1967-03-21

COMMITTEES OF THE HOUSE

[Stage Direction]
Eighth report of standing committee on industry, research and energy development-Mr. Cashin.
[Stage Direction]
Eleventh report of standing committee on broadcasting, films and assistance to the arts-Mr. Stanbury.
[Stage Direction]
Fifth report of standing committee on Indian affairs, human rights and citizenship and immigration-Mr. Klein.
Tenth report of standing committe on justice and legal affairs-Mr. Cameron (High Park).

Mr. R. J. Orange (Northwest Territories):: Mr. Speaker, I have the honour to present the sixth report of the standing committee on northern affairs and national resources, in English and in French.


Mr. Dinsdale:: I rise on a point of privilege, Mr. Speaker. I should like to point out that this report is presented on division.
[Note: Text of the foregoing report appears in today's Votes and Proceedings.1



LABOUR RELATIONS


Hon. J. R. Nicholson (Minister of Labour):: Mr. Speaker, I am pleased to inform those hon. members who have not heard it over the air that an agreement has been reached on the terms of settlement between the railway companies concerned and the negotiating committee of the Canadian Brotherhood of Railway, Transport and General Workers representing some 20,000 employees. The agreement is to be submitted immediately for ratification. I may say that the agreement was reached with the assistance of Mr. Carl
Goldenberg who it will be recalled was appointed mediator some months ago. In view of this development both the brotherhood and the companies concerned have asked that I withhold any action or arbitration on this particular dispute.
I also wish to announce the appointment of a board of arbitrators under section 10 of the Maintenance of Railway Operation Act, 1966 to deal with the dispute between the shop craft unions and the railway companies mentioned in the schedule to the act. Some 23,000 employees are involved. This is the only group that now has asked for arbitration. The board of arbitration will consist of Hon. Wilfrid Roach, formerly a justice of the Ontario court of appeal, Mr. Leon Lalande, Q.C. of Montreal and Dr. Horace Read, Q.C. of Halifax. Mr. Roach will serve as chairman of the board.
[DOT] (2:40 p.m.)
I also wish to lay before the house, Mr. Speaker, the regulations establishing the said board. I do so by tabling two copies in English and two copies in French.


Mr. Speaker:: Has the minister leave to table the regulations to which he has just alluded.


Some hon. Members:: Agreed.

On the orders of the day:


Mr. David Lewis (York South):: May I ask
the Minister of Labour a question in two parts arising out of the announcement he made earlier. First, is he in a position to inform the house whether the settlement between the railways and the C.B. of R.T. follows the lines of the settlement made with other unions with the assistance of Mr. Goldenberg? Second, can the minister inform us whether two of the members of the board of arbitration which he announced, Mr. La-londe and Mr. Green, were appointed on the recommendation of the parties to the dispute or by the governor in council?


John Robert (Jack) Nicholson: To answer the first part of the question, there

March 21, 1967
Inquiries of the Ministry are some points of difference in the settlement reached as compared with the settlements in the other cases, but there is a uniform pattern throughout all the settlements. The differences are those one might expect because of the varying circumstances involved.
With regard to the second part of the question, the responsibility for the selection of the arbitrators was placed by parliament upon the governor in council. Incidentally, I might point out that the hon. member erred in the name of one of the arbitrators. It is Dr. Horace Read, not Mr. Green. All three of the arbitrators were chosen by the governor in council.


David Lewis: Would the minister inform us whether the railways and the unions concerned were consulted about the persons appointed? I thought the minister said "Green"; I understand now it is Horace Read.


John Robert (Jack) Nicholson: Suggestions were made by the groups involved, but I think I can safely say that no one of the three arbitrators was recommended by either side. They were chosen by the government entirely on its own responsibility.



NATIONAL MUSEUMS


Hon. Judy V. LaMarsh (Secretary of State) moved: for leave to introduce Bill No. S-57 (from the Senate), to establish a corporation for the administration of the National Museums of Canada.
Motion agreed to and bill read the first time.



EXPO '67 REQUEST FOR STATEMENT ON ESTIMATED DEFICIT

[Stage Direction]
On the orders of the day;
Right Hon. J. G. Diefenbaker (Leader of the Opposition):: Mr. Speaker, my question is directed to the Minister of Trade and Commerce, and it is with respect to an article in today's Globe and Mail which no doubt, coming from Toronto, he reads with care and thought. What is the government's position with regard to financing Expo, in view of the disquieting reports that the deficit is now estimated to be of the order of approximately $100 million? Will the minister before this session ends, possibly tomorrow, give a detailed statement about the situation in general, and will he advise the house whether it

is in fact true that in advertising Expo in the United States the fabulous sum of $13 million is being expended.


Hon. Roberi Winters (Minister of Trade and Commerce):: Mr. Speaker, under the terms of the act establishing Expo, the minister responsible for the federal government's participation is required to periodically table in parliament an estimate of the capital and operating expenditures, and this has been done. This is a matter of public knowledge.


John George Diefenbaker: How long ago?


Robert Henry Winters: Very recently.


John George Diefenbaker: How long ago?


Robert Henry Winters: A few weeks ago; just recently. But as to the deficit, this is entirely dependent on the public response to Expo, the response of the people, of customers coming through the turnstiles and spending money in Canada. It is difficult, almost impossible, to estimate that response. It is estimated that regardless of the response within the gates of Expo itself, the net return to Canada will result in a profit on the expenditures made by the various governments concerned with Expo, which has every likelihood of being a tremendous success. The moneys expended for advertising in the United States, to which the right hon. gentleman referred are part of our insurance for the success of Expo.


Mr. W. B. Nesbili (Oxford):: A supplementary question, Mr. Speaker, addressed to the Secretary of State. In view of the question to the Minister of Trade and Commerce by the right hon. Leader of the Opposition, and the general interest in encouraging people to come to Expo, would the Secretary of State convey to the Canadian Broadcasting Corporation the suggestion that further programs such as "Shop Talk" this morning and others which have occurred within the last few weeks, and which are actively discouraging people from coming to Expo, be discontinued?


Julia Verlyn (Judy) LaMarsh: Mr. Speaker, I shall be happy as always to convey my hon. friend's thoughts to the C.B.C.



PRESENCE IN GALLERY OF MEMBERS OF STRATFORD SHAKESPEAREAN COMPANY

[Stage Direction]
On the orders of the day:
Julia Verlyn (Judy) LaMarsh: Mr. Speaker, I wish to draw to the attention
March 21. 1967

of the house a number of very illustrious young Canadians, members of the Stratford Shakespearean company, which opened last night in Ottawa on the centennial festival of Canada tour.


Some hon. Members:: Hear, hear.



BANKRUPTCY


[Stage Direction]
On the orders of the day:
Mr. Raymond Langlois (Meganiic):: My
question is for the Solicitor General in the absence of the Registrar General. I should like to recall a question which was asked last week by the hon. member for Kootenay West concerning the special committee of three which has been set up to study the bankruptcy situation in this country and complaints with regard to it. Would the Solicitor General be willing to allow a certain Mr. Heakes to testify and explain his classical case before this committee? I have on the order paper a motion for the production of papers which is relevant to this matter, and if the procedure I suggest were followed I could remove this motion for papers.


Hon. L. T. Pennell (Solicitor General):: I will take notice of the question and bring it to the attention of the Registrar General.



LABOUR RELATIONS


[Stage Direction]
On the orders of the day:
Mr. A. B. Patterson (Fraser Valley):: I wish to address a question to the Minister of Labour and ask him whether he will consider the advisability of calling a summit conference of labour and management as recommended by Mr. Jean-Real Cardin in his presentation to the conference on labour-management relations, to consider all problems related to technological change.


John Robert (Jack) Nicholson: Having read the paper in question with great interest I can assure the hon. member that serious consideration will be given to his suggestion.



FINANCE


[Stage Direction]
On the orders of the day:
Mr. W. H. A. Thomas (Middlesex West):: should like to put a question to the Minister
Inquiries of the Ministry of Finance. As reported at page 12557 of Hansard for February 2 the minister promised to make inquiries into certain charges made by the banks for renewal of the 3 per cent perpetual bonds. Has the minister authorized remuneration to the banks for renewing these bonds, which he promised to look into at that time?


Hon. Mitchell Sharp (Minister of Finance):: Mr. Speaker, I have had this question investigated, and I understand that in a few isolated instances charges were made by branch banks for this service. We have not authorized such a charge, and we are taking up the matter with the Canadian Bankers' Association.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Mr. Robert C. Coates (Cumberland):: Mr. Speaker, I wish to direct a question to the Minister of Manpower and Immigration. Is the minister in a position to indicate what action his department plans to take with regard to serious unemployment situations developing in Nova Scotia, especially in Amherst where the two major industries have laid off large numbers of employees with no indication as to when they might be reemployed, with the only alternative being transportation assistance to some other area of Canada?


Hon. Jean Marchand (Minister of Manpower and Immigration):: Mr. Speaker, I think what my department can do in such cases is very well known. The department of manpower makes placements, gives travelling grants and also gives retraining allowances. Of course we do not have an instrument in the department to fight seasonal or local unemployment as such, but in Nova Scotia we are going to do what we are doing elsewhere.


Robert Carman Coates: Mr. Speaker, I would like to direct a supplementary question to the Minister of Industry. May I ask him whether action is being taken through the Department of Defence Production for greater work in-put at Enamel and Heating, which only this week has indicated that further lay-offs will take place.


Hon. C. M. Drury (Minister of Industry):: Mr. Speaker, I think the question of consideration for Enamel and Heating has been raised

March 21, 1967
Inquiries of the Ministry on a number oi instances, and we will continue to do what we can to see they are provided with a fair share of the work load.



INQUIRY OF THE MINISTRY

[Stage Direction]
On the orders of the day:
Mr. J. N. Ormiston (Melville):: Mr. Speaker, I wish to direct a question to the Minister of Energy, Mines and Resources. Is the minister aware that the Ryan trophy of the Canadian Institute of Mining and Metallurgy will be awarded on March 26 to the International Mineral and Chemical Corporation of Ester-hazy, Saskatchewan, for the best safety record in Canada? This potash mine is the most modern in the world and deserves this award. Would the minister convey congratulations to I.M.C. on this achievement?


Some hon. Members:: Hear, hear.



EXPO '67 REPORTED OBJECTIONS TO DESIGN OF WEST GERMAN PAVILION

[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 Trade and Commerce. My question is based on an aerial photograph of the West German pavilion at Expo '67 which is supposed to represent a map which includes certain areas of the present Polish state and other eastern European states. A copy of this photograph was recently sent to me. I am also informed that the shape of this pavilion has been severely criticized by some eastern European states. Is the government of Canda responsible for the design of pavilions at Expo, and would the minister investigate the basis for these objections raised by some eastern European countries to the design of the pavilion of the West German government?


Mr. Speaker:: Order. I would think both these questions should be placed on the order paper.



NORTHERN AFFAIRS


[Stage Direction]
On the orders of the day:
Mr. G. W. Baldwin (Peace River):: Mr. Speaker, I would like to direct a question to the Minister of Indian Affairs and Northern Development. In light of the very interesting and welcome announcement as to new mineral development in the Yukon, and having in

mind the minister's statement as to the need for increasing port facilities would he, in collaboration with his colleagues, immediately review the government's position with regard to the Alaska highway and shortly make a statement in the house on the government's intentions and the result of discussions it has had with the United States and British Columbia?


Mr. Speaker:: Order, please. I suggest to the hon. member that this is not a proper question at this time.



ADMINISTRATION OF JUSTICE


[Stage Direction]
On the orders of the day:
Mr. Stanley Knowles (Winnipeg North
Centre): Mr. Speaker, may I direct a question to the Solicitor General. Has the Supreme Court of Canada given any indication as to when its findings with respect to the case of Steven Truscott will be made known to the government?
Lawrence T. Pennell: have no information on this matter, Mr. Speaker, and I do not anticipate that any prior notice will be given to the law officers of the crown before judgment is rendered.



CROWN ASSETS


[Stage Direction]
On the orders of the day:
Mr. R. N. Thompson (Red Deer):: Mr. Speaker, may I direct a question to the Minister of National Defence. In a current report it is revealed that some $103.7 million worth of obsolete but still serviceable defence equipment was sold for approximately $4.7 million through the Crown Assets Disposal Corporation. In view of the huge increase in government expenditure both this year and next, what assurance can the minister give that vast amounts of tax dollars are not being wasted through inadequate policies and inefficient administration?


Mr. Speaker:: Order. This question is not in order.



AGRICULTURE


[Stage Direction]
On the orders of the day:
Mr. R. A. Webb (Hastings-Fronlenac):: Mr. Speaker, I should like to ask the Minister of
March 21, 1967	COMMONS
Agriculture whether there is any reason that the fluid milk shippers have not received their subsidy cheques since January 14.


Hon. J. J. Greene (Minister of Agriculture):: Mr. Speaker, to the best of my knowledge most of them have. I was under the impression that they were all receiving the cheques regularly. If my hon. friend has information regarding any specific instances in which these cheques were not received, I would be glad to look into the matter.



MR. JUSTICE LANDREVILLE INQUIRY AS TO ACTION PROPOSED BY GOVERNMENT

[Stage Direction]
On the orders of the day:
John George Diefenbaker: Mr. Speaker, I should like to direct a question to the Acting Prime Minister. Would he advise the house whether it is the intention of the government to bring in a motion in connection with the case of Mr. Justice Landreville? Second, I should like to ask the Acting Prime Minister what action the government is taking regarding the unparalleled request by the justice to appear on the floor of the House of Commons while it is in session.


Hon. Paul  Marlin@Aciing Prime Minister: Mr. Speaker, I am not in a position to give an immediate reply. I understand that the evidence of the committee has not yet been printed. Perhaps later in the day or certainly tomorrow I may be in a position to say more about it.



BUSINESS OF THE HOUSE


[Stage Direction]
On the orders of the day:
Mr. Thomas M. Bell (Saint John-Albert):: Mr. Speaker, my question is for the Minister of Transport. Is it the intention that officials of Air Canada and the C.N.R. will be examined by the committee on transport and communications? If so, when? I ask this question because it is a considerable time since we have looked over these annual reports. Some of them already have appeared.


Hon. J. W. Pickersgill (Minister of Transport):: Mr. Speaker, the annual report of Air Canada was tabled the other day. I have been advised by my friend, the hon. member for Hamilton West that he hopes to be able to arrange for the officials of Air Canada to appear quite early after what we fondly think of as the Easter recess.
Inquiries of the Ministry INDUSTRY



NEWSPRINT-INQUIRY AS TO ACTION RESPECTING PROPOSED PRICE INCREASE

[Stage Direction]
On the orders of the day:
Mr. Barry Mather (New Westminster):: Mr. Speaker, I have a question which I should like to direct to the Minister of Finance. Having in mind the $3 a ton increase in prices scheduled for the newspapers of Canada by the newsprint industry, is consideration being given by the government to consultation with the newsprint industry with a view to restraining this proposed general increase, as was done in respect to the steel industry?


Mitchell William Sharp: No, Mr. Speaker; I have no plans to meet with the newsprint industry.



IMMIGRATION


[Stage Direction]
On the orders of the day:
Mr. H. W. Danforth (Kent (Oni.)):: Mr. Speaker, I should like to direct a question to the Minister of Manpower and Immigration. I wonder whether, before the Easter adjournment, the minister would be in a position to announce to the house government policy regarding the matter of seasonal farm labour, due to the approach of the planting season.


Jean Marchand: I do not believe so, Mr. Speaker.



CHANGES IN RULES SUGGESTED BY MINISTER WITHOUT PORTFOLIO

[Stage Direction]
On the orders of the day:
Mr. Howard Johnston (Okanagan-Revelstoke):: Mr. Speaker, I have a question for the Acting Prime Minister. Do the suggested changes in house procedures presented by the Minister without Portfolio in a speech delivered to the Osgoode Hall legal and literary society, which would prevent Social Credit and Creditiste spokesmen from replying on motions, represent official government thinking in this regard?


Hon. Paul Martin (Acting Prime Minister):: I am told it was a very interesting speech.

