1944-05-11

Hon. J. L. RALSTON (Acting Prime Minister):: Mr. Speaker, I regret to have to announce to hon. members the passing of one of our members since the house adjourned on Tuesday last. Mr. Eugene Durocher, the member for St. James, died on Wednesday, May 10. after an illness lasting two weeks. Had he lived, Mr. Durocher would have been sixty-three years of age on August 27 next. It was such a brief time since Mr. Durocher was with us in this house, seemingly in good health, that his death comes with an unusually sudden shock to many hon. members who were unaware of his illness.
He was first elected to the House of Commons at a by-election in December, 1939. He was returned in the general elections of 1940, receiving what was I believe the largest majority won by any member of the house. Our
friend brought to the House of Commons a breadth of experience gained in a successful business career, both in his profession as a chartered accountant and later in the business of insurance. He had already served his fellow citizens in the post of alderman of the city of Montreal for two years preceding his entry to the house. Earlier than that, in 1939, he served as a member of the Montreal metropolitan commission. His activities in fraternal and community and philanthropic organizations were many and helpful and as a citizen he could be depended upon to give his assistance to any activity for the betterment of conditions of the less fortunate.
Mr. Durocher was not a frequent speaker, but when he did take part in debates he was listened to with attention, and always made a genuine contribution. In private discussion he was noted for being vigorous and outspoken and, at the same time, sane and clearheaded in his presentation of his views.
Mr. Durocher was faithful in his attendance in the house, and followed the proceedings carefully and keenly. He was extremely well informed, and he served with great acceptance and benefit on the radio committee. I think I can say that no member of the house possessed greater charm, was more amiable and at the same time better informed or better able to present the point of view which he had in mind than our friend who is gone. He possessed the quality of being agreeable and, at the same time, forceful and impressive. He was a living exponent of the bonne entente, not by obtrusive declarations but in the quiet neighbourly kindness and the sincerity and friendliness of his character.
Our friend was the possessor of that estimable quality, a fine sense of humour. Perhaps one of the most distinctive traits of his character was his zest for life and his enjoyment of the simple things and the little things which make up happiness of living. His early going out is I think all the more tragic because of his satisfaction in the associations with which God had blessed him.
I should like to add this personal word. It was my good fortune to meet and talk frequently with Mr. Durocher in connection with his interests in matters affecting his constituents, and I was impressed by his personality, his tolerance and his moderation. So that I myself, while expressing the deep regret of the house at his untimely ending, can say with sincerity that I feel that in his going out I have lost a valued personal friend.
The hon. member has left to mourn him a widow, three sons and a daughter. I know personally from his own talks with me that he
The late Eugene Durocher

took great joy in his family and he spoke of them frequently. One of his sons, Lieutenant Claude Durocher, is overseas with the Fusiliers de Mont Royale. I am sure it will be the wish of all hon. members of the house that you, Mr. Speaker, should convey to Madame Durocher and her daughter and her sons-I am sure we will join in remembering particularly the soldier son overseas-an expression of the very deep sympathy which we have for them in their great bereavement.


Mr. GORDON GRAYDON (Leader of the Opposition):: Mr. Speaker, as we pause on this occasion to mourn and to pay tribute to one of our members who has gone from us, we cannot help recalling that since we have been members of this house many of our membership have passed away in the midst of their parliamentary careers. All of us will recall these sad occasions; since I first came into the house in 1936 no less than thirty-four members of the House of Commons have passed away, twelve of them since the election of 1940.
I was privileged to know Mr. Eugene Durocher from a close acquaintance with him, meeting him both in the House of Commons and outside. What the Acting Prime Minister has said is only too true. Mr. Durocher was friendly, well-disposed, and a man of good character. I always enjoyed meeting him and passing the time of day with him. I shall miss him, as will members of the house generally. He took the place of a very important man in the public life of this country who sat in the house from 1920 until he died in 1939, the late Hon. Femand Rinfret, who I think the members would also like to recall at this time.
I want to associate myself with the words of the Acting Prime Minister, and to extend to the government our genuine sympathy in the loss of an honoured and most respected and esteemed colleague. At the same time I should like to join with the Acting Prime Minister in suggesting to you, Mr. Speaker, that a message from this house should go to the widow and family who have been bereaved. It is for this reason that I rise, to couple this party, the official opposition, with the words which have been so eloquently and so appropriately uttered by the acting leader of the government.


Mr. M. J. COLDWELL (Rosetown-Biggar):: Mr. Speaker, we too would associate ourselves with the words of sympathy of the leader of the opposition for the members on the government side of the house, and would join with

the Acting Prime Minister in his expression of sympathy for the family in their susdden bereavement. Mr. Durocher was a member of the radio committee and I knew him there perhaps better than elsewhere. He was a courteous, kindly gentleman whom we all mourn. This sad occasion once again brings home to us in this house, shall I say, the wear of public life, as evidenced in the occasions on which from time to time we have to mourn the loss of one of our members. We join, Mr. Speaker, in the expressions of sympathy that have already been uttered.


Mr. J. H. BLACKMORE (Lethbridge):: Mr. Speaker, the members of our group desire to associate themselves with the eloquent and fitting words of the Acting Prime Minister and of the leader of the opposition in their expressions of appreciation of this man who has just left our midst. We desire, sir, that you convey to the bereaved ones our sympathy in this time of trial.


Mr. FRED ROSE (Cartier):: Mr. Speaker, I should like to associate myself with the words of the Acting Prime Minister in the passing of Mr. Durocher. He represented the constituency next to mine, and I found him very helpful to me coming here as a new member. A new member always appreciates a kindly word from those who have been in the house for some time. I had occasion to meet Mr. Durocher from time to time coming here on the train from Montreal, and I always found him kindly and helpful. He was a man who was able to forget the differences of party and to meet a member of another party on a friendly footing, as a human being, with kindness and consideration. I should like to add my personal word of sympathy to the bereaved widow and family.



NATIONAL HOUSING ACT


Hon. J. L. ILSLEY (Minister of Finance):: Mr. Speaker, as the house is aware, the government expects Ic introduce as soon as practicable a bill which will embody the government's recommendations in regard to housing legislation. This will be a comprehensive measure covering all phases of the housing problem and while, of course, it cannot be fully operative until the end of the war or at least until the period of acute material and man-power shortages has ended, nevertheless it is expected that some activity will take place under it in the immediate future. It is

National Housing Act
obvious that, even if this bill could be introduced tomorrow, it would be several weeks before the measure would become law.
However, it has come to my attention that with the knowledge that there is in the offing housing legislation which may provide assistance for house-building on more liberal terms than are now provided for, there may be a tendency for builders and prospective home owners to defer proceeding with the construction of urgently needed new houses. It would be unfortunate if such an attitude should lead to a smaller volume of house-building at the present time than the maximum which would be possible with the supply of materials and labour available, limited as that supply is. Under the circumstances, the government has become convinced that the only way in which we can meet this problem is to announce publicly a few, at least, of the fundamental changes which will be incorporated in or result from the new legislation.
Part I of the present National Housing Act deals primarily with loans made to assist the construction of individual dwellings for prospective home owners. Certain general principles and conditions governing such loans are laid down in the act itself but the details are incorporated in our agreements with approved lending institutions. For instance, the act gives authority to the minister to approve the rate of interest to be charged to the borrower and also the period for which loans shall be made and the terms of repayment. Under that authority, it was originally provided in the agreements with the lending institutions that the rate of interest should not exceed 5 per cent and that the loans should normally run, in effect, for a term of twenty years. Actually the loans usually run in the first instance for ten years but are renewable for a second term of ten years, and the schedule of repayments provides for complete amortization of the loan over a period of twenty years. The time has now come, it is believed, for a reduction in interest rates, and we had intended that when the new legislation was passed the maximum rate to be charged to borrowers would be reduced to 4J per cent. In view of the tendency to wait and see what provisions the new legislation will contain, the announcement is made now. Furthermore, we are immediately advising the companies that in respect of all loans under part I of the present act made after today's date, that is to say, loans for which the mortgage contracts have not yet been signed, the interest rate charged to the borrower must not exceed 4i per cent. It should be noted that 4i per cent is the rate to be charged to the borrower; as the dominion advances 25 per cent of the amount of the
loan at its normal rate of 3 per cent, the effect is that the lending institutions receive 5 per cent on their 75 per cent share of the joint mortgage loan.
Another feature of the new legislation in which there will be some public interest is the length of the term for which a loan may be grunted. It is our intention to ask for authority to make loans up to a maximum of twenty-five or thirty years, but loans will be made for so long a period only in communities where we are satisfied that the community has adopted adequate zoning ordinances and where there is an adequate community or regional plan governing the future development of the area. If, therefore, municipal authorities wish their citizens to receive the benefit of such long-term loans, they should promptly take the steps necessary to provide for adequate community planning and for zoning ordinances which will protect the owners of homes from suffering serious depreciation in property values as a result of the development of nuisances or other adverse influences which tend to create blighted areas and destroy the values of residential properties in the particular area. If the municipalities are to give this protection, provincial 'governments should see that there is enabling authority on the statute books, where such enabling authority does not now exist, to allow municipalities to take the necessary steps to develop and enforce strict zoning ordinances and sound community plans. Officials of the National Housing Administration will be prepared to assist municipalities in their planning to the extent of explaining to municipal officials and the general public the principles of community planning, but the provincial governments are or should be in a better position to encourage and assist their municipalities in connection with specific planning projects.
While we are hopeful that the cooperation of all governments in such a programme, with the full support of an informed public opinion, will produce very great economic and social benefits in stimulating housing construction, lowering the over-all cost of housing to the public and improving the efficiency and the amenities of urban communities, nevertheless it is obvious that it will take a good deal of time, perhaps two or three years in some cases, before effective results can be accomplished in this field. I hope that no time will be lost by our municipal authorities in getting the programme under way. Nevertheless, no one who is in urgent need of a house should wait merely in anticipation of the new legislation, as the present provisions, allowing amortization over a maximum period of
National Housing Act

twenty years, will continue to apply in ordinary cases and at least for the duration of the war.
There is one other point which should be [DOT]made in respect of loans under part I of the act. Building costs have risen since the outbreak of war and I understand that there is a demand, in certain communities at least, for houses with more bedroom accommodation than it is now possible to build under our present restricted lending limits. At present we are working under a statutory authority, in the form of an item in the supplementary estimates, which limits the maximum size of National Housing Act loans to $3,200. On houses with a lending value of not over $3,200, a 90 per cent loan may be made, but the maximum percentage of loan on houses with a lending value of over $3,200 gradually declines, on the basis of a sliding scale, until at $4,000 only a loan not exceeding 80 per cent, or $3,200, can be made. There is, however, an unused balance of approximately $380,000 in the appropriation provided originally by the National Housing Act itself. The funds so appropriated could be used to finance the construction of houses with a lending value in excess of $4,000. We are therefore proposing to utilize these funds for the making of loans on houses having a lending value of up to $5,000, with a maximum loan of 80 per cent in the case of $4,000 to $5,000 houses. As the dominion finances only 25 per cent of the amount of a loan under part I of the National Housing Act, it will be noted that the funds we have available in this appropriatoin will make possible a total amount of loans of $1,520,000-that is, four times $380,000. If this amount should prove insufficient to carry until the new housing legislation is enacted, it could be supplemented temporarily by an allotment from the War Appropriation Act. It will be noted that we do not propose to raise the legal limit for 90 per cent loans. In view of the present level of building costs, I do not think we are justified in urging people with small incomes wrho can only afford to put up a few hundred dollars, to invest all their savings in a 10 per cent equity in a house costing, say $4,000 or $5,000, and assume the obligations involved in a 90 per cent mortgage on such a house.
I have been speaking thus far of changes that will be made in respect of loans under part I of the Act. The new act will contain three or four other parts, dealing with such matters as rental housing, housing . in rural areas, repair and modernization of urban homes, and certain other matters. It is not necessary to refer to all these parts at the present time, but I would like to state that part II of the new act will include pro-
[Mr. Ilsley.l .
visions making -it possible for the dominion to make 90 per cent first mortgage loans, carrying an interest rate of 3 per cent, on low rental housing projects along the lines of the large project of this type recently announced in the city of Montreal. What we wish to accomplish by this type of legislation is to encourage groups of public-spirited citizens in communities where there is an acute shortage of low-rental housing to raise at least 10 per cent of the funds required by organizing a limited dividend housing corporation, to study objectively -the housing conditions of the particular community and develop suitable plans and specifications for projects designed to meet the ascertained need, to supervise the construction of the project in order to assure sound coqstruction at the most economical cost, and to provide continuing and efficient management for the project throughout its life. I would like on this occasion to pay tribute to Mr. Spinney and his associates for the valuable public service which they have rendered in working out the Montreal project, and to express the hope that similar leadership may be found in a good many other communities.
An enterprise of this character is one primarily for public service rather than one for private profit. In the case of the Montreal project, for instance, the dividend has been limited to 3 -per cent, at the express wish of the sponsors themselves-I do not think we could have objected to a 4 per cent dividend. All the shareholders can expect to receive is this reasonable -but modest yield on -their investment, the return of their capital over a period of years, and the satisfaction of having made an important contribution to the solution of an important economic and social problem in their own community. After the dominion's loan and the shareholders' equity capital have been retired, title to the property will vest either in the dominion, or in the municipality if -the latter gives suitable assistance to make a low level of rents possible under present conditions. Since the Montreal project was announced, great interest has been expressed on the part of other communities and we hope that a number of similar projects will go forward. The dominion is ready to cooperate on a similar basis in any community where there is a real shortage of low rental housing accommodation-subject, of course, to the limited supply of building materials and of labour available for all types of housing construction at the present time.
It is hoped that these measures will promote house-building now to assist in relieving -the congestion in urban centres to the maximum extent consistent with -the war effort. It should-be emphasized that they are in addition

Business oj the Home
to the measures already1 in operation or announced. Thus, the government will continue to press forward with its house conversion plan which now extends to fifteen cities and towns throughout Canada, and, as the Acting Prime Minister indicated last week, Wartime Housing Limited is initiating a programme for the building of additional houses for the relief of dependents of members of the armed forces urgently in need of housing accommodation and for whom housing accommodation is not otherwise available.
In closing, I think I should say once again that I have not attempted to describe or outline all the provisions of the housing legislation which we shall be introducing; but I feel I should make this announcement now, so that there will be no holding back by persons who fear that if they went ahead immediately their position would be prejudiced by the provisions of the housing act.


Gordon Graydon: In view of the need
which is well exemplified by what the minister has said, will there be any change, or the need of any change, so far as priorities are concerned, in materials, or in connection with the man-power situation, which of course is one of the things which has been holding back some of the development?


Hon. C. D. HOWE (Minister of Munitions and Supply):: In answer to the question of
the leader of the opposition, the matter of priorities for small house building is being met in as effective a way as possible having regard to the requirements of war. There are certain higher priorities than house building, but house building is placed in a very high priority after immediate war requirements have been met. An attempt is being made to step up production of fittings such as bathtubs, furnaces, stoves and other fixtures for small houses, and we hope to keep up with building in that regard. So far we have been able to do so, and we hope that we can continue; but I [DOT] cannot promise my hon. friend that priorities for small house building will be on a level with the high priorities of war production.


Gordon Graydon: What about the question of man-power? Has national selective service been working in cooperation with the two ministers in connection with the house building programme?


James Lorimer Ilsley: I am afraid I cannot answer that question. The appropriate minister, of course, is the Minister of Labour, but I think the answer would be probably the same as that given by the Minister of Munitions and Supply with respect to materials. There is a higher priority there as well, I think.


Gordon Graydon: If the bottleneck is in
man-power or priorities or both, then of course the solution which the minister now provides will not necessarily be a solution of the problem.


James Lorimer Ilsley: We have to carry on the war.



BUSINESS OF THE HOUSE


Mr. J. S. ROY (Gaspe):: Mr. Speaker, may I be permitted to move, seconded by the hon. member for Charlevoix-Saguenay (Mr. Dorion):
That private members' notices of motions be now taken up, in order that the one standing in my name for the suspension of the resolution passed by the house on February 11, giving priority to government measures, be now considered so as to facilitate the passing of Bill No. 110, "an act to amend certain instructions of the national selective service of the Department of Labour."


Mr. SPEAKER:: The hon. member gave me a copy of his motion before I came into the house. I have been considering it and I find that there is established in this house a precedent which would bar the discussion or consideration of such a motion. As will be seen at page 856 of Beauchesne's Parliamentary Rules and Forms, third edition, a motion was ruled out of order because all motions referring to the business of the house should be introduced by the leader of the house. I quote:
Mr. Church, seconded by Mr. Garland (Carleton), moved: That on Friday, June 1, Bill No. 63, "An act to amend the Railway Act" (Investigation of subsidiary of telephone or telegraph companies) now under public bills and orders, be given precedence over all (a) private bills, (b) public bills and orders (1) during the hour devoted to private bills and (2) over all other business until disposed of on that evening.
Hon. Mr. Lapointe took objection to this motion on the ground that it ivas unfair to other measures which had precedence over this bill.
Mr. Speaker said: The motion is out of order. The other day I ruled that according to May and Bourinot any motion concerning the order of business of the house should be made by the Prime Minister or the leader of the house. . . . I have so decided and I now- so rule.
The hon. member has on the order paper a motion, No. 20, succeeding nineteen others that have been on the order paper for some considerable time. In the words of the Hon. Mr. Lapointe, it is unfair that precedence should be given to this motion over others that have been on the order paper for this length of time. In view of the authorities that have been cited, and following the established practice of
Business oj the House

this house and the decision given by Mr. Speaker Lemieux, I must rule the present motion out of order.


Joseph Sasseville Roy: May I be permitted to submit to Your Honour that although this procedure is not quite in the ordinary course, but-


Some hon. MEMBERS:: Order.


Joseph Sasseville Roy: -there are no other means whereby private members can have their motions considered or public bills given second reading. We are all aware that the resolution which was passed on February 11 gives priority to government measures and that motions of this kind should be moved only by the leader of the house. But-


Thomas Vien: I have ruled, in accordance with the practice and, as I should think, in accordance with the law of the house, that it is not competent for the hon. member to move his motion in the terms proposed.


Joseph Sasseville Roy: I am sorry, Mr. Speaker, but I must appeal from your ruling.
Mr. Speaker put the question as follows:
Moved by Mr. Roy, seconded by Mr. Dorion:
I move, seconded by Mr. Dorion, that private members' notices of motions be now taken up, in order that the one standing in my name for the suspension of the resolution passed by the house on February 11. giving priority to government measures, be now considered so as to facilitate the passing of Bill No. 110. "an act to amend certain instructions of the national selective service of the Department of Labour."
I have ruled the motion out of order and the hon. member has appealed from the decision.



QUESTIONS

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

Mr. BLACK (Cumberland):: 1.	How many contracts have been let to the Eastern Woodworkers since January 1, 1940, stating whether by public tender or private contract for, (a) wartime housing or other buildings: (b) shipbuilding, scows and barges; (c) special work or materials?
2.	What is the total value of all such work and material, and what value has been completed or delivered?
3.	How much money has the government advanced for plant, supplies and materials?


Mr. CHEVRIER:: 1.	(a) Ten contracts: 2 by tender, 8 by negotiation.
(b)	Two contracts by negotiation.
(c)	Fourteen contracts were allocated to Eastern Woodworkers in 1940 and 1941 at prices set by the timber controller.
2.	(a) Total contract value: Wartime Housing Ltd., 82,110,032; shipbuilding, $2,791,000; lumber and millwork, $22,855.
(b) Total value of completed work: Wartime Housing Ltd., $2,098,262; shipbuilding (approx.), $1,634,000; lumber and millwork, $22,855.
3.	The Department of Munitions and Supply has only one contract with Eastern Woodworkers involving capital expenditure'. The amount of the commitment is $29,400 of which S8,375 had been advanced as of March 31, 1944, for plant and equipment.


SCRAP IRON-MOVEMENT FROM SASKATOON TO VANCOUVER
Mr. FAIR:: What was the cost per ton of moving scrap iron in carload lots from Saskatoon to Vancouver, (a) in 1938; (b) in 1943?


Mr. MIGHAUD:: The freight rates were as follows: (a) 812.50 per ton of 2,000 pounds; (b) $12.50 per ton of 2,000 pounds.


ST. ELEANORS, P.E.I., AIRPORT
Mr. HAZEN:: 1.	Was there an airport constructed at St. Eleanors, Prince county, P.E.I.?
2.	If so, what was the cost of the original heating plant installed at the airport at St. Eleanors?
3.	Did this heating plant prove satisfactory?
4.	Was the said heating plant removed and a new plant installed? If so, at what cost?
5.	What firm installed, (a) the first heating plant at No. 1 G.R.S., St. Eleanors, and (b) the second heating plant at St. Eleanors?


Mr. MACMILLAN:: 1.	Yes.
2.	No heating plant as such, was provided. All buildings were individually heated, including five hangars. Total cost of heating approximately $132,000.
3.	Yes.
4.	No. When the school was converted from an SFTS to a GRS, additional buildings were constructed and a small central heating plant was designed and installed to accommodate these new buildings. Provision was made in the new central plant to extend the system to inelude some of the original independently heated buildings if and when it became desirable to do so. Seven of these buildings are now being incorporated in the central steam system.
The heating units removed from these seven buildings are being used in heating other miscellaneous buildings in eastern air command.
The cost of the heating plant for new buildings 846,000.
The cost of extending the above to include seven original buildings $18,575.
5.	Independent heating of various types supplied and installed by General Steel Wares Ltd., Toronto, (Space heaters); Canadian Comstock Co. Ltd., Toronto, (Hangar heating) ; The Enterprise Foundry Co. Ltd., Sack-ville, N.B., (Warm air furnaces); Connolly an<i Twizell, Ltd., Montreal, (Independent steam). The central steam system, by W. E. Emerson & Sons, Ltd., Saint John, N.B. The addition to central steam system, Connolly and Twizell Ltd., Montreal.


CHARTERED BANKS-PROFITS, 1930-43
Robert Fair: What is the percentage of profit of each of the ten chartered banks in Canada each year from 1930 to 1943 inclusive?


