no House at all, and that we would be pleasing them best if we got away just as soon as we could. I am inclined to believe that that is what the general public think. Nevertheless these are important questions and questions which should be considered when there is opportunity to consider them. I doubt very much whether this matter is in order at all. I did not want to raise the point until the discussion was over because I wanted my hon. friends to have the opportunity of placing their views before the House. But the report on this question of inspection is in, and I think as a matter of order that the instructions are now discharged and if anything is to be done it must be a new committal to the committee. We might just as reasonably ask that we should have another Speech from the Throne.


William F. Carroll: Mr. Speaker, I was paired with the hon. member for York-Sunbury (Mr. Hanson). While I am not in a position to say how he would have voted on the question, had I voted I would have voted against the recommendation of the committee.



OFFICIAL REPORT OF DEBATES

Georges Henri Boivin: Mr. Speaker, it was my intention to-night, in accordance with notice given, to move that the first report of the select standing committee to supervise the Official Report of Debates be concurred in. But when this motion was brought up the other day and the unanimous consent of the House was asked, the right hon. leader of the opposition (Mr. Meighen) objected. I see that the right hon. gentleman is not in his seat at the moment. I do not know whether he is in the building or not, but if he is not here I would defer until tomorrow the presentation of the motion and substitute therefor a motion which merely covers the last part of the report, to which the right hon. leader of the opposition is quite agreeable. I therefore move, seconded by Mr. Logan:
That the following questions he referred to the select standing committee on Debates for the purpose of considering the same and reporting their opinion thereon to the House, viz:-
1.	Whether Hansard should be a record of debates only, containing such items of the proceedings of the House as may be necessary to make the report of the debates intelligible, or whether it should contain all the proceedings of the House as well as the record of debates.
2.	Whether it is desirable, in the interests of economy of time, labour and expense, that the report of the debates in Hansard should be limited to such speeches as may ibe delivered when Mr. Speaker is in the dhair, with or without a brief report of the proceedings in committee.
3.	Whether it is desirable to make Hansard an official record of all the proceedings of the House of Commons, as well as a record of the debates.
I understand that even to move this motion I would have to have unanimous consent, but I already have the consent of the hon. leader of the opposition.


[Stage Direction]
Motion agreed to.


[Stage Direction]
Hon. GEORGE P. GRAHAM (Minister of Railways):	Mr. Speaker, before you leave
the order of " Motions," with the consent of the House, I beg to move that the name of ,Mr. McGiverin be substituted for that of Hon. Thomas Low as a member of the Redistribution committee.
Donald Sutherland: This motion is certainly a surprise
to some of the members of this committee.

Questions

Mr. Low has been chairman of the subcommittee for Ontario, and during the past two sessions we have been endeavouring to bring about a scheme of redistribution for that province. If this motion means that Mr. Low's services are no- longer at the disposal of the committee, and we have to begin over again, it does not augur very well for a redistribution scheme being passed at the present session.


[Stage Direction]
Motion agreed to.

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

Sir HENRY DRAYTON:: 1.	To what amount have rebates of sales taxes been claimed under the legislation of last year?
2.	How many claims have been made?
3.	How many claims have been checked and paid and resulting in what total amount?
4.	How many claims have yet to be dealt with?


Hon. Mr. BUREAU:: May I ask my hon. friend to let this stand? The commissioner does not know exactly what rebates he will have; or we might drop the question.


