1967-03-16

[Stage Direction]
Fourteenth report of standing committee on transport and communications-Mr. Macaluso.
[Stage Direction]
Twenty third report of the standing committee on finance, trade and economic affairs -Mr. Gray.

[Stage Direction]
Mr. Hubert Badanai (Fort William) presented the fifth report of the standing committee on northern affairs and national resources.
Mr. Dinsdale:: Mr. Speaker, I rise on a question of privilege. The report of the committee on northern affairs and national resources will have to be received on division; the members of the official opposition dissociate themselves from the report.


Mr. Speaker:: Order, please. I understand there is no provision for this, as I am sure the hon. member appreciates. On a question of privilege he may indicate his disagreement with the report, but it certainly cannot be the subject of a debate.


Mr. Badanai:: Mr. Speaker, may I be permitted to explain-


Mr. Speaker:: Order, please. I suggest to the hon. member that this cannot be done.


Mr. Barnett:: On a question of privilege-


Mr. Speaker:: Order, please. The Chair has ruled that there is no question of privilege, so the hon. member cannot rise on a question that does not exist.


Thomas Speakman Barnett: My question of privilege is different from that raised by the hon. member for Brandon-Souris. My question of privilege is that I failed to hear what report it was that the chairman of the committee on northern affairs and national resources was tabling. I wonder whether he might be allowed to repeat the number of the report, because I think it has some significance.


Hubert Badanai: The report has nothing to do with the matter of-


Mr. Speaker:: Order, please. I ask the hon. member's co-operation to indicate to the hon. member for Comox-Alberni the number of the report that he has tabled.
[Note: Text of the foregoing reports appears in today's Votes and Proceedings.]

On the orders of the day:


Walter Gilbert Dinsdale: Mr. Speaker, earlier today I indicated that we objected to and dissociated ourselves from the report presented by the standing committee on northern affairs and national resources. It has now come to my attention that the report presented today was the fifth. The sixth report is still being translated, and that is the report to which we object.



INCOME TAX ACT


Hon. Mitchell Sharp (Minister of Finance) moved: for leave to introduce Bill No. C-280, to amend the Income Tax Act.


Some hon. Members:: Explain.


Mitchell William Sharp: Mr. Speaker, I am sure the house will be glad to know that this is a bill for the purpose of removing a tax, namely the 5 per cent refundable tax.
Motion agreed to and bill read the first time.
[DOT] (2:40 p.m.)



FISHERIES ACT


Mr. Frank Howard (Skeena) moved: for leave to introduce Bill No. C-281, to amend the Fisheries Act (seal hunting prohibited).
He said: Mr. Speaker, there are many who support the principle contained in this bill, many with humane instincts and concern about what has taken place in the seal hunting grounds not only this year but in the past. The purpose of the bill is to prohibit anyone from hunting, killing, impeding, injuring or obstructing the progress of seals within the area bounded by the territorial sea of the fishing zones as determined under the Territorial Sea and Fishing Zones Act.

March 16, 1967
Inquiries of the Ministry
There are two exceptions to the prohibition; first to enable the Indian and Eskimo people to hunt seals for food and clothing, and second to allow the Canadian government to engage in research work.
Motion agreed to and bill read the first time.



FISHERIES


[Stage Direction]
On the orders of the day:
Right Hon. J. G. Diefenbaker (Leader of the Opposition):: Mr. Speaker, as private members' bills do not often receive early attention, or any attention at all, I should like to address the following question to the Minister of Fisheries.
Now that the sealing season is concluded and the reports of the S.P.C.A. officials and other observers make it clear that cruelties are far from ended, and also that one of the department's senior officials was forcibly thrown off a sealing ship when endeavouring to enforce government regulations, would the minister inform the house whether he is now willing to bring before us the necessary legislation to put an end to this inhumane practice?


Hon.   H.-J. Robichaud@Minister of Fisheries: Mr. Speaker, first of all I wish to advise the right hon. gentleman that I have received a report from five representatives of S.P.C.A. societies who witnessed the seal hunt this year. They have unanimously agreed and reported that the evidence of cruelty was minimal, that there was a general improvement in the operation, that the level of the enforcement of regulations by officials of the Department of Fisheries was greatly increased, and that compliance with the regulations was generally satisfactory in the circumstances.
With regard to the event the hon. member has mentioned, when a senior official of the department was ordered off a ship, may I say that this senior officer suspended the licences of most of the crew members of the ship for 24 hours. As soon as the captain ordered him to leave the ship he immediately contacted his headquarters in Halifax, which got in touch at once with the owner of the ship. In turn the owner telephoned the captain and told him that unless the regulations of the Department of Fisheries were fully carried out the captain would be immediately replaced and the licence of the ship would be cancelled.


John George Diefenbaker: I should like to ask the
minister whether it is a fact that he received a telegram from the New Brunswick S.P.C.A. to the effect that autopsies performed on baby seals by Dr. Elizabeth Simpson "indicate a large proportion of baby seals still being skinned before death in unsupervised killings". I should also like to ask the minister, in view of the fact that the income from this operation is so small, whether the time has not come, in the interests of humanitarian considerations, to end this practice regardless of the improvement this year or the year before, which incidentally was pointed out by the minister in identical terms last year.


Mr. Robichaud:: Mr. Speaker, I did receive such a telegram from Dr. Kinloch, vice president of the New Brunswick S.P.C.A. I replied immediately to Dr. Kinloch that the statement in his telegram was not according to the facts. There were two veterinarians, representatives of the S.P.C.A., who witnessed the operation and they have by their own reports concluded that the report made by Dr. Simpson and a companion, Mr. Brian Davies, was not accurate or according to the facts.


John George Diefenbaker: Mr. Speaker, may I come back to the major question I asked, which was this. In view of all the circumstances and the fact that 50,000 is the total number that are being killed, having regard to the serious feeling on the part of the people generally toward the inhumanity of this operation and the smallness of the income from it derived by Canadians, does the minister not feel that the time has come to end this practice?


Hédard-J. Robichaud: Mr. Speaker, I wish again to advise the right hon. gentleman that the quota of 50,000 is the number being applied both to sealers and to those operating from aircraft. Furthermore, an additional number of seals are killed by landsmen, by fishermen who need the revenue at this time of year in order to provide a livelihood to care for their families. In view of the interest that is being shown by the right hon. gentleman may I remind him that it might be appropriate to go back to his own files between the years 1960 and 1962 and look at the letters which he himself sent to S.P.C.A. officials when he was responsible for the government.


Mr. Speaker:: Order. I think we are now getting into a debate between the Leader of the Opposition and the Minister of Fisheries.
I suggest that perhaps we should go on to another question.
March 16, 1967


John George Diefenbaker: Mr. Speaker, I would suggest, following that gratituous statement-
Some hon Members: Oh, oh.


Mr. Speaker:: Order, please.


John George Diefenbaker: I would suggest to the minister-


Some hon. Members:: Order.


Mr. Speaker:: Order, please.


John George Diefenbaker: I do not mind being howled down.


Mr. Speaker:: May we have order, please. My suggestion both to the minister and to the Leader of the Opposition is that we are no longer seeking information or giving information. Following the supplementary and further supplementary questions, asked by the Leader of the Opposition we began to get more into a discussion of the merits and demerits of the case for seal hunting. I do not think we should get into that kind of debate now.


John George Diefenbaker: Mr. Speaker, I rise on a question of privilege.


Some hon. Members:: Oh, oh.


Mr. Speaker:: Order, please.


John George Diefenbaker: I want the record to be clear that I was howled down by Liberal members because I dared to assert that action should be taken in this regard.


Hédard-J. Robichaud: All I ask of the right hon. gentleman is that he follow the policy that was followed by his own government.


Some hon. Members:: Oh, oh.


Mr. Speaker:: Order, please. May we forget about seals for the moment.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Mr. T. C. Douglas (Burnaby-Coquillam):: Mr. Speaker, now that you have quietened the seals I wonder whether I might turn the attention of the house to another matter. May I draw the attention of the minister of manpower to a joint statement issued by the minister's department and the Dominion Bureau of Statistics which shows that at the middle of February there were 396,000 unemployed
Inquiries of the Ministry in Canada, an increase of 40,000 over the same month of 1966 and representing an unemployment figure of 5.4 per cent of the Canadian labour force.
I want to ask the minister whether in the next few days on motions he would be prepared to make a statement to the house analysing these figures, to show to what extent this large increase in unemployment is due to structural unemployment caused by technological change and to what extent it is due to a decline in the economic activity of this country.


Hon. Jean Marchand (Minisier of Manpower and Immigration):: Mr. Speaker, I have no objection to looking at these details and statistics. After I have looked into them I shall determine whether it is proper for me to make a statement.


Thomas Clement (Tommy) Douglas: A supplementary question, Mr. Speaker. May I ask the minister whether when making that statement he would be prepared to detail what steps his department proposes to take to cope with this growing problem of unemployment.


Jean Marchand: I shall have to look at the details of the statistics before making any commitment or statement.


John George Diefenbaker: There are almost half a million unemployed.


Mr. Gilles Gregoire (Lapoinle):: Mr. Speaker, I have a supplementary question for the Minister of Manpower and Immigration.
In view of such increase in unemployment which is particularly noticeable in Quebec where the figures are approximately the same as in the hard years of 1960, 1961 and 1962, will the minister tell us whether he intends to take special measures to check the unemployment crisis in Quebec?


Jean Marchand: Mr. Speaker, a certain number of measures have already been taken, among which winter works carried out in co-operation with the municipalities, and of which Quebec is the largest beneficiary. This measure is already operative. It may not be perfect, but we are undoubtedly ready, with the co-operation of the provincial government, to counter seasonal unemployment.

March 16, 1967
Inquiries of the Ministry


Mr. D. V. Pugh (Okanagan Boundary):: Might I ask a further supplementary question of the Minister of Manpower and Immigration. When making his statement would he also say how much of this growing unemployment is due to lay-offs in the building trades.


Jean Marchand: Mr. Speaker, I have already mentioned that before committing myself to making a statement I shall have to look at the details and statistics. When making my statement of course I shall try to make it as complete as possible.


Mrs. Grace Maclnnis (Vancouver-Kingsway):: A supplementary question, Mr. Speaker. Is the minister investigating or will he investigate the reasons for the 30 per cent rise in the number of women without jobs, a disproportionately high figure?


Mr. Speaker:: Order, please. I am sure the minister will take all these suggestions into account. We shall set aside an afternoon for his statement.


Some hon. Members:: Oh, oh.



FINANCE


[Stage Direction]
On the orders of the day:
Mr. Gerard Laprise (Chapleau):: Mr. Speaker, I have a question for the Minister of Finance. By coincidence, my question is related to those directed to the Minister of Manpower and Immigration a while ago.
I should like to ask the minister whether, in view of representations by builders and homeowners associations, he intends to remove the sales tax on building materials?


Mr. Speaker:: Order. The hon. member's question is similar to that which has just been put.



QUEBEC-DOUBLE TAXATION ON DEPOSITRECEIVING INSTITUTIONS

[Stage Direction]
On the orders of the day:
Mr. H. A. Olson (Medicine Hal):: Mr. Speaker, I wish to direct a question to the Acting Prime Minister or to the Minister of Finance. Has an agreement now been reached with the province of Quebec or are meetings planned with that province to deal with the 
matter of double taxation of all financial institutions receiving deposits?


Mitchell William Sharp: Mr. Speaker, as the house is aware and as the Prime Minister informed us some weeks ago, a meeting is being arranged to discuss all financial institutions, including those that accept deposits. There has been some difficulty in getting agreement among all provinces for a suitable date. I believe a decision will be reached very soon for a meeting in April.


Horace Andrew (Bud) Olson: May I ask a supplementary question. I suggest that the Quebec legislature already has a bill of this nature before it, so is there any possibility there will be some double taxation of these institutions before that meeting is held and an agreement is reached?


Mitchell William Sharp: I am not sure that the Quebec legislature has a bill before it. I have learned what the hon. member has learned from the newspapers and the public broadcasts, that it is the intention of the premier of Quebec to have a bill introduced for this purpose. I cannot answer, therefore, whether there will in fact be so-called double taxation, although I should point out that this house has not imposed a tax upon deposit-taking institutions.



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Hon. Gordon Churchill (Winnipeg South Cenire):: My question is for the Minister of National Defence and relates to the Queen's Regulations and Orders for the Canadian forces. Is it the intention of the minister to drop the word "Queen's" or has that already been done, and substitute "Canadian Forces Orders" or some similar words so as to avoid using the traditional title?


Hon. Paul Hellyer (Minister of National Defence):: No, Mr. Speaker, there is no such intention to my knowledge. I would be surprised if there were.



THE CANADIAN CONSTITUTION


[Stage Direction]
On the orders of the day:
John George Diefenbaker: I should like to ask the
March 16, 1967

Acting Prime Minister whether his attention has been drawn to the constitutional faux pas on the part of the Minister of Industry who commented publicly on the choice of a successor to the late Governor General, and in particular whether his attention was drawn to these words in the report in the Montreal Gazette:
-Prime Minister is giving serious consideration to the possibility of recommending-


Some hon. Members:: Order.


Mr. Speaker:: Order. The right hon. gentleman should ask the question directly without reference to the newspaper article.


John George Diefenbaker: The question is, has his attention been drawn to this serious constitutional breach of a minister commenting on the recommendation to be made by the Prime Minister to the Queen regarding her representative in Canada?


Hon. Paul  Marlin@Acting Prime Minister: I have read the article, Mr. Speaker, to which my hon. friend directs my attention. I would say that my colleague indicated that this is a matter which under our constitutional practice rests with the Prime Minister. As my hon. friend knows, it is the reponsibili-ty of the Prime Minister to advise Her Majesty the Queen of Canada in the matter of the appointment of the Queen's representative in Canada. The advice by the Prime Minister to the Sovereign is and always has been regarded as completely confidential, and it is not for me to speculate in any way on what it might be.


John George Diefenbaker: The statement by the Acting Prime Minister that the recommendation is to be strictly confidential is well founded. Then I ask him what justification is there for one of the ministers to make a statement which would indicate that this particular tradition has been subjected to a gross travesty?


Mr. Martin (Essex East):: Mr. Speaker, I do not believe the story warrants the conclusion drawn by the right hon. gentleman. The Minister of Industry clearly indicated that under our constitutional usage this was the responsibility of the Prime Minister. In my judgment he in no way violated this principle of constitutional practice.
Inquiries of the Ministry



SHIPPING


[Stage Direction]
On the orders of the day:
Frank Howard: I have a question for the Minister of Transport regarding the representations of the Canadian Merchant Service Guild about the use of steel hull tow boats, and whether the minister is in a position to reply?


Hon. J. W. Pickersgill (Minister of Transport):: Yes. I think this is only the fourth time the hon. gentleman has asked the question. I have found my bit of paper, and the report I have is that on February 8 last the department received a copy of a preliminary report of an investigating committee of the Canadian Merchant Service Guild into tow boat sinkings on the British Columbia coast.
In the report a recommendation was made that steel hulled tow boats be called in to ensure that they contain three watertight bulkheads placed in such a manner that the flooding of any single compartment would not sink the vessel. The department is also doing a study of the recent tow boat sinkings, and the recommendation from the Canadian Merchant Service Guild will be considered at the time the department's investigation is complete. As soon as it has been completed I will let the hon. gentleman know the results.



HOUSING


[Stage Direction]
On the orders of the day:
Mr. Heward Graffley (Brome-Missisquoi):: Mr. Speaker, the day before yesterday in the house the Minister of Labour confirmed press reports that the cross-country housing symposia and study groups have come to an end. In view of this, and in view of the continuing housing shortage, can the minister inform us whether the government is considering new measures to be announced in order to affect springtime housing starts?


Mr. Speaker:: My recollection is that this is a repetition of a question asked two days ago by the hon. member.


William Heward Grafftey: Excuse me, Mr. Speaker; I asked the Acting Prime Minister this question

March 16, 1967
Inquiries of the Ministry yesterday in the absence of the minister directly concerned, and he was unable to answer it. In view of the serious housing situation I think it is appropriate to put the question to the Minister of Labour himself on his return today.


Hon. J. R. Nicholson (Minister of Labour):: This is substantially the same question that was put and answered by me the day before yesterday.



POSSIBLE FORMATION OF TRANSATLANTIC COMMON MARKET

[Stage Direction]
On the orders of the day:
Mr. Lloyd R. Crouse (Queens-Lunenburg):: wish to direct a question to the Acting Prime Minister in his capacity as minister of external affairs. In view of the announcement by Mr. Douglas Jay, president of the Board of Trade in the United Kingdom government, that the formation of a transatlantic common market including Britain, Canada and the United States is being studied in both government and private circles, has the minister any comment to make on the position to be adopted by Canada toward a wider area of free trade between Britain and North America?


Hon. Paul  Marlin@Aciing Prime Minisier: As is generally known, the Prime Minister has emphasized the importance we on this side of the house attach to the development of a strong Atlantic community. As to any comments I might be invited to make on what Mr. Jay has said, these will have to wait until I have had an opportunity to see what, in fact, Mr. Jay did say.


Lloyd Roseville Crouse: Will there be a joint meeting of key cabinet ministers of the British and Canadian governments in London in April to study this question of a transatlantic common market?


Paul Joseph James Martin: I do not want to anticipate the details of the formal announcement, but discussions have been under way for the purpose of establishing with Britain the same modalities that exist between Canada and the United States and Canada and Japan for joint ministerial meetings. There is to be a meeting some time before the end of April when ministers of the Canadian and British governments will discuss foreign affairs, Commonwealth matters, and trade and economic matters.


Mr. G. W. Baldwin (Peace River):: Mr. Speaker, I wish to direct a question to the Acting Prime Minister related to the questions asked by the hon. member for Queens-Lunenburg. If a meeting is held of cabinet ministers of the various countries involved, something we hope will take place, to discuss the question of an Atlantic free trade association, will the hon. gentleman in his present capacity, and with the special knowledge he has as the hon. member for Essex East, make sure that such reprehensible agreements as the Canada-United States automobile trade pact will be outlawed from the discussions?


Mr. Speaker:: Order. I am unable to determine whether the question is directed to the minister in his capacity as Acting Prime Minister, as Secretary of State for External Affairs or as the hon. member for Essex East. However, the question appears to be out of order.



LABOUR RELATIONS


[Stage Direction]
On the orders of the day:
Mr. Barry Mather (New Westminster):: have a question I wish to address to either the Acting Prime Minister or the Minister of Labour. Yesterday on orders of the day the Acting Prime Minister indicated in the absence of the Minister of Labour that he would look immediately into the strike which is threatened between United Press International and the wire service guild at midnight tonight. Could the minister tell us what the position is at the present time?


John Robert (Jack) Nicholson: Mr. Speaker, in this dispute a conciliation officer was appointed several months ago, and on his suggestion a conciliation board was established. The conciliation board which, of course, included a member representative of the employees, unanimously recommended that negotiations should continue. The negotiations did continue. When they broke off a request was made, yesterday, that a mediator should be appointed. Immediately one of the senior officers in my department, our senior official in Montreal in fact, was assigned to the task. The parties are negotiating and the deadline for the strike has been extended.
March 16, 1967



FINANCE


[Stage Direction]
On the orders of the day:
Hon. George Hees (Northumberland):: I wish to direct a question to the Minister of Finance. In view of the sharp increase in unemployment during the past year and the obvious need for increased production to take up the slack, will the minister give consideration to making credit more easily available to producers so they can increase production and thus provide more employment opportunities?


Mitchell William Sharp: I am sure the hon. gentleman has heard of the very considerable easing in capital markets which has taken place in the last few weeks. For example, there has been a drop in the yield on treasury bills from a high of nearly 5.20 to present levels of nearly 4.30 per cent.


George Harris Hees: Does the minister consider that the steps which have been taken are sufficient to take up the slack in employment which has become evident in the last 12 months?


Mr. E. Nasserden (Rosihern):: I have a related question for the Minister of Finance. Has the minister received any representations from building contractors or labour organizations drawing attention to the serious decline in employment and construction plans in the Toronto area and the St. Lawrence basin?


Mr. Speaker:: Order.


Mr. Herridge:: I rise on a question of privilege. Apparently the microphone is not working and we have no opportunity to hear your words of wisdom, Mr. Speaker.


An hon. Member:: He said "Sit down".



AGRICULTURE


[Stage Direction]
On the orders of the day:
Mr. Auguste Choquette (Loibiniere):: Mr. Speaker, I wish to direct my question to one of the ministers who understands the farm people best, namely the Minister of Agriculture who also makes a deep impression each time he appears in public.
Here is my question: Has the minister had talks recently with the ministers of
Inquiries of the Ministry agriculture of Ontario and Quebec to establish what steps can be taken to satisfy the Canadian dairy producers?


Hon. J. J. Greene (Minister of Agriculture):: Talks were held, Mr. Speaker, but not over the last few days.


Mr.   Patrick-T. Asselin@Richmond-Wolfe: Mr. Speaker, I have a supplementary question for the Minister of Agriculture. Can he give the house an indication of the date on which he will announce the new dairy policy which, I think, provides for an increase.


Mr. Speaker:: A question identical to that has already been asked by the hon. member.


Gilles Grégoire: Mr. Speaker, I should like to put a supplementary question to an inquiry made some time ago, with regard to the government's dairy policy.
Since the authorities of the Quebec Catholic Farmers Union are supposed to meet federal members in their respective ridings during the coming weekend, my question is as follows-


Mr. Speaker:: Order. Would the hon. member please put his question?


Gilles Grégoire: Under those circumstances, Mr. Speaker, I should like to ask the Minister of Agriculture whether he intends to announce this new dairy policy before the weekend.


Mr. Eric A. Winkler (Grey-Bruce):: Mr. Speaker, I have not yet received a reply to a question I asked the other day when the Minister of Agriculture was not in the house. May we expect a new dairy policy to be announced before the end of the month?



REQUEST FOR STATEMENT ON NEGOTIATIONS WITH JAPAN

[Stage Direction]
On the orders of the day:
['I think it would be very useful if there were a cease fire on both sides.']
Mr. Lawrence E. Kindt (Macleod):: I understand, Mr. Speaker, that the negotiations which for some time have been taking place between Japanese officials and representatives of the coal industry of western Canada are somewhere near consummation, if they have not already been concluded. I would ask the Minister of Energy, Mines and Resources

March 16, 1967
Inquiries of the Ministry whether he can make a statement at this time. I believe he does have a statement to make on this subject.


Mr. Speaker:: Order. The statement should be made at a time appropriate for ministerial statements.


Lawrence Elliott Kindt: May I rephrase my question, Mr. Speaker. Have the negotiations been completed with the Japanese authorities or industrialists, regarding coal shipments to Japan?


Hon. Jean-Luc Pepin (Minister of Energy, Mines and Resources):: Mr. Speaker, I think the best way I can answer is by saying that the negotiations of which I am most aware are taking part in this part of the world, in Canada, between the producers of the coal and the transport companies.



[Stage Direction]
On the orders of the day:
Mr. Heath Macquarrie (Queens):: Mr. Speaker, I wish to direct a question to the Acting Prime Minister. Can he advise^ the house whether Canada has accepted an invitation to send an observer delegation to the forthcoming and extremely important summit conference of western hemispheric leaders at Punta del Este in Uruguay?


Paul Joseph James Martin: Mr. Speaker, at the last meeting of the Organization of American States there was a Canadian observer. The meeting to which my hon. friend directs our attention is a meeting of the heads of states, and so far as I am now aware no provision is made for the inclusion in those discussions of persons from the governments of non-member countries.


[Stage Direction]
On the orders of the day:
Mr. Stanley Knowles (Winnipeg North
Centre): Mr. Speaker, may I direct a question to the Acting Prime Minister. It is a very straightforward question which I believe he can answer yes or no.
Some hon. Members:: Oh, oh.


Mr. Knowles:: Is it not time for Canada to say clearly that the bombing of North Viet Nam should stop?


Paul Joseph James Martin: Mr. Speaker, I am sure my hon. friend is aware that the government has indicated that in the opinion of the Canadian government a cessation of the bombing is one of the key factors. Another key factor is what action is taken by the other side to make it possible for both parties to engage in preliminary discussions that might lead to a negotiated settlement.
Undoubtedly my hon. friend is aware that at this time this matter is very much engaging the attention of a number of governments, including the government of Canada.


Stanley Howard Knowles: As a supplementary question, shouldn't the bombing stop now?


Paul Joseph James Martin: I think it would be very useful if there were a cease fire on both sides.



TRANSPORT


[Stage Direction]
On the orders of the day:
Mr. Maurice Allard (Sherbrooke):: Mr. Speaker, my question is addressed to the Minister of Transport and it is very urgent, since the Quebec Central Railway intends to proceed before April 30.
Has the minister received protests against the elimination of passenger trains Nos. 1, 2 and 4 between Quebec and Sherbrooke and is it his intention, in the public interest, to recommend that the Quebec Central Railway reconsider its decision.


Mr. Speaker:: This question should be put on the order paper.


Maurice Allard: At ten o'clock, Mr. Speaker. [English]



BRITISH COLUMBIA-STATEMENT BY LABOUR MINISTER RESPECTING BURRARD INLET CROSSING

[Stage Direction]
On the orders of the day:
Thomas Clement (Tommy) Douglas: Mr. Speaker, may I direct a question to the Minister of Labour and ask whether he made an announcement in Vancouver yesterday regarding a third crossing for Burrard inlet, and will he tell the house the nature of this announcement?


John Robert (Jack) Nicholson: Mr. Speaker, I did make such announcement,
March 16. 1967



or rather issued a press release yesterday. If the house would like me to, I would be pleased to table a copy.


Mr. Speaker:: Is it the desire of the house that the minister should have leave to table the document to which he has referred?


Some hon. Members:: Agreed.


Gordon Minto Churchill: On a point of order, Mr. Speaker. I doubt very much whether press releases should be tabled in the house. If we start that practice there will be such an accumulation of paper from the ministerial offices that we won't know what to do with it.


John Whitney Pickersgill: It is only one page.


Mr. Speaker:: If there is no agreement the document cannot be tabled.



SHIPPING


[Stage Direction]
On the orders of the day:
Mr. A. D. Alkenbrack (Prince Edward-Lennox):: Mr. Speaker, I wish to direct a question to the Minister of Transport. Will the minister please authorize the icebreaker Simcoe now on its way up the St. Lawrence river to Kingston, to continue westerly to Millhaven dock on the north shore west of Kingston, and from there to break a channel to Stella on Amherst island, in order that the ferry Amherst Islander may resume vital operations in service to Amherst island, the people of which are in serious need of the resumption of service with the mainland.


Mr. Speaker:: These are very interesting representations which I am sure have been noted by the minister, but this is not the type of question that can be asked at this time.