March 21. 1967
Inquiries of the Ministry EXPO '67



APPLICANTS FOR ACCOMMODATION QUERIED AS TO RACE

[Stage Direction]
On the orders of the day:
Robert Henry Winters: Mr. Speaker, yesterday the hon. member for Winnipeg North Centre asked whether I was aware of the advice being given by Logexpo to applicants for accommodation in Montreal during Expo '67 to the effect that they should indicate their race.
Mr. Speaker, no such advice is being given. Because of the seriousness of the suggestion, I looked into this matter quite carefully. The Quebec lodging service for Expo '67 is operated by the Quebec government, and has the responsibility for selecting the accommodation which Logexpo then makes available to visitors to Expo. No printed form of Logexpo or of the Quebec lodging service for Expo '67 asks any question regarding race or creed, and certainly no such question is asked of prospective visitors to Expo '67. In fact the hotels act of the province of Quebec specifically provides that there shall be no such discrimination. As far as the federal government is concerned, we have made our views in this regard clearly known to Expo.



PUBLIC SERVICE

[Stage Direction]
EASTER MONDAY-INQUIRY AS TO HOLIDAY On the orders of the day:
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, may I direct a question to the President of the Treasury Board. On Thursday, March 9, I asked him whether it had been indicated that Easter Monday would be a holiday for classified civil servants but not for prevailing rates employees. I asked further whether the government would consider treating both groups in the same manner. The minister said he would look into the matter. Has he anything further to say about this matter at this time?


Hon. E. J. Benson (Minister of National Revenue and President of the Treasury Board):: Mr. Speaker, these groups of employees are being treated this year exactly the same as in previous years.



IMMIGRATION


[Stage Direction]
On the orders of the day:
Mr. Ralph Cowan (York-Humber):: Mr. Speaker, I have a question for the Minister of 
Manpower and Immigration of which I have given him notice. At page 38 of the white paper on immigration there is reference to the non-discriminatory policy of the department. I should like to ask the minister how it is that five members of the Kawa family from Poland have been admitted to Canada, yet the children of a sixth brother are being discriminated against. At the moment Mr. Gruszka lives across the road from me in Toronto, and I should like to ask why there is a policy of discrimination against this man when his five uncles and aunts have been allowed into Canada.


Mr. Speaker:: Order, please. The question as asked contains allegations, and I do not think it should be accepted in that form.



AIR CANADA


[Stage Direction]
On the orders of the day:
Mr. Ed. Schreyer (Springfield):: Mr. Speaker, my question is addressed to the Minister of Transport. Can he give a clear indication as to the disposition of the request by the Manitoba government that DC-9 jet aircraft be overhauled and serviced at the Winnipeg airport?


John Whitney Pickersgill: The representations made by the
Manitoba government were passed on to Air Canada which, of course, has the responsibility for formulating policies of management in this regard. I did ask them to give me their views, but up to this point I have not received them.


Thomas Miller Bell: Mr. Speaker, does that not indicate another reason for the minister to accept this responsibility of seeing that the estimates of Air Canada go to the committee fairly soon?



OLD AGE SECURITY


[Stage Direction]
On the orders of the day:
Mr. Robert Muir (Cape Breton North and Victoria):: Mr. Speaker, the other day I asked the Minister of National Revenue whether gratuities received by retired Nova Scotia coal miners would be calculated as income for the purpose of qualifying for the guaranteed income supplement. At that time he said he would give an answer in the afternoon. I
March 21, 1967

might say he was very prompt and an answer was sent to my office that afternoon, although I regret I was not there. In that answer reference is made to $35. I should like to ask whether any amount they may receive will be calculated as income for this purpose.


Edgar John Benson: Mr. Speaker, the amounts received from pension funds, whether they have been contributed to by the employer or employee, are generally considered as income for tax purposes. Any amount, no matter how small, will be taken into consideration. I might say that steps are taken to offset some of these amounts in calculating benefits to be received under the supplementary old age pensions.


Mr. Donald Maclnnis (Cape Brelon Soufh):: I have a supplementary question, Mr. Speaker. I should like to ask the minister how he or the government arrived at the decision that retired Cape Breton miners are receiving pensions.


Edgar John Benson: Mr. Speaker, in the answer I sent to my hon. friend I was a little more explicit, and I thought I should not go into it in detail in the house. Under the general rules for determining the amount of supplementary old age pension, income is considered in the same light as income under the Income Tax Act. An amount which would be income under the Income Tax Act would be considered as income in determining the supplementary pension.


Mr. Maclnnis (Cape Breton South):: If you
will allow me to do so, sir, I should like to point out to the minister, as was pointed out to the Minister of National Health and Welfare at the time this legislation was considered by this house, that miners in Cape Breton receive no pensions whatsoever.


Mr. Speaker:: Order, please.


Donald MacInnis: Mr. Speaker, my question is-


Mr. Speaker:: Perhaps the hon. member will ask his question.


Donald MacInnis: Yes, Mr. Speaker. I should like to ask the minister to take note of some of the correspondence between the Minister of National Health and Welfare and the miners of Cape Breton in respect of the gratuities they receive and-


Mr. Speaker:: Order, please.
Inquiries of the Ministry NATIONAL DEFENCE



REQUEST THAT ACTING PRIME MINISTER READ EVIDENCE GIVEN TO COMMITTEE

[Stage Direction]
On the orders of the day:
Hon. Gordon Churchill (Winnipeg South Centre):: Mr. Speaker, I should like to direct a question to the Acting Prime Minister, if I can engage his attention. Is it the minister's intention to read the complete text of the evidence taken before the defence committee in order to form his own judgment, in view of the fact that the cabinet was not kept fully informed concerning the program of integration and unification.


Mr. Speaker:: Order, please. The question contains an allegation, and is not acceptable.



REPORTED WEARING OF NEW UNIFORM ON PARLIAMENT HILL

[Stage Direction]
On the orders of the day:
John George Diefenbaker: Mr. Speaker, the Minister of National Defence did not have an opportunity yesterday to answer a question I asked him. In reply to the hon. member for Cape Breton South he said:
-all uniforms are worn under the authority of the minister pursuant to the National Defence Act.
The question I asked related to the appearance of certain members of the armed forces on parliament hill apparently wearing green uniforms. Were those uniforms worn with the consent and approval of the minister, and do they represent the view of the government at this time regarding the nature of the uniform which the united forces will wear?


Hon. Paul Hellyer (Minister of National Defence):: Mr. Speaker, as I have indicated on a number of occasions, it is the intention of the government, the minister and the department that a number of uniforms will be worn this summer on a trial basis to determine their suitability for the forces in years ahead.
These uniforms are presently in the process of being developed, and they will be issued to selected members of the armed forces very soon to be worn this summer. In this process of development some photographs are being taken in order that they may be shown to members of the armed forces to acquaint them with our plans. It is hoped that as soon as this has been done-and this has been indicated to the armed forces-they can be taken into the confidence of the department at the outset, at which time they may obtain
142S8

March 21, 19G7
Inquiries of the Ministry their information internally through appropriate channels rather than by seeing pictures of the uniforms in the newspapers.


Gordon Minto Churchill: May I ask a supplementary question. Will the minister indicate the estimated cost of this propaganda effort?


Paul Theodore Hellyer: This particular effort will not be costly. The uniforms are being developed in fairly limited quantities for user tests. My hon. friend may or may not be aware that each of the three services was in the process of developing a new uniform of its own. Consequently the development of a single uniform at this time will probably save the Canadian taxpayers a certain amount of money. I am sure that news is welcomed by my hon. friend. I hope he will like the new uniforms as well as those people who have seen and worn them, because I am sure he will realize that they will reflect great credit on the fine Canadians who will wear them this summer.


Gordon Minto Churchill: If the minister does not buy the Cadillac he has in mind he will save money; is that right?


Paul Theodore Hellyer: Mr. Speaker, the minister has never been able to afford a Cadillac.


John George Diefenbaker: Mr. Speaker, perhaps the minister will come down from the high atmosphere and answer the question. Were the soldiers on parliament hill on March 17 wearing a uniform which was authorized by him? That is the question!


Paul Theodore Hellyer: There is an old saying which my right hon. Baptist friend will appreciate. "The better the day the better the deed." I think it was on March 17, St. Patrick's day, when these uniforms were worn. Certainly at that time they were worn on the authorization of the Minister of National Defence and the chief of defence staff.


John George Diefenbaker: Mr. Speaker, the reference to Baptists leads me to state that we Baptists would never abolish the navy.


Some hon. Members:: Oh, oh.


Mr. Macdonald (Rosedale):: On a question of privilege, Mr. Speaker, speaking for at least my section of the Baptist church, I do not agree with the right hon. gentleman.


Donald MacInnis: Do you
mean you would abolish the navy?


Wallace Bickford (Wally) Nesbitt: Mr. Speaker, the question I was about to pose was very similar to that asked by the right hon. Leader of the Opposition, but I should like now to ask the Minister of National Defence the following question. .Having been one of those fortunate members who saw the rather furtive appearance of the new uniforms on parliament hill last St. Patrick's day, would the minister consider having some of the members of the armed forces decked out in the new uniform for the Easter parade so we could all see them prior to the defence bill coming before the house again?


Mr. Speaker:: Order, please. I wonder
whether hon. members do not think it is time to call orders of the day.



BANK ACT


[Stage Direction]
The house resumed, from Monday, March 20, consideration in committee of Bill No. C-222, respecting banks and banking-Mr. Sharp-Mr. Batten in the chair.
The Chairman:: Order. The house again in committee of the whole on Bill No. C-222, respecting banks and banking. When the committee rose last evening, March 20, clause 53 of the bill was under discussion. The following clauses had been allowed to stand: 1, 33, 54 to 57 inclusive, and 75.
On clause 53-Limit on shares held by nonresidents.


Herman Maxwell Batten: Shall clause 53 carry?


David Lewis: Mr. Chairman, unless I am mistaken there is an amendment to clause 53 before the committee. Surely we should take the amendment first. I may be wrong, but that is my memory.


Herman Maxwell Batten: Order. The hon. member for York South is quite correct, and I apologize to him. The committee is now dealing with the amendment to clause 53 proposed by the hon. member for Nanaimo-Cowichan-The Islands.


Some hon. Members:: Question.


Herman Maxwell Batten: Is the committee ready for the question?


Some hon. Members:: Question.
Amendment (Mr. Cameron, Nanaimo-Cowichan-The Islands) negatived: Yeas, 10; nays, 95.
March 21, 1967


Herman Maxwell Batten: I declare the amendment lost. Shall clause 53 carry?


Mitchell William Sharp: Mr. Chairman, during the discussion of an earlier clause the chairman of the committee on trade, finance and economic affairs gave notice that he was going to move an amendment on behalf of the hon. member for Verdun, which is to be found in Hansard for March 17 at pages 14152 and 14153. Perhaps the hon. member for Verdun would now like to follow through with his original intention.


Mr. Mackasey:: Mr. Chairman, during the opportunity to speak on this bill on clause 2 I, like other members of the committee, reviewed some of the activities of the banking committee and some of the conclusions that we arrived at. I reviewed the minister's answers before the committee, not only in answer to some of my questions but some of those asked by the hon. member for Regina and other prominent members of the committee. The minister enunciated on several occasions that the principle behind the bill was to prevent large blocks of shares being held by individuals and their associates, which in the opinion of the minister, would act to the detriment of banking in general in Canada.
The various amendments to the bill brought forward at that time in my opinion and, I would say, in the opinion of all members of the committee, tended to tighten up many of the loopholes that existed. But there was one in particular that bothered me and it obviously also bothered the chairman of the committee. Since I did not anticipate being here today, the chairman of the committee very kindly followed through for me in his speech on Friday last. I refer to the possibility of individuals and their associates, as defined in the act, at present owning more than 10 per cent of the shares of a bank and adding substantially to their holdings on those occasions when new subscriptions or new share capital may be authorized by the governor in council. As I recall the minister's answers at the time, and I wish I could quote them precisely now, he assured the committee that on those occasions when the Mercantile Bank or any bank would request and obtain permission to increase their authorized share capital, those shares would be disposed of by sale to Canadians only.
[DOT] (3:20 p.m.)
The other evening I expressed the opinion that laudable as the minister's intentions
Bank Act
were, and convincing as his assurances sounded before the committee, this intention was not necessarily reflected in ariy of the clauses of the present bill. While I did not question the motive of the minister, I did express grave doubt that the minister or the governor in council would have a legal right to impose this type of condition under the provisions of the Bank Act. I suggested, therefore, that possibly it would be in the best interests of the bill if the minister were to introduce some amendment at the appropriate place that would ensure the pro-Canadian spirit of the act.
Perhaps by way of clarification, before reading the amendment, I should point out the situation as it now exists with respect to Mercantile. Under one of the restrictive clauses, I believe it is 75(2)(g), Mercantile Bank has been given permission to dispose of 75 per cent of its shares over a period of five years if the bank desires to avoid the restrictive features of this particular clause concerning the ratio of liabilities. I point out to the committee that there is nothing in the law that says Mercantile must divest itself of these shares, but the law is quite clear that it must divest itself of 75 per cent of the shares if it wants to avoid the punitive features of this particular clause. Furthermore the committee, at the suggestion of other members, also included a provision to the effect that where a bank is more than 25 per cent owned by non-residents, there can no longer be a transfer of bank shares from one non-resident to another. In other words the whole spirit of the bill has been to retain, as much as possible, Canadian control of our banking institutions.
What bothered me was precisely what the minister had in mind, as I reread the testimony, in those future cases where permission would be granted by the governor in council to Mercantile to increase its authorized shares. What is there in the bill that would prevent such a bank from retaining 25 per cent of its shares in perpetuity simply by buying up 25 per cent of the new issues? This could happen despite the assurances of the minister on half a dozen occasions that this is not the spirit of the act.
I requested the minister to introduce some amendment-this refers to all banks-which would provide that if any individual now owns more than 10 per cent of the shares of a bank and that particular bank does obtain permission to increase its share capital, that particular individual and his associates should

March 21, 1967
Bank Act
not be able to purchase any of these authorized shares. This in effect would mean that whenever Mercantile or any other bank attempted to increase its size by increasing the authorized share capital, the bank could do so only by the sale of those shares to Canadians until such time as the non-resident ratio was down to 25 per cent, and under no circumstances could those shares be purchased by someone who at that time owned more than 10 per cent of the shares.
This is not a new interpretation. This is what the minister assured the committee on three or four occasions was the intention. I expressed the reservation, however, that although I recognized the sincerity of the minister's desire, I would feel more comfortable if this expressed intention of the minister were transferred into some provision in the bill. Accordingly the chairman of the banking committee, as recorded on page 14152 of Hansard, pointed out that to attain the objective I desired an amendment would be required to another clause as well. Perhaps I should read his remarks so I can interpret precisely what I had in mind:


Mr. Gray:: X have no objection to that. It will be recalled that the hon. member for Verdun yesterday gave the committee his views, and I quote him as follows as recorded at page 14107 of Hansard :
"What bothers me, and I say this directly to the minister, is that I am not certain in reading the bill that the governor in council necessarily has that right."
I might say in explanation to the committee that the right I was talking about was to impose a condition on how the shares could be sold and who could buy those shares where the governor in council authorized an increase in the share capital. I continue the quotation from page 14152 of Hansard:
This was referring to the preceding part of his remarks.
"I suggest to the minister, and this might be implemented on the appropriate clause . .. that we ensure that whenever a bank receives permission to increase its share capital, no individual, as defined in the act, be permitted to add to his shares so long as he or his group owns more than 10 per cent of a bank."
I think this will meet with everybody's approval.
"I am not talking of a specific bank; I am talking of any bank; and more than one bank is in that particular situation. This would guarantee the carrying out of the minister's intention, as he has stated it on several occasions in the committee."

The chairman of the banking committee went on to say, as recorded on this same page:
The hon. member for Verdun was referring to the standing committee. He is not present at this time, but I might say that if we should reach clause 53, subclause 4 today I would suggest an amendment. Perhaps the simplest thing would be to read it.
This is the amendment which the chairman of the banking committee was offering on my behalf. The amendment reads:
That Bill C-222, an act respecting banks and banking, be amended
(a)	by striking out lines 9 to 11, inclusive, on page 32 of the bill, as reprinted, and by substituting therefor the following-


David Lewis: May I interrupt the hon. member and ask him if he would be good enough to look at the bill to see whether this is exactly what he meant to say. It does not seem to fit lines 9 to 11 on page 32, but perhaps we are failing to see something.


