1967-03-14

PRIVILEGE


Hon. Marcel Lambert (Edmonton West):: Mr. Speaker, I rise on a question of privilege which affects the members of this house and parliament generally. Briefly the question is as follows. Yesterday the President of Treasury Board tabled the estimates for the fiscal year ending March 31, 1968. Reference to pages 308 and following, dealing with the Department of National Defence, will disclose what I submit is a gross irregularity having regard to the law as it stands today and, in particular, to the National Defence Act and the Financial Administration Act.
I would say in support of my contention that these estimates in connection with the Department of National Defence are contrary to existing law as provided in section 15 of the National Defence Act, which reads as follows:
The Canadian forces are the naval, army and air force of Her Majesty raised by Canada and consist of three services, namely, the Royal Canadian Navy, the Canadian Army and the Royal Canadian Air Force.
Reference to vote 15 of the estimates as they appear at page 316 of the blue book will show that these estimates are based on the premise of a single unified service, something which is not founded in law today. For this reason the estimates are improperly set out, and as a consequence parliament will be asked to vote money and supply in a manner contrary to the existing law.
I say this without prejudice to the determination which may be made by this house at some time in the future, and I do not say that this house will have to consider all these estimates before the passage of Bill C-243. However, by the end of this month the government will come forward with a request for interim supply and will be asking this house to provide one twelfth or more of next year's supply on the basis of the estimates now put forward.
I put it to Your Honour that the passage of estimates based on a single unified service
would be contrary to the National Defence Act, and contrary also to sections 24 to 26 of the Financial Administration Act both in letter and in spirit. Section 24 reads as follows:
Subject to the British North America Acts, 1867 to 1951, no payments shall be made out of the consolidated revenue fund without the authority of parliament.
Section 25 reads:
All estimates of expenditures submitted to parliament shall be for the services coming in course of payment during the fiscal year.
Parliament cannot act outside the law and today, as we are facing these estimates, the law provides that there shall be three services. The National Defence Act has not been amended, and I therefore maintain that these estimates as presented, bearing in mind the necessity of the government asking for interim supply by the end of March, constitute an abuse of the privileges of this house.
[DOT] (2:40 p.m.)
Therefore I move:
That the book of estimates for the fiscal year 1967-68, as presented, be withdrawn and revised to show proposed expenditures for the Department of National Defence in conformity with existing law.


Mr. Speaker:: Order, please. As the hon. member for Edmonton West knows, it is the duty of the Chair in the first instance to determine whether there is a prima facie case of privilege. The matter which the hon. member is now submitting for the attention and consideration of the Chair is of considerable substance. Let me suggest to the hon. member and others who support his cause that perhaps we should hear arguments as to whether there is a question of privilege, after which the Chair may be given an opportunity to reflect on the matter before making a judgment.
I submit that perhaps it would not be proper in respect of such a serious matter for the Chair to render an immediate decision. It is my feeling that it would be helpful to hear arguments and precedents which hon. members may wish to submit for the guidance of the Chair. In my view that should be done before we proceed with other matters.


Hon. D. S. Harkness (Calgary Norih):: Mr. Speaker, I submit that here there is an open

March 14, 19G7
Alleged Irregularity in Defence Estimates and shut case of privilege. It is quite clear from an examination of the estimates presented in previous years that provision in each case was made for the expenditures of the navy, the army and the air force. Certainly the house is entitled to a full disclosure of the sums to be spent for each of those services. This is the first time the estimates have been presented without any mention whatsoever of the three services. I suggest, therefore, they were prepared in this form on the basis of the hope of the Minister of National Defence of getting from this parliament the authority to create a single unified force.
That authority has not been granted, and the bill in respect of this unified force is still before the standing committee for consideration. It has not been reported back for consideration by the house. Under those circumstances the estimates should have been presented in the form in which they have been presented for many years past. This would enable members of the house to determine the amounts being voted for each of the separate services as provided for by the National Defence Act.
On looking back at the estimates of the Department of National Defence for the year ending in 1966 we find that vote 15 provided for the operation and maintenance and construction or acquisition of buildings, works, land and major equipment for the Royal Canadian Navy, the Canadian Army, and the Royal Canadian Air Force. The amounts involved were then listed, first for the navy, then the army and then the air force.
In looking at the estimates for the past fiscal year which ends in 1967 we find that the vote has been changed to some extent. In this case vote 15 is worded in this way:
Operation and maintenance and construction or acquisition of buildings, works, land and major equipment and development for the Canadian forces-
I noted this difference last year but paid little attention to it because the unification bill had not been introduced, and because following that description there were listed the expenditures for the navy, the army and the air force in detail, just as they had been listed lor previous years. These details are to be found in the blue book on estimates at page 268 and following for the fiscal year ending in 1967.
I would take it that what the Minister of National Defence did last year was take a nibble at this business, and instead of the nomenclature of the vote being as it had been previously, to provide funds for the Royal
[Mr. Harkness.l
Canadian Navy, the army and the air force, that nomenclature was changed to provide for the expenditures required for the Canadian forces. However, as I say, I paid little attention to that because the expenditures for each of the forces were still detailed in the way in which they always had been.
But this year we find a complete change. Not only is the name of the vote changed from what it had been, but in the estimates which were presented to us yesterday there is no mention whatever of the navy, army or air force; and there is no means, by going over the estimates, of determining how much money is to be spent for each of these three services, which exist by law. As a result there is no means by which one can compare the expenditures proposed for this year with the expenditures of last year and previous years. Thus I think the estimates as presented quite palpably do not give the members of the house a true picture on the basis of which we are being asked to vote funds. Therefore they should be withdrawn and submitted in a proper form in accordance with the law as it stands.


Hon. Gordon Churchill (Winnipeg South Centre):: Mr. Speaker, I am supporting the question of privilege and the motion that has been based on it. It is quite obvious that this is a really serious matter and is another indication of the methods by which the present government is attempting to evade parliamentary responsibilities and attempting to prevent parliament from maintaining its control over the voting of money in this house. We had an earlier experience of this type of thing when we were dealing with interim supply last fall. We discovered that the government had altered the terminology in one of the sections dealing with the Department of Finance and had placed into a contingency fund millions of dollars, whereas in other years they had been satisfied with a million or two. As I say, we discovered that last fall.
This, of course, put us on the alert as to what is happening in the year 1967, and immediately we discover another attempt to circumvent the will of parliament by altering the terminology in the estimates and the headings in the book of estimates, contrary to the law of the land. It is becoming a bit of a trial, watching day by day what the government is up to with regard to parliament. I am not normally very suspicious-


Some hon. Members:: Oh, oh.
March 14, 1967


Gordon Minto Churchill: -but I am being compelled to adopt an inquisitive attitude with regard to things that are happening in parliament, and with some justification. Surely we are entitled to have the government act within the law; or is this an unusual request? We will let the pundits work out that one. But other people have to act within the law, and my opinion is that the government should also.
[DOT] (2:50 p.m.)
Although the government has been anticipating an alteration in the National Defence Act, that change has not yet become operative. The unification bill was passed over, our opposition last fall and now is being studied by the committee. It has to come back to the house and be dealt with here in committee of the whole and on third reading. In the interval it may be substantially altered; who knows? Perhaps the Acting Prime Minister, if left in charge for a month rather than a week, would have this bill withdrawn and use his sound common sense with regard to the operation of parliament. This is the uncertain situation with which we are faced; the unification bill has not yet been passed, yet the estimates have been prepared as if this bill had been passed.
From my experience on the government side these estimates are started in the late summer; they go through a tortuous process; they are subjected to examination by the Treasury Board, finally are approved by the cabinet, and the blue book is printed and presented to the house. It is a long process, presented to the house. It is a long process, diligence was shown on the other side of the house these estimates were prepared in the normal manner and therefore this new terminology must have been used last summer or in the early fall, even before the unification bill appeared on the order paper.
In this situation we in the House of Commons are unable to determine whether the amount of money required is adequate for the purposes intended, as we have no means of making a comparison with other years. We do not know whether the Canadian navy is going to be supported as it was in other years, or whether its funds will be depleted and it will be virtually wiped out of existence, which we suspect may happen. We do not know whether the air force is going to be sustained as it was in the past. Here in the estimates everything is lumped together. How can the house make a sensible decision with regard to the amount of money requested unless the estimates are divided, as they have been in the past, in accordance with the law of the land?
Alleged. Irregularity in Defence Estimates This is what makes this a really serious matter of privilege.
The minister, in his speech on December 7, informed us that some sections of the act might not be proclaimed immediately after the bill is passed. We have been told by the chief of the defence staff that the proclamation of the bill will wait until he has authorized the minister to have it proclaimed. So there is great uncertainty as to whether the bill will be proclaimed this year even if it is passed by the house in its present form.
I submit that these estimates are based on supposition. If you follow the argument a little further, sir, you may be inclined to think other departments intending to bring in some change in their organization might do what the Department of National Defence has done, that is introduce changes in their estimates for the next year based on the expectation that some alteration in the act pertaining to their department may take place. This opens the way to substantial alterations in the financial control of this country as normally exercised by the House of Commons.
Mr. Speaker, I would not object if Your Honour took a little time to think this over because it is a matter of major importance to the house, and it is possible that in the course of your contemplation the Acting Prime Minister will see that something should be done and will effect the necessary changes. Perhaps Your Honour will not have to make a decision on this matter, because with such an experienced person heading the government at the present time I am sure this question can be settled without a major debate in the House of Commons.
Hon. Paul Hellyer (Minister of National
Defence): Mr. Speaker, in reply to this alleged breach of privilege I would like to say first of all that the form used in the blue book this year is not contrary to the National Defence Act in its present form. I should like to say it has nothing to do with unification of the armed forces or the bill now being considered by the committee on defence. I should like to state also that the wording of the vote this year is exactly the same as it was last year.
In support of that statement I should like to read the two votes. I am reading from last year's book, 1967, page 265, the vote for defence services, vote 15:
Operation and maintenance and construction or acquisition of buildings, works, land and major equipment and development for the Canadian forces and $1,750,000 for grants to the town of Oromocto.



March 14, 1967
Alleged Irregularity in Defence Estimates
This vote was for the fiscal year which will end at the end of this month. Now the vote which is requested in this year's book, 1968, as recorded on page 308 under the same heading, "defence services" and the same vote No. 15, reads as follows:
Operation and maintenance and construction or acquisition of buildings, works, land and major equipment and development for the Canadian forces and $1,850,000 for grants to the town of Oromocto.
Mr. Speaker, with the single exception of the amount of money involved in grants to the town of Oromocto and a subsequent bracketed admonition, "details page 316", the two votes are absolutely identical. The only difference-


Mr. Diefenbaker:: Would the minister say where the Royal Canadian Navy is?


Mr. Hellyer:: The only difference is in respect of the details. This, I think, is not only logical but essential. The details for the fiscal year commencing April 1 next are based on the integrated forces as they are presently administered. It is not possible to segregate by services all the costs involved in operating the services in the year ahead, notwithstanding the fact that they are still three legal entities, the Royal Canadian Navy, the Canadian Army and the Royal Canadian Air Force.
If I may, I should like to give some examples of that in respect of maritime command. As hon. gentlemen are aware, Mr. Speaker, maritime command consists of elements of the Royal Canadian Navy and the Royal Canadian Air Force.


Mr. Lamberi:: It always did.


Paul Theodore Hellyer: The information which is really pertinent to parliament in making up its collective mind in respect of the expenditures for the year ahead is information concerning expenditures related to that particular function of maritime command.


Marcel Joseph Aimé Lambert: It was split last year.


Paul Theodore Hellyer: The situation is similar in so far as other commands are concerned, Mr. Speaker. For example, the way training command has been organized during the course of last year it would be physically impossible, without entailing administrative costs which would be ridiculously high and cumbersome and certainly not in the public interest, to maintain records on a single service basis because training command is organized to

provide basic training, individual training, including flight training to wing standard for the men and women of the three armed forces, the navy, army and air force.
In so far as materiel command is concerned, precisely the same problem arises. Although materiel command still has under its jurisdiction the three separate supply systems, during the interval and until a single supply system can be developed which will eliminate some duplication or triplication, which will permit the consolidation of bases and which will permit considerable savings and at the same time the implementation of a more effective logistic system for our armed forces, it is impossible to segregate in materiel command the costs which are attributable to the Royal Canadian Navy, the Canadian Army and the Royal Canadian Air Force.
[DOT] (3:00 p.m.)


Mr. Speaker:: Order, please.


Paul Theodore Hellyer: Mr. Speaker, I will only be a moment or two.


Mr. Speaker:: Order. I want to be fair to the minister because other hon. members who have taken part in this debate on the question of privilege raised by the hon. member for Edmonton West were given considerable latitude, and certainly the minister is entitled to the same consideration. However, from listening to hon. members, and particularly to the arguments advanced by the minister and by the hon. member for Winnipeg South Centre, I have the impression that this line of reasoning is of the kind which would be advanced more reasonably if the Chair recognized that there was a question of privilege and a motion were submitted to the house.
It seems to me that would be the time when arguments in support of or in opposition to a proposed motion should be advanced by hon. members. The very limited point of concern to the Chair at the moment is whether there is a question of privilege. No doubt many of the points advanced by hon. members might be quite relevant if this matter were before the house, whether by way of consideration of the estimate itself or the estimates in general or by substantive motion. But the one point the Chair has to consider now and on which I will reflect later on is whether there is a question of privilege here.


Paul Theodore Hellyer: Mr. Speaker, that was really the point to which I was addressing myself,
March 14. 1967	COMMONS
but in the process I had to explain that during the course of the last year the organization of Canada's forces has been changed. Whereas previously the supply system, for example, had been organized on the basis of the three individual services, it is now combined under one command which has the responsibility for supplying the three services. Similarly, Mr. Speaker, where previously each service administered its own training, there is now one single training command which provides service to the Royal Canadian Navy, the Canadian Army and the Royal Canadian Air Force. Therefore, Mr. Speaker, it is essential that the cost of that command be recorded on a single unit basis rather than on a tri-service basis.
In view of your suggestion in this respect, Mr. Speaker, may I say this. If I recall correctly there was some suggestion in the public accounts committee that a change be effected in the method of reporting proposed expenditures and of breaking them down in order to give members of parliament a more meaningful appreciation of how this money was being spent. The real object of changing the details in this year's book-that is, for the fiscal year commencing April 1-is to give members of parliament a more meaningful appreciation of how vote 15 is being expended.
For example, the change has been made to show whether the money under that vote is being taken up, or what proportion of the vote is being used, by the maritime function, the mobile command function, the air defence function and the various other functions all of which are included in the single vote 15.
As I was saying, Mr. Speaker, though I speak from memory, I think there was a suggestion in the public accounts committee that the department of defence should undertake this kind of breakdown and make it available to members of parliament for their study in order to permit members to have a better appreciation of what is involved by way of defence expenditures, and in order to assist them in making up their minds as to the relative priority of various functions being performed by Canada's defence services.
Under these circumstances, Mr. Speaker, I think it is perfectly fair to say that this is in no way anticipating the unification bill. This new method is not related in any respect whatever to the unification bill; it is only an attempt to give parliament more meaningful information. Not only is it not attempting to circumvent the will of parliament; on the contrary it is implementing an instruction of parliament to change the form of the details
Alleged Irregularity in Defence Estimates in such manner as to make them more comprehensible to members studying the proposed expenditures, and to make it possible for them to have a more realistic discussion of the relative merits of the expenditures being made in the years that lie ahead.
Therefore, Mr. Speaker, it is only a reflection of the organization of the forces at the present time as permitted by the law passed by parliament in 1964. In my opinion it does not raise any question of privilege whatever, and therefore I respectfully suggest that there is in fact no question of privilege here.


Mr. H. A. Olson (Medicine Hat):: Mr. Speaker, it seems to me that the alleged question of privilege before us concerns the form in which estimates were presented to this house in the blue book tabled yesterday. I suggest to Your Honour that there may have been some change here from the previous practice; therefore I cannot accept the argument of the minister that only the details have been changed. Surely the details contained in the blue book are an integral part of the estimates and of the form of the estimates. I should like to refer to a citation to be found at page 736 of May's 17th edition:
In accordance with the royal direction, estimates are annually laid before the House of Commons, stating the specific grants of money which will, during the current year, be required for the navy, the army, the air force, the civil departments, and the ministry of defence.
Then on the next page, under the heading "Form of the estimates", there is this statement to be found:
As the Sovereign is responsible for the presentation of the estimates of the public expenditure, the Crown, acting through its ministers, controls, subject to the requirements of the Exchequer and Audit Departments Act, 1866, the form in which the estimates are presented.
Then under paragraph (c) there is the statement that under established usage, however, important changes in the customary form of the estimates should not be made without the previous approval of the public accounts committee. I am not sure whether the public accounts committee have considered the form of the estimates of the Department of National Defence and in fact have approved these changes. Then paragraph (d) reads as follows:
-acting on behalf of the House of Commons; and, in deference to this principle, official alterations in the estimates are restricted to such rearrangements as involve no question of principle.
If the changes do in fact involve a question of principle so far as the organization of the
13956	COMMONS
Alleged Irregularity in Defence Estimates armed forces is concerned-a question that, as Your Honour knows, is now before a standing committee of this house-then I suggest there is in fact a rearrangement that is prohibited by the precedents. I suppose that when we get to the point where this house is asked to vote interim supply on these estimates we are going to be faced with a problem, Mr. Speaker. I think that was one of the points made by the hon. member for Edmonton West.
However, Mr. Speaker, until we do get to that stage I suggest that there is no question of privilege; because as I read the motion moved yesterday by the President of the Treasury Board it was a motion that these estimates be placed before this house. It was not a motion to deal with the estimates. According to page 13875 of Hansard the President of the Treasury Board said:
Mr. Speaker, X should like to table copies in English and French of the main estimates for the fiscal year ending March 31, 1968-
That is not a motion putting these estimates before the house for consideration. None of them has been entered at this point, so I therefore suggest there can be no question of privilege at this point. The estimates have simply been tabled in the house.
So I submit, Mr. Speaker, that while there may be a question of privilege when we are asked to approve either part or all of these estimates and it is found that the form has been rearranged, I do suggest to Your Honour that at this point there is not. In addition, Mr. Speaker, when we reach the stage where we require interim supply, if this occurs before the consideration of the armed services act now before the committee is completed, it may then be necessary for the Minister of Defence or somebody to withdraw the estimates of the department of defence and substitute therefor estimates in a form that does in fact comply with the previous practice.
In my submission, Mr. Speaker, we have not reached that stage yet. As of this date, therefore, I see no question of privilege.
[DOT] (3:10 p.m.)


Mr. A. D. Hales (Wellington South):: Mr. Speaker, I think the matter is as plain as this. Yesterday the President of the Treasury Board tabled the estimates of the various departments of government for this house to peruse, so that the members may be ready to discuss them on a future occasion. The minister presented the estimates in the way estimates are supposed to be tabled, showing what

DEBATES	March 14, 1967
money each department will need in the ensuing year under conditions established or set up in that department, according to what parliament may approve. Estimates are governed by the constitutions of departments.
The estimates for the Department of National Defence were not tabled in this way. They were not tabled according to the constitutional set-up of the Department of National Defence as it now exists.


Paul Theodore Hellyer: Quite the contrary.


Alfred Dryden Hales: The constitution of the department may be changed later, after this house has debated the point. The point is that these estimates are tabled on the basis of what the new department will be under unification.


Paul Theodore Hellyer: The hon. member is three years out of date.


Alfred Dryden Hales: The estimates, therefore, for this particular department were not tabled in their proper form. As a result I say that the minister has tabled a wrong set of estimates for this department.
It is quite true that the public accounts committee recommended that the various votes be as clear and concise as possible while giving all the information that it is possible to give, that members of the house may vote intelligently on the expenditures listed under each vote. I cannot refer to these votes in detail, but taking a quick glance at the new estimates of the Department of National Defence one sees that no figures for personnel are given, as were given in the previous year. Details are not given, under headings of votes, though these details were given last year. So it is clear that the estimates are not tabled in the form recommended by the public accounts committee.
I say the government has asked this house to study a set of estimates which do not conform with the constitution of the Department of National Defence. If this house is to study these estimates at a later date they must be put in the form they appeared in previous years, until such time as parliament passes or rejects the unification bill.


Hon. Paul Martin (Acting Prime Minister):: Mr. Speaker, the house should recall what the hon. member for Medicine Hat said in the concluding part of his observations, that all that has happened with regard to this matter
March 14, 1967	COMMONS
thus far is the tabling of the book of estimates. No action has been taken by the government to implement these estimates; the government has not yet asked parliament to accept the recommendations contained in these estimates.
There has been no change in the votes. It is often the practice, of course, for changes to be made in details. In the particular matter being discussed there has been no change whatsoever in the vote. The only legal effect that could result from any action by parliament would be a vote by this house on a proposed item designated as one of the items to be voted on in the Department of National Defence.
My hon. friend the member for Medicine Hat I think was in error when he said the practice was to first give the public accounts committee an opportunity of passing on the estimates before this house is called on to deal with them.


Horace Andrew (Bud) Olson: I said the form of the estimates.


Mr.   Marlin@Essex East: I see. I was about to observe that that is not our practice. The House of Commons in the United Kingdom follows that procedure; we do not. There is no motion to deal with the estimates; all that has happened is that they have been tabled.
The question before you, Mr. Speaker, is not whether the argument of the hon. members for Winnipeg South Centre and Edmonton West is to be accepted on the facts as stated. As Your Honour said, the question before the Speaker is a simple one; is the matter raised by the hon. member for Edmonton West a question of privilege? The Minister of National Defence has said that it is not, and I think he is supported by the observations made in Beauchesne, to be found in the fourth edition at page 99. Subsection (3) of citation 109 says:
It is declared to be a breach of privilege for a member, or any other person, to publish the evidence taken before a select committee, until it has been reported to the house.
I am not raising a question of privilege on what has happened today, but I might well have done so on the basis of this interpretation. It is not open to any member of this house to publish or to utter any evidence placed before a parliamentary committee until that committee has made a report to this house. Referring directly to the question of privilege and turning to page 102 of Beauchesne-


Some hon. Members:: Oh, oh.
Alleged Irregularity in Defence Estimates


Paul Joseph James Martin: My hon. friends laugh, but it is not open to any member of this house at any time to raise any question about any proceeding in any committee, or to refer to any evidence before that committee, until a report has been made to the house. Citation 113 of Beauchesne says:
Members often raise so-called "questions of privilege" on matters which should be dealt with as personal explanations or corrections, either in the debates or the proceedings of the house. A question of privilege ought rarely to come up in parliament. It should be dealt with by a motion giving the house power to impose a reparation or apply a remedy.
That has not been done, as Your Honour observed a few moments ago. There are privileges involving the house as well as individual hon. members. Beauchesne lists wilful disobedience to orders and rules of parliament in the exercise of its constitutional functions, insults and obstructions during debate. These are breaches of the privileges of the house. Such matters are not before Your Honour. Continuing reading from citation 113 of Beauchesne the following statement appears:
But a dispute-
This, I argue, is relevant:
But a dispute arising between two members, as to allegations of facts, does not fulfil the conditions of parliamentary privilege.
What do we have today? We have had nothing more than an allegation as to facts presented by the hon. members for Edmonton West, Winnipeg South Centre-


An hon. Member:: And Calgary.


Paul Joseph James Martin: I beg your pardon. The hon. member for Calgary North has also spoken. What was said did not involve a question of privilege. Those hon. members presented an argument based on a different interpretation of facts. It is clear, Mr. Speaker, that there has been no prima facie case of privilege. In fact no case of privilege whatsoever has been established. We have merely had a disputation between two hon. members about a set of alleged facts not yet before this house for its approval. The argument has been in terms of the decision which parliament ultimately must make on the recommendation put forward by the government with respect to the blue book of estimates.
For those reasons and for the reasons brought forward in citation 113 of Beau-chesne's fourth edition I submit that the only
13958	COMMONS
Alleged Irregularity in Defence Estimates question before us is whether there is a question of privilege, and clearly this is not a question of privilege.
[DOT] (3:20 p.m.)


John George Diefenbaker: Mr. Speaker, the house has listened to the words of wisdom of the dean of the house, and it was of interest that included in his presentation was a spanking of the Minister of National Defence. He pointed out that it was very wrong for anyone to refer to evidence in a committee until that committee had reported. This was the very thing that had been done by the Minister of National Defence; and if the debate so far has been effectual in any way it has certainly been so with the contribution of the Acting Prime Minister in putting the Minister of National Defence in his proper place.


Some hon. Members:: Hear, hear.


Paul Theodore Hellyer: Explain.


John George Diefenbaker: This is just another example of the flagrant manner in which this minister defies parliament with the passage of the days. I have seen examples of it multiplying, the attitude of the minister being that after all ministers have a right to unalloyed arrogance.


Mr. Mcllraiih:: Order.


Mr. Pickersgill:: What about leaders of the opposition?


John George Diefenbaker: The hon. gentleman used to be over here. He qualified fully. It is the arrogance of a minister endeavouring to trample on the rights of parliament.
It is said that this book of estimates really means nothing. If it does not mean anything, for what reason was it presented? It is now before the House of Commons and we will be asked, when a motion is made for interim supply and the vote on it takes place, to grant that supply on the basis of the estimates in the book that is now before us.
What has taken place here is very clear. In 1966-67, as one reads the defence estimates, one finds references to various elements in the defence forces such as Royal Canadian Navy, Royal Canadian Naval Reserve, Royal Canadian Sea Cadets, and so on. I realize that under this government "royal" has become a dirty word.


Some hon. Members:: Shame.

DEBATES	March 14, 1967


John George Diefenbaker: I repeat it; "royal" has become a dirty word.


Some hon. Members:: Shame.


Mr. Speaker:: Order, please. Can we have order, please?


Mr. Muir (Cape Breton North and Victoria):: The truth hurts.


John George Diefenbaker: Then, if it has not, why is it being removed? Every possible vestige of our royal connection is being removed by this government, and it is now done in the estimates.


Paul Joseph James Martin: On a point of order, Mr. Speaker, you said a moment ago that in view of the statements made by the hon. member for Winnipeg South Centre and the hon. member for Edmonton West you would allow a certain latitude. For that reason you allowed the Minister of National Defence to reply to certain statements that were made.
I can only assume from that observation that there has been enough discussion of matters that are not properly before the house, and I submit to Your Honour with the greatest respect that the only issue now is whether this is a question of privilege. If that ruling is not made now I suggest the right hon. gentleman will go on introducing irrelevancies, creating confusion, instead of addressing himself to the only question before the house. I feel it is surely not too much to ask the right hon. gentleman who, along with whoever is acting head of the government in this house is an officer of the house, to recognize that we both have a responsibility-


Some hon. Members:: Oh, oh.


Mr.   Marlin@Essex Easi: -to see that the rules are observed; and my right hon. friend knows that the only question now before the house is whether this is a question of privilege, and nothing else.


Some hon. Members:: Hear, hear.


Mr. Speaker:: Order, please. I have to recognize that the Leader of the Opposition has the right to make observations on the question of privilege, and I am sure he will limit his consideration to the question of privilege.


John George Diefenbaker: Mr. Speaker, I always like to sit at the feet of Gamaliel, but when it comes to his views on rules, disregard of the
March 14. 1967

rules has generally been his course through the years.
Before I was interrupted in that very improper manner I was referring to the estimates as they were in 1966-67, and was pointing out that alterations, significant ones, have taken place. My hon. friends opposite object strenuously to any suggestion that "royal" has become anathema-


Some hon. Members:: Order.