Almonte Douglas Alkenbrack: Mr. Speaker, I had notified the minister of my intention to ask it.


Mr. Speaker:: The hon. member had not notified me.



PILOTAGE


[Stage Direction]
On the orders of the day:
Frank Howard: Mr. Speaker, I wish to direct a question to the Minister of National Defence on a rather urgent matter. Can he activate the search and rescue service which exists within the Canadian armed
Inquiries oj the Ministry forces to see whether we can find the report of the royal commission on pilotage?


Paul Theodore Hellyer: I shall refer this question to the appropriate minister, Mr. Speaker.



POLLUTION


[Stage Direction]
On the orders of the day:
Jean-Luc Pepin: Mr. Speaker, I wish to reply to a question addressed by the right hon. Leader of the Opposition to the Acting Prime Minister last Tuesday, as recorded at page 13963 of Hansard, regarding a telegram sent to the Prime Minister by Mr. Cronkhite, chairman of the Calgary Fish and Game Association. This telegram expressed concern at the cost of a sewage treatment plant in Calgary and requested senior government financial assistance.
I replied yesterday to the telegram, and among other things I said:
Federal government assists municipalities in construction of sewage treatment plants by making available low cost loans through Central Mortgage and Housing Corporation. These loans are for a maximum of two thirds the cost and extend for a period of up to 50 years. One quarter of loan is forgiven if project is completed on time.
My office called the mayor of Calgary on this subject and was advised that no application had been made for financial assistance from the federal government, since engineering and cost studies are only now in process, and since Calgary would not be prepared to proceed with the construction for at least another year.



AGRICULTURE


[Stage Direction]
On the orders of the day:
Mr. David MacDonald (Prince):: Mr. Speaker, I wish to direct a question to the Minister of Forestry and Rural Development. On Monday of this week the minister informed the house that by March 15 we would be informed of the appointments to the livestock feed board. Have these appointments now been made?


Hon. Maurice Sauve (Minister of Forestry and Rural Development):: Mr. Speaker, on Monday of this week I announced that there would be a delay of at least ten days.

March 16, 1967
Bank Act


David Samuel Horne MacDonald: As a supplementary question, how soon may we expect the appointments to be made to the advisory committee, which is important to the operations of this board?


Mr, Sauve:: Both will be appointed at the same time.



AIR TRANSPORT


[Stage Direction]
On the orders of the day:
Mr. H. R. Ballard (Calgary South):: Mr. Speaker, I wish to direct a question to the Minister of Transport. Can the minister now indicate when we may expect an announcement by him of a decision on the submissions made by the city of Calgary and the Calgary Chamber of Commerce respecting landing rights for Canadian Pacific Airlines at the Calgary international airport?


John Whitney Pickersgill: Mr. Speaker, the answer to that question depends upon many variable factors, and I do not think I could work out the equation in time to answer it on orders of the day.



INCOME TAX


[Stage Direction]
On the orders of the day:
Auguste Choquette: I should like to direct a question to another very able minister, the Minister of National Revenue and President of the Treasury Board, concerning a matter which could very well be discussed at ten o'clock. Here is that question. Has he received an official request from the estates general of French Canada to the effect that any subscription, contribution or gift to that organization should be deductible for income tax purposes?
[DOT] (3:20 p.m.)



BANK ACT


[Stage Direction]
The house resumed, from Wednesday, March 15, consideration in committee of Bill C-222, respecting banks and banking-Mr. Sharp-Mr. Batten in the chair.
The Chairman:: Order, please. When the committee rose last evening clause 2 was being discussed.
On clause 2-Definitions.


Mr. Laiulippe:: Mr. Chairman, last night I called it six o'clock, and I think that-


Herman Maxwell Batten: Order, please. I apologize for interrupting the hon. member but it is rather difficult to hear his remarks.


Henry P. Latulippe: Mr. Chairman, I was just saying that I was explaining a table when I had to call it six o'clock. That table is not complicated but it does not appear in Hansard, probably because my request was not heard. At any rate, nothing was done about it and the table is not in Hansard.
If the committee will allow me, I should therefore like to table it now because it is part of my remarks, and is most important in explaining and completing my statement of yesterday. I shall send it to you, Mr. Chairman.
As I was saying, when $20 million worth of bonds redeemable in tender issued by the Bank of Canada are floated it costs chartered banks $20 million in interest over a period of 20 years; reimbursement at 5 per cent or annual interest at 5 per cent amounts to $1 million per year for the Bank of Canada and $1 million in interest for the chartered banks. After ten years, capital and interest cost the Bank of Canada $10 million, and the chartered banks, $10 million in interest, and, after 20 years, $20 million to the Bank of Canada and $20 million to the chartered banks.
Case one. Hospital entirely paid for: after 30 years, at an annual rate of interest of 5 per cent, $30 million in interest. After 40 years, at 5 per cent interest, $40 million paid in interest to the chartered banks. The bond is redeemable in 40 years, which means $20 million. The same hospital costs $60 million in capital and interest.
May I present this table so that it may be printed in Hansard?


Herman Maxwell Batten: Order. May I point out that the hon. member for Compton-Frontenac requested during the course of his speech this afternoon that a table be inserted in Hansard correcting figures which he had used yester-
March 16, 1967

day. I apologize to the hon. member for not hearing his request, and I would now ask the committee whether it gives its consent to having this table printed in Hansard.
Bank Act


Some hon. Members:: Agreed.
[Editor's note: The table referred to above is as follows]:

DIFFERENCE BETWEEN THE TWO METHODS Finance Figures in both Cases: For the People-or for Financial Institutions
Bond issue: Capital issued Reimbursement at 5%; or Interest at 5%: 1 year:
After 10 years: capital or interest:
After 20 years:
Bank of Canada

$ 1,000,000 in cap. $10,000,000 in cap. $20,000,000 in cap.
Chartered banks $20,000,000
$ 1,000,000 in int. $10,000,000 in int. $20,000,000 in int.
Case one: Hospital entirely paid for:
After 30 years: at an annual interest of 5%
After 40 years: at an annual interest of 5%
Bond redeemable in 40 years The same hospital costs $60 million, in capital and interest:
$30,000,000 in int.
$40,000,000 in int. $20,000,000 in cap.


Henry P. Latulippe: I was saying that after 40 years-to clarify the matter, Mr. Chairman- the $20 million bond becomes due, but since the government cannot pay, having disbursed $40 million in interest at the annual rate of 5 per cent, it must renew its $20 million bond according to the new terms of the creditors, capitalists, bankers or others, and according to the new conditions of the bond market, which may mean a rate of 7 per cent. You no longer see where the greed of those people who realized profits and pleased their gods and their golden calves will stop, especially when they know that the people are the ones who pay the interests and the capital.
Mr. Chairman, I need not say more to make clear the great importance of interest on selfgenerating capital in the machinery of our monetary, political, Canadian, capitalist and orthodox economy.
Nevertheless, that is the reason why, in matters which concern us, such as the study of a 6 per cent interest rate ceiling on bank loans, we can conclude that it is necessary to continue the game of interests to preserve the established system. At least, with our present knowledge, we can prevent the damage from spreading; we must take steps,
set up new barriers and above all keep from removing those which already exist, such as the ceiling of 6 per cent on the interest rate.
One can talk indefinitely about this game of interest and its harmful consequences on the national economy and the social welfare of each citizen of this country.
Since I am speaking to ministers and members of parliament, I think they will be able to draw their own conclusions from those very precise facts, reduced to their simplest expression, which I have just brought to their attention.
[DOT] (3:30 p.m.)
As for bank reserves amounting to 5 per cent in 1933, which were brought up to 8 per cent lately and which are supposed to be brought down to 7 per cent, I suggest that we increase progressively those reserves at a rate of 10 per cent per year, so that in 10 years, they will be equivalent to 100 per cent of the deposits; thus, the chartered banks will lose progsessively the privilege to create new credit, as they lost, in 1933, their privilege to print their own bank-notes. On behalf of the people, the Bank of Canada will use all its privileges to issue all the currency necessary to the Canadian economy and to the welfare of all the Canadian people.

March 16, 1967
Bank Act
Let us not forget that, as the legislators of the whole nation, we must ensure the national economic balance between all the Canadian citizens and all the Canadian institutions, in order to adminster the country efficiently, with the standard and proven formula of revenues-expenditures and profits.
Mr. Chairman, the Minister of Finance (Mr. Sharp) believes in taxation as the only answer to financial problems. Taxation, which tends to reduce private property so as to increase public property, is based on a false financial system which is not in accordance with actual facts. The result of this decrease in what is real by financial fallacies, causes needless suffering of individuals and families. Money is artificially rationed, while potential production is almost automatically eliminated. The money problem is strictly artificial, but society as a whole suffers thereby, judging from the number of victims and the duration of the suffering imposed. The persons responsible for this diabolical financial system cause more evils than all the other wrong-doers in the whole world, and the governments which do nothing to solve the problem are conscious-or perhaps I should say evil-minded-accomplices.
Mr. Chairman, you really would not say that the parliament gathered here is supposed to exercise the nation's sovereignty. On the contrary, one would rather think that one is witnessing a debate between people who want to divide among themselves what has been taken from the people of this nation, and I feel that to remedy this situation one should do what the Great Master did when He walked into His temple and saw that it was full of people gathered there to do business, to exploit part of the people, practically everyone.
The present taxation system is the result of a financial system based on injustice.
Mr. Chairman, we would have many things to say about this, but since my time is almost up, I feel that I have done all I could as a free man, a man who is not bound to anyone, to serve the nation. I feel that I have done my duty toward the nation, I feel that I have brought to light the ills of the present system and I would like the journalists to do the same thing, because they have not reported a single word of what has been said in this house in the last two days. I would say that the journalists also are at the mercy of high finance.
[Mr. Latulippe.l


Herman Maxwell Batten: Order. I must apologize for interrupting the hon. member but the time allotted to him has expired.


Mr. Johnston:: Mr. Chairman, I listened yesterday with interest to the remarks of the Minister of Finance as he detailed the history of this bill and the various delays up to this time in its path to becoming the legislation of this land. I listened also with interest to the remarks of the hon. member for Nanaimo-Cowichan-The Islands yesterday, particularly when he suggested that the Minister of Finance and the members of the Social Credit Party were all religious people. I would not deny that for a moment, but I would suggest that the hon. member for Nanaimo-Cowi-chan-The Islands is also a very deeply religious person, the difference being not in the depth of personal religious experience but simply whether the religion involved is living or dead with that of the hon. member falling into the latter category.
On the other hand, I would not want the suggestion to remain that the Minister of Finance and the members of the Social Credit Party share the same religious approach to matters of finance. I think the difference is that ours tends to be the examined view, whereas far too much of the approach of the Minister of Finance and his government tends to have clinging to it still the old magic and the old ritual, the old concepts of money being something quite other than a medium of exchange and holding a mystic, magical power of its own.


Mitchell William Sharp: Mr. Chairman, would the hon. member allow me to interrupt him and thank him very much for making this very clear distinction between our views? I should also like to remark, and I am sure the hon. member will appreciate this, that it is a measure of the thorough examination which has been given to this bill that when the hon. member first appeared in the standing committee his appearance was very different from what it is today, and I congratulate him on his great accomplishments during that period.


Some hon. Members:: Oh, oh.


Howard Earl Johnston: Mr. Chairman, I appreciate these barbed remarks of the minister. I admit that the sessions of the finance committee were very long, and I agree entirely with the remarks of the minister when he said yesterday that the members of the committee had learned a great deal in that process. I would
March 16, 1967

suggest also that the learning process in this type of work in committee sessions is a twoway street and that in many cases the witnesses appearing before committees also learn. But one thing I hope for, and I think the Canadian people could come to expect this, is a greater sophistication in the approach to the monetary system than was displayed by witnesses appearing before that committee and particularly those representing the chartered banks of Canada.
This is something Social Credit has been endeavouring to do for a very long time in Canada. It has been a long-term process of education to teach the Canadian people that the monetary system is not quite as innocent system as is suggested to us, that money is not, as is suggested frequently, a commodity like other commodities, that many of the comparisons that were made at great length in that committee were specious, that money is created in a way quite different from what was frequently suggested to us, and it is a gross over-simplification of the whole process of banking and money creation to suggest that the banks lend only the deposits of the people who have entrusted their money to them for safekeeping. This is the educative process that Social Credit has been engaged in for a long time, and judging from much of the evidence in the committee we will be so engaged for a long time yet.
But we do make progress, and we know that some measures which have been advocated by Social Credit from the beginning have been partially instituted. These were referred to in the debate on the Bank of Canada Act. We know that it has been possible for the Bank of Canada to assist in meeting the interest charges on the national debt, and this has been a saving to the people of Canada. We hope, though, that as time goes by the people of Canada will take a more acute interest in this matter, and I am sure they will as the interest charges on the national debt increase. This year, as we see in the estimates that have just been presented to us, the figure is $1,250,213,000.
I am sure the enormity of this figure must give Canadians cause for thought. If they have examined the diagrams that so many newspapers have prepared which show the Canadian dollar divided like a pie and have paid attention to the percentage of the whole pie that is dedicated to the cost of servicing the national debt, it should be obvious by now to the people of Canada that what the Social Credit party has been saying for so long has a far more permanent foundation
Bank Act
than has been suggested by the Minister of Finance or by the witnesses from the banking profession who appeared before the committee.
[DOT] (3:40 p.m.)
I know that in our questioning of those witnesses we could not expect to receive the same frank answers that were given in the 1930's when a different governor of the Bank of Canada was before the committee and when rather frank acknowledgements were made with regard to the involvement of the chartered banks in the creation of money. As I have said before, the learning process is a slow one and the defenders of the present system are not inclined at present to give a frank answer. One of the interesting features of the committee hearings was the very lengthy circumlocutions used by some of the witnesses in getting around the central facts of monetary policy and the creation of money.
We in this party are not denying the necessity of bringing the Bank Act up to date. We recognize the importance of bringing legislation up to date in light of the rapidly increasing pace of a modern technological society. This bill is overdue and has been long delayed.
We welcome parts of the Bank Act. For example, we welcome the clauses which deal with mortgage money and will allow chartered banks to enter into that field. Housing has been one of the most neglected areas of Canadian industry and the degree of neglect has reached a crisis point because owing to rising immigration our nation is facing a very serious housing crisis. The situation has reached the point where the proponents of public housing are suggesting that it is the task of the government to enter the field of housing to a far greater extent than it has done before.
I really cannot understand why this suggestion should be made even by the socialist representatives in this house because they should know from their reading about Sweden, that socialist state which is so often held up as an example to us, that that nation, which has a far smaller and far more stable and static population than that of Canada, has a severe, continuing and worsening housing shortage. If public housing and the socialist philosophy were the answer to the housing shortage, then if any nation in the world could show that this was the way to solve the housing problem surely Sweden would be that nation. Nevertheless I know from personal experience, having visited that country

March 16. 1967
Bank Act
in 1962, that the one complaint one heard there over and over again was that the government had not been able to meet the housing needs of that nation. Five years later we see that the situation there is worsening and that a way has not yet been found through the methods of socialism to solve their housing crisis. So it rings a little false in our ears when we hear pleas that the government should become involved in public housing.
We welcome the changes in the Bank Act which will allow the chartered banks to move into this area of money supply, and we hope that this will provide the housing industry what it has wanted for so long, a continuous and uninterrupted flow of mortgage money which will not be an instrument of monetary policy in the country but will guarantee a base from which that industry can plan and develop and use methods of production which are appropriate at this time.
There is one matter in the Bank Act which occupied a great deal of the committee's time and concerns us very much. I refer to the question of the interest rate. This is the really basic point of contention in the whole bill. This subject occupied much of the committee's time in its debate about commodities. The argument was advanced that if the prices of all commodities were increasing then the price of money had to go up as well. An analogy was drawn between the two, and there was a reason for that. Witnesses representing the chartered banks complained that they were limited in ways which the near banks were not and that this was related to the problem of the interest rate. They asked that the restrictions on the chartered banks be removed so they could raise the interest rate on loans. It was suggested that if the interest rate were raised they would be able to pay a higher interest rate on deposits, thereby attracting more deposits, and this way they would have more money to lend.
What should be kept in mind in this whole discussion of the interest rate is that the mechanics which I have spelled out do not in any way increase the money supply. This would remain constant. All it means is that the amount of money lent by the various institutions will be divided amongst them differently. If the banks are in a position to lend more, then somebody else will be lending less, but the over-all amount of money that will be lent will not be increased as the result of an increase in the interest rate.
An interesting fact I should like to mention is that this statement was made to us by
[Mr. Johnston.!
representatives of the banks as a factual matter. They said that the simple truth was that if the banks could attract more deposits they could lend more money; if they could pay a higher interest rate they could attract more deposits and therefore the interest rate they could charge on their loans should be raised so as to attract more deposits. This was presented to us as a fact about which no questions should or could be asked.
Nevertheless questions have been asked. There is an important article in the Canadian Journal of Economics of August, 1966 which does ask questions with regard to the interest rate. The preamble to the article sets out the reason why the study was made, and I would like to quote from it at some length because I think it is important to the whole argument concerning the interest rate. It reads as follows:
The primary purpose of this article is to perform a statistical test of the popular contention that interest rate differentials have been important determinants of the relative decline of the Canadian chartered banks in the competition for personal savings deposits. The report of the royal commission on banking and finance, in listing the various factors that influence the distribution of savings deposits among depository institutions, stated that, "the rate paid on deposits is also a very important factor in attracting funds ..." The commission also commented that the fact that the banks have not paid as high rates as their competitors on personal savings deposits "has without question contributed to their relatively slow rate of growth." In support of these assertions the commission stated that, "there is evidence suggesting the force of interest rate competition. As an example, market rates and rates paid on such claims as trust and loan company liabilities rose quite sharply in 1959 while the banks' rate held steady as 23 per cent. In that year the share of personal savings deposits in the 'market'... declined more sharply than in previous years."
The commission's evidence, it may be suggested, falls into the post hoc ergo propter hoc category. For example, the fact that the number of trust company outlets increased 5.3 per cent during 1958-59, compared to only 0.2 per cent on the average during the previous six year period, can just as easily be presented as the reason for the relative increase of trust company savings in 1959.
[DOT] (3:50 p.m.)
The study goes on at some length, and with considerable mathematical ability, to analyse the question to see whether these statistics could produce any conclusions regarding the ability of the chartered banks to attract deposits as opposed to credit unions or trust companies attracting deposits. I will omit the central material and go to the conclusions because I think they are important to the argument I am making.
The principal conclusion to be drawn from this analysis is that a substantial portion of the ability
March 16, 1967

of credit unions and trust companies to compete successfully with chartered banks for personal savings deposits is attributable to product competition (through shifts in demand) rather than price competition. This suggests not only that the rates of interest paid on personal savings deposits may not be "very important" in contributing to the relative decline of chartered banks, but also that there may even be some question whether they have contributed to the decline at all.
Admittedly, and the author of the article admits it, the study is a tentative one. However, the point I make is that the study has been made and it has been made of Canadian institutions. When I inquired of the Bankers Association whether they had made any comparable studies, the answer was no. They had handed us an idea which, in spite of the Porter commission, can be questioned. There is serious doubt as to the validity of the entire argument presented by the Bankers Association in this field. I do not believe that the Bankers Association wishes to eliminate the finance companies from the Canadian scene. I suspect that they would not mind at all removing the credit unions from the Canadian scene in any way open to them. I doubt that they want to remove the trust companies because the chartered banks themselves are involved in the trust companies too heavily to wish to see them go.
At the same time I doubt that the chartered banks are at all interested in taking over the type of unsecured, high risk loan which the finance companies at present make. When I asked the banks if they would not prefer to see some ceiling put on the interest rates that could be charged by other institutions rather than have their interest rates set, they said no, they were not interested in that kind of control of other institutions. What they are interested in is the profit picture of the chartered banks. This, I would contend in spite of much of what was presented to us as evidence, is a far better picture than the evidence was supposed to convey to the members of the committee. Although the profit picture of some of the near banks is still ahead of that of the chartered banks, they have been coming together steadily and consistently over the last ten years and it will not be too far in the future when they will be comparable again without any change at all in the interest rate. When I asked Mr. Paton, who was appearing for the Bankers Association, if the profit position was satisfactory when compared with that of the near banks, his reply was that "a profit position can always be improved."
Bank Act
I should like to spend a little time on the question of the legislation as it relates to the Mercantile Bank of Canada. This is something that concerns the members of this house because it represents the Canadian government taking very strong, very deliberate action involving a chartered bank and setting very sharply a new set of regulations under which one of the chartered banks can operate in this country. In many ways I think this is the kind of firmness toward a chartered bank that Social Credit has expected of Canadian governments for many years but which has not been applied. Of course there is a difference here because this particular bank happens to be owned by United States interests.
We should not really forget the history of this event or the basic factor in the whole issue, namely, that the bank was purchased by the City Bank of New York from the original Dutch owners, so it was already in foreign hands. I should like to refer to the rather outstanding contribution to the committee that was made by the hon. member for York-Humber on the last day that representatives from the City Bank of New York and the Mercantile Bank were before us. The questioning came very late in the day and was totally unreported in the Canadian press, but it did a great deal to set in focus the important elements. This questioning was not reported in the press because at the moment the press of Canada prefers the black blacks and white whites of anti-Americanism and pseudo-patriotism. It is much easier to deal with than the very complex question of relating economically to our enormous neighbour to the south.
Some very interesting remarks were made yesterday by the hon. member for Nanai-mo-Cowichan-The Islands. I am sure hon. members who listened must have thought he wandered far afield when he dealt at great length with the state owned bank in Australia as an example of nationalized banking as some sort of panacea for the economic ailments of the country. Then he was able to turn his argument to the question of the Mercantile Bank. Again, he was developing a very religious argument on behalf of state socialism with a faith which I think I could describe, Mr. Chairman, as touching. However, I am convinced that the platitudes of socialism remain platitudes whether they come from the land of the platypus or any other part of the world or whether it is the home grown variety that we have witnessed in the province of Saskatchewan.

March 16, 1967
Bank Act
[DOT] (4:00 p.m.)
What he was able to do with that carefully turned argument was to present to the minister a finely polished stone to kill two birds. He not only presented the stone to the minister but he also plucked both birds in advance. If the minister were to follow the advice of the hon. member for Nanaimo-Cowichan-The Islands he could reap all of the political benefits of being anti-American at the present time and also thrust socialism into the Canadian economy at one of the most crucial points.
Finally, Mr. Chairman, I feel there is one section in the Bank Act that is of great importance, and I refer to the amendments in the new legislation preventing the chartered banks from combining, co-operating and joining together to set interest rates. One is given cause to wonder why this provision is there. Has the minister become sufficiently certain of the future to suspect that this is going to happen? Somehow I doubt that he has the omniscience in regard to the future that the legislation would suggest. If he was so certain of the future I am sure he would never be involved in any conflict with his colleague the Minister without Portfolio.
I suspect that the legislation makes this provision because of what has happened in the past. As I say, it is very difficult to bring forward any evidence to prove that the chartered banks have combined to set interest rates in the past. Yet the provision is there, apparently as a purely preventative measure. I know how very difficult it is to obtain the sort of evidence that is necessary to convict Canadian companies under our anti-combines legislation. It is almost impossible to gather data that is sufficiently definitive to bring about a conviction, and I am sure it would be even more difficult to prove that the chartered banks of Canada had conspired to set an interest rate. Although in a way the legislation is a good thing-


Herman Maxwell Batten: Order. I must advise the hon. member that the time allotted to him has expired.


Howard Earl Johnston: Mr. Chairman, if I may have the indulgence of the Chair and of the committee, I have almost finished my remarks.


Some hon. Members:: Continue.


Howard Earl Johnston: May I just say that I think this provision represents a bit of wishful thinking on the part of the minister and the government and I do not think that the

Canadian people will be beguiled by it when the bill is passed by the house, as I am sure it will be. I doubt that any case could ever be launched under this provision when it is passed, and certainly no case could be brought to the point where a conviction would be secured.
We have heard in this chamber an attack on co-operatives, an attack against those producers at the primary level who have banded together in order to provide themselves with a more sustained income than they could ever receive with each trying to market his product individually. I suggest that one of the real causes of high prices in Canada has been the combining of companies at the top level. One of the continuing problems in the Canadian economic system has been the power of the chartered banks to come to mutually favourable decisions through consultation one with another. I doubt that this legislation, good as its intentions may be, will ever end this situation.