Bryce Stuart Mackasey: No, it would be clause 53, page 32, subclause 4. I do not want to hold up the committee too long, but perhaps I could take a minute to check out the clause and make sure this is the one the hon. member has in mind. I might as well read it from the top of page 32:
(a)	by striking out lines 9 to 11, inclusive, on page 32 of the bill, as reprinted, and by substituting therefor the following: "thereof",
(b)	by any person if, at the time the share is subscribed for, the total number of shares of the capital stock of the bank have by such person and by other shareholders associated with him, if any, exceeds 10 per cent of the total number of the issued and outstanding shares of such stock; or
(c)	except as otherwise provided in subsection (5), in other circumstances where if the subscription";
(d)	by striking out line 19 on page 32 of the bill, as reprinted, and by substituting therefor the following:
"(5) Subject to paragraphs (a) and (b) of subsection"
[DOT] (3:30 p.m.)
The lawyers can work it out among themselves, but what this simply says is that if at the present time an individual or his associates own more than 10 per cent of the shares they will not be able to purchase any of the new shares issued.
I do not want to bore hon. members too much but at the same time I should like to quote the chairman of the banking committee as reported on page 14153 of Hansard of March 17. He went on to say:
Of course, it is not easy to follow this just by listening to it. One would have to have the bill
March 21, 1967

in front of him. The reason I ask that clause 33 stand is that if the suggested amendment to clause 53 should be adopted by the house it would be necessary to have an amendment to clause 33 (1) (d) which I might bring to the attention of the house at this time. The amendment will be as follows:
That Bill C-222, an act respecting banks and banking, be amended by striking out line 44 on page 20 of the bill, as reprinted, and by substituting therefor the following:
"reason of paragraph (a) or (b) of subsection (4) of".
I do not grasp the significance of the last amendment suggested by the chairman of the committee but I am sure it can be fitted into the amendment I have just suggested pertaining to clause 53.


Mr. Cameron (Nanaimo-Cowichan-The Islands):: Mr. Chairman, I will take the hon. member's word that it can be fitted in here somewhere. I have no objection to his amendment but I wonder whether he quite realizes what he is doing. It may be an excellent idea but it does make fish of one shareholder and fowl of another. Suppose that a bank applies for an increase of up to 100 per cent of its authorized capital. Those are the terms which we have discussed for the Mercantile Bank. Is the hon. member for Verdun going to tell those who now hold 10 per cent of the existing capital are they cannot buy any more shares of the new issue and that they are limited to holding only 5 per cent but that a new shareholder coming in can buy 10 per cent of the whole lot? I have no objection to doing that-I have no particular love for bank shareholders-but this is obviously what will happen. This will create two classes of shareholders. The original shareholders will not be allowed to own 10 per cent of the shares. They will only be able to hold 5 per cent, or whatever may be the ratio.


Bryce Stuart Mackasey: I think the hon. member will understand that a shareholder will always be able to own up to 10 per cent of the shares. If the number of shares is doubled, there is nothing to prevent an individual from adding to his portfolio until such time as he owns 10 per cent of the particular banking interest. There are other banks in Canada in the same position. There is at least one bank where one individual owns more than 10 per cent of the shares as permitted under the act. This would apply as much to a particular shareholder as to the Mercantile Bank. So I can assure the hon. member that there is nothing here to prevent an individual in the United States or in Canada-this applies to everybody, regardless of where they live and 23033-9011
Bank Act
what the bank is-from owning up to 10 per cent of the shares.


Mr. Otto:: Mr. Chairman, I should like to put a question either to the "minister" of Nanaimo-Cowichan-The Islands or to the Minister of Finance on clause 53 with regard to the exact procedure that will be used in a particular situation which may very well arise. Shares of banks are listed and sold on the stock exchange. Owners of shares sell them from day to day. Let us suppose that at a particular time only 24 per cent of the shares of the Canadian Imperial Bank of Commerce are owned by foreigners and 10,000 shares are still available, and at one and the same time several buyers, some from the United States and some from England, buy 5,000 shares through the Montreal, Toronto or New York stock exchange. Only 5,000 shares are allowed to be transferred. Which 5,000 does the minister intend to authorize? Which of the individuals purchasing the shares will have good, valid shares?


Mitchell William Sharp: Mr. Chairman, this very difficult point was discussed at great length in the committee on finance, trade and economic affairs by Mr. Elderkin, who is sitting before me today. I will repeat the answer which he gave at that time. He said it would be a case of first come, first served. The responsibility would rest on the bank.


Mr.   Olio@: Nevertheless, as the minister knows very well, these shares could very well have been bought all at the same time and not necessarily transferred or even registered at the stock exchange at the same time. Has the minister given any thought to allowing the shares to be transferred directly over the counter in the office of the bank instead of being listed on the stock exchange? Buyers of the shares would then know whether or not the shares were transferable. An American buyer of shares might say, "I did not know those shares were not transferable". The question is: How will he get his money back from the vendor?
There is one more question I should like to put to the minister before I resume my seat. It is my understanding that options are not considered as ownership. In other words, an American can have an option to purchase 40 per cent of the shares of a Canadian bank from a Canadian resident. I think the minister knows very well that an option to purchase is tantamount to ownership, that it is possible to predict how the person who has the option will vote. How does the minister intend to deal with the question of options?

March 21, 1967
Bank Act


Mitchell William Sharp: Mr. Chairman, the answer to the first question posed by the hon. member is that he would get his money back by reselling the shares. The principle underlying the bill as far as ownership is concerned is dependent on registration, and that is within the power of the bank itself. Indeed, the bank is under an obligation not to register shares that exceed the limit set forth in the act. I agree with the hon. member that practical difficulties are involved. However, if it is our intention, as I believe it should be, to maintain Canadian ownership and control of our banking institutions, then this is an inescapable difficulty.


Mr.   Olio@: Mr. Chairman, the minister has not answered one question, namely, what would be the difficulty in buying the shares of the bank directly over the counter? Is there any particular difficulty other than that this would deprive the stock exchange of some transfer fees?


Mitchell William Sharp: We considered this problem at some length when these clauses were being drafted. We believe it would place too great a responsibility on the stock exchanges. The only workable method is to provide that the bank shall be responsible for the registration within the limits fixed in the bill.


Mr.   Oilo@: Let me put it this way. If it is just a matter of the transfer of shares, let us suppose that an American buys 90 per cent of the shares of the Canadian Imperial Bank of Commerce and only 25 per cent are transferred. Would that not mean that the owner of the 25 per cent has absolute control of the bank?


Mitchell William Sharp: Mr. Chairman, as the hon. member knows, he cannot buy 25 per cent. The limitation under the act is 10 per cent for an individual. The test is "registered owner", and that is the only test that can be applied in our judgment. We have examined other alternatives. As I say, if we are to try in this bill, as we should, to maintain a Canadian banking system we shall have to face these difficulties which are very real. In due course people trading in Canadian bank stocks will understand the intention of parliament and will understand the limitations.
[DOT] (3:40 p.m.)


Bryce Stuart Mackasey: I now have in front of me a copy of the amendment which I wish to present on behalf of the chairman of the committee who has entered the chamber. The first amendment I have is to clause 53(4). I should

like to place this first amendment on the table. I shall not deal with the other amendment until we have disposed of this first one.


Colin Cameron: Mr. Chairman, I am rising on a point of order. It is impossible for us to understand this amendment unless we have it before us. There is no excuse for not having copies for the members of the committee.


Herbert Eser (Herb) Gray: I must take the responsibility for order, I quite agree with the hon. member for Nanaimo-Cowichan-The Islands. If we look at page 14152 of Hansard for March 17, 1967-


Colin Cameron: I have done so. I hate to shatter my hon. friend's illusions, but that is as clear as mud. It is equally confusing.


Herbert Eser (Herb) Gray: I must take the responsibility foi not being as clear as I ought to have been. The point is that the text of the amendment is reprinted verbatim in my remarks which, though not clear, cannot be faulted for not containing the text of the amendment. That being so I suggest to the hon. member that the amendment is available to every party spokesman and to every member of the committee because of this gratuitous situation.


Colin Cameron: I should like the hon. member for Essex West to please explain to me how this fits in in the place in which it is supposed to fit because I do not think it fits.


Herbert Eser (Herb) Gray: I shall be glad to do so. Perhaps I might look at the amendment for a moment.
Turning to page 32 of the bill we see that lines 9 to 11 are to be struck out.


Colin Cameron: "Subdivision thereof".


Herbert Eser (Herb) Gray: Line 9 reads "thereof, or". Line 10 reads: "(b) except as otherwise provided in subsection" and line 11 reads "(5), in circumstances where if the subscription".


Colin Cameron: I should like the hon. member to read this. It says, "foreign state or any political subdivision," and then we knock out the "thereof" and continue with "except as otherwise provided".


Herbert Eser (Herb) Gray: If instead of reading the words "thereof, or" the hon. member reads in line 9 the word "thereof", the word "or" being eliminated, subclause 4(a) will stand as a whole. There will then be a new paragraph
March 21, 1967

(b) which brings into the act a new concept arising out of the useful suggestion made by the hon. member for Verdun in his speech of Thursday last. Then, following paragraph (b) there will be a new paragraph (c).


Colin Cameron: Mr. Chairman, I do not want to be thought dumb but I still think that this amendment does what I suggested it does. It sets up two classes of shareholders. It says in part:
*-held by such person and by other shareholders associated with him, if any, exceeds 10 per cent of the total number of the issued and outstanding shares of such stock;
Surely this must refer to the period before the extension of the authorized capital. Those must be the shares actually issued and outstanding at the time the governor in council is to authorize the expansion of capital. In effect you are saying that the original shareholders will have their percentage of shareholdings diluted. If you double the capitalization they will be allowed to have only 5 per cent of the total but the new shareholder coming in can have 10 per cent.


Mitchell William Sharp: I draw the attention of the hon. member for Nanaimo-Cowichan-The Islands to lines 15, 16, 17 and 18.


Herbert Eser (Herb) Gray: If I can supplement the remark of the minister I suggest that the point raised by the hon. member for Nanaimo-Cowichan-The Islands is taken care of by the last four lines. It makes the restriction apply only to the extent that the person referred to in the clause has holdings in excess of the total outstanding issued shares of the stock. Otherwise the hon. member has a good point.


Bryce Stuart Mackasey: I apologize to the hon. member for not having copies of the amendment. Copies are now available and will be distributed. I want to assure the hon. member, and I say this sincerely, that we welcome his thinking on the matter and we want to see if there are flaws in the amendment. The spirit behind my amendment is that anybody who owns more than 10 per cent of the shares of any of our Canadian chartered banks would be prohibited from adding to his holdings. I use the word "his" as applying to the individual and his associates as defined in the bill. It is not intended to apply to shares in the Mercantile Bank more than to shares in any other bank. Let us say a person holds 8 per cent of the shares of the Bank of Montreal. If at some future date the Bank of
Bank Act
Montreal were to decide to increase its share capital and obtained permission to do so, such a person would not be able to increase his holdings beyond 10 per cent of the share capital including, of course, the new shares.
[DOT] (3:50 p.m.)
This provision would in no way affect the clause in the bill which states that not more than 25 per cent of the shares of a bank can be owned outside the country. Provided the percentage in aggregate is less than 25, there is nothing to prevent non-residents from acquiring shares. But the amendment would prohibit all persons, whether resident or nonresident, from acquiring further shares if they already owned 10 per cent of the shares of a bank.


Colin Cameron: I have no quarrel with the spirit of this amendment or the intention behind it. But in legislation it is the words which are important, not the spirit behind them, and it is for this reason that I should like to have the wording cleared up. I will not press the matter unduly because I do not bother about bank shareholders to any great extent, but I do like to see a little logic in our legislation.


Mitchell William Sharp: Perhaps I might say a word for clarification. I have examined the proposed amendment and so has Mr. Elderkin who is sitting in front of me. As far as we can see, and I have more confidence in Mr. Elderkin's judgment than in my own, the amendment does in fact carry out the intent of the hon. member for Verdun.


Mr. Monteith:: Would this amendment have the effect of preventing anyone taking up warrants if he already owned 10 per cent?


Mitchell William Sharp: I am advised that warrants could only be taken up provided they did not bring the shareholder beyond the limitation in the bill. No one who already owns more than 10 per cent could take up any more shares.


Jay Waldo Monteith: Suppose shareholders own 10 per cent even can they then take up their warrants?


Mitchell William Sharp: Oh, yes, they can maintain the 10 per cent level, certainly.


Jay Waldo Monteith: Under this present amendment?


Mitchell William Sharp: Yes.


[Stage Direction]
Amendment agreed to.
Clause as amended agreed to.
[Stage Direction]
March 21, 1967
Bank Act
Mitchell William Sharp: Could we refer to clause 33 which was allowed to stand so as to make a consequential amendment?


Herman Maxwell Batten: Does the committee agree to revert to clause 33?


Some hon. Members:: Agreed.
On clause 33-Offer of shares of capital stock.


Bryce Stuart Mackasey: Again, as the chairman of the banking committee is present I would prefer him to deal with this matter in view of his greater experience and knowledge of the Bank Act. The reason I am talking at this moment rather than doing something more concrete and beneficial is that, having in mind the very logical suggestion that members should be provided with copies of the amendments, I have asked that photostats be made of the amendment I am proposing to this clause. I do not know whether they have yet reached the table. Perhaps I could borrow one in order to read it. Again I beg the indulgence of the committee and express the hope that the chairman of the banking committee will give the legal explanation. Obviously clause 33(l)(d) should be amended so as to make the amendment we have just accepted logical. I therefore propose the following amendment:
That Bill C-222 be amended by striking out line 44 on page 20 of the bill, as reprinted, and by substituting therefor the following:
"reason of paragraph (a) or (b) of subsection (4) of".
I know this sounds jumbled but if hon. members will look at clause 33 they will see that it fits.


[Stage Direction]
Amendment agreed to.
Clause as amended agreed to.
Herman Maxwell Batten: The committee will now proceed to clause 54 to be found on page 33 of the reprinted bill.
Clauses 54 to 57 inclusive agreed to.


Herman Maxwell Batten: The committee will now proceed to clause 75.


Jay Waldo Monteith: I wonder if I might make a suggestion at this point. A formidable task still seems to lie ahead of us. The clauses I am about to mention have been "cleared" with the other parties in the house by my hon. friend from Edmonton West. I believe they are non-controversial in every respect. The list does not include clauses 75, 88 and 91. It occurs to me that the following clauses

might well be moved en bloc without discussion: 103, 106, 117, 122, 124, 137, 138, 139 150 and 157. Schedules M, N, O, P and Q might also be put to the committee at the same time. I believe this might save some time.
[DOT] (4:00 p.m.)


Herman Maxwell Batten: Is it agreed?


Some hon. Members:: Agreed.


Herman Maxwell Batten: Then by unanimous consent the clauses as mentioned in the motion are declared to be carried.
On clause 75-Business and powers of bank.


Mr. Horner (Acadia):: Mr. Chairman, would the minister comment on how this clause affects the establishment of a new bank in Canada, and in particular its effect on the take-over of the Mercantile Bank by the First National City Bank of New York? Last night the minister and I dealt with this subject at some length, and as a result of what the minister said I received the impression that if a person wanted to establish a new bank the bulk of the shares must be owned by men of good financial management capability in order to get the bank off the ground.
In fact the minister said he found no fault with the B.I.F. group owning 53 per cent of the stock of the Bank of Western Canada, and no fault with a bank such as Mercantile being taken over by a United States bank. As a result I must conclude that whenever a new charter is granted it must be done under special privilege. The Bank of Western Canada was granted ten years in which to distribute its stock and the Mercantile Bank was given five years to do likewise. Does the establishment of a new bank require special privilege or a special amendment or special legislation?