Henry Lumley Drayton: Better let it
stand, and I will find out.
POST OFFICE EMPLOYEES Mr. CHURCH:
1.	What amount of money has been spent by the government to test the validity of the Industrial Disputes Act in the law courts to date in order to compel the appointment of a board of conciliation for the Hydro-electric employees at Toronto, and has any appeal been taken, or to be taken, to the Privy Council on the subject?
2.	Has the government refused a similar board of conciliation to the Post Office employees as not coming within the act?
3.	What conciliation was used by the government, if any, to adjust the Post Office strike?
Hon, Mr. MURDOCK:
1.	The government did not undertake to test the validity of the Industrial Disputes Investigation Act in the law courts.
The facts as understood are that on the advice of the member of parliament for North Toronto and others, the Toronto Hydro-Electric Commission protested the formation of a Board of Investigation, which had been applied for June 25 and established July 24, 1923, and later secured an injunction from Mr. Justice Orde to restrain the board from sitting.
Later Mr. Justice Mowat disagreed with the decision of Mr. Justice Orde, but instructed1 that the case be carried to the Appeal Court of Ontario which later, by a judgment [Mr. Murdock.)
of four to one, decided that the Toronto Hydro-Electric Commission and Mr. Justice Orde were in error in the injunction sought and granted.
It is understood that an appeal from the decision of the Appeal Court of Ontario which sustained the action of the department in forming a board, has been taken to the Privy Council. In the meantime the board has not been permitted to function.
The cost of protecting the Department of Labour's rights under the conditions referred to above has to date been 87,297.05, which amount in whole or in part may be salvaged as the latest decision assesses costs against the Toronto Hydro-Electric Commission.
2.	No application for a board was received by the Registrar of Boards of Conciliation.
The Minister of Labour advised certain persons inquiring, that a Board of Investigation would not foe granted to determine whether Post Office employees' salaries, established by the Civil Service Commission and approved by the Governor-in-Council, in accordance with the law, should or should not be revised.
It is definitely held that government employees do not, and were not, intended to come within the provisions of the Industrial Disputes Investigation Act, but that the compensation of civil servants is, under the law, specifically established by a separate commission.
3.	Early in the month of April 1924, members of the government' on several occasions covering a period of two weeks or more met with officers of the Postal Workers Federation on account of the threatened strike of postal workers to be made effective about April 15, unless prior to that date the salaries of postal workers had been dealt with and revised by the Civil Service Commission. The government also intimated to the Civil Service Commission the desirability of proceeding as promptly as possible to revise the salaries of all of the branches of the government service, giving first consideration to the revision of the postal workers salaries.
These matters were also discussed with the government Board of Audit. Later the Civil Service Commission presented to the government its proposed revision of postal workers salaries, and that revision appearing to be less acceptable than proposals for salary revision which had been made by Post Office Department officials, the proposed revision of the Civil Service Commission was referred back to that body with a request that further consideration be given to the various representations that had been made, and that