Mr. Clermont:: Mr. Chairman, I am pleased to add my thanks to those which have already been expressed for the wonderful co-operation given the committee on finance, trade and economic affairs in the study of Bill No. C-190, an act to amend the Bank of Canada Act, Bill No. C-222, an act respecting banks and banking and Bill No. C-223, an act respecting savings banks in the province of Quebec, by the hon. Minister of Finance and Receiver General (Mr. Sharp), and his parliamentary secretary (Mr. Chretien), by Mr. Louis Rasminsky, governor of the Bank of Canada, and by the deputy governors, by Mr. Maurice Ollivier, law clerk and parliamentary counsel, as well as by officials of the public service, namely Mr. C. F. Elderkin, special adviser to the Department of Finance and former inspector general of banks, to whom the committee is greatly indebted, Mr. J. W. Ryan, of the Department of Justice, and Mr. W. K. Scott, inspector general of banks.
I also wish to thank the persons, groups and associations who willingly made known their views on those various bills, the chairman of the committee, the hon. member for Essex West (Mr. Gray) and the deputy chairman, the hon. member for Quebec-Montmor-ency (Mr. Laflamme) and our dedicated secretary of the committee, Miss Dorothy Bal-lantyne, our researchers, Miss M. R. Prentis and Mr. Denis Baribeau, our interpreters and translators, in short, the whole staff assigned
March IS, 1967

to the preparation of the minutes of proceedings and evidence.
[DOT] (4:10 p.m.)
Mr. Chairman, I also feel bound to point out the effective work performed by committee members and by other colleagues who took part in this decennial review.
Allow me, Mr. Chairman, to submit an analysis of Bill No. C-222, an act respecting banks and banking. Financial systems all over the world have experienced a record increase in the demand and the resultant upward trends of the rate of interest.
It is customary in Canada to effect every ten years a thorough study of the country's banking legislation and to renew bank charters.	.
On October 18, 1961, was set up a royal commission under the chairmanship of Chief Justice Dana Porter on our banking and financial system. In the spring of 1964, on April 24, the commission published a far-reaching report on its work and studies.
Several recommendations were made and I believe the main recommendations are the following: greater competition between our banking and financial institutions to give an adequate choice to the borrowers or the depositors; allow the banks to lend on ordinary mortgages; eliminate the ceiling on the interest rates; disclosure of the actual total costs of loans or advances; greater disclosure of the accumulated reserves for losses on loans and investments; allow the banks to raise capital through sale of non-guaranteed bonds; opening in Canada of agencies such as Canadian banks have in New York and in San Francisco, U.S.A.
Mr. Chairman, as for greater competition, the commission recommends that the Minister of Finance and Receiver General be given the powers to prevent agreements between banking institutions on loans and borrowing. Clause 138 provides for the prohibition of such agreements.
As for the right of banking institutions to have common directors, subclauses 6 (b) and 7 (c) of clause 18 govern their number and eligibility.
Furthermore, the commission recommends a limitation of the powers of banking institutions to invest in non-banking and nonfinancial institutions. Subject to certain provisions, clause 76 of the bill respecting banks and banking restricts such participation to 10 per cent.
Bank Act
The introduction of banks into the field of ordinary mortgages should increase the supply of mortgage money and relieve the need for borrowers to apply to a more onerous market for second mortgage loans.
Mr. Chairman, here are some comments from the report of the Royal Commission on Banking and Finance.
The commission says, on page 364 of its report:
At the same time, the entry of the chartered banks into conventional residential lending would do much to improve this part of the capital market: access to mortgage security would enable the banks to improve their service to business borrowers, particularly smaller enterprises.
On page 367 the commission adds:
If it is demonstrated, however, that bank lending in this area would have so sudden an impact on other lenders as to hinder the long-run objective of developing a larger group of well-established banking institutions, some temporary limit might be placed on the annual rate of conventional residential lending by the present chartered banks.
Clause 75 of this bill gives to the banks the power to make conventional mortgage lending subject to the limitations of subclauses (3) and (4) of that clause.
Mr. Chairman, with regard to the removal of the interest rate ceiling, clause 91 of this bill for the time being, brings only a certain relaxation of the ceiling; it provides for its removal when the general level of interest rates has appreciably decreased.
I think that it is better to have a transitional period in order to avoid doubts, apprehensions which might result from the removal of the ceiling at the height of a period of tension.
The Porter commission brought forward some arguments in that respect, and I now take the liberty of quoting a few. On page 364, the commission said:
The prohibition on conventional mortgage lending by chartered banks and the interest rate ceiling are the most serious barriers to free market forces in the present chartered banking legislation.
Again on page 364, the commission said:
We recommend that it be removed regardless of other changes in the legislation. The ceiling stands in the way of flexible lending by the banks in that it frequently prevents them from making loans on which higher rates must be charged to cover administrative costs and risks.
Obviously, this is to the banks' disadvantage: more importantly, however, it discriminates against borrowers such as small businesses which, if they are to obtain funds at all, must turn to other lenders which charge rates well above those the banks would ask if free to do so.

March 16, 1967
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On the same page, the commission recommends:
The removal of those two restrictions, that is the 6 per cent interest rate ceiling and the prohibition on mortgage lending by the banks, because they interfere with competition, they decrease the supply of essential financial services and force the borrowers to apply for funds to costly sources.
Again on page 364, the commission said:
When market rates are high, banks would undoubtedly raise their own lending charges but the force of competition and the higher deposit rates necessary to attract funds would temper the tendency for bank earnings to rise and thus limit the amount of additional business they are able to obtain.
Also on page 364:
As already noted, the banks have only been able to compete in the personal instalment loan market -in which they have substantially improved the facilities and lowered the average cost of funds.
With regard to the disclosure of real and total borrowing charges on a loan or an advance, clauses 92 and 93 will oblige the banks to do so when they issue credit to a person with regard to loans or advances payable in Canada, or will give a person a loan or an advance payable in Canada.
Clause 60, subclause 2, paragraph (c) and the new Schedule "P" will oblige the banks to disclose to their shareholders, the Minister of Finance and the general public, their reserve accumulated for losses on loans and investments. Also clause 60, subclause 2, paragraphs (a) and (b), clauses 103 and 106 and the amended Schedules M, N, O and Q will submit more information on revenues, expenses, assets, liabilities, accumulated credits, to cover losses incurred by the bank on its investments and loans profits not carried, and those statements, will go either to the Minister of Finance or to the general inspector of banks, or to the shareholders and the public.
If the Canadian parliament passes clause 77 as it appears in the reprinted Bill No. C-222, banks will be authorized to issue unsecured bonds.
[DOT] (4:20 p.m.)
Clause 88(5)(b) of Bill No. C-222, read for the first time on July 7, 1966, reads as follows:
-claims not exceeding five thousand dollars in any one case for money owing by a manufacturer to a grower of perishable products of agriculture that are direct products of the soil for such products grown by the grower on land owned or leased by him and delivered to the manufacturer during the said period of three months-

Mr. Chairman, this same clause as amended adds the dairy products to the perishable products, and the maximum has been raised from $5,000 to $7,500. The period that immediately precedes the date when this order has been made or this assignment completed will be six months instead of three.
As regards the establishment of agencies in Canada, I agree with the views expressed in the 22nd report of the committee on finance, trade and economic affairs, tabled in the house on Friday, March 10, 1967.
Mr. Chairman, several other questions were examined and discussed before the committee, as for instance the definition of banking operations and of the dividing line that should be drawn between banks and other institutions. In this connection, following the evidence given by a witness who had just ex-presed his views concerning the definition of banking operations, I remember having said the following:
I believe, Mr. Chairman, that the members who were in charge of the 1954 decennial revision acted in a wise and practical way when they gave the following definition of a bank: Bank means a bank referred to in Schedule A, to which this act applies (Section 2, subsection 1, paragraph (c) and Section 4, paragraph (a). The Porter commission says the following, concerning such a definition, on page 411:
-As far as we have been able to determine, Canada is not alone, for we have not come across an exact definition of banking in the statutes of any country, in view of the difficulties of a narrower definition.
As regards activities of foreign banks in Canada, the committee held several meetings in that connection. Our banking legislation never stipulated anything concerning the establishment of agencies in Canada, even though Canadian banks have an important volume of business operations abroad. At present, the legislation concerning banks and banking operations does not prevent any foreign bank or any other group of non residents from acquiring a majority percentage or all the shares of an existing Canadian bank or applying to the Canadian parliament for a new charter. I should like to quote some comments of the Porter commission as found on page 374 of the report.
Ownership of one bank by another Is a somewhat different matter. While this has been prohibited among Canadian chartered banks, and should continue to be, no such prohibition applies to the acquisition of part or all of a Canadian bank's capital by foreign banks. Of course, if foreign banking interests want to establish a new bank in Canada, they-like any other group-are required to obtain Treasury Board approval. However, there is no provision for the authorities to control in
March 16. 1967

any way their buying stock in an existing bank and thus acquiring an established position in the Canadian banking system. Having regard to the large concentrations of economic and financial power which are sometimes centered in large foreign banks, we regard this as an anomaly which should be corrected.
As concerns the purchase of a majority of shares by residents or non residents, the provisions of Clause 54, sub-clause 2 of this bill would prohibit such a purchase.
"Subclause (2) of clause 56 provides as follows, with regard to a non-resident, a group of non-residents or a foreign bank which held stock on September 22, 1964."
Where more than fifty per cent of the issued and outstanding shares of the capital stock of the bank were held on the 22nd day of September, 1964 in the name or right of or for the use or benefit of one non-resident, sections 53 and 54 do not apply to or in respect of the bank; but if at any time thereafter there is no one person in whose name or right or for whose use or benefit more than ten per cent of the issued and outstanding shares of the capital stock of the bank are held, those sections apply from and after that time to and in respect of the bank.
And the following amendment was approved by the committee:
Where more than twenty-five per cent of the issued and outstanding shares of the capital stock of the bank were held on the 22nd day of September, 1964, in the name or right of or for the use or benefit of any one non-resident, the bank, so long as the total number of shares cf the capital stock of the bank held by non-residents exceeds twenty-five per cent of the total number of issued and outstanding shares of the capital stock of the the bank,
(a)	shall refuse to allow a transfer of a share of the capital stock of the bank to a non-resident to be made or recorded in a register of 'ransfers of the bank unless the transfer is from a non-resident and to any associates of the non-resident; and
(b)	shall not accept a subscription for a share of the capital stock of the bank by a non-resident; but if at any time after the 22nd day of September, 1964, there is no one person in whose name or right or for whose use or benefit more than ten per cent of the issued and outstanding shares of the capital stock of the bank are held, this subsection ceases thereafter to have any force or effect. _ Note that should this amendment be passed by parliament, it will no longer be possible for the First National City Bank to dispose of 75 per cent of its shares in the Mercantile Bank of Canada to enable the latter to increase the amount of its total assets (including paid up capital, general reserve and undistributed profits) to more than 20 times its authorized capital to other non-residents, whereas it could so at the present time.
The committee also approved an amendment to section 75 (2) (g) which is very important. It was moved by a government member, seconded by a member of the opposition and unanimously endorsed by the committee.
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Clause 72 will change the amount of cash reserve of the bank, which is now the equivalent of 8 per cent of its deposit liabilities and which is payable on demand, in Canadian currency, to make it 12 per cent of its deposit liabilities, which is payable on demand in Canadian currency, and 4 per cent of its deposit liabilities, which is payable after notice in Canadian currency; this gives an average of about 6.6 per cent.
That cash reserve which the bank has to maintain according to subclause 1 of clause 72,-during any month following the 12th month posterior to the coming into force of the present bill, if the Bank of Canada so requires, must not be inferior on the average during each of these two separate periods constituted, the first one by the first 15 days of the said month and, the second, by the remaining days of the said month.
If the Bank of Canada so requires, the bank shall maintain, in addition to its cash reserve, a secondary reserve.
In concluding, Mr. Chairman, I suggest to the hon. members to read-as the member for Perth (Mr. Monteith) has also suggested-* the recommendations of the 22nd report of the committee on finance, trade and economic affairs, tabled on March 10, 1967.


Mr. Lambert:: Mr. Chairman, as has been indicated by my hon. friend from Perth and again by the hon. member for Labelle, the committee met on some 70 occasions, as reflected in about 36 reports of its proceedings, to consider Bills C-222 and C-223.
It is true there were some odd interludes at times and one in particular which I thought was out of place. Somehow or other, because the committee happened to be sitting it was felt that it should be used as a forum for the airing of private views with regard to internal matters in connection with a chartered bank. I trust that particular incident will not serve as a precedent for any other type of organization which may be remotely connected with finance, trade and economic affairs, and that committees will not be used to provide a forum for the settlement of domestic disputes. Such a practice ought to be stringently applied by other committees of the house, including that on broadcasting.
[DOT] (4:30 p.m.)
I would add my words to those of the hon. member for Labelle with respect to the good working spirit that developed among the members of the standing committee, and I

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particularly want to commend the work of the chairman. Sometimes it is a little difficult to work under certain chairmen but as a result of our protracted hearings on this very important bill a good working relationship developed between the Chair and committee members, and I want to be among the first to congratulate the hon. member for Essex West on his performance as chairman, sometimes under rather difficult and enthusiastic conditions. I hope we will be able to continue with him in that position for some limited time anyway. I shall not wish him a long tenure of office because others might object to that.
I would like to point out to this chamber and to the country the value of the hearings that were held on this important legislation. This is the decennial revision of the Bank Act. To those who would say that committee hearings are of little or no value I would point out that the work of our standing committee gives the lie in their teeth. As a result of the committee hearings the government has proposed some 70 or 80 amendments to the bill. I do not say this is entirely to the credit of the government, considering that the present Bank Act has been in existence since 1954, that there were numerous hearings held by the Porter royal commission, and that the government put forward its proposals originally in Bill C-102. One must presume that the government's thinking had matured when it reached the point of presenting Bill C-102 but, lo and behold, that bill was never discussed in this house and now we are faced with Bill C-222 which in many respects is a radical departure from some of the proposals in Bill C-102.
Because of that I trust the Minister of Finance has urged his erstwhile predecessor and now new colleague, the Minister without Portfolio, the hon. member for Davenport, to participate actively in the debate on this bill. I am not trying to be facetious or to promote mischief when I say so. The hon. member for Davenport had definite ideas about controlling banks and about the development of banking in Canada. These ideas were evidenced in Bill C-102. But since that time many changes have taken place respecting incorporation, certain types of control, shareholdings, the limitation on the interest rate ceiling and a number of other features. These changes are reflected in Bill C-222 and we are entitled to know why these changes have been made in this legislation.
The hon. member for Davenport was in the chamber a few moments ago but slipped away. I had hoped he would stay to hear my
[Mr- Lambert.]
direct invitation to him to participate in the debate at the appropriate stages because I want to get the benefit of his thinking, particularly in view of the fact that he is the chairman of a committee inquiring into the extent of foreign holdings in Canada.
There is controversy within the government on how clause 75(2)(g) should be modified, as to how far the Mercantile Bank of Canada should be Canadianized, and as to how far the proposed provisions Canadianize our Canadian banks. This new legislation will be in force for ten years and therefore we should hear these conflicting points of view to determine their value before the house makes its final decision on the legislation.
I regret that the hon. member for Nanai-mo-Cowichan-The Islands is not in his seat today. Yesterday we had the benefit of hearing his views, and I must say I was disappointed. Since he has served for two sessions as a member of the banking committee I thought the hon. member would have lost his doctrinaire approach to banking and the fetish he seems to possess with respect to nationalization of our banking system. I must confess that he left me behind a long time ago with his tortuous thinking in regard to the nationalization of the banking system and the advantages he claims would accrue to the country if banks were nationalized.


Mr. Lewis:: May I ask the hon. member a question?


Marcel Joseph Aimé Lambert: The hon. member for York South can bide his time. I have but 20 minutes in which to speak.


David Lewis: Then may I rise on a point of order?


Marcel Joseph Aimé Lambert: A point of order?


David Lewis: Yes, sir. My point of order is that the hon. member for Edmonton West is misrepresenting what the hon. member for Nanaimo-Cowichan-The Islands has said. He never suggested nationalizing the banking system. He was talking about taking over the Mercantile Bank.


Marcel Joseph Aimé Lambert: If I may say so, Mr. Chairman, if ever there was a spurious point of order this is one. In fact it is an argument which the hon. member can put forward when he participates in the debate.


David Lewis: Would the hon. member allow me the floor to ask a question?
March 16, 1967


Marcel Joseph Aimé Lambert: The hon. member does not have the right to the floor to ask a question. I have had the privilege of sitting on the banking committee much oftener than the member for York South and 1 have heard enough asides from his colleague, the hon. member for Nanaimo-Cowichan-The Islands, to suggest that there is more than just the Mercantile Bank within his gunsights when he is talking about nationalization.
I must express, as I did in the standing committee, extreme disappointment with this legislation. As I say, the Bank Act has been in force since 1954 and we have seen the development of banking practices and of near banking practices since that time. Further, the Porter royal commission held many hearings and produced a monumental report which contained one key recommendation. It was not its most important recommendation but it was part of the central core of a package deal, and that was the control over near banks. Bill C-102 proposed nothing with regard to near banks and Bill C-222 does nothing with regard to them.


Mitchell William Sharp: Mr. Chairman-


Marcel Joseph Aimé Lambert: The minister will have plenty of time to speak. I have only 20 minutes at my disposal. I can resume this theme if he wishes. I hope we will have a healthy exchange of views, but if the minister will only contain his impatience he will get the true perspective of what I want to say.
[DOT] (4:40 p.m.)
I would think the control of near banks could be efficient under the act and its regulations as they now exist. Regardless of where these near banks are located it is obvious that provisions for inspection and control will not be the same as those which apply to the commercial and private banking system in this country. The act could have been divided into two parts. The first part could apply to commercial banks and the second part could apply to near banks. Instead of that we have suffered financial crises, strong pressures from external forces and three changes of mind on the part of the government in respect of deposit insurance. The government has also said that deposit insurance is an interim measure and we must look at the situation regarding agencies operating in Canada with a view to providing certain specific regulations. All I can say is, this is a terrible way to run the store. This is a slipshod practice. We are applying one plaster to
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another, putting one bandage on another, with the hope that the wound will cure itself.
It has always been my belief that with an appropriate definition of the business of banking we could have a great deal more control. The act indulges in the luxury of using the term "business of banking" and states that no one can commence the business of banking until certain things happen. What is the business of banking? The act is strangely silent. It says one must not indulge in certain practices until something happens but it does not say what that practice may be.
Many people have suggested that it would be difficult to define banking. Some are afraid to define banking at this time because such a definition might not cover the practices of dealing with the credit and money deposits which may exist in 1970. Someone in some court might say that the 1970 practices did not exist in 1967. It is argued for this reason that it would be difficult or imprudent to confine the practice of banking to a certain definition.
It is my suggestion that it is within the realm of human possibility to define banking in such a way that the definition will grow and change with circumstances. Let me refer hon. members to certain precise definitions of banking and the practices of banking. Before doing so let me say that I am concerned about definitions in respect of banks, banking, interest and currency because jurisdiction in this regard is confined to the federal level by the British North America Act. The federal government has exclusive jurisdiction to deal with these matters. Provincial governments have at different times attempted to assert some authority in this field. The province of Alberta, under the excessive zeal of the Social Credit administration, attempted to do a number of things regarding credit. It was finally decided that the province could not carry out these things because they were outside the jurisdiction of a provincial administration.
Let me refer the members of this committee to a definition of banking by Professor E. P. Neufeld:
-a bank is certainly a financial intermediary, and that a financial intermediary is a bank to the extent that it accepts deposits and to the extent that these deposits are used directly or indirectly as a medium of exchange; directly in the sense that cheques can be written against them, and indirectly in the sense that they may be moved very freely into cash or cheques or orders which are drawn against chequable accounts, and the question really is do the non-banks have deposits of this kind in sufficient size to justify their being controlled?

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That could not be accepted as a judicial definition of banking, but certainly any institution whose deposits or liabilities enter the stream of credit or as a form of exchange is engaged in banking.
What actually forms the basis for a definition of banks and banking institutions? Regardless of parentage, if institutions engage in the practices of banking then they must conform to federal regulations in the same way that broadcasting companies and air line companies must conform to federal regulations. Air line companies may have provincial charters but they cannot purchase aircraft unless they have a certificate of airworthiness from the federal authority. They cannot put a radio in an aircraft unless they have a licence from the federal authority. They cannot fly the aircraft unless they conform to federal regulations. There are no provincial regulations of any kind in this regard. I submit to the committee that the argument that because trust companies or other companies have provincial charters they are ipso facto under the full control of the provincial authority thus falls to the ground.
[DOT] (4:50 p.m.)
Let us look at some of the traditional definitions of banking. Going back some distance in time, Halsbury's Laws of England, third edition, page 151, defines the business of banking as the receipt of money on current or deposit accounts and the payment of cheques drawn by, and the collection of cheques paid in by, a customer. Then let us look at the definition by the appeal court in a Canadian case. The Privy Council stated:
The legislative authority conferred by these words-
They were referring to the words of section 91 of the British North America Act concerning banking.
-is not confined to the mere constitution of corporate bodies with the privilege of carrying on the business of bankers. It extends to the issue of paper currency, which necessarily means the creation of a species of personal property carrying with it rights and privileges which the law of the province does not, and cannot, attach to it. It also comprehends "banking" an expression which is wide enough to embrace every transaction coming within the legitimate business of banker.
This definition was given in the case of Tennant v. The Union Bank of Canada (1894) Appeal Cases, at page 31. I have quoted this definition given in 1894 to deal with the argument that a definition shall fix the entire ambit of banking. Let us consider another case much closer in time which was heard in the late 1930's. This was the reference on the
(Mr. Lambert.]
Alberta statutes, reported in Supreme Court Reports (1938), at page 100, and affirmed by the Privy Council in Appeal Cases (1939), at page 117. In the judgment of the Supreme Court of Canada Mr. Justice Duff said:
First, as to banking. A banker has been defined as "a dealer in credit". True, in ordinary speech, bank credit implies a credit which is convertible into money. But money as commonly understood is not necessarily legal tender. Any medium which by practice fulfils the function of money and which everybody will accept in payment of a debt is money in the ordinary sense of the words even although it may not be legal tender; and this statute envisages a form of credit which will ultimately, in Alberta, acquire such a degree of confidence as to be generally acceptable, in the sense that bank credit is now acceptable; and will serve as a substitute therefor.
There is a further case on this point, the Attorney General for Canada v. the Attorney General for the province of Quebec. It was heard in 1947 and was one of the last references placed before the Privy Council. It is interesting to note that in 1947 the province of Quebec purported to legislate an act respecting certain vacant property without owner. The purpose was to deal with deposits with the chartered banks which had been untouched, unreferred to and were really considered to be abandoned after a period of 30 years of inactivity. The province of Quebec legislated to the effect that they should now become vacant and fall to His Majesty the King in right of the province of Quebec. The provincial act provided that whenever deposits of money and of securities and all credits in specie or in securities in credit institutions and all other establishments which receive funds or securities on deposit have not been for 30 years or more the subject of any operation or claim by the persons entitled thereto, they, with the fruits thereof, are to be deemed to be vacant property and without an owner, belonging to His Majesty in right of the province. This is what the court said:
The matter which their lordships have to determine is accordingly whether the transaction of receiving from depositors bank deposits and repaying those deposits to the depositors, comes within the legitimate business of a banker. Prima facie it does-
The judgment continues as follows:
In their view, a provincial legislature enters on the field of banking when it interferes with the right of depositors to receive payment of their deposits, as in their view it would if it confiscated loans made by a bank to its customers.
Here their lordships were citing the former Alberta case.
Both are in a sense matters of property and civil rights, but in essence they are included within the category of banking.
March 16. 1967

In this regard I would say that the proposals announced today with regard to certain taxes on banking profits under the guise of deposit insurance could run up against this particular case. I am just making an observation at this stage, Mr. Chairman, that I think the legislation may be in for a rough passage. I should like to conclude this stage of my remarks by referring again to what the Privy Council had to say in connection with the Alberta reference.
The question, therefore, is whether operations of this sort fail within the connotation of "banking" as that word is used in section 91 of the British North America Act. Their lordships entertain no doubt that such operations are covered by the term "banking" in section 91. The question is not what was the extent and kind of business actually carried on by banks in Canada in 1867, but what is the meaning of the term itself in the act. To take what may seem a frivolous analogy, if "skating" was one of the matters to which the exclusive legislative authority of the parliament of Canada extended, it would be nothing to the point to prove that only one style of skating was practised in Canada in 1867 and to argue that the exclusive power to legislate in respect of subsequently developed styles of skating was not expressly conferred on the central legislature. Other illustrations may be drawn from section 91 as it stands: take, for example, head 5, "Postal Services". In 1867 postal services in Canada were rendered by the help of land vehicles, but nobody could contend that the modern use of aeroplanes for carrying mail is, on that account, not within the phrase. The concept of banking certainly includes the granting of credit by banks; "a banker," as Chief Justice Duff said in dealing with the Alberta legislation reference, "has been defined as 'a dealer in credit'." Whether the expansion of credit now effected by bankers' advances is regarded as wise or unwise, as just or unjust, as economically desirable or economically unjustifiable, does not, in the view of their lordships, affect the point here at issue at all. If it is fairly included within the conception of "banking" it is a matter exclusively reserved for the legislature of Canada.
[DOT] (5:00 p.m.)
I apologize to hon. members of the committee for making these rather extensive references to judicial definitions of banking. I do so because there have been so many arguments advanced as to the difficulty of a statutory definition of banking and as to the wisdom of incorporating within the Bank Act a definition of banking. For this reason I felt constrained to say that those arguments have no basis and it would have been far more preferable for the government to have defined banking within section 2 of the act and not leave it to one of the anterior sections to simply say that one must not use the terms "bank" or "banking" and that is the only prohibition. Therefore the act could have been constituted differently and we could have had proper control of banking practices
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in this country where it belongs, under the aegis of the parliament of Canada. Any institution that wanted to enter this particular field would then have had to submit to proper control. It is only in this way that the Minister of Finance will be able to control the monetary destiny of this country.