Mitchell William Sharp: Mr. Chairman, there are two separate questions involved here. One of them has to do with the establishment of a new bank and the conditions that may be laid down as to the distribution of shares. I do not know whether it will be possible in this country to begin a bank with a sufficient number of shareholders each of whom does not have more than 10 per cent of the shares at the outset. I could conceive theoretically of circumstances in which a sufficient number of original subscribers were found who could get together with sufficient capital to establish a new bank and that, of course, is the ideal. However, I think it more likely that a group of entrepreneurs could be found who could
March 21. 1967

put up the necessary amount of capital and who would be prepared to undertake the original risks of organization, and that they should be encouraged to do so and should be given an opportunity, after the establishment of the bank, of distributing the shares more widely in order to comply with the requirement in the legislation that hereafter no one shall own more than 10 per cent of the shares of a bank.
In the case of the Bank of Western Canada that is what happened. A group of financial people got together, applied for a charter which was granted by this parliament and then applied for a certificate to begin operations. They asked for a reasonable time in order to distribute the shares more widely. Treasury Board felt this was a reasonable request and granted ten years within which the original subscribers should distribute the shares more widely among a larger group, none of whom would own more than 10 per cent.
The Bank of Western Canada, however, which does have a single shareholder with more than 25 per cent, is just as much subject to clause 75(2)(g) of the bill as is the Mercantile Bank. There are two separate questions here. One has to do with the distribution of shares and the second has to do with the restrictions placed on any bank so long as one shareholder owns more than 25 per cent. In other words, the restriction contained in clause 75(2)(g) is not directed against foreigners. It is directed against any bank which has a single or associated group of shareholders owning more than 25 per cent. It is not directed specifically against the Mercantile Bank. It is equally applicable at the present time to the Bank of Western Canada.


John (Jack) Henry Horner: Is it possible to establish definitely that a holding of 53 per cent has been reduced to 10 per cent? In other words, can one follow the shares closely enough over a ten year period to establish that individual holdings have been reduced to 10 per cent?
I have a second question concerning the amalgamation of banks. We have seen bank amalgamations take place over the years and we can expect such amalgamations in the future. There were two major amalgamations recently. Yet the Porter royal commission recommends greater competition in banking. It is logical that the more bank charters there are in force the greater will be the competition. I give one example, using a hypothetical case. It is conceivable that the Royal Bank might buy out the Bank of Western Canada
Bank Act
or buy a controlling interest in it. Would this clause with its 25 per cent provision affect amalgamations, and will the minister give his views on amalgamations generally?


Mitchell William Sharp: With respect to the first question, a bank has to take declarations from the shareholders as to their holdings. The responsibility is laid upon the bank to observe the limitations on share ownership.
With respect to the second question, a bank requires my approval in order to offer to enter into an agreement with another bank. The amalgamation cannot take place without the approval of the government. So I believe there are as many safeguards as possible unless one were to have a complete prohibition, and I doubt the wisdom of that. Short of that, the government has complete control over future amalgamations. It would be impossible for an amalgamation to be effected in any way without the permission and knowledge of the government.
[DOT] (4:10 p.m.)


Mr. Nasserden:: Is there anything in this legislation which would prevent the amalgamation of the Mercantile Bank with a Canadian bank?


Mitchell William Sharp: I should like to remind the hon. member that the Mercantile Bank is a Canadian bank. As I have said, there is sufficient power within this legislation to prevent the amalgamation of the Mercantile Bank with any other bank or the Bank of Western Canada with any other bank. The permission of the minister would be required in order to begin negotiation and the approval of the governor in council would be required to consummate the amalgamations.


Jay Waldo Monteith: Does the government contemplate moving any amendments to this clause?


Mitchell William Sharp: I do not have in mind any amendments, although I understand from the discussion which has gone on that some questions have been raised which may emerge in due course. If views are put forward on this question, I have an open mind.


Mr. Klein:: Mr. Chairman, I have an amendment which I wish to move in respect of this clause. When I spoke on Friday I mentioned the fact that there was concern about whether the five year period was an equitable one, whether it was too short or too long. I believe

March 21, 1967
Bank Act
we ought to avoid having to face on December 31, 1972, a situation similar to the one we have recently experienced. The right of the Mercantile Bank to do business and to improve its position during the five years should be respected. It may be that at the end of the five year period the shares may be worth a great deal of money. As the hon. member for Acadia said yesterday, if suddenly the bank were obliged to comply with the law, the shares would be worth considerably less or the bank would not be in a position to find buyers.
I believe there should be provision for consultation between the Mercantile Bank and the superintendent of banks. This consultation should be periodic and should be carried on in good faith. It might well be that in the course of the discussions, as proposed by the amendment, the time limit might perhaps be found to be too short, in which case the superintendent of banks would be in a position to report to the government that more time was required. Should the time elapse, this would place the Mercantile Bank in a very serious position. On the other hand, there would be an opportunity for the government to learn at first hand from time to time what progress was being made in respect of compliance by the bank with the law. Therefore I propose the following amendment:
That Bill C-222, An Act respecting Banks and Banking, be amended by striking out line 43 on page 53 of the Bill, as reprinted, and by substituting therefor the following:
"1967, or after such later day, not being a day later than the 31st day of December, 1972, as may be prescribed from time to time by the Governor in Council, have outstanding total liabilities (in-"


The Acting Chairman (Mr. Richard):: I understand that the hon. member for Cartier has made available to the different parties copies of the proposed amendment.


John George Diefenbaker: Mr. Chairman, I had intended to speak at some length on clause 75(2)(g), but in view of the general agreement on the part of members and the arrangements which have been made to expedite debate I shall restrain my desire to outline in considerable detail the unusual peregrinations of the government in its retreat in connection with the Mercantile Bank. I doubt that in the history of our country there has been the equal of the sinuous course taken by the government in connection with this matter.
Finally, after having been assured in this house only a few weeks ago by the Prime Minister that there would be no retreat from
the stand taken, the government swallowed its words and knuckled down to the demands of United States financiers in the persons of the Rockefellers. Indeed, so successful has Mr. Rockefeller been that he is now advising Canadians on other economic matters. In particular he is suggesting that we should establish between Canada and the United States free trade along the lines of the auto agreement which agreement has revealed already, as I pointed out it would, that Canadians are suffering as a result of the action taken by this government in bringing about the agreement.
Let us review what has happened. I am glad the Minister without Portfolio-the former minister of finance-is here, because he has made a study of this subject unequalled by that of any other member of the house. Indeed, when he was head of a royal commission in the 1950's he dealt at length with the need to preserve in Canada the ownership of banking institutions operating in this nation.
[DOT] (4:20 p.m.)
Let us go back to July of 1966 when the present Minister of Finance, the anointed saviour of right wing Liberalism, decided to leave the former minister in a most unenviable position. He abandoned the principles that were enunciated by the former minister and he ignored the pious declarations of the Prime Minister and other members of the government that the government of Canada was going to take a strong stand in connection with the Mercantile Bank.
In July the announcement was made that the First National City Bank of New York would be required to divest itself of 75 per cent of its interest in the Mercantile Bank within 18 months, and reverse its ownership by issuing new shares or be subject to having its growth restricted by proposed changes in the Bank Act. The Minister of Finance planned to restrict the ownership of bank stock by an individual to 10 per cent. This provision was to apply also to the Mercantile Bank. The penalty for failure of the First National Bank to comply with the directions of the government of Canada was to be the same as that contained in the proposals of his predecessor in office. The Mercantile Bank's growth would be restricted to 20 times its authorized capital. All through the succeeding months the government stood firm. Fears were expressed that it would not stand firm because, after all, the record throughout the period of office of the present administration has been one of declaration, expounding.

March 21, 1967

determination and retreat. That has been its course through the years. The Prime Minister said when I faced him with this situation-I could give chapter and verse but I do not want to speak at length on this occasion-that the government would not retreat. Ever since then it has been running away from its commitments.


Mitchell William Sharp: That is just a bit of Action.


John George Diefenbaker: The minister says the government has not retreated. I should like him to explain the difference between a retreat and a strategic postponement. First the government went its way and then the Gordon way. Then it went both ways and then it met itself coming back. To continue the analogy, the government got there before it left and returned before it arrived. What a performance this has been. Never before has this nation witnessed a greater conglomeration of insipidity-declarations, determination and retreat.
Let me now read from a book written by the Minister without Portfolio. It states on the cover:
What is Canada's political and economic future?
The author examines the role that Canada should play in shaping her own destiny.
The book in entitled "A Choice for Canada". I know the Minister of Finance has read this book because he told me on one occasion in the course of cross-Are about the beneAt he had derived through reading it. Let us see what is said in this book by the former minister of Anance, that man who has such wide knowledge that he used to take bankrupt corporations and turn them into corporations that were more bankrupt than when he started. That is what he did. I could give a perfect example of that but I do not intend to divert from setting forth fully what I have in mind.
Let me quote from page 94 of this book. This is what was written by the minister:
I said the same sort of thing nearly five years before that in a speech entitled, "Whither Canada 

Satellite or independent nation?" This was severely criticized at the time-
Let me skip a paragraph or two. The following was written:
Amendments to the legislation governing federally incorporated insurance, trust, and loan companies in the fall of 1964 provided for their continued control in Canada. It was announced at the same time that similar amendments would be included in the revision of the Bank Act and made retroactive to the date of the announcement. Just prior to this, the president of the First National City Bank of New York came to Ottawa to inquire 23033-902
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whether the government would be favourable to his bank acquiring the Mercantile Bank of Canada from Dutch interests. He said no commitment had been entered into, pending information about the views of the Canadian government. He was informed that the government would not look favourably upon such a transaction because, inevitably, it would lead to requests from other United States banks for opportunities to enter Canada in other ways. The Canadian government wished to avoid this.
The president of the First National City Bank said he presumed that, if his bank went ahead with the transaction against the wishes of the Canadian government, it would do so at its peril.
When the minister says that I believe him because no matter how one may disagree with some of his ideas the statements of fact he has made in the house have invariably been unchallenged. I can pay no greater tribute to him than to say that is his reputation. When he says he advised that if they went ahead against the wishes of the Canadian government they would do so at their peril, I believe him. In reference to the president of the First National City Bank the minister wrote:
He was advised not to proceed until the coming amendments to the Bank Act were made public. He was warned that, as his bank had no commitment to buy the shares in question, the government would feel quite justified in proposing amendments that would be retroactive in their application. Nevertheless, the First National City Bank of New York proceeded to acquire the shares of the Mercantile Bank, contrary to the wishes of the Canadian government and despite the warning given.
Nothing could be clearer than that. He then wrote:
The revision of the Bank Act, announced in May of 1965, provided for the renewal of the charter of the Mercantile Bank of Canada but placed limitations upon its future growth. Immediately, the government was subjected to heavy pressure to remove this limitation.
This incident is mentioned to illustrate how Canadian governments are sometimes regarded by private foreign interests. A strong stand is necessary if the government is to make its decisions stick and if Canada is to retain her independence.
[DOT] (4:30 p.m.)
Those are strong words. He and the government were subject to pressure. What was the pressure? He is in the house, and I know he yearns for the opportunity of placing before the house and the country his knowledge of what took place. This government made its stand; it decided what it was going to do. It reversed Mr. Gordon in part. I refer to the Minister without Portfolio as Mr. Gordon because it is diAicult to refer to "the Minister without Portfolio" and be certain that one is identifying him. What happened? The government made a change, but that change was

March 21, 1967
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going to be final. Then a few weeks ago the government swallowed itself. I wonder why. Where was the heavy pressure against the government? The minister has never given any information in that connection.
Was it pressure from the United States government? Did the American administration decide that it was going to determine the course Canada was going to take? I remember that in 1962, during the election of that year, the Minister without Portfolio and other members of the government were not averse to receiving assistance from the United States. There was assistance in the way of manpower and also the expectation of financial assistance in order to defeat the government I had the honour to lead because we dared to take a stand on nuclear weapons contrary to the wishes of the United States administration.


Some hon. Members:: Hear, hear.


John George Diefenbaker: The Minister without Portfolio will recall the gentleman from Washington who with the approval, indeed with the activation of the administration of the United States came to Canada to show the Liberal party how to win an election because Canada had dared to take a stand that was not acceptable to the American administration.
I would like to hear the Minister without Portfolio tell us the story of the meetings with Mr. Harris at the Eoyal York hotel in Toronto and all the contributions that were made by the Americans to help the Liberal party. I would like to hear about that. Then American assistance for the Liberal party was not only acceptable but warmly welcomed. What happened? We wonder who exerted the pressure to bring about the last change that resulted in the bill that is now before us and in particular the clause to which I am referring and the revised version in the amendment of the hon. member for Cartier. I must say to him that as he produced that amendment he brought a smile of pensive approval to the countenance of the Minister of Finance. This amendment was going to be just a little thing and would help out. It has all the appearances of directed spontaneity. It was a beautiful piece of work-so obvious, so transparent. This amendment would bring about a situation that might command the support of the Minister without Portfolio and others who are associated with him in their particular economic views.

What happened in Washington? I recall in 1962 and 1963 that the trouble with the Diefenbaker administration was, they said, that it could not get along with Washington. The Liberal party embraced the assistance, as direct as possible, received from Washington. In the city of Ottawa the American ambassador had his staff meet with the press of Canada for the purpose of showing them, in connection with nuclear weapons, how politically vulnerable the Canadian government was and the means that should be taken by the press to undermine that government because the United States disliked the stand we had taken. That stand is being followed today. That which was heresy is now accepted internationally.
How wonderful the new heaven and earth were going to be. Revelations never produced an equal of the description. Relations were going to be so nice. I need not tell the committee that when the Prime Minister of Canada went to Washington he was treated with about the same consideration by the president as his two dogs were except that he was not lifted by his ears. Only the other day one of the leading exponents of Liberalism in the press gallery stated that the relations were somewhat strained and that when the Prime Minister went to Washington he was kept sitting around cooling his heels while the president was telephoning for an hour or more. What a strange transition. What a metamorphosis has taken place. Those who had the magic means of bringing about good relations with the United States find themselves in a position where pressure pays off. Only in the last few days a book has been published in the United States. It is referred to in a Canadian Press article by Arch MacKenzie. The article says:
A "Mike Pearson massage file" was set up at the White House alter President Johnson became indignant about the Canadian Prime Minister's 1965 proposal for a North Vietnamese bombing pause-
Then it says:
-the purpose of the file was to "hold friendly communications which had been sent to Ottawa over the president's name without being seen by him."
As I have said, the file is called the "massage file." Apparently they have two methods. They have a massage at one end and a massage at the other end whereby they kick the Canadian government around and get their results. Let us consider this article, because the book is not yet in the library and 1 know
March 21. 1967

the Minister of Finance always reads the books I suggest to him.


Mitchell William Sharp: Perhaps I have already read them.


John George Diefenbaker: The article then says:
Possibly it was intended to "massage" or soothe Pearson's feelings.
Then it says:
"Relations between Washington and Ottawa became frosty ...
"White House aides, looking for a turn in the president's mood, began keeping a 'Mike Pearson massage file.' "
[DOT] (4:40 p.m.)
What a change. Those who had the answers said we should not stand up to the United States and contend that Canadian policies would be made in Canada by Canadians. This was wrong. I have a great deal of material before me but all I am going to do is summarize it. There is a reference to the "massage file". I know that the Minister of Finance is a master of the art of massage because anyone who can take the Minister without Portfolio and others associated with him and massage them down to accept the present amendment has qualities that are possessed by few. How did he line them up? There is the Minister without Portfolio who is today supporting the government in doing that which he condemned. He wrote a book about it. What happened? Why did the government retreat? We will never know. Was it massage that brought it about or was it forceful denunciation? Whatever it was, they wavered. The government of Canada has bowed to the demands of the United States on a matter that is basic to Canada according to the Prime Minister, the Minister without Portfolio and other ministers.
I see over there the courier, the hon. member for Verdun. They tell me it was his masterly "message to Garcia" which brought about the acceptance by the United States, and in consequence he is about to be elevated to that sphere which all desire to attain. Yesterday the other Minister without Portfolio announced, in a most unusual way, that the hon. member for Verdun was about to be made a member of the cabinet. I am the first to congratulate the hon. member for Verdun because I know that with his eloquence, with the powers of persuasion which he exercised with such consummate skill in New York when everything else failed, all will be well.
23033-902 J
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Speaking seriously, and I am now speaking seriously, I say to the government, you have retreated. You have swallowed yourselves. You have made a joke of Canada. You took a stand, then you turned one somersault. That was not sufficient so you turned a second one. Now you have put the legislation in cold storage for five years. A few moments ago the hon. member for Cartier decided that five years might be five years too short and he is adding a tail. I can just imagine Rockefeller laughing to himself. "I came, I saw and we conquered", that is the attitude of the Rockefellers today. They take Canada and determine the course of Canada through a government which apparently responds to treatment whether it be massage or condemnation.
In view of this clause I say quite frankly that this bill ought not to have the support of the house. This is one of the clauses to which the strongest possible objection can be taken. Surely, sir, parliament is not going to be asked to be the cat's paw of a government that, having declared in the loudest, clearest terms through the lips of the Prime Minister there would be no retreat, has retreated. To accept this clause in its present form is to admit that this nation is not sovereign but is subject to the control, to the domination of the United States. Indeed, I go back to the immortal words of the Minister without Portfolio: Being subjected to heavy pressure, Canada cannot afford to be placed in the category that too often smaller countries have been placed in, of having their policies determined, not within their own country but outside.