John George Diefenbaker: What was the reason, then, for its omission from the estimates? What reason can be given?


Mr. Speaker:: Order, please. It may well be that the right hon. gentleman has a second question of privilege, but my understanding of the question of privilege raised by the hon. member for Edmonton West is that it is not related to the grievance to which the Leader of the Opposition refers at this time.


John George Diefenbaker: With the greatest deference, Mr. Speaker, the hon. member for Edmonton West referred to the complete change in so far as the estimates are concerned, and I am referring in particular to one change that to me is very significant. Why this change; why this alteration? What parliament is being subjected to is an attitude of mind on the part of the Minister of National Defence. He believes he can trample on the rights of members and force down the throat of this house his peculiar idea of unification of the forces. That is what it means and nothing else.
This is simply a means whereby he would gratify his desire to do that which parliament has not yet decided. He places before us estimates having no reference to the regular rules upon which estimates are founded and prepared, and the hon. member for Wellington South has said there has been no recommendation for any change that has been passed by the house.
That being so, is parliament simply to become a puppet in the hands of the minister? Is he to be privileged to produce the kind of estimates that he desires to gratify his own particular ego? Sir, if ever there was a breach of privilege this is clearly one.


John Whitney Pickersgill: Certainly this speech is one.


John George Diefenbaker: This parliament did not authorize-


John Whitney Pickersgill: Talk about egoes.


Some hon. Members:: Oh, oh.
Alleged Irregularity in Defence Estimates


John George Diefenbaker: Mr. Speaker, I bow with deference to that perpendicular "I" over there. This matter, sir, is just another example. The minister says the reason for it is to help parliament understand, and that it would cost money to follow the usual course. For a government that is going to spend $1,200,000,000 more this coming year to worry about the cost of a few dollars to produce a fair and proper book of estimates is the most specious argument that could ever be advanced. The Minister of National Defence is asking parliament to accept a mish-mash rather than the estimates that have been accepted through the years. He is trying to anticipate what parliament is going to do, and get his way before parliament has the right finally to determine the question. We cannot permit parliament to knuckle under to Caesar.


Some hon. Members:: Hear, hear.
[DOT] (3:30 p.m.)


Mr. Andrew Brewin (Greenwood):: Mr. Speaker, I can present my submissions to Your Honour very briefly. I understand the hon. member for Edmonton West to have based his question of privilege on the proposition that the estimates as presented to the house prejudge the decision of this house on the unification bill. If this were the case, a question of privilege might arise. But in my submission it is not the case.
As the Minister of National Defence pointed out, this form of presenting the estimates is perfectly appropriate whether or not the unification bill is passed. What has happened is that the estimated expenditures have been grouped under the different roles and commands which were set up under the legislation of 1964. In my view this method of presenting the estimates is an improvement over the previous method and in no way prejudges our determination of the unification issue. In fact, in the defence committee some of the members, including myself, suggested it would be a clearer and more satisfactory way of presenting the facts to the house. This being the case I suggest there is no question of privilege, that the question raised is without substance, and that we need not be detained with it any longer.


Mr. Speaker:: If the hon. member for
Rosthern feels he can contribute something substantial in connection with the question of privilege-


Some hon. Members:: No, no.


Mr. Speaker:: -he has every right to do so.

March 14. 1967
Inquiries of the Ministry


Some hon. Members:: Hear, hear.


Mr. E. Nasserden (Hoslhern):: Mr. Speaker, after some of the ill-defined statements which have come from across the way, any member of the house might feel he had something to contribute to this debate.
I will be very brief. I wish to refer to citation 106 of Beauchesne, to be found on page 96, since I would like Your Honour to take it into consideration when you are determining whether or not there is a valid question of privilege before us. Paragraph 1 reads as follows:
Although either House may expound the law of Parliament, and indicate its own privileges, it is agreed that no new privileges can be created. In 1704, the Lords communicated a resolution to the Commons at a conference, "That neither House of Parliament have power, by any vote or declaration, to create to themselves new privileges, not warranted by the known laws and customs of Parliament".
The way in which these estimates have been drawn up this year represents a departure from one of the customs of parliament.
Paragraph 2 says:
The dignity and independence of the two Houses are in great measure preserved by keeping their privileges indefinite. If all the privileges of Parliament were set down and ascertained, and no privilege to be allowed but what was so defined and determined, it were easy for the executive power to devise some new case, not within the line of privilege, and under pretence thereof, to harass any refractory member and violate the freedom of Parliament.
That is exactly that the minister is trying to do. He is trying to violate one of the freedoms of parliament.


Mr. Speaker:: Perhaps I should mention to the hon. member that I meant to say "something additional", not "something substantial". It was, if the hon. member for Macleod will allow me to use a Latin expression a lapsus linguae.



HATE LITERATURE


Mr. Bernard Pilon (Chambly-Rouville) moved:: That the following members be appointed to represent the house on the special joint committee on the question raised by the resolution concerning hate literature, namely:-Messrs. Baldwin, Forest, Gauthier, Klein, Leboe, Lewis, Mandziuk, Mongrain, Nasserden, Reid, Tolmie and Walker.
That a message be sent to the Senate to acquaint their Honours thereof.


[Stage Direction]
Motion agreed to.


Hon. Mitchell Sharp (Minister of Finance);: Mr. Speaker, I should like to inform the house that I have tabled today copies in English and in French of a report by the Tariff Board on reference 137 which covers machinery and equipment for fresh fruit or fresh vegetables. I have tabled also a transcript of the evidence presented at the public hearings held by the board.
I can assure hon. members that the board's recommendations will be considered carefully by the government. Interested parties who' may wish to comment on this report should do so promptly.



PUBLIC SERVICE


[Stage Direction]
On the orders of the day:
John George Diefenbaker: Mr. Speaker, my question is directed to the Acting Prime Minister. In the light of the warning by the governor of the Bank of Canada that the Canadian economy is being overloaded, and in view of the astronomical and runaway federal spending indicated in the estimates for 1967-1968, will the Prime Minister report to parliament in the very near future as to the steps the government is taking now to implement the Glassco recommendations to eliminate government waste inasmuch as Canadians are wondering whether the world of waste under this government is to go on unchecked?


Paul Joseph James Martin: Mr. Speaker, a great many of the recommendations of the Glassco commission have, of course, been implemented, some by the right hon. gentleman but more by the present administration. The government is giving consideration to further ways in which the implementation of these recommendations can take place. I should like to point out, however, with regard to the right hon. gentleman's observations, that the expenditures which are reflected in the estimates before the house are estimates based upon decisions made by this free parliament.


Some hon. Members:: Hear, hear.


John George Diefenbaker: A world of waste.
March 14, 1967


EXTERNAL AFFAIRS
[Stage Direction]
On the orders of the day:
Mr. T. C. Douglas (Burnaby-Coquitlam):: Mr. Speaker. I wish to direct a question to the Acting Prime Minister. Has his attention been drawn to a statement made in Miami by Felipe Rivero, who claims to be the coordinator of the Cuban nationalist movement, admitting the responsibility of his organization for the bombing of the Cuban embassy in Ottawa last October and for the bombing of an auction room in Montreal last Saturday, as well as threatening that persons who visit Expo are liable to be in danger if they enter the Cuban pavilion? Have any representations been made to the United States government with reference to this organization which has sought refuge in the United States and is apparently using that sanctuary as a base for terrorist activities against a friendly neighbour.


Hon. Paul  Marlin@Acting Prime Minister: Mr. Speaker, I have not seen the statement attributed to someone in Miami. I am aware, of course, of the incident which took place in Montreal on March 11 and of another incident last fall. I can say that the government is concerned about the recent bombing in Montreal for which Cuban exiles have claimed responsibility. At the present time an investigation in which the R.C.M.P. is cooperating is under way. With regard to the question of further threats, the government is well aware of this danger and we are taking appropriate steps in co-operation with the police forces in an attempt to prevent further incidents of this kind.


Thomas Clement (Tommy) Douglas: I have a supplementary question I should like to direct to the Acting Prime Minister. While we all appreciate the fact that the United States has given sanctuary to exiles and refugees, does the minister not think that representations should be made to that government asking it to curb the activities of this group which, by their own admission, are going to indulge in terrorist activities in Canada?


Mr. Speaker:: Order, please. It is my feeling that the question asked is argumentative.


Thomas Clement (Tommy) Douglas: I did not intend it to be argumentative, Mr. Speaker. If Your Honour thinks it is I shall simply rephrase the question and ask the Acting Prime Minister
Inquiries of the Ministry whether or not he intends to make any representations to the government of the United States asking it to curb the activities of this organization so far as Canada is concerned.


Paul Joseph James Martin: Mr. Speaker, discussions are taking place with the United States.



THE CANADIAN ECONOMY


[Stage Direction]
On the orders of the day:
Horace Andrew (Bud) Olson: Mr. Speaker, I should like to ask the Acting Prime Minister whether the government is aware that the Organization for Economic Co-operation and Development, of which Canada is a member, yesterday issued a statement urging Canada to take steps to control the rise in wages and prices, and whether there were any suggestions as to how Canada should take these steps.


Paul Joseph James Martin: Yes, Mr. Speaker, the government has been made aware of this report through its representative at the O.E.C.D. and this matter is the subject of careful consideration as outlined the other day by the Minister of Finance.


Horace Andrew (Bud) Olson: I have a supplementary question. Would the Acting Prime Minister or the Minister of Finance indicate whether the report contained any suggestions as to how Canada should achieve this objective?


Mr. Speaker:: Order, please. I do not think that is a proper question.



QUEBEC-POSSIBLE SALE OR LEASE OF ELEVATOR

[Stage Direction]
On the orders of the day:
Hon. Theogene Ricard (Saint-Hyacinlhe-Bagol):: Mr. Speaker, I have a question for the Minister of Transport.
Would he give us every assurance that the operation of the grain elevators in Quebec city will remain under the authority and ownership of the National Harbours Board?


John Whitney Pickersgill: No, Mr. Speaker, I cannot give any such undertaking. I can give the hon. gentleman the undertaking that the elevator will remain under the jurisdiction of the board of grain commissioners as a public elevator.

March 14, 1967
Inquiries of the Ministry



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Mr. W. B. Nesbill (Oxford):: Mr. Speaker, I should like to direct a question to the Acting Prime Minister. Does the presence in Ottawa today of so many senior officers of the United States navy indicate the grave and understandable concern of the United States regarding the increasing inability of the Canadian navy to carry out its continental anti-submarine defence responsibilities?


Mr. Speaker:: Order, please. I am sure the hon. member will recognize that the question is not acceptable in that form.



OLD AGE SECURITY


[Stage Direction]
On the orders of the day:
Robert Muir: Mr. Speaker, my question is for the Minister of National Revenue. I sent him notice, albeit short, when I came into the house. For the purpose of clarification will the minister advise whether the small gratuity received by retired Nova Scotia coal miners from the Dominion Coal Company and its subsidiaries will be considered as income in calculating the amount that will be payable under the guaranteed income supplement?


Hon. E. J. Benson (Minister of National Revenue and President of the Treasury Board):: Mr. Speaker, the amount of the guaranteed income supplement is a subject for determination by the Department of National Health and Welfare. I will take the hon. member's question as notice and supply him with an answer this afternoon.


Robert Muir: I have a supplementary question, Mr. Speaker. In view of the fact the Department of National Health and Welfare has advised me that this is the responsibility of the Department of National Revenue I hope the minister will be able to provide an answer.



DOMINION-PROVINCIAL RELATIONS BRITISH COLUMBIA-PROPOSED ESTABLISHMENT OF HARBOUR COMMISSION

[Stage Direction]
On the orders of the day:
Mr. Frank Howard (Skeena):: Mr. Speaker, I should like to ask the Minister of Transport

whether he has any knowledge of a bill introduced by the government of British Columbia yesterday in the legislature seeking to set up a provincial harbour commission to engage in operating, maintaining and developing harbours, particularly in the lower mainland? If so, will the minister consider that bill in relation to the injury it could cause to the potential development of northern ports?


Mr. Speaker:: Order, please. The hon. member is making representations and suggestions to the minister, and I do not think this is a proper question.


Frank Howard: I did not intend to do that, Mr. Speaker. Perhaps I could simply ask the minister whether he has any knowledge of such a bill being introduced and what steps he is taking in this regard.


John Whitney Pickersgill: Mr. Speaker, I learned through the press and as the result of a report I received from the port manager of the port of Vancouver that a bill with 36 clauses purporting to set up a B.C. harbours board was introduced yesterday in the British Columbia legislature by the attorney general. I have also been made aware of certain allegations by the attorney general which bear no relation so far as I can discern to the facts. He has apparently suggested that the B.C. government must take this action because the federal government is not carrying out its responsibility in the port of Vancouver. That statement is untrue and I resent it very much. There are certain functions provincial governments have to perform under the constitution which should occupy the full time of provincial governments.


Mr. Speaker:: Order, please. Perhaps I
should comment ex post facto that both the question and answer appear to be out of order. Let me suggest to hon. members that questions relating to provincial legislation should not be asked at this time. If hon. members adopt the custom or get into the habit of referring from day to day to legislation introduced in provincial parliaments this might take up most of the time allotted for questions. I recognize the hon. member for Trois-Rivieres.


Frank Howard: May I be permitted to ask one
small supplementary question?


Mr. Speaker:: Order, please. I have recognized the hon. member for Trois-Rivieres.
March 14. 1967



TRANSPORT


[Stage Direction]
On the orders of the day:
Mr.   J.-A. Mongrain@Trois-Rivieres: Mr. Speaker, I have a question for the Minister of Transport and I assure him that this is not the kind of question that will raise blood pressure.
Can the minister advise the house whether he received this morning a telegram from the directors of the national harbours at Trois-Rivieres, objecting to any increase in tolls on the St. Lawrence seaway or in the Welland canal, and mentioning also that the Trois-Rivieres city council last night passed a unanimous resolution asking the minister to do something to prevent such toll increases?


John Whitney Pickersgill: Mr. Speaker, just before coming into the house I made some inquiries, but up to that point no such telegram had reached my office.



POLLUTION


[Stage Direction]
On the orders of the day:
John George Diefenbaker: Mr. Speaker, I do not expect the Acting Prime Minister will be able to make an immediate reply to my question but it is an urgent one and requires some answer very soon. Mr. Cronkite, chairman of the Calgary Fish and Game Association, sent a telegram to the Prime Minister last week asking for a declaration by the government of Canada on the subject of pollution. Since the meeting of the association takes place tomorrow, will the Acting Prime Minister make sure that a reply is sent?


Paul Joseph James Martin: Mr. Speaker, I shall be glad to look into this matter.



HOUSING


[Stage Direction]
On the orders of the day:
Mr. Heward Grafftey (Brome-Missisquoi):: Mr. Speaker, in view of the answer given yesterday by the Minister of Labour in repect of Canada's current housing crisis, I should
Inquiries of the Ministry like to ask him whether the government intends to take action before the end of the current session in order to give some hope to many Canadians who right now are looking for decent housing facilities.


Hon. J. R. Nicholson (Minister of Labour):: Mr. Speaker, the question as to what should be done and when in the housing field is under constant review by the government. We have already taken many progressive steps which now are having beneficial results. When we decide on further steps an announcement will be made at that time.


William Heward Grafftey: I have a supplementary question. In view of the urgency of the situation and the necessity of taking immediate action, can the minister inform the house now that his cross-country symposiums and study sessions are to be brought to an end?


John Robert (Jack) Nicholson: If the hon. member had been following the newspapers he would know they have been concluded.


Mr. D. V. Pugh (Okanagan Boundary):: Mr. Speaker, I have a supplementary question for the Minister of Finance which is not based on a newspaper or any other report but on a statement made by the governor of the Bank of Canada concerning the drop in Canadian housing starts. Will the minister now consider removing the sales tax on building materials?


Mitchell William Sharp: No, Mr. Speaker.


William Heward Grafftey: I have a further supplementary question, Mr. Speaker. In view of the minister's remarks regarding the newspaper reports, can he now inform the house what have been the results of the symposiums, and when we can expect definite action, in view of the present crisis?


Mr. Speaker:: Order, please. The hon. member is asking for a ministerial statement and this cannot be done on questions.


EXTERNAL AFFAIRS
[Stage Direction]
On the orders of the day:
Mr.  R. Gordon L. Fairweather@Royal: Mr. Speaker, I have a question for the Secretary of State for External Affairs. I am wondering how the minister reconciles the decrease in the over-all foreign aid program, as disclosed in the estimates, with the following statement

March 14, 1967
Inquiries of the Ministry of the Prime Minister recorded in Hansard of January 23, page 12096:
We aim to reach a total of 1 per cent of the national income within a short period of time.


Mr. Speaker:: Order, please. It seems to me that the question as asked is argumentative in nature.


Mr. Fairweather:: Mr. Speaker, although I fail to see how my request for reconciliation of the estimates with the Prime Minister's statement can be classified as argumentative I will try again by addressing myself to the Secretary of State for External Affairs. I should like to ask him whether next year's estimates disclose an over-all reduction in foreign aid.


Paul Joseph James Martin: No, Mr. Speaker, they do not.


Mr. Speaker:: Order, please. The hon. member for Royal, if I interpret his question correctly, is asking for information which is available to him in the same way as it is to other hon. members, and therefore the question is not in order.


Robert Gordon Lee Fairweather: Mr. Speaker, can the Secretary of State for External Affairs tell the house why the estimates disclose an overall reduction in foreign aid?


Paul Joseph James Martin: Mr. Speaker, I said in answer to that question that there is not. The statistical story which appeared in this morning's Globe and Mail is an inaccurate one. Our aid appropriations have been significantly increased in recent years and they have increased in this centennial year. In summary, if the special, non-recurring items are excluded, there is a net increase in aid appropriations of $42.70 million. These figures refer to aid only and do not include ECIC (Section 21-A) credit-


Mr. Speaker:: Order, please. The hon. member for Winnipeg South Centre on a point of order.


Gordon Minto Churchill: Mr. Speaker, I rise on a point of order. Earlier today we were prohibited from discussing the estimates for the coming year. We were told that we could not discuss them until they are referred to parliament for study. Now the Acting Prime Minister is commenting on the book of estimates.


Mr. Speaker:: Order, please. I am sure the hon. member for Royal should have borne in mind the representation or suggestion now made by the hon. member for Winnipeg South Centre. I must bring to the attention of the hon. member for Royal that the question, even as asked the third time, was still out of order. I am sure I should not have allowed it. However, having done so I suppose the Acting Prime Minister was entitled to reply to it. The point raised by the hon. member for Winnipeg South Centre is well taken and I suggest that perhaps this would be a good time to call orders of the day.


Mr.   Marlin@Essex East: Mr. Speaker, may I make one further point? I do not think it is fair for the hon. gentleman to suspect his own colleague who has asked the question.


Mr. Speaker:: Order, please.


[Stage Direction]
On the orders of the day:
Mr. Jack McIntosh (Swift Current-Maple Creek):: Mr. Speaker, yesterday I addressed a question to the Minister of Agriculture, who happened to be absent from the house and his parliamentary secretary said he would take the question as notice. My question had to do with the announcement yesterday by the Minister of Transport that there would be an increase in the tolls on the St. Lawrence seaway which would be reflected in the cost of producing wheat. I ask the minister whether he has done anything under the international wheat agreement to increase the price of wheat to the producer.


Hon. J. J. Greene (Minister of Agriculture):: Mr. Speaker, I believe the subject matter of the question comes more directly under the responsibilities of my colleague the Minister of Trade and Commerce, but I can assure the hon. member that our representatives at Geneva are working actively and forcibly to see to it that the western wheat farmers get a fair shake in any new world wheat agreement.


An hon. Member:: It is about time.


Mr. Reynold Rapp (Humboldt-Melforl-Tisdale):: Mr. Speaker, my question is directed to the Minister of Trade and Commerce but in his absence perhaps another minister would answer it. The minister has returned
March 14. 1967

from Geneva where he was engaged in the renegotiation of the international wheat agreement. Can the house be informed what progress has been made in increasing the price of wheat?


Hon. Paul  Marlin@Acting Prime Minister: Mr. Speaker, the Minister of Trade and Commerce and several other colleagues are out of the house at the moment on matters that are of importance. This is why they had to leave. We have had a long question period and they had to keep a very important appointment. The Minister of Trade and Commerce will deal with this question tomorrow, and I think my hon. friend may be very happy with the very able way in which the minister carried out his assignment in Europe the other day.



BANKRUPTCY


[Stage Direction]
On the orders of the day:
Mr. H. W. Herridge (Kootenay West):: Mr. Speaker, I wish to address a question to the Minister of Justice. It is a question of great concern to many people and is of national importance. In view of the growing fraudulent bankruptcy racket in Canada and the statement made by Commissioner McClellan of the Royal Canadian Mounted Police that the underworld is on the verge of controlling all sections of our economy, has the government given consideration to the request made toy the Canadian Lumbermen's Association and other organizations for a royal commission to investigate all aspects of bankruptcy in Canada?


Hon. Guy Favreau (President of the Privy Council):: Mr. Speaker, that question concerns my department and notice of it was referred to me by the Minister of Justice and Attorney General (Mr. Cardin).
Without necessarily accepting to its full extent the assertion made in the first part of the question, I must say that all representations, all recommendations are under constant study by the minister as well as by his officials and special advisers.
In that respect, I must remind the house that a three-member committee has been appointed and that it is now carrying out an active study of the economic, social and legal aspects of the Bankruptcy Act.
Inquiries of the Ministry I am confident that as soon as I get that report I will be in a position to make all the recommendations I deem appropriate or to refer all committee recommendations, if I feel that is necessary.



INQUIRY OF THE MINISTRY

[Stage Direction]
On the orders of the day:
Mr. Howard  Johnsion@Okanagan-Revel-stoke: Mr. Speaker, I should like to address a question to the Acting Prime Minister. It is a question of grave national importance. Could the Acting Prime Minister tell the house whether the appointment of a governor general will await the return from western Canada of the president of the Quebec Liberal Federation, who is already reported as saying that Canadians should begin questioning the usefulness of the post of governor general and has promised to enlarge on that thesis during his western tour?



LABOUR RELATIONS


[Stage Direction]
On the orders of the day:
Mr. John M. Reid (Kenora-Rainy River):: Mr. Speaker, my question is for the Minister of Labour. Is the minister in a position to announce when the board of arbitration will be set up to deal with the two groups of striking railway employees?


John Robert (Jack) Nicholson: cannot announce anything definite today, Mr. Speaker. I can state, however, that the work on the regulations is well advanced and, as I have already advised the bargaining committee of some of the railway unions concerned, I hope to announce appointment of the board of arbitrators and table the required regulations on or about Monday next, certainly not later than Tuesday.



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Mr. J. M. Forreslall (Halifax):: Mr. Speaker, my question is for the Associate Minister of National Defence, or if he is unable to answer it perhaps it might better be directed to the President of the Treasury Board. In any event, I should like to ask either of them

March 14. 1967
Inquiries of the Ministry what action has been taken to meet the request of the dockyard trades and labour council in Halifax for one rate for labourers employed in the maritimes area by the Department of National Defence as opposed to the four rates in effect at the present time, which indeed is a discriminatory situation.


Mr. Speaker:: Order, please. The question is of a rather detailed nature and I suggest to the hon. member that it should be placed on the order paper.



CANADIAN BROADCASTING CORPORATION


[Stage Direction]
On the orders of the day:
Mr. C. S. Smallwood (Baffle River-Camrose):: Mr. Speaker, I have a question for the Acting Prime Minister. As we are aware, the Canadian Broadcasting Corporation spent over $80,000 for 107 colour television sets, and on this morning's news it was announced that the officials of the C.B.C. were so arrogant as to inform the public that they had no intention of revealing the names of the people who had received these television sets.


Mr. Speaker:: Order, please. The hon. member has to ask a question, not make a statement.


Clifford Silas Smallwood: This is just a preface to my question, Mr. Speaker. I am coming to the question now.


Mr. Speaker:: The rules indicate that the hon. member cannot have a preface to his question.


Clifford Silas Smallwood: I will rephrase the question, Mr. Speaker. I should like to ask the Acting Prime Minister whether he will introduce legislation to compel the C.B.C. to reveal to the public the names of the 90 people who received colour television sets so that the taxpayers will know how their money has been wasted by the C.B.C. I ask that legislation be introduced to compel the C.B.C. to reveal these names, because they have refused to do so.


Mr. Speaker:: Order, please.



AGRICULTURE


[Stage Direction]
On the orders of the day:
J.-H.-Théogène Ricard: Mr. Speaker, I should like to put

a question to the Minister of Forestry and Rural Development. Is he in a position to give us the names of the members of the Canadian Livestock Feed Board?


Hon. Maurice Sauve (Minister of Forestry and Rural Development):: No, Mr. Speaker. I had hoped to make a statement tomorrow, but there will a delay of a week to ten days.


J.-H.-Théogène Ricard: A supplementary question, Mr. Speaker.
Since cattle breeders consider this matter as very urgent, when will the minister be in a position to make that information public?


Maurice Sauvé: Mr. Speaker, as I have already said in my answer, within the next ten days.



INQUIRY AS TO ANNOUNCEMENT OF DAIRY POLICY

[Stage Direction]
On the orders of the day:
Mr. H. W. Danforth (Kent (Onl.)):: Mr. Speaker, in order to clear up some understandable confusion in the industry, may I pose this question to the Minister of Agriculture. The government has indicated that a statement on the dairy policy for this year will be made prior to April 1. Will this policy be enunciated by the Minister of Agriculture or by the new National Dairy Commission?


John James Greene: There will be a statement made in the house, Mr. Speaker.



REQUEST FROM PROVINCIAL PREMIERS FOR NATIONAL CONFERENCE

[Stage Direction]
On the orders of the day:
Mr. Ed. Schreyer (Springfield):: Mr. Speaker, my question is directed to the Minister of Agriculture. Has he received from any of the provincial premiers, the premier of Manitoba in particular, any request for the convening of a national conference on farm prices, costs and income?


John James Greene: Yes, Mr. Speaker. Some time ago we received a request from the premier of Manitoba for the convening of a national farm conference but I think its object was broader than was indicated by the hon. member.


Edward Richard Schreyer: A supplementary question, Mr. Speaker. Can the minister indicate to the house what course of action the government is taking with respect to that request?
March 14, 1967



EGGS-INQUIRY AS TO GOVERNMENT ACTION RESPECTING IMPORTS

[Stage Direction]
On the orders of the day:
Edward Nasserden: Mr. Speaker, I have a question for the Acting Prime Minister. In view of the information contained in parliamentary return No. 2696 tabled in the house yesterday, which indicates that imports of eggs have increased by 250 per cent during the past year, can the minister tell us what action the government proposes to take with regard to this unhealthy situation?


Mr. Speaker:: The hon. member is asking for a ministerial statement. This is certainly not a question which can be asked now.


Edward Nasserden: Mr. Speaker, may I rephrase my question to the Acting Prime Minister? In the light of the situation revealed by this return, will the government bring the operations under the stabilization board before the committee on agriculture, forestry and rural development?


Paul Joseph James Martin: Mr. Speaker, of course I cannot make an omelet without breaking eggs, but I will refer that question to the Minister of Agriculture.