Mr. Wahn:: Mr. Chairman, a comparison of this bank bill with the 1964 Porter report on banking and finance establishes that the bill will mark a major step toward the more creative, competitive and efficient banking system which was the objective of the Porter recommendations.
This revision of the Bank Act was originally introduced in May, 1965 by the former minister of finance. It was reintroduced in substantially the same terms earlier this session by the present Minister of Finance. The basic principles have been fully discussed at the resolution stage and on second reading, and a particularly thorough and helpful review was conducted by the standing committee on finance, trade and economic affairs which met under the able gavel of its chairman, the hon, member for Essex West, and its vice chairman, the hon. member for Que-bec-Montmorency.
Tributes have been paid from all sides of the house to the effective and non-partisan work of the finance committee. I will not repeat them except to say that I believe that most members of the finance committee are convinced as a result of their experience that the new committee system can perform a most valuable function in helping to make parliament an effective instrument of action and reform, which is the objective of all members of the house. In the course of the prolonged committee hearings there was an almost complete lack of active partisanship, and throughout the hearings the issues were examined in a rational and constructive manner by committee members of all parties.
This bill has reached its present stage after a very long process of careful consideration. Indeed, the hon, member for Perth has complained about the delay. The time has been well spent. Banking is basic and vital to our economy. We were wise to proceed with care.
The hon. members for Perth and Edmonton West have attacked the bill because it does not cover near banks. The near banks could not be dealt with in this decennial revision for practical reasons which I will mention a little later. My personal opinion is that they

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should be covered in the next decennial revision. Under the B.N.A. Act, parliament undoubtedly has exclusive jurisdiction over banking. The Porter commission recommended that the banking operations of all these corporations should be subject to federal regulation. This has not been done under this bill. The deposit insurance legislation passed this session will be of great help but it will not provide the entire answer. Indeed it is a startling fact which no member of this house should forget, that the Bank Act does not control any corporation, federal, provincial or foreign, carrying on banking provided it does not call itself a bank. I think something should be done about this but, as I said, for practical reasons I do not think it can be done in this decennial revision.
Certainly it is difficult to develop a completely accurate definition of banking, and we must guard against invalidating our important banking legislation by going too far and exceeding our jurisdiction. It seems to me that we could avoid all such technical legal difficulties by requiring all corporations carrying on banking within the meaning of the B.N.A. Act to obtain a licence under the federal Bank Act. If a particular corporation disagreed with the department on whether it was carrying on banking within the meaning of the B.N.A. Act, the issue would be determined by the courts. By making decisions in specific cases the courts would in time develop a satisfactory definition of banking within the meaning of the B.N.A. Act. For this reason I am not sure that we need a statutory definition of banking as suggested by the hon. member for Edmonton West.
Our financial legislation since confederation has tended to divide and isolate our financial institutions in separate compartments -chartered banks, trust companies, insurance companies, finance companies, and many others. Rapidly changing conditions have rendered this technique obsolete. Their functions overlap, and in order to remain competitive with other countries we must be prepared to break down the watertight compartments. This was recognized and recommended by the Porter commission. However, as I have said, this principle could not be made effective in this decennial revision. Before the numerous and various types of corporations now carrying on banking functions in Canada are made subject to federal banking regulations we must make sure we are in a position to enforce the highest standards of responsibility and inspection and to maintain effective
[Mr. Wahn.J
monetary control of our economy. This is of prime importance and must not be sacrificed under any circumstances.
If all these corporations are to be made subject to the Bank Act, presumably they must have essentially all the rights and obligations of chartered banks such as the security provisions under clause 88, or else it should be abolished altogether. They must have access to the Bank of Canada as lender of last resort. They must have clearing house privileges and all the other special privileges of chartered banks. Similarly, they would be required to maintain cash reserves with the Bank of Canada and presumably be subject to restrictions as to interlocking directorates and ownership and control in the same way as are the chartered banks. The problems involved here are not problems of theory nor are they constitutional problems. They are very practical problems. They are not insoluble, but they could not be solved in time for this decennial revision. They should be tackled, in my opinion, in the next decennial revision.
Up to the present time we have had a nice cosy club in Canada limited to eight chartered banks, the Bank of Canada and the Department of Finance. There has been the utmost co-operation among the chartered banks and the Bank of Canada in monetary policy. Their informal methods have worked well because there are only a few people involved who know each other well and are on a first name basis. There are Earl and Allan and Arnold and Louis and Jean and Bill and Neil and a few others. They understand one another. It is true that Earl likes to talk and you can never be quite sure what he is going to say next. He even writes letters to members of parliament an unusual procedure and one which lowers the tone of the club a bit. However, he means well and it works out all right. It is a respectable, well padded, well tailored group and though it may amuse or annoy us at times, depending upon our temperaments, unquestionably this banking club or establishment has served Canada well up to the present time. The great majority of Canadians are proud of the Canadian banking system despite its many imperfections.
Will the system work equally well if the club is thrown wide open to an assorted group of trust companies, loan companies, mortgage companies, investment companies, finance companies and other companies carrying on miscellaneous banking activities and of varying sizes and financial responsibility? Where will the line be drawn? Will it be possible to reach quick and effective agreements
March 16, 1967

and maintain proper monetary control under these circumstances? Clearly the practical problems are great. Nevertheless they must be solved. I am sure they will be solved. The day of the exclusive club is over. It must be thrown open and the winds of competition and change must be permitted to sweep through. This can be done.
[DOT] (5:10 p.m.)
It is clear from press reports and newspaper editorials that there is a great deal of misunderstanding about the provisions of the bill relating to take-overs of Canadian banks. One of the basic recommendations of the Porter commission was that action be taken to prevent foreign take-overs of Canadian financial institutions, particularly chartered banks. It is essential that control of these institutions should be retained in Canada. Moreover, to guarantee the independence of the chartered banks and to prevent undue concentration of financial power it is desirable to prevent any one corporation or group, whether Canadian or otherwise, from gaining control of a chartered bank by buying up its shares. These principles were expressed clearly in the house by the former minister of finance on September 22, 1964, when he said:
It has been evident for several years that there has been increasing concern about the problem of retaining Canadian ownership and control of Canadian enterprises and in particular of our financial institutions .. . The report of the royal commission on banking and finance published earlier this year also expressed concern about Canadian control of financial institutions, particularly banks ... Provisions relating to this matter .. . will be included in the bills to amend the bank acts and these would also be effective after today to the extent that I have indicated for insurance, trust and loan companies.
These provisions were included in the original revision of the Bank Act introduced by the former minister of finance and reintroduced by the present Minister of Finance. Consistent with these principles, the bill provides in effect that if a Canadian chartered bank now has more than 25 per cent non-resident ownership, no transfers to non-residents will be permitted which will increase further the percentage of non-resident ownership. But if the percentage of non-resident ownership in a Canadian chartered bank is less than 25 per cent transfers to non-residents will be permitted unless the result would be to increase non-resident ownership to more than 25 per cent.
Moreover, these sections provide that if at the present time a Canadian chartered bank has more than 10 per cent of its shares owned 23033-890
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by any person or group of related persons, then no additional transfers can be made to such persons which would increase the percentage which they own. But if there is no person or group of related persons who own 10 per cent of the stock of a Canadian chartered bank, then any transfers are permitted unless they would increase the holdings of any person or group above 10 per cent.
These provisions apply generally to all chartered banks, whether Canadian or foreign owned. They are not discriminatory. They apply equally to a Canadian owned bank as well as to Mercantile. They are not retroactive. They do not require non-resident ownership of a chartered bank to be reduced to 25 per cent if it is now over 25 per cent, nor do they require ownership by a single person or group to be reduced to 10 per cent if it is now over 10 per cent. If these limits are now exceeded they can stay that way whether the bank is the Royal, the Commerce, the Nova Scotia, the Mercantile or any other. But in future no transfers will be permitted which would increase such holdings further beyond those prescribed limits. I might add that, as hon. members know, bank stock is frequently held in the names of brokers, trustees or other agents, and in the past there has been no procedure for determining the names or residence of the owners of the stock. For this reason I do not believe we know for certain what percentage of the shares of our Canadian chartered banks are now owned beneficially by non-residents or by a single person or group.
This bill contains an additional provision which limits the total liabilities of a chartered bank to not more than 20 times its authorized capital stock. This provision applies only if more than 25 per cent of its issued shares are held by any one person or related group whether resident or non-resident. If enforced rigidly this provision might prevent the profitable growth of a bank, and in the case of a small or newly incorporated bank it might be desirable to have strong interests in control for a period of time until the bank became well established and able to compete on a fair basis with the other well established Canadian chartered banks. For example, the Bank of Western Canada has been given a ten year period within which to comply with this particular provision. When they appeared before the finance committee, officials of the Mercantile Bank argued strongly that this provision would prevent any further growth

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Bank Act
since Mercantile's liabilities already exceed slightly the prescribed amount. Citibank, the owner of Mercantile's outstanding shares, took the position that when it acquired the shares from the original Dutch owners in 1963 it did so quite legally and that it had no adequate warning of legislation to restrict Mercantile's growth before becoming firmly committed to the purchase. It claimed that this particular provision was retroactive, discriminatory and punitive.
As a result of questioning by members of the committee it became apparent that officials of Citibank knew or had good reason to suspect that the Canadian government was opposed to the acquisition before Citibank became firmly bound to proceed. In effect, the legislation gave Mercantile and its owners a number of options, either to reduce its nonresident ownership to 25 per cent or to remain at its present size or to have its future authorized capital, and therefore its size, strictly regulated by the Canadian government.
Members of the committee and the general public were, I believe, satisfied that in the circumstances these options were not retroactive, discriminatory or punitive but on the contrary were entirely fair. It was essential that the fairness of this legislation should be clearly established. Canada's growth and prosperity in the past have depended very substantially upon capital and technology from abroad. Our need for foreign capital and technology will not continue indefinitely but it will continue for many years. To develop our resources we will need for many years far more capital than we can provide from our own savings. I believe that this fact of life is accepted by all members of the house.
In recent years there has been a world wide shortage of capital, and interest rates and other costs of obtaining capital have therefore been high. Many countries are competing for the available development capital. Canada's ability to obtain such capital in the past on favourable terms has been based primarily upon the assurance that foreign investors are welcome here and that they will be treated fairly. It is perhaps just one application of a principle which has been established for at least 3,500 years, and is expressed in Leviticus, chapter 24, verse 22:
Ye shall have one manner of law, as well for the stranger as for one of your own country.
The same idea, Mr. Chairman, is well expressed in a recent publication prepared by [Mr. Wahn.l
the director of the institute of intergovernmental relations as Queen's University for a leading financial house in Toronto. It reads:
The most important thing in the long run is the atmosphere of confidence, or lack of it, that exists among foreign investors with reference to Canada's long-term status as a reliable place for investment. For a good many years now, this country has enjoyed an unexcelled reputation for stability and financial common sense.
When they were before the finance committee the Citibank officials said they had no intention of selling their Mercantile shares. They said it would not be responsible for them to place shares on the public market in Canada until the bank was in a more profitable position and was better established. They pointed out also that it would be difficult to carry on profitable operations and build up an earnings record which would be attractive to investors if their liabilities were restricted to 20 times their present authorized capital when other banks with which they had to compete could have liabilities of 40 or 50 times their authorized capital.
Since that time Citibank has changed its mind. It has indicated it is prepared to make shares of Mercantile available to Canadians. In view of this fact the committee recommended that the restriction on growth should become effective in 1972 rather than immediately in order to give Mercantile a five-year period to establish itself and build up an earnings record which would make it possible to market its shares successfully in Canada. In the result, if non-resident ownership of Mercantile is not reduced to 25 per cent by 1972 it will be necessary for Mercantile to comply with the growth restriction formula and to cut back its size. The finance committee believes that this provides a sufficient incentive to make orderly preparations during the five-year period for the sale of shares to Canadian residents.
[DOT] (5:20 p.m.)
This is a reasonable and fair approach. It has the advantage also that it will retain for Canada the benefits of increased competition in the Canadian banking system, which is greatly needed, and the valuable knowledge and experience which is provided by Mercantile and Citibank. In its third annual review the Economic Council of Canada said:
It is clear that nothing quite compares with foreign competition as a limitation on the exercise of market power.
It was generally recognized throughout the finance committee hearings that an increase in competition in the banking business in Canada is highly desirable. We need more
March 16, 1967

March 16, 1967
Bank Act
are nominees of management. It is somewhat as though the last federal election had not been run from the office of the chief electoral officer but instead from 251 Cooper Street with only one polling station, naturally at 251 Cooper Street. The vote would be cast there by persons named by the national director of the Liberal federation on the basis of voting papers sent out, naturally, by our national director from 251 Cooper Street. If we could run our elections like that I do not think we would have much trouble in getting a working majority. Yet that is the method by which the men are elected who control these great corporations which in turn control billions of dollars of our money. This is a vital problem which applies not only to our chartered banks but to our great insurance companies and other great financial institutions, indeed, to all corporations where voting rights are widely distributed.
This bill will prevent any single group of shareholders from controlling the election of directors. Under present election methods this means that management becomes self-perpetuating and responsible only to itself. Clearly this is not a healthy situation. Making really effective the right of shareholders to elect directors who will be truly representative of the shareholders is a problem which must be faced in the next decennial revision of the Bank Act. Perhaps elections will have to be run from the office of the inspector general of banks. The banks will not like this and possibly the inspector general of banks will not like it either. Perhaps provision will have to be made for regional meetings to elect regional directors or for the election of delegates to attend the annual meeting, with reasonable expenses of attendance being paid from corporate funds. The problem is not dealt with in the present bill.
In present circumstances surely it is entirely clear that the chartered banks must make the most complete and frank disclosure to the public of their financial affairs and their operations. Past legislation has permitted the banks to be secretive. They have set up hidden reserves which make it impossible even for experienced analysts to understand fully their operations. This bill will stop this practice. The banks must disclose their reserves and the results of their operations. The public is entitled to complete disclosure. We think the bill goes far in guaranteeing this. If experience shows it does not go far enough then further legislation will be necessary.
[Mr. WahnJ
[DOT] (5:30 p.m.)
There are a large number of other recommendations of the Porter commission which have been carried into the bill, Mr. Chairman, but time does not permit my dealing with them all. I wish to say a word about the relaxing and ultimate removal of the 6 per cent interest ceiling. This must be recognized as being a bold step in view of the limited amount of rate competition in Canadian banking. The alternative would have been to retain power in the governor in council to reimpose controls if the chartered banks took advantage of this newfound freedom.
Personally I think this might have been a rather good idea. Experience has shown, however, that the chartered banks have not charged all the traffic will bear in the past. If they do abuse their freedom in future I think public indignation will be such that the chartered banks will realize that they are simply inviting more restrictive legislation. Nevertheless we must recognize that the effect of relaxing or removing the interest ceiling will be an average increase in interest rates. I sincerely hope, Mr. Chairman, that the banks will pass on part of the increased profits from such increases in interest rates to their depositors.
A great deal has been done in this bill to give effect to the central recommendations of the Porter commission. This is a good bill, deserving the support of the house.


Mr. Flemming:: Mr. Chairman, in making some observations on the decennial revisions of the Bank Act I do not propose to go over every detail of every consideration brought before the committee. We held many meetings and many learned men in the banking profession and in the federal supervisory field, as well as persons occupying prominent and influential positions, appeared before us. It must be remembered that we were engaged in the business of revising the charters under which the banks will operate for the next ten years. That revision was done in the light of deficiencies which became apparent to us in our study of the situation. We also attempted to impose changes in the new bill. Such amendments as were made are in the bill as it has been presented to us.
It seems to me that we should not allow the charters of the banks to expire. The act under which they now operate expires at the end of the month, I believe. I do not know why parliament should not make a terrific attempt to finalize things so that the banks may operate as of April 1 under the new act. We must
March 16. 1967

remember that the present act under which the banks operate, which is really their charter, has existed for almost 13 years instead of the 10 years originally proposed and that many changes have occurred during its existence. It seems to me that we had a two fold duty, to examine the situation which has existed for the 13-year period and then to arrange for something which will be an improvement over the old act in the light of all the changed conditions and the great growth which we have seen in our domestic and export trade.
The members of the standing committee considered all these matters very seriously and with great responsibility. I must say I was greatly impressed with the membership of the committee. I associate myself to the fullest extent in the remarks made concerning the chairman of the committee. He handled the committee very well, with great impartiality, fairness and ability. The same words apply to the hon. member for Quebec-Montmorency, the vice chairman. May I say that when the hon. member for Labelle took the place of the vice chairman he carried out his duties with great distinction.
We are talking about the Bank Act and everybody is interested in the Bank Act. We in this house are considering that act, its different phases and what it will do for us in the next ten years. But, Mr. Chairman, I do not believe we can expect any bank act or any bank to solve our problems. We must remember that we have other duties and responsibilities and that the Bank Act and the banks can only be considered as being instruments that we can use to make this country an even greater nation than it is today. That is the way we should face the question of the Bank Act. I repeat that every member of the standing committee seemed anxious to see the act amended in such a way that it would conform to the banking needs of Canada in this world. We all had that in our minds. We had many meetings and before we got through we had made many amendments. Generally speaking, I believe the amendments are an improvement.
I was much impressed with the great knowledge possessed by the governor of the Bank of Canada. He showed that knowledge on appearing before the committee. We are fortunate to have a man of his calibre, capacity and ability at the head of the Bank of Canada.


Some hon. Members:: Hear, hear.
Bank Act


Hugh John Flemming: The Bank of Canada has operated since 1934 and it has seen many changes in this country. As we all know, the functions of the Bank of Canada are economic as well as financial. It has great influence. At one time during the depression, in the early 1930's, I was told that the depression might have been prevented had there been some machinery at that time to control the money supply. I am not arguing whether the depression could or could not have been prevented. I simply repeat the proposition I heard many times, that had there been the machinery to handle the financial structure of this country much of the depression might have been avoided or it might have terminated sooner.
Our committee, it seems to me, was faced with certain questions which it had to determine and in the committee of the whole house we face the same problems. Does this bill as amended contain adequate and appropriate provisions for dealing with the changes which have taken place since 1954? I need not mention the changes except to say there is no doubt that there have been changes. I was not here in 1954 but I suggest that if one were to go back and look at the budget for that year one would find government expenditures lower by several billion dollars than they are today. Surely we are dealing with a different financial climate, are we not?
[DOT] (5:40 p.m.)
The other day the estimates for 1967-68 were tabled in the house. I happen to be one who deplores the fact that governmental expenditures have increased so fast. I happen to be one who thinks that governmental expenditures should be provided for by taxation as we go along. I commend the Minister of Finance on the fact that just recently he imposed taxation to take care of a certain situation which was going to cost a few hundred million dollars. I have no hesitation about saying so. But I maintain that in the light of conditions today we must consider the changes which have come about since 1954 and ask ourselves whether the bill before us is adequate to take care of the situation as it will develop during the next ten years during a period in which we hope and pray we shall continue our growth in an economic sense and in the sense of the contribution we make to the general improvement of the well-being of all people in the world.
The committee has made many amendments. Let us hope these amendments will be sufficient to make this bill one which will have a great influence on the well-being of all

March 16. 1967
Bank Act
our citizens. We have to ask ourselves, as the committee did, whether this legislation provides ways and means of taking care of the increase in the demand for consumer credit. This is an important question today. Again I suggest we might look back to 1954 and ascertain how much consumer credit was used in this country in that year so as to compare the situation then with the need today. I believe hon. members would find that the increase amounts to many millions of dollars. What machinery will be available for the supply of the funds needed? These are things which the committee had to consider and which I am sure the committee of the whole will have to consider.
Again, we in this country must of necessity export goods in order to live. With this in mind we should ask ourselves whether the bill before us provides, among its other features, for the handling of a greatly increased volume of export traffic. Does it do so or not? We should ask ourselves these questions and if we are in doubt about the answers we should make representations accordingly. We should ask ourselves whether this legislation will make it easier to bring in the ever-increasing volume of imports which now serve our rising standard of living. Every year we increase our volume of imports, particularly fom the United States. They have the styles, and I know something about the ladies' preference for style. I have gone all through that. I know that in New York they understand how to make the clothes in which the ladies feel they look well. We bring these things in and they are sold to the ladies. This is proper, and I find no fault with it. Where do we get the money to pay for them?
I said at the beginning of my remarks that my comments would be general in nature, and so they are. But my point is this. We have a great country but we find heavy demands being made on our financial structure. I believe we should live within our income. I do not think we should live by borrowing money at a time when we are supposed to be living in a boom period. I do not believe we should be passing a debt on to a future generation and asking the Minister of Finance to borrow money to pay for a standard of living which we doubt we can maintain out of our own earnings. I do not approve of borrowing money, spending it now, and asking someone who succeeds us 20 years hence to pay the bill.
The bill before us appears to exert a restraining influence on the chartered banks

whose existence is generally considered to be beneficial to the growth of our economy. Hon. members may ask:	What do you
mean by "restraint"? I think banks should lend money to a considerable extent upon the basis of what is known as moral risk. I am thinking particularly of young people who have an ambition to do something. I am one who thinks that ambition should be encouraged. I am one who thinks that ambition is so scarce today that we should encourage all those who want to do something for themselves. It seems to me that far from imposing restraint on the banks they should be encouraged to lend money.
I could tell two or three stories to illustrate this point if I had the time and if hon. members were prepared to listen. Yesterday I attended the funeral of a man from the other chamber who had said to me some years ago: "I was a bank clerk and your father came to me and said he wanted me to do a job for him". After this young man had been released from the bank to perform these services for my father he never went back. He built one of the largest businesses in eastern Canada. He and his brother were the heads of it when he passed away within the last week or so. My point is that he had to have bank credit in order to do this sort of thing. And he got it. This is why I say we should encourage the banks to lend money rather than restrict them from doing so. If money is lost occasionally, what is the difference? Especially, as I say, we should encourage young people who want to do something for themselves.
I ask the question: Is it suggested that restrictions should apply to the banks although similar limitations are not to be imposed on some of their competitors known as near-banks? I am not taking sides one way or the other. But is it reasonable that the regulations which apply to banks should not also apply to the competitors of those banks? Is it reasonable that these competitors should be able to lend money at any rate of interest they wish to charge, as a consequence of which they can naturally afford to pay a higher rate of interest to their depositors? This is not the way to encourage the banks to carry out their functions. It seems to me these are matters which everyone should consider.
The committee had expert witnesses before it. We were fortunate to hear from the inspector general of banks who is sitting in the gallery of this chamber at the moment. I repeat, we are lucky to have men of his calibre in the public service of Canada.


Some hon. Members:: Hear, hear.
March 16, 1967


Hugh John Flemming: I have referred to Mr. Rasminsky, the governor of the Bank of Canada, who appeared before us many times. I shall not read the whole list which is embodied in the report, but before concluding I wish to point out that many learned professors of economics appeared before the committee. Last but not least, the Minister of Finance appeared before the committee. I am the first to say he made a favourable impression. I thought he was a person who not only knew what he wanted to do but, once he knew it, determined to do it in a particular way. A person's ability to make up his mind is a great thing. I do not always agree with everything the minister does, but when he came before the committee and made a decision it was always based on something pretty sound and solid.
[DOT] (5:50 p.m.)
I shall not go into the whole question of the Mercantile Bank. My hon. friend who preceded me dealt with it very thoroughly. I agree with what he said about the banks needing competition. We can learn a great deal by having experienced people in the banking business come to Canada and contribute their experience and money toward an increase in the flow of funds which we need for development purposes. Where shall we get the money to develop our country if we do not borrow it from the United States? There is no other place. We cannot expect our citizens to take the last dollar out of their savings accounts to develop our country. They cannot afford to do that. Many people place money in banks for safekeeping, thinking of the proverbial rainy day. We cannot take those funds and put them into what are called risk capital ventures. Therefore we have to borrow money. I cannot say anything strong enough to voice my objection to so-called anti-Americanism, if such exists in any part of this chamber. Where can we get funds if we do not approach our neighbours to the south?
One thing which interested many members of the standing committee was the definition of the business of banking. I must say it did not bother me at all. When I had anything to do with banks I was more anxious about getting a loan than about putting a label on the fellow giving out the money. In a practical sense the definition did not bother me. Can a comprehensive label be put on the business of banking? It is important to have this question answered, but I do not think the standing committee has answered it.
Bank Act
I think that under most general headings the near banks, trust companies, and credit unions qualify as banks because they accept deposits, lend funds and have no interest ceiling rate. What they do must be a form of banking. During the committee hearings it became apparent that the banks had been obliged to obtain extra revenue to service some of their accounts. I am one who thinks that if you put $1,000 into a bank and issue cheques on it within a few days the bank is entitled to something for the service it provides.
The committee also dealt with the question of compensating balances. A borrower might obtain $100,000 from a bank but could only use $90,000, being required to leave the rest on deposit. This bill contains a provision whereby all charges of this nature must be specified when a loan is made. The committee studied the whole question of service charges and felt it was reasonable to have such charges.
Possibly the most important single factor which the committee considered, and which is provided for in this bill, is the removal of the ceiling on interest rates. It is a question which may be bothering many hon. members who are within the sound of my voice at the moment. All I can say is that the interest rate has been set and the bill provides that for a certain length of time it shall be at a certain maximum. After that the ceiling will probably be removed. When we consider this point we must keep certain comparisons in mind. We must compare the ability of the banks to attract deposits in competition with trust companies and credit unions. I assume their ability to attract deposits depends on the legal rate at which money is lent. The present legal ceiling is 6 per cent for banks and this curtails their ability to compete with some of the so-called near banks which have no such ceiling. They can lend money at the highest rate of interest they can get people to pay for it.
I have noticed on the main street of Fredericton a trust company notice offering to pay 7 per cent on deposits. I do not know what the qualifications are, but it is unreasonable to expect banks to lend money at 6 per cent when their competition will pay 7 per cent on deposits.
The Porter royal commission recommended that the interest ceiling be removed and that banks should be allowed the same freedom in establishing interest charges as their competitors have. The commission was of the opinion that banks should be able to participate in all

March 16, 1967
Private Bills
fields of borrowing and to do so on a basis of equality with the near banks.
People have told me that they have paid 2 per cent per month interest to finance companies. If banks are allowed to free their interest rates more people will go to banks when they need to borrow money. People's ability to borrow will be greatly enhanced, and they will have more sources from which to borrow since the banks have branches all over the country. People will be able to borrow at reasonable rates of interest, and that is a right which they should have. In a geographical sense the banks have brought their facilities within the reach of people all across the country.
[DOT] (6:00 p.m.)
So far as bank interest rates are concerned, there is a ceiling on interest rates at this time which the banks cannot ignore. It does seem strange that they are unable to meet the demand of the borrowing public at the established ceiling. The committee has recommended the removal of the ceiling, and it would seem to me that we should consider whether such action will accomplish what the committee intended, making credit available to small businesses and individuals requiring small loans. If the removal of the ceiling does not accomplish the intention then it is open to parliament to take action in respect of making loans available to all Canadians at a reasonable rate of interest. Should the improvements intended fail to materialize parliament must have the power to do whatever is necessary to bring about the desired results.


The Acting Chairman (Mr. Richard):: Order, please. It being six o'clock it is my duty to leave the chair in order that the house may consider private members' business.



PROCEEDINGS ON ADJOURNMENT MOTION


Mr. Deputy Speaker:: 
Mr. Rosaire Gendron (Riviere-du-Loup-Temiscouaia):: Mr. Speaker, will the house agree to give priority to Bill No. S-41, which does not seem to occasion any controversy, so that it might be considered in committee of the whole house, read for the third time and passed.
I understand that, as a result of an agreement between the various parties in the house, the suggestion would be acceptable, inasmuch as there would not be any debate, except for a few words to explain the aims of the amendment.


Mr. Deputy Speaker:: Order, please. I should point out to the house that if it is the desire to follow the suggestion of the hon. member for Riviere-du-Loup-Temiscouata, those bills on the order paper in the first, second and third positions may be stood at the request of the sponsors. Item No. 4 on the order paper is the resumption of a debate and therefore it can be stood only by unanimous consent. Item No. 5 on the order paper can be stood at the request of the sponsor. I suggest this procedure in order that we may deal with item No. 6. Is the house prepared to accept the request of the hon. member?


Some hon. Members:: Agreed.


Ian Grant Wahn: Mr. Speaker, I agree with the suggestion that we proceed with item No. 6 on the assumption there will be no debate on that bill. Before standing item No. 4 let me say it is my understanding that the hon. member for Megantic (Mr. Langlois) is prepared to withdraw his amendment. Perhaps we could have that amendment withdrawn before proceeding with item No. 6.


Mr. Depuiy Speaker:: Is that agreed?


Mr. Peters:: No.


Mr. Deputy Speaker:: Perhaps I should point out to the hon. member for St. Paul's that an amendment moved by an hon. member can
March 16, 1967

only be withdrawn by that member. The hon. member tor Megantic is not in the house at this time.


Ian Grant Wahn: Mr. Speaker, I believe the hon. member for Megantic left instructions with another hon. member to consent to the withdrawal of the amendment, if that is permitted.


Mr. Gauthier:: No, Mr. Speaker, the hon. member for Megantic (Mr. Langlois) has not mentioned it to me.


Mr. Deputy Speaker:: Order, please. I think the hon. member for Timiskaming has already objected.


William Arnold Peters: Yes, Mr. Speaker.


Ian Grant Wahn: I have no objection to adopting the suggestion that we now proceed with item No. 6.


Mr. Deputy Speaker:: Is it agreed that item No. 1 shall stand?


Some hon. Members:: Agreed.