Mr. ABBOTT:: In his speech on the second reading of bill No. 91, an act respecting banks and banking, the Minister of Finance gave the average annual rate of shareholders' net income to total published shareholders' equity for the banking system as a whole for the fifteen financial years 1929-43 and for the financial year 1943. Shareholders' net income was taken as the sum of dividends, net capital, including non-recurring profits, and net current earnings available for losses, less average annual net amount required for losses in 1929-43. These figures were based on confidential information obtained from the banks

Questions

by the Minister of Finance. It is not in the public interest to disclose this information for individual banks.
Based on the annual published profit and loss statements of the individual banks it is possible to calculate for every bank the percentage of published profits to published shareholders' investment or equity, namely, capital paid up, reserve fund and undivided profits. It should be pointed out that all banks have not published such statements in precisely the same form, not being required to do so by the general terms of section 53(8) of the Bank Act. Certain of the banks formerly disclosed in their published statements provision only for dominion note circulation tax and income tax (and in the case of one bank dominion note circulation tax only), but from about 1934 to 1940 all banks, with one exception, followed the practice of showing provision for both dominion and provincial taxes in annual statements to shareholders. Since 1940 provincial taxes have not been a factor because of the dominion-provincial agreement on taxation. Municipal and other taxes, however, which have always
totalled a substantial amount, have never been specified in annual published statements.
In view of the foregoing and to provide more uniform information for comparative purposes net profits figures have been used after allowance for taxes in all cases and after published allocations to pension funds, bank premises depreciation and for other purposes (which likewise have not been treated in a uniform manner by all banks) as these amounts are definitely provided out of earnings and consequently decrease the amount finally available to shareholders.
The 1934 percentages in the case of several banks, namely Provincial, Commerce, Royal, Dominion and Canadienne Nationale, necessarily reflect reductions made in the published rest or reserve funds of these banks in 1933 for transfers to inner reserves, as publicly announced at that time and which came to the attention of the banking and commerce committee of the House of Commons when the Bank Act was reviewed in 1934.
The statement does not include any figures for The Weyburn Security Bank, which was purchased by Imperial Bank of Canada, effective as of May 1, 1931,.
Percentages of Net Profits of Each of the Ten Chartered Banks, Expressed in Relation to Total Shareholders' Investment or Equity, for Each Fiscal Year Ended in 1930 to 1943 Inclusive
Nova	Canadienne
Year	Montreal	Scotia	Toronto	Provinciale	Commerce	Royal	Dominion	Nationale	Imperial	Barclays1930.	... 7-04	5-38	6-00	6-43	6-51	7-38	5-98	5-27	5-93	1931.	... 5-97	5-32	5-55	6-10	5-98	5-73	5-24	5-13	5-47	. ..1932.	... 5-47	4-98	4-69	4-24	5-42	5-23	3-74	4-96	3-73	*141933.	... 4-51	4-26	4-64	3-09	4-51	4-57	5-11	5-06	4-74	*0191934.	... 4-11	4-05	4-63	4-26	4-77	5-18	5-58	5-18	4-59	*0231935.	... 3-96	4-00	4-49	4-01	4-71	5-14	5-17	4-61	4-56	[DOT]0151936.	... 3-93	4-17	6-58	4-08	4-84	5-48	5-32	4-60	4-57	[DOT]0621937.	... 3-96	4-22	5-87	4-61	4-78	5-64	5-47	4-61	4-60	[DOT]0911938.	... 3-81	4-19	5-79	4-74	4-36	5-58	4-98	4-62	4-55	[DOT]171939.	... 3-89	4-30	6-61	4-71	4-79	5-50	4-15	4-64	4-58	[DOT]0641940.	... 3-85	4-01	5-96	4-59	4-73	5-00	4-88	4-59	4-54	[DOT]261941.	... 3-86	3-98	6-24	4-63	4-74	4-83	4-74	4-58	4-61	[DOT]191942.	... 3-65	3-76	5-22	4-43	4-58	4-60	4-47	4-30	4-37	[DOT]181943.	... 3-68	3-36	4-40	4-03	4-02	4-56	4-43	3-89	4-37	[DOT]23
Footnotes:
Commerce: Fiscal year-end changed from November 30 to October 31, beginning 1938. Percentage for 1938 relates to 10-month period only.
Dominion:	Fiscal year-end changed from December 31 to October 31, beginning 1939-
Percentage for 1939 relates to 10-month period only.
Canadienne Nationale:	Calculations based on net profits figures before provision for
annual statutory payment of $125,000 to the Province of Quebec

provincial statute, 14 Geo. V, chapter 3.
Barclays:	Commenced operations September, 1929. No profits reported until 1932 and
no annual profit and loss statements published, although one is sent to the minister under section 53 (9) of the Bank Act.

Questions


WARTIME PRICES AND TRADE BOARD-PERMITS FOR PURCHASE OF TRUCKS
Mr. DORION:: Since the 1st of January, 1942, how many permits, in each province, have been issued each month by the wartime prices and trade board for the purchase of new trucks?


Mr. CHEVRIER:: Permits issued for the release of trucks are not recorded by provinces, by months, but are classified in essentiality groups. The production of trucks for civilian purposes was discontinued in March, 1942. At that time there were a number of trucks in dealers' inventories in various parts of Canada which were- ' released without permit, and these new units, together with used trucks diverted from nonessential to essential usages, fairly well met the requirements for 1942.
Following is a record of permits issued for the periods January 1, 1943, to December 31, 1943, and January 1, 1944, to March 31, 1944, divided into the various essential categories.
Trucks Released by Motor Vehicle Control Department of Munitions and Supply
Jan. 1 to Dec. 31,
War Work	1943
Independent companies on defence work	 282
Government companies on defence work	 6
Department of National Defence	 25
Royal Air Force Ferry Command	 3
United States projects	 1
Construction: Roads, Docks and Aerodromes	 181
Other direct war work	 44
Other indirect war work	 86
Jan. 1 to Mar. 31, 1944 28 1 4 2
105
Total	 '	628	278
Essential Services
Medical services, A.R.P., Red Cross and Public Health	
72	30Police	
17	4Postal	
54	22	,Public Utilities	
237	52Communications	
5	10Freight Transportation	
358	110Bus Operators	
1	-Mining, Lumbering and Oil	
1,507	520Government Departments (other than National Defence)	
121	41Other essential civilian services	
1,280	1,155Newfoundland government	
12	-Air transportation	
10	25Total	
3,674	1,960Grand Total	
4,302	2,247


WINNIPEG HYDRO-ELECTRIC-SLAVE FALLS PLANT
Mr. KNOWLES:: 1.	Has the city of Winnipeg hydro-electric system applied to the construction controller of the Department of Munitions and Supply for a permit to commence preliminary work on the extensions of its Slave falls plant?
2.	If so, on what date or dates?
3.	Has the above application been supported by communications from any other organizations? If so, from what organizations?
4.	Has the application been granted? If not, is it being considered?


Mr. CHEVRIER:: 1.	Yes.
2.	Application No. 45869 dated March 14, 1944; application No. 47115 dated April 20, 1944.
3.	Yes, the Winnipeg board of trade.
4.	Application No. 45869 dated March 14, 1944 was not granted. Subsequent application No. 47115 dated April 20, 1944 is still under consideration.

Questions as Orders for Returns


PREMIUMS ON HOGS
Mr. DIEFENBAKER:: 1.	Are packers entitled to make a discount or * deduction of three dollars on the purchase or
price of overweight hogs?
2.	If not, when was the practice of doing so discontinued, and under what circumstances?
3.	What premiums are now payable on the various grades of hogs?


Mr. GARDINER:: 1.	No.
2.	On April 10, 1944, at which time a simplified schedule of carcass grades and payment by warrant of the new dominion quality premiums became effective.
3.	The dominion government now pays a premium of S3 per head on grade A and $2 per head on grade B1 carcasses. The former packer's premium of $1 on grade A carcasses is now embodied in an increased price for both A and B1 grades.


PRODUCTION OP ALCOHOL
Mr. TUSTIN:: How much alcohol was produced in Canada in each of the months, January, February, March and April, 1944?


Mr. GIBSON:: January, 1944-2,547,383-46
proof gallons; February, 1944-2,805,524-37 proof gallons; March, 1944-3,185,409-08 proof gallons.
Figures for the month of April, 1944, not yet available.



QUESTIONS PASSED AS ORDERS FOR RETURNS


Mr. NICHOLSON:: 1.	Who is the wartime prices and trade .board administrator in charge of the branch handling grapefruit juice imports?
2.	What firm was he associated with before he joined the wartime prices and trade board?
3.	WTiat quantities of grapefruit juice have been imported during the past year?
4.	What firms in Canada were granted permission to import grapefruit juice?
5.	What were the total quantities imported by each firm?
6.	What subsidy was paid?


POTATOES-PRODUCTION SUBSIDIES, ETC.
Mr. BLACK (Cumberland):: 1.	What sums were paid as subsidy for the production or marketing of new potatoes in the fiscal year 1943-1944 in, (a) Canada; (b) Nova Scotia; (c) New Brunswick; (d) Prince Edward Island?
2.	What sums were paid -in the last fiscal year by the government for freight on potatoes within or into each province?
3.	What was the basis upon which payment was made of, (a) subsidies; (b) freight; (e) purchases?

4.	What quantity of potatoes was imported into Canada from the United States of America in the last fiscal year, stating what permit or authority?
5.	What subsidies, freight allowances or reduction of import charges and exchange were allowed?
6.	Were Canadian producers restricted in making exports to United States of America?



FARM LOAN BOARD


Mr. NICHOLSON:: How much has been paid to Mr. S. T. Shabbits by the Canadian farm loan board, (a) as salary; (b) expenses, since his appointment?


Douglas Charles Abbott: Return tabled.



PRODUCTION OF ALCOHOL-RAW AND SYNTHETIC RUBBER

Mr. WINKLER:: 1.	By years, what was the price range of raw rubber per pound in Canada since 1919 until the outbreak of the present war?
2.	By years, what was the estimated cost of Buna S. (artificial rubber) in Canada since the outbreak of the present war, using as a base, (a) ethyl alcohol; (b) petroleum?
3. At the present price of raw materials, what is the estimated cost of producing ethyl alcohol from, (a) grain; (b) molasses; (c) waste sulphite liquor; (d) wood hydrolysis; (e) petroleum?
4.	What is the estimated cost of producing alcohol to-day, using wheat at a price of its low for the last 25-year period as compared with producing it from molasses priced at its low for the same period?



SWITLIK CANADIAN PARACHUTES LIMITED-ROMEO VALOIS

Mr. LACOMBE:: 1.	Has Switlik Canadian Parachutes Limited, 3575 St. Lawrence street, Montreal, obtained any contracts from the dominion government, testing silk for the manufacture of parachutes?
2.	If so, for what amount, in what year, and at what date?
3.	Is one Romeo Valois a director of Switlik Canadian Parachutes Limited, or interested therein ?
4.	Have sub-contracts been granted by Switlik Canadian Parachutes Limited to any individuals or companies?
5.	If so, to what individuals or companies, and for what amounts in 1939, 1940, 1941, 1942, 1943 and 1944?



CONTRACTS TO J. A. A. LECLAIR AND DUPUIS LIMITED, MONTREAL

Mr. LACOMBE:: 1.	Have J. A. A. Leclair and Dupuis Limited, of Montreal, obtained contracts from the dominion government, either from the Department of Munitions and Supply or any- other department?
2.	If so, for what amounts during 1939, 1940, 1941, 1942, 1943 and 1944?
3.	What kind of work have they performed for the government?
4.	What is the total amount of payments made to them up to the present in connection with said contracts for each of the years above-mentioned?

Post-War Civil Aviation



FARM CREDIT


[Stage Direction]
Hon. J. L. ILSLEY (Minister of Finance) moved that the house go into committee at the next sitting to consider the following resolution:
That it is expedient to introduce a bill to encourage the provision of intermediate term and short term credit to farmers for the improvement and development of farms through bank loans, guaranteed with limitations, by the crown; moneys payable under the act including expenses of administration to toe paid out of the consolidated revenue fund.
He said:	His Excellency the Governor
General, having been made acquainted with the subject matter of this resolution, recommends it to the consideration of the house.
Motion agreed to.

[Stage Direction]
On the orders of the day:
Mr. J. G. DIEFENBAKER (Lake Centre):: I should like to direct certain questions to the Minister of Munitions and Supply in connection with a Canadian Press dispatch of to-day's date in reference to a statement made by Lord Beaverbrook in the House of Lords yesterday with respect to post-war aviation. Lord Beaverbrook stated that the. united nations would hold a conference, possibly this year, to decide on the post-war international regulation of civil aviation, and also that Great Britain had rejected or abandoned the Canadian-sponsored plan covering this field. The questions I should like to ask the minister are these. Will he inform the house as to whether or not Canada will be represented at a united nations conference, as mentioned by Lord Beaverbrook; also whether he had any knowledge that the draft Canadian convention that was submitted to this parliament was unacceptable to both Great Britain and the United States, and whether the Canadian government intends to submit any convention or plan on civil aviation alternative to the convention already submitted to this parliament.


Clarence Decatur Howe: Since the statement of Lord Beaverbrook in the House of Lords has been referred to it may be well to place the exact statement on Hansard. I happen to have it here in a letter from His Lordship dated April 26, 1944, as follows:
The LTnited States delegation proposed that we should go forward to an international conference on the following lines. That there
should be an international authority to lay down standards for technical requirements and for rates of air carriage and to interchange information. The proposed authority would start on a non-executive basis with no power or means of enforcement of its regulations-at least, during an interim period.
The United Kingdom delegation presented for consideration the Canadian draft convention which has been laid on the table in the Canadian parliament. This draft convention lays down a detailed plan for an international regulatory authority with powers of enforcement. Its provisions include the allocation of frequencies of air services and national quotas for international air traffic.
This Canadian proposal was considered by the Americans to be too rigid as a basis for talks at the proposed international conference. After discussion it was agreed, therefore, that we should go forward to the conference on the basis of proposals for international handling of civil aviation evolved at the commonwealth conversations. These proposals are in some respects open to varying interpretations and were considered by the Americans to be flexible enough to provide a more satisfactory basis for an international conference. The broad purpose would be to draw up an international convention on air navigation to be implemented by an international transport organization which would evolve standards, seek to eliminate uneconomic competition, work out for each nation an equitable participation in world air transport and maintain broad equilibrium between air transport capacity and traffic offering. On these general principles the United States and Great Britain are in agreement. The powers of enforcement of the provisions would be open to further discussion.
In his preamble my hon. 'friend referred to the Canadian proposals, as laid on the table of this house, as being rejected. May I point out that the Canadian proposals were not presented to the United Kingdom-American conference for acceptance or rejection. They were prepared in Canada as a basis for the discussion of international problems. It is rather interesting to note from the statement I have just read that the draft convention as tabled here was presented to the bilateral meeting in London as the view of the United Kingdom government. It then would appear that the United States took the view that its provisions were too rigid, and for that reason another draft upon which the Canadian convention was founded is to be put forward for discussion when the international conference is held.
The first question was whether Canada would be represented at a united nations conference. Canada certainly will be present. I was then asked if I had any knowledge that the Canadian convention submitted to this parliament was unacceptable, both to Great Britain and to the United States. Lord Beaverbrook's statement makes it perfectly clear that the United Kingdom were quite prepared to accept the basis proposed by Canada. The United States simply stated
Post-War Civil Aviation

that in many particulars the convention was too rigid. I think I may say that the position of the United States was known when the statement was laid on the table. It was simply tabled here as Canada's proposed basis for a discussion of an international agreement.
The third question was whether Canada intended to submit an alternative convention or plan. May I say that the Canadian convention is the first attempt by any nation to put forward a detailed plan for the regulation of post-war civil aviation. The amazing thing to me is that the Canadian proposal has received such widespread study. It has been the subject of comment in aviation circles in a good many countries. In my opinion it served a most useful purpose and has become the focal point in the discussion of civil aviation problems. I stated in the house during the course of the debate that no one would be more surprised than I if the convention should be accepted without many changes as a basis for international agreement. It has proved a most useful basis for discussions of post-war civil aviation, and for that reason I think it is a useful document. Canada will not at this time attempt to prepare another document.


Major James William Coldwell: Since this convention has not been approved by two of the major powers, will Canada continue to place such a convention before the international conference, at which many other nations will be represented? In other words, will Canada continue to press for a solution of the problem along the lines suggested?


Clarence Decatur Howe: The views tabled in this parliament are the views of Canada for a solution of the civil aviation problem. Our view's may be modified as a result of discussion, but we will continue to press them in any conference to which we are invited. I believe it is proposed that a number of bilateral conferences will be held before the general conference, and at those discussions Canada will present the document tabled here as the views of Canada.


Gordon Graydon: Will the minister, following the usual procedure in a matter of this kind, table the letter from Lord Beaverbrook to himself from which he has quoted?


Clarence Decatur Howe: It is not a secret letter, but it is a personal letter. That letter contains the agreed statement that Lord Beaverbrook said was to be made after the discussions in London. I am not going to table this letter; it is personal.
IMr. Howe.]


Mr. HANSON (York-Sunbury):: Then you should not have read it.


Clarence Decatur Howe: I did not read the letter.


Richard Burpee Hanson: You read part of it.


Clarence Decatur Howe: I read the official statement given in the House of Lords which happened to be conveyed with the personal letter from Lord Beaverbrook to myself. I read the official message, and I am not going to table a private letter.


Gordon Graydon: I rise to a point of order. I think the rules of this house provide very clearly, and it has been many times decided, that when a minister of the crown reads a part of a letter or the whole letter


An hon. MEMBER:: He did not.


Gordon Graydon: -or an official document, he must table that letter or document. That is not only the custom and the practice; it is in accordance with the rules of this house. If the minister had said that he was reading only the document that was produced to the House of Lords, it would be an entirely different matter. I listened carefully to what the minister said. As I understood him, he said that he had either received the letter on or the date of the letter was April 26, and he then attempted to quote from the letter. There was nothing in what he said to indicate that he was quoting only part. From where I sit I could see that all the letter was not being quoted by the minister. I rise now to indicate that the rules of the house, which I think must be clear enough, provide for the tabling of the letter itself.


Clarence Decatur Howe: I am going to surprise my hon. friend. I will read this personal letter in full.


Gordon Graydon: Table it.


Clarence Decatur Howe: It is dated Gwydyr House, Whitehall, S.W.l, April 26, 1944, and reads: My dear Clarence,
Many thanks for your cable of 10th April and your letter of 11th April. By this time you will have had the detailed summary of our discussions with Berle which was sent by cable.
So far the Russians do not seem to have arrived in Washington. I shall look forward to an account of your meeting with them. Three points emerge from our discussions with the Americans:
(i)	The Americans have accepted, as a basis for negotiation, the subcommittee report on international control, which resulted from our commonwealth conversations.
(ii)	The subject of air bases and their post-war use has yet to be discussed.
(iii)	We are agreed on the principle of colonial cabotage. That is, a nation has rights of cabotage on all airlines to and within its colonies and dependencies.

Post-War Civil Aviation
We had hoped to carry the Americans with us on the structure of your draft convention. We went through it with them line by line, but they felt that they had so many reservations to make that it could not be taken as a basis. Instead we adopted the commonwealth report which, as you know, contains the same general provisions in a flexible form.
Berle has agreed with me a more detailed statement which I will give in the House of Lords in answer to a question on the conference. The agreed statement runs as follows:
You will not ask me to re-read the quotation which was the official statement?


Gordon Graydon: All I asked the minister to do was to table the letter.


Clarence Decatur Howe: I had better read it now.


Gordon Graydon: All right.


Richard Burpee Hanson: It can go on the record and you can table it.


Clarence Decatur Howe: The letter continues:
Your version of the Douglas DC-4 with Merlin engines should make a fine transport. I imagine it will show its heels to its American-built cousins across the border. A Canadian-built product of this sort should create an excellent impression. Adequate numbers of commercial aircraft will be the crux of the immediate post-war period in civil aviation.
I am delighted to see that you are going ahead with plans for construction. I hope that we shall be able to make further progress with building civil aircraft here before long.
I look forward to seeing the Prime Minister in London shortly, although I do not know to what extent civil aviation will be discussed at the prime ministers' conference. I will not raise it.
Yours ever,
Max.


Gordon Graydon: Mr. Speaker, may we now get down to earth and have the document tabled, as it should have been at the very beginning? I have no objection to the minister's reading the letter. In fact, I welcome it, because it contains information that is very valuable to the house and the country. I am surprised at the minister refusing to follow the ordinary rules of the house and not tabling it in the first instance.


James Lorimer Ilsley: 'Mr. Speaker, may I speak on a point of order? I am no expert on the rules, but it seems to me that this would be stretching the rules beyond all reason. The Minister of Munitions and Supply read to the house an announcement that was made in the House of Lords.


Gordon Graydon: That is not what he said.


Richard Burpee Hanson: He did not say that.


Mr. CRERAR:: Oh, yes; he did.


Richard Burpee Hanson: The record will show.


James Lorimer Ilsley: Mr. Speaker, I would like to have a little order when I am speaking decently and civilly in this house, but very often I do not meet with it, and I could name certain hon. gentlemen, too, from whom I do not meet with it.
The case before us is exactly as if the Minister of Munitions and Supply had said: I have an announcement which was made in the House of Lords and is enclosed in a private or a personal letter. That is exactly the case. One must look at the pith and substance and sense of the rules. The rule about tabling a letter is to prevent part of a letter from being read to the house when there is something in the context that alters the meaning of the part that is read. That is the principle underlying the rule. But when an hon. member of this house reads an official announcement it does not make any difference whether he takes it out of a letter or whether it was an enclosure with a letter. It does not carry with it the obligation of reading a personal letter in this house, and the hon. leader of the opposition is attempting to stretch the rule beyond any bounds of common sense when he says that that should be done. We are on an academic point, because the letter has been read to the house and made public at the instance of the leader of the opposition. It would be an irresponsible attitude for the leader of any party to take to press for the reading of a personal letter in the house when all that the member who was speaking was doing was giving to the house the terms of an official announcement.


Richard Burpee Hanson: On the
point of order, Mr. Speaker, I think the error that has been disclosed-


An hon. MEMBER:: There is no point of order in that.


Richard Burpee Hanson: There was a point of order raised by my hon. friend here arising out of an error on the part of the minister, who announced that he was reading from a letter from Lord Beaverbrook when he intended to read from a statement enclosed in a letter from Lord Beaverbrook. That emerged afterwards. There is no doubt that the minister said that he was reading from a letter from His Lordship, and I assumed at the beginning that it was an official letter and therefore that it was entitled to be tabled in this house. But the actual position seems to be this, that Lord Beaverbrook prepared a statement for the House of Lords, and then enclosed a copy of it in a letter to the minister. The statement which he made in the House of Lords was properly read by the minister to the house. I do not
Post-War Civil Aviation

think he was called upon to read a personal letter. What happened was that the minister fell into error in the first place and thereby led us into error, and then later corrected the position. I conceive the rule to be this, that any official communication read to the house should be tabled, but personal letters should not be tabled and should not even be referred to.
May I be permitted to say a word on one other point arising out of the minister's statement? I understood him to say that the British government in the first instance had accepted the Canadian proposal. My question is based on a statement in a Canadian press dispatch which appears in the Ottawa Journal this morning entitled "U.K.-"


Thomas Vien: This has gone beyond what is before the Chair. As I understand it, the leader of the opposition raised the point of order that the letter read by the minister should be laid on the table. If there is any other hon. member who wishes to speak on that point, I shall be glad to hear iiim.


James Layton Ralston: Mr. Speaker, I should like to follow what my colleague said, with this. I think the hon. member for York-Sunbury has in a general way cited the rule correctly. The rule as mentioned in the third edition of Beauchesne, at page 111, reads as follows-and I quote it now because this point frequently comes up and there is a great deal of misunderstanding about it:
It has been admitted that a document which uas been cited ought to be laid upon the table of the house, if it can be done without injury to the public interest. The same rule, however, cannot be held to apply to private letters or memoranda. On the 18th May, 1865. the attorney-general, on being asked by Mr. Ferrar if he would lay upon the table a written statement and a letter to which he had referred on a previous day, in answering a question relative to the Leeds Bankruptcy Court, replied that he had made a statement to the house upon his own responsibility, and that the documents he had referred to being private, he could not lay them upon the table. Lord Robert Cecil contended that the papers, having been cited, should be produced; but the speaker declared that this rule applied to public documents only.
That same rule was laid down by you, Mr. Speaker, last session in connection with a document which was read by the hon. member for North Battleford (Mrs. Nielsen). I support what my colleague the Minister of Finance (Mr. Ilsley) has said, that the reading of a public document enclosed in a letter does not compel for a single instant the laying on the table of the private letter in which that public document was enclosed.