Edward Nasserden: Surely the Acting Prime Minister could indicate whether the government would consider bringing the operations under the stabilization board with regard to eggs before the parliamentary committee?


Paul Joseph James Martin: I have already done so.


Edward Nasserden: Would the Minister of
Agriculture indicate what the situation is at present?


John James Greene: Mr. Speaker, I understand the ham is on the other side of the house; we have the eggs.


An hon. Member:: Let the minister look at himself.



INDIAN AFFAIRS


[Stage Direction]
On the orders of the day:
Mr. F. J. W. Fane (Vegreville):: Mr. Speaker, I wish to direct a question to the Minister of Indian Affairs and Northern Development. Will he order the distribution to members of parliament of part 1 of the
Inquiries of the Ministry Hawthorn-Tremblay report which was tabled in the house last Friday? So far I have not received a copy.


Hon. Arthur Laing (Minister of Indian Affairs and Northern Development):: Mr. Speaker, I am very sorry about this. I understand that the hon. member attempted to get a copy yesterday. He could have secured one by telephoning my office. However, today a general distribution was made to all members of parliament.


Frank Howard: I have a supplementary question, Mr. Speaker. The other day I addressed a question to the Minister of Industry-I did not know at the time that it was addressed to the wrong minister-about the distribution free of charge of a copy of the Hawthorn-Tremblay report to each of the Indian bands in order that they may have access to it as well. Is the minister in a position to make any comment about that?


Arthur Laing: No, Mr. Speaker, except to say that I think it is important and should be done.



AIR CANADA


[Stage Direction]
On the orders of the day:
Mr. Jack Mclnlosh (Swift Current-Maple
Creek): Mr. Speaker, I have a question for the Minister of Transport, who 1 believe reports to the house for Air Canada. Can he inform us whether the Air Transport Board has received an application from Air Canada to abandon all service in Saskatchewan?
John Whitney Pickersgill: Mr. Speaker, I do not think there is the faintest likelihood of this having happened, but I suppose I should go through the motions of inquiring.


Mr. Lawrence Watson (Assiniboia):: I have a supplementary question, Mr. Speaker. When the minister is looking into the question of air service in Saskatchewan, would he inquire whether and when Regina and Saskatoon will get jet service?


John Whitney Pickersgill: I will be glad to do that.



SHIPPING


[Stage Direction]
On the orders of the day:
Frank Howard: Mr. Speaker, may I direct another question to the Minister

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Bank of Canada Act
of Transport. I am certain this one will evoke a less volatile answer than the last one did, and I am sure it is in order. Last Thursday I asked him about a communication he may have received from the Canadian Merchant Service Guild relating to towboats on the Pacific coast. Is the minister in a position to reply now?


John Whitney Pickersgill: Mr. Speaker, as a matter of fact I have a very carefully worded reply somewhere and I have had it in the house for two or three days. I was looking for it just when the hon. gentleman asked his question but I do not think I have it with me today. Since the subject is very technical I think it would be wise for me to stick to my text.



BANK OF CANADA ACT


[Stage Direction]
The house resumed from Monday, March 13, consideration in committee of Bill C-190, to amend the Bank of Canada Act-Mr. Sharp-Mr. Batten in the chair.
The Chairman:: When the committee rose yesterday clause 1 of the bill was being discussed and the hon. member for Lapointe had completed his speech in the time allotted to him.
On clause 1.
[DOT] (4:10 p.m.)


Mr. Gregoire:: Mr. Chairman, on the point of order, I had not finished my allotted time; quite the opposite, I was just starting. I had finished part of my remarks when the Minister of Finance (Mr. Sharp) rose to speak for a few minutes. Not being satisfied with the remarks of the Minister of Finance, I rose again, that is I was properly recognized again after listening to a statement of fifteen or twenty lines by the Minister of Finance. So I started over again and I had barely been speaking three or four minutes when the sitting was adjourned last night.
That is why I believe that on starting over again today-


Herman Maxwell Batten: I recognize the statement made by the hon. member for Lapointe, but I am sure he will recognize the fact that the statement made by the Minister of Finance

was in answer to a question. The hon. member had completed his 30 minutes at that time. I would be pleased to listen to the hon. member again after somebody else has made a contribution.


Gilles Grégoire: Mr. Chairman, on a point of order. If you will kindly refer to Hansard for yesterday Monday, March 13, 1967, on page 13946, you will find that my time was up. The Minister of Finance then rose and gave some explanations. Afterwards, I rose again, being the only one to do so after the explanations from the Minister of Finance, and I was recognized by the chairman of the committee; so, I started to deliver my statement. However, only three or four minutes had elapsed when I called it ten o'clock, because I thought that I could continue today with the same statement I had started last night at the end of the sitting.
Unless I am mistaken, Mr. Chairman, the rules state that when we study a bill in committee of the whole, the member who has the floor at ten o'clock is entitled to continue the day after, as is the case when the house is sitting, with the Speaker in the chair. Furthermore, the rules of this house also state that when we are considering a bill in committee of the whole, we have the right to speak as many times as we wish; of course, our time is limited, but if another member takes the floor after one of our statements, we are allowed to speak again. So, I humbly submit to Your Honour that this is exactly what happened yesterday, and that is the reason why, at the end of the sitting, I called it 10 o'clock.


Herman Maxwell Batten: Order. The Chair is not at all willing to accept the argument now being presented by the hon. member for Lapointe. I have before me Hansard for yesterday and the indication is that the minister was asked a question by the hon. member which the minister answered. At that time the hon. member for Lapointe had used the time allotted to him. As I said before, the Chair will again recognize the hon. member for Lapointe when some other member of the committee has made a contribution. The Chair recognizes the hon. member for Three Rivers.


Mr. Mongrain:: Mr. Chairman, I rise on a question of privilege. With all due respect, may I point out that you have identified me as
March 14, 1967

the member for Three Rivers whereas the known designation of my constituency is Trois-Rivieres.


Herman Maxwell Batten: The Chair apologizes to the hon. member for Trois-Rivieres.


Joseph-Alfred Mongrain: I hope I did not hurt the feelings of the Chair, and I apologize if I did.

Mr. Chairman, I cannot let the study of Bill No. C-190, an act amending the Bank of Canada Act, go on without pursuing a little further the matter I discussed the other day, at which time I mentioned that when we speak of finance or the banking system, it is absolutely necessary to refer to the situation of the Canadian municipalities which represent one of the three important levels of government and which are treated most of the time as poor relations, and which do not have the means to carry out their responsibilities to the people.
As briefly as possible, this afternoon, I should like to show further four main points. Canadian municipalities at the present time operate in a frightful state of stagnation, they have to assume their responsibilities in a sort of strait-jacket, and it is a nightmare for the mayors and the aldermen- whatever they are called, depending on the province-to try and balance their budget and meet the requirements of their constituents. Not later than this morning, I learned that my own municipality, like a great number of other Canadian municipalities at this time of the year, had to raise its property tax, which it had managed to avoid through some sort of miracle for several years.
Second, I should like to pinpoint one of the causes of the financial mess in which the municipalities find themselves in regard to such investments and capitalization as they are forced to make in order to meet pressing requirements.
They experience those financial difficulties because, first of all, they do not have sufficient sources of income to meet the cost of their loans; second, they are at a disadvantage in the bond market, in the loan market because the federal government borrows at privileged rates, followed by the provinces whose rates are advantageous. The municipalities come third and must borrow at higher rates.
Bank of Canada Act
Mr. Chairman, this new bank act should, therefore, provide the greatest possible measure of compensation for the difficulties experienced by the municipalities, because their responsibilities are growing in direct relation to the phenomenal development of our country.
Third-and with this I draw my submission to a close-I should like to propose a solution to the hon. Minister of Finance and Receiver General (Mr. Sharp), a solution which I originally intended to move immediately as an amendment. But I should like, first of all, to explain my point of view which is that of all the mayors in Canada.
This I know full well because much of what I have to say this afternoon is based on the surveys made in the last 25 years by "Mr. Municipality" himself the late George Mooney, executive secretary of the Canadian Mayors Federation, on the recommendations sent to me by its administrative secretary, Mr. Lawless, as well as on the briefs this federation which is in close contact with the provincial unions of municipalities, has published and submitted to the provincial government in recent years.
To support my argument, Mr. Chairman, let me mention the "Credit communal" as it exists in Belgium since 1860. Similar systems can be found in Scandinavian countries, but I shall limit myself to Belgian organization. It might give the hon. Minister of Finance an idea of what could be done here in Canada, with certain adaptations.
I am not forgetting all through my remarks, that we must not lose sight of the constitutional responsibility of the provinces as regards the municipalities, although I do not agree that we should keep on calling the municipalities the creatures of the provinces. In my opinion, the municipalities represent the first level of government, since they are the closest to the people and they must face up to perhaps more urgent, more utilitarian needs than the federal and provincial governments. However, constitutional considerations must still be kept in mind.
I am not forgetting either that a sort of overall priority classification should be established with regard to the fiscal needs of the municipalities. When I refer to fiscal needs, I mean those for capitalization purposes, in co-operation always-and that has been the weak point of the governments in the past- with the authorized spokesmen of the municipalities who are the elected members to

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Bank of Canada Act
the Board of the Canadian Federation of Mayors and those who, in their province, are elected to the executive of the unions of municipalities.
As I say, that was not done enough in the past, and I am not blaming one government more than any other, because on several occasions, I had the opportunity of taking part in representations made to governments headed by members of the two largest parties here. As a matter of fact, I attended such meetings as the spokesman for the mayors of Canada and, this year, I was in attendance as a member of parliament-if I may say so, I was on the other side of the fence-and I feel I must conclude that, for all practical purposes, the Canadian mayors' representations do not amount to anything more than a social call on the federal parliament, nothing much ever comes out of them except perhaps-one must be honest-a few decisions, like the winter works program and some other projects which were implemented over the last few years.
However, the situation is now so serious that over-all policies must be conceived and established; this would necessitate an important amendment to the Bank Act or perhaps a new piece of legislation related to the Bank Act.
I am not forgetting-and this is my fourth point-that this fund whose establishment I am recommending should be some sort of a perpetual revolving fund for municipalities, with no final date, no time limit-as in the case of works financed by the government in the past few years-and offering privileged rates.
Mr. Chairman, in my speech of March 9 last, I quoted figures to show that municipalities have been assuming more and more responsibilities while their revenues have not kept the same pace; on the other hand, revenues of the federal and provincial governments have been going up all the time, but their responsibilities have not increased in the same proportion.
At that time, I did not have the latest figures, since I rose at the very last moment. However, this afternoon, I would like to sum up rather briefly the figures that I gathered in the 1965 statistics and which are valid for until the beginning of 1966.
Mr. Chairman, they show that 42.7 per cent of all government expenses in Canada are actually borne by the municipalities, while the federal government takes on only 34 per

cent of them and the provinces, 23.3 per cent. On the other hand, as far as capital investments and capital costs are concerned-I am speaking of what must be borrowed specifically for capital expenditures-the percentage amounts to nearly 40.6 for the municipalities, 17 for the federal government, and 42.2 for the provinces. I shall not repeat the figures I mentioned the other day. Besides, they can be found on page 13808 of Hansard for March 9. They show that municipal revenues are not proportionate.
That is understandable, Mr. Chairman. School expansion is phenomenal and the number of hospitals increases following the adoption of legislation pertaining to hospital insurance or health insurance. The roads which have to be built in the towns to connect with the highways the federal government provides, the public utilities, slum clearance, urban renewal, parks and playgrounds, water sewage plants, recreation grounds, urban transportation, unemployment which constitutes a certain obligation, even at the municipal level, grade crossings that municipalities have to finance at least in part when they should be financed by the railways, all that entails heavy expenses. All those things prove, beyond any doubt, that as Canada develops, municipalities should develop also and borrowing facilities should be expanded to enable the municipalities to shoulder their responsibilities and meet the needs of their citizens; however, the reverse is happening.
So, our municipal councils, which now operate within the limits of their budgets, have to limit their capital investments to a point which is harmful, which paralyzes the expansion of the country and which gives rise to unemployment in certain cases.
Now, if there was any consistency, if there was any consultation between the three levels, a comprehensive policy could be arrived at, which would enable this third level-or first level, in my view-to fulfil its responsibilities with the result that it would relieve the provincial and federal governments of some duties.
Mr. Chairman, I have here a great many quotations I could read out in support of my argument. For many years, those things have been advocated. I have excerpts from briefs of the Canadian Federation of Mayors and quotations I could draw, for instance, from the special report of a Senate committee,
March 14, 1967

called the Manpower and Unemployment Committee, which said in a June, 1961, report:
[DOT] (4:20 p.m.)

The scale of capital financing required in the future for municipal works is so large that a new measure of responsibility is required in the raising of such funds on the part of the provincial and federal governments. Here, perhaps, is the basis on which a solution to the other problems of better planning and the development of better machinery for co-operation might also be sought.

You will note, Mr. Chairman, that I do not claim nothing has been done, and I would not want my remarks to be considered as a criticism of any government we have had in the last 10 or 12 years. I would like it to be understood that I am now putting forward- at least, I am trying to-constructive remarks that could be helpful to all levels of government. Indeed, I feel that, to date, everything that could be done under the circumstances has probably been done. But I suggest that the problems have become so acute that it is essential to put forward drastic and comprehensive solutions. And let us not simply fill gaps, as we had to do in the past. I will not read all those quotations to the house. I have one here, for instance, an excerpt from the Globe and Mail, which said not so long ago:

Municipalities provide many services from which national wealth flows ... If these services cannot be provided-

Because, for instance, they cannot afford to finance them. The comment is mine.

-if the municipalities are starved of current funds or of long-term capital, the flow will be checked and all three levels of government will be poorer.

Then, Mr. Chairman, I would like to make a suggestion to the minister or rather tell him that the government should probably consider the introduction of parallel legislation to the Bank Act or an amendment to that legislation. It is not for me to tell him how to proceed. I easily agree that in the financial field, he is much more qualified than I am. But as for municipal finances, I was one of those who had to put up with the situation for a number of years. I think I would be remiss in my duty as a member of parliament if I 23033-883
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did not strongly emphasize the fact that that level of government does not have the proper tools to discharge its responsibilities.
I would like to illustrate my explanation to the minister by summing up briefly the operation of what is called the Credit communal beige, the Credit Communal of Belgium. Similar organizations exist everywhere in Europe, in the Netherlands, in Germany, in Norway. I believe that we would probably be best advised to follow the Belgian formula although, admittedly, we would have to adjust it to our requirements. I would still like to summarize its operation so that those of my colleagues who are not familiar with what was done over there may understand, with the help of supporting evidence, where lies the cure of the evils of this first level of government.

The Credit Communal of Belgium was founded in 1860. Prior to that time small municipalities were experiencing great difficulty in obtaining loans for municipal improvements. As a rule, the only source avail-to them with the private banks and financial institutions and, on occasion, private individuals. It seems we are a century behind in this regard. Under these circumstances municipal loans were obtained under rather onerous conditions. Only the larger cities were able to issue their own securities and obtain capital funds at reasonable rates.
As a result, the greater part of the 2,600 communes of Belgium, as they are called over there, found it virtually impossible to obtain loans for their required municipal improvements.
Toward the middle of the last century several studies were made in an endeavour to solve the problem. The matter was taken in hand by the national government and the then minister of finance sumarized the alternatives as follows. First, either the national government would have to intervene and provide loan funds direct to municipalities which would mean some loss of municipal autonomy inasmuch as the state would be responsible for the municipal loans or, second, a private institution might be established whose function would be to raise loans for municipalities with any profit from its operations accruing to the shareholders of the company. The minister made it clear that what he had in mind was the creation of an institution or private

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company which would operate within well established business and financial methods.
[DOT] (4:30 p.m.)
Out of this background there emerged the idea of creating a company whose shareholders would be the borrowing local authorities, with the annual profits being distributed among them without any intervention from the government. It was on this basis that the Credit Communal was founded. It began without any capital, the first subscriptions to its capital shares being part of the first loans made on behalf of municipal governments.
From the beginning the Credit Communal has had all the characteristics of a cooperative society. However, inasmuch as Belgian law in 1860 ignored such a form of association, the Credit Communal was founded as a limited liability company for a duration of 99 years. This is still the case, although the statute rules of the company are somewhat different from private limited liability companies.
The Credit Communal was the first cooperative association of local governments in the world. Economists such as Bernard La-vergne, a Frenchman, have assigned to this historic event the same importance as is ascribed to the creation of the first consumer co-operative society, The Equitable Pioneers of Rochdale.
The most important problem which the Credit Communal had to surmount at its inception was the matter of the guarantee of municipal loans. This was solved as follows: In 1860 some of the local taxes prevailing in the cities and towns of Belgium were abolished. These were replaced by a central fund, fonde communal, which was derived from state imposed taxes and distributed each year among the municipalities. It was agreed that the communes would be allowed to turn over to the Credit Communal their part of the state collected taxes as a guarantee for the loans concluded by the Credit Communal. Even today the contributions provided by the state authorities to local authorities are the principal warrant for the capital funds which local authorities borrow from the Credit Communal.
As indicated, the Credit Communal is owned by the local authorities, their share capital consisting of part of the consolidated long-term loans which the Credit Communal has made to local authorities. These loans are repayable by equal annuities. Originally, 5 per cent of the amount of any consolidated loan represented a subscription to the share
[Mr. Mongrain.j
capital of the Credit Communal by the borrowing municipality. In 1911 the share subscription of the municipalities was reduced to one-tenth. Since 1949, when the practice of making consolidated loans was abolished, no further capital subscription has been required of local governments.
The management of the company consists of a general assembly which is composed of all the municipal shareholders represented either by their mayor, alderman, or a local councillor. A board of directors appointed by the general assembly administers the company and in turn appoints a supervisory committee for the general oversight of all the operations of the company, including the loans made to local authorities. The board of directors consists of nine members elected for six years. The Credit Communal now makes loans to provinces, municipalities, joint boards of local authorities and to some other local organizations such as public assistance boards.
The Credit Communal issues the following types of credits: First, long-term credits. Under this heading come consolidated loans. This type of loan credit has now been abandoned. Under it the loan requirements of several municipalities were grouped and consolidated in one loan issue. The amounts obtained therefrom by each of the several municipalities were repayable in annuities, including interest and capital. Originally consolidated loans were granted for up to 60 years. Subsequently their duration was reduced to 30 years. The interest conditions did not change during the duration of the loan.
As indicated, the capital required was obtained by long-term issues and distributed between the cities which had requested a loan. The rate fixed for the duration of the loan included all the issue and administration costs. As this kind of capital borrowing was only possible when the Credit Communal could issue bonds of at least 30 years, the consolidated loans were abandoned after the second world war when it became impossible to issue bonds in Belgium for more than five years, and in exceptional cases ten years.
Second, they also grant non-consolidated loans. Since 1948 the loans granted by the Credit Communal to local authorities are repayable by annual amounts with a variable rate of interest. The rate is fixed twice a year, in June and in December. It is impossible to fix the rate for the whole duration of the loan as the capital funds are now provided by issues of short and medium term bonds-one,
March 14, 1967

two, three, five and ten years-which at their expiration have to be replaced by new bonds, the rate of which may differ considerably from the old ones. It therefore follows that local authorities, when concluding such loans, do not know at the time the loan is concluded what the rate will be over its duration. As a rule, it has always been lower than the public market rates. This is due principally to the co-operative character of the company. As pointed out, there is no subscription of share capital required from the local authority when non-consolidated loans are concluded.
From 1948 to 1953 the long-term loans of the Credit Communal ranged from 20 to 30 years. In 1953 the maximum duration was reduced to 20 years inasmuch as at that time the issue of long-term bonds was not readily acceptable in the money market. They also issue medium term loans. These loans range from five to ten years and exceptionally for 15 years. The procedure in obtaining the loan is the same as for non-consolidated long-term credit.
A third kind of loan is made by way of short-term credits for extraordinary expenses. Loans under this heading would cover the borrowing needs of local authorities for unforeseen expenses of an obligatory character. In most instances, the national government makes contributions toward such requirements of from 30 per cent to 60 per cent. However, as these grants are not always paid promptly the Credit Communal discounts the promised amounts normally for a three year period and, in exceptional cases, for five years.
Another kind of short-term loan is for current ordinary expenses. In Belgium the state collects certain local taxes which are handed over to the Credit Communal to guarantee the annual service costs of municipal loans. There is frequently a delay, however, in turning the amounts over to the Credit Communal. As a consequence, municipal governments require interim credit pending the payment of such taxes. For this purpose, the estimated credit balance-which is not necessary to cover interest and repayment costs of the loans granted to the municipality-can be discounted to enable the communes to pay their currect expenses.
Finally, in some instances, loans are made directly to other public bodies, but I will not go into those.
What are the financial assets of the Credit Communal? As I have already said, long-term bonds formerly were issued for terms of from 23033-8831
Bank of Canada Act
30 to 60 years. With these proceeds long-term loans were granted. Included in such loan obligations was a 5 per cent capital subscription to the shares of the Credit Communal. At the end of the second world war the issuance of long-term bonds was abolished, but the municipal share capital still remains an asset of the company. I have mentioned that before.
[DOT] (4:40 p.m.)
The Credit Communal also operates savings departments. Deposits in savings accounts are callable on demand. Another source of the deposit assets of the Credit Communal is that it acts as the banker for local authorities and other local public bodies. Funds of these bodies remain on deposit for varying times and, as indicated, a good portion of them is earmarked to cover the capital and interest cost repayments of any loan made to these bodies. Just imagine the amount of money that would be available for us here in terms of what is invested by municipalities in banks, Mr. Chairman.
In addition to state collected municipal taxes local authorities also collect direct taxes and other revenues. These local taxes and revenues are deposited with the Credit Communal. In recent years the Credit Communal has been afforded wide banking powers and can, in effect, provide full banking and loan facilities on behalf of local authorities, including savings deposits and the issuance of short-term, medium and long-term loans.
Just to give a more complete example of what the situation is, during the first three months of 1963-here, Mr. Chairman, if you do not mind, I shall revert to French-

In the first three months of 1966, the Belgian Credit Communal loaned 7,151 million francs to its municipalities; if you divide that amount by five, you will have some idea of its value in Canadian money. Out of that amount-that is for the expenses concerning ordinary loans-there were also longer-term capital grants of 1,196 million francs, which would represent a total of 8,347 million francs. By dividing the whole amount by five, we would obviously get some idea of its meaning for a country much smaller than Canada.
Mr. Chairman, in concluding my remarks, perhaps too long already, I will say this: When dealing with financial questions and with matters as important as the Bank Act,

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Bank of Canada Act
which will be in force for at least ten years, we should not forget that municipalities are facing tremendous problems, that they are ill represented in the discussion on legislation, since most of the time the distribution of electoral areas in the provinces is not done on a fair basis. Urban municipalities are poorly represented and have greater needs than rural municipalities, since the federal government even compels municipalities to pay taxes on materials they buy, while the federal and provincial governments are exempted from that. And double taxation is levied on the citizens.
Third, the municipalities are handicapped when it comes to getting funds and paying them back because the federal government takes its share first and then the provincial government does the same, and if there is anything left the municipalities will get it, but otherwise they do without it.
And fourth, the municipalities are handicapped with regard to their borrowing possibilities and indirectly their burden gets heavier each year as the country develops thanks to the efforts made by our governments to ensure prosperity throughout the country. So they must prepare new housing sectors, provide sewer systems and water mains, new roads, new parks new schools, new hospitals.
Of course, they get generous contributions from the governments, but I say that they do not solve their problems to the extent that the responsibilities of the municipalities have increased in the last few years. A drastic and comprehensive solution must therefore be found.
What I find most reprehensible is that the municipalities have no say in the matter. They are treated like poor children, orphans, and they are forced to accept the crumbs of the wealthy. They should be consulted, allowed to take part in the discussions between the federal and provincial governments about tax sharing, at least as observers to know what is going on. And when they submit well researched briefs, as they have been doing for over 25 years, to the governments concerned, partisan considerations should be forgotten-it is not done enough in the provinces, although the federal government does it-and the municipalities should be listened to and taken seriously.


The Acting Chairman (Mr. Richard):: Order. I regret to inform the hon. member that his time has expired.


Horace Andrew (Bud) Olson: Mr. Chairman, I wish to ask the minister a couple of brief questions about the report issued yesterday by the Organization for Economic Co-operation and Development. I am rather alarmed that such a report should have been made by an organization of which a number of countries are members, including Canada.
Has the O.E.C.D. asked the Canadian government to take steps to adjust its monetary policy through the Bank of Canada in order to provide some additional control over the rise in wages and prices? Apparently in last year's review of the Canadian economy the O.E.C.D. experts advised Ottawa to establish some wage and price guidelines. I do not know if this was done and I would like the minister to advise what steps Canada has taken. Were these steps taken through monetary and fiscal policy, and did the O.E.C.D. make even more severe suggestions to the Canadian government with respect to achieving control over wages and prices? It seems to me that this is something which should be discussed when we are considering the Bank of Canada because it is one of the instruments which in the past has been used to exercise some measure of control over prices and wages.


Mitchell William Sharp: Mr. Chairman, as the hon. member rightly says, Canada is a member of the Organization for Economic Co-operation and Development and participates with other member countries in trying to achieve the objectives we hold in common, principally a steady expansion of output.
The committee will recall that some years ago the O.E.C.D. fixed targets for member countries. I am very happy to say that in general these targets have been exceeded, and certainly they have been exceeded here in Canada. We have in fact achieved a larger increase in output than was thought reasonable a few years ago. The Organization for Economic Co-operation and Development, the International Monetary Fund and other international agencies have, however, drawn attention to the tendency for demand to outstrip production and have pointed, I think quite rightly, to the grave dangers that exist if we try to do too much too quickly.
March 14, 19G7

As I recall the references to Canada in the report of this organization, they pointed to the desirability of having adequate fiscal and monetary measures and in particular endorsed what I have said on a number of occasions and what has been said by other international organizations, that there should be less reliance on monetary policy and more on fiscal policy. Looking back over the history of the last few years I think it can be said of practically all of the major industrial countries of the world that governments have not been prepared to use fiscal policy as they should have. On the other hand, I believe the record of performance in this respect has been improving in most of the countries of which I am aware.
The O.E.C.D. in addition, however, has been concerned about the question of whether fiscal and monetary policy in itself is adequate to provide the desirable degree of stability along with expansion. In other words, is fiscal and monetary policy adequate to ensure expansion without inflation? I have asked this question myself. Indeed, on a number of occasions, both in this house and outside it, I have spoken about the more general question: Should there be supplementation to fiscal and monetary policy such as guide lines, guide posts, income policies, or wage and price ceilings?
[DOT] (4:50 p.m.)
We put this question to the Economic Council of Canada and, as hon. members may recall, the answer we got from the council was in the negative, namely, that the kind of policies I have been describing are not likely to be very effective. On the other hand, the governor of the Bank of Canada in a speech he made recently in Rome did point to the importance of mobilizing public opinion in support of the general objective of expansion without inflation. I regret I do not have his words in front of me. Therefore, while not adopting any of these devices or mechanisms such as an incomes policy or guide lines, or guide posts-certainly not wage ceilings-I have nevertheless pointed out the importance of finding some way of mobilizing public opinion among employers, employees and consumers in support of the general objectives which the community has in common. The O.E.C.D., if I may say so, seems to have come down on the side of Mr. Rasminsky rather than on the side of the Economic Council.
Bank of Canada Act


Horace Andrew (Bud) Olson: I should like the minister to tell us whether recommendations of this kind are made to other countries urging them to impose additional controls. I think the words are "take steps to control the rising wages and prices". The minister told us that the organization was concerned about whether or not fiscal and monetary policy was sufficient. What other steps does the council in its wisdom suggest that countries such as Canada ought to take? Is this a general statement without any suggestion as to specific ways and means of achieving the objective desired? If the Economic Council rejects some of the other suggestions which have been made and if the O.E.C.D. continues to urge Canada to take certain steps, surely there must be some substance attached to the proposals.