Mr. Deputy Speaker:: Is it agreed that item No. 2 shall stand?


Mr. Cameron (High Park):: Mr. Speaker, I am prepared to allow this item to stand on the same terms, that there will only be a short debate lasting not more than a few minutes. If the hon. member has made some arrangement I am prepared to allow my bill to stand and to be taken up in its proper order during the next private members' hour. I object to this procedure on any other basis.


Frank Howard: Mr. Speaker, I think some confusion has developed as a result of calling the individual items. I think that by unanimous consent we have bypassed these items and the only way we can return to them is by unanimous consent. I think we should proceed with item No. 6, second reading of Bill S-41. At the conclusion of our consideration of that bill we should return to item No. 1 and the others in the appropriate order.


Mr. Deputy Speaker:: I will accept the suggestion made by the hon. member. However, in respect of item No. 4 we should have unanimous consent. Does the house give unanimous consent to standing item No. 4?


Ian Grant Wahn: I agree as long as it does not lose its position on the order paper.
Private Bills


Mr. Deputy Speaker:: Is the house agreed?


Some hon. Members:: Agreed.


Mr. Deputy Speaker:: Does the house give unanimous consent to the suggestion that we now proceed with item No. 6 on the order paper?


Alan John Patrick Cameron: I agree on the basis I have put forward.


Some hon. Members:: Agreed.


Rosaire Gendron: the second reading of Bill No. S-41, respecting La Societe des Artisans.
He said:

Mr. Speaker, I want first to thank the house for its courtesy and the sponsors of the various bills which had priority over mine, for their indulgence, I shall not overtax their patience.
The purpose of this bill respecting La Societe des Artisans, which is a fraternal benefit society, is first to enable it to use the terms appearing in the Canadian and British Insurance Companies Act, that is: fraternal benefit society.
The second amendment seeks the authorization to reinsure any insurance risk undertaken by similar insurance companies.
The purpose of the third amendment is to confer on the executive certain privileges pertaining to the general assembly which only meets every four years, so as to improve the dispatch of the society's business.
The fourth amendment is to allow new members of the executive to be selected from outside Montreal and suburbs whereas such a territorial limit existed previously.
[DOT] (6:10 p.m.)


William Arnold Peters: Mr. Speaker, I thought that the changes suggested in this bill should be implemented because on reading its title in French, "La Societe des Artisans", I presumed it had something to do with artisans in the English sense of the word and was a trade union bill. I was very surprised to find the title has nothing to do with co-operatives or trade unions and is in fact not concerned with artisans in any way, shape of form but is an insurance bill. Reading the bill quickly, I find it is not even

March 16, 1967
Private Bills
a normal insurance company in the sense that we understand. Perhaps the sponsor of the bill should have been a little more clear as to the purpose of the bill.
I notice that one of the clauses allows the society to reinsure a part of any personal insurance risk carried by a fraternal benefit society. This, of course, is not the normal reinsurance which a company undertakes with a number of other companies because the risk incurred in the insurance policies is beyond the capability of the fraternal organization to carry. Protection is achieved in this way. In this case it appears that there is an inter-relationship or interlocking among various insurance companies. Here a fraternal benefit society carries a personal insurance risk that would have to be carried by the individual and could be taken care of through reinsurance with several other agencies of a mutual character. There is in the bill the continual use of the phrase "fraternal benefit society". This may also carry a connotation in French that is not readily translated into English. In the direct translation there is apparently a totally different kind of insurance envisaged than that with which we are normally concerned.
I apologize to the house for not having considered this particular aspect of the bill, but I did not really understand that it dealt with an insurance company. Perhaps other hon. members interpreted "artisans" to mean what it means in English rather than what is apparently its meaning in the direct translation. This society seeks these changes by federal legislation, but the bill uses the expression "may delegate such power to the executive council". This matter is not very clear to me and perhaps it will be made clearer when the bill is referred to the standing committee. In its translation perhaps "executive council" has a different connotation. I presume it may have something to do with the executive council of the province of Quebec, but I should like to be clear on this point.
I am also concerned about the fact that the bill does not provide enough information for us to ascertain whether major changes are being effected by it. This statute was passed in 1946 and the bill does not include the names of the persons who seek these changes or the other normal requirements in connection with this type of bill. We are not able to look at the bill in its entirety and understand the extent to which the amendments apply.
I shall therefore be interested in the discussion that takes place in the committee, because as I read the bill there is a considerable

difference from what we normally consider to be mutual and other insurance companies in regard to reinsuring and the extent to which protection is provided to the policyholder by the Canadian and British Insurance Companies Act. I think there will be some interest on the part of hon. members in ascertaining how this reinsurance will be carried out-


Mr.   J.-A. Mongrain@Trois-Rivieres: On a
point of order, Mr. Chairman, I would not want to be disagreeable toward my colleague, but I know that the hon. member for Riviere-du-Loup-Temiscouata (Mr. Gen-dron) went around the house all afternoon. We asked him all those questions. Finally, the house agreed a minute ago to consider his bill provided there were no discussion. It seems to me then that something is not in order. I think it was my colleague here who specified two or three times: Provided there is no discussion.
I wonder then whether we are quite in order.


Alan John Patrick Cameron: On a point of order, Mr. Speaker, I would confirm that this is exactly what did take place. When I gave my consent to item No. 2 standing I did so with the distinct understanding that there would be a very limited debate on this matter. If debate is to continue, I must withdraw my consent.


Frank Howard: Mr. Speaker, on the point of order I should like to say, because I was involved in the discussion, that the hon. member for Riviere-du-Loup-Temiscouata came to see me a moment or two before six o'clock and posed the question of giving second reading to this bill without debate. I think the hon. member for Riviere-du-Loup-Temis-couata will confirm that I suggested this was not a very wise course, that if we passed the bill without debate it would be contrary to what we were trying to do, and the least that should be done was that we should have an explanation from the hon. member sponsoring the bill. Therefore there was not an across-the-board understanding that this bill would be passed without debate, even though the hon. member for Riviere-du-Loup-Temiscouata may have had a previous discussion about it. However, I know that the hon. member for Timiskaming has just about reached the conclusion of his remarks.
March 16, 1967


Mr. Speaker:: Order. The hon. member has already dealt with the point of order. In any case, I understand the hon. member for Ti-miskaming (Mr. Peters) has nearly finished his remarks, so that will automatically settle the problem.


Mr. Mongrain:: Mr. Speaker, on that point of order-
[DOT] (6:20 p.m.)


William Arnold Peters: Mr. Speaker, I should inform the house that I did not take part in the discussion and therefore I took this bill at its face value, as I am sure you did, Mr. Speaker. The request was made to take up this bill rather than other bills and, as I said, I was very surprised to find that it was not what I had thought it was. This bill contains a couple of points which make it different from other similar bills. It may be that some hon. members are not interested in examining this type of bill. However, I think I have an obligation to point out that in my opinion there are differences between this bill and other such bills. I am prepared to let it go to the committee without further debate in the hope that an answer will be found there to some of the problems which can be raised legitimately in regard to legislation of this nature.


Mr. Speaker:: Is it the pleasure of the house to adopt the said motion?


[Stage Direction]
Motion agreed to, bill read the second time and referred to the standing committee on finance, trade and economic affairs.
Rosaire Gendron: Mr. Speaker, I had asked for unanimous consent so that the bill could be studied in committee of the whole immediately and the motion for third reading could also be passed.


Mr. Speaker:: I must point out to the hon. member that standing order 102 stipulates that no private bill shall be studied in committee of the whole without a special reference. If the hon. member refers to standing orders and more particularly to the order I have just mentioned, he will note that it is extremely difficult to permit examination of a bill by the committee of the whole rather than by a special committee. Naturally, the house may make whatever decisions it wishes, but at this point I will call the attention of the house to the fact
Private Bills
that it is abnormal to proceed as the hon. member for Riviere-du-Loup-Temiscouata suggests.


Rosaire Gendron: Mr. Speaker, would you have any objection if the house gave unanimous consent? Therefore, I ask for the unanimous consent of the house.


Mr. Speaker:: Unfortunately, I believe the problem to which I have just alluded still remains, since the standing order reads as follows:
No motion for the suspension or modification of any provision of Part II of the standing orders applying to private bills or to petitions for private bills shall be entertained by the house until after reference is made to the committee on standing orders, or to one of the committees charged with the consideration of private bills, and a report made thereon by one of such committees and, in its report, the said committee shall state the grounds for recommending such suspension or modification.
The hon. member suggests that the house do precisely the opposite of what is stipulated in the standing orders. To my mind, the hon. members should think seriously of the difficulties which would stem, even with the unanimous consent of the house, from overriding a standing order which stipulates that a private bill shall be considered by a special committee rather than by the committee of the whole.


Rosaire Gendron: I accept your ruling, Mr. Speaker.


[Stage Direction]
On the order:
House in committee of the whole on Bill S-26. An Act respecting the Excelsior Life Insurance Company (without amendment).-Mr. Stanbury.
Mr. Stanbury:: Mr. Speaker, I rise on a point of order. Clearly there has been a misunderstanding about the order of business during this hour. Already half the private members hour has been taken up on a bill which many of us were led to believe was going to be passed without debate. The result of the misunderstanding is that only half an hour remains for discussion of this bill and whatever other bills might be taken up during the hour. The suggestion I should like to make for the consideration of hon. members is that private members' hour today be extended to 7.30 so that in fairness to those who have suffered by reason of this misunderstanding-

March 16, 1967
Private Bills


Mr. Speaker:: Order, please. I would ask the hon. member to take into account the fact that it is only 6.30 now and that there is always a possibility that all the bills to which he has referred might be passed and adopted by seven o'clock. If he wishes to extend the private members' hour I would suggest to him that the motion be made and considered at that time.
The house in committee on Bill No. S-26 respecting the Excelsior Life Insurance Company-Mr. Stanbury-Mr. Batten in the chair.
Clause 1 agreed to.
On clause 2-Powers, privileges and liabilities.


Frank Howard: Mr. Chairman, we made an exception and referred this bill to the miscellaneous private bills committee, in other words, to another committee than the one set out in the standing orders. When it was considered in the miscellaneous private bills committee on two occasions, I believe consideration was given to the question of the foreign ownership of this company. I think we cannot let this clause pass without making reference to some statements which were made earlier by the Prime Minister and to one which was made just yesterday by the Minister without Portfolio who heads the cabinet committee dealing with foreign ownership of companies in Canada, a matter of tremendous concern to all of parliament.
Perhaps I should go back to the time a few weeks ago when the Prime Minister, in a nation-wide television broadcast, made a great issue about declaring the policy of his government with respect to foreign ownership of companies in Canada, if not by direct statement then by leaving a very clear impression that he and his government were in favour of steps to bring industry in Canada under the control of Canadians and to remove as quickly as possible the element of foreign ownership of companies in Canada.
When the Minister without Portfolio said yesterday that he hoped that the matter of foreign ownership of Canadian industry would become a major issue in the next election, his statement had an even more direct bearing on the bill that is before us now. I am not looking toward an election at the moment and trying to involve myself in it, but I do say, as has been said on many occasions in the past, that we have an undeniable obligation to the Canadian people to look seriously at the matter of foreign ownership of our industry and to look seriously at the Excelsior

Life Insurance Company which is being considered at present. Not long ago the Prime Minister replied, in answer to a series of questions in the house, that the insurance companies act contained the same provisions with respect to foreign ownership as are contained in the Bank Act. It was a bit of a surprise to most of us because we did not appreciate that all insurance companies in Canada came under the proscription that only a certain percentage of them were permitted to be owned by other than Canadians. It was for this reason we raised the matter in the standing committee when considering the Excelsior Life Insurance Company. We raised the matter of foreign ownership of this company, and if my memory is correct the figures given were that this company had 70 per cent of its share capital held in the United States. If my memory is faulty, the sponsor of the bill can correct me.
[DOT] (6:30 p.m.)
Even though the insurance companies act to which the Prime Minister referred earlier contains provisions which limit the degree to which life insurance companies may be owned by foreigners, the provisions of that act do not apply to the Excelsior Life Insurance Company primarily because it became a United States owned company before the coming into force of the amendments to that act in 1964-65.
Without reading the relevant sections of the insurance act, I want to make reference to the fact that if we were to add a few words to clause 2 we would bring Excelsior Life under Canadian control. I submit that the period of five years has been used on two other occasions when dealing with foreign ownership of financial institutions of this country. It seems that five years was established as a reasonable period of time to permit Excelsior Life Insurance Company to become a Canadian owned corporation or, in effect, lose the full power of foreign ownership. The amendment that was sought to be moved in committee was ruled out on a technicality. Incidentally, the technicality could be objected to because I have looked up the rules and have sought advice on the matter. No objection was taken in the committee because it was obvious the hon. member for Timiskaming would need a seconder for his motion from one of the other parties because the New Democratic party had only one member on the committee. Since he was unable to secure a seconder, there was not much point in attacking the validity of the ruling of the chairman at that time. Consequently he let the matter proceed,
March 16, 1967

knowing that it could and must be raised again in this chamber.
It is undoubtedly our responsibility to concern ourselves with the matter of foreign ownership, not only the foreign ownership of a company like Excelsior Life Insurance Company but other companies. The foreign ownership involves a tremendous interference with the degree to which we may control our own economic destiny. The Prime Minister has declared it to be government policy, as well as the former minister of finance, that industry and finance should be brought under the control of Canadians. We cannot therefore just blindly pass the clauses of a bill of this nature without putting the matter to the supreme test, so I intend to move an amendment in a moment. If this amendment does not carry in committee, we would have no choice then but to move it, in essence, when we reach the third reading of the bill in order to test this question of foreign ownership of The Excelsior Life Insurance Company in particular, and in general the whole question of the validity of the declaration of the Prime Minister, as well as others in the Liberal party who have declared themselves in favour of advancing the cause of Canadian ownership of industry. Many of the members of the Conservative party expressed the idea in the previous election campaign.
The time is long past when we should put into effect the same provisions that are contained in the bank bill, the same provisions that were contained in this other bill and as applied to the Mercantile Bank. This provision should be made applicable to The Excelsior Life Insurance Company because that is the company before us at the moment. This seems to be the time when other life insurance companies and finance companies should be told that the majority of their stock should be owned by Canadians.
Accordingly, I move:
That clause 2 be amended in line 17 by adding after the word "thereto" the following:
"Except that the provisions of section 16F(2) and 16F(3) of the Canadian and British Insurance Companies Act shall not apply to the company beyond the 31st day of December, 1971."
The effect of the amendment, Mr. Chairman, just referring briefly and not in detail to the particular section 16F, would be to remove the exemption which now exists. 16F(2) provides an exception for non-resident ownership of a company. In other words, where a company is foreign owned the provisions of the Canadian and British Insurance
Private Bills
Companies Act which now require that foreign ownership shall not exceed a certain percentage would not exist beyond December 31, 1971.
To put it succinctly, if the amendment carries, then by January 1, 1972, Excelsior Life Insurance Company would no longer be in a position to be a foreign owned company. This would be in line with similar provisions contained in the bank bill as well as the policy declarations made by the Prime Minister and the former minister of finance. I believe we should consider this very seriously because we have an obligation to the Canadian people which cannot be glossed over.
[DOT] (6:40 p.m.)
Amendment (Mr. Howard) negatived: Yeas, 6; nays, 20.


Herman Maxwell Batten: I declare the amendment lost.


[Stage Direction]
Clause agreed to.
Clauses 3 to 9 inclusive agreed to.
Title agreed to.
Bill reported.
Mr. Deputy Speaker:: When shall the bill be read the third time?


Some hon. Members:: By leave, now.


Robert Douglas George Stanbury: the third reading of the bill.


Frank Howard: Mr. Speaker, on the motion for third reading may I say I do not think there is much point in reiterating what was said during the committee stage on clause 2. However, I propose to move an amendment which relates to clause 2, and even though there is no reference to this in the amendment it relates specifically and absolutely to the matter of foreign ownership. It is for this purpose that I should like to refer the bill back to committee for a reconsideration of clause 2 and whatever changes might be made to it.
Accordingly, Mr. Speaker, I move, seconded by the hon. member for Timiskaming (Mr. Peters):
That Bill S-26 be not now read a third time but that it be referred back to the committee of the whole house for reconsideration of clause 2.
I think technically that is the proper wording, Mr. Speaker.


Robert Douglas George Stanbury: Mr. Speaker, my only comment is this. Whatever the merits of the suggestion of the

March 16. 1967
Private Bills
hon. member, the applicant here is only one of 13 companies which are exempt from the provision referred to by the hon. member. It would of course be quite unreasonable and discriminatory to single out this company for this kind of restriction. If the hon. member feels that a change of general policy is desirable, then it seems to me that that would be done more properly by another piece of legislation. I submit that this company should not suffer in the meantime, being the only one of 13 companies to lose that exemption.


Thomas Speakman Barnett: Mr. Speaker, in speaking to the amendment that has been proposed by my colleague the hon. member for Skeena (Mr. Howard), and in reply to the remarks which have just been made, may I suggest to the hon. member that what he has said really falls to the ground on two counts. One of them is that as far as I am concerned if, as and when the other companies come before this house we can deal with them at the first opportunity, in exactly the same manner as we have dealt with this company.
Second, and perhaps preferably, I suggest to the hon. member that if he is prepared to bring in an appropriate amendment to the act to which reference was made earlier-the act of general application-then I would be more than happy to support him in taking an approach of that kind to deal with what he alleges to be a discrimination against this particular company.
He may be somewhat closer to the source of initiating such legislation than I am, and in view of the fact that he has made these remarks I suggest that he should consider my suggestion to eliminate the discrimination that he feels exists. Let me assure him at once that if he can arrange to have such proposal laid before the house we would be more than happy to support him in eliminating what he terms a discrimination against this particular company.


William Arnold Peters: Mr. Speaker, I did not intend to say anything on this amendment at the third reading stage because it is self-explanatory. I will say, however, I agree with the hon. member that this action is discriminatory in that only one of 13 companies is affected, should this amendment pass and clause 2 is changed. The same state of affairs exists with regard to insurance legislation. The changes which are being recommended by the government in the banking legislation are also discriminatory

against two banks in particular, namely the Bank of Western Canada and the Mercantile Bank, though obviously they are in a different position. I would submit that this is a problem that the government will have to face up to.
[DOT] (6:50 p.m.)
If hon. members decide to vote for this amendment, then obviously the government, as my colleague has said, must bring in legislation to provide for the equality of each of the companies. It would be a poor excuse to say that because all 13 companies are not before the house it should not deal with this one company. This is a financial institution, and if parliament is to control all financial institutions in this country it will have to deal with this matter. I think the amendment will be supported. There is an obligation on the government to bring the other 12 companies into line.
Hon. members voting against the amendment will be voting with tongue in cheek, because this bill now before us deals with the subject matter dealt with in the Bank Act. Surely some of the similarities in the two pieces of legislation cannot escape hon. members.


Mr. Deputy Speaker:: Is the house ready for the question?


Some hon. Members:: Agreed.


Mr. Deputy Speaker:: Those in favour to the motion will please say yea.


Some hon. Members:: Yea.


Mr. Deputy Speaker:: Those against will please say nay.


Some hon. Members:: Nay.


Mr. Deputy Speaker:: In my opinion the nays have it.
And more than five members having risen:


Mr. Deputy Speaker:: Call in the members.


Marcel Joseph Aimé Lambert: On a point of order, Mr. Speaker-


Mr. Deputy Speaker:: I shall read the standing order to the house. Stop the bell, please. Standing order 6(3) says:
If any member objects to the taking of a vote at any time between 1.00 o'clock p.m. and 2.30 o'clock p.m. or between 6.00 o'clock p.m. and 8.00 o'clock p.m., Mr. Speaker shall request those members who object to rise in their places and if five or more members rise, the taking of the vote shall be postponed.
March 16, 1967

As I remember, there was no objection.


Marcel Joseph Aimé Lambert: I beg to differ, Mr. Speaker. As soon as Your Honour said "Call in the members", I stood up, indicating I objected. Then, following the standing order, the burden is on Your Honour to ascertain whether other members do not wish the vote to take place at this time. I think we are at that point.


Mr. Deputy Speaker:: I shall accept the explanation of the hon. member for Edmonton West. It is now my duty to ask those who object to the taking of the vote at this time to rise.
And more than five members having risen:


Mr. Deputy Speaker:: More than five members having risen the vote will be deferred, to be taken when the house resumes at eight o'clock.


Alan John Patrick Cameron: the second reading of Bill No. S-27 to incorporate Laurier Life Insurance Company. He said:
Laurier Life Insurance Company was incorporated under letters patent granted by the province of Ontario dated October 6, 1965. The company received a certificate of registry under the Canadian and British Insurance Companies Act in December, 1965, and a few days later a provincial licence to undertake insurance contracts in the province of Ontario. The federal registration restricted Laurier Life to the conduct of insurance business in Ontario. This company was formed group life business of Global Life Insurance Company, a company which was operating in Ontario, Quebec and British Columbia. In order for Laurier to acquire this business it was necessary that it become incorporated and licensed as quickly as possible and there was not time to incorporate this company by way of federal charter and to acquire the Global business at the same time.
It was therefore resolved to incorporate the company under an Ontario charter and, in accordance with the request of the Ontario department of insurance, to register it federally-although the business would be confined to Ontario-so that the group life business of Global Life Insurance could be acquired. Pursuant to that purpose the company was incorporated and the sum of $2 million was raised, $1 million as capital and $1 million as paid up
Private Bills
surplus. It was out of the surplus funds subscribed to the company that the group life business of the Global Life Insurance Company was purchased. The purchase price was $1 and upon payment of this Laurier Life Insurance Company acquired by way of re-insurance the liabilities and benefits from the group life business of Global. It also acquired the paid up reserves backing these contracts. The company therefore was immediately in business with some $80 million worth of insurance on its books and a premium income of approximately $1.3 million per year.


Mr. Deputy Speaker:: Order, please. The Chair has been requested to note that a quorum is not present. I shall therefore ask the Clerk Assistant to count the members.
And on the count being made, more than 20 members were declared to be present.


Mr. Deputy Speaker:: Twenty four members are present and the house is properly constituted.


Alan John Patrick Cameron: Among the business acquired was group life contracts in the province of Quebec. Under the terms of the federal registration the only place in which the company could sell insurance was Ontario, and it is a desire of the company to be able to sell insurance as well in the province of Quebec. It is necessary for the company to keep office facilities in the province of Quebec in order to service the existing business acquired by way of re-insurance from Global Life; it is relatively uneconomical to maintain these offices without also providing the staff with an opportunity to sell insurance in that province.
At the time that the formation of this company was discussed with both the Ontario department of insurance and the federal authorities, the founders of the company undertook that they would in due course apply for federal registration and federal incorporation so that the company would be on the same footing as other insurance companies; it would not be a company operating under an Ontario act and under the federal act, and to that extent be an unusual company for both the provincial authorities and the federal authorities.
The shareholders of the company are made up of businessmen from Toronto, Windsor, Barrie and other centres in Ontario. It is an undertaking of the company that it will, before entering into the insurance business under its new charter, acquire all the assets

March 16, 196?
Private Bills
and obligations of the existing Ontario company, terminate its operation, and have paid in as capital, over and above the surplus which was used to acquire the Global Life business, $1 million. The federal incorporation of this company is desired so that it may turn its uneconomical Quebec activities into an economical operation. The transfer of the group business from Global to Laurier Life by way of re-insurance contracts has been studied by both the federal Department of Insurance and the Ontario department of insurance and has met with no apparent problems or opposition from either of these departments.
May I add, Mr. Speaker, that if the hon. member for Kamloops (Mr. Fulton) were in the house he would show his interest in this bill.
[DOT] (7:00 p.m.)


William Arnold Peters: Mr. Speaker, we do not intend to talk this bill out. I should like to say just a few words.


Mr. Deputy Speaker:: Order, please. It being seven o'clock, pursuant to an order of the house made on March 3, this sitting is adjourned for one hour.


Frank Howard: Could I plead with the house through Your Honour to give consent to have this bill read the second time, and perhaps my hon. friend from Timiskaming could explain our position with regard to it.


Mr. Deputy Speaker:: Does the house agree to continue the discussion on this bill?


Some hon. Members:: Agreed.


William Arnold Peters: I appreciate the remarks which have been made by the hon. member for High Park (Mr. Cameron) in relation to the difficulties encountered by this company, as well as others, in changing from provincial to federal incorporation so as to take advantage of the operations of the federal superintendent of insurance, and the protection given by his office.
I am pleased to note from the hon. member's explanation that this company is transferring its provincial assets to the federal company, unlike the last company we dealt with whose bill contained an expression to the effect that this was deemed to have been done-a form which I did not think was desirable. The company now in question is following a form which allows us to ascertain

what transactions are taking place in connection with the transfer from provincial to federal jurisdiction.
Another important fact to be borne in mind when dealing with the establishment of this company is that the ownership is Canadian and meets a requirement which I believe the previous company should have been asked to meet, though it was exempted. We are pleased therefore that this transfer is being undertaken so as to take advantage of a measure of protection which in my opinion is too often overlooked-the protection available after incorporation as a federal company by reason of the operations of the superintendent of insurance.


[Stage Direction]
Motion agreed to, bill read the second time and referred to the standing committee on finance, trade and economic affairs.
Mr. Deputy Speaker:: The sitting is suspended until eight o'clock.



SITTING SUSPENDED


[Stage Direction]
The house resumed at 8 p.m.

Mr. Speaker:: Order, please. The question is a deferred vote pursuant to section (3) of standing order 6, as follows: Mr. Stanbury, seconded by Mr. Cameron (High Park), moved that Bill S-26, an act respecting The Excelsior Life Insurance Company, be now read a third time. In amendment thereto, Mr. Howard, seconded by Mr. Peters, moved that Bill S-26 be not now read a third time but that it be referred back to the committee of the whole house for reconsideration of clause 2.
The question is on the amendment.


Mr. Speaker:: I declare the amendment lost.


Mr. Tucker:: Mr. Speaker, I was paired. Had I voted, I would have voted against the amendment.


Herbert Wilfred Herridge: Mr. Speaker, I was paired with the Minister of Energy, Mines and Resources. Had I voted, I would have supported the principle, purpose and spirit of the amendment.


Mr. Speaker:: The house will now revert to the business interrupted at six o'clock.


Some hon. Members:: Question.


Mr. Speaker:: Order, please. The suggestion being made by hon. members is that the question on third reading of the bill be put, but I suggest that it would require the unanimous consent of the house to put the question at this time.


Some hon. Members:: Agreed.


Frank Howard: Mr. Speaker, this is far, far too important an item to rush through at this moment.


Some hon. Members:: Oh, oh.


Mr. Speaker:: The house will now revert to the business interrupted at six o'clock.