Gordon Graydon: May I add one word,
Mr. Speaker? Whatever may have been the argument against tabling this document, the

minister quickly and strangely surrendered to the request I made, and I can only hope that in the public interest he will continue to surrender. My point is that once the minister had read, as he said, the full letter to the house, he took away any possible argument against tabling it that there was from the governments point of view on the ground that it was a private or personal matter. He could not possibly say that of a letter which had been read; therefore I am going to ask that the letter be tabled. If I am not permitted to do that under the rules, I am afraid there is nothing I can do about it, but certainly I think I am right in my request.


Mr. NOSEWORTHY:: I think this is a
point which should be cleared up. I ran into the same difficulty in this house on March 27 last, when I was reading from a personal letter and the Minister of Munitions and Supply, at page 1879 of Hansard, asked that the letter be tabled. I then asked whether the rules of the house obliged me to do so, and the Minister of Mines and Resources (Mr. Crerar) said: "They certainly do." And the Minister of Munitions and Supply said: "Oh, yes." I then laid the letter on the table under protest, but the next day received it back from the Clerk of the House, who told me that the rules of the house did not permit me to lay the letter on the table.


Mr. CHURCH:: Is this motion debatable,
Mr. Speaker?


Thomas Vien: There is no motion before the house. With respect to the point of order raised by the leader of the opposition in regard to the letter read by the Minister of Munitions and Supply, it appears to me that there is nothing for me to decide, because the house has taken cognizance of the letter. Objection was taken by the leader of the opposition regarding this letter, and the Minister of Munitions and Supply replied to that by reading the letter in full into Hansard. We are not dealing with a departmental report. As Bourinot so aptly says, at page 243, "No document can be regularly laid on the table unless in pursuance of some parliamentary authority." Beauchesne's Parliamentary Rules and Forms, third edition, page 145, paragraph 385, says with regard to papers which are laid before the house:
Papers are laid before the house in pursuance of
(1)	Provision of an act of parliament;
(2)	An order of the house;
(3)	An address to the crown;
(4)	The command of the crown;
(5)	Standing orders of the house.
The letter in question does not come within any of these categories, therefore it need not

Post-War Civil Aviation
be laid on the table as a parliamentary paper. It may be tabled for information during a debate, but there is no motion before the chair at this moment. It is true that it could have been said, and it was so stated by the Minister of Finance, that the document need not be laid on the table of the house if it be against the public interest. Paragraph 278, on page 111, states:
It has been admitted that a document which has been cited ought to be laid upon the table of the house, if it can be done without injury to the public interest.
If there was a debate and that debate contained some reference to a document which was cited by a minister of the crown, undoubtedly that letter would have to be placed on the table of the house, according to the well-known principle that you cannot in a court of law seek to supply evidence from a document without producing the document. But there is no debate before the house, and therefore the position is, I take it, that I have nothing to decide. The letter has been read; it is part of the record, and there it must stand.


Gordon Graydon: May I ask Your Honour


Some hon. MEMBERS:: Order.


Gordon Graydon: I am not going to submit to that kind of thing. If Mr. Speaker asks me to sit down I will sit down, but I am not going to be told to do so by a lot of people across the floor. Your Honour referred to the letter having been read in full. I should like the minister to state whether what he read is the letter in full?


Clarence Decatur Howe: It is, with the exception of one sentence.


Richard Burpee Hanson: May I ask the Minister of Munitions and Supply a short supplementary question arising out of his reply to the hon. member for Lake Centre? Did I understand him to say that in the first instance the United Kingdom government, or the Beaverbrook committee-whichever he may designate-had accepted a Canadian-sponsored plan regarding post-war international regulation of civil aviation? Had they actually accepted it, and if so, is it not a fact that they have now abandoned it? I would think that that is so, from the Canadian Press report, but I want to know if they had actually committed themselves to the plan. I am not sure that he made that clear.


Clarence Decatur Howe: I have tried to make it clear that the plan has not been presented to anyone for acceptance or rejection.


Richard Burpee Hanson: It was a basis-?


Clarence Decatur Howe: It was put forward as a basis for discussion. It has neither been accepted nor rejected. But I think my hon. friend will see, if he reads Lord Beaverbrook's letter which I put on Hansard, that the conference was interested in it.


John George Diefenbaker: This matter is a most important one. The minister in his answer to the question as to what took place yesterday in the House of Lords, referred me to a letter dated on April 26. This press dispatch dealing with what took place in the House of Lords yesterday states that Lord Beaverbrook, the Lord Privy Seal, disclosed that last year's commonwealth discussions provided for an all-red route, presumably an air route girdling the globe and operating entirely on an empire basis. The question I wish to direct to the minister is this. Did Canada come to an agreement with the empire countries at the commonwealth conference for an all-red route? That question, Mr. Speaker, arises directly from the discussion which took place in this chamber when the convention was before the house, and I ask whether or not Lord Beaverbrook properly set forth the facts in that regard in the House of Lords yesterday.


Clarence Decatur Howe: I have not seen Lord Beaverbrook's statement in the House of Lords. I have seen the official statements of all the conferences which have been held to this date. I gave the house the official statement, that is the agreed statement issued from the conference recently held in London, and I find no reference to any such discussion. It is well understood in discussions of this type that the agreed statement is the only information which can go forth from the conference.


John George Diefenbaker: Does the minister say there was no agreement on an all-red route?


Clarence Decatur Howe: There was no agreement
resulting from any of the discussions. All meetings have been for the purpose of exploratory discussions. They resulted in discussions, not agreements.


Richard Burpee Hanson: Proposals?


Clarence Decatur Howe: As I say, I am bound not to give any more information about these discussions than was contained in the agreed statement.

Halibut Fishing Fleets



FISHERIES


[Stage Direction]
On the orders of the day:
Mr. THOMAS REID (New Westminster):: I should like to direct a question to the minister who is acting on behalf of the Minister of Fisheries: it has to do with the halibut fleet on the Pacific coast. That fleet should have commenced fishing operations after April ' 16, but so far no boat has gone fishing. What steps, if any, have the government taken or do they contemplate taking to deal with the difficulty which exists in connection with the tie-up of the halibut fleet?


Joseph Enoil Michaud: On behalf of the Minister of Fisheries, and in reply to the hon. member for New Westminster, I may say the information which is laid before me is as follows:
Although halibut fishing was permissible from April 16, the entire United States and Canadian halibut fleet on the Pacific coast has remained tied up. The United States fishermen are not satisfied with price ceilings announced by the Office of Price Administration. The halibut fishery is an international one, and the Canadian fishermen have decided to remain idle in sympathy with their United States friends. Despite continuous negotiations between the United States fishermen and
O.P.A. no agreement has been reached, and, as far as it is possible to ascertain at this time, there is no immediate prospect of reconciliation.
There is no relation of employer and employee between the Canadian government and the fishermen, and it is only by persuasion that the Canadian fishermen could be induced to resume their fishing operations. So far they have been adamant to any representation made by the Canadian government.



THE PRIME MINISTER


[Stage Direction]
On the orders of the day:
Mr. A. W. ROEBUCK (Trinity):: May I direct a question to the administration through the Acting Prime Minister? I think it is fitting that the attention of the house should be called to an historic event which took place this morning, when the Prime Minister of this country (Mr. Mackenzie King) addressed the combined houses of parliament in Great Britain. I ask not only that we take notice of that historic event, the first time I believe in the history of the Dominion of Canada that

a prime minister of this country has addressed the combined houses of parliament in Great Britain, but I would inquire whether his address, and the various speeches accompanying it, since they will be printed in the British Hansard, will also be printed in the Hansard of this house.


James Layton Ralston: This matter was brought to my attention from another source just before three o'clock. At that time I wanted to have a word with my hon. friend the leader of the opposition, but I was not able to get him at the moment. Since I came into the chamber the hon. member who asked the question mentioned the matter to me privately. I have considered it, and my view, as representing the government at the present time, is that probably it is not in order to print, either in Hansard or as an appendix to Hansard, an address made outside the house.


Richard Burpee Hanson: There is no doubt about that.


Thomas Alexander Crerar: It will be printed.


James Layton Ralston: I realize of course that it is printed in the British Hansard. It appears as a matter of courtesy, in the same manner as the speeches of Mr. Churchill and Mr. Eden were printed here. My suggestion, as to which I wanted to speak to the leaders of the opposition and of the two groups, is that I should get copies of the speeches made by Mr. Churchill, by the Lord Chancellor, and by the Honourable the Speaker of the House, along with the speech of the Prime Minister to which my hon. friend has referred, and that they should be tabled in this house, because I think all will agree, regardless of party, that it was an historic event. The house can then consider whether or not they desire to have the speeches printed either in Votes and Proceedings or as a house paper. I shall speak to my hon. friends the leader of the opposition and the leaders of the other two groups, with reference to the matter. In the meantime I simply wish to indicate what my views are, first, with regard to the printing in Hansard and, secondly, with regard to the procedure that might be adopted, having regard to the significance of the occasion.



HOUSING


[Stage Direction]
On the orders of the day:
Thomas Langton Church: I wish to ask the Minister of Munitions and Supply (Mr. Howe) a question arising out of an insufficient return to an order of the house on war-time housing. I refer to return 112A

Victory Loans
which states, in an answer, that no war-time houses were built in Toronto. My question is this. Is the minister arranging for the building of 500 war-time houses in Toronto? Who will administer them, and will the rents be collected by the municipality? I may say that 250 new war-time houses are to be built in Windsor, according to my understanding. Will the same practice be followed in Toronto and, if so, to what extent?


Clarence Decatur Howe: While it is technically true
that no war-time houses have been built in Toronto, it is in fact hardly correct to say that. It was decided by the mayor of Toronto and myself that the purposes of that city would be better served by building war-time houses outside the limits of Toronto, and that has been done. Two hundred houses have been built at Malton, and also a men's hostel to accommodate 422 persons and a women's hostel accommodating 422 persons. Two hundred houses have been built at Long Branch together with a women's hostel to accommodate 416 persons. That is really housing for the city of Toronto, which could just as well have been built inside the city limits, had those concerned in that area not felt that the houses could be better built to better advantage outside. War-time housing has been instructed to study further the needs of the Toronto area and I hope shortly to be able to inform the house as to what arrangements are being made for additional houses. I am not able to do so to-day.



INQUIRY OF THE MINISTRY


[Stage Direction]
On the orders of the day:
Thomas Langton Church: I wish to ask a question of the acting leader of the government.. Is it not the practice in the British House of Commons, with regard to such war announcements to-day concerning the three services such as the air, for such announcements to be made in the house on the same day on which they are given to the press? We had a premature announcement on civil aviation about a month ago in connection with Washington. This parliament ought to be informed first on any conventions or agreements. Are we to have all these announcements made, against us or with us, and binding on Canada, without the house having anything to say or do about it?


James Layton Ralston: I do not know to what announcement my hon. friend is referring, but speaking for the department I represent, I have always 100-177J
said it did not seem to me that this house should be a bulletin board and that matters of news, the usual statements as to matters going on in the department from time to time, should be published in the regular way in the newspapers for the benefit of members and everyone else. Matters of policy, when the house is sitting-it is, I think, almost the invariable rule-are announced in the house at least concurrently with publication in the newspapers, if not prior thereto.



VICTORY LOANS


[Stage Direction]
On the orders of the day:
Mr. H. R. JACKMAN (Rosedale):: I wish to ask the Minister of Finance a question on the basis of a statement by the provincial treasurer of this province, to the effect that victory bonds of the sixth series will be accepted at par and accrued interest in payment of Ontario succession duties in every estate liable to such duties if the bonds were the property of the deceased during his lifetime. Will the minister also accept victory bonds in this series at par value in payment of dominion succession duties if the bonds were held by the deceased during his lifetime?


James Lorimer Ilsley: The answer is that the bonds are not so accepted. The question, as a practical one, has not arisen, because bonds have not gone down. If anything they have gone up, and we hope and believe they will not go down. For reasons I have repeatedly stated throughout the country, we have felt that we could not as a dominion give special-


Harry Rutherford Jackman: Ontario did it.


James Lorimer Ilsley: But we do not follow all precedents set by the province of Ontario.


Gordon Graydon: It might be better if you did.


James Lorimer Ilsley: It was felt that the dominion government could not give a special value, or guaranteed value, to bonds held by certain persons, namely, those whose estates will be subject to succession duties.


Major James William Coldwell: If such a policy is considered, will it be extended to all the people of Canada and not merely to a few estates?


Richard Burpee Hanson: Anyone who dies and is liable to succession duty.


James Lorimer Ilsley: The question which the hon. gentleman asks is objectionable on two grounds. In the first place, it is a hypothetical
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question, and, second, it would involve a matter of government policy which would be announced in due course.


Mr. LOCKHART:: Would the Minister of Finance be good enough to indicate to what extent the bonds of the fourth and fifth victory loans subscribed to by those who are overseas have been issued? Are they still in process of being issued? I have received inquiries from boys overseas whose next of kin have not received bonds paid for some time ago and I was wondering to what extent the issuing of these bonds had been carried out.


James Lorimer Ilsley: That is obviously a question which I cannot answer without notice-


Norman James Macdonald Lockhart: Would the minister be good enough to consider it and answer later?


James Lorimer Ilsley: -nor is it one which, in my opinion, should be asked on the orders of the day. In order to answer it correctly, one would have to have an extensive investigation carried out with reference to dates. I am fully aware of the problem and under great pressure of work, in spite of lack of staff, we are trying to get them out as promptly as possible.



BANK ACT AMENDMENT


[Stage Direction]
The house resumed from Tuesday, May 9, consideration of the motion of Mr. Ilsley for the second reading of bill No. 91, respecting banks and banking, and the amendment thereto of Mr. Coldwell.
Mr. ANTHONY HLYNKA (Vegreville):: Bill No. 91, an act respecting banks and banking, contains provisions which will govern the conditions of the extension of bank charters for the next ten years. It may well be said that economic conditions in Canada for the next ten years will be governed by this bill. For these and other reasons, I consider the bill to be of extreme importance. I regret to say, however, that to me the bill looks more like a charter for a new depression than a new lease on the economic life of the nation.
The stand of the Social Credit movement on monetary and economic matters should. I think, by this time be well known across this country. During the past nine years the Social Credit members of parliament havej placed upon the record of this house, time and again, some of the most enlightening material on the subject. The hon. members for Lethbridge (Mr. Blackmore), Acadia (Mr. Quelch), and Wetaskiwin (Mr. Jaques), have

gained for themselves prominent recognition in this field. W'e may also include in this group three or four members from the Liberal ranks, the leading two of whom1 are the hon. member for Vancouver-Burrard (Mr. McGeer) and the hon. member for Parry Sound (Mr. Slaght). Disappointing, however, is the fact that the Liberal monetary reformers talk monetary reform but always vote with, the government in support of reaction.
I would say that the Minister of Finance (Mr. Ilsley) achieved the object which he aimed at by his speech of May 2. His twenty-one page provocation drew out the opposition groups to speak along the lines which he charted for them. This arrangement smothered a considerable amount of anticipated attack. As was said the other day, the minister took the offensive and in my opinion, Mr. Speaker, the results so far show that he has had a measure of success.
The minister certainly showed courage when he undertook to divert the attention of the house from the inefficiency, shortcomings, and inadequacy of the government's policy, and to unleash a projected attack upon what he considered to be the unsound stand of apposition groups. In other words, the minister placed the opposition groups on trial before this house and the country, and he assumed the role of the prosecuting attorney. In my humble opinion the positions should have been reversed.
I should like to make only three or four references to the minister's speech of May 2. In the first place, the minister unloaded the blame for the last man-made depression on the first world war. No doubt his successors, by the same process of reasoning, will blame the next depression on the present war. In the second place, the minister quoted Professors Thorp and Mitchell as his authorities for Canada enjoying 1-86 years of prosperity for each year of depression. I am prepared to take the minister's word for the correctness of this statement. But would the minister mind explaining to the house and to the country why a nation as rich as Canada is should have one year of depression for every 1-86 years of prosperity? Why should there ever be depression in the midst of plenty?


James Lorimer Ilsley: May I say a word at this stage about that? The professors who made the study had the years divided into years of prosperity, revival, recession and depression, which were defined in accordance with their own principles. When that fact is taken into consideration the picture is certainly different from the impression given by me. Moreover, the period covered was from 1888 to 1924, and wras before the establishment of

Bank Act-Mr. Hlynka
many central banks, and certainly long before the time when central banks had developed and perfected techniques for controlling savings from prosperity to depression. But it must be admitted that in the period between 188S and 1924 there were business cycles. The point of the quotation was, of course, to show that Canada's position was better in that respect than that of all other countries or at least seventeen other countries.


Anthony Hlynka: An argument to the effect that Canada has had more prosperity in decimal points than some of the other countries in the world does not prove to me that we should have any depression. Of course, if we think along the lines of reaction it. would seem to indicate that for this nation to enjoy 1-86 years of prosperity as against one year of depression is quite an achievement. But, as I said, the situation is one that cannot be justified.
The third point that I wish to refer to in the minister's speech is to me a significant statement which appears at page 2549 of Hansard of May 2. In defence of the government's policy the minister states:
There is no reason why the government should seek to escape the cost of interest on its borrowings at the expense of any one or all of these particular groups associated with the banks. The only equitable policy is for the government to pay reasonable rates of interest appropriate to the form and nature of the borrowing and meet the cost from taxation levied by parliament.
I believe that the shoe should be on the other foot. The minister says "Why should the government seek to escape the cost of interest on its borrowings at the expense of any one of those particular groups associated with the banks?" May I ask the minister this question: Why should the banks escape with the privilege of the issuing and withdrawing of credit which rightly belongs to the people? The minister further explains that he finds four objections to the social credit proposals, and they appear in Hansard to this effect: (1) That if the Social Crediters had their way the shareholders of the banks would have to suffer losses; that is, if the right to expand credit were restored to the people; (2) That the depositors would pay higher service charges; (3) That interest rates would have to be reduced on savings to depositors and, (4) that bank employees would get less in wages and salaries. May I state frankly that the four arguments advanced by the minister cannot hold water. Just as the inflation bogey became worn-out, threadbare, until the minister was forced to give up that argument, so will these four gems of wisdom eventually fall by the wayside.
The minister built up his wdiole argument on the premise that there was little wrong with the government's policy. However, he failed to explain to the house and to the country why the old status quo policy has failed so miserably in the past. Instead of devoting so much time to suppositions why the new proposals of opposition groups would not work, the minister would have rendered a service to the country had he confined himself to an explanation of how his policy will be made to work. This is one question, among others, that should have been answered by the minister. However, he sidestepped many important questions, and went on to build up his case against the new proposals. For this reason I desire to ask the minister a few questions, to which I should like categorical answers.
1.	Would the minister tell this house and the country by what method he intends to repay the staggering debt of this dominion? Does he consider it necessary to repay it and, if so, when does he intend to begin?
2.	Would he tell us how he proposes to meet the interest falling due each year on our huge national debt? Is he aware of the fact that 44-04 per cent of our national income in 1934 was swallowed up by interest charges on our national debt, leaving only 55-96 per cent of the national income to take care of all other expenses? That was the situation when our national debt was only 83,141,042,097. What will be the situation when our national debt reaches the fifteen billion dollar mark after the war?
3.	Will the minister give us the assurance that no money consideration will be permitted to stand in the way of our post-war reconstruction? He did give us this assurance as far as the prosecution of the war was concerned. Will he now give us the same assurance in respect to the peace-time requirements of this nation? I feel that the people of Canada should have this question answered.
4.	The minister did not explain by what manner of means he intends to place sufficient purchasing power in the hands of the people of Canada to enable them to buy the goods and services they require to maintain a decent standard of living. This standard of living should be commensurate with the wealth of this nation, which we can give our people in goods and services.
I will make this statement, that if the government continues to pursue its present financial policy it will put an end to private enterprise in Canada. Socialist critics at the present time are using the argument that private enterprise is to be blamed for the many ills from which the people of Canada
Bank Act-Mr. Hlynka

have suffered in the past, and I can tell the government that there seems to be a considerable number of willing listeners to that unsound argument. These critics refuse to admit that it was the monetary system which failed to distribute the goods that private enterprise was ready to produce. I believe in private enterprise for the farmer, for the business man and in other pursuits, but I wish to make it clear that I oppose any and all monopolies, government or private. It is my considered opinion that all economic reform is based on monetary reform; and unless the government is ready and willing to give the Canadian people real monetary reform, all talk of reconstruction, housing schemes, rehabilitation schemes, old age pension schemes, health schemes, educational schemes, a floor under the income of the farmer and so on will remain idle and futile, in the words of the right hon. Prime Minister (Mr. Mackenzie King).
Social Crediters have two main slogans which I believe express at least in part the social credit philosophy. The first is: "What is physically possible must be made financially possible." May I illustrate the point? If in time of war we had men and material, would we refuse to manufacture the weapons of war because there was no money? I suggest to you, Mr. Speaker, that no government would dare advance this "no money" argument in time of war so long as men and materials were available. That has been amply proven during this war. Now let us take a peace-time period. If we have materials which the people need, shall we continue to tell them that we cannot feed and clothe them because there is no money? Any government permitting such a condition to exist after the war will have no place in Canada. Our second slogan is: "Security with freedom." Not only do we propose to give our people .security; we will assist them in guarding jealously the hard-won freedoms for which [DOT]our forefathers laid down their lives. At the present time we hear men prominent in our public life stressing in their speeches and in written articles the material and economic :side of life. I agree that the economic side [DOT]of life is most important. I agree that the people of this rich nation no longer should tolerate anything which would resemble the pre-war years. 1 believe the Canadian people should be enjoying the highest possible standard of living. At the same time, to become purely materialistic, we hear theories advanced along these lines: promises made to the people that all they have to do is give up part of their freedom, give their consent to certain amounts of regimentation, and they
(Mr. Hlynka.]
will be guaranteed security. I feel that the time has come when hon. members should rise and declare their stand on this important point. We must draw a distinct line between those proposals which would land us eventually in a totalitarian set-up, and those which would guarantee the people national economic security and freedom.
Therefore I repeat that the Social Crediters have two main slogans. The first is: "What is physically possible must be made financially possible," and the second: "Security with freedom."
If this bank bill is the best the minister and the government can produce then I personally feel that the people of this nation will demand that the minister and the government guarantee to them the results which they want and the things which they need. As I pointed out, 55-96 per cent of our total national income in 1934 was left to discharge our obligations, to pay old age pensions, to pay our civil servants and to take care of all other expenses that enter into government. Our national debt has now risen until it is in the neighbourhood of S15 billion. I say then that the people of this country cannot expect any improvement along economic lines unless our money system is changed. I for one am disappointed to find that the best the government can do, after the heroic achievements of the men and women in our armed forces, is to bring down a bill which, as I said, reads more like a death warrant than a new lease on the economic life of this nation.