Mitchell William Sharp: May I answer the first question? The O.E.C.D. gives advice to all its member countries. This is one of the most useful of the international forums which have been developed for the discussion of mutual problems. I remember that my parliamentary secretary went to a meeting of this organization about a year ago and he said he was astonished at the frankness with which members spoke to one another. I can assure the committee that advice is given to all members freely and frankly. It is a great step forward in the development of international institutions that we can have reports placed before us as the result of an independent group looking at our situation and giving us the benefit of its advice and views.
As I understand the recommendation of the O.E.C.D. it is not too specific. The organization does not attempt to be precise about the nature of the steps which should be taken by any country to deal with its domestic affairs. It believes it can be more useful if the observations made are general rather than specific, since specific suggestions might be rejected on the ground that the organization is not sufficiently familiar with local conditions to know what best to do. What I believe they have in mind are measures to supplement financial and monetary policy such as those which have been taken in the United States, in the United Kingdom and in Europe in an attempt to bring public opinion to bear, on a voluntary basis, upon the determination of wages and prices.


Jean-Thomas Richard: Order. Would hon. members please resume their seats? I have been watching the proceedings and I must confess that some of the questions are short but the answers are rather long. I

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wonder whether the hon. member for Medicine Hat intends to proceed with his own remarks or whether he would have any objection if other hon. members were to enter the debate.


Horace Andrew (Bud) Olson: I simply want to ask the minister whether it would be possible to have a copy of the report which was made by the O.E.C.D. to the Canadian government.


Mitchell William Sharp: I will be very happy to provide it.


Joseph-Alfred Mongrain: Mr. Chairman, with your permission, I should like to rise on a question of privilege.
I just realized that I misled the committee of the whole earlier when I quoted figures in Belgian francs and converted them in Canadian currency. Since I do not wish to mislead the committee of the whole, I want to make a correction. I said that one should divide Belgian francs by 5 in order to convert the amount in French francs. My colleague from Lafontaine (Mr. Lachance) who is more of an expert than I am in financial matters, tells me that one should divide by 50. Of course, I am making this correction quite readily, so as not to mislead the committee of the whole.
If you allow me, Mr. Chairman, to pursue this question of privilege, I must confess that my natural verbosity played a trick on me. I had one more sentence to say and I wanted to ask the minister-

I wanted to ask the minister to comment on his attitude toward providing in this banking legislation or in parallel legislation something which would take care of the financial problems of the municipalities.


Mitchell William Sharp: I recognize that some of the municipalities have difficulty in raising money for their various capital projects. A few years ago this parliament passed financial legislation which was of some help in this connection, but it was intended as a means of promoting employment. It served its purpose and has now expired. I would think it would be very difficult for the federal government to establish an institution for the specific purpose of financing the subsidiary bodies of provinces.
When I was listening to the hon. member giving his very interesting speech about the Belgian experience it occurred to me that
[The Acting Chairman (Mr. Richard).]
it would be quite possible for any province to establish such an institution for the benefit of its own municipalities, though I did wonder who would be in charge of the queue when the municipalities lined up to take advantage of the facilities. I doubt that it would be in accord with the constitutional tradition of this country for the federal government to establish a bank which dealt with municipalities. An institution of that kind would certainly not be able to function without the permission of the provinces and this being so I think it would be better for the provinces to act directly. Perhaps some day we may contemplate an organization for this purpose in conjunction with the provinces, but surely not an institution which dealt directly with municipalities.


Joseph-Alfred Mongrain: Does the minister not think this might well be the subject of discussion with the provinces when meetings are held to discuss financial matters? Such a system could not operate without the help of the federal government.


Mitchell William Sharp: From time to time the provinces do raise questions of this kind. I do not remember the matter being raised at the last meetings I attended and this, I believe, is evidence that the provinces doubt very much that the federal government should intervene in the manner suggested.


Horace Andrew (Bud) Olson: Was the municipal development and loan fund not handled in exactly the same way? It had to be channeled through the provinces, and some of them set up municipal finance corporations which in fact distributed money to various municipalities on application.
[DOT] (5:00 p.m.)


Mitchell William Sharp: Mr. Chairman, let me just add this. Those were not banks but sources of funds voted by this parliament to finance certain municipal works. This parliament can at any time follow that course. I thought my friend the hon. member for Trois-Rivieres was referring to a new kind of institution and it was that institution about which I was casting some doubts.


Gilles Grégoire: Mr. Chairman, when the house rose last night I was just putting a question to the Minister of Finance and Receiver General (Mr. Sharp). I was asking him whether he would object to having the Bank of Canada instead of the chartered banks
March 14, 1967

create new credit representing the economic growth of the country. And the minister replied: "Yes, Mr. Chairman, very great difficulty indeed."
Needless to say, Mr. Chairman, that we were not satisfied with this reply. We wanted a more detailed and more substantial reply and we wanted the minister to tell us what prevented the Bank of Canada instead of the chartered banks, from creating the new credit representing economic growth.
If you will recall, Mr. Chairman, I was very careful to explain yesterday, to specify what we meant by creating credit and what the Bank of Canada would have to create, that is, the amount which is representative of the economic growth for the year and which the chartered banks lend at the present time.
Then, after insisting for a more detailed reply than this from the minister, he finally gave us the following answer, according to Hansard dated March 13, 1967, page 13946, and I quote:


Mitchell William Sharp: Well, Mr. Chairman, if I may say so once again, I consider that such action would be very detrimental to the interest of the people of Canada because it would be very inflationary, and all of these arguments being presented by the hon. member for Lapointe are simply a camouflage for one of the oldest practices in the world, which is the practice governments have indulged in in the past, and I hope will not indulge in in the future, and that is printing money for the purposes of meeting government expenditures.

If I may say so once more, Mr. Chairman, it is not we but the minister who does not understand, because he still thinks that we want the Bank of Canada to create credit by printing bank notes. As the Minister of Finance could have seen by looking at page 13944, I did specify that it was not a question of printing bank notes. In fact, as may be seen from the right hand column on page 13944, around the middle of the page, this is what I said:
It is not a matter of putting the money press to work but of doing exactly what the chartered banks are doing, what the Bank of Canada will have to do after getting the authorization from parliament to give back to the Canadian people a real degree of control over credit.
As I was saying, Mr. Chairman, before the Minister of Finance answered me, it is not a matter of printing money but of doing exactly what the chartered banks are doing now: creating credit not by printing money but by raising the figures in circulation which represent credit money.
Bank of Canada Act
Why does the Minister of Finance bring up again this idea of printing money, following the example of some clowns in the Liberal party-of the Yvon Dupuis type-who said that the Creditistes want to print money and who threw a bunch of dollars in the air? The Minister of Finance is using the very same tactics as these former buffoons in the Liberal party, saying that Social Credit wants to print money and denouncing us for it when it is not true.
Mr. Chairman, in order to show that the minister is being dishonest at the present time, I should like to repeat what I said before, and I quote:
It is not a matter of putting the money press to work but of doing exactly what the chartered banks are doing.
The chartered banks are not printing money; they are creating credit, and the minister has acknowledged this.
Why does the minister then bring up again this question of printing money? Is he being sincere? Does he want to have an intelligent discussion with us or does he not? He tells us he has understood nothing. Well, Mr. Chairman, in that case he will never understand. Incidentally, if he persists in being so insincere, he will not get away with it.
He was listening closely yesterday when I said that it was not a matter of putting the money press to work but of doing what chartered banks are doing, and that is to create credit.
I will once again put the question to the minister, but I must first explain. It is not a question of printing bills, Mr. Chairman; I said it yesterday and I say it again today. It is a question of creating credit, just like chartered banks do at the present time. When they do, they do not print one single dollar; they need only multiply by 12, on paper that is, their cash reserves supplied by the Bank of Canada. The Minister of Finance said that this would be inflationary. Mr. Chairman, here again, I would like a straight answer from the minister, because he has circumvented the point. I have put the question to the minister, but he confined himself to generalities. He said that if the Bank of Canada were to create credit instead of the chartered banks that would cause difficulties. Speaking in a general way, he said it would give rise to many difficulties. We insisted on getting more details and, suddenly, the minister came up with this, and I quote again:
-that such action would be very detrimental to the interest of the people of Canada because it would be very inflationary-

March 14, 19B7
Bank of Canada Act
Mr. Chairman, I would ask the minister to be more specific on this point. Let us define the problem. I trust the Minister of Finance will not speak again of putting the money-press to work, for we now say to him-and I feel the matter is clear enough-that it is not a question of printing bills, but one of creating credit, just as the chartered banks are doing at the present time. The minister tells us it would lead to inflation. I therefore ask him, had the Bank of Canada instead of the chartered banks, created, in 1966, $1,669 million in credit, as, by the way, the chartered banks did in 1965, would this have placed a single cent more in circulation in Canada. Would there be a single dollar's worth of credit more in circulation in Canada, if that amount had been provided by the Bank of Canada rather than by the chartered banks? There would not have been one extra cent. Obviously, as I said last night, if the Bank of Canada were to create credit, then the char-tred banks should no longer have the authority and privilege to do so. Chartered banks should no longer have the power and privilege to multiply their monetary reserve by twelve. They should no longer have that privilege, because if both the Bank of Canada and chartered banks created credit, I agree with the minister that, there would be some confusion.
[DOT] (5:10 p.m.)
We are asking to transfer the creation of credit from the chartered banks to the Bank of Canada; the chartered banks would lose that right and the Bank of Canada alone would have it; the chartered banks would no longer be entitled to multiply by 12.5 their reserve in hand and the Bank of Canada alone would have the right to create new credit. If during a year, the Bank of Canada instead of chartered banks creates some credit amounting to $1,669 million will that increase the money supply by a single cent? No, because instead of having been created by the chartered banks, credit will have been created by the Bank of Canada. And this will not increase the money supply, the money circulation or the credit by one single cent, whether it comes from the chartered banks or the Bank of Canada.
I have here one glass and two jugs of water, one belonging to the Bank of Canada and the other to the chartered banks. Whether I fill the glass with water from the Bank of Canada or water from the chartered banks, I will still have the same amount of

water in the glass. Well, the situation is exactly the same in the monetary field, whether the new credit comes from the chartered banks or from the Bank of Canada. If the Bank of Canada were to put into circulation or create the same amount that would be created by the chartered banks, that would not cause inflation nor increase further the credit in circulation nor the money supply.
The government refuses squarely to print a single bank note; it merely wishes to create new credit. It will not allow it, it wants to leave to the chartered banks, as before, the privilege of creating credit. Let that privilege be granted exclusively to the Bank of Canada. Would it not be advantageous for the whole country to have the Bank of Canada create new credit instead of the chartered banks?
Mr. Chairman, with that explanation, with that specific qualification I have just given again to the minister, could he answer my question? After the last explanation to the effect that it is not necessary to use the money press, that the chartered banks did not use it, the fact still remains that, in 1965, they created $1,669 million of new credit, as can be seen in the annual Statistical Summary of the Bank of Canada. Then, what would prevent the Bank of Canada from assuming that credit function, instead of the chartered banks?
As I said yesterday, the chartered banks create the new credit. The minister said so himself in an answer which I have quoted on many instances and which I quote again. As stated on page 3012 of the Minutes of Proceedings and Evidence No. 43 of the standing committee on finance, trade and economic affairs, he said:
The system used to create credit is well known. The banks grant loans.
Therefore, when the banks lend money they create credit; it is as simple as that. The minister summarized it in a clear sentence, and I congratulate him for having so well defined the creation of credit, as he did in the committee on finance, trade and economic affairs.
Well, if chartered banks are now creating credit, granting loans with interest and accepting deposits on which afterwards they have to pay some interest, then could the Bank of Canada instead of chartered banks not create that credit, make interest-free loans to public bodies, municipalities and school boards, for the construction of roads, bridges, schools, etc. Then, individuals would receive wages or would be paid for materials with money lent interest-free by the Bank of
March 14, 1967

Canada, and they would deposit that money in chartered banks, obtain a 3 per cent interest in return, and the chartered banks could lend it to other people.
This is the system which we are advocating and I am asking the Minister of Finance-since we assure him that we are not interested in the issue of new dollar bills, but merely in the creation of the same percentage of credit now issued by chartered banks to have a permanent money supply, since the economy of the country is expanding-why he objects to entrusting the creation of credit now issued by chartered banks with the Bank of Canada for the benefit of public development in Canada?
I believe that, as a result of those explanations, the minister should be in a position to answer my question more fully than he did last evening. It seems to me, with the data and explanations which we are submitting to him, that he should be ready to give us a reply in that respect.


Mitchell William Sharp: Mr. Chairman, I was reviewing the remarks made by my colleague the Minister without Portfolio when he introduced the Bank Act in 1965 and did something that I regret I did not do at the beginning, that is, give a dissertation on Social Credit theory.


Mr. More:: He voted for it.


Mitchell William Sharp: However, Mr. Chairman, I was reviewing with great interest his remarks on that occasion when he dealt in a general way with some of the questions-


Gilles Grégoire: Mr. Chairman, may I ask the
minister on what date the Minister without Portfolio made those remarks, because I should like to ask for a copy of Hansard for that date?


Mitchell William Sharp: I certainly suggest that the hon. member for Lapointe should read those remarks and digest them over and over again. If after a time they begin to penetrate I think my colleague the former minister of finance will have made a great contribution to the discussions in this house and to the enlightenment of our Social Credit friends. The former minister of finance, in the course of-


Gilles Grégoire: Mr. Chairman, may I again ask the minister to give us the date?
Bank of Canada Act


Mitchell William Sharp: Yes, I will be very happy to do so. I refer to Hansard of June 14, 1965, beginning at page 2373 and continuing to about page 2376 where there is an excellent and very sympathetic discussion of the errors of Social Credit. However, Mr. Chairman, I shall not put these remarks on record again but shall attempt to deal with the specific questions-


Kenneth Hamill (Ken) More: That was just before he voted for Social Credit theories.


Mitchell William Sharp: -which the hon. gentleman put to me last night and again today. Perhaps I ought to begin by saying that most of the suggestions that have been made from the Social Credit corner of the house are not-


Horace Andrew (Bud) Olson: Mr. Chairman, may I remind the minister that the hon. member for Lapointe is not a member of the Social Credit party.


An hon. Member:: He is a separatist.


Mitchell William Sharp: The hon. member for Lapointe and the other Social Crediters-shall I put it that way. These proposals, which as I say were discussed at some length by my colleague the Minister without Portfolio a couple of years ago when a similar act was under discussion, are really not needed in order to enable the Bank of Canada to carry out its monetary policy function of having an influence on the over-all credit situation in Canada. Nothing that I have heard during this debate has led me to believe that the Bank of Canada has inadequate powers in this respect.
[DOT] (5:20 p.m.)
Views may differ from time to time. I have heard some views expressed here that the government has not followed monetary policies that were entirely suitable to conditions. I have also heard some criticisms of the governor of the Bank of Canada. This is natural. As I have said in reply to a question put by the hon. member for Lapointe when we were in committee, which he has quoted on a number of occasions, I believe that these are questions of judgment. Of course he has quoted a much more illustrious man than I, namely a former governor of the Bank of England who put it in terms of feelings and flair. I refer to simple words like judgment. I am very interested to see that my hon. friend has given even greater prominence to that very famous governor of the Bank of England. However, I am quite content to say I believe that in these matters a certain amount of judgment is involved.

March 14, 1967
Bank of Canada Act [Translation]


Gilles Grégoire: I rise on a point of order, Mr. Chairman, for I have before me the answer given by the Minister of Finance to my question:
On what do you base your decisions to set the money supply at a given level?
Here is the reply of the Minister of Finance, and I quote:
When a governor of the Bank of England, Lord Norman, was once asked that question by J. M. Keynes, he said: "I do it by feel and flair", and I believe that this is still a matter of judgment, up to a certain point.
Therefore, Mr. Chairman, it was not I who insisted on feel and flair, but the minister. In fact, he says that this is a matter of judgment up to a certain point only, and not entirely, but he made no qualification when he repeated the words of the governor of the Bank of England, and I quote:
"I do it by feel and flair".
The minister did not set any restriction regarding this field, but he did establish one concerning the matter of judgment, and I want this specifically put on record.


Mitchell William Sharp: Mr. Chairman, I am quite happy with that. If the hon. member wants to quibble about these words I am sure it is not going to impress anyone other than the two of us. There are much greater issues involved in this debate.
Last night the hon. member for Lapointe drew attention to the recent increases in the deposits of the chartered banks. I believe he referred to the increase of about $2 billion in 1965, and he asked why financing made available through the chartered banks on this scale could not have been made available more cheaply through the Bank of Canada. I gather this was the general purport of the question which he put to me. If this had involved a further increase in the outstanding amount of the present Bank of Canada liabilities, it would have involved a very serious inflationary danger. That is why I said the following last night in reply to the question put by the hon. member for Lapointe:
I consider that such action would be very detrimental to the interest of the people of Canada because it would be very inflationary, and all of these arguments being presented by the hon. member for Lapointe are simply a camouflage for one of the oldest practices in the world, which is the practice governments have indulged in in the past, and I hope will not indulge in in the future, and that is printing money for the purposes of meeting government expenditures.
CMr. Sharp.]
For the Bank of Canada in its present form as a central bank to issue $2 billion worth of Bank of Canada notes or make deposits in the Bank of Canada available to the public generally would be very inflationary indeed. I will be perfectly fair to my hon. friend from Lapointe and add that alternatively, and this is what the hon. member has in mind, we might have some system which would have involved the Bank of Canada having $2 billion of public deposits on its books as well as having $2 billion of additional assets in the form of securities and business and personal loans. In other words, the Bank of Canada would have been like any other bank. Apparently this is what he is talking about. Under these circumstances the bank simply does not have the facilities to service the deposits or loans of the public.


Gilles Grégoire: Perhaps the minister would allow me to clarify the first part of my question right away.

In our minds, when the Bank of Canada creates those $2 billion that the chartered banks actually created in 1965 by increasing the money supply, there is no question that it should create this new credit in order to make loans to the general public. We are for the Bank of Canada creating this new credit in the same manner as chartered banks are doing at present, but instead of making loans to the public, it would grant them without interest to public bodies, that is, to the provinces, municipalities, school boards or the federal government. It would grant those loans without interest to the municipalities which would repay them over a given period.
So, I would like to correct this immediately in the remarks of the Minister of Finance. There is no question of the Bank of Canada lending to the general public, but solely to public bodies, for instance municipalities, school boards, provinces or even the federal government, to construct public buildings and such public bodies would reimburse the Bank of Canada at the rate of depreciation of the buildings constructed or built through loans by the Bank of Canada.
Mr. Chairman, I believe this correction was necessary before the Minister of Finance continued.


Mitchell William Sharp: Mr. Chairman, I had no objective other than that explained by the hon. member for Lapointe, and I am discussing it in his terms. I accept his conditions. As I said,
March 14. 1967

the Bank of Canada has no facilities at the present time for taking deposits, for accepting deposits on such a large scale, it is because it has no facilities for servicing them. It could not accept cheques and it could not carry out banking business on the scale envisaged by the hon. member. If it did have these facilities, then of course it would be just like any other bank and the cost of doing business would be exactly the same as that borne by any other bank. There would be no difference then between the Bank of Canada and any chartered bank and it would not be cost-free money. The bank would have to pay interest because no one would leave money with the Bank of Canada without obtaining interest. If the Bank of Canada wanted to keep money on deposit it would have to pay interest or alternatively some law would have to be passed which would require money to be kept in the Bank of Canada.


Gilles Grégoire: Will the minister permit a question? Why should the Bank of Canada accept deposits? That is not its objective or goal. There would be no need for the Bank of Canada to accept deposits from the general public. Its purpose would be to lend money to provinces, municipalities and school boards, not to individuals. It would not be its role to accept deposits from the public. Far from that. When the Bank of Canada received repayments of these loans it would then lend these moneys again.


Mitchell William Sharp: The hon. member must have it one way or the other. If he is going to have the Bank of Canada performing the services of an ordinary bank, then the balance sheet must balance. On one side would be the liabilities and on the other side the assets. When it places at the disposal of municipalities and provinces $2 billion of loans, there are equal liabilities. Under the circumstances what would the municipalities and provinces use for money if not deposits in the Bank of Canada? Unless we go back to the first case which I said was so inflationary and which I am sure is what the hon. gentleman has in mind, namely the issuance of Bank of Canada bills which then become a cash basis for the chartered banks to expand their liabilities.
[DOT] (5:30 p.m.)


Herbert Wilfred Herridge: I rise on a point of order, Mr. Chairman.


Jean-Thomas Richard: The
hon. member for Kootenay West on a point of order.
23033-884J
Bank of Canada Act


Herbert Wilfred Herridge: I think the hon. member for Lapointe is imposing upon the minister's time and also upon other members of the house. I know the minister is just dying to reply to the sound proposals put forward by the hon. member for Fraser Valley, the hon. member for Medicine Hat and the hon. member for Kootenay West, and I think it is only right he should be allowed to do so.


Gilles Grégoire: Mr. Chairman, is-


Jean-Thomas Richard: Order. The hon. member for Lapointe (Mr. Gregoire) still has a few minutes at his disposal and when he is through with his statement, another member will have the floor.


Gilles Grégoire: Mr. Chairman, I think that the gap between ideas is getting narrower, at least, the misunderstanding can obviously be reduced.
The question that remains obscure, Mr. Chairman, is the following, if I understand the Minister of Finance and Receiver General (Mr. Sharp) well. The minister is asking how the Bank of Canada could, for instance, make interest-free loans to municipalities, if it does not first have deposits?
Mr. Chairman, I wish to tell him that that is exactly what the chartered banks are doing now. They make loans, even before they get deposits. I ask the minister to bear that in mind. That is how credit is created. The chartered banks make loans before they get deposits. And I can quote three or four testimonies in that connection. The minister said:
-The system used for creating credit is well known. The banks make loans. The monies are deposited with the banks.
So, when the chartered banks make loans, they create credit, and it is only after that- because the banks do not have the necessary deposits-that those loans are left with the banks as deposits.
Mr. Chairman, I have another testimony to that effect. It is a booklet published by the Royal Bank of Canada-that is surely not a sacred institution-more specifically by the department of economic research of the Royal Bank of Canada. That booklet is entitled: "Economic Trends and Problems, June 1966".
On page 6, one reads:
Currency is an unproductive asset for the chartered banks.
Any excess of currency represents a lack of earnings for the chartered banks. When they

March 14, 1967
Bank of Canada Act
have cash reserves in excess of 8 per cent, they have a surplus of money which entails a lack of gains. And the booklet goes on to say:
Consequently, the banks waste no time in using their excess oi cash to make loans or to buy bonds, thus restoring the original deposit level.
So, to increase deposits the chartered banks make loans or buy bonds. Therefore, what I have just said is confirmed not only by the minister's answers but by the pamphlet issued by one of the most important chartered banks in Canada.
When the chartered banks make loans and create credit, they do not then have the required deposits. Those come in time, not too long after, but after the loan is made. This fact has also been admitted, Mr. Chairman, and I will find the reference in the Minutes of Proceedings and Evidence. We received 30 copies of these, 10 in a jiffy, and that is why I could not find everything since we have started consideration of this bill. However, the president of the Royal Bank himself has admitted that loans precede deposits, that banks make loans before they receive the required deposits and that it is only when the loan is made that the money involved is deposited and the balance is restored.
Therefore, if chartered banks can do it, lend money without having the deposits, I ask the minister why the Bank of Canada could not do the same? Lend some money, when that money or credit represent an increase in the growth of the economy of the country. Why could not the Bank of Canada do what the chartered banks are doing, even if it does not have deposits, as it is the case at the present time for the chartered banks? And this happens each time the Bank of Canada increases its cash reserves in circulation in Canada. And these reserves, when they are directed to the chartered banks, make it possible for them to make loans that are then deposited anew in the whole of the banking system.
The argument of the hon. minister seems to be that without deposits, the Bank of Canada could not lend money. The hon. minister should look at what is now happening in the monetary system. Pie will notice that lending money without deposits is precisely what the chartered banks do nowadays. The Bank of Canada would do exactly the same. However, the Bank of Canada would lend this new, yearly credit for the development of Canada, whereas the chartered banks do it to involve the country in debt.

I feel that is a good enough reason for the minister to look into the matter a little deeper and to let the Bank of Canada do exactly what the chartered banks are now doing.