BANK ACT


[Stage Direction]
The house resumed consideration in Committee of Bill No. C-222, respecting banks and banking-Mr. Sharp-Mr. Batten in the chair.
On clause 2-Definitions.
Mr. Oito:: Mr. Chairman, this debate started off surprisingly harmoniously with the hon. members of all parties on the opposite side of the house being rather complimentary to the minister and the committee in connection with this bill and the amendments proposed in committee. There were some suggestions made by the hon. member for Victoria-Carleton. He said: I think the main question is, is this bill going to meet our banking and credit requirements for the next ten years? But he did not answer that question.
The hon. member for St. Paul's made several suggestions and indeed pointed out the incongruity of our banking system as it relates to our banking requirements; but he was very polite about it and tried to slay the

March 16, 1967
Bank Act
dragon with a leather when he might have used a dagger. I am not going to use a feather; I am going to use an axe. There are really two main questions to be raised in connection with this bill. I regret very much that in this case some of my comments will have to reflect upon the Minister of Finance. This is always the case when the putative father, so to speak, the hon. member for Davenport, is not here and the foster father must answer for the legislation that is on the books.
[DOT] (8:30 p.m.)
The question is, first, is this is good banking legislation; in other words, is it going to assist Canadians in their industrial growth and in their commercial expansion over the next ten years? I say it is not; it is bad legislation and, with all due respect, the committee did not consider this question. It approached this matter on the basis of individual amendments. Mind you, they were good amendments to a bad act. However, making worthwhile amendments to a bad act will not make it a good act; it does not make it good banking legislation.
The other question is: How in the world did we mix up nationalism with banking legislation? What have those two things to do with each other? I suggest to you that nationalism, this great quest for some sort of feeling of unity, has no place in banking legislation. Indeed everyone who has spoken on it, and the hon. member for Davenport has himself commented on it, pointed out that we as Canadians are not worried about money lent to Canadian companies or any type of bond issue which can be paid back. The hon. member for Davenport said that what he has worried about was industrial equity. There is a difference between the two.
I fully support the concept that Canadians should be induced to buy shares, to get dividends and to re-invest in their own growth. Here we are talking about money, we are talking about banking tools for industry. We welcome tools from anywhere, because this can always he paid back. However, nationalism has no connection with banking. We are very concerned about national unity and we think we can obtain this national unity, or this ersatz nationalism, by skinning it off the hides of someone else. This cannot be done. We are greatly concerned about our centennial. We are rushing on at a frantic pace with the idea that we have something to celebrate, and we want to discover in our country a national spirit. So we have 200 mountain climbers climbing mountains, we have 100

canoeists canoeing down the river, and we have a high wire act and other such ambitious projects. However, this has nothing to do with banking. I do not want to deal with nationalism any further. All I wanted to do was to point out that it really has no bearing on banking. What we should seriously consider is whether we have good banking legislation.
The following question was raised by the hon. member for Edmonton West and by others: What is the definition of banking? It does not matter much what we say the definition of banking is, but we have identified it by the nomenclature we use. We have said that banks are institutions, and if one examines the definition of "institution" in its broadest or narrowest terms he finds that it is an organization established for the protection of souls, to guard established or cultural rituals. It is not active. This is exactly what our companies have become. They have become institutions.
We may well ask ourselves whether institutions, in their institutional way of thinking and doing business, help our industrial requirement for capital? I say they will not. The hon. member for St. Paul's mentioned that banks are like a club. Of course they are a club, and a very private one. They are a very inefficient little club with a monopoly.
There is something to be said for the charging of interest. But interest is earned through taking risks. Interest is usually the payment of money for the mere use of money, without a risk being attached to it. I submit that our banks, for the past 15 or 20 years if not longer, have not been in the habit of taking risks. They do not want to take risks. They say: We will lend you some money, but first we want to be absolutely certain that we will get it all back, and yet we want the interest on it. There is a place for this type of financing, but it is not the type which we will need in Canada for the next 10, 15 or 20 years. We have to have someone who is willing to take a risk and get the interest for it.
Our banks are not established in that way. In their minds, and indeed in our minds, they are institutions. Hon. members will recall that the original Bank Act, and in fact all our banking legislation-and this bill specifically -was devised to protect the depositors' money. That is the whole purpose of the Bank Act. It contains a large number of regulations specifying exactly what the banks can and cannot do.
We did not consider whether this was a good way to do business. What we have said
March 16, 1967

is: By following these rules we are going to make absolutely certain that the banks will be able to pay back the depositors' money. However, this is not the problem which will be facing us in the next 10, 15 or 20 years. We already have depositors' insurance, and that is an easy solution.
The object of the legislation should be to make the banks efficient and to allow them to give credit, with a calculated risk, so that our industries and our people can borrow to buy and expand their industrial potential, and indeed if necessary to buy other shares and other equities from foreign owned institutions. This bill does not do this. It is merely a coating of pieces of reforms on an act which was never intended to fulfil the function which all our banks now have to fulfil.
An argument was advanced at one time that banks could not take all these risks because their interest was limited. We have solved this. But having recommended a free interest rate over a period of time we have not changed the act as yet, or brought in any reforms which will give us protection and an ability to carry on the banking business in an efficient manner.
What changes in the bill could have been made in the committee to make it function as a good instrument of banking? I could suggest several changes, but first I should like to draw attention to what the hon. member for St. Paul's has said. He has given us a great deal of information regarding the directors and the managerial staff of our banks, and how they function. I want to suggest that I do not agree with all he said. The directors of the banks are not themselves bankers, and we all know this. They are gentlemen from all walks of life. They come from the right families and they are definitely in the establishment. Their main concern is to make no mistakes which might reflect on their good name. They do not make a living from the bank. They know nothing about banking. They do manage to scrape a few thousand dollars together on subscriptions of shares. The banks are closely interrelated with heavy industries. The directors can borrow money from the banks or from their companies, and they make their money through the share structure of different corporations, including the issuance of shares from banks. Their main concern is to have a place in all of these banks and in all the financial institutions.
I believe that if one were to refer to the press reporter's book, "The Vertical Mosaic" he would gain an insight into the ways in which the establishment really functions in
Bank Act
our economic society. This is not banking. Indeed if those directors had to rely for their living on the bank, they would inevitably make the bank more efficient. From time to time the management and the advisory staff of the banks make recommendations for certain changes in policy. I recall hearing the president of a bank say that he has one job to do, and that is to take the advice of the management and then try to sell it to the board of directors. I asked what was the secret of his success, and he said. "If I can get 10 per cent of those recommendations approved by the board of directors I am very lucky because the directors are not that keen on improving the banking system." This is where the fault lies. Can anyone suggest that Mr. Rockefeller and Citibank would move into Canada if the Canadian banking system were efficient and competitive? We have thousands of branches of banks. We have more bank branches probably than churches. Why would he come in here? He is not a fool. The reason he wants to come is that he knows our banks are not doing the job, and that is why he can make a dollar at it. I have no objection to that.
[DOT] (8:40 p.m.)
This bill does not improve the banking position, nor will it make the banks more competitive. I notice the bill continues the same old provision with regard to proxies. The hon. member for St. Paul's mentioned this. He said that the directors are self-appointed; and so they are. I would have thought the minister or the finance committee would have introduced a clause into this bill to prevent the directors from sending out proxies. In other words the directors should send them out at their own expense and not at the expense of the bank. If there are millions of shareholders, it is a very expensive business to send out proxies in order to try to get votes. When the banks send them out at the bank's expense, the directors will continually be the directors.
If I read the bill correctly I find that if I wanted a list of the shareholders of the bank I would get a list that was four months old. In four months almost anything can happen to the shareholders. They may be all over the place by this time. This is not the type of bill I would have thought would have been presented. There is nothing in it about the near banks. I would like to know how anyone can say that this bill is going to make the banks more competitive in any way whatever.
I did not intend to dwell too long on the question of nationalism or foreign control.

March 16, 1967
Bank Act
However, there is a question I should like to put to the minister. Presuming that this bill passes, will it indeed bring the results that we seek? I wonder about the drafting of the bill. It would seem that in order to make this clause function in relation to the 25 per cent ownership, the bank would be the only one entitled to sell shares. Suppose at a certain time 24 per cent of the shareholders are nonresident, leaving a 1 per cent gap. Suppose, then, shares are sold on the market and, as in many cases, hundreds of thousands of shares are transferred to foreigners. The question then arises, whose shares are going to qualify for transfer? If ten people buy at the same hour on the same day, and after the shares have been transferred from non-resident to resident we find ourselves with 30 per cent foreign ownership, someone has to say that 5 per cent of those sales are not going to qualify for transfer.
The question then arises, who tells the people who are buying the shares? Do they know that they are taking a gamble? In other words, if this is to be done at all there would have to be a provision that the shares cannot be sold through the stock market but must be sold directly through the bank. This is the only way you can control the situation. Let us suppose this problem is solved, and I will put another question to the minister. If I read this bill correctly, there is nothing invalid about transferring more than 25 per cent of the shares. The only provision is that they will not be transferred in the books of the bank. Would it not be in line with the new law for anyone from the United States or Europe to buy 90 per cent of the shares of a bank? The first 25 per cent of the stock is registered but the remaining 65 per cent is not transferred, so that stock has no voting privileges. In other words, with the 25 per cent he owns he has all the voting privileges. How is this going to accomplish the purpose of the bill before us?
A further question comes to mind. The bill does state that in the event more than 25 per cent of the shares are sold or more than 10 per cent in so far as an individual is concerned, business conducted after that time is voidable. Does this mean all the loans made in that period of time are not valid? All these questions arise as a result of the provisions of this bill.
I say in conclusion, then, that there is nothing wrong with the Mercantile Bank coming into Canada and doing a good job of banking. I will say to this house that, having had some experience with United States bankers I find

them much more in tune with the new requirements of banking. They are willing to take risks. In addition to that, they are willing to advise customers. They sit in and discuss customers' problems. Our banks will not do that. They say: We do not want your problems, we just want the money. I cannot see how this bill or any other bill at the moment is going to bring more competition into our banking system or make the banks more efficient. I will say this, that the introduction of a good, strong bank will set our banks on edge. Our banks will have to pull up their britches and do a good job of banking or they are going to be out in the cold. It is not our concern to protect the bankers. We need the tools; we need the money for our industrial potential.
What I should like to see is a concentration of our efforts to induce Canadians to buy shares and get dividends. Then these dividends could be reinvested so that we could see Canada grow in the way she should.


David Lewis: Mr. Chairman, the decennial revision of the Bank Act gave the minister and this parliament an opportunity to revamp the law and to bring the banking machinery in Canada a little more up to date. It is my submission, Mr. Chairman, that the minister failed completely to do this in the bill which he presented to parliament, to the banking committee, and which is now before us. The bill makes a few useful improvements, as I shall indicate later. However, I suggest that it completely lacks imagination and is characteristically timid in its major aspects.
It seems to me there are four major areas in banking policy with which we have to be concerned. There are others, but I suggest these four are our primary concern. One is the level of the money supply at any time, and another is the level of the general interest rate at any time. The third is the level of interest rates for various classes of borrowers. The fourth, and in a sense the most important element, is the availability of capital to serve social purposes and national goals.
Now, Mr. Chairman, I think it can be said without having to be an authority on banking that the first two objectives, namely the level of money supply and the level of the general interest rate can be controlled through the central bank, and on the whole is regulated by the central bank; whether or not one agrees with the particular step it may take, it has that power.
March 16. 1967

[DOT] (8:50 p.m.)
I suggest that the important and deep concern we ought to have for the particular rates of interest charged various classes of borrowers, and for the allocation of available capital in the right direction to serve national purposes, is not reflected in the present banking machinery, and there is nothing in this bill which in any way assists our banking machinery to serve these purposes. That is why I suggest that, as I have said, the bill lacks imagination, and fails to meet the needs of a modern, technological society.
I want to make clear, in case the minister or anybody else is under a false impression about what I am saying, that I and my colleagues are not of those groups in the community that feel that all of our economic ills can be solved merely by playing around with the monetary or banking system. Our party does not accept that kind of approach. We are fully aware that monetary policy is only one of the tools that are available to assist us in promoting the right kind of development for our economy; nevertheless it is a very important tool, and it is a great mistake to play it down. It is important in two ways, Mr. Chairman. It is important to the economy as a whole and it is also important to many people such as small businessmen and individuals who need credit desperately from time to time.
As far as the large corporations are concerned, one need not be terribly worried about them. For one thing, during the last number of years they have developed their reserves and are able to finance a great deal of their development through internal financing. In any case they represent a pretty safe security and can obtain loans at the prime rate without much difficulty. However the small businesses and individual borrowers are under great pressure under the present banking system, and here again in my submission the bill fails to make the kind of adjustment that will be of assistance to the majority of the people in the two classes to which I have referred.
One of the basic weaknesses of the legislation which is before us, and of the government's approach to the problem of banking, is the failure to exercise a jurisdiction which, in my view, the federal parliament clearly has over all interest rates and all banking operations, whether those banking operations are performed by banks or by institutions other than banks.
Bank Act
The hon. member for Edmonton West referred at some length during his speech earlier today to judicial decisions of the Privy Council and Supreme Court of Canada establishing the clear jurisdiction that the federal parliament has in the field of interest rates and banking. I do not think, if I may say so without presumption, that there is any doubt that the federal parliament does have that authority.
After all, Mr. Chairman, one of the major reasons that the banks appeal to this parliament to remove the interest ceiling arises from their complaint that there is an interest ceiling for the banks but none for the near banks and other financial lending institutions, which places the banks at a disadvantage.
If I understand the matter correctly, Mr. Chairman, one of the reasons that the members of the banking committee agreed to the eventual removal of the ceiling on interest rates was to eliminate the disadvantage suffered by the banks, because of the fact that the federal legislation did not apply to the large financial corporations other than banks that did banking business. If I recollect some of the discussions of the committee in the reports I have been able to read, it recognized that the role of lending institutions other than banks

and therefore their role in controlling interest rates and the allocation of funds -was becoming an increasingly important one.
I say to the minister that there is no reason other than typical and characteristic timidity that this parliament should not have acted to deal with this question, although it may be that this particular bill is not the best framework within which to formulate legislation for the regulation and control of financial institutions, or the banking operations of financial institutions, other than banks.
However, Mr. Chairman, I can see nothing wrong with or illogical about the suggestion of the hon. member for Edmonton West that a bill of this kind could be in two parts, one part dealing with banks and the other part dealing with financial institutions other than banks. Whether or not we have one bill in two parts or two separate bills is a minor and irrelevant point: This parliament ought to have before it legislation providing for regulatory controls over all banking operations of financial institutions other than banks, as well as of banks.


Mitchell William Sharp: Mr. Chairman, may I just ask the hon. gentleman a question. Did he say "all

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banking operations or all financial institutions"? I think I may have misunderstood him.


David Lewis: I said all banking operations of financial institutions other than banks.


Mitchell William Sharp: Then may I ask another question for clarification. Would he include instalment finance companies, and so on, that are not carrying on banking?


David Lewis: It may well be, Mr. Chairman. I think one would have to look into the constitutional problems there a little more deeply, though my impression is that the exclusive jurisdiction of the federal parliament over interest rates may easily open the door to dealing with even those institutions. But certainly there is no question of our power, I suggest, to deal with what are normally called near banks-none at all.
The reason that I criticize the government for failing to bring such legislation before us is that the government have had the report of the Porter commission in their hands for about three years. No one can suggest that this is a new idea and that there would be difficulties in drafting the necessary regulations or the necessary legislation to deal with what is, I appreciate, a rather complex problem. The recommendation of the Porter commission that the federal parliament pass legislation covering the entire field of banking has been in the hands of the government, if I remember correctly, for either just under three years or just over three years, so there has been ample time for the government and the minister's department to deal with this question.
I suggest, Mr. Chairman, that until such time that the federal parliament takes responsibility under the constitution for the entire field of banking we will take only half steps in dealing with our financial operations. All of the efforts that we will make to obtain some kind of control over the allocation of funds and over interest rates will, partially at least, be frustrated by the fact that a large proportion of our banking functions are being performed by organizations which do not come under the law.
The minister recognized this, of course-I am not telling him anything he does not know-and he introduced deposit insurance, making certain provisions to enable him to look into the books and regulate the operations of organizations other than banks which came within the deposit insurance scheme set up by this parliament. So as I say, Mr. 
Chairman, why the hesitation? This is the time to take action. This is the decennial review of the Bank Act and this is the time to have such legislation before us.


Mitchell William Sharp: Mr. Chairman, may I put another question to the hon. member. Since the Porter commission did make the recommendation that federal jurisdiction be extended over near banks, what in his opinion was the reason they did not recommend the retention of a ceiling on interest rates for all those institutions?
[DOT] (9:00 p.m.)


David Lewis: I shall come to the interest rate later. I think, subject to what I want to suggest, there is good logic in not having any ceiling. I have agreed with those who have suggested that an arbitrary ceiling does not fit the situation, or may not fit the situation. When the interest rate goes up and a ceiling is imposed, though if certain institutions are included under the law there may not be problems of competition, none the less the ceiling will be pierced, avoided, evaded and a great deal of harm may be done. I am afraid I cannot look into Mr. Justice Porter's mind.
Surely, however, the minister's question is totally irrelevant to the point I am now making. Whether you have an interest ceiling or whether you have any regulation of interest rates in the way I shall suggest, we ought to have some regulation of the interest rate. And whatever you have, whether it is little or much, it ought to be applicable to all banking operations, if it is to be effective for whatever purpose you want to serve.
The minister, I suggest, had the power, the possibility, the time, and if I may so without flattering, the talent to deal with this matter; but he lacked, if I may also say unflatteringly, the courage to deal with this problem which ought to be dealt with, and ought not to be delayed for another ten years. We ought to have had legislation in one document, or two separate documents, to cover the whole field of banking operations. Until we do that we are not dealing with the banking problem in the way it ought to be dealt with.
My second point, and I shall only deal with three in this legislation,-and I find this point disturbing,-is the fact that we are proposing an increase in the interest rate ceiling immediately to 7J per cent. In view of the amendment made in committee where the formula for the removal of the ceiling is now based on a 5 per cent rather than a 4J per cent floor for the debentures or securities we
March 16, 1967

are concerned with, and considering that the present average interest rate for these securities already is below 5 per cent, and no one expects the interest rate to go up this year, we are legislating in this bill an immediate increase in the interest rate from 6 per cent to 75 per cent, and we are removing the ceiling on December 31 of this year without providing any other regulatory machinery at all. After December 31 of this year the banks, as all other financial institutions, will be free to do as they please with the interest rates.


Mitchell William Sharp: As recommended by the Porter commission.


David Lewis: Yes.


Mitchell William Sharp: The hon. member seems to quote only what suits his purpose, and not otherwise.


David Lewis: That is right. I suggest that Mr. Justice Porter is exactly like the minister and exactly like myself, a human being. Some of his ideas are good, and those I accept. Some are not so good, and those I do not accept. The same holds true for the minister. Mr. Justice Porter did not write, I suggest, a holy scripture. Because I pick out one part does not mean that I have to accept the whole volume.


Mitchell William Sharp: The hon. member was quoting from it rather fulsomely.


David Lewis: I was not quoting it fulsomely. I merely said that the suggestion to bring in the near banks was in the Porter report. The minister has had it for three years, and he could have done something about it.


Thomas Clement (Tommy) Douglas: One need not accept every-part of the report.


David Lewis: I do not have to accept every part of the report. I can disagree with some of it, and I do. I do not disagree with the increase in the ceiling, and to some extent I do not disagree with the removal of the ceiling if there could be some other form of regulation of interest rates. If we cannot have regulation, at least let us have supervision of the interest rate.


Mitchell William Sharp: Then the hon. member disagrees with the Porter commission.


David Lewis: On that point, yes.


Mitchell William Sharp: That is fundamental.
Bank Act


David Lewis: I know that is fundamental. I appreciate that is fundamental to the Porter report.


Mitchell William Sharp: Yes, to the whole concept.


David Lewis: I do not know about being fundamental to the whole concept. Let not the minister and I enter into an academic discussion about what makes a whole or partial concept. Let me say that this is one recommendation of the Porter commission with which I disagree. Other recommendations the minister disagreed with and I agreed with. This recommendation he agrees with and I disagree with.
May I say to him. I hope without offence, that what he agrees with and disagrees with and what I agree with and disagree with point up the differences in our social philosophies.


Mitchell William Sharp: May I ask the hon. gentleman whether he looked at the Porter commission report carefully. He has been quoting from it. Could I draw his attention to this one statement page 364:
We recommend that it-
Referring to the ceiling:
-be removed regardless of other changes in the legislation.


David Lewis: I know that. I do not know why the minister had to read that. He did not have to read that sentence. I do not deny that the Porter commission recommended the removal of the ceiling. If the minister enjoys repeating the same thing three or four times I shall sit down and let him repeat it three or four more times; then without fear of being interrupted I shall go on with my remarks.
I will say that the thing he disagrees with in the Porter commission report, the extension of the law to cover all banking operations, and the thing he did agree with, the removal of the ceiling without any further safeguards, shows the differences in our social philosophies-shows the minister's typically doctrinaire private enterprise philosophy. The kinds of things I have accepted from the Porter commission report show our concern to make the banking industry function for the social goals of Canada as much as it is possible to do so.
I suggest to the minister that it is not a service to the Canadian people to remove this interest rate ceiling at the end of this year without, as I have said, providing any machinery for regulation or even for supervision

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with respect to what the lending institutions will do with the interest rate later.
I do not have to tell hon. members, who know as well as I know, or perhaps better, that we normally deal with three different kinds of borrower, the individual borrower, the business borrower, and the borrower involved with mortgage loans. In my submission there ought to be some decent relationship between the rates charged to each class of borrower. If the classes can be subdivided further without creating confusion, by all means let us do so.
We ought to have some regulatory body perhaps the Bank of Canada is the best body-to ensure that the removal of the ceiling will not merely create an opportunity for the lending institutions-all of them instead of only some of them-to exploit particularly some of the small borrowers of the country. If the minister does not like a regulatory body, then I suggest, as urged by my colleague the hon. member for Nanai-mo-Cowichan-The Islands, that we establish a publicly owned commercial bank in this country and take advantage of the Mercantile Bank situation to achieve that purpose.
This is another and very effective way of regulating the interest rate, or at least of influencing the interest rate and influencing the flow of available investment or lending funds in the right direction.
[DOT] (9:10 p.m.)
The hon. member for Edmonton West referred to the suggestion made by my hon. friend and said he was talking about a fetish of his-the nationalization of banks. I would point out that my hon. friend was not suggesting the nationalization of the banking system. He was suggesting that we take into the hands of the people of Canada through the government a commercial bank which we could make sure would function in the interest of the economy and of the people of Canada and which would introduce genuine competition into the banking system. No one can convince me that there will ever be competition among the chartered banks of this country, and I do not think the minister believes there will be. There may be, and there is, competition between them and other lending institutions; but that nice, cosy club the Bankers Association, is such that there will never be any real competition among the banks themselves. Very few people in this country believe otherwise.

Why this doctrinaire approach by the minister? Why does the hon. member for Edmonton West feel so outraged by the suggestion made by my hon. friend? The fact is that the government of Canada is already in the business of banking, either directly or indirectly, through a number of statutes which are on the statute books of this parliament. Let me mention a few. Under the National Housing Act, both by guaranteeing loans and by making direct loans we are in effect in the banking business. Under the Farm Credit Act credit to farmers is guaranteed by the federal treasury and loans are made to farmers at an interest rate of 5 per cent, if I remember correctly. This is an intervention by the government to make sure that farmers can obtain the credit they require without having to pay a usurious rate of interest. The Small Businesses Loans Act, even though it has not been very widely used or very effectively implemented, is intended to assist in the provision of credit to those engaged in small business who cannot obtain credit through the usual channels. The Student Loans Act is a form of banking into which this parliament has entered through legislation. The Municipal Development and Loan Act is another form of banking which this parliament has undertaken.
The Export Credits Corporation, by guaranteeing export credit, is engaged in another form of banking which has been undertaken by parliament. The Industrial Development Bank is an agency by which direct loans are made to business people in certain circumstances. Here are seven statutes which are on the statute books today, and there are probably others I have not thought of. Why does this legislation exist? It exists because the parliament of Canada found that the ordinary banking facilities and the ordinary banking methods based on making as much profit as possible and getting as high an interest rate as the traffic would bear were methods which could not serve the farmer, the student, or the small businessman who needed a loan and could not survive if he had to deal only with the banks or other lending institutions.
Why all this fuss, therefore because we suggest that in addition to this piecemeal kind of banking here and there this parliament and the people of Canada should set up a publicly owned bank in competition with the privately owned chartered banks as a yardstick, as a model, so that two things could be achieved.
March 16, 1967

The first would be the establishment of some indirect control over interest rates, because if this bank acted in the public interest it would apply interest charges which were justified, and because of its very existence the other banks would have to fall into line. In the second place it would help push the banking system into serving social purposes. If the private chartered banks were unwilling to make certain loans which the economy required, which fairness required, which equity required, then those customers could go to the government-run bank and, if it were run efficiently and in accordance with equitable social principles, its facilities would be available for them to use.
I ask: Who is doctrinaire? Who is being governed by a fetish or, as the hon. member for Nanaimo-Cowichan-The Islands put it yesterday, who is acting in accordance with irreverent religious faith if it is not the Minister of Finance and the hon. member for Edmonton West? What my hon. friend recommended in the committee and what he recommended in his speech yesterday was not anything doctrinaire; it was a practical proposition for a form of regulation, a form of public intervention which would make the banking system a little more human-note, I do not say "human"; I say "a little more human"-than in most cases it is.
This is why I feel very distressed about the bill which is now before us. My hon. friend from Nanaimo-Cowichan-The Islands supported the idea of giving Citibank five years during which to divest itself of the 75 per cent of its interest in the Mercantile Bank. He explained yesterday-and I fully appreciate and respect his position-that if we are not willing to buy up 75 per cent of the Mercantile Bank now and place it under public ownership, we should not be irresponsible and make it impossible for anything to happen-remain, as it were, in a strait-jacket. If we do not act sensibly and make Mercantile into a publicly owned bank, we should do the practical thing and give Citibank an opportunity to divest itself of the 75 per cent interest as the legislation requires.
What will happen during these five years concerns my hon. friend; it concerns me, and I hope it concerns the minister. In these five years the Mercantile Bank will become a much more powerful institution. I hope that before all the clauses of this bill are finished with, the minister will be able to assure this parliament that he has ways and means of obliging Citibank to divest itself of 75 per 23033-891
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cent of its interest in Mercantile Bank within the period allotted.
I sincerely hope that five years from now we shall not find ourselves in an even worse
position than we are today because the shares of the Mercantile Bank will be much more expensive, the bank will be a much more powerful institution and the government of the United States, particularly the secretary of state of that country, will be even more angry at any steps which may be taken to deal with an institution which will have become much more powerful than it is now.