Mr. W. A. TUCKER (Rosthern):: Mr. Speaker, as the first member supporting the government to speak this afternoon I should like to express our pride and gratification at the eloquent, moving and statesmanlike speech of the leader of this house, the Prime Minister of Canada (Mr. Mackenzie King), before both houses of parliament in London this morning. I feel that it was a most historic occasion, and the speech of the Prime Minister was worthy of the great occasion and our great country which he so ably represents at the present time.
At the outset of my remarks I wish to commend the Minister of Finance for the able and thoughtful speech he made when he introduced this bill with respect to banks and banking. It was alleged to be provocative, but the thought occurred . to me that surely the minister had the right to defend the system of regulated free enterprise in which he believes, just as anyone else has the right to attack that system. It seems to me that there has been growing up in the country on the part

Bank Act-Mr. Tucker
of some people a strategy of making violent attacks on the honesty of purpose and the integrity of motive of other parties. Then when those parties defend themselves, the parties who had made the first attack play the martyr and pretend that the others are the aggressors. It reminds me of the strategy which was employed recently by a certain man in European affairs. It enabled him to gain certain initial successes, but they are not remaining very permanent.
I commend the minister particularly for the information he gave in regard to the operations of the chartered banks. In qrder properly to understand and deal with these matters of laws regarding banking we must have this sort of information. The giving of such information recognized that these banks are administering a valuable franchise granted to them by this parliament on behalf of the people of Canada-and the people of Canada have a right to know how and in what manner they, the banks, are discharging the obligations which were placed upon them by the granting of this franchise.
This bill will renew the charters of ten banks for the period from 1944 to 1954. The decision we shall make and the bank charters which we shall establish will be, in my opinion, one of the most important pieces of legislation passed in this parliament. We shall be legislating for a decade which should see us win final victory over the aggressor nations of the world. That decade should see the return to this country of our gallant men and women of the armed services and their reestablishment in the civil life of the country. It should see, we hope, a period of the greatest prosperity that Canada has ever known. Most economists believe that such a post-war era of prosperity is possible if certain basic and now admittedly essential steps are taken.
The primary step which most economists seem to agree will have to be taken is to permit the free flow of international trade in this post-war era. Anyone who has studied the causes of the depression which started in 1931 will, I think, admit that the main cause, not only in the case of Canada but throughout the world, was the loss of export markets. This was owing to the chaotic conditions in Europe and the trade restrictions and other interferences with trade imposed by European nations in an attempt to prepare themselves for war if it should come.
Then in the ease of Canada there was an additional reason in that there was a period of almost ten years of most extensive and almost continuous crop failure in western Canada. This period extended from 1930 to 1938 inclusive. An attempt has been made to
attribute the ills from which Canada suffered during that period to our present economic system, but I feel that the majority of our people, after they study the facts which have been and will be laid before them, will reject decisively this attempt to mislead them. All countries experienced a depression during that period. In one socialist country which suffered no crop failures such as we had in Canada millions died of starvation during that period.
In this connection I should like to quote a well know western editor, I believe now deceased, Mr. Charles W. Peterson. He was editor of the Farm and Ranch Review of Calgary from 1912 on. In an article published not long before his death he said:
I have never been able to see how socialism would help the farmer in any substantial way. The crisis of the 1930's which is solely responsible for the existing political revolt on the prairies had nothing whatever to do with our "free enterprise" economy. We had a series of crop failures in the west which no political action could have prevented. And we had almost complete demoralization of prices solely due to conditions in Europe. The only useful thing any Canadian government-socialist or capitalist-could do was to help the fanner by way of public subsidies and relief, which, as we all knowr, was promptly done. Whether we had had Liberal Prime Minister King or High Commissar "Comrade" King, in command, the situation would have been neither better nor worse.
In approaching the revision of our banking system there seemed to be two points of view among the parties in Canada. I am not quite so sure about the present attitude of the Labour Progressive party, but leaving them out of the picture we have the Cooperative Commonwealth Federation advocating a gigantic state owned and operated banking monopoly. All other parties, as I understand their present attitude, wish to retain our present competitive banking system and to reform it in a greater or lesser degree.
I suggest that the purpose of a banking system should be to provide credit to a people, individually and collectively, to the extent that is in the best interests of this country, that it should be supplied as cheaply as possible, and without taking away the fundamental rights of the people.
In what way will a state-owned monopoly do this better than our present system? In the first place, will more credit be provided? Apparently the banks have taken more chances in regard to lending money than I had thought they had, until I heard the figures given by the Minister of Finance (Mr. Ilsley). According to those figures the average losses during the past fifteen years and up to and including 1942, less recoveries, averaged $13,800,000 a year. A more generous lending policy obviously
Bank Act-Mr. Tucker

would have entailed heavier losses and increased the cost of credit. One of the things that the advocates of socialist operation of banks would have to answer is this: Would a bank operated by government employees be more ready to take chances on sustaining losses than operators of private enterprise, who might be induced to take a chance in order to gain some profit? My experience of those in government positions is that they will not take chances because they have nothing to gain if it works out right and they have everything to lose if it works out wrong. So that I think the chances of getting a freer credit policy from a state-operated banking system would not be great.
Second, would it lead to cheaper credit? Institutions run in competition with one another are likely to be more efficient than any giant monopoly. This is even admitted by the leader of the C.C.F. party himself, when he says that if he took over the Canadian Pacific Railway Company, as he says he would do, he would operate it in competition with the Canadian National Railway. If it is a good thing to keep the two railway systems operating in competition with each other, why in the world would it not be a good thing to keep the banks operating in competition with one another? The answer of the C.C.F. is that they would create one state-owned banking monopoly.
It may be argued that a state-owned bank would operate at lower rates because it would not need to operate at a profit. I would suggest to you, Mr. Speaker, from what I have seen of state-operated institutions, that the chances are that if they charged the same rates as the present banking institutions do they would probably have no profit. But, as it is, we do tax that profit at a heavy rate and leave only enough to give a reasonable return on the capital invested, plus compensation for risks run and efficient management, plus a certain amount to cover possible losses in the years which might not be so prosperous.
It may be that the banks, on the basis of present interest rates, are making a higher profit than they perhaps should. The answer to that is that the rates have been coming down ever since this government came into office in 1935, and I feel that that process should be continued. You do not have to socialize the banks in order to reduce bank profits to a fair level.
There is, however, an overriding consideration which I think at this time is most important, particularly now when we are spending the precious lives of our sons to protect our democratic and free institutions.

I submit that the more you extend the field of government action, the more you endanger our present democratic system. When everyone is working for the government, the government becomes master of the people and the people become servants of the state. Indeed this is the avowed purpose of the leader of the C.C.F. party and of the C.C.F. in socializing the banks. To prove that, I should like to read from an article by the leader of the C.C.F. party which appeared in Maclean's magazine of September 1, 1943. Here is what he said:
However, there are certain key industries control of which automatically brings about control over the economy as a whole. The financial machinery, transportation, electric power and large monopolies are such key industries.
Then in the C.C.F. book, "Make this Your Canada", written by David Lewis, national secretary of the C.C.F. party, and Frank Scott, national chairman of the C.C.F., with a foreword by M. J. Coldwell, national president of the C.C.F. and member for Rosetown-Biggar in this house, which publication was issued August 16, 1943, the Regina manifesto of the C.C.F. party is given, and I quote the second plank, in part:
Socialization of Finance.
Socialization of all financial machinery- banking, currency, credit, and insurance, to make possible the effective control of currency, credit and prices, and the supplying of new productive equipment for socially desirable purposes.
Planning by itself will be of little use if the public authority has not the power to carry its plans into effect. Such power will require the control of finance and of all those vital industries and services, which, if they remain in private hands, can be used to thwart or corrupt the will of the public authority. Control of finance is the first step to the control of the whole economy.
I emphasize the last sentence:
Control of finance is the first step to the control of the whole economy.
It goes on to say what their ultimate objective is:
No C.C.F. government will rest content until it has eradicated capitalism and put into operation the full programme of socialized planning which will lead to the establishment in Canada of the cooperative common-wealth.
It might be objected that the present C.C.F. does not adhere to that manifesto; but the hon. member for Rosetown-Biggar (Mr. Cold-well), writing in Maclean's magazine of September 1, 1943, said this:
Question (1) is wrong in seeming to assume that there has been any confusion between the original Regina manifesto and any later pronouncements either by myself or by the party as a whole. The manifesto was and remains a statement of the basic principles of the C.C.F.

Bank Act-Mr. Tucker
The hon. member for Weyburn (Mr. Douglas), speaking in this house the other day, said, as reported at page 2731 of Hansard:
I say to the minister that we do not believe in socializing anything just for the fun of socializing it.
The pronouncements of the Regina manifesto on behalf of the president and the secretary of the C.C.F. party, endorsed by the leader of the party, are more authoritative on that point than any pronouncement by the hon. member for Weyburn. I submit that the hon. member for Weyburn should not in this house or in the country pretend that their policy is not socialization when it is the admitted policy of their party. He went on to say, still on page 2731 of Hansard:
There can be only one criterion as to whether or not anything should be operated by the public, and that is whether it can thereby be operated to the better advantage of the community as a whole than by leaving it in private hands.
There is another criterion and it is a more important criterion still. Admittedly at times a benevolent autocrat might operate our state more efficiently for a period of time than we can under our democratic system. But is this all we care about in this country of ours? Is our democratic, system worth so little that we would barter it away in order to get a benevolent autocracy that might be able to administer the country more efficiently for a time than our democratic system? Are we to sacrifice our freedom and political democracy for an alleged improvement in our economic lot? I say "alleged," because it is the history of mankind that after peoples have placed themselves in the hands of an all-wise dictator they generally find that he ultimately makes a big mistake which does more harm in one year than he has done of good in all the previous years of his government, and if he manages not to make a mistake he is invariably followed by somebody who does. In other words, Caesar Augustus was followed by Nero.
The danger is great. So-called democratic socialism of the sweeping type advocated by the C.C.F. is bound, in my opinion, to lead to dictatorship in the long run, and maybe not so long either.
The Liberal party favoured the Bank of Canada as a nationally owned1 and controlled institution, and brought it into existence as such, because it was deemed that on balance it was in the best interest of the people to bring it under government ownership and control and that by doing so there was no great threat to the democratic liberties of the people of Canada as a whole. I submit that, if ever the question arises, if it could be shown that
monopolistic government banking would operate somewhat more cheaply, if it would endanger the fundamental democratic liberties of our people, we would not want it. We want no dictator in Canada, no matter how smart he may be, no matter how wonderful the promises he makes of how much better off we shall be if we place ourselves within his power.
Therefore I believe the present competitive and controlled commercial banking system is better than the gigantic monopolistic banking system proposed by the C.C.F. I know it can be improved so as to serve the people better than any state-owned monopoly could or would, and since the object and result of government ownership and control of the whole banking system by any party is admittedly the dictatorial control of our nation, I shall oppose the amendment.
I stated at the outset that all other parties than the C.C.F. believe in improving our present banking system. I believe.our party has accomplished real reforms in the years it has been in power. The first great reform was to establish full ownership and control of the Bank of Canada by the people of Canada as represented by this government and this parliament. Anyone who understands the nature of the powers of the Bank of Canada realizes that the government, by being in control of it, in the last analysis has absolute control of the issue of currency and credit in this country, as to the volume to be issued, not of course as to who individually shall receive it.
What has been the record since control has been taken by the Bank of Canada of the financial system of this country? I should like to give the house figures indicating the decrease in the cost of money to our government since 1936.
On March 31, 1935 the average rate of interest paid on direct governmental borrowing was 4T5 per cent. If you take into account the $14 millions which was returned by the Bank of Canada to the consolidated fund, the net cost-the interest on-our governmental borrowing had been reduced to 2-45 per cent per annum on December 31, 1943. On March 31, 1935, it was 4-15 per cent per annum; on December 31, 1943 it was 2-45 per cent per annum. That is a reduction of 1-70 per cent per annum in that period of time, a reduction of over 40 per cent in the interest rate paid by our government on its direct borrowings. That was achieved in a period of nine years, and if the same rate of reduction were maintained in the next ten years the rate would actually be cut down to T7 per cent per annum, or $17 interest for the use of $10,000 for one year. This indicates the rapid progress
Bank Act-Mr. Tucker

which has been made in reducing the interest burden of our borrowings since the central bank was placed in charge of our financial system. As far as I am concerned I am favourable to continuing the present process of reducing the cost of governmental borrowings to a point where it will amount to only a small service charge. I am convinced that if we are to carry out the great reform programme which we intend to carry out and maintain a programme of full employment, we shall have to get the cost of governmental borrowing down to a level where it will represent only a small service charge, and we have been proceeding in that direction very rapidly. I earnestly commend the government for the progress it has made in that direction.
One of the means by which the Bank of Canada has effected this result is by the heavy purchase of government bonds and securities. Since March 31, 1935, it has increased its holdings of government bonds and securities from $152,100,000 to $1,345,900,000, an increase of $1,193,800,000. This credit costs the government nothing except the extra cost of operating the Bank of Canada in consequence of the purchase of these securities, because the income made by collecting the interest on them is turned over to the consolidated fund, less cost of operation. These operations have another and most important effect: they load the banks up with cash reserves on which th y must pay interest to depositors, and since, according to the figures given by the Minister of Finance, the average rate of interest on all bank deposits was -53 per cent per annum, if all that billion dollars were taken by the people who received it and deposited in the banks, it would lead to an extra cost in interest to the chartered banks of this country of $5,300,000 per annum. This, I think, accounts for the willingness of the banks to buy short-term treasury bills. If they cannot loan their credit to private enterprise, rather than have it lie idle they must find some means of using it, and the system of treasury bills and deposit certificates has been resorted to. It is interesting to compare what we pay in interest to the banks of this country for these short-term loans with what the United States and Great Britain pay. On the last issue of treasury bills we pay -387 per cent per annum. Concurrently the United States is paying -375 per cent, almost the same, while the United Kingdom pays -999 per cent, over twice as much. As of December 31, 1943, there were over one billion dollars of treasury bills and deposit certificates outstanding. This substantial item indicates that almost all the extra money 
issued by the Bank of Canada has had to be reinvested by the banks and financial institutions in these low interest-bearing treasury bills, on which the last rate of interest was -387 per cent per annum, and the highest rate paid since March 31, 1943, was -498 per cent per annum, less than one-half of one per cent per annum.
Naturally, the banks would gladly lend at higher rates of interest if they could find borrowers, but the farmers of the country, for example, are paying off their loans as rapidly as possible. The figures in this regard are quite interesting. Bank loans on October 31, 1939, as compared with October 31, 1943 were: Farmers loans, cattle and fruitraisers' loans, October 31, 1939, $57,000,000, and in 1943. $49,800,000, a reduction of $7,000,000. Manufacturers' loans, however, owing, I suppose, to the war, increased from $192,600,000 on October 31, 1939, to $302,800,000 on October 31, 1943. Naturally, after the war there will be great expansion of industries to produce civilian goods, and the banks will be anxious to lend as much money as possible at a higher rate of interest than less than one-half of one per cent per annum. This will be particularly true of loans of intermediate credit under the proposed agricultural improvement act, because those loans will be in effect guaranteed by the government. I understand that an aggregate amount of 10 per cent of loans will be guaranteed.
That brings up a point which I wish to press on the attention of the minister. I feel under these circumstances that these loans should bear a top rate interest of 3 per cent per annum, and I say so for this reason. The cost of money to the banks, according to the figures given by the minister, which includes cost of paying interest on deposits, remuneration of employees, provision for taxes, contribution to pension fund, depreciation of bank premises, and all other current operating expenses, is 2-28 per cent of their total assets for the year 1943. The average total operating earnings are 2-86 per cent of total assets. If the average total earnings of the banks is 2-86 per cent, I submit that this money, used to assist farmers in getting labour-saving machinery and in building better homes for themselves, should be given to them at approximately the average rate of the bank's income. In other words, I suggest 3 per cent, and since their average cost of operation is 2-28 per cent of their assets, on these loans, which in effect are government-guaranteed, they would still be making, roughly -75 per cent per annum, or more than their average rate of profit.

Bank Act-Mr. Tucker
It is important that the farmers be given this consideration, because of their past difficulties and the present great contribution they are making to our war effort. Many of them are working long past the age at which they should be working. They are making a really tremendous contribution to the war effort of Canada, and they should therefore, in my opinion, receive special consideration after the war in order that they may obtain labour-saving machinery as soon as possible and be in a position to build for themselves homes with modern conveniences just as good as those which the people in the cities have. The government, I repeat, in making loans available at 3 per cent will not be putting a burden on the banks, because the banks are actually making on their assets an average of less than 3 per cent per annum.
That raises another point, namely, the top limit of interest on ordinary loans. I submit that the top limit should be five per cent and not six per cent as proposed in this bill. At the time when the government was borrowing money on long-term bonds at 5i per cent, the top rate of legal interest chargeable by the banks was seven per cent. Now we are paying only three per cent on long-term loans. We have reduced the interest paid by the government on long-term loans by 2J per cent, and I submit that we should reduce the top rate of interest chargeable on private loans by at least two per cent, making five per cent, the legal rate of interest in this country, the limit which banks can charge.
Undoubtedly competition will tend to reduce the rate of interest, but it does not operate so much in favour of the small borrower as it does in favour of the large borrower. It was found in recent years that the banks were charging six per cent in city districts and particularly in Ontario, while they were still charging seven per cent in western Canada and in the maritimes. A top rate of interest would protect the little man who is not able to bargain. The big man can bargain and get a rate of five per cent or less, but if you have a top rate fixed you protect the little man, because he is generally charged the legal limit. I would ask the minister to consider this proposal very seriously.
I am told that the banks, some of them anyway, have followed the policy of refusing to do business with anyone who has taken advantage of an act passed by this parliament, the Prairie Farm Assistance Act. If that is true; if they have taken that attitude, then they are in effect defying this parliament, because parliament put that act on the statute books for the benefit of the farmers so that
they might avail themselves of it; and if the bankers, the people who administer public credit, are doing something they should not do-


James Lorimer Ilsley: Is the hon. gentleman quite right about the act to which he refers?


Walter Adam Tucker: The Farmers' Creditors Arrangement Act.


James Lorimer Ilsley: The hon. gentleman said the Prairie Farm Assistance Act.


Walter Adam Tucker: I meant the Farmers'
Creditors Arrangement Act. The bankers are administering a public utility, and they should be responsible to some public authority for the manner in which that administration is carried on. If there are such cases or others there should be someone to whom an aggrieved person could appeal and who could look into the matter, and his report, together with the protest, should be submitted to the government and parliament and be subject to investigation, if deemed proper, by the banking and commerce committee or some other public authority. The banks should be made to feel that they have not absolute authority as to persons to whom they may give credit and those from whom they may withhold it, without perhaps being answerable to parliament for any arbitrary act.
The railways cannot close agencies without getting the permission of the board of transport commissioners, and I submit that the banks should not be permitted to curtail the services which they give the people without the permission of some public authority. In all these matters we should bring the banks under more direct control. One of my hon. friends of the Conservative party just now suggested in a very-well, I would not say he sneered, but he said "Wouldn't that be wonderful?" I submit that the banks must be made to realize that they are administering a public utility and are answerable to parliament for how they do it.
Another feature of this government's programme for which I should like to commend them is the foreign exchange control board.


Gordon Graydon: My hon. friend referred to someone in our party having said something.


Walter Adam Tucker: I did not like to name him. I see him sitting here.


Gordon Graydon: Is it on Hansard?


Walter Adam Tucker: I do not know whether it is on Hansard or not. I heard it. It does not have to be on Hansard. If they do not want me to refer to it, do not let them say it behind my back. I do not blame the leader
2S18
Bank Act-Mr. Tucker

of the opposition for not wanting that to appear in Hansard as coming from one of his own party.
I was referring to the foreign exchange control board. This should be continued to the extent necessary to prevent in the future such things happening as have occurred in the past. We have seen instances where men have made large fortunes from developing the mining resources of the country and have then removed those fortunes from Canada. We have also seen cases where manufacturers have made large fortunes under the protection of our tariff policy, and then have taken that money to other countries, sometimes to countries where they pay lower labour rates, to set up industries in competition with the industries which they have asked to have protected in this country.
I submit to you, Mr. Speaker, that we must have some form of control so that sort of thing does not happen in the future, and wealth that is built up out of the resources of this country and by virtue of the protection enjoyed under the laws of this country should be kept here in order that it may be subject to our income taxes and our succession duty taxes.
In closing, may I say that when this bill as amended becomes law it will confer a valuable franchise on the banks. It will be giving them the right as trustees to handle a large share of the credit of this country. That trusteeship has been very carefully adhered to in so far as their obligation to their depositors is concerned; but their attitude toward the people of western Canada during the period of 1930 to 1939 makes me feel that it must be brought home to the banks that in handling that great franchise they are not absolute masters, but are answerable to this parliament and to the people of Canada. They must be made to feel that they must handle it in accordance with the best interests of this country. In order to bring that home to them I think some public authority should be established to which they must be answerable and which will then make a report in proper cases to this parliament.
As I said before, this bill is one by which we are legislating for a period of ten years. During that time our troops will return from overseas where they have been defending our country and defending our system of freedom and democracy. One of the things they say over and over again is: "We do not want to return to things as they were from 1930 to 1939"-to depression and unemployment. I am glad this government at this crucial time takes the attitude, as I understand it does in the speech from the throne, that regardless of

what happens with respect to matters beyond our control in the way of foreign trade and so on, it will see to it that conditions are not permitted to get in the state they were in from 1930 to 1939-that the individual is ensured real security. I think the government's programme, including such things as a floor on farm prices, family allowances, reduction of interest rates and the other controls that it is setting up, including the farm improvement loan bill and other companion measures that the government has put into effect or will put into effect this session, will introduce such a measure of reform and social security that Canada will, after this war, enter a period of the greatest happiness and prosperity that this country has ever seen.
Mr. II. R. JACKMAN (Rosedale): Bill No. 91 does not call for any lengthy remarks on my part at the present time. On the whole I believe the amendments should be salutary and lead to greater satisfaction of the credit needs of our community. We look forward to the introduction of the farm improvement loan bill to see what further provisions are provided therein, and it is our fervent desire that every possible credit facility be afforded to the farming and fishing industries of this country.
May I say here, however, Mr. Speaker, that the spirit in which those provisions are administered means almost as much as does the actual wording of the provisions themselves. We shall look forward to the particular set-up of the farm improvement loan bill to see exactly what the provisions are before we are able to pass judgment. As it is, the amendments carried out in Bill No. 91, substituting the new Bank Act for the old. do make more forms of agricultural property available for the extension of credit by the banks than heretofore, and to that extent the new bill is an improvement. While it may not be entirely within the province of this parliament, nevertheless I believe that the chartered banks should so further the intention of the provisions which are passed by this house that they will endeavour to make their branch managers not merely judges of the credit worthiness of those who apply for loans, but also salesmen of credit, so that where there is a good business man or a good farmer who can use additional credit usefully and economically the bank manager will not necessarily sit back in his office and wait until he is approached, but will be encouraged and trained by the banks themselves to go out and put the credit to effective use. In that way our whole business and agricultural activity will be greatly stimulated.