Questions
additional opportunity be given to the representatives of postal workers and department officers to present their respective views or claims to the Civil Service Commission. The Board of Audit were also requested to give careful consideration to the salary revision for postal workers, and later the Board of Audit made known to the government its recommendations as to salary revision, which was found to be in respect to some fifteen classifications slightly higher or better than those which had been proposed by the Civil Service Commission.
The government therefore requested that the Civil Service Commission give further consideration to this matter, and for that purpose had before them the Civil Service Commission and the Board of Audit.
On June 9 the Governor in Council gave consideration to the Civil Service Commission's final report to the government on postal workers' salary revision, which was the third report to the government that had been made by the Civil Service Commission in this matter, although there was no difference in the rates of compensation proposed in either of the three reports.
On the same date a copy of the Civil Service Commission's report, as approved by the Governor in Council, was handed to the officers of the Postal Workers Federation.
No further word or representations were received from officers of the Postal Workers Federation until the morning of June 17, when a telegram dated June 16 was received by the Minister of Labour from Mr. G. R. Jackson, President -of the Postal Workers Federation reading:
Postal situation developing more serious parliament can and should immediately right a wrong. Let me hear from you.
Reply was within the hour sent to Mr. Jackson as follows:
Your telegram of last evening will be brought before government to-day.
And on the same day, June 17, the matter was discussed by the government, and suggestion made that the Minister of Labour should communicate with the Postal Workers committee at Toronto to suggest that they come to Ottawa for conference with members of the government.
On the afternoon of June 17, the Minister of Labour by long distance telephone suggested to Chairman G. R. Jackson, of the Postal Workers Federation that the committee should come to Ottawa, and on that evening the committee representing the postal workers left Toronto, arriving in Otttawa on the morning of June 18.
251 i
On June 18, the postal workers committee were in the Minister of Labour's office from about 10.40 a.m. until 1 p.m. discussing with four members of the government the conditions of dissatisfaction said to exist and the objections filed by the postal workers against the revision of salaries that had been given to the committee on June 9.
It was discovered at this conference that the Postal Workers Federation had before leaving Toronto on the evening of June 17 authorized a Dominion-wide strike of all postal workers to become effective as of 5 p.m. on the evening of June 18.
At 1 p.m. on June 18, the conference in the Minister of Labour's office adjourned to permit the four members of the cabinet to discuss in council the situation as it had developed, and at 3.10 p.m. on June 18 the conference between the postal workers and members of the cabinet again met in the Minister of Labour's office, and the postal workers were given the following letter:
June 18, 1924.
Mr. J. E. Archer,
Secretary, Canadian Federation of Postal Employees,
Ottawa, Ontario.
Dear Sir,
This acknowledges receipt of a copy of your letter of even date addressed to the Right Honourable the Prime Minister advising him that:
"Acting on the wishes of the membership of the organizations concerned, as expressed in a Dominionwide ballot, a general strike in the Postal Service has been called to commence at five o'clock this afternoon." After discussion of this matter with the government, I am authorized to state that we regret the decision arrived at by your committee, and it is a matter of additional regret that your committee have not prior to this date officially indicated to the government your dissatisfaction with the recent salary revision for postal workers as authorized by the Civil Service Commission and the government.
Since the receipt of your letter of even date, a su!b-committee of the cabinet has had the opportunity of discussing these matters at some length with your committee and have heard the views of your committee that further consideration should be given to the claims of the postal employees by the government.
In connection with this matter the Prime Minister in parliament yesterday stated as follows:
"We are prepared, when the Civil Service Commission has submitted its report upon the salaries of the entire civil service, to consider that report carefully in the light of all the material which we have before us and to make to parliament, if we think it advisable so to do, recommendations supplementing those which are contained in the report of the Civil Service Commission. But we do not feel that we are in a position to make any recommendations to parliament at the present time with respect to the postal employees; and I hope that the employees of the Post Office Department will see that the position which the government is taking is one which is in the interests of the entire civil service of the country and in the interests of the taxpayers as wefll."
We also in discussion of this date learned of the dissatisfaction of the postal employees due to the
Questions

fact that in certain cases the present salary plus 1924 bonus was higher than certain rates proposed by the Civil Service Commission for the same class of employees, and I am authorized to state that in the case of employees whose revised rates, as determined by the Civil Service Commission are less than the former rate plus 1924-25 bonus, such bonus shall oe continued until salary revision for the entire service has been consummated.
I am further authorized to say that in carrying out the plan and action proposed by the Prime Minister in the above quoted paragraph, that the government policy is that when the Civil Service Commission has submitted its report upon the salaries for the entire civil service, that opportunity will be given to the representatives of the employees in the Postal Department or in other departments of the government who have objections to file against salary revision proposed by the commission to fully present their views to a sub-committee of the government and to discuss such matters of differences as fully as may be necessary to ensure a thorough understanding, and, it is hoped a final and satisfactory agreement on the points in dispute.
I trust that your committee will at once take the necessary action to see that continuous operation of the Postal Service is maintained.
Charles Stewart,
Acting Postmaster General.
At 4 p.m. on June 18, members of the government withdrew from the Minister of Labour's office, leaving the postal workers committee in conference to determine their further action, and at 4.45 p.m. the Minister of Labour rapped on the door and advised the postal workers committee that 5 o'clock was only fifteen minutes distant and that some decision should be made as to whether the strike ordered for 5 p.m. was or was not to take place.
At 4.56 p.m. the postal workers agreed that the strike order for 5 p.m. that date would be set back for 24 hours, and at once by long distance telephone and otherwise, from the Minister of Labour's office, the committee undertook to advise their local representatives at Toronto and elsewhere that the postponement of the strike order had been determined upon by the general committee at Ottawa.
During the evening of June 18 for two or three hours the postal workers committee were in the office of the Acting Postmaster General at the House of Commons with members of the government endeavouring to set back for 24 hours the strike, which had in many places, as a result of previous orders given, taken effect in some towns and cities of Ontario and at other points.
On the evening of June 18 the postal workers' committee left for Toronto, and during the next day efforts were still made by the government to secure an adherence to the understandings reached the previous day that the strike would be held in abeyance for 24 hours.