Mitchell William Sharp: We can always depend on the right hon. Leader of the Opposition, Mr. Chairman, for an entertaining hour or so and he has certainly not disappointed us on this occasion. He appears, however, to have his facts a little mixed. Perhaps the least I can do is to set the record straight. The hon. gentleman is attempting to create quite a false impression of the course of events. When the present senior Minister without Portfolio was minister of finance he brought before this house a bill to amend the Bank Act. Included in that bill was clause 75 (2) (g) exactly in the form as I introduced it in 1966. That clause was to the effect that any bank with an individual shareholding of more than 25 per cent would not be permitted to have liabilities in excess of 20 times the authorized capital after December 31, 1967. Neither in the bill introduced by my distinguished predecessor in office nor in the bill introduced by me was

March 21, 1967
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any change made in any of the other provisions relating to the authorized capital of a bank. In all of those respects, the bills were identical.
The committee on finance, trade and economic affairs recommended two important changes. Here I should like to give credit to the committee once again for the very thorough way in which they examined this bill and for the many very useful improvements, some of which were recommended by me or by Mr. Elderkin on my behalf while others were made by the committee itself. One of the most important changes made by the committee was to strengthen this bill in so far as it related to a bank in the position of Mercantile Bank. This amendment prohibits any bank, subject to the restrictions included in clause 75(2)(g), from selling shares to non-residents. This was a very important amendment. As the bill was introduced in 1965 and 1966, shares could have been sold to non-residents as well as residents.
If this recommendation is accepted, and it is now in the bill as reported by the committee, the Mercantile Bank can only escape from the restriction on the ratio of its liabilities to its authorized capital if 75 per cent of the shares of the bank are acquired by Canadian residents. This is a very important and I believe a very useful improvement in the bill.
[DOT] (4:50 p.m.)
I now come to the second main recommendation of the committee, and I refer the house to the evidence of the standing committee on finance, trade and economic affairs of February 22, 1967, when I appeared to discuss clause 75. At that time I read to the committee two messages from the Mercantile Bank. I will read them into the record so that we can have a ready reference. The first message was from Vancouver, dated February 14 and addressed to me. It reads as follows:
As there appear to have been some conflicting reports about the position of our bank regarding the current revision of the Bank Act, we would like to make the record clear. Being a legally constituted Canadian chartered bank since 1953, we of course have been and are now subject to and governed by Canadian law. Any increase in our authorized capital is subject to the control of appropriate Canadian authorities. At the present time it would be inappropriate to offer shares in the bank to the investing public as some years are needed to build profitability. We would appreciate a period of time to accomplish this work. If the proposed special ratio of liabilities to authorized capital becomes the law, this time is needed. We will give consideration to making shares available to Canadian residents when it is appropriate to do so.

I now read into the record another message I received that day, February 22:
We are pleased to confirm our intent to seek share participation by Canadian residents when it is appropriate to make an attractive offering.
Both of these telegrams were signed by Stewart B. Clifford, general manager of the Mercantile Bank of Canada.
The committee discussed these telegrams at some length, and in order to avoid putting the whole of the discussion on the record, although it is very interesting and sheds a somewhat different light on the situation from that which has been suggested to us by the right hon. Leader of the Opposition, I might quote the following excerpts. I was asked the following question by the hon. member for Regina City:
If I may put a supplementary question to the minister, does he consider this to be a reasonable request to meet the situation, so that the committee may have some basis for consideration?
To which I answered:
Yes; I believe it is not an unreasonable request. It is very difficult to have a judgment.
I am so interested in having the Mercantile Bank become a Canadian bank that I hesitate to put any unnecessary road blocks in the way. If the extension of a few years would enable them to market their shares successfully to Canadians, then I say, from a Canadian's point of view, that I think this would be a reasonable thing to do.
The chairman then asked the hon. member for Edmonton West whether he had any further questions to ask. The hon. member for Edmonton West said the following, as recorded at page 3492 of the proceedings:
-I am glad to see the minister's attitude, and that of others, which is to let the Mercantile people get themselves back into reasonable shape, or at least of giving them a chance to get into reasonable shape to dispose of their shares. I think it would be an absolute death sentence for this organization if we insisted on the legislation as it now stands, without a further amendment providing for at least five years and a chance to operate in a very competitive market. I am going to limit what I say to that. As I said, I do not agree with the principle of the legislation.
As members of the committee who are present here know, the hon. member for Verdun, at the invitation of the chairman, then moved an amendment which is now the present version of clause 75 (2) (g) as it appears in the committee's evidence. It was seconded by the hon. member for Nanaimo-Cowichan-The Islands, and all members of the committee, including some of the supporters of the right hon. gentleman, unanimously agreed that this was a reasonable change.
March 21, 1967

These are the facts, and I thought that at this point I should at least put the record straight.


John George Diefenbaker: Will the minister produce the United States note or notes of condemnation of the action of his government relating to the proposed legislation respecting the Mercantile Bank? Will he admit that the United States government took strong objection and condemned the government of Canada for this action, and will he table these notes?


Mitchell William Sharp: Mr. Chairman, the best answer I can give is to say that one of the most notable things that happened in the committee was the complete reversal of the position of the Mercantile Bank because the government of this country did not give way to pressure from any source.


John George Diefenbaker: Mr. Chairman, I ask the minister now whether he will answer my question instead of indulging in his customary evasive non sequiturs. Did the United States government not offer the strongest objection to the intended legislation regarding the Mercantile Bank? Did not the ambassador, Mr. Butterworth, who supported the Liberal party in 1962 and 1963, express strong objection? I ask the minister that simple question. It cannot be answered by recounting what the committee did.


Mitchell William Sharp: I did not think I was being irrelevant. I was simply putting the record straight. I can assure the right hon. gentleman that the United States did make representations to us on this subject. This was stated by the Secretary of State for External Affairs and I think I said it on the same occasion. However, we did not in any way give way to any pressure from the United States and, if I may say so, what the right hon. gentleman is doing is to accuse his own members on the committee of knuckling under to that pressure, and I do not think they did.


John George Diefenbaker: No, it is the government that knuckled under.


Paul Joseph James Martin: May I ask the
hon. gentleman a question? Would he not like to modify or withdraw his statement about the representative of another country in Canada being identified with a political party, because I think it is a reflection both
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on the ambassador and on his country, something which I know my right hon. friend would not in any way want to do?


John George Diefenbaker: Mr. Chairman, that question indicates that no one should ask about matters being debated when he has not been here and has not listened. The minister wandered in at this moment and decided he would propel himself into the discussion. What I said was that in 1963 the ambassador of the United States and those connected with him briefed members of the press of Canada as to the means whereby they could attack the government of the day. If he does not accept that, will he look up the statements made by a very distinguished member of the press gallery who in a national radio and television broadcast admitted there had been such a briefing. The minister usually speaks after reflection. Today he departed from his custom.


Paul Joseph James Martin: I am aware of the alleged briefing in question. I do not know whether it took place. However, that is not the statement to which I take exception. My right hon. friend said that there was a link between the ambassador and a political party in this country. As Secretary of State for External Affairs it is my duty to defend the heads of missions in this country in the absence of evidence to the contrary. I regard this statement as a reflection on the United States ambassador to Canada. I know this is a reflection which my right hon. friend, with his great experience, would not want to persist in casting.


John George Diefenbaker: I will not be diverted by rataplans. I make this very clear, that I believe the administration of the United States participated actively through its agents in Canada in the elections of 1962 and 1963, and no amount of subterfuge or smokescreen on the part of the minister can convince us otherwise.


Mr. Martin (Essex Easf):: Mr. Chairman, the fact that the right hon. gentleman makes a statement does not necessarily establish the validity of that statement.


Some hon. Members:: Oh, oh.


Paul Joseph James Martin: An argument which is made by assertion, as my right hon. friend himself has often pointed out, is often the weakest kind of argument. The right hon. gentleman has made an assertion in respect of a matter of the greatest

March 21. 1967
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delicacy and importance and involving our relations with a friendly country. I do not propose to sit by and listen to so baseless a charge made against my party, with all the implications it contains. In the last election and in other elections the Liberal party conducted its own case under its own program and under its own leader without influence from any country, without influence from any other party, but with the great support of the Canadian people.
[DOT] (5:00 p.m.)


Some hon. Members:: Hear, hear.


John George Diefenbaker: I will simply say that if there is a prize for fiction this year the hon. gentleman should receive it.


Mr. Scott (Danforth):: Mr. Chairman, I had not intended to take part in this discussion. I listened with a great deal of interest to the speech made by the Leader of the Opposition. All of us in this house are aware of the precision with which he documents his arguments. It seems to me he has raised a serious and fundamental charge drawing attention to the apparent deep-seated division between the views of the Minister of Finance and those of the Minister without Portfolio, the hon. member for Davenport.
This is a division which has been widely discussed throughout Canada. The Minister without Portfolio is spending a good deal of his time going all over the country and making eloquent speeches about the need to preserve Canadian sovereignty. Today the Leader of the Opposition has pinpointed with devastating accuracy the nature of the division between these two individuals and, as a consequence, within the government. I do not see how we can allow this bill to pass unless the Minister without Portfolio is prepared to rise in this committee and say the things he is saying outside it.


Steven Otto: Mr. Chairman, I will be very brief. I cannot help admitting I was very disappointed to see the Leader of the Opposition turning his back, as it were, on principles which I have hitherto admired and training his guns upon the government over an issue which really does not matter. If there is one thing I admired about the right hon. gentleman it is that he has always stood up against the establishment. He is the man who fought against the elite, the mandarin class, and no one can deny he made his presence felt.
But here we find the right hon. gentleman defending the Bay Street boys against the
(Mr. Martin (Essex East).]
Wall Street boys. In reality that is all this amounts to. What have the people of Canada got to do with banks? Are they shareholders? Their only connection with them is when they are refused loans. The right hon. gentleman would have done better to concentrate on subclause 2, paragraph (e), which says:
(2) Except as authorized by or under this Act, the bank shall not, directly or indirectly,
(e) lend money or make advances in a principal amount exceeding five per cent of its paid-up capital to a director of the bank or to any firm or corporation of which a director or the general manager of the bank is a member or shareholder without the consent of two-thirds of the directors present at a regular meeting of the board or a meeting of the board specially called for the purpose;
This is the essential point, in my opinion. The establishment, the elite, the directors, all belong to this family compact. Can anyone deny that the family compact is more powerful today than it was 130 years ago? The members of this establishment control 85 per cent of our industry in Canada. This is the enemy. Can the right hon. gentleman tell me why he is giving up his fight against the Canadian establishment, why he has now embraced that establishment while purporting to pick a political quarrel with this government?


Colin Cameron: Mr. Chairman, I do not want to delay the committee too long, but I came in while the Leader of the Opposition was in full oratorical flight. I always enjoy the speeches of the Leader of the Opposition when he is in full flight and I was particularly interested in this instance because, as the Minister of Finance has revealed

I suppose most people knew it-I seconded the motion which was proposed by the hon. member for Verdun. As I suggested when I spoke a few days ago, I did so with somewhat mixed motives. It is not very often that one can do what one thinks is the right and sensible thing while also deriving some fringe benefits. The fringe benefit I anticipated was the discord within the Liberal party which I thought might be stimulated if this particular motion were passed.
On the other hand-and I address myself now to the Leader of the Opposition-we have to face some realities in these matters. I gather he has adopted the same position, an irresponsible one in my view, as was adopted by the former minister of finance, the present Minister without Portfolio, who was prepared to leave this bank in a strait-jacket as a potential cause of future trouble between our selves and our United States neighbours.
March 21, 1967

One would have to be very naive not to believe that the pressures to which the right hon. gentleman has referred would be intensified if we left the bank in its present anomalous position. There was one sensible solution which I proposed in the committee and in the committee of the whole. It was rejected by the government and to the best of my recollection it obtained no support from the members of the party led by the right hon. gentleman. I proposed the only sensible solution to this problem created by the presence of a foreign-owned bank in Canada, which was that the government of Canada should make an offer to the Rockefeller interests for their shares in Mercantile. Mr. Rockefeller told us he had nothing of value to sell, and it occurred to me that this was an opportunity to do him a good turn by relieving him of his valueless property. But that solution was rejected by the government and it was rejected, I gather, by members of the party on my right.
To return to the points raised by my hon. friend from Danforth, I suggested when I spoke earlier that the people of Canada are entitled to know just what is the position taken on this question by the former minister of finance who has expressed himself so forcibly with regard to the presence in Canada of a foreign-owned financial institution and who since this move was made has continued to speak all across the country, as hon. friend has pointed out, warning us of the dangers inherent in United States ownership. I think it is time the former minister of finance got up in this house to tell us that he agrees with the irresponsible position outlined in the bill as he originally presented it to the house, leaving the problem of the Mercantile Bank unsolved in order to create future trouble with our United States neighbours. I suggest we have much more important problems to discuss with them in the near future.
[DOT] (5:10 p.m.)
I am sure the Minister of Manpower and Immigration will agree with me on that point. We should clear out of the way these irritating and exasperating things such as the Mercantile Bank matter. Of course, the best way to do it is the way that has been rejected. The only other course is to accept the amendment moved by the hon. member for Verdun and seconded by myself in the committee, as I said, with some misgivings because I have very grave misgivings about the future conduct of the Rockefeller interests of New York.
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I hope the Minister of Finance is prepared to make sure that the Rockefeller interests will divest themselves of their shares in the Mercantile Bank within the five year period. I do not quite know how he is going to do it. So far he has not been able to tell us how he is going to do it. He can only express a hope that they will agree with the policy of the Canadian government.
I conclude by saying that I think the Canadian people and this parliament should know the position of a member of the Liberal cabinet who, up until quite recently, vigorously opposed the action taken by the standing committee and which is now being presented to the committee of the whole.