Bank Act-Mr. Jackman
I am told by those who have had longer experience than I that there was a time in the development of this country when the bank managers actively sought to get their credits out; but that has to a large extent ceased during the last two or three decades.
I should also like to point out a word of ^caution to the Minister of Finance (Mr. Usley) in regard to the provisions affecting the small personal loans. If those personal loans are to be extended as far as granting credit by the chartered banks is concerned, it might be that the better ones, the so-called cream of the small loans, will flow to the chartered banks, leaving only the more risky, more troublesome and more costly ones to the ordinary finance companies; with the result that the personal finance companies, which are to-day functioning, might find they *will have to refuse the service to necessitous borrowers, a service which they have provided for in emergencies; or the personal finance companies will have to ask to have the rates which they charge at the present time raised. Those rates, as we all know, are regarded by many as extremely high, although they may not result in any undue profits to the companies themselves.
Then again, the minister has said that he would welcome recommendations by the committee on banking and commerce on several specific matters. May I say, however, that this is not the first time he has suggested that the banking and commerce committee make a recommendation to this house and to himself. The last time the recommendations were made

which I may say did carry by a narrow majority-they were simply flouted when they came to the house, and the minister went on his own way and paid little or no heed to the resolution passed by the banking and commerce committee. It is no wonder that in such circumstances the minister deservedly finds attached to himself such words as "stubborn and narrow"; and there is a feeling on the part of a large body of the house that it is not the will of the people's representatives that is carried out in many of the financial measures but rather the will of certain people who are in the confidence of and who advise the minister.


Colin William George Gibson: Who says so?


Harry Rutherford Jackman: I do not wish to say more
about the various sections. Did the Minister of National Revenue wish to ask a question?


Colin William George Gibson: I said: "Who says so?"


Harry Rutherford Jackman: I will answer that at another time.
Until the banking and commerce committee hears the evidence of the various witnesses who will come before it I do not wish to say anything further about the various sections of the bill, but will confine myself largely to certain statements made by the hon. members of the Cooperative Commonwealth Federation. I should like to refer particularly to the remarks made by the hon. member for Weyburn (Mr. Douglas). He stated that the, government proclaimed the complete absence of political influence in the running of the proposed industrial development bank, while at the same time the government claimed that there would be political influence in the running of any nationalized banking system. As the hon. member for Weyburn pointed out, the government cannot have it both ways. They cannot say that there are no political influences in the running of the industrial development bank and at the same time say that under a nationalized banking system there would be political influences obtaining. I would point out, however, that the industrial development bank is not likely to have a great number of customers. It may have a thousand industrial customers, whereas the commercial banks have probably well over a million customers who are also voters. Nevertheless the principle is the same. Once the government gets into the banking business it gets into the business of securing votes willy-nilly and to some extent, perhaps a large extent under certain circumstances, it will find that political pressure is brought to bear, and that banking cannot be carried on free of political influence as long as it is under government administration. With the central bank, the Bank of Canada, the situation is vastly different, because that bank does not deal with the public directly and, therefore, is not concerned with and cannot influence votes one way or the other. I should like to point out that under Sir Adam Beck the Ontario hydro electric system for many years was entirely free of political influence, but after the last Liberal regime in Ontario came into power there came a time when the Ontario hydro electric system became the football of politics.


Joseph William Noseworthy: It was that, long before then. That is rvhat I said the other night.


Harry Rutherford Jackman: If the hon. member for York South (Mr. Noseworthy) wishes to justify his remarks he is entitled to do so at some other time, but for the present I challenge his statement.
Therefore the industrial development bank, like the Ontario hydro electric commission, may very well find itself perfectly safe and free from politics for a number of years; yet almost inevitably there comes a time when the
Bank Act-Mr. Jackman

most vital force in our community, namely the political force and the attainment of power, overrides all other considerations. What was the situation in Ontario? For a very short time during the depression we had a temporary excess of power, and the contracts we had with Quebec power companies were cancelled by the then premier and the then attorney general, now the hon. member for Trinity (Mr. Roebuck). If these contracts had not been made originally; if the power companies had not been developed to the extent they were, our present war effort would have been greatly handicapped. So that it is not only likely but inevitable in connection with some of these public institutions which should be maintained under a private system-true, under government regulation where necessary -that when they come under government administration temporary political considerations will outweigh economic planning which is designed only to serve the people and not to wrest power for some political purpose.
So much for political influences. One fears for the life of this industrial development bank because it is so entirely under the control of the government. But just as the government cannot argue both ways, so the C.C.F. cannot argue that the financial system of this country- has battened on its ill-gotten gains- which I do not admit for one moment-and at the same time argue, like the devil citing scripture for his own purposes, that the financial system is no good because in a time of stress the government had to give it assistance. The leader of the C.C.F. made much of the order in council which was passed during the depths of the depression and which established conventional values for certain securities held by some of our large institutions. The purpose of this order in council was, of course, that public confidence should not be lost; and these conventional values which were established, at a level somewhat higher than market values, were more representative of the inherent value of the securities themselves than were the market prices, which were merely the prices in the open market at a particular time. It is very much the same as wheat selling at forty cents, when every hon. member knows that is by no means a fair price for that commodity and does not represent the inherent value of it. As was pointed out in the house the other day, the government also had to come to the assistance of the wheat pools because the initial payment was larger than the price to which wheat subsequently fell. I was amused to hear the statement made that the bankers had wrongly advised the heads of the cooperative pools by telling them to make a larger initial payment than
fMr. Jackman.]
they should have made, and that when the market fell below the amount of the initial payments the bankers drove a hard bargain. ,1 can scarcely imagine that any member of the C.C.F. party would have advised a smaller initial payment than that which was made and which was recommended by the chartered banks, according to what I have heard.
The C.C.F. cannot at one and the same time say that the financial system is an octopus which feeds gluttonously, and then say it is so weak that it needs a blood transfusion. The only purpose of the order in council establishing conventional values was to endeavour to reestablish confidence on the part of the people; and the fact that the order in council was needed merely goes to show that finance suffered during the depression just as much as did business or labour. It has been pointed out also that the people who make up the financial community are drawn from all classes in this country, the same as with most other occupations, and that they are motivated by the same reasons. Indeed I have found little difference in human nature wherever I have come in contact with it. Everywhere there are good and bad; everyone must be responsible to some higher authority, just as parliament must be responsible to the people. I believe I heard the leader of the C.C.F. party quote Lord Acton in these words:
All power corrupts, and absolute power corrupts absolutely.
The banking system is not only responsible to parliament; it is responsible also to relentless and inexorable economic laws.
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock.


Harry Rutherford Jackman: Mr. Speaker, before the dinner recess I had made reference to the order in council which was passed by the Conservative government in 1934 and which established conventional values for securities. Since then my attention has been directed to certain matters concerning that order in council. I was familiar with the effect of the conventional values on the securities held in the portfolios of the insurance companies, but not with the effect on securities held in bank portfolios.
I find that contrary to the inference, if not the direct allegation, of the leader of the C.C.F., that order in council had little or nothing to do with the financial crash of 1929 and 1930. If I recall correctly, his inference

Bank Act-Mr. Jackman
was that the order in council had to be passed to save the banks because of the failure of some brokerage house in this country.
The actual facts are that England went off the gold standard and the order in council was passed establishing certain values for the securities held by the banks, which values applied only to government and municipal securities and not to such securities as might be expected to be held in speculative accounts. Furthermore, the conventional values applied only from October 27, 1931, until the following March.
We see that the assistance given at that time by the government to the banking system had no reference at all to speculative excesses, but on the other hand what happened was due entirely to the terrific impact of Great Britain going off the gold standard with its resultant effect on investment values which caused a shattering of investment confidence. I am in the financial business and I well recall the night England went off the gold standard. I was telephoned at two o'clock in the morning by a gentleman who was once a member of the cabinet of this country. Those of us who realized that the financial world was built around sterling credit and the gold standard felt that anything might happen because of the terrific impact this would have upon public confidence. It was solely to restore confidence in some measure that the order in council was passed.
To get back to where I left off in the main body of my remarks. The hon. member for Rosetown-Biggar (Mr. Coldwell) stated that bill No. 91 omits to provide for economic expansion and full employment. Undoubtedly it does. According to my thinking, it was never the intention that the Bank Act should be the sole means of regulating our economy and maintaining our national income. There are many other means. Anyone who will consult the Winnipeg charter of the Progressive Conservative party will realize that definite measures are proposed, particularly with relation to agriculture and labour, having to do with the maintaining of full employment and the maintaining of our national income.
The C.C.F. leader suggests that full employment is impossible under the present Bank Act, or even under the proposed amendments now before the house. How then does he explain the present prosperity and the full employment which now prevails under present banking practice? It would seem to me that his argument must fail when one considers the situation which now obtains under the present law. Certainly banking is not the be-all and end-all of our economic regulators.
While all of us like to give as much service as possible to the slogan and to endeavour to'make ''financially possible that which is physically possible," nevertheless we must not confuse that statement, as apparently some hon. members to my left have, with the following statement, namely, that that which is financially possible is also physically possible. The two are entirely different.
Then the members of the C.C.F. have charged the present banking system with being a monopoly. We hear that in practically every speech and we read it in every circular they put out. They say that while it is true that the banks compete for loans, they charge the same rate of interest, pay the same rates on deposits and have an association like any other industry or body of workers. I should like to ask the leader of the C.C.F. if the farmers and business men do not compete when wheat or any other article they may produce is sold at an open or market price? Competition may be on a price basis or it may be on the basis of service. All through the development of industry we have seen the reduction of costs through efficiency and the lowering of the price of the finished article. Nothing could illustrate this better than our automobile industry. Does the leader of the C.C.F. want to have price discrimination between banks and between industries? There is no greater weapon of unfairness than price discrimination when improperly used, the quoting of one price to one man and another price to another man.
The C.C.F. charge that the banks prevent competition by the closing down of branches. I think it is the opinion of most hon. members that the banks should close branches where there is unnecessary duplication over and above the needs of the community. This is exactly what the C.C.F. argue for most strenuously when they say, "Why should there be two, three or four bread and milk wagons covering the same route?" Under their system they are going to consolidate; everything becomes a monopoly; the people are to be served by the one instrument.
Undoubtedly unnecessary duplication means unnecessary waste, but the C.C.F. cannot favour competition and at the same time shout the virtues of state monopoly. State monopoly would do away with all duplication and competitive practices; yet competition has within it the seeds of efficiency as well as apparent wastefulness. If the C.C.F. theory were carried to its logical conclusion, we would find ourselves eating in community kitchens and sleeping in community barracks. Undoubtedly that would be more efficient and
Bank Act-Mr. Jackman

less costly and would effect a saving of manpower, but there are things to be prized more highly than a mere material civilization.
The two key speeches of the C.C.F. which endorse the remarks of the minister in regard to increasing representation on bank boards by small business men and agriculture and labour should not give rise to too great exception. No great exception need be taken to that. However, one wonders whether the interests of small business men, farmers or workers are in the least prejudiced by the present set-up, because the men who are now on the boards of the various banks are those who for the most part, probably ninety per cent, started in business in a small way and, because they followed successful practices, grew large and became members of the boards of the various banks. It would seem to me that these men who were able to apply successfully the principles of business in their own field are in a position ably to administer larger affairs. Yet at the same time I think it would be a very good thing if our chartered banks invited representatives of labour, of agriculture, and if you like, of small business too, to sit on their various boards, for nothing tempers power quite so much as responsibility and a clear understanding of the problems of the whole community.
In an endeavour to support his charge of banking monopoly the leader of the C.C.F. says that no new chartered bank is likely to come into existence. But the Bank Act as it now stands, and the amendment also, provide specific means whereby a new bank may be brought into existence. But why, if the ordinary commercial needs of the community are well served by existing institutions under existing law, should there be a further waste of man-power by setting up a new competing organization with branches from one end of the country to the other? If there is room for another bank because it can provide a better service or the same service at less cost, then obviously it will be possible and worth while under our open competitive system to obtain a charter and to set up a new chartered bank. With the imposing array of other directorates held by bank directors, which was so amply demonstrated in previous speeches, it must be obvious that one of the chief sources of revenue of the banks is the interest and service charges paid by the companies represented by the very directors who sit on the boards of the banks. If one were to examine the extent of the directors' shareholdings in the banks as compared with their financial interest in their own companies, which are customers of the banks, one would soon find whether the directors' shirts or their coats were closer to their backs. If these men thought for one
TMr. Jackman.]
moment that their banking needs could be provided more cheaply by setting up a new and competing institution it would be done without another thought. Under a socialized banking system business men would have no alternative. They would have to deal with the state bank irrespective of the charges made or the srevices rendered.
The hon. member for Rosetown-Biggar endeavoured to make a point of the fact that the banks depend now to a large extent on the government to keep them going. Be that as it may, it is little wonder that under a war economy, with the government spending well over half of the nation's income, much of the banks' business is concerned with war production for national account. How could it be otherwise? Production of new civilian goods has been rightly stifled in order that as much as possible may be produced for war. If there is any complaint in this regard it is that civilian consuming standards have been allowed to increase as they have, when further restrictions might shorten the war and save the lives of those who are preserving liberty for us.
The C.C.F. continually raise the point that bank dividends are relatively high in relation to subscribed capital, and they refuse to apply the dividends as a percentage of the paid-up capital plus reserves and ploughed-back earnings. If in the course of the life of a bank its shareholders wish to withdraw in the form of dividends only part of what their investment has earned, and to plough back the remainder in order to strengthen the security behind the depositors as well as to provide reserves against emergency, surely they are as much entitled to an income on those ploughed-back earnings and reserves as they are to an income on the par value of their original subscription. Indeed, if one traces the history of bank subscriptions, one will find that in a great many cases not only was $100 paid for a share of . $100 par value but that a premium of twenty-five per cent or more was paid and the shareholder only got back the $100 certificate, the $25 additional that he paid going to constitute a reserve to provide further security for the depositors and for the whole banking system.
There is no guarantee under any system that the money put into a business will be maintained intact. Every new venture faces great economic uncertainties and those which are successful must be used to offset those where-
The best-laid schemes o' mice an' men
Gang aft a-gley.
One cannot help being a little amused at the leader of the C.-C.F. who says:
We never consider ourselves on the defensive; we are on the offensive, and when an attack of that sort is made, we shall act upon that offensive so far as our opponents are concerned.

Bank Act-Mr. Jackman
That must be a very comfortable policy of self-deception. Apparently the hon. member feels that there is something in the slogan "on the offensive", even though everyone knows that in the present instance he is clearly and admittedly defending his political theories against an attack by the Minister of Finance, for I hold in my hand a reprint of a recent speech of my hon. friend given in this house entitled, "We are on the offensive." May I express the hope, however, that his party is not still indulging in the mercenary practice followed when his speech on the Aluminum company was reprinted and sold at a profit of not less than 150 per cent.
It is true that the bank shareholder, through his directors, has the right to declare all earnings in the form of dividends, but if he chooses to plough back part of the earnings as a further safeguard for the depositors or as a reserve out of which dividends may be paid during difficult times, that is surely his business.
May I remark here that the banks sometimes find a pressing need for reserves, and in 1933, in order to rebuild their reserves, they wrote off from their published statements no less than $29,500,000 in one year to properly adjust their published reserves. So that in the banking business there is risk to be borne as there is in practically every industrial and commercial business, and it is necessary to have some good years to make up for some of the lean years, to say nothing of those years in which circumstances are well-nigh calamitous.
The contention of the leader of the C.C.F. was that this method of augmenting the capital of the banks by the ploughing back of earnings tended to increase the capital of the banks, and he was against that because he felt that it led to concentration of the ownership of bank shares. But his argument falls entirely to the ground when everyone knows that bank shares are purchasable on any of the . leading stock exchanges of this country by anyone who desires so to invest his or her money and become the owner of a bank's stock. The banks are required to file a list of shareholders with the government, and anyone who wishes to see how broadly and in what unconcentrated form the shares are held may do so. Ploughed-back profits and original capital set up as a reserve are properly combined with the par value of a stock when percentage earnings are being calculated. This procedure is not to be compared with the so-called unearned increment which attaches to the increased value of urban
real estate or homestead farms, classes of property which are held by a very large part of our population.
I might make a suggestion, however, to the Minister of Finance with regard to the popularization of bank shares and the spreading of their ownership more generally. At the present time bank shares have a par value of $100 and sell for an3'where from S125 to $250. If an amendment to the Bank Act required that these shares, in place of having a par value of S100, were to have a par value of $25 or even $10 they would become much more popular mediums of investment than they are at the present time, and I believe one would find that their distribution would become even wider than it is to-day. There are fashions in investments as there are in everything else, including governments. There was a time when a $100 par value share was looked upon as a standard of investment. That day has long since gone by, and no one but a very well-to-do person wants to buy shares costing $100, much less $200 each; they want to buy a number of shares at a smaller price. It amounts to the same thing in the end; there is no difference; but this happens to be the fashion, and fashions are sometimes compelling. Therefore I suggest to the minister that consideration be given to causing bank shares to be split, so that they will be more available to and popular with a much larger part of our population.
It was not unnatural that the C.C.F. should seize upon the ill-advised and capable-of-being-misinterpreted statement of the Minister of Finance when he said that Canada had experienced between 18S8 and 1924 1-86 years of prosperity for every year of depression, as against a slightly less favourable record for the United States. Since he no doubt has the document available from which the figures were taken, together with the supporting information, I hope he will give some further explanation of what was meant by "prosperity'' and what was meant by "depression", because I can see that statement being published from one end of the country to the other. We all know that during the period under discussion, 1888 to 1924, there was a tremendous growth in population in the United States and also a substantial increase in material prosperity, and the same conditions applied to Canada. So that I feel that the terms which he used, "depression" and "prosperity", are somewhat technical terms, which mean something to an economist but are by no means the same thing as understood in the popular mind.
It is not to be thought that the Progressive-Conservative party holds any brief for a
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static system of finance. The Bank of Canada was first established under a Conservative government, and this was a step forward in placing the control of currency and credit under a government-sponsored institution. To learn nothing from experience is to shut one's eyes to all progress. We believe in reform but not in revolution. The Progressive-Conservative party retains an open mind on all questions of national interest, and has only one objective, the common good of all the people. Unlike some other parties, the Progressive-Conservative party has a disposition to preserve what is good in the old as well as a capacity to improve.


Mr. J. J. KINLEY (Queens-Lunenburg):: Mr. Speaker, once in every ten years parliament is called upon to consider the law relating to banking and commerce as it refers to the chartered banks of Canada, and with the passage of time we approach another occasion when we must give heed to this duty. Accordingly, the Minister of Finance (Mr. Ilsley) has introduced a bill which is now receiving the consideration of hon. members. Ordinarily we who support the principle of the bill would allow it to go to committee and there discuss its provisions and see to it that the rights of the public are properly protected. But the bill has been seriously challenged by an amendment which would disturb and almost destroy the whole economic set-up of the country, and it therefore becomes my duty as a member of this house to give some reasons why I support the principle of the bill and refer to some of the things which have been said in this debate.
It seems to me that, whatever our opinions about finance, this is not an opportune time to occupy the time of parliament or disturb the people with any serious change in the banking system. Canada, with the united nations, is engaged in a war overseas which is perhaps at its gravest period. We at home should be united in our domestic affairs and postpone changes until such time as we are secure.
I do not believe that any government or any parliament should endeavour to change the Bank Act to the extent of socializing the banking system without a mandate from the people, and I am quite sure that neither the Liberal party, the Progressive Conservative party nor any other party has a popular mandate to make so drastic a change.
The duty which we are now asked to discharge is a recurring one, and to my mind this fact must have a salutary effect on the bankers and must bring confidence to the people, because it shows that always in the minds of those who make our laws finance is

regarded as a progressive science, and that changes must come from time to time. Those who came before us made provision for that in seeing to it that a review of the banking system should occur every ten years.
We have heard a great deal of discussion and some criticism of the banks of Canada. Some people think they earn too much money, that they are too prosperous and too efficient. It seems to me that that is one of the penalties of being successful. Power and responsibility come with success, and our great concern should be how the banks use this power and how we as members may see to it that they carry on in a way which is beneficial to the country.
It is generally recognized, I believe, that in the world of finance Canada has a high place and is eminently efficient. We have the admiration of the people of the United States and of Great Britain as well for the manner in which we have carried on, for we have done all those things that were necessary for an all-out war effort, which has been financed so successfully by the people of Canada. In that effort the banks have played a large part, and if there is one thing in which we excel in Canada, in comparison with the great free nations of the world, such as the United States and Britain, it is in our banking system. The Canadian people are proud of the banking system of this country. They look to the United States and remember the things that happened to the banking system there in the not too distant past, and they recall that our banks here carried on, and continued successfully. The Canadian people have paid their obligations, so that at this moment Canada has borrowed no money from anyone outside the country in order to carry on our war effort. No lease-lend comes to Canada. On the other hand, Canada, with a comparatively small population, gives lease-lend to many rich and populous countries.
The banks are closely linked up with the capitalistic system. I am in favour of the capitalistic system. I do not say it is perfect, but it is the best thing that has yet been devised for carrying on in an orderly way the business and the social advancement of the dominion. It is the system that is in effect in the countries of our great allies, Great Britain and the United States; it is the system in countries where there is the highest standard of living in the world, and where the greatest freedom and happiness are to be found.
We are living in a competitive world, and when we are inclined to hold the view that we are not in such a favourable position by comparison with other countries, we have only

Bank Act-Mr. Kinley
to stop and think to realize that we are infinitely better off than most people in the world, and for that we should be thankful and give credit to the institutions that helped to bring about that condition.
The virtue of the capitalistic system is that it works. We were told some years ago, when we had a depression, that the capitalistic system would not work, that it was dying. Well, we have gone through nearly five years of war and have made an effort that has surprised our neighbour to the south. It has enlightened the people of our own country, for many of us never thought we could make such an effort. It shows that the capitalist system can work and is now working, and working better than it has ever done. The system has never worked better than it has worked during this war, and it has done so because, with taxation, we have had a redistribution of wealth, whereby the people generally have received much of the money that has been in circulation, a greater proportion than ever before. That has had a great deal to do with the smooth working of the banking system of the country.
Money is not wealth; it is a demand on wealth, and what concerns us is not so much the money, but how much the money will buy. For that reason it must be carefully controlled and its value carefully guarded. In the highest sense, money is the economic blood stream of the nation. It is the force which keeps business alive, the force which creates the transportation of goods and services from one person and nation to another. It is a circulating force that makes for a happy, prosperous and industrious people.
We are told that the love of money is the root of all evil, but that does not mean that money is bad. It means that we have that human characteristic called greed, and it is not money that will ruin a nation but greed, and greed is something which must be and is being controlled and in the future, we hope, will more or less disappear. AVe do not hear very much about scandals in this war. We do not hear much about people wanting to get rich. They are working for the nation, and the reason is that it is not possible to get rich. We also know the government has so arranged that the money is taken out of circulation for war services so that no one can get rich even if he wanted to do so. Therefore the incentive for greed is gone and, with that incentive gone, so are the scandals that might come in war-time spending.
There is an old proverb, "Heed what men say, but watch what they do." I was interested in the speech of the hon. member for York-Sunbury (Mr. Hanson). He said that the Bank
Act was a serious and important piece of legislation and that it should be treated in that way, but I think he went out of his way to make a personal attack on the Minister of Finance, who has been working hard and successfully in the interests of the people. I cannot understand why so eminent a member of this house, in a matter of this kind, should make a political attack on the man who is responsible for bringing this bill into the house. He even went into the minister's own constituency and he talked about the closing of banks in Canada. He said:
I think this position could be illustrated in almost every constituency in Canada from east to west. Eight in the minister's own constituency there was closed not so long ago a branch bank in the little town of Middleton, which has had a bank for some considerable time.
What would you take from these remarks? That there was no bank in Middleton, Nova Scotia. Middleton is in the minister's constituency, not very far from my home, and I know that town very well. It is a small town in a farming community, a fine town. I thought it was strange that there was no bank there, and I went to my room and looked up the telephone directory. I saw there the Royal Bank of Canada, Middleton; the Canadian Bank of Commerce, Middleton; then I looked further and I saw that in Kingston, a few miles along, there is another bank, and a few miles further on, in Bridgetown, Nova Scotia, the Royal Bank of Canada.
What was the reason the hon. member wanted to have this house think there was no bank in Middleton, Nova Scotia, right under the eyes of the Minister of Finance? This matter of closing agencies is a business matter. The world is getting smaller. There are better roads, with better transportation, and quicker movements of people from one point to another make it unnecessary to have so many banks close together. I am sure the bank that remains in Middleton will be able to look after the interest of the people there and save overhead for the banks, and the people will be well serviced. I cannot see why this should be made a point of attack on the minister in this house by an hon. gentleman who should know better. However, he will likely vote for the bill. The proverb said: "Heed what men say, but watch what they do. Most of the attack in this debate has been academic and by people who have had very little experience.
However. I think of the party to the left, the Social Credit party, and I realize that they did have some experience. We watched what they did. Not long before they came into power in Alberta they promised the people a bonus of $25 a month, saying that
Bank Act-Mr. Kinley

they would pay that amount to every citizen in the province. I must say it is to their credit that, after they were elected to power, they did not do that, Then they did something else: they repudiated their debts. They owed bonds of that province to the people of Canada, and they arbitrarily reduced the rate of interest.