Mr. Laiulippe:: Mr. Chairman, I am pleased to have once again the opportunity of discussing social, economic and banking matters.
We know that the purpose of the economic activities of a nation is to produce as much as possible with as little effort as possible, to enable every citizen to benefit from the progress of science and everything that exists in Canada. Does our economy give each individual what he is entitled to? I put the question to all the hon. members. Does production in Canada achieve its goal? I ask the question once more. The answer is up to you.
I could tell you that under our existing financial system each individual does not get what he is entitled to. The present system does not distribute prdouction on the basis of Canadian units, of human beings. And yet we have a considerable production, despite credit restrictions.
The Minister of Finance and Receiver General (Mr. Sharp) said on several occasions that the world knows of no other system than the one we have; it is a nonsensical, debtmaking system leading to loss-sales, credit restrictions, inflation, deflation, war, as well as to the most heinous atrocities, in every country of the world. That is what the minister wants to uphold by his false, diabolical, antisocial', unnatural, antichristian inhuman system.
Such is the system that you, members of parliament, advocate. And yet you represent the Canadian people. You were elected to put some kind of order in finance, in the nation's economy so that the economic activity can reach its objective.
But we have an old, diabolic, inhuman, antisocial system which is worthless, which does not satisfy the people, which gets them into debt, which brings upon them the worst recession, wars and all kinds of atrocities. And that is what you respect. That is what you want to save. You find that funny, but when you are called upon to account for your mandate, the work you did to remedy the present economic situation, you might not find that as funny then.
March 14. 1967

I would not want to hurt anyone, Mr. Chairman, but we know that it does not work. We know that something is wrong, that the present system does not work, that it gets the workers, the people, the school boards, the provincial governments, the federal government and the whole nation into debt. We are compelled to tax the people and to ask them to tighten their belt.
Our dollar is only worth 40 cents, we find that funny. We find it sound and natural for the governments to sell bonds. The federal government and the provincial governments, at all levels, try to get hold of some money, the blood which runs through the economy, and they leave very little money to finance development. Everything is taken away. When the government puts $10 in circulation, it takes $20 back. Then, we are always in the red.
When banks create credit, when they lend us money, they do not lend us the interest on it. We have to reimburse the capital with the interest. Our system stands up as long as the number of loans increases. The interest is not lent to us, and we are required to reimburse more than the amount put in circulation. But we find that logical. The hon. members opposite find that amusing. They find that logical.
[DOT] (5:40 p.m.)
One day, they will have to admit that those who explain the present system are right. If you do not understand what we are advocating, it is because you fail to understand the present system. We are not explaining anything other than the present system. It is that system which we are bringing before you in an attempt to make you understand it. This is what you have never understood and that you still do not understand.
You think that because it has been called social credit, it is utopian and foolish. Well, it is the present system, nothing else. Instead of being called social credit, it could be called the present system.
It is the current system that is being explained to you and that is absolutely all. It is the present system which should be improved and for which solutions are sought to improve the economic lot of each individual and of every level of government. And it can be improved, too.
I do not wish to condemn the present system as a whole for it has some good points. But this does not make it any less blameworthy. There are great and good things in the present system and we must
Bank of Canada Act
preserve all that. But any useless part should be revamped. Several adjustments should be made and the financial and economic system of the nation should be kept abreast of the scientific progress accomplished not only in Canada but in the world. Financial systems have made great strides, but our own has never been revised; it is as old as Adam and is no longer serving its original purpose.
This does not mean that it is not a basically sound system, but its foundations, the structures which support it are too old and are practically falling apart.
Therefore, the foundations and the structures will have to be reinforced. That is what we must da We do not despise the system; we do not sweep aside all that was done in the past and all the structures erected in the past. These structures had their uses for a time.
This financial system has not changed; it is old as the hills. It must change. We must introduce the improvements necessary to adopt it to our modern economic structure. That is all we ask. The hon. members opposite find that funny. But they are now laughing in fact at their own system and at themselves. If I am sometimes inclined to laugh with them and at them, it is because they do not want to change their system.
Mr. Chairman, the Bank of Canada is now 33 years old. It was founded in 1934. It has acquired some experience and it has served its apprenticeship. It has now reached its maturity. It must assume all its responsibilities before the community, before all foreign countries and all Canadians, over 20 million of them. It must do so for all Canadian institutions, for our 800,000 dwellings. And each individual, each family, each institution requires money to meet its own needs. The monetary unit is the Canadian dollar printed by the Bank of Canada and bearing the signature of the governor of the Bank of Canada.
Therefore, Mr. Chairman, each individual, family and institution in our country needs the Bank of Canada for self-management. And according to the commonly accepted formula for management one needs a sufficient income, one must provide for the essential expenses and leave room for some profit, for a surplus in the reserves, savings and accrued capital. We are in favour of all that. There is nothing we would like to change in the whole matter. Everyone is entitled to make a living, those who handle capital, those who deal in business, need capital, reserves, improvements,

March 14, 1967
Bank of Canada Act
accumulated capital. We are all for it; we do not want to change that.
If that holds true, Mr. Chairman, for every individual, every family, every institution or company, for every corporation or cooperative group, for every municipality, for every province, for every credit union, it also holds true for the Bank of Canada. I feel that if we wanted it, if the hon. Minister of Finance were willing, we could improve our pitiful economic situation, which must be reformed, readjusted, to match the normal evolution and the scientific progress of our country.
The Bank of Canada, Mr. Chairman, is the creature of parliament. It has a special mission to fulfil in the Canadian national economy and that mission was assigned to it by the parliament of Canada.
I shall not discuss again the various aspects, or the origin of money, these matters have been debated at length. I want to speak of the general responsibilities of parliament, of each appointed member of that parliament, of the responsibility of the Minister of Finance and Receiver General, since he has the highest responsibility in the land. It is with him, on his shoulders, that this high responsibilty rests.
Mr. Chairman, what is this parliament of Canada? It is we, each member, Mr. Chairman, Mr. Speaker, the Prime Minister, the member for Compton-Frontenac and the members for all the other electoral districts in Canada. That is parliament. We represent the nation, the individuals, the families. A few are ministers, indeed 26 among us are ministers and constitute the government of Canada. And the hon. Minister of Finance and Receiver General is the one who is responsible for the administration and mission entrusted to the Bank of Canada.
If a single person in Canada lacks any of the necessities of life, for want of money, that person is entitled to complain to his M.P., to the Minister of Finance and Receiver General, to the Bank of Canada, but especially to the minister and each of the 265 members who are responsible for the economic activities across Canada.
And protests can be heard all day long. You cannot go out without hearing protests on every side. Every public organization, all that constitutes our economy, its structure, has complaints to make, each one of which concerns financial matters.
Can you find anything that is not a matter of finance. When the provincial ministers are
[Mr. Latulippe.l
gathering here in Ottawa, with the Minister of Finance and Receiver General and the right hon. Prime Minister (Mr. Pearson), what do they intend to discuss here in Ottawa? What are they looking for in Ottawa? What do they want to get from Ottawa? They do not come here to discuss civil engineering questions, transportation or production matters or questions pertaining to some private organizations. No, they come here to get money, for otherwise they have everything, they have engineers, and everything they need to build this country, they have professors, carpenters to build schools. But they have no money.
The hon. Minister of Finance claims there is no shortage of that, that it is not difficult to find money. How is it, if you have no trouble finding this nation's economic blood, so as to give every province what it needs, to give every person what is required to live a decent life in this country abounding in wealth, what about your responsibilities? I wish to insist on that since we share those responsibilities. The economy of this nation depends on us.
[DOT] (5:50 p.m.)
Mr. Chairman, in the committee I have spoken to the greatest bank president of all. In the committee, I even addressed one of the greatest American financiers. I also spoke to university professors, to the most outstanding economists and administration experts, to presidents of the largest banks and bankers' associations, to accountants and stockbrokers. I also addressed the governor of the Bank of Canada, Mr. Louis Rasminsky, and the Minister of Finance. The questions I asked in the committee were not funny, but fundamental questions. I tried to learn about the origin of the dollar, its present rate, I wanted to know who created and circulated it, how many times it circulated in a year, who controlled the money supplies, and whatever you like. I asked questions on all those points and got uninteresting and vague answers. A few of them were specific, but most were vague.
And then, Mr. Chairman, someone was constantly interjecting to say: the hon. member is out of order. The hon. member should know he is beside the point. Your questions are fine, searching, emotional, but you should wait until later to ask them. I was always put off until later. There are a great many questions I did not ask because the chairman prevented me from doing so.


Gilles Grégoire: That is true.


Henry P. Latulippe: Therefore, we could not perform our duty. The committee chairman did not assume his responsibilities either, with all
March 14. 1967

due respect, because I could have lost my temper more than I did. But I was respectful to him and I even neglected to publish a brief I tabled, it was actually one of the first briefs to be tabled, and it was not published.
I asked members who sat on the executive or steering committee, if you prefer, and I saw that my brief had been scratched from the list. I asked the members of the steering committee to appear as witness, because I felt I was able to discuss the brief I had tabled, and felt capable of answering questions that might be put to me. And I was told: "When the opportunity occurs, you will be asked to appear. When we run out of-


Mr. Gray:: Mr. Chairman, on a question of privilege. I wish to give the members of the committee of the whole the assurance that no one prevented the hon. member for Comp-ton-Frontenac (Mr. Latulippe) from appearing before the committee on finance, trade and economic affairs as a witness. He himself told the committee that he was withdrawing his initial request to appear as witness, and if he is not satisfied now it is his own fault.


Some hon. Members:: Hear, Hear.


Herbert Eser (Herb) Gray: He was very often present at the committee sittings as a regular member and he asked questions. All the questions that were in order were accepted. But it is the hon. member's responsibility, just as it is any other committee member's, to conform to the rules. At that time, he accepted quite pleasantly, the rulings of the Chair and of the other committee members. I would not like the record of the committee of the whole to report erroneous statements such as those the hon. member has just uttered, and if other members of the committee are in the house at this time, I feel they will agree with me that the hon. member for Compton-Frontenac was perfectly free, as were all other members of the committee, to work in committee and to appear as witness, if he so wished, at the proper time.


Gilles Grégoire: On the question of privilege of the hon. member for Essex West (Mr. Gray), sir, I also had some grievances to submit with regard to the attitude of the chairman of the committee, who, I think, did not preside over the business in an impartial way, who, on many occasions, prevented us from putting questions and who, to put it briefly, managed to take the floor much more often than all the other committee members, and I
Bank of Canada Act
shall make it a point to submit evidence of this a little later on.


Mr. Chretien:: Mr. Chairman, I would like to say a word on this question of privilege. I think that no committee of finance, trade and economic affairs ever sat as we did this year. Indeed since last October, we held 110 sittings, including 90 on the Bank Act. All hon. members had an opportunity to put the questions they wanted, but in the committee, as in the house, there is a rule which prohibits repetitions ad infinitum such as those now being served on us here in this house.
Of course, I do not know what objective is sought by those who persist in always putting the same questions. There may be differences of opinion, but the rules do not permit repetition and the chairman of the committee, then, made an excellent job, as can be confirmed by the members who sat on that committee. As far as the hon. member for Compton-Frontenac is concerned, he was called upon to give evidence, but he declined the invitation; that is why we did not discuss his brief.
I think the hon. member for Nanaimo-Cowichan-The Islands (Mr. Cameron) and the hon. member for Perth (Mr. Monteith) can testify to this.


Mr. Cameron (Nanaimo-Cowichan-The Islands):: Mr. Chairman, I want to take a few moments to corroborate completely everything the hon. member for Essex West has said. The one criticism I would make of the hon. member as chairman of that committee is that he was altogether too considerate of members of the committee who had no consideration for their fellow members.


Some hon. Members:: Hear, hear.


Colin Cameron: With regard to the hon. member who complained that he was not allowed to present his brief, I have a distinct recollection of the hon. member being asked by the steering committee whether he wished to present his brief himself. He told us he did not wish to present it and was satisfied merely to deposit it. We should take great care to see that statements of the kind which have been made do not go unchallenged on the record.


Mr. Monteith:: Mr. Chairman, as a member of the steering committee I agree with the

March 14, 1967
Bank of Canada Act
hon. member lor Nanaimo-Cowichan-The Islands concerning the brief which the hon. member for Compton-Frontenac had prepared. I would simply like to add that so far as I could see any hon. member who attended the committee, whether as a regular member of the committee or otherwise, was given every opportunity to be heard.


Henry P. Latulippe: Mr. Chairman, I see that several people agree to say that I refused to appear, but I will tell you that it is completely false, because when the list was full, and after I had said that I wanted to appear on that committee, my name was put back on the list and I was told that I would be notified when the time came. However, I was not. I did not insist on appearing either because I expected to be called at any time, but I was never called. That is why I say that they did not want to study my brief.
I had insisted on having my name put back on the list so that I might appear, but I was told that I would be heard when there was an opening and the time was right. But that time never came. Therefore, I never agreed not to appear and I can swear it here. I never said that I did not want to appear. I never said that. For the information of those who say otherwise, I say flatly that they could not be more wrong. I never told lies and I am not here to tell lies. Now, Mr. Chairman, let us change the subject. That matter is past and forgotten.
However, I asked one thing of the committee chairman and he gladly granted my request. I wanted my brief to appear at least in the Minutes of Proceedings; it appeared in No. 53, the last one. It has already been circulated and put at the disposal of the members of the committee when consideration of the Bank of Canada Act began. I am grateful to the chairman for having my brief printed and I am satisfied in that respect.
I would say, Mr. Chairman, that I felt some embarrassment and concern at finding myself alone quite often to defend my point of view. Those documents are now before the public. You can read them, study them, and anyone at all can judge them and appreciate or reject them. But they are there before the people, and none has the right to ignore them when it is a question of making laws, of revising the Bank of Canada Act and legislation concerning the Canadian chartered banks, or when the other Canadian finance companies, the credit unions or all the other near banks are concerned.
[DOT] (6:00 p.m.)
Mr. Chairman, at this occasion, carrying out my official mandate in the eyes of my electorate and of the whole Canadian people, I was conscious of doing quite simply my duty as a member of Parliament, and I still intend to do all I possibly can in this house. I am here before you because I am a representative of the people. I said several times to one of the members of the committee and even to the chairman that I represent the people of Canada, of my riding and my province even more than those concerned with high finance. I also represent the world of high finance, but I was elected and delegated by the people of Canada, who have needs and want improvements, who want to live and have a right to live. I defended those who elected me to office, at the same time respecting the law and the rules which I certainly do not intend to break, for I do not want to destroy anything, nor to humiliate anyone. And so, I want to be respectful of all that has been done but, while trying to be as human as possible, I want to respect and keep what has been well done.
I also want to commend all those who did their job. They deserve congratulations, they should be commended, because our predecessors accomplished good things and have not made too many blunders. A lot of good things have been accomplished, as evidenced by the economy which has finally picked up, across Canada.
But certain things have to be corrected. Let the economy roll along, but efforts should be made, however, to lower public debts, to relieve the people, not tax them to the hilt, in short, stop the public debt from increasing to such the extent that people go bankrupt. At the present time, the federal government is on the brink of bankruptcy, as well as provincial governments, municipal governments and school boards, and individuals go bankrupt, but nobody cares. In the province of Quebec, there has never been so many bankruptcies under the present system, and the same thing must be happening in the other provinces.
And some will say that there is no room for improvement, they will try to ridicule those who are speaking up, who want to improve the situation, who want to reform the economic system to stop the wave of bankruptcies, to stop debts from sky-rocketing, taxes from soaring high; high taxes are threatening to crush the people and rouse them to revolt. I

March 14, 1967

think we are on the verge of revolution, and if hon. members do not see it coming, I do. That is why I speak about it in this house, that is why I am making a heartfelt appeal so that everybody may realize that something must be done to start improving this disquieting economic situation. That is the only reason why I mention this, for I bear no grudge against anyone. I believe that we are all the same, in the sense that we are all elected by the people and we all mean well. However, we do nothing, while we must talk it over to accomplish anything, admit the facts, in short sit down and discuss the problems. If you allow the same problems to remain without any change, and if you do not want to change them, if you will not make any improvement and laugh at those who are trying to make improvements, what do you expect to change?
If you do not remedy the situation, you will see it get worse, you will see human weakness, rancour, misery which leads to enmity, because people are ridiculed, because life is too miserable and it is too hard to benefit from science and progress, in short, because it is too hard to fulfil the duty as a citizen.
Mr. Chairman, no one should ever forget that each human being, even if only an infant, is much more important than any economic system in the world, and of even greater consequence in terms of reorganization and improvement of our economy, our financial situation, the circulation of our money, and all the various sectors of our economic activities.
All the Minister of Finance says is that we will have to organize taxation and use the means that our taxation system makes available to us, that is, tax the people who are already burdened, unable to live. Levy new taxes; is that what you want Mr. Minister? Is that your solution to the problems? If you have no other solution than that, at least be good enough to listen to those who offer you some; give them a try at least. If they produce nothing, if they do not work, you will always be able to change them.
But you have no solution to offer to improve present economic conditions in the country. You have no solution, you keep on applying the old methods, you will only maintain bodies of the past which are of no use to the people, to the country and to foreign countries. It is impossible to find financial means to enable the citizens to live decently. And if war were declared
Bank of Canada Act
tomorrow morning, the minister would find millions and billions of dollars. Yet, when the old age pension was increased, we had to have new taxes immediately because we had no money, because we could not find the funds to finance the cost of the $280 million increase in old age pensions.
New taxes were levied in order to collect $400 million. However, $280 million only were needed, but since the minister is interested in all kinds of fields, he took that opportunity to increase the taxes and to further burden the citizens who cannot pay such taxes.
In the municipality where I live, at the present time, 74 properties have been sold for school taxes. Yet, there are those who say that there are no financial problems in Canada. It is the same everywhere, throughout the country. There are no problems to settle. Those who mention them are not listened to.
It should be realized that the situation is more serious than one cares to admit. I know that those who always sat on padded arm chairs, who always drew a salary of $20,000 to $40,000, are not aware of the troubled situation which prevails in Canada. They know nothing of the problems faced by the families, the farmers, the municipalities. Especially when everything has always gone well at home, when one has always been well treated.
[DOT] (6:10 p.m.)


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


Joseph-Alfred Mongrain: Mr. Chairman, in rising now I feel that I should apologize because I am afraid I am imposing on the committee. But when my time ran out this afternoon I still had a conclusion to draw. I addressed a few questions to the minister. He gave me some answers and these prompt some comments from me. I will make my observations very brief.
Last night the minister answered a suggestion by the hon. member for Villeneuve by saying, "This has never been done before". I thought I had explained to the minister this afternoon a formula which has been operating for more than a century to help ease the financial situation of municipalities. In answer to some of my questions the minister said this was a provincial responsibility. I

March 14, 1967
Bank of Canada Act
admit this. In fact, I admitted it at the beginning of my remarks. The minister told us also that the provinces had already discussed proposals along these lines and that some of them appear to object in that they would not, of course, welcome interference by the federal government. This, too, I admit.
Nevertheless, I believe that if the minister would consider my suggestion carefully he would conclude that objections from the provinces would be unlikely. It is simply a question of the federal government incorporating in this banking legislation or in parallel legislation authorization which would enable the provinces to set up co-operative municipal banks. Those provinces which are not interested would simply leave this authority to one side. Others, where the municipalities were able to convince their legislatures of the usefulness of the measure, would be permitted to set up such a bank. Such an institution along the lines of the Credit Communal de Belgique-here it could be called a municipal bank or something like that-would considerably lower the interest charges faced by the municipalities and help with their budget difficulties.
The minister told us in his answer that he knew there were some municipalities which face financial problems in connection with their capital projects. I have to tell him that more than 95 per cent of all the municipalities of Canada are faced with this difficulty. This is why I am less prone to apologize for my intervention now, even if I may seem to impose upon my colleagues in this chamber.
I happen to be familiar with this situation. All over this country there are friends of mine who are mayors and members of city councils. We have studied these problems for years and years and they are still begging me to be their spokesman in this house and to tell my colleagues that Canadian municipalities are really facing a difficult situation, one whose solution should be given a very high priority. I am not suggesting that the minister can deal with this matter this afternoon or this evening. But I am insisting that we should not now pass a law which would bind us in such a way that nothing can be done along the lines I have suggested for the next ten years.
The minister should consult with the authorized spokesmen of the municipalities, the Canadian Federation of Mayors and Reeves and the Union of Municipalities, in an effort to find a suitable formula. Let us take the time also to place a suitable provision in the bill

and then advise the provinces that here is a solution which has been discussed. It would be natural for representatives of the provincial legislatures to attend these discussions also. Then those provinces which wish to take advantage of the new facilities would do so and the others would simply leave them aside. I think this would be an easy solution.
The minister said also that the government had done certain things which had achieved their purpose in the lessening of unemployment, for instance. I have to differ with him. I do not think there are many difficulties which have been settled once and for all. The measures he had in mind were piecemeal and though they helped considerably they were still piecemeal measures. There is no global legislation to ease the financial situation of the municipalities. This is a problem which should be given top priority, and drastic action is needed.
I am ready to co-operate with the minister in passing this legislation as quickly as possible as long as there is a guarantee that it will not bind the government for another ten years during which the municipalities will be told that under the present banking laws nothing can be done for them. It is essential that the door should be left open.


Gilles Grégoire: Mr. Chairman, the present Minister of Finance was quoting a while ago the speech delivered by the former minister of finance, the present Member of the Administration, the hon. member for Davenport (Mr. Gordon), on June 14, 1965, in which he was criticizing the Social Credit philosophy.
Mr. Chairman, in order to understand a little the circumstances in which that speech was delivered

at that time, the hon. minister was presenting a motion for second reading of Bill No. C-102, on banks and banking. We were discussing the motion for second reading of the bill and we know that, at that stage, each of the members may speak once but he cannot reply, let us say to the minister introducing the bill. Moreover, according to another section of the rules, whenever the member introducing a bill rises at a given moment to give an answer to those who asked questions, the debate is then automatically concluded.
Besides, when the former minister of finance, the present member for Davenport, delivered that speech-I regret his absence in the house at this time since I intend to
March 14, 1967

deal with that speech, and I had advised the parliamentary secretary to the Minister of Finance (Mr. Chretien), hoping that the hon. member for Davenport would be present-he knew quite well that nobody in the house could reply because he was then concluding the debate-under the standing orders-following the motion on second reading of Bill No. C-102 concerning banks and banking.
He delivered this speech on Social Credit theories knowing quite well that, according to standing orders, nobody could answer him, the debate being concluded, and that, in short, under the standing orders, no member could rise and refute that speech.
Here are some excerpts from that speech which I would like to comment.
First of all, the Minister without Portfolio, the former minister of finance, starts out from principles which are not really social credit principles. The leitmotiv, the argument used over and over again in that speech of the former minister of finance-which can be found at page 2373 of Hansard for June 14, 1965-the ever-recurring idea is this: the Social Crediters want an inordinate increase in the money supply.
Well, then, Mr. Chairman, objection must be taken immediately to what the former minister of finance wants to include in a theory, when that is not in it at all.
[DOT] (6:20 p.m.)
The point, Mr. Chairman, is not to increase the money supply beyond measure, far from it. What Social Crediters propose is to increase the money supply at the same pace- neither faster nor slower-as, Canadian citizens and Canadian industries are able to increase the Canadian output.
If there is a large increase in Canadian production, there has to be a corresponding increase in the money supply, because the money supply enables Canadian citizens to buy what they produce.
If, on the other hand, production does not increase, or if it decreases, then it is obvious that the money supply cannot increase either; indeed, it must be reduced at the same rate as production decreases. Therefore, we can realize that this is far from the allegations of the former minister of finance, the present member for Toronto-Davenport and Member of the Administration, when he said we wanted to increase the money supply out of all proportions.
Bank of Canada Act
The minister said, at one time, and I quote:
The other chief danger arising from excessive expenditures associated with an excessive increase in the money supply-
Mr. Chairman, that phrase "excessive increase in the money supply" is used continuously in the speech of the former minister of finance.
Therefore, it is easy to see that the whole statement of the former minister of finance is based on false premises because the Credi-tistes have never advocated an excessive increase in the money supply. Criticism of a system is always easier after one has inaccurately described it. But if one begins by understanding the exact meaning of Social Credit, criticism becomes more difficult. In fact I have never met anyone yet who could criticize it by stating exactly what is Social Credit. Those people tried to ridicule it rather than understand it.
Mr. Chairman, the former minister of finance, who is now Minister without Portfolio, also stated:
We must recognize that inflation is fundamentally unfair.
Because he had said previously:
I do not believe that the proponents of Social Credit feel that price increases and inflation constitute a serious danger.
And he said that Social Credit would create inflation. He said especially, and I am still quoting from his speech:
If the money supply increases unduly, it will lead to price and cost increases and to balance of payments difficulties. If such increases in the money supply and consequent increases in the pressure of expenditures in the economy should persist, we can expect that ultimately it will lead to inflation and, in a country such as ours, to an exchange crisis.
The former minister of finance was waving the spectre of inflation when talking about the Social Crediters.
Well, Mr. Chairman, have we not inflation, today? Is it because of the Social Crediters' theories which are applied. Not at all. They are laughed at. But we are in the midst of inflation, as big an inflation as Canada as never known since the Liberal government came to power. The Social Crediters are not responsible for the present inflation, and still we are smack in the middle of it. What is the cause of inflation? The present government, by continuously increasing taxes, brings about price increases and when prices increase, the workers naturally ask for higher wages and when wages increase, prices increase. But the primary cause, the true cause

March 14, 1967
Bank of Canada Act
of price increases and of the inflation now being felt in Canada is the increased taxes which have been continuously rising since the present government has been in power. That is the cause of inflation. If we are in a period of inflation brought about by a government of which the hon. member for Davenport (Mr. Gordon) is a member he claims:	"The
Creditistes will bring on inflation." But his own government has brought it about and it continues to worsen. Is there any logic in the criticism of the hon. member for Davenport? None at all, since he is one of the men responsible for the inflation we are now undergoing. And he would blame it on the Creditistes while he has brought it about himself. And he claims:
The other chief dangerbecause there are two chief dangers the former minister of finance used to see in the Creditiste theories.
The other chief danger arising from excessive expenditure associated with an excessive increase in the money supply is the effect on the balance of payments.
Well, Mr. Chairman, the Creditistes are not currently in power and applying their theories to Canada. The government is a Liberal one.
Let us look at what that government has done in regard to unfavourable balance of payments of our country.
I have here the latest edition we have received of the Canada Statistical Review, dated February 1967, and on page 70, we shall see what is the balance of payments after three years under a Liberal administration, when during part of that period, the former minister of finance, now Member of the Administration, the hon. member for Davenport, was in office.
In 1965, when the minister made that statement, he had been minister of finance for two years already, what was the Canadian balance of payments? Did it show a surplus? Indeed not. It showed a deficit of $1,083 million at the very time when the former minister of finance was telling us that Social Credit was going to be a danger to our balance of payments.
Are the Canadian citizens to blame? No, Mr. Chairman, because if they had had their say in the matter our balance of payments would have been favourable, since two factors must be considered with regard to the balance of payments: the commodities accounts, that is exports and imports, and the invisible
[Mr. Grcgoire.l
accounts, that is the inflow and outflow of money.
Let us examine the commodities accounts. We worked hard, we produced enough and we exported more than we imported. If one looks only at the commodities account, imports and exports, that is the work done by the people to produce, put on the market goods which are not too expensive, that represents a balance, a surplus of $118 million in the balance of payments. Thus, the Canadian people must not be blamed for the unfavourable balance of payments which showed a total deficit of $1,083 million, in view of the fact that in foreign trade, exports and imports alone, we had a surplus of $118 million.
[DOT] (6:30 p.m.)
But then we come to the invisible accounts, the capital inflow and outflow, because our governments are forced to borrow in New York, London or Belgium, all over the world, because the Bank of Canada does not fulfil its duty, and does not hold sufficient credit to provide for the development of the country. There we see that we have a deficit. So we borrow elsewhere, pay interest rates on foreign loans and end up with a deficit of $1,201 million.
Was a Social Crediter responsible for that? No. The Minister of Finance was in office at the time. He was the one responsible for this deficit in the balance of payments, but he still had the nerve to say: it would be dangerous to accept the Social Credit theories; our balance of payments could be seriously threatened. But it was worse than a threat; at the time the danger not only existed but we showed an unfavourable balance of payments totalling $1,083 million with a deficit of $1,201 million only because our Bank of Canada was not assuming its responsibilities, and our municipal and provincial governments were forced to borrow in the United States, England and sometimes all over the world.
Mr. Chairman, it takes quite a bit of nerve to blame Social Credit theories for the two plagues, the two great calamities of that period, which still exist today, namely an endless inflation and an unfavourable balance of payments unprecedented in our history.
Nevertheless, the former minister of finance said there was no fault or mistake to be found in the monetary system we have today. In fact, he said: I am convinced of the necessity of influencing the money supply to help our economy reach its full potential, at a given
March 14. 1967

time, and to enable it as well to reach a high and constant growth rate.
According to the minister, the handling of money supplies and the regular growth rate were adequate at the time. He felt that that was good and he flattered himself that the expansion was very satisfactory in 1965. Yet, we now realize that the monetary and economic policies implemented by the former minister of finance have led to inflation-of which he is responsible-and restrictions in many fields, in short, they are the cause of the increased unemployment we are now experiencing.
Mr. Chairman, it is all very well to criticize the Social Credit theories, to say that they are nonsensical, that their application would lead us to inflation and create problems in our balance of payments, but we realize that our present monetary system has all those flaws, even though a Liberal government is now in power. We live under this faulty monetary system and the government does nothing to change it and to put an end to the situation.
Mr. Chairman, it is time we found solutions to the problem. It is time to establish a system which will allow the Canadian people to benefit from the wealth of the nation and be prosperous in such a prosperous country.
The subject we have been dealing with, and which I myself had the opportunity of dealing with on several occasions, is that we should like credit to be created by the Bank of Canada rather than by the chartered banks. I must say, Mr. Chairman, that the answer we have received from the Minister of Finance has been far from adequate; he tried to evade the problem instead of giving an answer. He charged us with statements which we had not made, but he still did not answer our questions, far from it.
In any event, the people will read his answers and decide which one of us is right. The minister wants to leave control of the monetary system in the hands of the chartered banks, or rather leave the control of the creation of credit-or, I might say, the operation itself-in the hands of the chartered banks, whereas we want it given to the Bank of Canada.
There is another very important point, Mr. Chairman. On what basis does the government decide how much money should be in circulation?
For a long time, we were told that money was based on gold. There are even members
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in this house who travelled across the province of Quebec, saying: Social Credit is a lot of nonsense; money is based on gold and cannot be based on production. Money is based on gold. So many people told us that. Perhaps 75 per cent of the present members imagine that money is based on gold. The Parliamentary Secretary will say no, because he has heard the replies of the governor of the Bank of Canada on this subject.
Page 997 of No. 19 of the Minutes of Proceedings and evidence of the standing committee on finance, trade and economic affairs for 1966 gives a few questions I put to the governor of the Bank of Canada. And I quote:
Mr. Rasminsky, I would like to ask you what Is the reserve in bullion behind Bank of Canada notes?