Bryce Stuart Mackasey: Mr. Chairman, I rise to thank the Leader of the Opposition for taking such a great interest in the affairs of the Irish community. Had I known he was that interested in what transpires in our community in Montreal I would certainly have invited him and, God willing we are both here on March 17, 1968, I shall invite the right hon. gentleman to Montreal to attend the various functions, to march in the parade, take his place on the reviewing stand and, all in all, to wear the green. I do not know whether the new uniform of the armed forces will be worn in the parade next March 17 as part of the celebrations. However, I do know that I at least have misgivings about the colour because not only is it the traditional colour of the Irish but unfortunately it is also the official colour of the socialists. Thus at times I am for the green and at times opposed to it.
Someone once said to me, "You should never speak when you are angry," and I am going to take that advice. A few things were said during the debate in the course of the last 15 or 20 minutes about pressure by the Americans. The Leader of the Opposition has a knack of painting pictures much blacker than they are when it suits his political purposes. He is a past master at that and I always like to attend his performances in the house because I learn on each and every occasion how to be gloomier than necessary and how to be more optimistic than necessary. But I would like to tell the committee that I share his concern that pressure was put on the government in the case of the Mercantile Bank.
I believe this. I believe it from press reports. I believe it from the evidence given before the committee. But what I think is more important is that the government did not bow to American pressure. I had no idea

March 21, 1967
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that the right hon. gentleman had intended to participate in the debate at this time. Had I know I might have brought along some documentation showing that we did not bow down to the Americans. But perhaps it might be sufficient for the right hon. gentleman if I read to him some of the statements made by the Prime Minister on the television program "The Nation's Business" on February 1, 1967, which I think best exemplify the firmness and the decision of the government that we are sovereign in affairs of finance and do not have to be told by anyone how to act. I would like to quote exactly what the Prime Minister said on that occasion:
There are two dangers, however-
He was talking about our relationship with the United States in this particular area.
-which we must avoid in the search for fair and acceptable solutions to our problem. The danger on the Canadian side is an oversensitive nationalism, defensive rather than aggressive-
I suggest this was the spirit of the right hon. gentleman's intervention a few minutes ago.
-based on the feeling, and the fear that as the weaker partner we are too dangerously vulnerable to the effect of the decisions of the friendly giant that lives beside us. The danger from the American side is ignorance of our desire, yes, our determination, to remain independent and separate; and an inability on their part to understand our refusal to accept the doctrine that what is good for the United States must necessarily be good for Canada too.
The point that the right hon. Leader of the Opposition has conveniently overlooked is the fact that at no time before the banking committee was any amendment brought forward, or any suggestion of an amendment from members of this party or members of his own party, in any way, shape or form destroying or weakening the pro-Canadian spirit of Bill C-222. The principle of the bill today is as it was in 1965 when first introduced by the former minister of finance and as reiterated by the present Minister of Finance when he appeared before the committee, that we in this country insist on our right as a sovereign nation to decide every decade what are the rules and regulations under which the banking institutions are to function. This is a fundamental right of Canada that was given in 1871 with the passage of the first Bank Act. Every ten years we review banking in this country and set out the terms, rules and regulations under which banking is to operate.
The owners and directors of the Mercantile Bank refused to recognize this Canadian right
[Mr. Mackasey.l
but because of the efforts of the present Minister of Finance the directors and owners, in not one but two telegrams to the committee and to the Minister of Finance, later emphasized quite clearly and quite concisely that they accepted the principle that Canadians had the right to make their own rules and regulations governing banking. They recognized the fact they were a Canadian chartered bank, and recognized the right of the Canadian government to specify their conditions of operation for the next ten years.
It was in the spirit of these telegrams from the Mercantile Bank accepting this principle that any and all amendments were introduced to the Bank Act. Several people have overlooked the fact, and it is one I must mention once again to the Leader of the Opposition, that his party was represented on the banking committee by what must be considered to be the cream of the members of the Tory party. Hon. members like the hon. member for Regina City, the hon. member for Perth, the hon. member for Edmonton West and the hon. member for Kamloops sat on that committee and the latter, despite his compaigning around the country, rarely missed a meeting of the committee. With such hon. members on the committee you would imagine, Mr. Chairman, that the right hon. gentleman would have been more than pleased to trust the viewpoint of the Tory party to the hands of these very well educated and responsible people.
When the hon. member for Nanaimo-Cowichan-The Islands indicates that the key amendments made in the banking committee were accepted unanimously, I can only repeat what I said last Thursday, that this is not only a tribute to the effectiveness of the chairman of the committee but also to the spirit of objectivity that prevailed in that committee. If the right hon. gentleman is going to accuse that committee of retreat then he has to accuse in the same breath the hon. member for Regina City, the hon. member for Perth, the hon. member for Edmonton West, the hon. member for Kamloops, and all the other distinguished members of the Conservative party who sat on that committee and approved every amendment that was adopted.


Edward Nasserden: May I ask the hon. member a question?


Bryce Stuart Mackasey: I would be surprised if you didn't. Go ahead.
March 21, 1967


Edward Nasserden: Thanks very much. All I
want to ask is whether the hon. member agrees with his colleague who earlier in the debate said that there were some good amendments to what was a bad act.


Bryce Stuart Mackasey: Those might be a few good words in what could start out to be a bad speech, and I will comment on the hon. members' remarks at another time. The important thing, is that this bill as amended is no retreat and, as I mentioned before, if it in any way, shape or form can be considered as a retreat, then each and every member of the banking committee of the House of Commons must be held responsible.
[DOT] (5:20 p.m.)
There is an evolution of this house toward the committee principle. Committees of the House of Commons are obtaining a new dimension of responsibility. The committee system is working despite its disruption of the work of the house itself. The committee on finance, trade and economic affairs is a fitting example of how committees should proceed in the future. When we got rid of political partisanship and started discussing the bill we came up with a bill of which all members of the house, not just the minister, should be proud. Many of the suggestions, objective criticisms and improvements which were made were advanced by members of the Conservative party. Obviously there was very little communication between the right hon. gentleman and the members of his party who were members of that committee.
The clause to which the right hon. gentleman objects, clause 75 (2) (g), is familiar to all members who have followed the proceedings. What was the content of this clause in its original form? It stated simply that if any bank, as at January 1, 1967, had more than 25 per cent of its shares held by an individual or his associates, that bank would be restricted to a ratio of 20 to one in its liabilities. This is the crux of the problem. This is the clause in the bill that the former minister of finance felt was necessary to prevent the Mercantile Bank from growing and dominating the Canadian banking scene. Some of us are a little puzzled about how the Mercantile Bank is to grow into such a monster when we realize that, with its authorized share capital of $10 million, it is about one fifth the size of the next largest bank and considerably smaller than many of the banks such as the Bank of Montreal, the Canadian Imperial Bank of Commerce and others which may be 20 times as large.
Bank Act
Because of the philosophy behind the bill that it is our right as Canadians to administer financial affairs in this country we accepted the principle. However, when we considered that the effective date for the coming into force of the legislation would be six months hence, it became apparent that it was not realistic. In six months we would have expected the Mercantile Bank to dispose of three quarters of its shares, 750,000 shares of the stock. We keep proclaiming that we are not anti-American. There is a very fine line between professing our sovereignty and adopting a dog in the manger attitude. If every country were to take restrictive action, the flow of capital in the world would cease.
The important point, having convinced our United States friends that we intend to exercise our right to administer the act according to our principles, is that we should not then adopt an anti-American attitude. If we were to force any United States controlled bank to dump 750,000 shares on the market and dispose of them to Canadians in a period of six months, this would be an anti-American action. I do not care what anyone in the house is inclined to think about it; there is a thin line, but it is there.
We agreed to give the Mercantile Bank five years within which to dispose of its shares because neutral observers who appeared before the committee on finance, trade and economic affairs, including the minister, expressed the opinion that if 750,000 shares were dumped on the market now in accordance with the restrictions contained in clause 75(2)(g), there would be sheer speculation and no one in his right mind would buy the shares. This was the information we received from bond dealers.
The question then arose, what should we do? All the members of the committee, including members of the Tory party, the New Democratic Party, the Liberal party and the Social Credit party, said to the bank, "Go out and prosper; if you can make the shares worth while in five years, go to it. On January 1, 1972, unless three quarters of the shares of your bank are in the hands of Canadians, you will come under the restrictive clause and be forced to a 20 to one liability position." There is nothing unfair about this; there is no question of retreat.
I said that I did not intend to speak in anger, but my anger has been generated by the amendment of the hon. member for Cartier. If we say to the Americans that we are going to give them five years and then do

March 21. 1967
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not, we are being anti-American. In effect this amendment says that we are giving them five years but next month we will hold a cabinet meeting and say that it is not in the best interests of this country that the law become applicable in 1972. That is the effect of the amendment of the hon. member for Cartier.
The clause would no longer say that the Mercantile Bank, or any other bank in the same position, has until 1972 to divest itself of the shares. It would say in effect that the date would be any time after a certain date in 1967, or after such later day, not being a day later than the 31st day of December, 1972, as may be prescribed from time to time by the governor in council. The effect would be that if at any time in the next five years the governor in council thought that the Mercantile Bank was not acting like a good Canadian and was not divesting itself of its stock fast enough, the restrictive clause, clause 75(2)(g), could be brought into force before the date which was unanimously agreed upon by the members of the committee on finance, trade and economic affairs. I do not know what effect this might have on me as a politician but, as I said on Thursday, I do not play dirty pool. I said, and I say again, that I will vote against the amendment because it is diametrically opposed to what was accepted unanimously by the members of the committee some weeks ago.


Jay Waldo Monteith: Mr. Chairman, I should like to say a few words about this matter. I wish to differ with the hon. member for Verdun in one respect. He suggested there had been no communication between the right hon. Leader of the Opposition and the members of his party who were members of the committee. I should like to point out that this is absolutely incorrect. Further, I should like to say that it was not the Conservative party which retreated. I had not taken a stand in respect of the Mercantile Bank. When the matter first came before the house for consideration my stand was that I did not like discriminatory or retroactive legislation of this nature. Aside from that, however, I agree with him that when we were in committee we discussed this matter and I voted for the five year period. I thought this was the consensus of the committee after having considered the matter. Following my statement to the effect that I did not like retroactive or discriminatory legislation, I find no reason to be ashamed of the way I voted in the committee.

[DOT] (5:30 p.m.)
The hon. member has explained the consideration which led to the decision. I suggest that the amendment brought forward by the hon. member for Cartier is presumed to be a compromise to settle the dispute which arose between the Minister of Finance and the exminister of finance some two weeks ago. I do not think there can be any shadow of doubt about that. The minister has not had the gumption to get up and move this amendment himself. He has not had another member of the ministry move it. He is simply using the hon. member for Cartier to move the amendment in an attempt to bridge the gap which exists between the former minister of finance and the present Minister of Finance. That is very obvious.
The amendment would leave it up to the governor in council to select a date upon which the government would say to an institution that it must divest itself of whatever assets it might hold at that moment. The date when this should happen should be spelled out in the legislation. It should not be left for decision by the cabinet. What could we expect under these conditions? We would not even know which minister would initiate the final decision. We must know specifically when this is to take place. All this amendment is supposed to do, as I said before, is to fill the gap between the opinions of the Minister of Finance and the former minister of finance.


John George Diefenbaker: Mr. Chairman, we are all awaiting with anxious expectation to hear the views of the former minister of finance. The hon. member for Perth has suggested that the amendment proposed by the hon. member for Cartier has simply been devised to provide a means whereby the two wings of the government can get together. I am sure the Minister of Finance would join with others in asking the Minister without Portfolio, who has wide knowledge in business, to give us his views.
Having listened to the hon. member for Verdun I doubt whether I have ever witnessed a minister excoriated to the same extent as was the Minister without Portfolio. He did not mention him specifically but he condemned him out of hand, and he condemned any suggestion that there should be control on investment. I think his attitude in general is one which would indicate that he wishes this house to recall that old song, "Walter, Walter, lead me to the altar".
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Mr. Caoueiie:: March 21. 1967
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shares. By that time, nobody will likely remember what we are doing today, because once this bill is passed, the act will remain in force for ten years, which means that in five years from now this matter will probably not be reconsidered.
Mr. Chairman, whether or not the Conservative amendment is carried, we shall vote against the control of the Canadian economy by a few foreign individuals. I think that on behalf of the Canadians, we have to vote in favour of the amendment to clause 75 (2) (g).


Herman Maxwell Batten: Is the committee ready for the question?


Some hon. Members:: Question.


Herbert Eser (Herb) Gray: Mr. Chairman, I wish to speak very briefly on the amendment before us. After listening to the debate in the committee this afternoon it seemed to me that all hon. members were generally in agreement with the basic principle that this vital segment of the Canadian economy should not fall under foreign domination, and that there would be some value in giving to those who do not at the present time fit within the code of rules aimed at bringing about this result a reasonable period of time to get into the position required by the legislation.
It seems to me, in looking at the proposed amendment, that its basic purpose and approach are consistent with the principle I have stated and that the only real difference between the amendment in the bill as reported to the house by the finance committee is that it gives the government a greater opportunity for supervision in a flexible way, to assure that the basic aim is achieved within the period of five years. It will make sure that those institutions which do not at present conform with the code of rules contemplated by the law, which is aimed at making sure that this crucial and vital segment of the Canadian economy remains in Canadian hands, comply fully with those rules.


Jay Waldo Monteith: Mr. Chairman, I should like to point out that this is an entirely divergent view from that expressed by the chairman in the committee.
Amendment (Mr. Klein) agreed to: Yeas, 50; nays, 16.


Herman Maxwell Batten: I declare the amendment carried. Shall clause 75 as amended carry?
Clause as amended agreed to.
Clauses 76 and 77 agreed to.
Clauses 82 to 87 inclusive agreed to.
[Mr. Caouette.l
On clause 88-Loans to certain borrowers and security.


Harold Warren Danforth: Mr. Chairman, clause 88 sets out provisions that are perhaps the most important so far as the agricultural industry is concerned. It lays down the provisions under which banks may make loans to farmers. Before it is passed I should like to comment briefly on one or two points and I have a question or two to pose to the Minister of Finance.
There is no doubt that in this day and age the costs of production of primary products are so high that there is tremendous concern on the part of farmers about the economy of their industry. One of the difficulties which farmers face is that in many instances the manner in which their products are sold causes great concern and grave economic hardship. This is particularly true in regard to certain specialized crops such as fruits and vegetables and products of the dairy industry. These foods are financed and produced by the farmers and delivered to warehouses or storage facilities where they are subject to further processing before they are placed before the buying public.
In the case of dairy products, for example, milk is manufactured into cheese. When this takes place a long period of time often elapses between the time the primary producer delivers his goods and they pass out of his hands until the time he is paid for his product. Very often a tremendous risk is involved because of the perishable nature of the product and varying marketing conditions. There are instances where a farmer may deliver a product such as tomatoes and three or four months pass before he receives payment for his produce. I have used the example of milk products where there may be a lapse of 30 days or more before the farmer receives remuneration. In the case of tobacco and sugar beets, many months pass before the producer is paid for his product.
[DOT] (5:50 p.m.)
This situation has always been of great concern to the farming industry across the country on two counts. First, it is often felt that manufacturers have the use of the products of the farm and in many instances have received returns for them and are using the farmers' money upon which the farmers have had to pay interest. Second, there is grave concern that in many instances manufacturers may fall into economic chaos or bankruptcy before payment has been made. In extreme cases, the result has been that when
March 21, 1967

the creditors have been satisfied there has been nothing left to pay the farmers for their products.
These instances, although they have been few in number, are striking examples of what can happen at any time. When they are coupled with the high cost of production today, farming communities can suffer great hardship. Clause 88 indicates that there has been an attempt to check this trend and give primary producers a more favourable position. I have absolutely no quarrel with this. Farm organizations have been trying for years to bring about this change in the legislation. Farm organizations were faced with the fact that the act is normally revised every ten years so there was a ten-year gap during which they knew that although they might make representations there was little chance of having such an amendment made.
Farmers across the nation are delighted to see that at last the government has taken cognizance of this problem and is attempting to do something about it. In the last ten years nearly every farm organization concerned with fruits, vegetables and dairy products has made representations for such a change. Every device has been used, even the introduction of a private member's bill. I should like to give credit to the hon. member for Essex South whose private bill was referred from the house to the committee and paved the way for the clause we have before us today. Even so, Mr. Chairman, there were many months when it seemed that success would not crown the efforts of those hon. members who were directly concerned about the welfare of the farmer.
Clause 88, subclause (5) (b) makes provision for the fruit and vegetable growers. Can the minister explain to me why a sum was not stipulated in dollars and cents as was the case in connection with dairy products? Since I feel we are truly concerned about the success of both of these segments of the industry, perhaps such a sum should have been stipulated in both provisions.
I should also like to have the minister's comments on the effect such legislation might have on the credit of small canning factories and small manufacturers of dairy products who depend almost exclusively on bank credit for their seasonal operations. While we have every sympathy with the farmers and must make sure they receive their just due for their produce, we are concerned also for the small dairyman and the small fruit and vegetable canner. If as a result of the provision of this
Bank Act
bill it is impossible for small canners to obtain the necessary financing in order to conduct their operations successfully, this will certainly cause grave hardship in small, isolated regions where the farmers depend almost exclusively on delivering their special products to the local plant. Can the minister explain whether or not this provision will cause any serious impediment to bank loans to these small processors? These are my concerns in connection with clause 88. I am delighted indeed to see the farmers are being protected to the degree they are, but I should like to be assured also that in protecting the farmers we are not causing the processors undue hardship because they are necessary to the successful operation of this industry.