An hon. MEMBER:: That is not right.


John James Kinley: If it is not true, I rest on the judgment of the house. Then, after complaining about the banks they came here and a few years ago introduced a bank bill. They are not content to abide by the Bank Act, but wanted special privileges. They wanted to be able to issue currency which was being depleted in the other banks. That bill was not accepted, because they are not willing to come under the general laws of Canada respecting banks and banking. This year they have brought in another bill-a much better one, I must confess. They preach the gospel of social credit. In other words, they would water the money. That is not something peculiar to them alone. Go to St. James street, Montreal, the home of sound business, and you will find corporations which water their stock. There you will find company stock watered. There is no difference between people who water money and other people who would water stock. Both of them want something for nothing, and want somebody else to give it to them.
What would we think if to-morrow morning a farmer, who had a market in town for 100 quarts of milk, found upon milking his cows that he could get from them only fifty quarts, and in that situation said, "Oh, I will put it under the pump, pump in some water, and then I shall have 100 quarts." Yes, he will have 100 quarts but, not only will he be cheating his customers, but, if found out, will be branded a criminal. There the principle is the same. Dilution never made strength. It will make quantity, but not strength. The same is true of money.
While we are talking about the provinces, let me say this: In my view any drastic change in the Bank Act such as suggested by the amendment would affect the property and civil rights of the provinces. When banking and commerce were placed under the control of the federal government, I do not think it was ever intended that its jurisdiction over banking and commerce should affect property and civil rights in Canada. Before parliament enacts any such legislation, of a type which most certainly would affect property and civil rights of the people in every province, we should consult the provincial legislatures.

Then, this thought occurs to me: when we hear talk about the monopoly of banking we should remember that there is no banking monopoly. Any province can start a bank of its own-and I am not so sure it would not be good business for a province to go into the banking business, with the federal government controlling the Bank of Canada and the issue of currency and credit.
Now we come to the Cooperative Commonwealth Federation party, the party which would nationalize the banks of Canada, and thereby make of them a monopoly. In my view a government monopoly is just as dangerous as an industrial monopoly.


An hon. MEMBER:: Far more dangerous.


John James Kinley: Speaking the other day, the hon. member for Weybum (Mr. Douglas) said that the minister could not have his cake and eat it too. The hon. member said that the minister had adopted socialism in banking because of his sponsoring of a bill before the house to create an industrial development bank. Well, Mr. Speaker, competition is the life of trade, and we believe in free enterprise. Even the Right Hon. Winston Churchill, speaking over the radio some time ago, said that in the future it may be that we would have two kinds of business side by side, a certain portion of public business and a certain portion of private business. He thought it only natural that we would have both kinds. But when the minister creates an industrial development bank to take up the lag in industry, the uneconomic part of the banking system which needs attention, and may be termed economic research or experiment, he is told that he is tainted with the virus of the C.C.F. I do not think that can be true- although I was always taught that wherever a serious minded body of men got together there was a degree of truth. But there is error, also. I would not say for one mim.te that everything said by the C.C.F. is untrue, or that everything they say is in error. But truth is mixed with error, and there is so much error that the truth forms only a minor part of their argument.
The hon. member for Weybum also said that the Bank of Canada did not control the issue of currency and credit. He said that there was no way whereby they could get money into the hands of the people. I say that the Bank of Canada can do this in two or three ways. They can buy or sell securities. If they sell securities they will reduce the amount of money in ciroulation, and if they buy securities they will put more of it

Bank Act-Mr. Kinley
into circulation. Then, they can fix the rediscount rate-and that rate was lowered as late as February of this year. "Canada at War" of April 1944 contains this:
Bank of Canada rediscount rate charged on advances to chartered or savings banks reduced from two and a half to one and a half per cent, effective February 8.
That is what is called an easy money policy.
But, it is urged, the present system does not get money into the hands of the people. It does. It has been found to work satisfactorily. Furthermore, if it comes to an emergency, the government can set up a public works programme. We may have to do that in the future, to develop and improve the country, and to give work. In that way money can be put into the hands of the people.
We hear talk about the banks being a monopoly. The fact is that there are a number of banks in Canada. And do not forget that there is the clearing-house. Each morning the banks of Canada must face the clearing-house, and show that their positions are secure. If we had a government-controlled system of banking-which would be a monopoly-there would be no clearing-house, and the banks could do almost anything they liked. Let us suppose that I, as a business man, need money. I go to the government bank, and they refuse to let me have any. There is no other place to which I can go. Now I can go from one bank to the other; the banks are competitive, so that I have that freedom, which all citizens enjoy. Who in this house, be he Liberal, Conservative or anything else, would want a bank run by a party he did not support? I would not want the Tories running the banks of this country, and I am sure the Tories would not want the Grits to run them. Our banks should be operated by men not particularly interested in political affairs but interested in business matters, in giving the best possible service and facing the competition which we think is the life of trade.
We believe in free industry; our friends believe in socialism, in state control. I do not object to government industry, but as practised it is not free industry. Every time one of these new ventures is started they want to get free from payment of taxes; every time something supposed to be of the new order is commenced you find them coming to the government asking for privileges; they do not want to met their obligations to this country in the way of taxes. Look at the wheat pools in the west, about which we have been speaking for years. They have so arranged their structure that they do not have to pay income tax. Only the other day the government of Quebec took over a great public utility. I
am not discussing the merits or demerits of that action, but as a result the exchequer of Canada will lose millions of dollars of taxes in this time of war. That is the difference between private industry and so-called public industry. We believe in free industry, a free road and no favours, with everyone meeting his obligations and paying his share of the taxes. Then, when that is done, let the best man win.
The other night we heard a speech by a new member down in the corner who said he was not so much interested in where the money came from as he was interested in jobs and wages, and I think that was a good contribution to the debate. I am an employer of labour; I have been associated with labour all my life, and for the life of me I cannot see what labour has in common with C.C.F. socialism. Labour is a part of the capitalistic set-up; labour gets more as industry achieves greater success. Only the other day in the magazine Time I read a warning given by the president of the Boston chamber of commerce, who said that if employers and labour would cooperate and get along together they would be free, but that if they fought one another the state would control them and they would be slaves of the state. That is my conception of capital and labour; we should endeavour to get along together, each doing his part and each getting his share according to his contribution to the success of the enterprise. We have heard so much about the schoolteachers, that they are educated people and are not properly paid. I will admit that schoolteachers are not paid sufficiently in this country; but they work for the public; they do not work for private industry. This is an example of what we would get if the whole thing were mixed up under C.C.F. socialistic control. The community pays the schoolteacher, and he is the lowest paid man of education we have. So that while hon. gentlemen in the comer talk about private industry, here is an indictment against community effort.
The other evening my eloquent and good friend the hon. member for Vancouver-Burrard (Mr. McGeer) took part in this debate and said that the only fundamental change in this Bank Act was the raising of the rate of interest on loans to the poor men from seven per cent to 92 per cent. My hon. friend, who is an eminent lawyer, knew that statement was not fair. He knew that under the present Bank Act the maximum rate of interest is seven per cent, and that under the proposed amendment it will be six per cent. Let me say a word right here to those who think the ' banks are prosperous and that there should be more control over them. We could bring about all the changes they desire by changing just
Bank Act-Mr. Kinley

one word in the act; that is, by changing the "six" to a lower figure. That would change the whole aspect of the situation. My hon. friend knew that the banking and commerce committee had before it at a previous session a bill dealing with small loan companies. After discussing that matter for two years, we came to the conclusion that these companies ought to be allowed an interest rate of two per cent a month in order to permit them to carry on business, and that was made their maximum rate. But we said we would do something to try to meet this situation when the Bank Act came up for revision, and as a result the minister has placed in the bill a provision under which the discount rate on short-term loans is five per cent, which would figure out at 9| per cent for that kind of business, which formerly cost the people of this country as much as two per cent a month. And let me say that as far as the cooperatives are concerned, their interest rate is much higher than 9J per cent. Nowhere in this country can you do this kind of business at this rate except with the banks; and while I question the advisability of tying the banks up with this dangerous kind of propaganda business, I say that provision was inserted as a service to the needy people of this country, though it is not always the poor people who borrow and repay in instalments.
Then the hon. member for Parry Sound (Mr. Slaght), also an eminent member of this house, had something to say about this bill. He wanted debt-free money and said that the right to issue currency should be taken away from the chartered banks. In the early days of this country, in the Yukon and other places of that kind, the right to issue bank currency was a great help in facilitating business. But we are doing, in a progressive manner, just what the hon. member said should be done; so why make that an issue in this debate? Then he said that we should have inflation. Let me say that inflation never succeeded anywhere it was tried. It was tried in Mexico some years ago, and the situation became so bad that the only money people would take was American cheques. Those doing business had American cheques, which were used as currency, passing from one person to another. That inflation almost ruined the business of that country.


Mr. HANSELL:: Who wanted inflation?


John James Kinley: The hon. member for Parry Sound.
. Mr. HANSELL; He did not say that.


John James Kinley: Let me tell the hon. member that he said that if the minister went down to the bank with a million dollar bond-he
rMr. Kinley.]
may have mentioned a greater amount-at three per cent, the banker would say to him, "I will give you a million dollars, but you must pay me three per cent for a period of twenty years." The hon. member knows that the Minister of Finance would not do anything of the kind. He would go to the bank with a treasury bill and he would get the money for three-eighths of one per cent. That is less than the cost of doing business, because we are told that the cost of operating private banks is about three per cent. Also the minister might offer a short-term bond which bears interest at one and one-half per cent. It seems to me that that is what he would do because it is the sensible thing to do.


Ernest George Hansell: What has that to do with inflation?


John James Kinley: If my hon. friend will listen perhaps he will find out. I said that money in its highest sense was the financial blood stream of the nation. Suppose the Minister of Finance goes to the Bank of Canada and says, "I must have a million dollars without interest." I think the hon. member for Parry Sound said that he would pay interest to the bank, but he would be paying it to himself so that it would not cost anything. It does not cost the Bank of Canada anything to do business!
If that million dollars is put into the financial blood stream of the country, what happens? A good test would be to ask, "How much will it cost to get it back?" The only way to get it back would be to impose taxation or to issue bonds, long-term bonds at three per cent or short-term bonds at one and one-half per cent. Let me tell the house what would happen. This money would go into the economic blood stream of the country and would finally reached the chartered banks. According to our set-up in Canada they could use that as a means of increasing their credit reserve. Can hon. members say that there would be no inflation because of that? I believe that if the Minister of Finance did that he would seriously impair if not entirely destroy the functions of the Bank of Canada which has been set up to control credit and currency.
Let me give a homely illustration. A man has a store, and he also has a wife and a daughter. His wife and daughter come to the store and they say, "We want this; we want that." Then the wife may go to a neighbour and say, "My husband has a store; I went down there, took what I wanted and it did not cost me anything." It has been my experience that many splendid merchants have been forced into bankruptcy because their families

Bank Act-Mr. Fraser (Peterborough)
took away goods which they thought belonged to them and which they thought it did not cost anything to take from daddy's store.
Credit is another matter. Credit is a matter of confidence and integrity. It depends upon the confidence you have that somebody else will pay you when you trust him. The average storekeeper is able to give credit many times the value of the goods in his store provided that he has a quick turnover. This all depends upon whether the people pay him. If they do, and the wholesaler trusts him, he is able to carry on and grant credit. As I say, credit is something that depends upon integrity and confidence.
Let us not forget that our banking system has a great deal to do with export trade. The banks act as missionaries in foreign countries. Canadians should be proud to know that Canadian banks are doing business in some of the largest countries in the world, and they are doing it successfully. They are there to help carry on our foreign trade, a trade which will be of great importance in the future. The fact that they are there denotes that they are efficient. I think our banks have proved themselves capable of competing in the markets of the world. They are there as outposts for the future benefit of this country.
There is to be an international bank composed of five principal shareholders-the United States, Soviet Russia, Great Britain, China and Canada. Canada is the fifth partner with the other large nations of the world. These countries are going to deposit so much money in the pool, and the basis of that money will be gold. Canada will deposit gold in order to become a partner in the bank. If we have inflation and our money does not buy very much, it will cost us more to put that gold there. We must not forget that Canada is a gold-producing country and we should be loyal to the exports and products of our country. We in Canada should favour sound money and a condition that prevents inflation, because this country is a producer of a material which will be the basis of credit in the international world when this war is over.
Canada has shown herself to be a big nation financially. She has reached that position because there is confidence in her financial institutions and in the industry of her people. We hear much criticism from people with no experience, people who in an academic way talk about something that must be applied in a practical way in order to see how it works. For the benefit of this country we should travel and improve the road that has made this country great in the past.


Mr. G. K. FRASER (Peterborough West):: Mr. Speaker, I should like to thank the hon. member for Springfield (Mr. Turner) for granting me this time because I understand he is to speak next. I do not intend to make a speech, but I wish to have a little information on one or two subjects. I think the hon. member for Queen's-Lunenburg (Mr. Kinley) has made a very good speech. I am a member of the banking and commerce committee and I generally listen to the hon. member when he speaks, and sometimes support him. I should like to ask the minister a question in regard to section 89, subsection 4, paragraph (b) of bill No. 91. This reads in part:
Every sale of live stock shall be made by public auction not less than five days after publication of an advertisement.
If live stock is sold by a bank at public auction there is every likelihood that the minister's department will step in and say that the farmer owes income tax on the proceeds of the sale. Proceeds from sales of livestock are considered to be income under the income tax act. Where a farmer sells cattle at auction, will that be considered income and come out of the farmer's pocket? Or the farmer might have live stock, perhaps breeding stock, which he did not want to sell but which he puts up as collateral to tide him over a difficult time. Then something happens and he cannot meet the note. The bank takes over his stock, sells it and gets $5,000, we will say, on the sale. If they got that much it would mean that the farmer would have to pay some $2,300 in income tax. I think the minister, when he is making his statement to-night, should say something in regard to that and tell us whether that is to be regarded as income or not.
In his speech the Minister of Finance (Mr. Ilsley) had this to say, as reported at page 2559 of Hansard:
In the case of the industrial development bank you only require to have ten or twelve branches all over the country and you can handle it without trouble.
What I should like to know is why the minister did not put it in the bill if we are to have ten or twelve branches of the industrial development bank. How does he know we are to have ten or twelve branches, and if he does know, just where are these branches to be? I feel, and I think I am right in this, that the minister should have told the house about these branches, where they were to be, and what was what. Mr. Towers, governor of the Bank of Canada, in answer to a question, said that the industrial development bank would likely use the managers
2830	COMMONS
Bank Act-Mr. Fraser (Peterborough)
of the chartered banks as its agents. If that is the case I do not see why we need twelve branches across the country.
Another thing which does not bother me very much personally but which does bother people with poor eyesight is that some chartered banks' notes of different denominations are the same in colour and are hard to distinguish. Take, for instance, a five dollar bill. I believe that the Bank of Canada five dollar bill is blue in colour, but the ordinary five dollar bill of the chartered banks is green in colour and looks very much like the green one dollar bill. The minister would be wise to see that all the banks, the Bank of Canada and the chartered banks, have one colour for one denomination, and that there be not the variations there are at the present time. I know that would help people with poor eyesight very much.
The Minister of Munitions and Supply (Mr. Howe) told us that the industrial development bank would look after financing returned men who were seeking to set up their own private air lines, and that information was sent out by the wartime information board in a bulletin dated April 21, not only throughout Canada but, I understand, to South America, the United States and other allied countries. As I look at it, that information is absolutely wrong and the minister should have it corrected. It is a case where the Minister of Munitions and Supply did not know the set-up proposed for the industrial development bank. However, I believe that the minister should see to it that the industrial development bank, by a change in the set-up, can look after all these loans.
I would ask the Minister of Finance whether he believes in the kind of bank that the Cooperative Commonwealth Federation are advocating, what is really called the old-sock bank. According to the Calgary Herald here is a statement from a C.C.F. pamphlet being circulated in the west:
Your money is not safe in a chartered bank during a depression. During the next capitalist depression you had better hide your money in an old sock. It's safer.
Under the heading "Vicious C.C.F. Propaganda" the Calgary Herald goes on to say that that statement is as false as it is vicious.


Thomas Reid: Who said that?


Gordon Knapman Fraser: The C.C.F., in a pamphlet being circulated in the west.


Mr. GILLIS:: Likely by the bankers'
association.


Gordon Knapman Fraser: I have been talking to a few people who live in the riding of Lisgar in Manitoba, who were told by C.C.F. men in that part of the country that the sock was the safest place to put their money.


Mr. FULFORD:: If I may interrupt the hon. member I have a photostatic copy here of exactly what the C.C.F. said. May I read it:
During the next capitalistic depression you had better hide your money in an old sock. It's safer.
Is that not fine propaganda to put out? It is undermining the confidence of the people of Canada in their established institutions.


Gordon Knapman Fraser: I do not want to be too hard on the C.C.F., because only the, other day I was told by a Progressive Conservative member of the Ontario assembly that the C.C.F. opposition in the Ontario house was a model opposition.


Clarence Gillis: Surely.


Gordon Knapman Fraser: "Surely", the hon. member for Cape Breton South says. I have looked up the definition of "model" in the dictionary and I find that it means an imitation of the real thing.


Mr. J. M. TURNER (Springfield):: Mr. Speaker, I wish to say a few words with respect to bill No. 91 now under discussion, which deals with banks and banking. But before I do so I should like to join with the member for Rosthern (Mr. Tucker) in saying that I think all Canada should be justly proud of the outstanding address delivered to-day by our Prime Minister (Mr. Mackenzie King) to the members of both houses of parliament in Great Britain. In my judgment it was a masterpiece that will be remembered and appreciated for many years to come.
May I congratulate our Minister of Finance (Mr. Ilsley) upon his able presentation, on the second reading, of all matters and phases to be dealt with by this bill. This government is to be congratulated upon its financing and upon the banking course that it is following. It is sticking strictly to Liberal policies in that regard by putting through banking legislation of one kind or another designed to help the farmer, the fisherman, the labourer, and the little man. This is Liberal policy in the truest sense and I know it will be welcomed by that great army of people right across Canada generally, particularly by the small man in all branches of our industrial and business life.
I believe, sir, that everybody in this house knows that I am not a financial expert, nor do

Bunk Act-Mr. Turner
I ever hope to be one; neither am I a mechanical expert and I do not ever expect to be. Perhaps all I know about finance is that a dollar has 100 cents. Nevertheless, when I get in my car in the morning to start to drive I can immediately detect if there is something wrong, although I may not know what it is. That is the way I feel when talking on finance. There is something radically wrong with our whole financial system. The way it is set up it is like a gigantic octopus, choking the very life out of our Canadian nation through the interest system we have adopted. This certainly has to be changed.
Just as an illustration, I hold in my hand a copy of a brief prepared in February of this year by the city of Winnipeg to be presented to Hon. Stuart S. Garson, our premier. Attached to this brief is a statement of the interest paid on debentures by the city of Winnipeg from the year 1930 to 1943, a period of fourteen years, and the staggering interest total for that period is $40,319,694.20. This figure does not include the interest on the greater Winnipeg water district, which happens to run right through my constituency. The interest on this alone amounts to $800,000 a year. Now, Mr. Speaker, if I were to stand here to-day and tell the people of Winnipeg that between now and 1957 they are going to hand out again to the money-lenders an amount close to fifty million dollars for interest, they would think I was not stating the facts. Nevertheless, that did happen before and it can happen again. That city is urgently in need of slum clearance, new homes, hospitals, parks and other public projects, and if we could save only half that amount, say $20 millions or $25 millions, for those purposes, I am sure it would be welcome news not only to Mayor Coulter, but to all the citizens of Winnipeg.
The figures I have given for Winnipeg can, in proportion to population, be duplicated in almost every province, city, town and municipality in Canada. Interest has a strangle-hold on governments of all kinds and acts as a hydraulic brake against any district progressing to its fullest extent. How can they be expected to progress, carrying this terrific load?
Let us take a look at our own financial set-up in the dominion. Before the war this nation's debt as of March 31, 1939 was $3,710,610,592.87 and interest charges on same were $127,995,616.75; to-day our national debt is $9,228,252,012.03, as of March 31, 1943, the interest charges being $188,556,249.39, better than $15 millions a month, an increase of over $60 millions a year, or roughly five million dollars a month. That is a staggering figure, and who can tell to-day that the war may not 100-178
last for two or three years yet and the debt will be just that much greater? We are getting in deeper all the time.
I said before that I am not a financial expert, but I know there is something positively wrong with this whole business, and I envisaged the Bank of Canada as being set up to step in and lend money to public corporations, as I have already indicated, without any interest, but with just an operating charge or a bookkeeping cost. The present system cannot go on indefinitely. We should, therefore, be prepared to try another kind, and force the big banking houses to get out of government business entirely and operate in their own field, namely that of commerce and industry. They are paying too much attention to government financing, and not enough to the commercial field, which, if they did, would stimulate business rather than retard it. I believe that the Bank of Canada is not operating to the fullest extent in the important matter of financing public debt and public corporations.
Is it not a fact, Mr. Speaker, that the largest and wealthiest corporation in Canada is the Dominion of Canada itself? It has some eleven and one-half million shareholders: it has billions of dollars of unseen wealth below the ground, in gas, oil, radium and other minerals, and it has billions of dollars of wealth above the ground. For instance, we own the Canadian National Railways, a corporation worth anywhere from one to two billions dollars, with between seventy-five and one hundred thousand employees. We own the Trans-Canada Air Lines. We own the Bank of Canada and other big public corporations, including twenty-five crown companies which have been set up since this war began. We own some five hundred to six hundred fighting and merchant vessels; in addition, we own some five or six hundred million bushels of wheat in storage in the elevator bins of this country, and in the short space of three months or better we hope to have another four or five hundred million bushels of wheat. We shall own it all, and without it I doubt if this war can be won.
According to the hon. member for Parry Sound (Mr. Slaght), the total paid-up capital of all the banks is $145 millions, an insignificant amount as compared with our own wealth and resources-those of the Dominion of Canada.
The question I should like to ask is simply this: why then should it be necessary for us to put on a bombastic flag-flying display, supported by acrobats, comedians, movie actresses and bands, in order to induce corporations and ethers to lend us money who obviously are less

Bank Act-Mr. Turner

wealthy than, we are, whose resources in fact are insignificant compared with our own? That point has never been cleared up in this House of Commons to my satisfaction. I for one have never believed that a man or corporation is doing an outstanding patriotic service by investing a certain amount of money in victory bonds. What he is really doing is buying insurance and at the same time collecting a little premium. The really patriotic citizen of this country is wearing a uniform, flying over Europe or existing in foxholes in Italy, fighting the submarines on the seas, or risking his life elsewhere in the war. That is what I call real patriotism, and I have yet to be shown that I am wrong.
I find myself, therefore, in agreement with the principle put forth by the hon. member for Rosthern (Mr. Tucker), the hon. member for Parry Sound (Mr. Slaght) and the hon. member for Vancouver-Burrard (Mr. McGeer). As a matter of fact, I told the hon. member for Rosthern, when he spoke in this house away back in 1936 or 1937 on financing public debt-he will remember the incident-that I was of the same opinion in this regard at that time.
I hope the government will give special attention to this important matter of financing public debt and public institutions and projects, before it is too late.