Mr.   Rasminsky@: Nothing at all, Mr. Gregoire. The Bank of Canada has no bullion, no gold.


Gilles Grégoire: There is no gold reserve behind Bank of Canada money?


Mr.   Rasminsky@: No, Mr. Gregoire.
May I point out that the matter was very simple; but we had been told so often that money was based on gold that I still hesitated. I continue:


Gilles Grégoire: It is true, then, to say that Canadian money is not based on gold?


Mr.   Rasminsky@: Yes.
Three times in a row, I was told that money was not based on gold. A little further on I asked Mr. Rasminsky, and I quote:
I would like you to say that ten times in a row. I had heard it said in Canada that our money was based on gold. So there is no gold reserve whatever behind Bank of Canada bank notes?
[DOT] (6:40 p.m.)
I put another question to Mr. Rasminsky. Here it is:
But Canadian money is not based on gold?


Mr.   Rasminsky@: No, sir.
Is it clear enough, Mr. Chairman? Canadian money is no longer based on gold. We have known it for a long time.
In that case Canadian money is based on what? On faith and credit, I will be told. Well, if money is based on faith and not on gold and if you want to increase the money supply, you have only to get Canadian people together and ask them to shout very loud: We have faith, over and over again, and then increase the money supply. Is that how the money supply is increased? Is it done by saying that money is based on faith and by asking all the people to shout together: We have faith in the dollar, let us put it on a

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Bank of Canada Act
pedestal, let us kneel before it and say: We have faith. If money is based on faith rather than gold, I feel that if there is more faith there should be more money.
We are told that money is based on faith. In my opinion, it is somewhat like the minister's answer. I am ready to believe that the minister is not too happy about the way he answered my question and I quote:
-feel and flair-
Maybe a little judgment, to a certain extent, but not too much, because one must not rely too much on the judgment of the Minister of Finance. He stated flatly: I do it by feel and flair and to a certain extent- not too much but some-it remains a question of judgment. But it is mostly feel.
When one asks on what money is based, one is told: On faith. What kind of monetary system is that, Mr. Chairman? Quite an unusual system based on faith, feel, flair and maybe on a little judgment.
Mr. Chairman, Canada should give itself a scientific monetary system, based on reality, on what it represents. In philosophy, Mr. Chairman, smoke is a sign and fire is the significatum. Therefore, if that is applied to money, the sign is the dollar but the significatum is the production. What is the real value of both? It is not the sign, but the significatum. It is the significatum which is the real value, the dollar; money is only a sign which represents, according to the philosophical terms I used earlier, the real value of the country, the real wealth, our production, our ability to produce, our real title. The dollar is only a symbol.
Mr. Chairman, when it comes to evaluating the temperature, the significatum is the temperature; the mercury in the thermometer is only the sign, and the mercury is there only to represent the degree of heat or cold whereas the real value of the temperature is the cold or the heat. The mercury is only a sign which represents the significatum.
Well, Mr. Chairman, if I confine myself to monetary system, our real value, that is the significatum, must be the country's wealth, our output, and the sign must be the dollar, the money supply. However, the sign must give an exact and adequate representation of the significatum. The sign must be a true reproduction of the significatum; otherwise, the sign is broken and diverted from its true role. For instance, if the temperature is-let us say-90 degrees and the thermometer indicates only 8 degrees, it
[Mr. Gregoire.l
will be said that it is out of order, that it is broken and does not represent the true and exact temperature outside, since it is actually 90 degrees, as evidenced by three or four other thermometers, but the other one is broken for it says only 15 degrees. Therefore, the thermometer must be changed.
Similarly, in the monetary system, Canada has a considerable output or wealth. Every last one of us says that Canada is a rich and prosperous country with its oil wells, its wheat production, its ore, its iron, asbestos, copper and nickel mines, its forests that supply lumber throughout Canada and pulp and paper throughout the world, with its tremendous sources of electric power. We have a rich and prosperous country. But because the sign is lacking, the sign which must give a true and adequate representation of the country's wealth, the Canadian citizens are not as prosperous as the country.
Canada is a prosperous country. But because the sign is inadequate, because our monetary system, which is the sign, does not adequately represent the country's riches and prosperity, because that monetary system is like a thermometer that is out of order. As a result, the sign, that is, the dollar, is preventing production from reaching Canadian homes and the Canadian people. The result is a simple one: it can be said that our population is poverty-stricken in a land of plenty.
Our country is one of the richest in the world. But, nevertheless, there are at present, in the province of Quebec alone, 114,000 unemployed who live on meagre unemployment insurance benefits and as many persons in receipt of welfare allowances who do not live, but merely exist with the small weekly or monthly benefits they receive. This is taking place in a so-called prosperous country where the Canadian people are unable to share as they should in the national prosperity, wealth and development.
Mr. Chairman, this points to a deficiency. If our monetary system, which is the sign of our prosperity, is a failure, if it does not represent more adequately the country's wealth and prosperity, it is then up to parliament and to this committee of the whole to study the Bank Act, the Bank of Canada Act, which is the sinew of our monetary system. It behooves us to change this monetary system, to gear it to modem times, to the country's wealth, to the Canadian people,
March 14, 1967

so that this wealth may reach Canadian homes and the Canadian citizens.
This is what is lacking today. Why? In spite of our enormous production, of our tremendous wealth, the fact remains that the sign of that national wealth and prosperity is inadequate since it does not enable the Canadian people to avail themselves of the country's wealth.
Well, then, I say it is up to all of us to consider in depth this Bank of Canada Act which is the main sinew of our economic life, to amend it and change it so that the Canadian people may benefit more from the prosperity of the country.
Some claim that we are infringing upon their privileges by speaking too long. Mr. Chairman, I will say this to those people. We have had the Bank of Canada Act under consideration for two days only. It had not been before parliament in 12 years and the Bank of Canada controls the whole monetary system and the whole life of the country. It is the main sinew of our monetary system and of our whole economic life. Yet, some people find that two days is too long even though some hon. members found means to talk for three months on the Canadian flag. Let no one tell me that two, three or four days, or even two weeks is too long for the members who are present here to analyse the amendments to the Bank of Canada Act.
Unfortunately, Mr. Chairman, and I mean unfortunately, I realize there are not enough members elected by the people in this house who are really concerned with the amendments to the Bank of Canada Act. I realize that there are not enough who would study our monetary system and toil over the amendments required to improve the Bank of Canada. Unfortunately, I realize that the Minister of Finance is too steeped in or imbued with the prejudices of the traditional, conservative and orthodox economic system to be in a position to find the solutions to our present economic problems.
Mr. Chairman, time has come to bring about drastic changes to our economic and monetary system if we want Canada to make advances, if we want the Canadian citizens to share in the wealth of Canada, because at the present time-it is a sad thing to say-foreign investors benefit and share much more than the Canadian citizens in the gains derived from the development of our natural resources. Foreign investors get more profit out of our natural wealth than
Bank of Canada Act
our Canadian citizens. Our Canadian citizens work in the woods, in the mine pits while foreign investors reap the benefits. Why? Because we are told that we do not have enough capital to invest in the development of our country. Canada will never really control its economy until the day when it sets up the necessary institutions which will bring in the capital required for the development of our country. Until then we shall keep on trying to administer with the minister's flair and feel-lings, with a little judgment if necessary, but the economy of our country will not make progress that way. What is needed is a scientific and rational system.
[DOT] (6:50 p.m.)


Herman Maxwell Batten: The time allotted to the hon.
member has expired.


Mr. Gauthier:: Mr. Chairman, I find it difficult to see a quorum in this house, and I must talk in front of at least 21 members. Actually, I see two, four, five, six, seven, eight, nine, ten, 11, 12, 13, 14, 15, 16-16, Mr. Chairman. In my opinion, this is not a sufficient number to deal with such an important matter as the structure of the Bank of Canada; consequently, I would ask for an adjournment until eight o'clock, if we cannot have a quorum.


Herman Maxwell Batten: Perhaps I should read to the hon. member the standing order relating to the quorum. Standing order No. 3 reads as
follows:
The presence of at least twenty members of the house, including Mr. Speaker, shall be necessary to constitute a meeting of the house for the exercise of its powers.
The Speaker referred to in the standing order would, of course, include the chairman in the case of committee of the whole. The next paragraph reads:
Whenever Mr. Speaker adjourns the house for want of a quorum, the time of the adjournment, and the names of the members then present, shall be inserted in the Journal.
Perhaps I should also read, for the hon. member's benefit, citation 60 from Beauchesne, page 48:
Any member may direct the Speaker's attention to the fact that there is not a quorum present. The Speaker will proceed at once to count the house, and if there are not twenty members present, including himself, the Clerk will take down the names, and the Speaker will then adjourn the house without question first put until the usual hour on the next sitting day.
139S4

March 14, 1967
Bank of Canada Act
Further on in citation 60, I find this:
When oommittees of the whole, supply or ways and means are compelled to rise for want of a quorum, they neither report progress nor ask leave to sit again.
I would, therefore, ask the Clerk Assistant to count the house.
On the count being made, 20 members were declared to be present.


Herman Maxwell Batten: I have been advised there are 20 members present and the committee is properly constituted.


Charles-Arthur Gauthier: Thank you, Mr. Chairman, this is exactly what I wanted, 20 members at least. There is one member leaving, so we remain 19.


Some hon. Members:: Oh, oh.


Charles-Arthur Gauthier: Mr. Chairman, I feel that questions of such importance as those concerning chartered banks and especially the Bank of Canada, which is our national bank, the bank of the people, should interest at least 50 per cent of the members. I can assure you that if the citizens of Canada were in the galleries this afternoon they would be stunned by the unconcern of the hon. members for such essential matters.
Mr. Chairman, when we consider that we are dealing with the very essence of our economical life and we have difficulty in finding 20 members responsible enough to try and settle the problems which affect us so closely, we wonder where we are going.
Mr. Chairman, in my speech of yesterday I mentioned that the control exercised by the Bank of Canada was more on secondary matters than on the monetary question, as it was meant to have us believe, that the bank was more anxious to prevent from speaking, through the use of occult forces, those who care for monetary reform in Canada, than to control effectively our monetary system; and I gave supporting evidence to that effect. Those which I read in the house were trustworthy since most witnesses were technicians or former governors of the Bank of Canada who appeared before the committee in 1954.
I will sum up Bill No. C-190, Mr. Chairman, by asking: What do we find in it? Only trifles, superficial amendments, in short: no substantial amendment. We study a small bill, the national bank bill that has 20 articles, and to discuss these articles, there are hardly 20 members in the house who look like they are
[The Chairman.]
sleeping in their seats and who seem to be saying: When will we at last be through. How do you like that, Mr. Chairman.
Yesterday afternoon I felt new hope when I heard the member for Lapointe (Mr. Gre-goire) giving such clear information, and above all, asking the minister some questions-


Herman Maxwell Batten: It being seven o'clock, and pursuant to an order of the house made on March 3, this sitting is suspended for one hour.
Before leaving the chair, may I read the questions to be considered at the adjournment tonight? They are, the hon. member for Trois-Rivieres (Mr. Mongrain); transport-Trois-Rivieres, P.Q.-representations against an increase in fees on the St. Lawrence seaway and the Welland canal; the hon. member for Skeena (Mr. Howard); dominion-provincial relations-British	Columbia-proposed establishment of harbour commission.



SITTING SUSPENDED


[Stage Direction]
The committee resumed at 8 p.m.
Charles-Arthur Gauthier: Mr. Chairman, it affords me pleasure, after taking a good meal, to proceed with the few remarks I wish to make this evening. I hope that the minister, as well as his parliamentary secretary, have regained their strength, in order, at least, to listen very patiently to what we have to say about the Bank of Canada.
As I was saying before supper, our hopes were renewed last night when we saw the house listen quietly to the remarks of the hon. member for Lapointe (Mr. Gregoire) and we really hoped at the end of the day that some would understand something about our claims and the cause we are defending. But lo and behold, through some magical power, I suppose, a financial wind swept over that quiet assembly; everything changed and members of the government returned to their old ways and showed as much ignorance as ever.
However, Mr. Chairman, I believe such discussions were useful since, first of all, we succeeded in having the minister express his opinions at various times, but not always.
March 14, 1967

And this will be published in the record. What we are saying today is not so much for this committee but for the record and for those who read it and who want to know what is going on in this house.
We succeeded in having the minister admit that chartered banks actually create money, that they receive deposits from the Bank of Canada, that cost absolutely nothing to them, deposits which they have a right to multiply twelve times and a half and to lend at 8 and 9 per cent.
We wish the government would attribute certain members four, five or six members, small banks like that, which would not be expensive. I believe it would be profitable to multiply them so as not to always grant such a little group the privilege of taking hold of this country's wealth and of impoverishing the rest of this country. But what would be still better and what we are longing for is that the Bank of Canada plays its part. We do not want to upset anything in the financial system; we simply want every organization to play its part.
The Bank of Canada, which is the bank of the Canadian people, should deal with the general public, and the private banks, that is the chartered banks, the credit unions and so on, should operate in the private sector. I think this is perfectly logical, whereas the system we have today is totally illogical. I am surprised to see that people who consider themselves intelligent do not understand this problem or, if they do, refuse to say so-for I am certain that the Minister of Finance and his parliamentary secretary are intelligent enough to understand it. They know very well that if the Bank of Canada were to take over the present functions of the chartered banks with regard to the creation of credit, there would be no more inflation than is created now by the chartered banks with the same means. They are fully aware of that. Only, the minister cannot speak up because, as I said yesterday and tonight before supper, he is prevented by some occult power from being himself and from saying what he thinks, as are also all the other people involved in the present financial system.
[DOT] (8:10 p.m.)
I was rather surprised, four years ago, to hear the director of a chartered bank who was also a member of parliament tell me, as I was having a discussion with him: "My friend, do you think we do not know what you are saying in the House of Commons? Do you think we are not aware of all this?
Bank of Canada Act
And you are 100 per cent right". That is what he told me. I asked him: "Why do you not let the Bank of Canada undertake such operations?" He said: "My friend, I would like to keep my head on my shoulders". That was a serious thing to say. And that is where I saw the power of international finance, which controls not only our country but most of the nations of the world.
We are glad that the Minister of Finance and Receiver General told us several important truths. He had to hide some from us, for he was not in a position to tell us everything. But he should not say, for example, that he is here to look after the interests of the people, when he is here to look after the interests of the trusts. Let him no try to sell us such stories.
Mr. Chairman, yesterday I mentioned some evidence which was put before the finance committee in 1954. Ever since the beginning we have talked a great deal about the present review, the third since the creation of the Bank of Canada.
I was just reading over some most interesting passages, although an attempt was made to hide them from the public at large; they might also prove interesting for the members of the house, but since they seem to be deaf to all truth, I will now put them on record for the benefit of the people.
I was just referring to the words of a former speaker of the House of Commons here, hon. Mr. Macnaughton, who said:
It seems that now, and always, I believe, if we succeeded in controlling credit by changing for instance the cash reserve of chartered banks, we could eventually stabilize our economy and generalize a monetary system which might improve while expanding-
I am convinced that what Mr. Macnaughton had in mind when he said this, was to increase gradually the chartered banks' reserve to bring them to save 100 per cent of liquid assets instead of the usual 8 per cent they accepted at the time on a deposit. Today we are down to an average of 6.6 per cent. I believe that Mr. Macnaughton gave most valuable advice to the committee in an endeavour to improve gradually the control that the Bank of Canada must exert over our whole monetary system.
After such a straightforward statement, can you deny that the only way to control a company, for instance, is to own at least 51 per cent of its shares? On the other hand, is it not ridiculous to talk about control when you hold only 8 or 6.6 per cent?

March 14, 1967
Bank of Canada Act
So Mr. Macnaughton hoped that the Bank of Canada would slowly recover monetary control. I believe that is clearly logical. That is why we claim that we can gain control of banks through the Bank of Canada when we own 100 per cent of the new credits which are the exclusive property of the chartered banks.
The day is yet to come, I think, when the government, through the Bank of Canada, will cease to control only the insignificant reserves of those who control the blood of the nation and will force chartered banks to have larger deposits than the 10 per cent required each year.
Then the banks, as well as caisses populates and other near-banks, will only be authorized to lend to the extent of their actual assets and not on the basis of fictitious accounts. I would refer those who still think we are talking through our hats, to page 158 of that same report, where they will find the answers of Mr. Towers to Mr. Cannon and the proof that bankers do get favours from the Bank of Canada.


Mr. Cannon:: Q.-I understand that to make money more readily available you buy government bonds?
A.-Yes.
Q.-I see by your balance sheet dated December 31, 1953 that, apart from government bonds and fixed capital, your assets are only about $90 million?
A.-Yes.
Q.-Supposing that in order to reach a certain objective you had to buy for more than $90 million worth of government bonds, how would you go about paying the amount in excess of $90 million which you would not have and which you had to pay immediately?
A.-In answering this question I might invite the criticism of Mr. Low on the one side and Mr. Macdonnell on the other, for we would pay the additional government bonds by crediting the amount in our books, namely to the deposit account of chartered banks. Whether or not we purchase the bonds from the banks is immaterial, this procedure can be repeated indefinitely.
Q.-Indefinitely. I thought so, but in an emergency would you not simply make a new issue of money? I suppose you would only have to make a book entry and then pay the bonds, thereby increasing the amount of money in circulation?
A.-Any book entry increasing chartered banks' deposits actually constitutes a new money issue.
Q.-That is creating money, is it not?
A.-Yes.
Is that plain enough, Mr. Chairman? Creating money with one stroke of the pen. You see how easy it is for chartered banks to obtain money. Should they lack any, the Bank of Canada will even be so generous as to make deposits for them. Then, the chartered banks will only have to multiply the

said deposit, which did not cost them a penny, to lend the whole amount to the people. It is as simple as that.
But, it is precisely that operation that the financiers have always withheld from the people. And Mr. Cannon continues:
Q.-During your testimony, you said that there is no limit to the amount of money which can be issued at any time?
A.-That is right.
Where is the control of the Bank of Canada, Mr. Chairman? Do you not think that it would be a good thing to set a limit? Here it is the chairman of the committee, mind you -it is the chairman of the committee who comes to the rescue of the governor of the Bank of Canada, short of arguments. Besides, the same thing occurs all through those inquiries, when the big shots are in danger, when the representatives of the people attempt to know more about the limits set by big finance. Listen to the last answer of the chairman of that time.
[DOT] (8:20 p.m.)
We already have fully discussed that matter.
That is the real shield of the present financial myth. The truth must not be revealed. Therefore, what is the part played by that chairman? I ask you. Is he not there to guarantee the freedom to both parties or to provide only the security of the big financiers? It is for you to decide. As for me, I have only read the evidence. It is strange anyway. And the saddest part of it is that these actions from the chairman occur on many occasions. For example, on page 128, when Mr. Tucker was questioning Mr. Towers:
Mr. Towers, you still hesitate at this time to tell us whether it was wise or not on the part of the federal government in the early thirties to deliberately let the deficits accumulate to make up for the purchasing power which was no more in the hands of the people?


Mr. Towers:: I do not think I can possibly give you a straight answer because I have too many reservations to make.
Imagine that. "I have too many reservations to make," he said.
That is one of the interesting questions to the solution of which the representatives of the government should devote themselves. That is it. We are paid to do a job, when we are not able to do that job anymore we shift the responsibility to the government, to the members. It is so easy, so simple. A member is always ready to bear with everything, so we pass it on to the members.
And the chairman interjected in those terms:
Why not leave the task to the historians?
March 14, 1967

That is the final and clever answer from a committee chairman. That is a very intelligent retort for a committee chairman. It is the instruction to transfer everything to history, to hide everything behind the curtain of ignorance.
Which moved Mr. Pouliot, now a senator, to say as shown on page 93 of the report:
I realize that high finance is not within the grasp of the people. We can neither see nor understand it and I would be most interested in obtaining information on the staff of your bank. I would like to know the salary of Mr. Brooks, your doorman? I asked Mr. King and Mr. Abbott and they told me it was not proper to ask such questions.
And the joke goes on, Mr. Chairman. Behind each director lurks an occult force that continues to haunt parliament.
The people responsible for the Bank of Canada, the chartered banks, the Department of Finance, have their secret sessions just like in the times of emperors, and they sit at the same table as the great world financiers.
Sometimes, tips are passed on, sometimes a danger will be forecast and even the Bank of Canada will supply arms to fight the enemy No. 1, the people. Then, it will be decided to take away or give them something more, according to the whims of the financiers. This is called inflation or deflation.
Has anything changed today after 13 years, the last inquiry into the banks dating back to 1954? Not in the least. As for the inquiry, the present chairman seems to have received the same orders as the chairman in 1954 to protect big finance. It seems the briefs which most favour our present financial system are the ones that are discussed. Witnesses are called before the committee who favour the status quo, while those who are hostile to it are almost systematically kept away.
A few are accepted, merely to confirm the rule. I do not know whether the chairman does all this willingly, but on reading the proceedings one gets the feeling that he is somewhat like St. Paul who said: "For the good that I would I do not; but the evil which I would not, that I do".
And the victim, the people, continue to be sacrificed on the altar of the golden calf, big finance. The astounding thing about it, is that we always find in our midst, more and more high priests of big finance to offer the holocaust without uttering a word. A foreboding of this occult course probably moved His Holiness Pope Pius XII to say that those who control money and credit,
Bank of Canada Act
control the blood of the nation, and that without their permission, no one has the right to live.
Mr. Chairman, I wanted to read statements of people who are not socreds. I also want to point out that I could quote, for hours on end, people who, although they do not look upon social credit with favour, still advocate financial reform. For instance, I could name Rev. Father Levesque, one of the great French Canadians, who said:
If you would not have communism nor socialism, then set social credit against them. It alone has the means to check those two perverse movements.
Today, we no longer hear of Father Levesque. He was banished to Africa. That is how I was able-I know the family very well- once again to see first hand that real strength which can neither be seen nor felt, but which stands there watching the interests of big finance. It is a royalty which, it seems, it is very dangerous to attack.
As for us, it may be that we have more gall than the others, but we attack that royalty which is high finance, for we think that if we do not destroy that myth, tomorrow the people will be destroyed. We are here to save the life of the people, Mr. Chairman. I feel all the members should realize that the time has come for the Canadian people to deal with its business seriously, and to see to it that those various organizations fulfil the role for which they were created.
When one considers the Bank of Canada Act, its definition, the first duty it must perform, one finds that this role has been well determined: to control currency and credit 100 per cent. What has caused it to abandon its role? The power of financiers who have bought the representatives at a good price to stop it from doing its duty.
Mr. Chairman, if someone will listen to us once more, we just want the Bank of Canada to create, on behalf of Canada, on behalf of Canadians, new credit and to cease giving for nothing our yearly surpluses to the chartered banks which are private institutions. I do not despise them, far from it, but they have their duties and I say that they are not playing their role at this time. As a matter of fact, they are taking over the role that belongs to the Bank of Canada, and it is imperative that the Bank of Canada should control credit and particularly put it at the service of Canadians and stop the practice of borrowing our own credit.

March 14, 1967
Bank of Canada Act
[DOT] (8:30 p.m.)
Someone was asking me the other day: But, sir, what are we going to do to get rid of those debts that accumulate from year to year?
And I answered: "My dear friend, with the system we have, there is only one way. That is to stop producing, because as soon as we produce, as soon as we have surpluses, we have a new debt the next day. To stop getting into debts, we must stop producing."
Mr. Chairman the more we produce, the more debts we will have. Because it is essentially the basis of our present system, because the Bank of Canada is a debt agency, that has been made quite clear in every report.
Mr. Chairman, I still would have a number of reports to quote, such as, for an example, Hon. Lucien Maynard's brief which is reported on page 318 of the proceedings and evidence of the standing committee of 1954. Hon. Mr. Maynard submitted a marvellous brief in which he gave some definitions, some examples, an historic outline of the banks within our financial system. In the second part of his brief he referred to the faults of our financial system. He also referred to the accumulation of debts as a defect, and he compared our financial system to a poker game.
I believe, Mr. Chairman, it would have been more interesting for all members if they had read these reports once, twice and even ten times, to understand at last the ridicule of our present financial system.


Gilles Grégoire: Mr. Chairman, I have
but one question to ask of the Minister of Finance. Up to this point, I have had the opportunity to give some explanation of our ideas on credit creation. I should now like to leave this area. I have put my questions in this regard and I think I have given the long and short of my views. We have the answers of the Minister of Finance recorded in Hansard. We will now let the Canadian public be the judge both of the value of the arguments with regard to credit creation and of the minister's answers. The public will be the judge and will decide who, in these discussions, brought forward useful arguments and suggested amendments to the Bank of Canada Act so that the Canadian people may profit by its monetary system.
The question I should like to put tonight deals with another thing. I have begun to touch upon the subject this afternoon. I refer to the money supply in circulation, to the

volume. As clearly stated by the minister, it is obvious that it is the Bank of Canada which decides what the money supply will be. If the Bank of Canada issues $1,000 in cash, it means that there will be $100 worth of money supply, once the chartered banks have proceeded to the creation of credit. If the Bank of Canada wishes to bring that $100 down to $50, all it has to do is to withdraw $4 from Canada's money supply. On the other hand, should it want to increase the money supply to $150, it will simply add $8 in cash, and then the money supply will jump to $150.
What I would like to know from the minister is this: How does the Bank of Canada proceed to determine what the volume of the money supply should be? On what criterion did the Bank of Canada base itself in 1960, for example, when it enacted that the money supply would be about $12 billion, that it would be $15 billion in 1964, $17,186 million in 1965 and that, at the end of September, 1966, the money supply would be $18,155 million? At least there is an increase. It is not a round figure increase when you add $800 million at a time, or $1 billion, no, that is different from month to month, that can increase by $197 million.
What I would like to know is this: What are the criteria upon which the Bank of Canada bases itself to increase that money supply? Are there any criteria? What are those criteria which are dictated to the Bank of Canada and by which the latter determines, at a given time, the volume of the money supply?
One who receives the monthly reports of the Bank of Canada knows that the money supply fluctuates continuously, from week to week, and that every week, the Bank of Canada buys or sells bonds to keep the money supply in constant fluctuation.
Tonight, I should like to ask the minister the following question: What are the precise criteria the Bank of Canada uses to determine what will be, on a given day, the volume of the money supply in Canada?
I hope that the minister will be able to answer that question immediately.