About 4.30 p.m. on the afternoon of June 19 the Minister of Labour was called by long distance phone from Toronto by Mr. J. E. Archer, who advised that he had resigned his position as secretary of the Postal Workers' Federation, and that he was returning at once to Hamilton to insist that the postal workers at that point should return to duty and permit the government to carry out the understanding and proposals that had been made in letter of the previous day which had been addressed to him as Secretary of the Postal Workers Federation, the result being that shortly thereafter Hamilton postal workers returned to duty, although during the time they had been out on strike some 130 men had been employed in the postal service.
Before the postal workers committee left Ottawa they had been advised by the Acting Postmaster General that as they had earnestly endeavoured to set back the strike for 24 hours it would not be held that the strike was in effect until the committee definitely advised him that such was the case.
Late on the evening of June 19 advice was received from Mr. G. R. Jackson, President of the Postal Workers Federation that a strike of postal employees had been authorized and made effective as of 5 p.m. on the 19th, although as a matter of fact the strike had been effective in Toronto and at some other points for 24 hours prior to that time.
Efforts at conciliation then ceased, as it became then a question of determining whether the government or striking postal employees were in charge of the mail facilities.


SICK MARINERS' DUES
Mr. STEVENS:: 1.	What amount of money was received last year from sick mariners' dues?
2.	What is the total amount of money received at the port of Vancouver?
3.	What is the total amount of money received in Canada from this source?
4.	What is the total amount of money received from this source since 1870?
5.	What was the total expenditure for last year at the port of Vancouver?
6.	What was the total expenditure for last year in the whole of Canada?
7.	What is the total expenditure since the year 1870?
8.	Are receipts from this kept in separate account; if so, what amount remains to the credit of the account at the present time?
9.	How many hospitals are maintained by the government and where are they located?
10.	What was the cost of operation of each hospital during the last year?
11.	Does the United States government levy a tax of six cents per ton on all vessels arriving from Canada, or from points in Canada where two cent sick mariners' due is charged?

Contract for Steel Rails


Hon. Mr. BELAND:: 1.	$172,319.15 received during fiscal year ended March 31, 1924.
2.	$37,211.50.
3.	$172,319.15.
4.	$3,206,19053 received during the fiscal years 1869-70 to 1923-24, inclusive.
5.	$15,791.
6.	$109,793.02. In addition to this, accounts received prior to March 31, 1924, and paid from the appropriation for 1924-25 totalled $9,095.30.
7.	The expenditure for treatment of sailors from 1869-70 to 1923-24, inclusive, totalled $2,988,850.26. This amount does not include anything for the cost of 'administering the act at Ottawa or anything for salaries for the collectors of customs who collect the sick mariners' dues im addition to their other duties.
8.	The receipts are deposited to the consolidated revenue fund and the expenditure is paid out of the moneys parliament appropriates for this purpose.
9.	Two: Sydney, N.S., and Lunenburg, N.S.
10.	Sydney, $7,716.37. Lunenburg, $3,418.54.
11.	No information.


QUESTION PASSED AS ORDER FOR RETURN
Mr. KENNEDY (West Edmonton):: 1.	What is the total amount paid by the Dominion government for harbour improvements at each of the following ports: Halifax, St, John, Quebec, Montreal, Fort William, Port Arthur, Vancouver, Prince Rupert, Fort Nelson (a) by way of loan; (b) otherwise?
2.	What is the total amount paid by the Dominion government srince confederation for all other harbour improvements, such as wharfs, piers, breakwaters, jetties, dredging or other harbour and river improvements in each of the nine provinces; and (a) what percentage of the work done is estimated as permanent; (b) what percentage must be renewed annually; (c) what percentage must be renewed every five years; (d) what percentage must be renewed every ten years?