Mitchell William Sharp: May I answer the two questions put by the hon. member who has just spoken? First, I should like to join with him in congratulating the hon. member for Essex South upon the happy outcome of his indefatigable efforts, as he would say himself. May I couple with the hon. member for Essex South the hon. member for Labelle who supported the hon. member for Essex South so valiantly in the standing committee on banking, trade and economic affairs. In saying this, I do not want to be invidious because I know there were many members in the committee who worked toward the same end. However, I happen to have observed particularly the work of the hon. member for Labelle when I was visiting the committee.
The first question put by the hon. member relates to page 74 of the bill. The answer is a simple one. If he will read the clause he will see that the words beginning at line 18 apply to subparagraph (i) as well as to subparagraph (ii). The $7,500 relates not only to (b) (ii) but also to (b) (i). The words are extended out to the margin and apply to both of the foregoing subparagraphs.
The second question was related to the effect
upon the credit standing of canning factories and others. There is bound to be some effect. If the position of the producer is going to be improved, to some extent this must be at the expense of other creditors. However, under the amended act the banks can take other types of security and I do not believe the effect will be serious. I think the over-all effect of the legislation is good and should commend itself to the committee.


Harold Warren Danforth: May I ask the minister one supplementary question? Does the minister feel that under the provisions of the bill there

March 21, 1967
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would be any instances in which small canning factories would not be able to obtain the
necessary credit? Were representations received in the committee on behalf of any processors or canning factories in this regard? I am a bit curious to know whether they were aware of the provision and whether they made representations.


Mitchell William Sharp: I, of course, cannot speak for
the committee because I was not present during all the hearings. I understand that the Federation of Agriculture, which would have some concern about canning factories succeeding, did support this amendment.
[DOT] (6:00 p.m.)


Mr. Korchinski:: Mr. Chairman, I should like to make a few brief remarks with regard to this clause of the bill which as presently worded allows the bankers to make loans in the field of agriculture. As a representative from Saskatchewan where a considerable amount of bank credit is and has been incurred over the years I know that many of our people would be concerned about their position with regard to the Farm Improvement Loans Act. In clause 88(1) (h) (v) there are these words:
any works for the improvement or development of a farm for which a farm improvement loan as defined in the Farm Improvement Loans Act may be made,
The question which comes to my mind is, what will be the position of a farmer or a banker in the case of an application for a loan, to which a farmer is entitled under the Farm Improvement Loans Act, for the purchase of various commodities, and what rate of interest will be applied? On the one hand there is the Bank Act which may require a higher rate of interest and on the other hand there is the Farm Improvement Loans Act which permits farmers and all those who fall in the categories set out in the act to obtain a maximum loan of $15,000 at 5 per cent.
I know that if the interest rate is increased to per cent the interest which a farmer will have to pay on a loan may amount to a considerable sum of money and may cause hardship to farmers who are used to paying 5 per cent interest on a $15,000 loan. The difference will amount to $337.50 according to my calculations. Many of these loans are made for a longer period than one year. They may be made for as long as five years or whatever time is permitted depending on the type of loan that the farmer wishes to obtain. However, as soon as he has repaid a certain part of the loan he may want to purchase other

equipment or make necessary improvements on his farm.
I have before me some figures which were provided to me by the Department of Finance. I note, for example, that in 1961 the total value of the loans amounted to approximately $108 million. By 1965 the amount had increased to $202 million, and according to the news release issued by the Department of Finance the latest figures indicate that in 1966 85,553 loans were obtained for a total of $212 million in round figures. It is quite evident that there has been a tremendous increase in the number of loans that have been obtained. The total of loans in the whole of Canada amounts to approximately $394 million. Even with an increase of 1 per cent, an additional $4 million will have to be paid in interest charges. If the additional interest rate were 2 per cent or per cent, it would mean roughly $9 million on the volume of business that is transacted.
This sum does not amount to much when spread over a number of farmers but it does mean that $9 million is taken out of the pockets of farmers to be paid to the banking institutions. This money could be used in many cases to help farmers who have not been very successful. When one realizes that approximately 10,000 farmers leave the industry every year one begins to wonder what the reason for this is. Of course some of those who leave have retired, but on the other hand some of them leave the industry because they cannot make ends meet and they have no possibilities for improvement. This additional cost may prove to be too much for them.
I realize there are many farmers who have obtained the maximum loan permitted under the Farm Improvement Loans Act, $15,000 and then have found that owing to the rising cost of machinery and other essential facilities they require additional funds. At times they have to borrow from the machinery companies at higher rates. Perhaps the provisions set out in this clause will eliminate the necessity of obtaining loans at higher rates of interest. I should like to ask the minister whether he feels that the implementation of the provisions set out in the bill will eliminate the need for financing by machinery companies or other financial institutions which provide services to farmers.
The two main questions I wish to raise at this time are, first, will farmers be able to obtain loans of $15,000 at the 5 per cent rate now permitted under the Farm Improvement
March 21. 1967

Loans Act and then obtain further loans under the provisions of this bill or will the banks have to tell the farmers that it is impossible for them to grant loans at 5 per cent? According to my information, and I have checked it with the officials of the department, there is no means whereby the banks can be compelled to lend money at 5 per cent even under the Farm Improvement Loans Act. Until now the banks have been co-operative in cases where no risk is involved. As a matter of fact the record of farm improvement loan repayments is good. However, if a man has a good record of repayment there should be no reason for not granting him a loan at that interest rate. I have not heard of many cases where people had difficulty in obtaining loans but that is only so because their credit rating is good. Will those whose credit rating has been good be able to qualify or will this bill nullify the Farm Improvement Loans Act?
My second question is whether this legislation will eliminate the higher rate of interest demanded by finance and machinery companies? This is important, particularly in Saskatchewan where about one-third of all the loans are made. This legislation will also be of importance to the machinery industry. What will be their position if farmers decide to stop buying machinery owing to the high interest rates and the difficulty of obtaining loans? This would be a natural reaction of people who try to save money in every way possible and try to cut corners in their operations. With these few remarks I shall conclude, hoping that the minister will provide me with the answers.
[DOT] (6:10 p.m.)


Mitchell William Sharp: Mr. Chairman, may I reply to the questions asked by the hon. member for Mackenzie. I fully expect that the Farm Improvement Loans Act will continue to function as it is now functioning. The banks which make farm improvement loans to Farmers, are guaranteed against loss and are therefore willing to make loans at lower rates of interest than under the normal ordinary commercial terms where risks must be accepted. I do not think that the greater freedom we shall give the banks under this act, if approved in the form of the amendments before us, will make much difference to that part of their activity. The principal effect of removing the ceiling will be to give the banks greater scope to vary the interest rate with the risk involved.
Bank Act
My answer to the second part of the question is, therefore, that the banks will hereafter be able to provide a greater range of services to the farmers who, I think, will not be as dependent as they have been until now upon supplementary financing from the machinery companies at very much higher rates of interest. If the banks are freed of the ceiling on their interest rates I believe they will be able to service the farmers at a lower rate of interest than obtainable from the machinery companies now doing the financing.


Stanley James Korchinski: May I ask a hypothetical question? If we find after this bill becomes law that the banks are charging a rate higher than 5 per cent, what guarantee have we that even though a man is a good risk, is progressive and has paid off his indebtedness to the bank over many years he can still go to the bank and say, "Under the Farm Improvement Loans Act I am entitled to a loan. Why must I pay a higher rate?" What safeguards are there that the higher rate will not apply?


Mitchell William Sharp: The rate with respect to the Farm Improvement Loans Act is fixed by parliament at 5 per cent and cannot be raised. That is a separate piece of legislation and is not affected by the Bank Act. It will be possible for the farmer to get other forms of financing partly because the banks will now be allowed to take security which they could not previously take and partly because they will be free to compete with acceptance and loan companies for business that hitherto had been unobtainable for them.


Stanley James Korchinski: Should we find ourselves in the position that for two months after the coming into force of this bill there are fluctuations in the interest rate and the banks decide they must first see how the rates level out and as a result restrict loans under the Farm Improvement Loans Act, what safeguards are available to farmers? I realize that the point I have raised is only a possibility, but what guarantees are there that farmers will be able to obtain loans under the Farm Improvement Loans Act?


Mitchell William Sharp: This is a highly hypothetical question and perhaps I should not even attempt to answer. There are strict provisions in the law against any such conspiracy as the hon. gentleman has described. Second, I cannot believe that the banks of this country will stop providing the services they have been providing for farmers under the Farm Improvement Loans Act when greater freedom is given under this act. It is my belief,

March 21. 1967
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and it can only be a belief, that it will be in the interest of the banks to continue serving farmers under the Farm Improvement Loans Act as they have in the past. As the hon. gentleman knows, the banks cannot be compelled to lend money to anyone.


Stanley James Korchinski: That is the point.


Mitchell William Sharp: There is nothing we can do about it. We cannot compel anyone, including banks, to lend money to anybody else. I may say that the experience we have had with the Farm Improvement Loans Act leads me to believe that the banks will continue to provide hundreds of millions of dollars of loans under that act.


Mr. Clermont:: Mr. Chairman, with regard to Bill No. C-222, in clause 88(5)(b), I read on line 45:
-au cours de la periode de trois mois qui-
But, if I refer to the English version of Bill No. C-222 reprinted, on line 16 page 74, I read:
-the period of six months next-
Then, I wonder whether, in such a case, we must amend the French version or whether the correction can be made without an amendment.


The Acting Chairman (Mr. Asselin, Rich-mond-Wolfe):: Would the hon. member be good enough to repeat what he has just said?


Gaston Clermont: This is it, Mr. Chairman. On page 79 of the French version of Bill No. C-222 reprinted, I read the following:
-au cours de la periode de trois mois qui-
But if I refer to line 16, on page 74 of the English version of the Bill No. C-222, I read:
-the period of six months next-
Under the amendment passed by the committee of finance, trade and economic affairs, it is really a period of six months, and this is my question: Should we move an amendment to the French version or can we make the correction some other way.

The Aciing Chairman (Mr. Asselin, Rich-mond-Wolfe): I am informed by the law officers of the House of Commons that it can be changed without an amendment.


Mr. Bigg:: Mr. Chairman, in clause 88 there is reference to a manufacturer in subsection 1(b) and to a farmer in subsection 1(c). Are these definitions inclusive or exclusive? Is a

farmer excluded from being a manufacturer?
I see that money can be lent to a person engaged in the manufacture of maple syrup. He can use the maple syrup as security if he is a manufacturer, wholesaler, purchaser or shipper of maple syrup. If a farmer doing this as a sideline he be considered a manufacturer despite his being a full time farmer for the rest of the year?


Mitchell William Sharp: The answer is simple. He can be either or both. He can be both manufacturer and farmer or he can be either manufacturer or farmer.


Frederick Johnstone (Jack) Bigg: That brings me to my second question. In this bill we are giving the banks what appears to be a blank cheque. I can vote for some clauses in the bill with a clear conscience because I realize that farmers and small producers must get the credit they need. We had been told so far that we are protecting these people by allowing the banks to enter the lending field in places where they have been excluded, which has been to the detriment of these farmers and small producers. That sounds fine. But I am worried that the suggested ceiling of 7J per cent will become a floor. I do not think anyone will be able to borrow money under all these fine subclauses at a rate lower than 7J per cent. This will place an added interest burden of at least 25 per cent on all these primary producers.
[DOT] (6:20 p.m.)
I certainly think the risk is extremely small. Farmers who borrow money at the present time constitute a risk amounting to only one tenth of one per cent. I should like the banks to show me why they need an increase of 1J per cent and later of 2 per cent in interest rates when there is no indication whatever that farmers in the future will prove any more of a risk than in the past. I do not see why farmers should not get the money when the risk involved is virtually nil. When people go out to pioneer the land, when they put up with the absence of facilities for their comfort and for the education of their children, I do not see why they should not have the benefit of lower rates, especially when the risk they constitute is as small as one tenth of one per cent.
I do not see why the chartered banks should not become a pipe line from the financial wealth of Canada to those who are making the greatest contribution to our affluent society. I should like to have some assurance that this ceiling will not in fact become a
March 21, 1967

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floor. I should like some assurance that the banks will really and truly be in competition not only with the loan sharks, as I call them, and the legitimate money lending institutions but among themselves. The chartered banks should make a real effort to provide the necessary capital for young people who are starting out and who find it tremendously difficult to raise the $30,000 or $40,000 necessary to begin farming operations. Although there are other acts which provide facilities for borrowing a certain amount of money, young farmers are still forced to borrow money against their cattle and field crops in order to pay for the machinery they need. I hesitate to give the chartered banks a blank cheque, as it were, without good reason to believe they will be really competitive and help the primary producers to set themselves up, branch out and even increase Canada's agricultural wealth.


Mitchell William Sharp: By way of a brief reply to these observations may I point out that when the ceiling was 6 per cent over a long period of years loans were made at very much lower rates of interest-3J per cent or 4 per cent, for instance. So the ceiling has not by any means been the rate which the banks have charged. I can recall when 6 per cent was considered to be a very high rate of interest. The banks thought they would never be able to realize such a rate. It is only in recent years with the high demand for funds that rates have risen to around 6 per cent. I would hope and expect that as in the past there would be keen competition among the banks below the ceiling or in the absence of a ceiling at all.


Frederick Johnstone (Jack) Bigg: I do not think any farmer in my district in the last 20 years has been borrowing at a rate anything like 3J per cent. It has been difficult to borrow at 6 per cent in many cases. So they have been forced into the hands of the loan sharks; there is no kind word for them when they charge an interest rate anywhere between 18 and 30 per cent.
I am hoping this legislation will help those who have had no opportunity whatever to borrow money at reasonable rates. As I say, I am afraid that if the ceiling is raised there will be a tendency to lend money close to the ceiling. It provides a certain amount of fuel for those who believe in Social Credit theories and suggest that the flow of money should depend on the natural resources of the country and the willingness of the people to work
rather than on arbitrary decisions made behind closed doors and around mahogany tables. Those of us who have spent all our lives in the farming industry cannot but feel there is a modicum of common sense in this contention. If by statute we are able to make reasonable loans to people for reasonable purposes, taking into account their ability to repay, we accomplish something which is of real value. Otherwise I can only give my full approval to this bill with a great deal of trepidation.


Herbert Wilfred Herridge: Mr. Chairman, I have listened to a large part of this debate with great interest. I want to say that I find a number of members are not very well informed with respect to the operation of banks. I am saying this as a socialist. I have dealt with a local bank for 50 years. I have found that the local manager is always honourable and willing to co-operate with the farmers in the district and the small forest operators and has an understanding of their problems. Within the limits of the act and the circumstances prevailing I have always found him willing to do the best he can.
This is true of other bank officials in my area. I have known them to stick their necks out, to use a vulgar term, on behalf of people they are trying to help. I am sure the farmers, the vegetable growers and the fruit growers will be pleased to see clause 88 in the bill and I wish to compliment the committee for adopting it. I know that the chairman of the agricultural committee, the hon. member for Essex South, and other members of that committee have a direct relationship with farmers and know their problems at first hand. I always enjoy the remarks of the earthy member for Kent (Ont.) on this subject because he speaks from personal experience, not just from the book.
I rise to say once again that in my opinion the agricultural producers will consider clause 88 to be a great improvement over the previous section in the act. I wanted to ask the minister one question. This provision applies to agricultural producers, fruit growers, vegetable growers and so on. Would it apply also to the farmer who grows wood as a crop as part of his farming operation and sells it in the form of logs or otherwise to a small sawmill, for example? People engaged in operations of this kind often lose considerable sums of money because those with whom they are dealing go bankrupt. Are they protected in the same way as other producers are protected?