Mitchell William Sharp: I shall do my best to reply to these questions of the hon. member for Lapointe whose curiosity is insatiable. May I reply by quoting, first, the statements made by the governor of the Bank of Canada to the royal commission on banking and finance, the Porter commission, in which he put
March 14, 1967

forward the standards he was trying to maintain for the economic and financial welfare of the nation? They are-
[DOT] (8:40 p.m.)
-sustained economic growth at high levels of employment and efficiency, internal price stability and the maintenance of a sound external financial position, an equitable sharing of economic benefits and burdens and the maintenance of a high degree of economic freedom.
Those were the general objectives of the governor of the Bank of Canada in implementing monetary policy. If the hon. gentleman's curiosity is not satisfied by that very general statement perhaps I should refer him to the annual report of the governor to me for 1966, which was tabled in this house. In that report he will see a discussion beginning at page 4 and continuing for several pages in which he gives a detailed account of the considerations he had in mind in determining the volume of cash reserves of the bank, and how generally he operated in the market to influence the volume of money. He will find there an exercise, as I referred to it previously, of judgment.


Gilles Grégoire: Mr. Chairman, if I am not mistaken, the hon. minister quoted an answer, rather a brief presented by the governor of the Bank of Canada, Mr. Rasminsky, and in that answer, as far as I can recall, although I may not have heard everything, all the criteria set by Mr. Rasminsky, the minister told me that the Bank of Canada puts in circulation the necessary currency to increase the money supply in such a way as to ensure the economic growth of Canada and to provide for adequate employment. Are those, more or less, the two criteria mentioned by the minister?


Mr. Tremblay:: Price stability and exchange stability.


Gilles Grégoire: Then, there would be four criteria which the governor of the Bank of Canada would use as a basis to increase the money supply, to reduce it or to keep it at a given whatever, say level X, and those four criteria would be the following: to ensure economic growth, to keep up employment at a reasonable level, to maintain price stability and to keep up exchange stability.
It is therefore obvious that the Governor of the Bank of Canada has failed all along the line.
Bank of Canada Act
First of all, he is far from having maintained price stability. We are experiencing an inflationary period as never before, nobody can deny it. The Governor of the Bank of Canada claims to be maintaining the money supply at the proper level to ensure price stability, and throughout Canada, people complain about inflation. No later than today, the governor of the Bank of Canada complained in the press about inflation and the lack of price stability. Well, if I take my stand on that criterium, the Governor of the Bank of Canada and the Minister of Finance have missed the boat.
What is this reasonable level of employment that they strive to maintain? There are 114,000 unemployed only in the province of Quebec. That is some reasonable level of employment. Once again the criteria of the governor of the Bank of Canada have proved a complete failure.
The minister says that just enough money is being provided to maintain a reasonable level of employment. Just enough, eh? In Quebec, 114,000 jobless. Is the minister satisfied? I think he has left. It was becoming embarrassing to realize that their whole policy is turning out to be a complete washout. Our minister is in a quandary because he left when he heard: maintain the economic growth. Well, in his article published today, the governor says that the economic growth must be controlled. He is no longer trying to maintain it.
I quoted yesterday an answer given by the Minister of Finance, as reported on page 3000 of the minutes of proceedings and evidence No. 43 of the standing committee on finance, trade and economic affairs. He said then:


Mitchell William Sharp: It is the pressure upon our resources which arises from demands upon them.
I had asked him:
And to what do you compare your satisfaction?
At seeing there is enough money at present.
Is it to actual production of Canada, the actual goods produced in Canada?
And the minister replied:
It is the pressure upon our resources which arises from demands upon them. In other words, I have felt that economy required, for stability, some restraint.
Therefore, the minister is advocating and preaching restraint. I have here the article in question. It also appeared in La Presse.

March 14, 1967
Bank of Canada Act
On Tuesday, March 14, 1967, it made headlines in he Droit:
Rasminsky: prices and costs have risen too sharply in 1966.
Mr. Chairman, this underlines the very failure of the policy of the Governor of the Bank of Canada. The volume of the money supply is maintained and increased just enough to maintain price stability.
Now, prices lack stability.
And the Governor of the Bank of Canada says so himself:
Prices and costs have risen too sharply.
Now, with regard to that criterion, the Governor of the Bank of Canada sure muffed it.
Second criterion: maintain reasonable employment. Try and tell that to our unemployed in the district of Lotbiniere, in the district of Saint-Maurice-Lafleche, in the district of Matapedia-Matane; in that area there are even more unemployed than elsewhere.
Try and tell that to the governor: a reasonable money supply is needed to maintain reasonable employment. Try and tell the unemployed that they are reasonably employed. Will they think you are being reasonable about it?


An hon. Member:: It is getting better.


Gilles Grégoire: It is a matter of reducing unemployment, they go live elsewhere. Unemployment then decreases in the Matapedia-Matane district.


Mr. Choquelie:: One thing is true: with Social Credit, we would have total ruin.


Gilles Grégoire: Total ruin. The expression of demagoguery. We already have total ruin at the present time. And now to cover up, to hide their incompetence, they want to cast the blame on those who are guiltless.
Third criterion: maintain the stability of exchange. Are they really stable when one realizes that in 1966 we had a deficit of $1,201 million in our balance of payments? To maintain the stability of exchange, to ensure economic growth. The Governor of the Bank of Canada, maintains that an adequate volume of money supply is sufficient to ensure reasonable economic growth. Take a look at the field of housing. See the sensational reduction of housing starts. Is that reasonable economic growth? When it is said for instance, that Quebec is unable to build a steel

industry for lack of money. But the Governor of the Bank of Canada says that the money supply is sufficient, that its volume has increased sufficiently to maintain adequate growth. Look at the number of areas where economic growth is far removed from our wealth and our natural resources.
[DOT] (8:50 p.m.)
Mr. Chairman, I say it and proclaim it. If those are the four criteria on which the Governor of the Bank of Canada bases himself to determine what volume of money supply will be in circulation, well then, inevitably and obviously, the monetary policy of the Governor of the Bank of Canada is a monumental failure. And if the Minister of Finance and Receiver General of Canada is prepared to support him in spite of everything, I would then say that something is wrong. I would say that the Minister of Finance and Receiver General of Canada is not truly acting in a scientific way, but according to his feel and his flair, as he said yesterday, and he is proving to us that he has no flair.
I read in La Presse a statement of the Governor of the Bank of Canada:
Canada is seriously threatened by inflationary pressures.
What is he going to do with the volume of the money supply?
Mr. Rasminsky said that the increase in production costs and consumer prices may well price Canada out of competition with the United States and thus represents a threat of new problems for the country.
Is that what is called the stability of exchange? And the governor, who has the authority and the means to maintain the stability of exchange, has just more or less recognized the monumental failure of his policy since he recognizes it in the statement he has recently published.
And he adds:
The summit, reached by costs and prices in the last two years of great activity in the Canadian economy demands reflection.
Now here is one asking us to effect, and the other wants feel and flair. This one asks that we reflect. Well, the Minister of Finance and Receiver General said it. So any complaints on demagoguery should be directed to the Minister of Finance. Perhaps I misinterpret his words-


Auguste Choquette: Indeed, you do.


Gilles Grégoire: The hon. member for Lotbiniere (Mr. Choquette), says that I am mis-
March 14, 19S7

construing his words. I shall repeat them. I know it hurts every time we quote statements of the Minister of Finance and Receiver General. I shall quote them again for the benefit of the hon. member for Lotbiniere who might not have been here at the time.
I quote again from No. 43, page 2998, of the minutes of proceedings and evidence of the standing committee on finance, trade and economic affairs-


Joseph Jacques Jean Chrétien: That is the fifth time he repeats it.


Gilles Grégoire: 


Gilles Grégoire: If you have the control over the volume of the monetary supply, upon what do you base your decisions to set the monetary supply at a given level?


Hon.   Mr. Sharp@: When a governor of the Bank of England, Lord Norman, was once asked that question by J. M. Keynes he said: "I do it by feel and flair"-
The minister said that, not I and he adds:
-and I believe that a certain extent-
-not far, "up to a certain extent"-
-it remains a matter of judgment.
And the minister adds:
There is no mathematical formula by which the money supply can be regulated.
That, Mr. Chairman, is the fundamental flaw of the present monetary system. That is the fundamental mistake of the Minister of Finance and Receiver General and the government who do not want to see in an economic system something scientific but want to see in it something sentimental, something that depends on flair.
Mr. Chairman, we saw this afternoon-and I quoted statements from the governor of the Bank of Canada or the government has not a money is not based on bullion and that the Bank of Canada of the government has not a single ounce of gold to guarantee the Canadian dollars. What must be the main standard of the governor of the Bank of Canada when he decides the volume of the money supply?
I am going to tell it to the parliamentary secretary to the minister so that he might answer this because the minister has left. I see that he has realized that the answer he gave earlier was far from adequate and has left the house rather quickly. I regret it because the discussion was becoming interesting. But I will mention it to the parliamentary secretary to the minister and he
Bank of Canada Act
might be able to give an answer. On what must the volume of the money supply be based? It is a purely scientific operation.
According to statistics which can easily be analysed, each time that the Bank of Canada puts in circulation $2 in cash, one dollar remains in circulation either in the cash registers of stores or in the pockets of the Canadian citizens and the other goes into the vaults of the chartered banks or in their coffers to be used as cash reserve.
Therefore, out of $2 put in circulation by the Bank of Canada, one remains in circulation and the other is used as cash reserve. There are statistics to prove this.
Every time there is a dollar in cash reserves in the coffers or drawers of the chartered banks, these banks can multiply that dollar by 12.5, which gives a money supply of $12.50. This is for each and every dollar.
If we continue to analyze the statistics and examine the cheques exchanged in private offices and the payments made in cash, we realize that each dollar in the money supply, meaning the total credit cash reserves, circulates 25 times in one year.
Each one of these dollars in the money supply, even if it circulates 25 times in one year, represents only $2.50 in purchasing power. To return to my original example, if the Bank of Canada puts $2 into circulation, one of them will go into cash reserves and become $12.50 in money supply, and if you add the other dollar, which remains a part of the cash in circulation, it brings the total to $13.50. These $13.50, after circulating 25 times, will represent a purchasing power of 2.5 times that, which comes to about $33.
Therefore every $2 put into circulation by the Bank of Canada will, during the course of one year, represent $33 in purchasing power, or just about. This may be calculated from the statistics available in the course of a month. Every month, we receive a booklet called the Canadian Statistical Review which gives the volume of production for the previous month.
[DOT] (9:00 p.m.)
Each month, the production for that month should be calculated, as is done now. If the goods and services produced amount to $33, the Bank of Canada should see to it that $2 in cash are put into circulation. If one dollar is already in circulation, the Bank of

March 14. 1967
Bank of Canada Act
Canada should add another, so that all production might buy itself through a corresponding purchasing power. If production increases by $33 in the course of a month, the Bank of Canada must take care to put another $2 in circulation which, circulating at a fixed speed, will eventually produce $33 in purchasing power-that is, a purchasing power equal to the increase in production during the previous month.
Should there be a drop in production, the Bank of Canada would have to reduce its legal money reserves in the same way it increased them. Then, Mr. Chairman, you have a scientific system, based on statistics, not a system based on mere judgment, on flair or feeling. The government get statistics every month through its Canadian Statistics Bulletin. I have had for some time the February 1967 issue. When the figures are available it will only be a matter of figuring out scientifically, mathematically, what was the total Canadian production for that month, how much money has been put in circulation at what rate to obtain what purchasing power, how much cash was needed, as I explained earlier, and of having accountants to maintain a constant balance between the purchasing power and the production, on the Canadian market, in goods and services.
Mr. Chairman, that is scientific, that is mathematical, that is taking into account the real Canadian values, the fact that a monetary system must be something scientific and not something left to chance. The minister said to the committee on finance, trade and economic affairs that he would perhaps need an electronic computer. I am all for it. If it is necessary to provide the government with a computer to enable them to get all the necessary data on the monthly production of goods and services that would take into account the rate at which money circulates, the purchasing power of the dollar circulating in Canada, all well and good because then it would be possible to provide this computer with statistical data and every month the government would know precisely, accurately, mathematically and scientifically what is the money supply required in Canada?
Mr. Chairman, that is scientific, that is mathematical, that is not imaginary; that is based on facts, since the real purpose of money is to enable one to buy what is being produced and money must be related to production.
[Mr. Gregoire.l
I regret that the Minister of Finance (Mr. Sharp) was not able to listen to this description of the technical method that we would have suggested to him. He has returned to his seat. I have suggested a rigorously scientific method to control the money supply in Canada, but in any event, since it was the last of the two questions that I had to ask the Minister of Finance, perhaps his parliamentary secretary (Mr. Chretien) could comment for him on my few suggestions as to the purely scientific method that is required for the government to determine its money supply.
I would then ask the parliamentary secretary to the minister if he could somehow indicate what the government thinks about the method we have just suggested.


Joseph Jacques Jean Chrétien: I will merely tell the hon. member that we are actually going to buy a computer to unravel the six speeches which he made.


Gilles Grégoire: Mr. Chairman, we see that the Department of Finance is running short of answers and arguments to reply in such a manner. I will not press the point. I will get some copies of Hansard and will show them to the people of Quebec. I will tell them: This is the speech I delivered in a very cool manner on a scientific method to determine the volume of the money supply. Would you like to know what the Department of Finance answered through the authorized channel of the parliamentary secretary? There is the answer. And it will be up to the people to judge the seriousness of the answers given by the parliamentary secretary.
Mr. Chairman, I think that this is another proof that the government is not at all interested in obtaining suggestions. The Canada Bank Act is revised every ten years. It has not been revised for the past 12 years. We are making suggestions to the government and this is how the parliamentary secretary answers. I think it is disgraceful for a man in his position and I find it even embarrassing for the parliamentary secretary to have answered in such a way.
I will not insist because I will leave it to the people of Quebec to judge the value and quality of the answers given by the parliamentary secretary on behalf of the minister.
March 14, 1967


Mr. Dionne:: Mr. Chairman, I am somewhat surprised to find that with such an interesting subject as that of the organization of the Bank of Canada, an institution which is intended to find a way to accommodate the Canadian citizens by making available to them the wealth produced by them in their own country, the participation in the discussion seems limited to a certain group of members. However, I draw some satisfaction out of this situation since it will enable me to express my views on the matter.
By the way, I do not forget that ever since I became a member of this house I saw debates last for one month and even a month and a half on matters which were sometimes trivial and contributed to cast a shadow on our members' reputation. And still, almost the whole team was ready to clarify its position on the Munsinger case, for instance, and many others.
When you contemplate a means to tax people, then you have a good turn-up for discussion. But when you are looking for a system which would enable Canadians to enjoy a decent way of life, members who are ready to take part in the debate are much less numerous.
It surprises me that after so many years of study and after thousands of opportunities to realize that the real source of most of the problems is a financial one, we now seem to urge the passing of a bill, which, in my opinion, does not constitute a very constructive contribution since it provides for few changes with this exception that it allows for a greater control of the financial system over the economic activities of the country.
It is reasonable to believe that the monetary system of a country should be a public service operated in the public interest. It is inconceivable that one or two private enterprises can control the amount of money in circulation. Under our ill-organized system, the only way to increase the amount of money in circulation is for a bank to make a loan to the government or to an industry by making a simple entry in the credit account of the borrower. But such loans are not in the least based on the country's increased production.
[DOT] (9:10 p.m.)
When the government borrows in order to purchase weapons to keep wars going in various countries in which they should not 83033-885
Bank, of Canada Act
be interested at all, to purchase, for instance, nuclear arms, that does not increase one bit the amount of goods on the market. The only increase is in the means of destruction; however, it brings more money into circulation because of the credit created by lending banks. Every day we see men and young men offer their services to increase the country's production. The amount of money in circulation is not in keeping with production.
In our modern economy, you need more and more money because of the great discrepancy between labour and money, so there is a surplus of production. Fewer people are earning money because of scientific processes and automation increasing production while the number of salaried workers decreases. Money is necessary to ensure the distribution of goods, but the amount in circulation is not proportionate to the amount of goods on the market. Men produce things, and with the help of machines they produce a lot of things. But only a few men, the bankers, are authorized to create money. The money they create is not proportionate to the things men produce. The makers and destroyers of money, the bankers, control governments, sometimes prevent government representatives from speaking up.
Everything is there, except money, to ensure the prosperity of the country, but the government, who ought to promote prosperity, does not do anything about it.
When abundance goes to waste in the face of crying needs, merely for lack of money, the government seems paralyzed and unable to act. Why? The self-same government intervenes to give orders to the taxpayers or the civil servants; but it does not intervene to give orders to those who must produce money and who bring hardship to the whole population by so ill-advisedly performing their duties. There are powerful men who use their power rather strangely and harmfully. Pope Pius XI could well write:
They hold so close in their hands the life of the economic organism that without their consent no one can breathe.
It is not that there is a lack of difficult things to accomplish, or that the citizens are afraid to fail. We have reached heights in the field of useful production and we can increase production four-fold if needs be. Our forefathers, generation after generation, have always bequeathed to us a greater Canada, better settled, more productive. Farms, yards,

March 14, 1967
Bank of Canada Act
plants of all kinds serve production in such abundance that our businessmen's major problem is finding markets in every continent to dispose of our goods. And all along, brains coming from our institutions of learning continuously create new means of increasing production with less and less labour. Every possible means is used to furnish everything needed to live.
Yet, we are faced with a situation where a sizeable percentage of our families find it very difficult to buy food, clothing, lodging and pay for health care. Our learned politicians, at least those who believe they are learned, are not even able to find the means of distributing the abundance that exists and that could be distributed if all citizens had the privilege of working instead of having to go through unemployment periods as a result of an unbalanced system.
The livelihood of the majority of individuals and families today depends on a salary, and the salary depends on employment. It is obvious that as soon as employment ceases, the salary ceases too. The individuals as well as the families find themselves faced with hardship through no fault of their own. Undeserved misery, according to Pius XI, fearfully hard and cruel economic life.
I think that we do not pay enough attention to the real value of things. If there were only banks in the country, banks everywhere, but no farms; bankers but no labourers or farmers, safes in the bank vaults, but not a single bag of flour or potatoes, not a pound of meat, cheese or butter-nobody could live in this country even with banks, it would be impossible to stay here without any food to eat.
Faith in our country, that is the real credit of a nation, comes from those who contribute one way or the other to the production of goods; from those who work, who teach, who create, who raise families and render services.
The base of credit, which is the real value of money, is the production of the country and those are all the factors who contribute to maintain or increase production.
Those factors are found in organized society, in the means of production but not in the banks.
All members of a society, considering the organization of life in society, enable us to receive from others and to give to others; therefore, the real credit of a country is an eminently social credit.

Besides, it is on that same credit the provinces and nations have been accustomed to sign debentures which they ask bankers to transform into credit money.
Unfortunately, as soon as banks have transformed that credit into credit money, for governments or for industrialists, bankers look upon it as if it were their own. They lend it and keep the debentures, the borrowers' promissory notes as a guarantee, giving them the right to take hold of the very basis of credit, the means of production, should the borrowers not repay the bankers, with profit, the credit the producers have built, but which the banker has only put into circulation.
We feel this is prostituting the credit of this country and turning it into a debt which burdens our economy.
How is it that the government orders through its legislation, to the officials of the income tax, to deduct from the worker's salary this or that amount and that it does not seem to be able to order a few holders of bank charters to create credit in accordance with the actual wealth? How is it that the government of this country continues to yield to the requirements of the financial system; a government supposed to lead, has become the flunkey of private interests.
I think it quite fitting and proper to quote here a part mentioned in the "Quadragesimo Anno" Encyclical by the highest doctrinal authority on earth.
[DOT] 9:20 p.m.
Pope Pius XI wrote the following under the subtitle "Free competition followed by economic dictatorship";
In the first place, then, it is patent that in our days not only is wealth accumulated, but immense power and despotic economic domination is concentrated in the hands of a few, and that those few are frequently not the owners, but only the trustees and directors of invested funds, who administer them at their good pleasure.
This power becomes particularly irresistible when exercised by those who, because they hold and control money, are able also to govern credit and determine its allotment, for that reason supplying so to speak, the life-blood to the entire economic body-
It is interesting, no doubt, to find out that certain demonstrations occur on the anniversary of encyclicals; nevertheless, I think the important thing is to put into practice the recommendations included in them.
If politicians who are well paid out of the people's taxes are satisfied with following the
March 14, 1967

courses prepared in advance by their masters, the financiers, without taking into account the hardship in this country, without seeking to understand the reasons warranting a change in distribution, they will have to bear the responsibility of their carelessness in the face of abuse of all sorts, and questionable contracts, which give rise to bitterness, envy, and desperate actions.
Some politicians will tell you: but this financial power is international and we could get ourselves into trouble on the national level if we change our financial system.
It is not necessary to wait until the whole wide world is ready to get rid of it. When a whole family is sick, everyone in it does not have to wait to seek a cure until all the others are ready to recover at the same time.
There is no reason why a country set upon reforming its financial system should not do so immediately on its own
Nothing prevents a country which so desires to balance the purchasing power of the people with the domestic production or with imports from other countries in exchange for our surpluses.
And nothing prevents a country from setting up a more adequate system to distribute the wealth by combining the dividends to all its citizens with the salaries of the producers to make up the total purchasing power.
International trade would not be affected in any way, except for the better. In fact, goods and not money go from one country to another. Social Credit does not close or open the door to them.
Under a creditist system, the goods which come in, imports, are considered as incoming wealth. The goods which go out, exports, are outgoing wealth undoubtedly to get something else in return.
Therefore, a creditist system does not tend at all to erect tariff walls against products offered by foreign countries. And that would facilitate trade relations between nations.
Today, we fear that the wealth which comes in may cause hardship to our people, and leave them unemployed, because the present system distributes the purchasing power only to the producing employees. Social Credit does not limit in that way the purchasing power to employment; it bases it on the whole production offered, from wherever it may come. Therefore, Social Credit is not afraid of the leisure time due either to foreign production, 23033-8851
Bank of Canada Act
or to automated production. Leisure time is a boon; it is free time which one can devote to activities of his own choice. Free activities enrich life much more than subservience to an assembly line, where the worker carries out orders without really knowing for whose benefit or for what purpose.
The only thing a country may lack to establish a sensible economy, is the decision to do so by the government with the power to legislate.
We could give abundant examples of the results of this debt money system, the construction of public buildings, bridges, roads, which have been paid for three times, due to the loan mechanics provided by the present banking system. Costly wars in men and materials which were won and which we had to keep on paying for years later, all this is quite illogical.
An understanding mayor of a city in our province, faced with the perpetual indebtedness system, not long ago, gave a full summary of what had happened on the occasion of an issue of bonds worth $573,500.
The town first had to pay $17,211.60 in brokers' fees, then $2,051.15 for the printing of the bonds to which were added the legal fees. Furthermore, the discount amounted to $17,000. For the first portion of that loan, in the amount of $486,000, we will have to pay, on top of that sum a total amount of $494,157.50 in interest. In 40 years, that financing for which the city received less than $475,000 in real securities, will have cost $980,157.50.
Interests and costs more than double the' price of the loan. The city will have to pay interests on the amount of the loan, and not only on the money it receives, but even on the money it does not receive, that is on the brokers' share, the bankers' discount, etc. The same goes for the school board loans.
The Bank of Canada should initiate such a service in view of reducing by a half the costs of the municipal loans. This would be one of the main methods to relieve the taxpayers and help the municipalities and school boards to balance their budgets.
If the Bank of Canada were really a bank for the Canadians, at the municipal, educational, provincial and federal levels, Canadians from all parts of the country would not have to pay $900,000 to get $450,000, on the occasion of a municipal loan.

March 14, 1967
Bank of Canada Act
Surely, the difference does not profit to those who toil toward the development of the country. I believe that the minister of Finance and all the Canadians aware of their responsibilities should try to understand the difficulties which arise from this topsy-turvy system and find a practical solution.
[DOT] (9:30 p.m.)
We, the Creditistes, make our own suggestions. If the government or a number of members do not seem in agreement with such suggestions, at least, they could find means reasonably effective to try and tidy up the present chaos.


Mr. Isabelle:: After his eloquent address, I would like to put a question to the hon. member. He has just made an extraordinary speech. How is it that after all your statements, Time magazine, in 1965, happened to call you "Funny money boys"?


Charles-Eugène Dionne: I shall answer the hon. member who has just this question. Personally,
I do not need Time magazine, "money" here and "money" there, to prove my use of common sense, of logic. There are as many commodities as needed, they come in huge quantities, but there are no means to distribute them.
The politicians, and the one who has just spoken to me, agree that there are many products of all kinds, that this production could be increased and they do not have the brains to find a way to distribute them. It is unfortunate but such things are obvious.


Henry P. Latulippe: On a question of privilege. In reply to the hon. member who has read in Time magazine about funny money, I would tell him that he is rather a funny monkey to repeat the same thing. I would tell him that he has never known what a monetary system is, I would tell him that he lives in a monkey system, a crazy system and that he is one of the most remarkable-


Jean-Thomas Richard: Order. That was not a question of privilege. The hon. member for Chapleau has the floor.