Herman Maxwell Batten: Order.
[DOT] (9:20 p.m.)


Joseph-Alfred Mongrain: Mr. Chairman, I shall try to be brief. At first, I was not going to take part in the discussion of this bill, because I find it very technical and I readily admit my incompetence.
But I want to tell the house what happened to me last night. I was reading a newspaper from western Canada which reported: The review of the Bank Act has been awaited for two years and it is to be hoped that, after all the time lost on the Munsinger case, the Spencer case, unification, the flag debate, the furniture matter and all that, our parliamentarians will take the time to discuss the Bank Act and to express the views of the poor man.
It is therefore the poor man's point of view that I wish to express this evening, Mr. Chairman, and my remarks will deal with that masterwork of technical complexities, the details of which baffle me, as is probably true also for a great number of members.
Interesting points of view were expressed to which I listened very attentively, because I think I am not the only one concerned with trying to pass legislation that will be able to meet the needs of the mass of the people. Other members have the same concern while expressing other points of view, but the views of an independent member possibly contribute something different.
For instance, I have listened attentively to my friends of the Ralliement or others who, with exemplary conviction, preached monetary reform and, at this point, I should especially mention how much I admire the force of conviction and the tenacity of the hon. member for Compton-Frontenac (Mr. Latulippe). We know the member for Compton-Frontenac as a modest man, as a man who normally does not seek the starring role but who is inspired by such a deep-seated conviction that he will

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not hesitate to face any provocation to try to promote his belief in monetary reform, and I believe this homage is due to him that he is sincere. Even though we may possibly hold a different opinion on his conclusions, even though we are not inclined to go as fast as he would like us to, nevertheless we must recognize his obvious sincerity.
The Creditistes consider finance in relation to the people and want to preserve free enterprise.
Our friends of the New Democratic Party, for their part, go slightly further; they want to make finance serve the people and to that end, they favour state ownership of all organizations that are sources of finance in the country. Listening to them, I sometimes say to myself that there are in that many sensible views dictated by circumstances in a way, but mostly by this anxiety that is spreading among the masses as to the extent to which our financial system is revealed as powerless and a failure as far as the problems of our times are concerned.
Conservatives and Liberals hold a different viewpoint. It is rather a search for modern techniques to ensure the survival of the present financial system. Of course, that might be explained by the fact that, in those two great parties, there are more millionaires, more directors of companies than in the others; it might be also-it was said viciously and I do not know to what exent it might be checked-[DOT] because the financial circles contribute more generously to the election funds of those two parties. But their preoccupations are obviously different.
Personally, Mr. Chairman, I would just like to say that tonight I am speaking for the poor devils, the ordinary people who wonder what that heavy and complex text will mean for them. As a matter of fact, what will it mean for the small people who never had a large bank account, who quite often are in the red, just like the grocer and the butcher who supply them, the merchant where they buy their clothes, whose credit is cut and who is then forced to limit his operations.
That is what the great majority of Canadians are concerned about. It is not a matter of knowing whether the method will make a few more rich people or a few less; it is not a matter of knowing whether banks will be a little more or a little less solvent, whether they will get a little more or a little less competition. This reminds me of certain

words by Peguy, who said: What do I care if some people have more wine in their cellar, or more castles; what concerns me is whether the poor will find their bread tomorrow morning.
Such is the concern, then. I say there is a concern margin in this bill, for people say to themselves: For ten years to come, the economic life of the country is being settled, it is being decided now, in periods of prosperity, we, the poor, shall be treated. In periods of prosperity, they say: Well, there must not be too much for fear of inflation, and in depression periods it is: Well, there is no money. So, again it is hardship for the poor.
That is when the Independent that I am wonders, Mr. Chairman. I tell myself that truth is not intangible, that it does not look red or blue to me. It does not even look gray-if I may so characterize the N.D.P.- nor green-if I may apply that color to the Creditistes. I say that there is still something which seems to me very sensible in the Creditiste or N.D.P. theories, something we will have to try to combine, before long, with the orthodox doctrines of the two old parties, in order to face the challenges of the times. Otherwise, the day may not be far removed when the people will revolt in the face of that ever recurring situation: when there is money, there is inflation, too much production, and tightening measures are taken to prevent inflation; when there is not enough money, privation ensues with all it entails.
Mr. Chairman, I commend them for their strong convictions, for the seriousness of the arguments they have put forward, and I refer particularly to the hon. members who have expressed what I would call views of the "common people." Most of the speeches I have heard were from members of the New Democratic Party and from Creditistes. I say this as an Independent member who might stand his ground against them one of these days, but I think truth should prevail.
This concern, Mr. Chairman, takes many forms. For instance, not too long ago, I read this report in the financial page of a large Montreal newspaper, La Presse, and I quote:
According to Mr. R. B. MacPherson, an economist with the DuPont Company of Canada, the country will go through a depression between 1968 and 1970. He made this grim forecast in a speech delivered this week before the members of the Montreal Rotary Club.
March 16, 1967

Mr. Chairman, when one sees that the federal government is controlling the economy, that banks, after all, are institutions applying daily the general policies of the federal government, when one sees that the future is that grim, how can simple people like us, who did not have the opportunity of learning all the intricacies of our financial system, not be concerned about the future?
Has any thought been given, when drawing up those laws-because I have always been told that financiers and even financial experts had neither heart nor soul; but they must have, for even financiers have some concern, as human beings, although it seems to me they do not when they are drawing up laws-to the effects they would have on the mass of the Canadian people, on the small wage-earner who, becomes jobless, or on the small business man whose enterprise is placed in jeopardy when their credit is cut off? I wonder, and I am really looking at this objectively.
But the economist I have mentioned is not the only one who is pessimistic. I see in the Commentator, another English magazine from Toronto-a financial centre if there ever was one-an article which I would like to quote verbatim so as not to run the risk of translating it badly:

If we look back over the budgets of the five years ending this coming December, we see that we had substantial budgetary deficits every year and that these aggregate close to 2.5 billion dollars. In a full ten-year period, the total comes to about 3.6 billion dollars; in only one of these years was there a surplus. You don't have to be an accountant or an economist-indeed one needs no expertness at all-to know that this is a financially precarious course. How can we disagree with some "authority" who forecasts a financial collapse down this road of continuous extravagance?
* (9:30 p.m.)

Mr. Chairman, once again, for simple minded people like me and the people on whose behalf I speak, such statements are rather disquieting and I cannot but recall this caricature which appeared in the Globe and Mail a few days ago. It showed a poor devil, in rags, unshaved, standing on a street corner where a lot of well-to-do people were going about-it must have been Bay Street, in Toronto, or St. James Street, in Montreal. He had in his hand a small tin and on his chest a sign which went something like this: "Please help me. I have a wife and three governments to support." There is no doubt that he was in a rather serious situation and it is more or 23033-891J
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less how he feels when confronted by all those complicated illustrations put before him now.
I should like to quote another testimony to show that not only in simple circles are people concerned with the financial future and wonder whether the banks' role will be the creative role it should be, whether it will promote intense circulation in the economic arteries of the nation.
In a lecture delivered in 1966, Mr. Neil J. McKinnon, chairman of the board of the Canadian Imperial Bank of Commerce, said:
-there is a shortage of investment capital throughout the world, and in a country where this shortage is such as in Canada, foreign investments should not be discouraged.
Mr. Chairman, that worries and puzzles the simple people that we are, because without foreign investments, especially with the present controversies, economic development will slow down rapidly.
And Mr. McKinnon adds:
Very substantial capital investments are essential to improve production processes and increase productivity.
Well, it was said this afternoon that there are about 390,000 unemployed in Canada, and 160,000 of them are in the province of Quebec. A few days ago, I read an article stating that, in addition to these 390,000 unemployed, there must be from 100,000 to 125,000 unemployed who are not registered and not included in statistics.
Mr. Chairman, it must be admitted that this situation does not help the butchers, the grocers who want to see their bills paid and who know what worries are.
The chairman of the board of directors of the Canadian Imperial Bank of Commerce said further:
On the other hand, if American investments in Canada are very high, Canadian investments in the United States are also substantial. Direct investments of United States citizens in Canada amount to $63 per capita, and holding investments, to $33 per capita. Direct investments of Canadian citizens in the United States amount to $97 per capita, and holding investments, to $66 per capita. On this basis, Canadian investments in the United States exceed by two-thirds those of United States citizens in Canada. Total investments of American citizens in Canada, according to the latest statistics, amounted to 18 billion dollars, and those of Canadian citizens in the United States to more than three billion dollars.
This might look like double dutch to many of us, but we can still understand that considerable sums are involved. Does it reflect the situation accurately? Should we infer that our federal government, with the support of

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banks, is unable to control that modern financial system supposedly responsible for that tremendous prosperity which, nevertheless, allows half a million unemployed and hundreds of thousands of poor families, as reported in the official statistics of the federal government?
It is the concern of the average or poor citizen that I want to express this evening in connection with the bill. I want to tell the minister and his departmental technicians who are well meaning, of course, but more inclined perhaps to hear only one side of a question, that of technicians expert in this complex international financial organization, which is perhaps more interested in preventing banking bankruptcies than in ensuring decent living conditions to most Canadian people.
I must confess, Mr. Chairman, that it is unwise on my part to talk that way, because I am not one of those with whom banks are making money; on the contrary, I am rather one of those who need banks and who are quite often in the red. I do hope the banks will not blame me tomorrow morning for such outspokenness concerning certain feelings that strike me as being true, now that I have listened to a number of more experienced colleagues.
And what I am saying here is so true and so vital. It was not so long ago that we read in the newspapers that the premier of the province of Quebec and his counsellors had to go to Bay Street, in Toronto. They also had to go to Wall Street, in New York. And it was in order to beseech the people there not to forsake the province of Quebec, but to permit it to take advantage of certain capital for, as they were reported as saying, the day is not far distant where the situation will not be a bright one. In fact, this represents a problem once more, that concerns poor people like us. This bill concerning banking reform is going to seal the fate of most of the Canadian people for ten years to come.
Now, we would like to strike this note to be sure that thought has been given to this proposal. If it is not possible, in this bill, which is one of complicated technicalities, to include everything, we should at least bear in mind the concern which should be underlying any piece of legislation passed by this house.
Further to the evidence I just gave, with a view to point out the concern of the Canadian people-the average Canadian, the poor fellow -faced with the financial situation which is, after all, always characterized by the part

played by the banks, I will quote the hon. Minister of Finance and Receiver General (Mr. Sharp) from a comment which appeared in another newspaper, that is La Press dated February 23, 1967, and written by a newspaper man who is a specialist in economics and financial matters. Here is what he said:
According to the analysis made by Mr. Sharp, the federal authorities have endeavoured in recent years to develop the Canadian economy by working in the field of capital as well as that of the manpower and foreign trade.
I think this is true.
Yearly important gains have been obtained in the Gross National Product and in the reduction of unemployment. The impetus brought about by these various governmental policies has led, however, to inflationary pressures since several months. In this new context, Ottawa has used the monetary and fiscal policy in order to check the trouble in the field of prices but, according to Mr. Sharp himself, mistakes have been made because the adjustments put into effect have not eliminated the evil at its very root, which is essentially characterized by insufficient productivity and its inevitable consequence, that is excessively high prices.
Mr. Chairman, I am of those who support the financial policies of the government. I think I shall continue to do so because I promised my electors I would. I promised to do so when major issues are not at stake, regardless of the government in power. I am still willing to support the government also because I feel that it does what it can under the circumstances and I believe the minister is competent.
However, the fact remains that I must see to it that what I call the voice of the poor is heard. That is neither superfluous nor uncalled for. And I repeat, I do not feel ill at ease in doing so, considering the time that has been wasted in this house, for instance, in a quarrel over a flag, which took three months to divide the country, and for such an insignificant matter as the Munsinger affair which holds no appeal for people of taste such as we are, the members of this house. Let the voice of the poor be heard that those who in this house are responsible for the finances of the country may be reminded that the needs of the mass, the small wage-earners, should always be the first consideration and source of inspiration in our legislative measures.
[DOT] (9:40 p.m.)
And I am passing over a few things, Mr. Chairman, in order to give a brief summary of my conception of the new bill and express a thought. And to be sure of not misleading
March 16, 1967



anyone, I shall quote textually the summary handed, to us by the minister of his proposed review of the Bank Act.
According to him, that review of the Bank Act comprises 14 key proposals. Let us go over them briefly:
1.	Banks will be forbidden to hold more than 10 per cent of voting shares in other companies, including near banks.
2.	By forbidding directors of near banks to sit on the board of directors of banks, the new act will remove the overlapping of boards of directors which prevents competition.
3.	Directors may not sit on the board of two banks.
4.	Not more than one fifth of the directors of a company may be directors of the same bank.
5.	Agreements between banks on interest rates are prohibited. The basic principles of the Combines Investigation Act will apply to the banks.
6.	The ceiling on bank interest will be eliminated when credit conditions ease off.
It seems that it will be done.
7.	In the meantime, there will be a slight relaxation of the maximum rate to help immediately the small borrowers and to take into account the general trend of the interest rates.
8.	Banks will be required to disclose in detail their revenues and expenditures and, for the first time, their hidden reserves.
9.	A federal provincial conference on consumers' credit is foreseen.
10.	Federal project of insurance deposits-
11.	Federal plan of insurance deposits to promote the setting up of new banks.
12.	Banks allowed to grant mortgage loans-
13.	Issuance of bonds-
14.	Two levels of cash reserves will be required in respect of these two classes of deposits-
I find all this very good, except that it does not entirely remove worries from those I would call "the poor devils".
I already see that there will be conflict with at least one province about insurance deposits. When you look at the list of those bank directors, you find that at the same time they are all directors of large Canadian corporations. Now, this means that, in the final analysis, it boils down to a not so long list of big financiers who are the directors of our banks and large corporations. In looking at all this, well, the poor soul wonders: Is the purpose of all this not to make sure that banking institutions will get protection against the hazards of the various financial seasons, which have their ups and downs, or against competition from foreign banks, or against the cost of certain modern progress, rather than to make sure that these banks will really serve the poor, to help them have a minimum standard of living to which they
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are entitled in the democracy in which they live?
I assure you, Mr. Chairman, that it is a worry. I lack the competence to say to what extent or in what way that could be avoided. I am just saying that after studying the theories put forth here in this house, I have reached this conclusion: what seems lacking in this bill is the human touch, some concern for the problems of the people which remain forever unsolved, for instance unemployment, the lack of capital which forces the small contractor or the owner of the corner store or the worker to deal with finance companies which make them pay prohibitive interest rates. That does not seem to solve the problem ever. I admit that it worries people who, like me, are seeking the truth, so much so that they have to ask themselves questions.
And we see some astounding things. For example, in the Financial Post of January 19, I read a report which struck me and pleased me because I had said to myself: It is a good sign; when the Minister of Finance brought out his last budget he told us that it would prevent a too painful inflation period. I voted with the government in that respect; it achieved some success. Consequently, I will quote that editorial of the Financial Post: [English]
The government's venture in restraint has been remarkably successful. By the last quarter of 1966, living costs were rising less than half as rapidly as in the first quarter. Prices of industrial materials at wholesale dropped 4.4 per cent during the year (against) a 4.5 per cent rise in 1965.

I then said to myself, that is good. But after another look, in March 1967, I said: There is not less unemployment, there is not more money. We have been hearing about such things for years. Some may tell me: if the minister had failed to act as he did, the situation would have been worse. Yes indeed, and I am grateful to the minister for having had the foresight of taking such action last year. But I am beginning to think: would it not be advisable to change the system instead of simply changing a few parts of the machine, as is being done at present? I now wish to quote an item of the Canadian Press from Vancouver reporting a statement of the president of the Laurentide Financial Corporation:
Mr. Peter Paul Saunders did, however, admit that the monetary restriction would have the advantage of slowing down the economy which is presently overburdened and to check the actual threat of inflation.

March 16, 1967
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Then, for whom is inflation a danger? For the financiers, of course; for the poor, of course, because should it occur, costs would become prohibitive. But are we going to start all over again, every four or five years, with the result that whenever there is money, we will have to take steps to restrict consumption, by fear of inflation, and when there is a shortage, the poor will have to tighten their belts.
I wonder, Mr. Chairman, and I believe that my concern is sincere, for I am not yet a socialist. I still believe in the capitalist system, but I say that this system is being challenged, that if it does not take up the challenge soon, it will have to answer certain questions, to face certain upheavals. I think that my colleagues, who are now listening to me, know that I am not biased, and that if I show narrow-mindedness, it is not intentional.
I am trying instead to give a warning which I hear whispered in the masses-and the problem is not settled.
Mind you, I have no intention of blaming the government. This represents probably a global legislation so important that its preparation and implementation would take years. But I say to the government that time has perhaps come to listen, and not to say at the outset: Well, the Creditistes are wrong, they are dreamers; or else: Well, the N.D.P. members are socialists, they are wrong, they are dreamers.
I wonder whether we should not take something from all these theories. And then, it is not necessary to say it, because I see on another financial page-which I shall not quote to spare time-the following title:
Did Ottawa choose the right solution?
Mr. Chairman, I almost wish to close with an extract by somebody who advocates the Mr. Douglas' theory of Social Credit, but I will spare you and shall only say this: There is, among Canadians, a great concern about what I call the failure of the financial system in which we live. The financial system has perhaps prevented a greater evil, but it did not give that minimum comfort which the people expect in our modern times.
Now, this is the challenge that the government will have to face.


Mr. Mackasey:: Mr. Chairman, in view of the fact that tomorrow is a very important day in the history of most enlightened people, because I will not be here and I understand that another Irishman from the riding of

Rosthern will be delivering a speech, I am hoping that when ten o'clock comes hon. members might celebrate St. Patrick's day by permitting myself and the hon. member for Rosthern to complete our observations on this particular clause of the bill.
I have listened with a good deal of attention to the discussion on the bank bill during the last two days. Like most hon. members I was impressed by the chairman of the finance committee and the way in which he conducted 70 or more meetings. Although I joined that committee very late in its hearings, I think this was a perfect example of how the committee stage can work, and how committees of the House of Commons can perform an important function, provided the members forget extreme partisanship and are objective in performing the task given to them by the house. I think it is safe to say that perhaps there is more interest in this bill than ever before in the history of Canada in regard to any legislation governing banks and our financial institutions.
[DOT] (9:50 p.m.)
Canadians for generations have been proud of the record of their chartered banks. I suppose all of us at one time or another have repeated the story that our chartered banks did not fail during the depression as did the banks south of the border, and we have become a little complacent about our banking institutions. Our bankers stand up with pride and, for instance, point to the vast sums of money they are lending under the Small Loans Act. When we look at the fine print and find that practically all these loans are paid, and that the federal government is rarely called to meet its obligations as guarantor we realize that the banks are taking little risk in making these loans. However, recent failures in the field of near banks have made Canadians a little more apprehensive about our banking system and our financial institutions. Certainly if there was any intention or inclination on the part of Canadians not to be interested in the present Bank Act their attention would have been focused on the banks forcibly by the unexpected events concerning the Mercantile Bank and the so-called cabinet leak.
Most speakers have spoken very eloquently about the Bank Act. The hon. member for Labelle made a very intelligent and thoughtful opening speech concerning the Bank Act and the Porter commission report, a better speech than I could possibly deliver. However, I should like to speak on one aspect of the
March 16, 1967

whole problem which perhaps was somewhat clouded in some of the recent events. First of all let me say that I do not pretend to know whether the philosophy behind the present Bank Act is the best one for Canada. I have read the recent speech of the former chairman of the Bank of England, Lord Cromer, who warned the western world and Europe that economic nationalism could impede the flow of capital in contrast to what took place in the nineteenth century. I have listened with great interest and read the speeches of the president of the Royal Bank of Canada who endorses the same views. If time would permit me I would quote an extract from "Barrens" which castigates not only Canada but also the United States and most of the other countries of the world for what they consider to be their very restrictive policy, so far as the flow of capital is concerned.
However, the one thing that is important to me as a Canadian is that regardless of what action we take and what philosophy we endorse, of whether we believe that the banks should be entirely Canadian or should be open to people from all over the world, it should be our decision to make, without the pressure of outside corporations and without the pressure of any country in this world no matter how friendly that country professes to be. That is the right of Canada as a sovereign nation.
1 was appalled at the degree of pressure that was put of this government by the White House and by the various interested groups in the United States. Efforts were made to discredit the former minister of finance. I am sure very few people in the house were surprised at the testimony presented to the committee which proved that the events as outlined earlier by the former minister of finance leading up to the purchase of the Mercantile Bank by Citibank corresponded with facts. This does not surprise those of us who know the hon. member for Davenport. I have said in the house and I do not mind repeating it that regardless of what he accomplishes in the rest of his political career he has been the man responsible for preventing the further erosion of our publications. He had the distinction of putting forward in the House of Commons legislation which prevented the sale of our newspapers to foreign interests.


Mr. Mcllrailh:: Mr. Chairman, I wonder if progress could be reported for the purpose of making a motion to continue the sitting for a short time?
Progress reported.
Bank Act


Mr. Deputy Speaker:: Is it the wish of the house to consider this bill at the next sitting or later today?


Some hon. Members:: Later this day.


George James McIlraith: Mr. Speaker, I move, pursuant to standing order 6(2), that the house continue to sit until not later than 11 o'clock p.m.


Some hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.


[Stage Direction]
The house resumed consideration in committee of Bill No. C-222, respecting banks and banking-Mr. Sharp-Mr. Richard in the chair.
Bryce Stuart Mackasey: Mr. Chairman, I thank hon. members for their courtesy.
I was speaking of some of the accomplishments of the former minister of finance. Before I get back to the subject of the Bank Act I might remind hon. members that as the former minister of finance he brought in legislation to protect our insurance companies and our trust and loan companies from passing further into the hands of foreign investors. It is no secret that I am a strong believer in many of the ideas and much of the philosophy of the former minister, but it is equally true that I am also a supporter of the present Minister of Finance.
I think that the biggest problem we have had in the last few weeks is that many of our newspaper writers have not understood the present Bank Act. I could mention one editorial which appeared in the Toronto Star three nights ago whose author tried to make out that the present Minister of Finance has changed in some devious way the philosophy and the spirit of the act as enunciated by the former minister in 1965. I suspect that such newspaper writers are not doing a proper service to those people who believe what they read in the newspapers. I might quote for instance this statement, which appeared in the editorial to which I have referred:
Two vital concessions-vigorously opposed by Walter Gordon and the nationalist wing of the Liberal party-have been offered the National City Bank of New York (Citibank). Citibank purchased Mercantile after being warned they could not expand unless they abided by new Canadian banking rules.

March IB, 1967
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The banking committee agreed that Citibank will be allowed to retain a 25 per cent interest in the Mercantile Bank of Canada, now its wholly owned subsidiary.
Mr. Chairman, this was contained in the original Bank Act of 1965. The 25 per cent interest which Citibank was allowed to retain was a provision also contained in the original Bank Act, and no action of the banking committee nor any amendment brought in by the present Minister of Finance have in any way changed the magic figure of 25 per cent. So, I think in all fairness to the present minister, when we get to a clause by clause study of the bill some of these things should be appreciated. I am pleased, as one member of the committee, to repeat here tonight that there is no difference in the philosophy of the present bill and the bill which would have normally been adopted had the election not interfered with its passage.
[DOT] (10:00 p.m.)
Now, Mr. Chairman, I believe that, if anything, the present bill is a little more restrictive of Citibank and other large groups of investors. It is more restrictive because some of the loopholes that existed became apparent to members of the committee and were properly blocked. There is one, however, that bothers me a little and I hope to get to it in a few minutes. I will make a suggestion to the minister, but whether or not he intends to do something about it will be up to him.
I am rather pleased, Mr. Chairman, to see the front page of the Montreal Star tonight. There is a headline which reads, "U.S. Reverses Stand on Bank Control". This is one of the types of harassment to which the government felt they were being subjected at the time of the Mercantile controversy. I like to think that the remarks the Prime Minister made on the program "The Nation's Business" on February 1, 1967, pretty well summarized the philosophy not only of our party but all parties. In mentioning our relationship with the United States, he said:
There are two dangers, however, which we must avoid in the search for fair and acceptable solutions to our problem. The danger on the Canadian side is an oversensitive nationalism, defensive rather than aggressive; based on the feeling, and the fear that as the weaker partner we are too dangerously vulnerable to the effect of the decisions of the friendly giant that lives beside us. The danger from the American side is ignorance of our desire, yes, our determination, to remain independent and separate; and an inability on their part to understand our refusal to accept the doctrine that what is good for the United States must necessarily be good for Canada too.

Now, Mr. Chairman, the the main conflict with Citibank and Mr. Rockefeller resulted from their failure to understand that we respected our sovereignty, that we have a right to control our own destiny and that the Bank Act becomes a charter for our Canadian banks. We have the right, therefore, to change the rules every ten years. Once Mercantile Bank accepted this philosophy, once they realized we were firm on this particular point, once they realized that as a Canadian chartered bank they had a responsibility to respect the laws of this country, not adopted by this party but by this parliament, they stated quite definitely in a telegram placed at the disposal of the committee by the present Minister of Finance that they would respect this law. I can assure you that, to the best of my knowledge at least, in any role I may have played wittingly or unwittingly, no concession was given to Mercantile Bank in return for their realization of our determination to run our own affairs. For that matter, none was asked. The moment Mercantile Bank respected the Canadian philosophy in this bill, then we in the banking committee felt it would be fair play if we were to help Mercantile Bank adjust to the restrictive clauses that exist in the bill and which existed in the previous bill tabled in the house in 1965.
I should like to say-and I am watching the clock-something about the cabinet split and the newspaper headlines. I notice the hon. member for Ontario looking at me quizzically, but I am not a member of the cabinet nor have I been. He was a member of the cabinet. I say, what type of cabinet would this be if we had 24 members all sharing the same philosophy, all left wingers, all right wingers, all uniform in their thinking? Is it not the purpose of cabinet to represent all segments of society, all philosophies and all political thought?


Mr. Maclnnis (Cape Breton South):: Solidarity.


Bryce Stuart Mackasey: That may not be true across the way, but it is the way it should be. All Canadians in this country are entitled to representation in cabinet, whether geographically or any other way. The purpose of cabinet is to form a consensus and to-


Donald MacInnis: Would the hon. member permit a question?