Mr. S. H. KNOWLES (Winnipeg North Centre):: I welcome the opportunity of hearing a few words from the hon. member for Springfield (Mr. Turner). I feel that to-night he has epitomized the position of the Liberal members of this house so far as this debate is concerned. He began by expressing his approval of the policies of the government, and then launched an attack in which he showed the results of those policies gave evidence that there should be drastic changes.
It has been said a number of times during this debate that the Minister of Finance (Mr. Ilsley) made a most provocative speech if it were the desire of the government to keep this debate short. I might say, on the other hand, that the chances are it is a good thing that the minister made that kind of speech, because by so doing he has produced a longer debate and one in which, I feel, fairly clear statements have been made indicating where the various groups in this house stand. It took some little time to get very much said by the members of the Progressive Conservative party, except for their first spokesman, who started off on Monday, but at least they have said enough to make it clear that they

are prepared to defend to the limit the private ownership of the chartered banks of this country.
The position of the Liberal party as it has already been made evident by the hon. member for Springfield is one of definite division. We have the Minister of Finance stating the official policy of .the government, which is for a continuance of the present status of the banks with the minor changes which are proposed in the amending bill now before us. The minister in his speech of last week expressed his view that his party and the country as a whole would be with him in the stand he was taking. But during the course of this debate we have had the very interesting speeches of the hon. member for Vancouver-Burrard (Mr. McGeer), the hon. member for Parry Sound (Mr. Slaght), the hon. member for Rosthern (Mr. Tucker), and now, the hon. member for Springfield. If I have overlooked any others who have been rebellious in their remarks I offer my apologies to them; but it has been made quite clear that the Liberal members of this house do not agree in their views on banking policy. There is one thing on which they seem to be agreed, namely, that they are not going to vote for our amendment, but among themselves there is a wide divergence of opinion.
If I may say so with respect to our hon. friends of the immediate left, the Social Credit group, I feel they have stated their position a little more clearly in this debate than they have done on previous occasions. They were able to express their views in a subamendment which, despite the fact that it did not go far enough, came very close to our position and was such that we were able to vote for their subamendment when that vote was taken the other evening. With the assistance of the hon. member for Parry Sound, I would say that the Social Credit group has made its position a little clearer in the course of this debate. I hope that the house will agree that we in this group likewise have made our position quite clear. We feel that such an important function in our economic life as our banking system should be under complete public ownership and public control so that it might be operated in the interests of the country and the people as a whole.
A good deal of time has been taken already in dealing with some of the arguments put froward the other day by the Minister of Finance, but I should like to make a few comments on some of his arguments, some of which have been supported since by other members of his party.
There is one argument which he made, on page 2546 of Hansard of May 2, which I am

Bank Act-Mr. Knowles
sure he will not try to substantiate further when he speaks later on to-night, if he gets the opportunity. I refer to these words which he used:
But a far more important point is the undesirability of having the credit of each of us and of every business throughout the country assessed by civil servants working under political control for a government banking monopoly, rather than by bank managers interested not in the political or other views of the borrow-er but solely in his ability and trustworthiness as a debtor.
As other speakers in this group have pointed out, if that were to be the case with banks owned and operated by the people of Canada through their government, then one would expect the same to be the case with respect to the Bank of Canada, with respect to the industrial development bank that is to be set up, and with respect to other matters that are under the control of the government; but this is not so. One feels like asking this question: Does the minister's argument mean that departments of government, such as the Department of National Revenue, deal with cases that come before them on the basis of political interest? Does it mean that the war contracts depreciation board make their decisions on a political basis, on applications for huge depreciation allowances, which have been submitted to them during the course of the war? Does it mean that the government itself, when it has some special application for depreciation, such as that of the Aluminum Company of Canada, deal with it on a political or partisan basis? What about the. annuities branch of the Department of Labour? I have a copy of a pamphlet which the annuities branch publishes, urging people to take on this form of protection for their old age. I see nothing in it that indicates anything of a partisan political nature. I see nothing to suggest that there is any regimentation involved or any danger or insecurity if one protects one's old age by purchasing a Canadian government annuity. Rather I find it an attractive booklet, with a picture of the parliament buildings on the cover, and underneath the slogan, "Backed by the whole resources of the dominion".
One might think of other matters of a financial nature which the government handles. Take housing. We had an extensive statement this afternoon by the minister as to further government plans to make possible the building of homes in this country. This kind of thing involves the government stepping in and channelling credit into certain forms of economic activity so that socially desirable goods will be produced. The government does not apologize for these things. It claims credit for 100-178J
them. It insists not only that they are nonpolitical and non-partisan, but that they are marks of the progress that has been achieved while this government has been in power. In fact, I find it interesting to read the minister's speech and find him at one point complaining about the entering wedge of socialism., and at other points claiming credit for the fact that the government have put in the thin end of that wedge. As reported at page 2547 of Hansard the minister says:
We are providing a publicly owned institution to provide credit for useful and desirable industrial projects which the private institutions are-unable or unwilling to finance.
True, he went on to say:
But we do not want to create a huge government monopoly of the banking business.
The minister warns against the socialist wedge, as he calls it, but takes credit for the thin edge of the wedge for which the government is responsible. Similarly, in another passage, at page 2544, he says:
It requires only socialization of central banking-and that of course we have already-achieved.
"Socialization" is a terrible thing in many purple passages in the minister's speech; but when it comes to something like central banking, when it comes to other measures which the government has instituted in the economic life of the country, such as those to which I have referred, the minister is not only proud of the things the government has done, and claims credit for them, but he does not hesitate to use the very word "socialization" which is suposed to have such dire results.
Similarly, I was interested in listening to the remarks of the hon. member for Rosthern. He started off with one of his chronic attacks on the position of the C.C.F. and quoted from our literature, which we print in as great abundance as we can and make aavilable for Liberals and others to read that they might learn thereby. He quoted to show that we believe the banks and financial institutions of the country should be brought under public control, and then he launched into a great tirade to suggest that public control, as advocated by the C.C.F., would involve dictatorship, loss of democracy and all that kind of thing. When he finished his attack on the C.C.F. and got down to business, dealing with the Bank Act, he, being of the school of the hon. member for Parry Sound, the hon. member for Vancouver-Burrard, the hon. member for New Westminster, and some others, found some fault with the bill as proposed by the minister. He insisted that the time had come when we must let the banks know that they must be responsible to a public authority.
2S34
Bank Act-Mr. Knowles

I would point out that he used the very same words, "public authority", when he asserted what we must have, speaking for the rebel Liberals, as he used when trying to attack the position of the C.C.F. He made some other references to the wealth made in the mining industry and to ways and means whereby that 'wealth is taken out of the country, and he asserted that there must be established ways of preventing this. The "public authority" must step in to protect the interest of the people of the country as a whole. What I am trying to point out is that the hon. member for Rosthern and the Minister of Finance as well, if they will read their speeches closely will see that they have themselves laid down the basic principles which we really want to incorporate into our banking set-up. In that very interesting passage in the minister's speech, to which the hon. member for Weyburn (Mr. Douglas) directed the attention of the house, where the minister said that it was his wish-and of course he was expressing only his own personal opinion-that the banks would call to their directorates men from a much wider field of our national life, including farmers, industrial workers and the like, he was laying down one *of the basic principles which underlies our [DOT]whole position. In other words, our contention is that the banking set-up, the financial [DOT]machinery of this country, is basic to the well-ibeing of Canada and her people, that because of that fact it ought not to be under the autocratic and dictatorial control of a few ipeople not responsible to the parliament of Canada and to the people as a whole, but rather that it ought to be specifically and directly under our control in parliament.
I wish again, as I have done before, to deprecate the many speeches made in this house deploring parliamentary control in the economic life of our country. The idea is handed out time and again by hon. members that that involves dictatorship and a loss of democracy. But these hon. members do not seem to face up to the alternative. The alternative to public control by the people through parliament, such as we are advocating, is what we had through the great depression-private control of the things which affect the lives of our people, control of those things by a few individuals outside parliament, and not responsible to this democratically elected body.
I find it hard to understand how hon. members who seek election to the House of Commons to represent their people, and to play some part on behalf of those people in the affairs of their country, can rise in their
(Mr. Knowles.]
places in the house and say, "We do not want to run things here; we want to turn the basic and the important things in our Canadian life over to private individuals outside parliament."
In his remarks the other day the minister had a good deal to say about the profits of the banks, and endeavoured to give the impression, and to substantiate that impression with figures, that those profits were not large, and that therefore the claim of this party that the banks should be nationalized must fall to the ground. It seems to me that in arguing about the profits of the chartered banks in that fashion he misses the central point of our whole contention. Our interest in the function of the banks is directed, not only to the fact that they make profit on their banking operations, but primarily to the fact that they are in a position to control production in this country, to determine what kind of production will take place, and what the extent of our economic activity will be. And it is because we want the people, through their parliament, their democratically elected representatives, to have a say in how much production there will be and a say in what kind of economic activity we shall have, that we contend that the basic function of finance should be under the control of the people of Canada, through their parliament.
As I see it-with one drawback to which I shall refer in a moment

we have done that, for the purposes of war. This evening the hon. member for Rosedale (Mr. Jackman) made some references to the fact that the banking system seemed to be functioning fairly well in this time of war, in that it had made possible a high rate of production of war goods, and a high level of economic activity in the country as a whole. May I point out to him, the minister, and the house, that in this time of war the government has really stepped into the whole picture of channelling credit, and of determining where credit is to be made available. True, the government has borrowed the money in various ways from the people and from the chartered banks and, to some extent, from the Bank of Canada; but the government has taken away from the banks and from private industry the power to determine what kind of production is to be effected. The government has stepped in, through the various war departments, the Department of Munitions and Supply, in particular, and has said, "Air training stations must be built, whether economically or not, in various parts of Canada." They have said, "Munitions, aircraft, ships, guns, uniforms-all these things must be produced. We are going to see to it

Bank Act-Mr. Knowles
that credit is made available and channelled in the right direction, so that these goods will be produced for the needs of the war."
In other words, with the one exception to which I shall refer in a minute, in this time ol war the government has superimposed upon the private credit machinery of the country a publicly directed system of channelling credit. The only thing wrong with what the government has done-although I want to make it clear that we commend the government for the position it has taken, namely, that goods had to be produced, and that what was physically possible and necessary for the war effort had to be made financially possible -is that much of this credit has been made possible through the old procedure of borrowing at high rates of interest. Under that process it is clear that after the war is over, and in the years that lie ahead, while we may not pay off this increase in the national debt, still we shall have to take out a portion of the wealth we produce in the first decade and in the second decade after the war, and so on indefinitely, and give that portion of wealth to certain people who have a claim against the government, owing to the fact that a large portion of the national debt has been placed in their hands.
The fact is that we are waging war out of current production, out of goods and services we are producing right now. We are using the raw materials we secure to-day, and we apply to-day to those raw materials the power of labour. We cannot wage this war out of work which will be done ten years from now. But because of the system of borrowing from the chartered banks the huge sums of money we need for government purposes, at the rates of interest we have to pay, in the decades after . the war, or as long as the present system lasts, we shall have to keep on taking portions from the wealth we produce to pay tribute to those who, as a result of the war, have the national debt in their hands.
Speaking the other day, the hon. member for Vancouver-Burrard implied that this would be fairly easy, that we had achieved our financial independence, and have shown that it is no longer necessary for us to go into the money markets of the world. He implied that we have shown we can achieve a high level of production and, if I understood him correctly, his contention was that so long as we maintained this high level of production we shall be able to pay the interest on the national debt, and keep on going, provided that the government is prepared to continue the policy of huge government spending. I would point out to the hon. member for Vancouver-Burrard, and to others who think along those lines, that if after the war we are to have
to borrow more money, so that the government can spend it to maintain our economic activity so that we can pay the interest on the war debt, without its affecting our future economy too drastically, and if in this process we continue the creation of interest-bearing debt, it simply means that the proportion of the national wealth which will have to go to those who hold the national debt will keep on increasing as the years come and go to the detriment of the people as a whole. It seems to me, therefore, that there is no argument at all for delay in this matter. I think those who have emphasized the fact that we get a chance to revise the Bank Act only once in ten years, and therefore should realize the importance of this bill in this year 1944, have done well in emphasizing that point. Bearing in mind the developments of the next ten years, we should be taking steps right now to see to it that we put a stop to this constant increase in the proportion of the wealth we produce that has to go to those who hold our national debt.
Now for a moment I should like to look at another argument advanced by the minister, also appearing at page 2546 of Hansard for May 2, where he spoke about the personal relationship between the potential borrower and his chosen banker. The passage reads very well, unless you stop to consider it for a moment and realize that not all the eleven and a half million people in this country are looking for a financial set-up in which it will be possible for each of us to have a personal banker for the purpose of borrowing money. The other day the hon. member for Parry Sound emphasized that not very many individuals in Canada make extensive use of bank accounts and chequing facilities, which is quite true. If you look a little further and ask how many individuals in Canada ever go in and sit down across the desk from a banker to float a loan and establish this personal relationship the minister talks about, you will realize that really very few are involved in that way. The great majority of the Canadian people want national policies that will result in full employment, in the distribution of goods and services to provide a high standard of living, in the guarantee of social security, protection in times of sickness, accident and old age. As I say, the great majority of people are more concerned about things of that kind than about having a personal relationship with a particular banker who would be very friendly and understanding. Certainly; let us have that kind of relationship in the banks of this country under government ownership as well, but we have a greater task than that, and the purpose of bringing the banks under public ownership is to achieve
Bank Act-Mr. Knowles

policies for the control of credit, for directing credit into the production of goods and services that we need, so that there will be a high level of production, full employment, security and a good standard of living for our people.
Actually we have had more than a debate on the banking system itself. The discussion has developed-and I do not regret it; perhaps it is logical and right

into an argument between the ways of life represented by the [DOT]various groups in this house. Most of the *other parties seem wedded to the idea that private enterprise, despite all its failures in the past, despite the low level of living it has forced upon millions of our people, still is the system to which we should hold. We take the position that in this modern age, with all 'the technological advances we have had, with the tremendous capacity we have for producing wealth, with the way in which economic power has become concentrated in the hands of a few, the only course to follow is to see to it that those things which potentially are so valuable and so important should be in the hands of the people so that the wealth we produce can be made available to us all.
I am satisfied that the people of this country, and those who are fighting our battles overseas, are tremendously anxious that we should really make headway when this struggle is over, that we should really move into the kind of economy under which we shall be able to live a better life, under which we shall be able to have jobs continuously, and under which we shall be able to enjoy the productivity of which we are capable; and beyond everything, to move in the direction of cooperation, wider public control, extending the principle of democracy from the political into the economic sphere. I cannot help deploring .the attempts made in this house to hold back the waves; the speeches made again and again in which the people of Canada, who want a better day with the basic things they are counting on-cooperation, public control, continuance of the high level of production we have achieved through the government stepping in as it has-are told that these things must not be, that we must go back to private enterprise and all that it gave us during the thirties.
I am going to draw my remarks to a conclusion, Mr. Speaker; I understand there is still hope that this debate may be wound up to-night, though quite frankly I feel that it ihas been interesting and worth while. Before I sit down, however, I want to say that when the vote is taken on our amendment, if it is beaten-and from what has been said I assume that it does not stand a very good

chance in this chamber-and the way is then clear, I hope some of the Liberal members who have indicated their dissatisfaction with the principles underlying the bill now before us will move another amendment. I am hoping that the hon. member for Parry Sound, or, if he is not here, the hon. member for Vancouver-Burrard, or perhaps the hon. member for Ros-thern, or the hon. member for New Westminster (Mr. Reid), or the hon. member for Fraser Valley (Mr. Cruickshank), or the hon. member for Springfield, who preceded me, will move another amendment. Someone behind me suggests that perhaps the Progressive Conservatives might move an amendment, but I do not suppose they have any alternative to the bill before us. However, the hon. members whom I have named have made one specific suggestion repeatedly; that is, that the necessary changes should be made so that the government could do all its borrowing from the Bank of Canada. The hon. member for Parry Sound suggested that the five per cent ratio provision should be changed to read 100 per cent in order that the minister's objection to inflation might be ruled out of court. I do not see why one of these hon. members should not move such an amendment. By their speeches they have indicated that they feel free to disagree with their own government on this matter. As a matter of fact, on Tuesday evening I was on the list of speakers, but I was frozen out by others who caught the Speaker's eye; and when it developed into a battle among several Liberals, who was I to interfere? As far as I was concerned it could go on all evening. But I was wondering why we did not get from some of those hon. gentlemen to whom I have referred an amendment to the motion for second reading of the bill, expressing their point of view. It would be less than we are asking; it would be only a step, but it would be a step in the right direction and would give hon. members a chance to express themselves on the idea of making at least that much of a change. No doubt, some will say they are going to wait until the bill gets to the banking and commerce committee, where they will try to argue for these changes. If we wait until the bill reaches the committee, those who want the bill to remain as it is will be able to say that the house voted down our amendment, and voted for the second reading, endorsing the principle of the bill as it is without any change. There will not be much chance to do anything in the committee. I suggest that if we had an amendment embodying the specific proposals of the hon. member for Parry Sound, which have received the support of so many Liberals, it would act as an instruction to the committee so that it

Bank Act-Mr. Church
2S37
would have something to work on. I wonder if the reason why hon. members are refraining from moving such an amendment is a fear that it might carry. As a matter of fact, I believe it would.


Mr. CRUICKSHANK:: Why do not you move it?


Stanley Howard Knowles: The hon. member for
Fraser Valley would like to trap us into moving something which would be less than the position we take. I believe he agrees with the hon. member for Vancouver-Burrard and the hon. member for Parry Sound. He knows how to move an amendment. After this vote has been taken, should our amendment be defeated, I hope that he, or some other hon. member, will move such an amendment as I have suggested, so that we may have a division and know where the house stands on this question.


Thomas Langton Church: Mr. Speaker, I gave up my time last night so that a vote would be taken, but it was not. I am sportsman enough to allow hon. gentlemen who want to catch the train to get away. I had hoped to make a few remarks on behalf of the industrial workers, but I am willing to waive my right to speak at this time because I do not want to prevent hon. gentlemen from keeping important engagements which they have to-morrow. I wanted to say something about the functions of money and the basis of credit as affecting the industrial workers of this country. I hope when the bill goes to committee their case will be considered. There were other matters to which I wished to refer, but it is now after ten o'clock. I had intended to be absent tomorrow, but I cancelled my reservation and I was ready to wait until the bill came up again, in order to let hon. gentlemen catch their trains. With the understanding that I shall have the right to say, on the preamble of the bill when it comes from the committee, what I had intended to say, I shall take up no more time of the house at the moment.


Mr. GASPARD FAUTEUX (Sainte-Marie) (Translation):: Mr. Speaker, I do not wish to delay the debate longer ....


Thomas Langton Church: If other members are to speak, I should like to continue with my remarks. I gave way on the understanding that I was to be the last speaker. I think it is only fair that the hon. gentleman who has attempted to follow me should accept my suggestion. If this debate is to continue until to-morrow I wish to say a few words which I think would be of great importance to the industrial district I represent. I did not know the hon. gentleman was on the list of speakers.


The ACTING SPEAKER (Mr. McCann):: The hon. gentleman has the floor and if he desires to exercise his privilege, he may speak.


Thomas Langton Church: This is the most important piece of legislation we have had all session. This bill comes before us once every ten years. I am opposed to the nationalization of banks and insurance companies, but I realize that war-time conditions have changed the business of banking. I think the minister has acted fairly with the house in connection with this bill. He said he wanted to have the utmost investigation before the committee, and this puts me in mind of the statement made in order in council 1562, which was passed on July 31, 1933, to appoint the Macmillan commission. The exact text of the reference is:
That such examination should also include a study of the entire monetary system of Canada, including credit, currency and coinage, particularly in their relation to commodity price movements and fluctuations in international exchange;
That it is also advisable to consider whether and in what respects the banking institutions and the monetary system of Canada may be modified, extended or developed for the purpose of facilitating intra-imperial and international cooperation in public policies designed to promote the revival of domestic and foreign trade and enterprise and the general increase of employment, and to ensure a greater measure of stability in respect thereto.
I think the committee might consider that report in all its phases and the text of the reference in detail. As I say, very little has been done in the Bank Act and other legislation for the industrial workers. The farmers and fishermen have been considered in different pieces of legislation, but the industrial worker and the small retailer, wholesaler and manufacturer are still left at the mercy of the existing shark loan companies. There are no shark loan companies preying upon farmers and fishermen. This bill has sections to deal with the inspection of our banks. This inspection has not been what it should be, as is illustrated by the Home bank and Farmers' bank failures.
Section 82 deals with loans on real estate, but the fact is that the banks are doing a commercial business in real estate. They have driven a coach and four through the whole section with the active consent of the treasury board. They have built skyscrapers in all the large cities of Canada. They have got around the provisions of this section by appointing holding companies, and I suggest that the necessary words should be added to prevent this, that they shall not directly or indirectly deal in real estate, or it shall, the act says, revert to the crown.
Bank Act-Mr. Church

Bank Act-Mr. Fauteux

exchange of goods. When the volume of traffic in goods diminishes paper currency flows back to the Bank of England and is destroyed. Thus each note represents the true value of goods of some description. . . . Behind the issue stands not only the redemption fund, which is a mere cog in the wheel, but the whole wealth of the country in its truest sense. This may include not only gold and silver bullion, but every commodity. Surely you have here a currency of infinitely greater value than that based upon a single metal, gold, which is always coveted, and liable to be spirited away by some foreign buyer. . . .
As we know, the United States took nearly all the gold of the world between the two wars and in this one when they had what was also called the cash-and-carry policy.
There is a future for gold. That future will not lie in any such basis of value as currency that it had in the past since there will be an international bank; gold will prosper in a better future in the arts and in industry, for which ninety-five per cent of it is being used to-day, and in connection with which there is a tremendous future for the gold mining industry of this country.
In conclusion, I wish to state that I will support any measures taken by the dominion and provincial governments to aid the mining industry, and to give the commercial banks fair play, but some reform is needed.