AGREEMENT WITH THE CITY OF OTTAWA
[Stage Direction]
Hon. J. H. KING (Minister of Public Works) moved that the House go into committee at the next sitting to consider the following proposed resolution.
Resolved, That is it* expedient to provide that the Minister of Public Works may, on behalf of His Majesty, enter into an agreement with the corporation of the city of Ottawa, extending for a period of one year from the first day of July, 1924, the provisions of the agreement between His Majesty and the said corporation dated 30th March, 1920, and set out in the schedule to chapter 15 of the statutes of 1920.
He said: His Excellency the Governor General, having been made acquainted with the
subject matter of this resolution, recommends it to the favourable consideration of the House.
Motion agreed to.

[Stage Direction]
Hon. JACQUES RUREAU (Minister of Customs and Excise) 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 Department of Customs and Excise Act and to place the administration of the Business Profits War Tax Act,
1916,	and amendments, and the Income War Tax Act,
1917,	and amendments, under the Department of Customs and Excise, and to provide for the constitution of an advisory board to investigate and study various modes of taxation with a view to simplifying and improving the existing systems.
He said:	His Excellency the Governor
in General, having been made acquainted with the subject matter of this resolution, recommends it to the favourable consideration of the House.
Motion agreed to.

[Stage Direction]
On the Orders of the Day:
James Shaver Woodsworth: I would ask whether, as reported,
the government has awarded a contract for steel rails to the British Empire Steel Corporation and if so, especially in view of the conditions of unemployment that prevail, an arrangement has been made for that company to adopt the eight hour day on such contract?
Hon. GEORGE P. GRAHAM (Minister of Railways):	The government has no knowledge of the letting of any contract to the British Empire Steel Corporation. It may be that the management of the Canadian National Railways has let such a contract, but if so I have no information concerning it,


GRAIN INQUIRY COMMISSION
[Stage Direction]
On the Orders of the Day:
Robert Gardiner: When may we expert the report of the Royal Grain Commission? And is it the purpose of the government to go on with the resolution standing in the name of the Minister of Marine and Fisheries with reference to the loan of money to the Vancouver Harbour Board before that report is received?
Hon. GEORGE P. GRAHAM (Minister of Railways): I will make inquiry and ascertain when the report is likely to be brought down. I should imagine it will be a few days anyway.
Business Profits War Tax


BUSINESS PROFITS WAR TAX ACT, 1916
[Stage Direction]
Hon. J. A. ROBB (Acting Minister of Finance) moved that the House go into committee to consider the following proposed resolution:
Resolved, That it is expedient to provide, that the Business Profits War Tax Act, 1916, and amendments, shall be construed and have effect and be deemed to have had effect since its enactment without lapse or interruption as if section twenty-six thereof when first enacted had provided as follows:-
" The provisions of section three of this act shall not continue in force after the thirty-first day of December, one thousand nine hundred and twenty; and anything enacted inconsistent therewith shall be deemed to have been superseded, amended or repealed, as the circumstances may require, and all taxes, interest and penalties payable under the said act and amendments shall remain a tax owning to His Majesty until fully paid and satisfied.
Motion agreed to and the House went into committee, Mr. Gordon in the chair.
Resolution reported, read the second time and concurred in. Mr. Robb thereupon moved for leave to introduce Bill No. 219, respecting the Business Profits War Tax Act, 1916.
Motion agreed to, bill read the second time, considered in committee, and reported.
James Alexander Robb: I move that the bill be read the third time.


Robert Gardiner: I have no objection to
this particular bill receiving the third reading now, but I would respectfully remind the government that it is not desirable to carry the third readings of bills that have not been printed. We have had an experience of this in past years towards the end of the session, and the plan is not a wise one.


James Alexander Robb: If my hon. friend would
rather not proceed-


Robert Gardiner: I have no objection to
this particular bill being read the third time.
Motion agreed to and bill read the third time and passed.


REFUNDING LOAN $300,000,000
[Stage Direction]
Hon. J. A. ROBB (Acting Minister of Finance) moved the second reading of Bill No. 217, to authorize the raising, by way of loan, of certain sums of money for the public service.
Motion agreed to, bill read the second time, considered in committee, reported, read the third time and passed.
On motion of Mr. Graham the House adjourned at 12.05 a.m. (Thursday).

Thursday, July 3, 1924.