Bryce Stuart Mackasey: Not now; I will at the end, if I am given time, because I am racing the clock. If the cabinet wants to leak what goes
March 16, 1967

on in cabinet, then I as a backbencher can only look upon this with a certain amount of disbelief at their willingness to destroy themselves.
That there should be controversy in the cabinet over an issue such as our banking law should surely surprise no one. I do not know whether such controversy does exist, but I do know that it beclouds the issue, which is that the banking committee in an objective spirit, representing the best brains of all parties -myself excluded-brought forward a bill consisting of polished amendments which were accepted unanimously, which I hope will be debated in this chamber from here on in with that same spirit of objectivity which prevailed in the committee, and to which reference has been made by members of all parties today.


Donald MacInnis: Would the hon. member permit a question now, while he is reaching for his glass of water?


Bryce Stuart Mackasey: When I am through. I mentioned earlier-and I jump straight to this so I have time to answer the question-that I should like to make some reference to the evidence before the committee. As reported at page 2942 of the Minutes of Proceedings and Evidence No. 42 the Minister of Finance, in answer to a question, said:
If the National City Bank had definite plans for reducing its holdings in the Mercantile Bank to 25 per cent I believe it would be in the Canadian interest to facilitate those plans.
That was the philosophy behind permitting this five year period, to come to the restrictive clause 75(2)(g).
Further on the minister re-emphasizes the fact that loopholes in the bill must be plugged. He referred to an amendment that he intended to introduce, and which he did introduce and which members of the banking committee accepted. As reported at page 2956 he said:
Such an amendment would not prevent the shares being sold to residents of Canada. It would prevent them being sold to residents of the United States, including the present owner of all the shares. However, the decision on whether to permit an increase in capital per se remains within the discretion of the governor in council.
To save time, Mr. Chairman, on several occasions during the committee hearings the minister emphasized the following points. If a bank-any bank, including the Mercantile Bank-were to appeal to the governor in council for permission to increase authorized share capital, those shares would be made available to Canadians only whenever at least 23033-892
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25 per cent of the shares of that particular bank were owned outside this country or more than 25 per cent of the shares remained in the hands of any individual. The minister repeated that on half a dozen occasions.
[DOT] (10:10 p.m.)
What bothers me, and I say this directly to the minister, is that I am not certain in reading the bill that the governor in council necessarily has that right. I suggest to the minister, and this might be implemented on the appropriate clause and I am not sure which clause it is, that we ensure that whenever a bank receives permission to increase its share capital, no individual, as defined in the act, be permitted to add to his shares so long as he or his group owns more than 10 per cent of a bank. I am not talking of a specific bank; I am talking of any bank; and more than one bank is in that particular situation. This would guarantee the carrying out of the minister's intention, as he has stated it on several occasions in the committee.
I say these words in a spirit of co-operation. I have pointed out what I believe is the only flaw in the act. I bring it forward for one reason only, because the minister has spoken about this matter half a dozen times in committee. I am not the type of person who likes to play dirty pool, but I would not want to be party to the changing of any act, as it affects the Mercantile Bank or anybody else, once those people have accepted the principle of pro-Canadianism as outlined in this measure. I shall say now, notwithstanding that I am in the house-I would say it were I not in the house-that if the government tries to reduce the five-year period granted to the Mercantile Bank for the application of clause 72 (2) (g) I would vote against such amendment, if the minister were to bring it in.


Donald MacInnis: May I
ask a question?


Bryce Stuart Mackasey: One moment, please. I shall put on my hearing aid.


Donald MacInnis: I shall make myself heard. I wanted to ask the hon. member, when he was dealing with the point, since he is making a poor job of excusing the controversy-


Bryce Stuart Mackasey: On a point of order. If the hon. member wishes to ask a question for information I shall accept it. If he wants to use the opportunity to get his version of things in, and to colour the question, then I do not intend to cede him the floor.

March 16. 1967
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Donald MacInnis: I was
not under the impression that the hon. member had ceded the floor.


Bryce Stuart Mackasey: For what excuse is the hon. member up.


Donald MacInnis: The hon. member sat down before I had asked him whether he would answer a question.


Bryce Stuart Mackasey: Does the hon. member wish to ask a question now? I shall sit down to allow him to ask it.


Donald MacInnis: Since the hon. member is getting so touchy I shall wait until he is through. He cannot be too long; he will run either out of water or out of words.


Bryce Stuart Mackasey: May I put it to the hon. member that I hope never to run out of brains which the hon. member ran out of a long time ago.


Donald MacInnis: On a
question of privilege, let me say I can think of many important differences between us.


Bryce Stuart Mackasey: I am sure we could exchange those for a long time.


Stanley Howard Knowles: Next speaker.


Mr. Starr:: Time.


Bryce Stuart Mackasey: Mr. Chairman, I hope when we approach the various clauses of the bill that we realize the precise size of the Mercantile Bank as it exists today and realize that in five years that bank can be a sizeable operation with assets of up to $1 billion. For those who are concerned with the danger of the Mercantile Bank becoming too big, and I think an hon. member mentioned this earlier in the evening, let me say this: The law is very definite. Any bank with more than 25 per cent of its shares in the hands of individuals or groups will have to combat certain liabilities. I forget in which clause of the bill this is mentioned-I think it is clause 145(5)-but there is provided a penalty of $1,000 a day where a bank with more than 25 per cent of its shares in the hands of an individual exceeds the 20 to 1 ratio.
Fear has been expressed by some people whose opinion I respect that Mercantile will make no effort to dispose of its shares until the last day of the fifth year. I think most people would agree that the bank would be most unlikely to dump 50,000 shares, or what-

ever the number may be, on the stock market in one day. The chances are that Mercantile and other banks in a similar situation would wish to dispose of their shares as the opportunity arose or whenever it was in their best financial interest to do so.
I notice that my time has expired and once again I thank all members of the committee for giving me this opportunity to complete my speech.


Donald MacInnis: I wonder if I might direct a question to the hon. member before he sits down.


Herman Maxwell Batten: The hon. member may proceed.


Donald MacInnis: I will make a brief comment, first.


Bryce Stuart Mackasey: Ask the question.


Donald MacInnis: The
hon. member made an attempt to alibi the controversies within the cabinet. Would he be courageous enough to alibi the controversies which have taken place outside, and which cannot be denied? What value has the hon. member for Davenport, in relation to the more than 15 seats in the Toronto area, as compared with the Minister of Finance? Apparently the Minister of Finance is rated lower.


Bryce Stuart Mackasey: There are about six questions there. Which one would the hon. member like me to answer first?


Donald MacInnis: Let us
deal with the controversies outside the cabinet.


Bryce Stuart Mackasey: I suppose the hon. member was so anxious to ask this question that he did not hear what I said about the controversies outside the cabinet. I said they were deplorable. Look at Hansard tomorrow. I made it clear what I thought about the controversies outside the cabinet. I said I deplored them as a backbencher and considered them to reflect a philosophy of self-destruction. This is precisely what I said and the hon. member will see it tomorrow in Hansard.


Donald MacInnis: Would the hon. member agree that his remarks now about deplorable conduct apply to the Minister of Manpower and Immigration and the Associate Minister of National Defence, who stood up in this house on opposite sides, something which is rarely seen in this country?
March 16, 1967


Bryce Stuart Mackasey: On the contrary, I respect them for having the courage of their convictions.


Edward Nasserden: I must confess I cannot claim the distinction of being an Irishman either by birth or by blood, but I often suspect I have some of their more notorious characteristics when I look at some of the speeches I have made in the House of Commons from time to time.
I cannot but feel that all hon. members who are here are imbued with at least one characteristic of the Irish, namely generosity, and I wish to thank them very much for displaying this quality. I think the hon. member for Verdun will agree that the little people must have been working on behalf of both of us tonight.
It is fitting that in the centennial year consideration of the Bank Act should be one of the major concerns of the Canadian parliament. This does not, of course, excuse the government for its indecision and for delays which have contributed to the general tightening of money and the pressure on interest rates, since the government announced that the ceiling would be one of the primary factors to be considered.
[DOT] (10:20 p.m.)
In trying to assess the effectiveness of the legislation before us it would be well that we consider the history of Canadian banking. I feel that this legislation covers not only the Bank Act but the whole future of Canada. Our aim should be to have Canada's financial resources serve the national purpose, and in order to do that we must establish a purpose which is commensurate with the potential of the nation now and in the future.
We must not forget that our country depends now, and will continue to depend in the future, on investment not only from sources within the country but from other sources wherever we may secure them, provided of course that outside investment is prepared to acquire the qualities of good Canadian citizenship and abide by Canadian aspirations. For my part, the aspiration is to secure and develop a strong, independent, free society which will be able to exert itself in the search for peace at the international level. That will not be one of the easiest objectives to attain, but I maintain it is the only worth-while objective for this nation.
I would go further, sir, and say that unless we do this it might well result in our nation
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becoming the slave of the United States purpose. If that happens it will not be due to what the United States does, but due to the things we ourselves do, or the things we fail to do.
Looking at the success which our banking institutions have had, we can see that that success is due to the supervision and restraints that have been placed upon them in order to meet the peculiar problems of a nation in circumstances such as those which obtain in Canada.
The problems that have arisen in connection with our financial institutions during the past few months have not come from organizations that are classed as banks; they have come from those that are classed as near banks, which have been left largely without supervision and without the restraints and regulations that have ensured the success of our regular banking institutions.
Banks in Canada have a worth-while tradition, and I cannot agree with those who have made disparaging remarks about the role banks have played in the development of the nation and in the development of individual enterprises. Our banks have one of the most romantic and heartwarming stories to be found among those which form part and parcel of the Canadian heritage. The fact that Canadian banking has not been an unprofitable enterprise does not mean that there have not been occasions when they came up against obstacles. I recall the depression years, and also the years when government itself was competing for deposits that normally would be placed in banking institutions.
Generally speaking, the concept has been that the banks have provided an instrument for short-term and intermediate-term credit. To supplement that we have the trust companies which provide a service different in character, on a longer term basis, mainly for those people who want to place their money on deposit on long term, and know that it is going to be secure. I believe the Bank Act, as it is today, has confused the role that each of these institutions might play in our economic life. The primary role the banks should play is to provide short and intermediate term loans. The trust companies have a role to play in the long term field. They can give stability and security to those individuals who want to put their money in long term investments.
As one who believes in the development of things that are rewarding to those willing to develop this nation, I cannot say that deposits in banks should receive the same interest as

March 16, 1967
Bank Act
those deposits in development projects which involve some risk. For this reason, as well as others, I question the suggestion that we should remove the ceiling on the interest charged by banks.
The hon. member for Verdun said he was frightened by the philosophy behind the Bank Act. He is wrong in his analysis of that reasoning because we must have a credit system if we are to achieve our proper place as a nation and if we are to have maximum development. We must provide an instrument to give our citizens an opportunity to develop this nation.
Not very long ago we were talking in the committee on immigration about bringing thousands of people to Canada. We should develop means by which we can encourage these people to bring their capital wealth to this country. It is imperative that they bring with them their capital for the development of Canadian resources, to the benefit of Canada and the rest of the world. When we look to our neighbour to the south we cannot help but realize the development that has taken place there. Surely it is apparent to everyone that this development was the result of the influx of resources from other sources. The United States did not have this money at the beginning. We in Canada do not have the money now. I cannot understand the philosophy of those who want to place obstacles in the way of foreign investment in this nation.
As I said on an earlier occasion, this bill represents an act of cowardice. It is an indication that this government is unready and unwilling to face up to the problems relating to consumer loans. The interest rates that finance companies have been allowed to charge are such as to indicate a lack of supervision or regulation. These companies invest their money at very little risk, and they are operating at a high rate of profit in cities such as Ottawa, Montreal, Toronto, Saskatoon, Regina, Edmonton and Vancouver.
It is my suggestion that if we tonight were dealing with something which deserves priority of consideration we should be dealing with measures to regulate and supervise the activities of these finance companies which operate in Canada. Many thousands of people in Canada are involved in financing transaction. The expense involved in financing consumer purchases has become part and parcel of merchandising programs across this nation.
[DOT] (10:30 p.m.)
This does not mean that we have to shut our eyes, as seems to be the case with those

who sit on the government benches, to the need for regulation in this field. The hon. member for St. Paul's said that the elimination of the interest rate ceiling was a very bold step. I wish to emphasize those words to you, sir because they are words that we should be thinking about in Canada today. We are a young nation, a nation that will be seeking capital from the four corners of the world, a nation with a large national debt. What will an interest hike of 1J per cent or 2 per cent do, first of all to the cost of carrying the national debt, and second in regard to our competitive image in the markets of the world? This is one of the things that I believe we have to think about, and think about seriously as we consider this legislation.
I think it was the hon. member for St. Paul's who said that somehow we had to get effective foreign competition into Canadian banking. I cannot help but feel that they are words of wisdom at the present time as we consider the future of our nation, and our potential. The hon. member for York East said that the amendments contained in the bill were good, but the bill itself was bad. I think most hon. members of the House of Commons would agree with that statement. I wish to read from the Bank of Canada annual report for 1966, page 4, referring to the Canadian economy:
Costs increased more, and productivity increased less, in Canada than in the United States in 1966. Diverging movements in costs and productivity such as we have been seeing recently cannot go on for long without seriously affecting the Canadian economy and in particular its international competitive position; a formidable obstacle would be placed in the way of maintaining the strong growth in output and employment of recent years.
Yet this government and the Minister of Finance, who now admit having made a mistake in bringing forward the 11 per cent sales tax, are thinking of lifting the ceiling on interest rates and adding another cost to that of business in this country. I believe that if this bill is adopted in its present form the result will be to add a substantial cost to the small businessmen from one end of the country to the other. I say again, sir, that this is one of the things that the government of Canada and hon. members who have any thought of the future of this country should take into consideration when considering the legislation which is before us. I know that there are members on the other side of the house who feel the same way as I do in this regard, and they are to be commended for the stand they have taken.
March 16, 1967

Mill
I do not wish to take up too much of the time of the committee, and I shall try to be as brief as possible. In regard to the inspection and supervision provisions, to reinforce the argument I put forward I should like to quote from the president's report, Canada Trust-Huron and Erie, 103rd annual meeting, February 8, 1967:
Let there be no illusion that deposit insurance alone will give the man on the street iron-clad protection. An essential feature of the proposed insurance act is the requirement for adequate regulation and inspection of all participating companies.
What is said there is particularly important in regard to the finance companies that we have in Canada. He went on to say:
Without such a requirement the act would not serve its intended purpose, for lack of proper regulation and inspection has been a root cause of the trouble.
He is referring there to the lack of proper regulation and inspection being a root cause of the trouble we have had in Canada.
With regard to foreign capital investment he had this to say:
Canadians should do less worrying about foreign capital coming into the country to help with our development, and spend more time finding ways to encourage greater use of our own savings for the same purpose. If we want to keep Canada for Canadians, then we must give more incentive to Canadian equity ownership.
I say that if we are going to place our savings deposits in the banks of our country as against other forms of investment in the country to the extent implied in the bill before us, we will be defeating the goals which we are striving to achieve.
Mr. Chairman, in normal circumstances I would have some more things to say, but the hour is late and hon. members have been generous so I will conclude now.


Marcel Joseph Aimé Lambert: Mr. Chairman, in view of the hour and the progress that has been made I would suggest, with the consent of the house, that we stand clause 2 and that a number of clauses which the committee unanimously agreed to and which appear in the Minutes and Proceedings of the committee of February 14 at page 3263 be passed en bloc because they are of a general housekeeping nature and are non-controversial. The only exception in the list would be clause 9.


George James McIlraith: I assume the hon. member would also include the schedules?
Bank Act


Marcel Joseph Aimé Lambert: Yes, Mr. Chairman, I would move seconded by the hon. member for Victoria-Carleton:
That the following clauses and schedules b* passed en bloc: Clauses numbers 3, 5, 7, 8, 15, 18, 20, 21, 22, 23, 24 , 27 , 30, 32, 34 , 37, 38 , 40, 41, 42, 43, 58 , 59, 61, 62, 66 , 67, 68, 70, 71, 73, 74, 78, 79 , 80, 81, 94, 95. 98, 99, 100, 102, 104, 105, 107, 108, 109, 110, 111, 112, 113, 114, 115, 116, 118, 119, 120, 121, 123, 125, 126, 127, 128, 129, 130, 131, 132, 133, 134, 135, 136, 140, 141, 142, 143, 144, 146, 147, 148, 149, 152, 153, 154, 155, 156, 159, 160, 161 and schedules B, R and S.


Gilles Grégoire: Mr. Chairman, may I ask the hon. member what clauses 92, 100 and 102 were about?


Marcel Joseph Aimé Lambert: There was consent of the house; therefore-


Gilles Grégoire: Mr. Chairman, I do not want to refuse unanimous consent from the house, I am simply asking-


Marcel Joseph Aimé Lambert: Mr. Chairman, I am ready to answer, but I had understood that there was unanimous consent and I thought that the agreement still remained the same. Now, what are the numbers of those clauses?


Gilles Grégoire: The subject matter is amalgamation among banks and the clauses in question are numbers 99, 100 and 102. a (10:40 p.m.)


Marcel Joseph Aimé Lambert: In order to accommodate the hon. member for Lapointe, I would withdraw numbers 99, 100 and 102.


Herman Maxwell Batten: Does the committee agree that from the block of clauses listed on page 3263 of the committee proceedings, clauses 99, 100 and 102 be withdrawn?


Some hon. Members:: Agreed.
Motion (Mr. Lambert) agreed to.


George James McIlraith: I move that we rise, report progress and ask leave to sit again.


Some hon. Members:: Agreed.
Progress reported.



BUSINESS OF THE HOUSE

Stanley Howard Knowles: Tomorrow?


George James McIlraith: Tomorrow we will be considering the same business as today, and after that the same list as indicated last night. After that, we will have interim supply and the final supplementary estimates.

March 16, 1967
Proceedings on Adjournment Motion PROCEEDINGS ON ADJOURNMENT MOTION
A motion to adjourn the house under provisional standing order 39A deemed to have been moved.



TRANSPORT-BRITISH COLUMBIA-FEDERAL CONTRIBUTION TO BURRARD INLET CROSSING

Thomas Clement (Tommy) Douglas: Yesterday, Mr. Speaker, I asked the Minister of Transport for some clarification regarding the press release which he issued dated March 15. I should like to quote part of that release:
A third crossing of Burrard Inlet is under active consideration at the present time and the question of federal participation in this project has been raised on a number of occasions.
It is understood that the preliminary estimates placed the cost of the new crossing at about $85 million. A part of the cost would be occasioned by the requirement to avoid any obstruction to navigation in the port of Vancouver and a part of the expenditure would provide easier and more efficient access to the wharves and the new National Harbours Board facilities on the waterfront, both in Vancouver and on the north shore.
The government of Canada is prepared to make a capital contribution to the project which would reflect obligations which are essentially national rather than local in character. In addition to a capital contribution the federal government would be willing to guarantee a loan to be floated by an appropriate local non-profit harbour crossing authority, provided suitable arrangements were made to ensure the payment of interest and the repayment of the capital of the loan spread over a suitable period. If such an authority is established by the provincial and local authorities, the federal government would be prepared to enter into discussions without delay with a view to getting the project launched as quickly as possible.
Now, the part of the press release which seemed to me exceedingly vague was this sentence:
The government of Canada is prepared to make a capital contribution to the project which would reflect obligations which are essentially national rather than local in character.
I was hoping I could secure from the minister some idea of what the federal government is actually prepared to do.
It so happens that at the same time that the Minister of Transport was issuing his release here, the Minister of Labour issued a release in Vancouver, a copy of which I obtained from the office of the Minister of Labour, and it is almost in identical terms. However, in the press conference which followed the issuing of this release the Minister of Labour was not
tMr. Mcllraith.]
quite so reticent, and the press report which came over the wire was as follows:
The Minister of Labour, Mr. Nicholson, says the federal government is willing to pay one third the cost of building a bridge tunnel across Vancouver's Burrard Inlet to ease traffic congestion across the Lions Gate bridge. Mr. Nicholson added that the government was also prepared to finance the rest of the $85 million cost with a 50 year loan.


John Whitney Pickersgill: Would the hon. gentleman give the source of that quotation?


Thomas Clement (Tommy) Douglas: This came over the C.B.C. on the television news last night, and I got a copy of it from the C.B.C.
An article in this morning's Vancouver Province reads as follows:
Mr. Nicholson is reported as saying that the federal government was prepared to contribute $20 million or more plus long term deferred interest loans for the construction of the crossing. He is quoted as saying that the federal grant could go as high as $30 million.
So, Mr. Speaker, there is a good deal of interest in what exactly is the federal government's proposal. If the statement attributed to the Minister of Labour is correct and the federal government is prepared to contribute one third, which would be roughly $28 million-and the provincial government has already indicated its willingness according to press reports to put up $27 million-then this still leaves $30 million to be raised.
I assume that the federal government would be prepared to lend this amount on a long term basis, but I think that the problem which would face the local authorities on the lower mainland would be to find the sources of revenue available to them to retire a debt of $30 million at the rate of interest that they speculation in the Vancouver Province to the would be expected to pay. There is some effect that the federal government is going to ask for 25 per cent of the gasoline tax in the metropolitan Vancouver area to pay off this loan. The public is entirely in the dark as to what the proposals are, and I think it would be much better if the whole thing were brought out into the open so we all know what each government is prepared to do.
I recognize that the minister cannot be too definitive and that certain negotiations have to take place. But it would be helpful if, instead of saying that the federal government's contribution will reflect obligations which are essentially national, the federal government is prepared to say that they will contribute one third or one half of the amount required, and will tell us how they propose to help the local authorities meet the problem of retiring a
March 1$, 1967	COMMONS
long term loan which the federal government have offered to finance.
Therefore, Mr. Speaker, I am raising the matter because of the tremendous interest on the lower mainland in this question. A third crossing is essential. The congestion is atrocious and appalling. Something must be done and done quickly. I welcome the fact that the minister has made a statement regarding the willingness of the federal government to make some contribution. Now I think it would be helpful if he could tell the people on the lower mainland of British Columbia something which is more specific about the nature of the offer of the federal government to assist in this very essential project.


John Whitney Pickersgill: First of all, Mr. Speaker, I think I should clear up something that the Minister of Labour hoped to have the chance of clearing up today, and that is that the stories that appeared in the Vancouver Province and which were reproduced by the C.B.C.-notwithstanding that the minister held a press conference in the meantime at which he said neither of these things-were in fact not representative of what he actually did say. The minister felt quite indignant about that and I think this should be cleared up. No figures were mentioned, quite deliberately. The primary responsibility in this matter is not the responsibility of the federal government.
[DOT] (10:50 p.m.)
I think hon. members who are experienced in dealing with the government of British Columbia know that one must be on one's toes in dealing with them. It did seem to us an indication that we were willing to be forthcoming and helpful with the people who have the primary responsibility, the provincial and local authorities, they might put forward a plan to expedite the goal that the hon. gentleman, all British Columbians and indeed all Canadians ought to have at heart.
The hon. gentleman is quite right about the importance of this third crossing to the third largest agglomeration of Canadians in this country. It is important that this be gone ahead with. It was felt by our government that if we showed we were ready to be cooperative it might perhaps act as a catalyst to bring forward a definite proposal from the provincial and local authorities. We are quite prepared to discuss the matter with them as soon as they have something concrete for us to discuss.
Proceedings on Adjournment Motion
In the meantime the hon. gentleman, who in another capacity took part in a great many federal-provincial negotiations of this kind will, I am sure, particularly when one thinks of his origins, understand why the government is a little reticent about giving any figures at this time.



SHIPPING-REQUEST FOR OPENING OF CHANNEL TO AMHERST ISLAND

Almonte Douglas Alkenbrack: Mr. Speaker, I am sorry to detain the Minister of Transport at this late hour. I know he has had a heavy and busy day.
My intercession in the adjourned debate at this time concerns a matter of vital importance to an island municipality in my constituency of Prince Edward-Lennox. It is the municipality known as Amherst island, part of the county of Lennox and Addington. It was part of the old seigniory of LaSalle in 1675 under the French regime. It was then known as the lie de Tonti, named after LaSalle's heroic Italian lieutenant, Henri de Tonti, who assisted him in the discovery and administration of the far-flung western regions of New France. Amherst island, a beautiful unspoiled rural gem on the breast of lake Ontario, is three miles from the mainland, approximately ten miles west of Kingston. It is now served during the navigation season by the motor vessel Amherst Islander, which plies between her home port of Stella, on the island, and Millhaven, on the mainland.
Each year due to thick ice in the channel, this vessel is forced to lay up for part of the winter until the opening of navigation. This ferry has been laid up since February 25 and the population of about 400 people, depending on its services, now awaits the end of this period of isolation. Many commodities are in short supply on the island at this time of the year and the people depend on various forms of transportation that can use the ice or the air. The ice is now unsafe, and there is no airport. As a result I have received a request from Reeve Harry Fleming and his council out of which evolved my question to the Minister of Transport this afternoon. My question was as follows:
Will the minister please authorize the icebreaker Simcoe now on its way up the St. Lawrence river to Kingston, to continue westerly to Millhaven dock, on the north shore west of Kingston, and from there to break a channel to Stella on Amherst island, in order that the ferry Amherst Islander may resume vital operations in service to Amherst island, the people of which are in serious need of the resumption of service with the mainland?

March 16, 1967
Proceedings on Adjournment Motion
For the information of the minister and the house, I wish to add that the Amherst Islander is a good ship of limited power, but she is not a good icebreaker and her hull would be vulnerable if she attempted to play the part of an icebreaker at this time and under present conditions. That is why the municipality now requires the services of the Simcoe.
I thank the minister for his courtesies and services in the past, particularly for the light buoy, which following my request he authorized at Bath, and which was installed last year as a safety measure on a dangerous shoal in front of that village. Since my question this afternoon regarding the subject under discussion, I have been informed by the minister's office that his department is giving favourable consideration to this request and I wish to voice my appreciation in that regard not only on my own behalf but on behalf of the people of Amherst island, and the reeve and council, who anxiously look forward to the re-opening of the channel and the resumption of the normal ferry service.


John Whitney Pickersgill: I do not believe it is really necessary for me to say anything because the hon. member-and I congratulate him on his excellent Italian-has not only asked his question but answered it as well.
However, just in case my department is not able to perform quite as fast as the hon. gentleman may have given the impression it may, I must say in all sincerity that the Simcoe has had some engine trouble and is now tied up at the Portsmouth wharf at Kingston. Every effort is being made to effect repairs and it is hoped to have the vessel seaworthy by tomorrow or, at the latest, on Saturday. As soon as she is available she will undertake this service, and I hope perform it successfully. As there are islands off the mainland of Newfoundland in my constituency which are sometimes in a similar difficulty, the hon. gentleman can assure his constituents of Amherst island that I am very anxious that what he has asked should be done.
Motion agreed to and the house adjourned at 11 p.m.

Friday, March 17, 1967