Gaspard Fauteux: Mr. Speaker, I do not wish to lengthen this debate, but I should feel remiss in my duty if I did not comment briefly on the remarks made yesterday by an hon. member of this house about the salaries paid by a certain bank in the province of Quebec. I may say at the outset that I am in complete agreement with the numerous hon. members who spoke in favour of this bill and that I shall consider it a pleasure as well as a duty to vote for this measure. I wish to take this opportunity to congratulate the hon. members who delivered splendid speeches in which they referred quite aptly to the good work performed by the banks in this country. As was stated many times during this debate, we have before us a bill which will empower the government to renew the charters of our banks. It has been said time and again that a privilege is thus conferred on those financial institutions. I wish to point out in this connection, to those institutions that every privilege implies some obligation, and that it should be part of their responsibility to pay at least reasonable salaries to their employees. The attention of the house was called to the salaries that a certain bank had paid in the province of Quebec, namely S8

a week, for instance, to young clerks who were starting in the employ of that bank. Tellers were paid $17.50 a week even after nine years of service. It has also been stated that assistant accountants of thirteen years standing were receiving $22 a week and accountants, after fifteen years, enjoyed a weekly salary of $26.
I wish to raise my voice in this house to protest against the starvation wages these institutions are shamelessly paying their employees. It would be wise for the banking committee and the Minister of Finance (Mr. Ilsley) to force these financial organizations, who enjoy a privilege granted by the government to pay better salaries to their employees. If the banks, as many other financial institutions, fear that, in view of the radical movements which seem to make some headway in our country undesirable reforms may be enacted, I feel that there would be less cause to take alarm were such powerful organizations as the bank already mentioned to set the example for others, for commercial and industrial firms in general, in the field of reasonable salaries. Thus, they would promote in Canada the cause of order and economic stability, which have been our claims to greatness in the past.


Mr. JEAN:: Mr. Speaker, I was paired with the hon. member for Charlevoix-Saguenay (Mr. Dorion). Had I voted I would have voted against the amendment.


James Lorimer Ilsley: Mr. Speaker, I am not sure whether I can finish to-night before eleven o'clock, but I do not think I should move the adjournment of the debate now, because we still have twenty minutes to go. Therefore, probably I had better begin, even if I have to divide my speech into two parts, delivering part to-night and part to-morrow afternoon.
The debate which has taken place on the motion for second reading, and on the two amendments which have been moved, has been to my mind a very interesting and valuable one. It must be borne in mind that the principle of the bill is a simple one, namely, that the bank charters be renewed for another ten years. When renewal is moved, of course the government has certain amendments to the Bank Act to suggest. This year those amendments have been somewhat extensive, although they have been by no means radical or revolutionary.
100-179J
In this debate it became necessary of course for us to consider certain very important proposals that have been before this house and before the country for a number of years. In the debate I have been criticized because I made what was called a provocative speech. Indeed the hon. member for York-Sunbury (Mr. Hanson) referred to it as a piece of passionate propaganda. I did not intend to make a provocative or propagandist speech, but I intended to examine what it was my duty to examine, namely, first, the proposal of the Cooperative Commonwealth Federation party to nationalize the banks and, second, the proposal of the Social Credit party that any borrowing the government of Canada has to make from the banks be made from the Bank of Canada, which would be coupled with an alteration of the five per cent ratio provision to a 100 per cent ratio provision. Those were the very gravamen of the issue. They went to the very heart of the question as to what we should do with the Bank Act in this year 1944. I would have been derelict in my duty had I not met those issues head-on at the outset, and considered and discussed them. If we should nationalize the banks we should' not extend their charters, nor should I be introducing this kind of bill. If as a government we should cease to borrow anything from the chartered banks-and I certainly do not wish to borrow any more than can be avoided-and if we were to substitute the Bank of Canada for the chartered banks, as a source of money we need over and above the money we get from the public, and couple with that the 100 per cent ratio provision, it would mean a radical amendment to section 59 of the Bank Act. That is something which should also be considered in the debate on second reading.	;
Therefore the debate came on in that way, and it has been a valuable one. The C.C.F. party took exactly the position which I said they would take, and which everybody knew they would take, both in the house and out of it. They put their position forward frankly; and 1 think for the most part- perhaps altogether-their speeches have been fair and direct arguments in support of the position of that party. Thfeir position is that the government should go into the ownership' and operation of the commercial banks of Canada.
The Social Credit party also took exactly the position that was foreshadowed in the speech I made on second reading. Their position is that any borrowing which we do from the banks should be from the Bank of Canada; that is, debt-free money, or the creation of new money. And they for the
2S42
Bank Act-Mr. llsley

first time I think in this house, together with the hon. member for Parry Sound (Mr. Slaght)-and probably some other members- have implicitly, if not expressly, accepted the argument I have been making for years, that if we were to substitute borrowing from the Bank of Canada for borrowing from the chartered banks, and leave the five per cent ratio provision as it is, the effect would be so tremendously inflationary that it should not be tolerated. Therefore they have done exactly what I knew they must eventually do; they must be driven to the 100 per cent ratio proposal. The hon. member for Lethbridge (Mr. Blackmore) said that if the 100 per cent ratio proposal placed the banks in a position where they would undergo great loss, then the government should pay the loss. That meant that we would be substituting interest in another form for the interest which we are now paying the chartered banks, and the position so far as the taxpayers of Canada are [DOT]concerned would be precisely as it is to-day.


Mr. QUELCH:: Very much less.


James Lorimer Ilsley: No. And I would kindly ask hon. members to let me conclude the debate.
Let us take a few of the arguments advanced, and a few of the objections which have been made. Since I have only forty minutes in which to conclude the debate, I can select only some of the more striking arguments, some of those which have made the greatest impression upon the house.
Applying that principle I do not think it is necessary for me to say very much about the speech of the official critic of the Progressive Conservative opposition, because his speech was a very curious performance. I had made no attack upon him. I had made no attack upon his party. I had made no attack upon his party's policy. His party had no amendment to suggest. His party had no criticism to my bill, except a very minor criticism related to bona vacantia, which we can discuss in committee. Yet we had a long speech from the hon. member for York-Sunbury (Mr. Hanson), which consisted in an attack upon me, and the manner of my presentation of my case to the house.
With regard to the lessons in taste which the hon. member sought to teach me, I am greatly obliged to him for them, and perhaps will derive some benefit therefrom. But with regard to his attack upon the method of my presentation to the house I contend to him that I had to do exactly what I did in my [DOT]opening speech, namely, to examine the position of the C.C.F. party and the Social Credit party.
I shall not refer to any other speakers by name, although I may perhaps say something

about the speech of the hon. member for Parry Sound, which possibly impressed some hon. members, because of the picturesqueness of the language rather than the soundness of the argument. But I do wish to take up, in the few minutes remaining to me to-night, a few of the arguments which have been advanced against the bill.
In the first place, the most important provision of the bill, that providing a guarantee of loans to farmers and fishermen, has not received the amount of attention in the house which I think it deserves. True, it has been discussed by a few speakers-the hon. member for Qu'Appelle (Mr. Perley), the hon. member for Rosthem (Mr. Tucker) and the hon. member for North Battleford (Mrs. Nielsen)-but very few speakers have dealt with that important provision in the legislation. To the hon. member for Rosthem, who made the suggestion that the rate should be three per cent instead of five per cent, I would say that is a matter that can be considered either at the time the farm loan improvement bill is before the house, or in committee on this bill; but my personal opinion-and I give this for what it is worth-is that if the rate is made three per cent instead of five per cent we shall defeat the purpose of the bill and the loans will not be made. We must remember always that we cannot, simply by putting down interest rates, ensure that loans will be made in volume at those low rates. My opinion is that this would be an impracticable proposal.
With regard to the advantage of this provision for credits, some have expressed scepticism as to whether these loans would be made in volume, but my expectation and belief is that any honest farmer who can use the money for fruitful and productive purposes will be able to get a loan under the provisions we have inserted in the Bank Act, and under the provisions of the farm loan improvement bill. That matter can be fully discussed in committee, and by the time that discussion ends I think hon. members will be satisfied that this provision will really result in the extension of useful credit on very reasonable terms to large numbers of the primary producers of the Dominion of Canada.
I have been asked in this debate why we are giving the farmers merely a modified home improvement loan plan while we are giving the industrialists an industrial development bank. The criticisms of our position fall under two heads. It was suggested by the leader of the opposition (Mr. Graydon), though I must say not advocated, that we might have provided for our industrial loans in the same way that we have in this bill provided for agricultural loans; that is, that

Bank Act-Mr. Ilsley
they should be made by the chartered banks under a guarantee by the dominion government. I want to give a few reasons why I think that would have been inadvisable. In the case of intermediate credit loans for farmers and fishermen, there is a vast number of loans all of a more or less uniform character, and also of the type which the banks are equipped to make. The insurance principle is therefore applicable to them. In other words, it is easy to lump all these similar loans together and apply a guarantee to them based on a stipulated percentage of the total amount of loans made by any one bank. The same thing applies to home improvement loans; there will be a very large number of relatively small loans of a very similar type. But the type of loan that will have to be made by the industrial development bank will be entirely different. The amount of the loan in each case presumably will be a great deal larger than in the case of agricultural intermediate credit loans or home improvement loans, and the number of loans will be relatively small. Each of these loans will present its own special problems; each will be a special case and will have to be considered on its merits. For these reasons the insurance principle is entirely inapplicable.
There are other reasons as well. Partly for the reason just mentioned-that is, the high degree of variability in the character of the loans-it would be extremely difficult to fix a percentage of guarantee that would be suitable. If the percentage were placed at a relatively low figure, such as ten or fifteen per cent, the government could be sure that there would be many loans that never would be made by the banks. A banker might be concerned with the possibility of loss on the particular loan before him, and might not feel that his loss on this loan would be offset by the bank's experience in a multitude of other loans. In practice, as already pointed out, there would not be a multitude of other loans. In the case of any one bank, particularly a small bank, the number of loans made in the course of one or two years probably would be relatively small, and not enough to give the diversification of risk upon which the pool or insurance principle is based. Then the Bank of Canada should exercise an active rather than a wholly passive influence in the type of loan concerned with the initiation of a new enterprise or the expansion of a small enterprise. Loans of this type which are desirable in the national interest, particularly if Canada is to carry out an expansionist policy in the years after the war, might never be made, and the government's guarantee never asked for under the insurance principle; and
many of the loans the industrial development bank will be making are not of the type that commercial banks have made in the past, and perhaps in most cases of the type they are not equipped to make.
These are some of the reasons why I think the pool guarantee principle should not be applied to the kind of operations envisaged for the industrial development bank. But then from the other side, from the C.C.F. and perhaps others of the smaller groups, we had the suggestion that instead of providing for guarantees of the loans by commercial banks to farmers and fishermen, we should set up an agricultural development bank; and we were asked why we wdre not doing that. Well, there is a very practical reason; there are-several reasons for not doing it, but one is very practical. It is that an agricultural development bank would mean a bank with perhaps a thousand or two thousand branches. It would mean duplicating existing banking facilities wherever there are farmers and fishermen, and that takes in most of Canada. It would mean great personnel problems; it would mean problems of labour and materials, and. in addition, it would get us into something like commercial banking, which I do not believe and the government does not believe is a suitable field for government enterprise.
Hon. members have attempted to say that we are in an inconsistent position; that we say the government should not go into the field of commercial banking for various reasons, one of which is -that political influences might prevail, but that at the same time we are going into the field of industrial development banking, and one hon. member says we cannot have our cake and eat it. I want to point out the difference between the very limited type of banking or loaning that we propose to do in the industrial development bank and the kind of business we would be in if the government went into commercial banking. To begin with, the commercial banks have about thirty thousand employees; the industrial development bank, after it gets going, will have perhaps fifty or a hundred. I presume the commercial banks make several hundred thousand loans a year; the industrial development bank, comparatively speaking, would make only a few.


Gordon Graydon: I do not want to interrupt the minister; but if that is the case, the whole object of the industrial development bank, as we understood it, which was to help the small people throughout the country, will be negatived, because if you are not going to have more than the number of loans suggested you are not meeting that objective.
2&14
Bank Act-Mr. llsley

Mr. II.SLEY:	In his speech to-night the
hon. member for Rosedale (Mr. Jackman) said that perhaps the industrial development bank would have a thousand customers while the commercial banks have a million. I do not know whether those figures were evolved from some discussion that took place in the committee while I was absent; but while such figures cannot be at all exact, at any- rate the *difference in magnitude and ramifications and contacts, particularly public contacts, between the industrial development bank and the chartered banks is tremendous. The chartered banks have 3,077 branches in Canada. The industrial development bank at the outset will have no branches; it will have nothing but a head office. After that there will be some branches, perhaps one in each province. You have two entirely different kinds of institution. It is the multiplicity of these contacts, these hundreds of thousands, perhaps millions of contacts, that create the political dangers in an institution, the dangers of political pressure, political control and so on. It is where large numbers of people are affected, as every hon. member knows. Not always is that the case. There are public utilities which deal with the public on a standardized basis where the danger is negligible, but in this case thousands of government employees will have to pass upon the honesty and character .of the people they deal with. They will have *to deal with A to-day on one basis, and with IB to-morrow on a different basis. That is the .-situation in which the impropriety of govern-.anent operation emerges, in my opinion and -in the opinioi of the government.
The C.C.F. have attacked that one argument I have made against the socialization of the banks, but they have left the others pretty well alone. I challenge any member of this house, after hearing the eloquent and able speeches by members of the C.C.F., to put in a sentence what the utility would be of nationalizing the banks of Canada. They say, "Oh, well they would deal out credit in terms of public need." Does that mean that loans are to be made on the basis of what would be helpful to the person applying for money, regardless of whether or not the money is to be repaid? I have thought this thing over after hearing the hon. member for Weyburn (Mr. Douglas) the hon. member for Rosetown-Biggar (Mr. Coldwell) and other hon. members, and I cannot see what difference there would be in this thing unless they propose to go in for bad loans on a large scale.
On the question of the volume of credit, the loosening up of credit in times of depression and the contraction of credit in times of boom,

may I say that that is controlled by the Bank of Canada, as I explained in my earlier speech. One of the speakers for the C.C.F. said, "Oh, yes, the Bank of Canada can force reserves on the chartered banks, but they cannot make them grant loans, or if they do, they cannot prevent the banks from calling the loans in." The profit motive ensures that they will lend if they can safely do so, and it ensures that they will not call the loans in if they can safely let them stay out.


An hon. MEMBER:: Oh, no.


James Lorimer Ilsley: Oh, yes; it certainly does. If the C.C.F. proposes that their government commercial banks are to be run without regard to profit and loss, then they are in for a gigantic system of bad loans on the part of the government. Probably in a great many cases they will have to be granted under mass pressure. Perhaps they will say that that is democracy, but that is what would happen if they are going to change the operation of the commercial banks in the way which they propose.


Major James William Coldwell: Since the minister has asked a number of rhetorical questions, may I say that we regard the banking system as part of the whole economic system.
Mr. ILSLEY": My hon. friend says that he regards the banking system as part of the whole economic system. I think the hon. member for Rosthern proved to the house in his speech this afternoon that the reason why the C.C.F. desires the nationalization of the banks is that that is essential to the socialization of the whole system. In other words, the fourth argument, if hon. members will recall, in my speech which was referred to by the hon. member for Weyburn, is a sound argument. That is the basis and crux of the socialist position in connection with the nationalization of the banks. I should like to move the adjournment of the debate.


Some hon. MEMBERS:: Go ahead.


Thomas Vien: With the consent of the house.


Major James William Coldwell: I think the minister is tired, as is everybody else.


Gordon Graydon: Leave it to the minister to say whether he wants to go on.


James Lorimer Ilsley: I would prefer to wind it up to-night if I can have unanimous consent. I shall have to keep within my forty minutes. Reference was made to the small loan business by the hon. member for Vancouver-Burrard (Mr. McGeer), who indicated that he would

Bank Act-Mr. Ilsley
fight hard against this bill in the banking and commerce committee because it increased the rate from seven per cent to 9J per cent to small borrowers. That is not the effect of this bill. The present rate paid by borrowers for small loans on the instalment plan is up to twenty-four per cent. That is what they pay when they borrow from the small loan companies. We thought that the banks should be empowered to make this class of loan, but that there should be a limitation placed upon the rate of interest they could charge, and this has been put at 9| per cent. We have put it in the form of a five per cent discount, but it really amounts to 9J per cent. This is a special and unsecured instalment type of loan, but it is being made available at a much cheaper rate than is now being paid by the people of this country. I believe this to be one of the most constructive proposals in the bill. It fills a current need.
If the measure comes out of the committee with the borrowings limited to a rate at which they cannot carry on the business in any volume, then I am not sure but that it would be my duty as head of the department of insurance to issue licences to additional small loan companies. If I did not do that and there were no regulated facilities, these people would be driven to note-shavers and loan sharks, as was the case some years ago. I consider this to be one of the most constructive provisions in the banking bill. For two or three years now I have been turning down applications by small loan companies for licences.


Victor Quelch: Is the bank of Commerce not making small loans?


James Lorimer Ilsley: Yes, but at rates higher than 9J per cent.


Victor Quelch: But less than twenty-four per cent.


James Lorimer Ilsley: But higher than the limitation provided by this bill.
I think that is all I can say about that part of the measure because I must hurry along. Perhaps before I get too far along in my time I should say something about the speech of the hon. member for Parry Sound (Mr. Slaght). The hon. member made an astonishing speech. He used the word "monopoly" in a sense which it does not have. He talked about the monopoly which the banks of Canada have. He used the word in the sense of a holder of a franchise. Apparently it did not make any difference to him whether there was one holder, two holders, ten holders or, as in the case in the United
States several thousand holders of the franchise. He used the word in a sense which would make the banks of the United States or the banks of any country a monopoly simply because they were empowered to carry on the business of banking. I think I dealt with the question of monopoly by the banking system of Canada in my first speech.
In dealing with the profit of the private banks the hon. member for Parry Sound denied that the shareholder's equity was the proper basis. The hon. member for Rosetown-Biggar denies that also, as well as other members of the house. They have said that in working out what would be a fair return to the shareholders of a bank we should take into account the original paid-in capital and nothing else. Let me put this to hon. members. If a farmer as a result of his operations is able to save some money and he buys another farm next to his original farm, would it be fair if we were asked to set a fair return on his farm to take the value of both farms or of the first farm only?


Mr. COLD  WELL@: The example is not comparable.


James Lorimer Ilsley: It is comparable. What does a shareholder's equity consist of. Do hon. gentlemen know? It consists of paid-up capital, reserve funds and undivided profits. I believe that one of these banks has been in existence for 125 years, while other banks have been in existence for many decades. It would be most unfair to take the original investment only, made perhaps half a century ago, and say that it is only on that original investment that the present owners of the bank are entitled to a return. Most of the owners of banks have obtained their shares in more recent years and have paid, not $100 but $150, $200, $250 and sometimes more per share. If they are to be paid a return only on the original investment it would mean the immediate reduction of the shares to something approximating their par value, which would be entirely unfair. The shareholders' equity is the proper basis, and what was their rate? Six per cent. All those great figures we heard, $47,000,000 including tax, sixteen per cent, twelve per cent, ten per cent and so on, all come down to this, that in the year 1943, which was a good year for the banks, when they did far better than the average for the fifteen previous years, for which I have also given the figures, they earned-they did not get by way of dividends, but their net earnings amounted to 6-03 per cent of the shareholders' equity.
Bank Act-Mr. Ilsley

The hon. member for Parry Sound says, just as the Social Credit party says, that the borrowing should be done from the Bank of Canada. He recognizes, and I am glad that at last after two or three years apparently he has come to recognize that that would be very inflationary without some change in the ratio provision. Therefore he suggested a change from five to 100 per cent in section 59 of the act. He says that the banks have two billion dollars worth of bonds they should not have. If we were to repossess those bonds and turn them over to the Bank of Canada and borrow another billion from the banks, that would make three billion dollars we would borrow from the Bank of Canada this year. If we did that, it would increase the deposits of the chartered banks by three billion dollars. That is certain. The banks, in order to carry that three billion dollars would have to pay interest on a very considerable part of it, and on all of it they would have other substantial carrying charges. Our best estimate of what the total marginal cost would be, the additional cost by reason of the banks having to carry that amount of deposits under conditions like this, is three-quarters of one per cent. If that three billion dollars were borrowed from the Bank of Canada and we had a 100 per cent ratio provision so that against the three billion dollars of deposits in the chartered banks they would have to keep an equivalent deposit in the Bank of Canada, we would impose an additional charge of 822,500,000 a year on the chartered banks. That is precisely nothing more or less than a tax on the banks. Would anybody in his senses propose a tax of 822,500,000 on the chartered banks in addition to the present taxation? The banks would not take it themselves. They would either liquidate or they would pass it on, and, as I said, there are only four classes to whom they can pass it on-to their depositors. to their borrowers, to their shareholders, or to their employees. They certainly would try to pass it on to one or more of these classes, and would do so. By our borrowing from the Bank of Canada instead of from the chartered banks we would have simply imposed a tax of 822,500.000 or more on some or all of these classes. That is all we would have done. This is a budgetary proposition. It is not nearly as much a banking proposition as a budgetary proposition.
Will it be argued that that is a fair tax, that it is a better tax than the income tax? At last the issue is out in the open. It is not hidden somewhere. It is not on a basis of getting something for nothing or on the basis of the banks getting enormous profits which must be taken away from them. Do we or do 
we not want an additional enormous tax placed on the depositors, or the shareholders, or the borrowers, or the employees of the banks? That is the issue. I think we should know exactly what we are facing, and that is all it is, because as the hon. member for St. Antoine-Westmount (Mr. Abbott) said the other night, you cannot get something for nothing. I do not believe we should do that, not for one moment. I think there is no sense in that tax. I think it is unscientific, illogical, unjust and a bad tax. I think our present system of taxation has much more regard for ability to pay than that kind of taxation would have.
I do not know that there is very' much more I have to say. A great many things have been said in this debate which ought to be replied to if one were doing a complete job, and which ought to be replied to sooner or later, but I have not the time in the forty minutes which are allotted to me.
In my opening speech-and I mentioned it this afternoon at the time the hon. member for Vegreville (Mr. Hlynka) was speaking-_ quoted two professors of economics in the United States about the years of prosperity and the years of depression in Canada, and that has been mentioned several times. But as I explained this afternoon the impression given by what I said is probably not the impression that should have been given because these professors divided the business cycle into four phases: depression years, revival years, prosperity years and recession years, and in the figures I used they were only comparing the years of high prosperity, coming toward the peak of the boom, with the years of depression. The period covered was not recent. It was from 1888 to 1924. Between 1921 and 1936 twenty-three central banks were established in twenty-three countries of the world. It is only recently that central banks have been established in practically all countries or that central banks have developed a technique to help control swings from prosperity to depression. It would be folly to deny that there are business cycles, that business is better at times than at some other times, and that certainly would be true under a socialist dispensation. Anybody who thinks that by changing the ownership and operation of industry from private to government hands you are going to do away with business cycles or that times are not going to be better sometimes than at other times is very much mistaken.
I am sure I have forgotten some of the things I should have said, but my time has expired and I am therefore concluding the

Members' Accounts and King's Printer__
debate on this motion. I am sure that in the banking and commerce committee we shall have a discussion which will be vigorous at least, if not enlightening, and probably it will be enlightening as well. I really think the legislation we are proposing this session is the legislation best suited to conditions as they exist at the present time and to the decade which lies ahead.


[Stage Direction]
Motion agreed to, on division, bill read the second time and referred to the standing committee on banking and commerce.
On motion of Mr. Ralston the house adjourned at 11.20 p.m.
Friday, May 12, 1944