Mr. Laprise:: Mr. Chairman, I do not intend to speak at length on Bill No. C-190. I would rather ask the Minister of Finance and Receiver General a question.
I do not intend to repeat everything that has been said. My colleague of the Ralliement Creditiste have set forth the monetary reforms we advocate. The hon. member for Lapointe (Mr. Gregoire) has also submitted to the

minister and the committee the principles of Social Credit, and in the past day or two, we have done our utmost to make the minister, the committee and the Canadian people understand the defects of the present monetary system and the solutions we advocate.
The information I am asking him this evening, stems from the main estimates tabled recently by the Minister of National Revenue and President of the Treasury Board (Mr. Benson). I find therein that in 1967-68, the public debt charges will cost us $1,275,906,400. Such are the debt charges we will have to pay in 1967-68.
We have to pay this amount because our debt is in excess of $19 billion, according to the summary report of public accounts for March 31, 1966. It costs us some $1,200 million in interest on that debt.
Then, Mr. Chairman, to explain my point, to have it better understood, I shall use a statement made at the banking and commerce committee, in 1954, by the attorney general of Alberta, Hon. Lucien Maynard. One finds that statement or part of it on page 338 of Minutes of Proceedings and Evidence of the committee for 1954.
I quote:
Defects of the banking system.
After this sketchy review of the evolution of banking principles and the history of the bank in Canada-
As you can see, Mr. Chairman, this is not the first time that consideration is given to the banking system. Every ten years, the Bank of Canada Act is brought before the house; it is examined and people present briefs to the members of a committee made up of members of the house. The act is reviewed, but, and, this is noticeable, very little is done.
I continue with the quotation.
...it is now possible to draw some specific conclusions. One of them, with which I will deal, brings home what, to me, seems to be the main defect or the weak point of the Canadian banking system. I do not mean to imply that it is found only in our banking system. It is an integral part of the banking principles and operations of every country in the world, including the United States, Great Britain, France, etc. However, I shall confine my remarks to the situation in Canada because the committee was asked to examine the Canadian banking legislation and its effects on the economy of the country.
The chief disadvantage or weak point of the Canadian banking system arises from the effect it has of piling on the shoulders of the Canadian citizens a constantly increasing load of debt that can never be paid off.
March 14, 1967

As I have previously explained, ithe first charters originally gave the banks the power to issue notes to the extent of three times the cash on hand. You will recall that the banks were required to remit in kind all the notes issued. Some banks succeeded in doing this and they are still operating. Others failed because they were not able to meet this condition. You will find on pages 782 and 783 of the proceedings of this committee a table showing what happened to the 110 chartered banks that have operated or were incorporated since confederation.
Only eleven are still in business.
There are now eight and there will soon be ten, because two new bank charters have been granted.
I will read further:
Profits made by banks are especially the result of interest charged on loans. At the beginning, profits were small, simply because loans were based on the figure of fiduciary circulation, restricted itself to three times the share capital paid in addition to the bank cash deposits. Nowadays however, profits are higher, because banks are free to grant some loans under the form of bank credit up to 20 times the amount of legal tender on deposit. In fact, they seldom exceed the ratio of 10 to 1.
Mr. Chairman, a few years ago, during one of the first federal-provincial conference, that is in 1942, a former Conservative leader, who was then premier of Manitoba, Hon. John Bracken, stated at that conference that the present tax source was unbalanced.
As for the interest which I mentioned earlier, it must be understood that the Canadian workers will pay taxes to provide the necessary money for the interest on the national debt.
And this is what led John Bracken to declare in 1942:
The unbalanced tax system transfers the income of comparatively low-wage earners to those who have comparatively higher incomes. The proceeds of indirect taxes collected by the federal government are mostly used to pay the interest on the national debt-
[DOT] (9:40 p.m.)
I would like to ask the minister how he intends to reimburse the present debt of Canada. Only a few days ago, my colleague, the member for Portneuf (Mr. Godin), put on the order paper question No. 2,485, which was answered on March 13, last, as shown on page 13879 of Hansard.
How many years will it take the government of Canada to reimburse the debts it has been accumulating since 1867?
Bank of Canada Act
Here is the reply given by Minister of Finance:
The government of Canada's outstanding debt represents the cumulative total of all government cash deficits less surpluses since 1867. The deficits, have been financed through the sale of cash; securities while surpluses have been used to reduce-the total of securities outstanding. Changes in debt for any period of time, assuming a constant, cash balance, represent the difference between government cash receipts and expenditures of all kinds-and are, therefore, the consequence of the government's fiscal operations. Since these fiscal operations have a very important effect upon Canada's economy, fiscal policy must take into account prevailing economic circumstances and the probable consequences of any action taken.
That is only part of the minister's answer. At this point, I would like to ask him who determines what the prevailing economic circumstances are in Canada. And I quote the end of his answer on that occasion:
It is not possible to predict when economic circumstances would make it appropriate for fiscal policy to aim at achieving cash surpluses. It is* therefore, not possible to forecast whether or to what extent the government would consider it appropriate to reduce or eliminate all its outstanding debt.
So, Mr. Chairman, it seems that the minister does not know how and when we will be able to repay this debt which now costs us over $1,200 million per year.
I am very much concerned about the answer given by the minister, Mr. Chairman, and I will put again the question to him. When and how will he manage to pay that debt, so that the Canadian taxpayer, the Canadian worker, will not have to pay that interest which goes directly to those who hold claims on Canada's debt and who are not farmers or workers or settlers, but who are well off and few in numbers.
I hope the minister will come up with a satisfactory answer. If he does not want to accept the Social Credit policy, let him find another one, at least, let him get us out of the economic mess we are in.


Mr. Allard:: Mr. Chairman, I should like to make a few brief comments on this very important bill. Tonight, we have heard hon, members speak very seriously of the role of the Bank of Canada and make some most appropriate suggestions to the Minister of Finance and Receiver General.
But, for my part, I should like to remind the minister that thousands of Canadians understand that the financial and monetary

March 14, 1967
Bank of Canada Act
administration of our country is a rather complex thing. However, there are also thousands of Canadians who believe that the Bank of Canada does not play the part it should in the economic, financial and administrative evolution and development of our great country.
For example, if I am not mistaken-I am not an expert in this field-I believe that since its establishment in 1934 the Bank of Canada has been empowered by its constitution to lend money to the Canadian provinces. If I remember correctly-and the hon. Minister of Finance can give us precise information on this subject-the Bank of Canada did lend money to our provinces during two years, from 1934 to 1936 but, according to statistics, it has not lent any money directly to the provincial governments.
In my opinion, this is an anomaly, and it is obvious that this important body, this financial and monetary nerve centre does not answer the needs of the provincial governments. The latter are often forced to borrow on foreign markets at excessive rates.
I remember, for example, a very dynamic and necessary event which occurred in the province of Quebec in 1962, when the government of that time decided to nationalize the electric power of the province, which was produced by several private companies, in order to direct and encourage industrial expansion and the development of the natural resources in the province. It was thought important, in the Quebec of 1962, that the state of Quebec should direct the development of the natural resources and the expansion of the industry in the province by owning and controlling the production of electricity in the province. There was a most dynamic and quite justified measure for developing the province of Quebec. In order to meet this provincial requirement, the Quebec government was forced to borrow on the American market $300 million at excessive interest rates, considering the administration costs and the financial position of the province. In such circumstances as well as in all others where requirements of the various provincial governments in this country are involved, the Bank of Canada, this national institution whose prime object should be to serve the Canadian citizens as well as the governments representing the Canadian people-this backbone of our monetary and financial administration, does not adequately meet the needs of

Canadians and of the provincial and other governments in this country.
Mr. Chairman, this suggestion to increase the services provided by the Bank of Canada to the Canadian people, to the provincial as well as the municipal governments and to the school boards, as the hon. member for Trois-Rivieres (Mr. Mongrain) has proposed, is most timely. It goes without saying that the Bank of Canada should serve the interest not only of the federal government, but also of the provincial and other governments in this country. It should extend its field of operations. Its constitution of 1934 does not prohibit such an extension and precedents exist to the effect that the bank did make loans from 1934 to 1936.
[DOT] (9:50 p.m.)
Obviously, Canada, through this organization that is the Bank of Canada, is even lending money to foreign countries, to foreign banks. I can understand that Canada, in the external affairs field, as well as in international affairs, as far as financial and monetary matters are concerned, cannot live isolated from other countries and other international organizations, such as the International Monetary Fund. Considering certain historic and economic bonds, obviously, the government of Canada has even loaned, in 1964, to the Bank of England a sum of $200 million, I believe, without interest.
This is the service that our Canadian bank renders to foreign countries. But we must not forget that charity begins at home. The first to profit by this intelligent administration by the qualified personnel of this bank and by all the administrative machinery would certainly be the provincial governments and the other governments of this country.
I ask the minister to take into account the claims of many Canadians. I think that a body like the Bank of Canada would have to play a better, more obvious, and very useful role. And this would be an opportunity, among many others, to cement a kind of national unity, not in the realm of feelings, but in the field of the dollar which is very interesting for everybody, for all Canadians, whatever their ethnical origin.
For instance, if British Columbia, Ontario, the Maritimes, Newfoundland and the province of Quebec were to go to the Bank of Canada, managed by the federal government, to borrow the money they need to develop
March 14, 1967

their provinces and natural resources without always having to go abroad, I am sure they would be very pleased. That would help to draw the various governments closer to one another.
There is a suggestion which is not new. Let us hope to get results along this line.
Mr. Chairman, I want to conclude my brief remarks by also asking the minister and I appeal to him to make these representations to the cabinet, where appointments are concerned to recommend to the board of directors, to the governor of the Bank of Canada, to appoint more French Canadians at the top management of this bank.
I do not know what is the present composition but I suppose it is not so much different from the figures provided in 1960, to the then prime minister, by the Conseil de vie fran-gaise. These figures are reported at page 18 of a booklet I wrote in 1963 and which is entitled: "The Last Chance". Here is what it says:
At the Bank of Canada, out of a total of 12 high officials, only one was a French Canadian.
I am sure that the minister is convinced that there are now many competent French Canadians in business, in monetary and administrative matters. Some French Canadians have proved themselves in the field of management and hold high administrative posts in the most important chartered banks in the country. We even have French Canadians who have spent sometime with chartered banks outside Canada, who have acquired the best experience at the administrative, financial and monetary levels.
Again that would be an opportunity to strengthen national understanding and unity.
In this centennial year, should there be any vacancies within a few weeks or months, some French Canadians could be added to the high officials of the Bank of Canada. It is not only a sociological matter, Mr. Chairman.
If a French Canadian was appointed to a high post it would enable those who direct the monetary and even financial policy of this country to understand better the aspirations of the province of Quebec which are not revolutionary but evolutionary. Quebec wants to play its role in Canada; it wants its fair share in every field. In the financial field, in the borrowing field, in the Bank of Canada, in the monetary field, Quebec wants to make a contribution. It would like to make suggestions,
Bank of Canada Act
and French Canadians would even like to be consulted.
As the hon. member for Mount Royal (Mr. Trudeau) pointed out quite recently, French Canadians must think of asserting themselves competitively in our country, but before we can do so, we must be provided with opportunities to participate in a fair competition. In many fields, especially with regard to higher positions in the Bank of Canada, French Canadians have not been allowed to compete, as pointed out recently by the hon. member for Mount Royal before the members of the Canadian Club in Montreal.
If we are to compete, some of our compatriots must be appointed and there are many of them. The minister knows who they are, as well as the hon. member for Mount Royal and other government members. Let us be allowed to make our contribution and the Bank of Canada will be none the worse for it. On the contrary it will be in a position to better direct the Canadian monetary, financial and economic policy, taking into account the characteristics of the Canadian mosaic.


Gilles Grégoire: Mr. Chairman, I do not wish to speak at great length, as I do not want to delay the passing of this bill tonight. If the government wishes to continue a few minutes after ten o'clock in order to pass this bill, we will not object. We want to show that our part in this discussion is not obstruction, but we participate therein so as to express our point of view.
If the minister wants to have this bill passed tonight, we would have no objection to sitting for ten or fifteen minutes after ten o'clock. We believe that the whole bill could be passed by that time.
Mr. Chairman, I would simply like to summarize our position in the course of the debate that took place yesterday and today as regards the amendments to the Bank of Canada Act.
We regret that the government did not see fit to consider, analyse and take into account the suggestions we made in order to bring a few improvements to the Bank of Canada Act.
Our suggestions, the improvements we are suggesting pertain to two areas. First, we have expressed the wish that the Bank of Canada should create credit, instead of the chartered banks. We feel that money is credit. This is the most important factor, the factor which is most essential to the economic development of a country. We do not think that

March 14, 1967
Bank of Canada Act
the creation of credit and money should be left in the hands of the chartered banks which are private enterprises and which have this exclusive privilege and who use this creation of credit for their own purposes. Now, the chartered banks create credit, as the minister himself admitted it.
[DOT] (10:00 p.m.)
We do not want this creation of credit left to some large chartered banks who would use it not for the benefit of the population as a whole, but for their own interest, for their own benefit.
At the same time, if this creation of credit were put under the control or in the hands of the Bank of Canada, this crown agency would not act in its own interest or for the benefit of some big capitalists; to the contrary, it would act in the public interest and for the benefit of every Canadian. This is the fundamental difference.
A state bank like the Bank of Canada should control and regulate itself the creation of credit in favour of the population of Canada, whereas actually the private banks, that is the chartered banks do so to their own benefit and in their own interest whenever they can.
We are against this, because creation of credit is probably and certainly the most important factor of our economic life.
Second, we have asked the government and the minister which criteria the Bank of Canada and the government itself use to determine the money supply. It is useless to say that we were not satisfied with the replies given, since everything is run in a haphazard way, without any directives and there is nothing really scientific which would serve to determine the money supply which is needed.
To us, this is very important because upon the amount of money supply will depend the economical expansion of the country, the buoyancy of the country as well as the prosperity of every Canadian.
Mr. Chairman, it is unfortunate that the minister and his government chose not to take into consideration those two determining factors in our growing Canadian economy. It is regrettable. We believe the Minister of Finance should have taken those suggestions into serious consideration, because the objective here is to enable every Canadian citizen to live decently, honourably, with dignity and

liberty and to enjoy security in a country fabulously wealthy, capable of ensuring that each and every one living here can live decently and honourably.
If the minister is bent on holding up our system to ridicule, well, let him find another one under which can be achieved the objectives for which any economic system is established, that is to ensure that all Canadian citizens can live decently, honourably and with dignity. That is what we expect from our Canadian economy. We have had one opportunity since yesterday-for the first time in 12 years to express those ideas to the government. It chose to ignore them, not to act on them. We are sorry about that. Now, it will be up to the Canadian people, to the people of Quebec to pass judgment on the attitude of the minister, on the policy of the government in that field. The people will continue to ask: what is the use of having a prosperous country if that prosperity is not reflected in fact in the lives of its citizens? What is the use of having such bounteous natural resources in Canada, if Canadian citizens can not share them and benefit from them? That is what we would like to achieve through our suggestions to the Minister of Finance.
We regret that these suggestions have not been heard. We shall let the people judge and they will be capable of deciding whether it is normal, logical and reasonable to live poorly in such a rich and prosperous country. What would bring this prosperity in our Canadian homes would be an adequate economic and monetary system. But there are some who do not want our monetary system to be adequate. They tell the Canadian people: keep on bearing it and living in misery in the midst of plenty.
It is now for the Canadian people to judge the minister and the present government.


[Stage Direction]
Clause agreed to.
Clauses 2 to 10 inclusive agreed to.
On clause 11-Fiscal agent of Canadian government.
Henry P. Latulippe: Mr. Chairman, I point out that it is ten o'clock. We have an amendment to move on clause 11. We will have the opportunity of moving it tomorrow and discussing this section.
March 14, 19G7	COMMONS


Gilles Grégoire: Mr. Chairman, I have a suggestion to make to the hon. member for Compton-Frontenae, in order to prove to the government that what we have said has not been done in order to create obstruction. If the hon. member for Compton-Frontenae has an amendment to move on section 11, and to that section only, he might agree to have the other sections on which there is no amendment passed, and tomorrow, we could come back to section 11?


Herman Maxwell Batten: Is it agreed that clause 11 shall stand?


Some hon. Members:: Agreed.
Clause stands.
Clauses 12 to 20 inclusive agreed to.


Herman Maxwell Batten: Shall clause 11 carry?


Henry P. Latulippe: Mr. Chairman, I also have an amendment to move to the preamble of the bill, because the preamble of the bill was removed in 1954. In my opinion, a bill of this sort should have a preamble to explain the general meaning of the bill.
Therefore I should like to move an amendment to the preamble of the bill.


Herman Maxwell Batten: It being ten o'clock, shall I rise and report progress?
Progress reported.



BUSINESS OF THE HOUSE

Reynold Rapp: Mr. Speaker, what will the business be for tomorrow?


Mr. Pennell:: It is proposed to continue with item No. 63, the Bank of Canada Act amendments, to be followed by item No. 74, the Bank Act, and item No. 75, the Quebec Savings Banks Act.



PROCEEDINGS ON ADJOURNMENT MOTION

[Stage Direction]
A motion to adjourn the house under provisional standing order 39A deemed to have been moved.
Proceedings on Adjournment Motion
[DOT] (10:10 p.m.)

Mr.   J.-A. Mongrain@Trois-Rivieres: Mr. Speaker, this afternoon, I asked the Minister of Transport (Mr. Pickersgill) if he had received a telegram from the operators of our grain elevators and from the municipal council of Trois-Rivieres objecting to the increase in fees on the St. Lawrence seaway and the Welland canal.
The minister said he had received no telegram. I understood why, a few minutes later, because while questions were being asked here, which, to my mind, were not important, I took time oft to go through the papers and I realized that the minister had just stated that there would be no increase.
So I immediately called those people, my municipal council and the directors to tell them: If the telegram has not gone, do not bother sending it because it seems that the problem is settled. I have here the telegram, the original telegram reporting that the municipal council of Trois-Rivieres strongly objected to the increase in fees on the seaway as likely to be detrimental to the economy of the whole Trois-Rivieres area.
But I would nevertheless like to take this opportunity-and I thank the minister for his intervention to prevent such an increase in fee-with your consent, since I realize I am stretching the rules, if ever so slightly, to remind the minister that the grain elevators of Trois-Rivieres are faced with a difficult problem which I would not want to explain all over again since I have already spoken of it. I should simply like to ask the minister whether he could not unofficially and for the good of the economy of the whole area served by the grain elevators to ask the responsible officials of the National Harbours Board to call, again to discuss the matter, an informal meeting with the mayor of Trois-Rivieres, the representative of the grain elevators, the federal member for Trois-Rivieres and the provincial member for Trois-Rivieres, because there is a question of taxes, as the minister is aware, that concerns the provincial area.
I believe that if we could gather around a table these people whom I call men of good will, to talk together, we might find a compromise to a difficult problem which endangers the very existence of our grain elevators, something which would seriously affect the
14012	COMMONS DEBATES	March 14, 1967
Proceedings on Adjournment Motion area. We are also suffering from the effects of progress. You know that my hon. friend from Lapointe (Mr. Gregoire) claims that winter navigation does not operate well. I will state, tonight, that it is operating too well and the ships go right up to Montreal and do not stop at Trois-Rivieres. We are therefore victims of progress, and as a matter of fact, for the first time this year, we have almost no ships.
I understand there are other considerations, and that longshoremen are not too anxious about it, but the fact still remains that our harbour facilities and particularly our grain elevators are mortgaged. I would therefore ask the minister if he would first take the initiative of calling this informal, and I mean informal, meeting of all these people of goodwill.
And here I will perhaps encroach more seriously upon the rules of procedure, to remind the minister that he once promised to help me to appeal to the Canadian Pacific to restore the night train between Montreal and Quebec for Expo '67.
I must say to the minister that in spite of the official resolutions of at least 20 or 25 municipalities, in spite of the support of a large number of members of his party, of the opposition and representatives of the provincial governments-the legislature is passing this week a bill in that connection-the authorities of the Canadian Pacific are objecting to that project and deny us that night train when the last train is at 7.30 p.m. It is being claimed we do not have the necessary facilities, whereas we know that the cars are loaned to the Canadian National, which has two more trains on the south shore, a fact that does not help the north shore.
We know that the city of Montreal will not be able to accommodate all visitors to Expo '67. We know that millions of persons between Montreal and Quebec will want to visit Expo '67, will wish to spend the night there and not be obliged to come back at 7:30 in the evening, but rather at midnight as was done in former days when we used to have a train at that hour. We know it is not true that such a service is an uneconomic one, since we have made economic studies on this matter.
Therefore, I remind the hon. minister of the promise he made to me that he would willingly support our claims to the president of the Canadian Pacific. I say to him that in a few days, the mayors of the municipalities concerned, along with some members of this

house and the member of the provincial legislature will call upon the authorities of the Canadian Pacific in order to prove to them by means of figures and arguments, that they have no right to refuse this essential service to the people, that they have no right to say that it is uneconomic. Besides, we will show them that it is economic.
I know how obliging the minister was. I also know how concerned he is with the whole north shore economy which is in serious jeopardy because of this lack of Canadian Pacific service. I will tell the minister that the service offered by the Canadian National is infinitely better than that of the Canadian Pacific on that section of the province of Quebec I am referring to, except that there is no railroad along the north shore of the St. Lawrence that could serve the more important industrial towns.
Then, I shall recapitulate and express thanks to the minister whose intervention prevented increased rates on the seaway. I beg him to kindly exert his authority with the National Harbours Board to call a meeting of men of good will to settle the problem of grain elevators in Trois-Rivieres. And I request him to support with his full authority, which is certainly considerable, since he is the man who decides to grant those fantastic privileges requested by the railway companies, that team comprising mayors, members of his own party, members of opposition parties and members of the provincial legislature who want, for the duration of Expo '67, a night service between Montreal and Quebec.


John Whitney Pickersgill: Mr. Speaker, the hon. member for Trois-Rivieres (Mr. Mongrain) is very persuasive-obviously more persuasive than I am, because so far my attempt to mediate with the Canadian Pacific does not seem to have produced results. However, I shall have another try.
With respect to the other suggestion, that I seek to arrange an informal meeting or get the harbours board to arrange an informal meeting to discuss this question of the tax problem in relation to the elevator at Trois-Rivieres, I will be glad to pass the suggestion on to the harbours board. Perhaps I will be able to be a little more persuasive in that case than I have so far been able to be in the case of the night train to Quebec on the Canadian Pacific.
March 14, 1967



DOMINION-PROVINCIAL RELATIONS-BRITISH COLUMBIA-PROPOSED ESTABLISHMENT OF HARBOUR COMMISSION

Mr, Frank Howard (Skeena):: Mr. Speaker, for some considerable period of time, certainly before my entry into federal politics, we have had a great deal of trouble in the northern coastal part of British Columbia in getting adequate consideration from the government for harbour development. My predecessor, the late Mr. Applewhaite, who was respected in this house and at home as well, has told me in discussions I had with him during the time I was a member of the provincial legislature that this matter arose on a number of occasions, but not a great deal of satisfaction was received.
We have now perhaps four general communities in the northern part of British Columbia that lend themselves to proper harbour development, that is the type of harbour development for shipping purposes. I refer to Stewart, Kitimat, Prince Rupert and Bella Coola, all of which have access or will have access to the interior part of the province and would lend themselves to provincial harbour development.
Even in so far as Stewart is concerned, a few years ago we saw the federal government refuse to proceed further with the agreement with the province of British Columbia to build a road under the roads to resources program which would connect Stewart with the northern hinterland of the province, and the Yukon Territory. If the road had been provided, under a joint program, it would have put Stewart in the business of being a deep sea port. Just the day before yesterday, I believe it was, a bill was introduced in the British Columbia legislature to establish a provincial harbours board. This act would be called the provincial harbours board act.
The purpose of the harbours board, as I learned from a telephone call, would be to develop and to encourage the development of harbour facilities in the province, to provide access to and from such harbour facilities and to assist and promote industrial development of the province in conjunction with harbour development. In the last few years, Mr. Speaker, we have perhaps gone into the area of federal-provincial co-operation to an extent far in excess of that which existed before. We have had federal-provincial conferences on a variety of subjects, not only fiscal matters such as used to take place but matters such as fisheries, Indian affairs, and heaven knows what else.
14013
Proceedings on Adjournment Motion
We are in an era of federal-provincial conferences and the atmosphere has been right for some three or four years now for provincial governments to gain access to the ear of the federal government and to work out agreeable arrangements with regard to a variety of problems confronting the different sections of the nation. I submit that here is another opportunity for the federal government to take advantage of the spirit of cooperation that exists between federal and provincial governments, because the federal government is involved in the development of harbours and has been for some time. Here is an opportunity for co-operation to the fullest extent possible so that, with respect to the coast of British Columbia, we may get an orderly, planned harbour development program under way that will give the coast of British Columbia an opportunity to develop its full potential in so far as export shipping is concerned. It would provide access to the deep sea ports for the commodities not only of British Columbia but of the prairie provinces as well, to a far greater extent than exists at the moment.
[DOT] (10:20 p.m.)
I hope that co-operation will take place and that we will see this unified approach of the federal and provincial governments to the matter of harbour development, now that the provincial government has expressed its desire to get into this field by the introduction of a bill-of which, of course, I do not have full details at the moment-which sets out the concept of harbour development. Naturally I have a prior interest in the northern half of the province, because that is the area that has been neglected.
I was rather taken aback by the eruption of the minister today resulting from the question that I finally got through to him via Mr. Speaker's hands. I got the impression that he might be rather opposed to the idea of British Columbia engaging in this sort of thing, because of the constitutional requirements. I sincerely hope that he is not opposed to the idea but will work in a co-operative vein. I hope he will not be too rankled by the invective or, as the minister put it, the allegations of the attorney general of the province who, as we all know, like the Minister of Transport when making speeches is oft times not able to control his verbosity in explaining matters. I am sure that the Minister of Transport will give due credit to the remarks of the attorney general.
14014	COMMONS
Proceedings on Adjournment Motion
So, Mr. Speaker, in this regard I say, please do not take steps, as is permissible under the British North America Act, to disallow the legislation and to engage in a full scale war with British Columbia-because after all on this question, Mr. Minister, we are correct.


John Whitney Pickersgill: Mr. Speaker, I thank the hon. member for his lesson in etiquette, which comes exceptionally well from him. There is nothing I would welcome more than the co-operation of the government of British Columbia or the government of any other maritime province in the development of our harbours.
When on November 10 last I announced in Vancouver that the boundaries of Vancouver harbour under the jurisdiction of the harbours board would be extended south from the present limits of Vancouver harbour to the international boundary, I had informed the premier of British Columbia before I made the announcement, as a matter of courtesy. He asked me whether we would co-operate with any plans the province had, and I said that as long as they were in the national interest we would be very glad to do so. I gave him that assurance and said that I hoped that the co-operation would be reciprocal.
I also said, Mr. Speaker, that the government intended at once to initiate long term planning for the development of the facilities that would be required for shipping through the lower mainland, when the capacity of Burrard Inlet and the Fraser River ceased to be adequate to meet traffic needs. I pointed out that there was still considerable room for expansion both in Burrard Inlet and in the Fraser River, but that long term planning should not be delayed.
I also pointed out that the harbours board already had under way economic studies designed to forecast the nature and volume of water-borne shipments up to 1976, and trends to 1986. In addition to the economic studies I said that engineering surveys would also be required. Only last week, Mr. Speaker, the government authorized the National Harbours Board to engage the engineering firm of Swan Wooster to work out plans for future port development between Point Grey and the international boundary, taking into account all
DEBATES	March 14, 1967
types of cargo which can be forecast and taking into account as well the existing and future planned development within Burrard Inlet. This study is to include feasibility, economics, engineering and chronology and is to take into account the full findings of the three studies that have been undertaken in the economic field. Swan Wooster were advised yesterday morning that the study had been approved and should be proceeded with at once.
All this planning is, of course, in addition ' to the very large developments that are taking place in the existing port of Vancouver, which is still a long way from being used to full capacity. The lower mainland harbour facilities are alredy handling most of the overseas export traffic of one third of Canada. These harbour facilities are a vital national asset which must and will be developed in the interest of Canada as a whole by the national government, which has the exclusive constitutional responsibility.
Needless to say we will welcome-and I underline this-the co-operation of the provincial and local authorities as well as that of private interests; but co-operation obviously involves consultation and not unilateral action without advance notice by a government which does not have the constitutional responsibility.
With respect to northern British Columbia I think, with the hon. gentleman, that we shall have to make much more use of Prince Rupert, Kitimat, and probably of Bella Coola and Stewart as time goes on. I think it is in Prince Rupert and Kitimat that we should envisage the earliest development. It is clear with its greater proximity to the Orient that the advantages recognized in Prince Rupert when the National Transcontinental and the Grand Trunk Pacific railways were built at the beginning of the century, will be realized long before the end of the century. This involves a national obligation which will be discharged by the national government in the interests of the nation. In doing so we shall welcome all the co-operation we can get from the local authorities and from the provincial authorities. We shall welcome the co-operation of all whose interests are concerned.
Motion agreed to and the house adjourned at 10.30 p.m.

Wednesday, March 15, 1967