March 21, 1967
Bank Act


Mitchell William Sharp: No, Mr. Chairman, they are not.
[DOT] (6:30 p.m.)


Mr. Whelan:: Mr. Chairman, I was the sponsor of a bill to protect primary producers in the case of bankruptcy when I was first elected to this house in 1962. I re-introduced it following the election in 1963 and the government at that time saw fit to send it to the banking and commerce committee. It was one of the first private members bills which was studied by the committee and reported back to the house.
As a primary producer this made me quite happy and today, finally realizing that what I was seeking is going to become law, I feel happy that I have accomplished one little thing since becoming a member of the house. I know that farm organizations across Canada will be delighted by the action of the government and the committee. The former committee recommended to the government that some type of legislation be initiated to protect farmers, mainly producers of primary crops that are perishable. I commend the committee, and in particular the hon. member for Labelle and the hon. member for Nanaimo-Cowichan-The Islands for their studious work while serving on the committee.
I was not a member of the present standing committee which studied this bill, but I did observe some of the work done by it and had consultations with its members at different times. The provision now incorporated is even better than what was contained in the previous bill introduced last session but which never became law. The committee has done a wonderful job and, as I have said, the farm organizations will be happy about it.
The new provision raises the amount of money which farmers can claim. In the previous bill it was set at $5,000. That is now changed to $7,500 and farmers have been given another three months from time of delivery in which to make claims.
I know the hon. member for Kent (Ont.) is aware that people are concerned about this matter in the province of Ontario and that the provincial legislature is hoping to pass legislation to protect the producers of dairy products in Ontario.
The provision in this bill will not create any hardship for any small canner. In my opinion any such canner who cannot finance himself has no right to use the assets of a primary producer whose whole livelihood can be placed in jeopardy if the canner is not on a sound financial footing. A lot of financially unstable canners have already gone out of

business but this has not stopped new canneries being established. In fact in my own county of Essex five new ones have been established.
Bankers were aware of this new provision, and knew there was a great possibility of its becoming law. When moving my original bill I received an education in bankruptcy and in parliamentary committee procedure. At one stage the bill was thrown out of the standing committee. Later it was returned, however, and the experience which I gained on that committee has helped me in my work on other committees. I want to thank the present Minister of Finance and the present standing committee for making this become a reality.


Mr. Aiken:: I wish to ask the minister a question concerning subclause (5) (b). I have looked back at the initial consideration of this question in the standing committee, and my recollection is that at that time the bankers who appeared said categorically that if a provision of this kind were put in the bill, by which they would lose their first charge on the assets of canners, they would refuse to make loans to them. There was a great deal of discussion about the matter in the committee. Is the minister now in a position to get any assurance from the bankers that they are satisfied with this subclause, and that they will continue with normal loans to canners, particularly to small canneries, so that the provision will not in the end hurt both small canners and the producers themselves? The feeling was very strong that bankers would not make loans to canners. It was thought that because this new provision gives no protection to bankers they would discontinue making loans to this type of operation.


Mitchell William Sharp: Mr. Chairman, this matter was discussed at some length in the committee. If the banks had shared the views expressed by the hon. member they certainly would have expressed them to the committee. They did not do so, and it is my understanding that their attitude is that they can live with the legislation.


Gordon Harvey Aiken: But can the canners live with it?


Mitchell William Sharp: If the banks had been so strongly opposed and felt they could not deal with canners they would have said so. They expressed themselves in the way that I have expressed it now, that they can live with the legislation, in other words that they can continue to operate and make loans.
March 21, 1967


David Réal Caouette: Mr. Chairman, a few words only to show my full appreciation as regards this clause 88, which gives banks authority to lend money and make advances to any farmer, producer, wholesaler, forwarding dealer or buyer of agricultural products.
I believe this clause really places the bank in its proper perspective. As a matter of fact, we claim that banks should finance the private sector, encourage individual enterprise and initiative and we believe the part it will thus play will be effective. And the bank can certainly and very easily replace, for instance, the financial organizations that are swallowing up the farmers at present.
A farmer from the Temiscamingue area wrote me recently to say that he had borrowed from a finance company in order to buy a car; and he owed about $2,800 to the company. A month later, the farmer goes to the finance company, bearing the name of Delta Acceptance. Now, for a one-month period, the company charged him $208 for service costs and interests.
Banks can certainly play an important role in that field. Still, it should be remembered, Mr. Chairman, that some bank directors are often also directors of finance companies or acceptance corporations as we call them.
And so they would rather loan money at 12, 14, 15, 20 and 25 per cent through acceptance rather than at 6 or 5 per cent through the bank: it pays more. And anyway, all those loan companies are financed by chartered banks. The note of a finance company is discounted at the chartered bank within a few hours after it is signed and the finance company immediately makes 80, 85, 90 per cent of the full amount of the note, which includes the interest for a period of 36, 24 or 12 months.
[DOT] (6:40 p.m.)
I for one would not wish to see banks discriminate against our farmers for any consideration whatsoever. I agree that the minister and the government have their hearts set on assisting the farmer.
This clause 88 clearly sets out the possibilities for farmers to profit by a government act, but what we should know is to what degree the banks will meet the requirements of farmers and will understand the important part they can play in the development of agriculture in Canada. Indeed, of all the clauses contained in Bill No. C-222, I suggest that clause 88 is the most important, the most vital, for it affects the social class which is
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the whole basis of our economy. Without a prosperous agriculture, we cannot maintain the other social classes in prosperity indefinitely.
Farming is the foundation. Without farmers, not a single member or minister would be sitting in this house. We must have food and clothing, and all that comes from the farmer, from farming.
And that is why, Mr. Chairman, we give so much importance to the help which parliament and the government can give to the Canadian farmers. I sincerely believe that the Minister of Finance is as proud as we are of clause 88 which is meant to help the farmer in his sphere of activity, and we support that objective wholeheartedly. The bank will be able to play its role in its very own field and we do not want to prevent it from doing so, far from it, because we know that farming must remain in the private sector. If we help the farmer to have more initiative, he can improve considerably the quality and quantity of his production, because if the farmer has better equipment and facilities, he will give a better output to serve society. As a matter of fact, the farmer asks nothing more than to serve better, as long as we give him the possibility to do it.
Two years ago we had the opportunity to visit some community farms with farmers who own absolutely nothing. In Russia, for instance, in Czechoslovakia, where the government practised controlled farming, what were the results? Such a complete failure that today those governments are forced, to go back to the method of personal incentives and determine that if a farmer produces beyond such a quota, he will receive a bonus on his production surplus.
If, in those countries, they nationalized, state controlled and communized everything, now they must go back to realities and rehabilitate farming.
Mr. Chairman, in Canada, we must preserve, improve and further assist the initiative of our farmers, and that is why the members of the Ralliement Creditiste are happy to endorse clause 88 which will allow the banks-let us hope that they will be broadminded-to co-operate to the farm development required in Canada, to assist the farmers, so that they can improve their living conditions as well as their production capabilities.
Mr. Chairman, we are glad to see the interest shown by the government in the Canadian

March 21, 1967
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farmer through clause 88 and we endorse 100 per cent the potential role of the bank in assisting our farmers.


Harold Warren Danforth: Mr. Chairman, although I am in accord with one part of clause 88, I am very much concerned about another part of this clause with which I should like to deal in a moment. First of all, I should like the minister to give us an explanation of how the provisions in clause 88 (5) (b) (ii) will work with relation to provincial legislation, which I understand deals with this specific subject in a somewhat similar manner. I should like to know whether or not there has been any consultation at the federal-provincial level in this regard and whether or not it was found that such legislation is compatible federally and provincially. Also I should like to know whether in respect of this clause the federal and provincial governments will act separately or together in order to provide the protection which the farmers need. This is one matter which I hope the minister will explain.
Like the hon. member who preceded me I am not in full accord with subclause (1) (h) (v) of clause 88 because I believe the effect of this would be to cancel one of the very vital financial tools which farmers in recent years have employed in successfully carrying out their operations. This clause makes it possible for banks to loan money to farmers for any works for the improvement or development of a farm for which a farm improvement loan as defined in the Farm Improvement Loans Act may be made. The banks cannot be compelled to lend money under the Farm Improvement Loans Act. Under this act the rate of interest is stipulated to be 5 per cent. Loans at an interest rate of 5 per cent will not be accorded to farmers.
The banks certainly are in business to make money. If under the provisions of the Bank Act the banks are in a position to loan money at 6 per cent, 7 per cent, or at such higher percentage rate as may be authorized when the Bank Act comes into effect, certainly when the farmer approaches a banker for a loan the banker will not lend him money at 5 per cent under the Farm Improvement Loans Act.
This will bring great hardship to members of the agricultural industry who have over the years taken advantage of these 5 per cent loans under the Farm Improvement Loans Act. These loans have been very popular among farmers. In recent years millions of
[Mr. Caouette.l
dollars have been loaned to farmers on this basis. If the banks are to be given an alternative, this provision in the bill would be useless because the farmer would be unlikely to receive a farm improvement loan at 5 per cent. My contention is that if in the implementation of this legislation the ceiling on the interest rate is allowed to rise, then all the good which has been brought about by the Farm Improvement Loans Act will be nullified because since the banks will not make a loan with a rate of interest of 5 per cent these loans will not be available to farmers. Because of this farmers will be faced with the necessity to borrow money at a rate of interest which has been increased by one and a half or two per cent.
[DOT] (6:50 p.m.)
With the high cost of living today the farmers carry a sufficient burden, particularly when one considers the cost of farm machinery and its necessity under present day farming practices. I can only express consternation and alarm at the fact that these amendments to the Bank Act will work to the detriment of farmers in those ways I have outlined, in spite of the fact that to some extent it may appear that some relief will be provided. I hope I am wrong in this belief and that the Minister of Finance can convince me of that error. However, unless I hear a reasonable argument to the contrary I am satisfied that when this measure comes into effect the benefits farmers now receive under the Farm Improvement Loans Act will be lost.


[Stage Direction]
Clause agreed to.
Clauses 89 and 90 agreed to.
On clause 91-Powers re interest.
Mr. Chretien:: Mr. Chairman, we have a problem in respect of clause 91 in that the hon. member for Compton-Frontenac wishes to speak to it.


Mr. Starr:: Mr. Chairman, before the next hon. member speaks, with his permission perhaps I may suggest that we adjourn now for dinner and return at eight o'clock in order that his remarks will not be interrupted.


Edward Nasserden: Mr. Chairman, may I call it
seven o'clock?


Mr. Mcllrailh:: Mr. Chairman, it apparently is the wish of hon. members of the committee that we rise and suspend the sitting until eight o'clock in order that we may have a dinner recess.
March 21, 1967


Herman Maxwell Batten: Shall I rise and report progress and request leave to sit again later this day?


Some hon. Members:: Agreed.
Progress reported.



PROCEEDINGS ON ADJOURNMENT MOTION


Mr. Deputy Speaker:: It is my duty, pursuant to provisional standing order 39A, to inform the house that the questions to be raised at the time of adjournment tonight are as follows: The hon. member for Lotbiniere (Mr. Choquette), income tax-request made by the Estates General of French Canada; the hon. member for Kootenay West (Mr. Herridge), health and welfare-research into illness caused by noise; the hon. member for Grand Falls-White Bay-Labrador (Mr. Chatwood), fisheries-abolition of seal hunt.


George James McIlraith: Mr. Speaker, I would ask that the sitting be suspended until eight o'clock.


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


Some hon. Members:: Agreed.


Mr. Deputy Speaker:: Perhaps hon. members will agree to resuming the business interrupted a few minutes ago, before suspending the sitting.


Some hon. Members:: Agreed.



BANK ACT


[Stage Direction]
The house resumed consideration in committee of Bill No. C-222 respecting banks and banking-Mr. Sharp-Mr. Batten in the chair.
Herman Maxwell Batten: The committee will resume its work at eight o'clock.



SITTING SUSPENDED


Herman Maxwell Batten: Order. House again in committee of the whole on Bill No. C-222, respecting banks and banking. The committee is considering clause 91. The hon. member for Rosthern.
Bank Act
On clause 91-Powers re interest.


Jay Waldo Monteith: Mr. Chairman, may I ask a question before the hon. member speaks on clause 91? I understand that clause 88 has been carried. Has the minister had an opportunity to study the remaining clauses with the thought in mind that possibly we could clean up most of them, or all of them other than clauses 1 and 91?


Mitchell William Sharp: Mr. Chairman, during the supper hour I took a few minutes and made a note of clauses that I thought were non-contentious. Perhaps I might read the numbers and a note might be taken of them.


Jay Waldo Monteith: Would you mind reading them rather slowly, Mr. Minister?


Mitchell William Sharp: Yes, I will. Then we might at an appropriate point decide that we could in fact approve them en bloc. Clause 93-


Raymond Langlois: Not 93.


Mitchell William Sharp: -clauses 96, 97, 98, 101, 145, 151 and 158. Then I include all the remaining schedules.


Jay Waldo Monteith: Would the minister mind repeating the numbers?


Mitchell William Sharp: Yes, I will read them again: 96, 97, 98, 101, 145, 151 and 158.


Mr. More:: Mr. Chairman, the minister mentioned clause 93 the first time. Has he dropped that clause?


Mitchell William Sharp: There was an objection to clause 93.


Jay Waldo Monteith: And all the schedules?


Mitchell William Sharp: All the remaining schedules.


Stanley Howard Knowles: Mr. Chairman, does this leave clauses 91, 93 and 1?


Mitchell William Sharp: The final clauses, and No. 1. With respect to the final clause I propose to move an amendment. Because of the lapse of time and there being no opportunity for proclamation, this act will have to come into effect when it is approved.


Jay Waldo Monteith: Mr. Chairman, the minister is referring to clause 162?


Mitchell William Sharp: Yes, clause 162. I am leaving that clause for discussion because I propose to ask that an amendment be made; and clause 1. I am not certain which of them I left out,

March 21, 1967
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but anything I had any question about I left open for discussion.


Stanley Howard Knowles: Then it looks like clauses 91, 93, 162 and 1.


Mitchell William Sharp: And clause 99. I think the hon. member for Compton-Frontenac asked that we hold clauses 99, 100 and 102.


Raymond Langlois: I think there might be a misunderstanding, Mr. Chairman, according to my information. Clauses 99 and 100 were not reserved in this respect. With regard to clause 93, I do not wish to anticipate anything but I would rather have that clause held for the moment. I would rather discuss it later on.


Mitchell William Sharp: Then, Mr. Chairman, may I add to the list clauses 99, 100 and 102?


Jay Waldo Monteith: May I suggest that the minister move the adoption of these particular clauses.


Mitchell William Sharp: I would like to be fair to the committee. I do not want to appear to be pushing anything or trying to put anything over on the committee, but I would be very happy to move that these clauses be approved en block without further discussion.


Jay Waldo Monteith: Would the minister mind repeating the numbers again?


Mitchell William Sharp: I will read the numbers again: 96, 97, 98, 99, 100, 101, 102, 145, 151 and 158, and all the remaining schedules.


Herman Maxwell Batten: It is moved by the Minister of Finance:
That clauses 96, 97 , 98, 99, 100, 101, 102, 145, 151 and 158, and schedules A to L and R and S be carried en bloc.
Is it the pleasure of the committee to adopt the said motion?


[Stage Direction]
Motion agreed to.
[DOT] (8:10 p.m.)
On clause 91-Powers re interest.
Edward Nasserden: Mr. Chairman, in rising to speak to this clause of Bill No. C-222, I think it is fair to make the observation that this is perhaps one of the more important clauses of the bill. It is important not only because of the effect it may have on banking in our country but the effect it may have on the economic activity within our country for a number of years ahead. While it is true that the Bank Act will provide for charters being granted to the banks over a period of ten

years, the effect on the economic life of our country will be more far-reaching than that. The trends and patterns that will be established in the years immediately ahead after this bill comes into operation will, in large measure, decide the future of Canada itself and of individual Canadians as well.
What we in this house must consider tonight is whether or not the wealth that has been accumulated in this country which finds its way into deposits in the banks of our nation will serve the average Canadian or whether that wealth will go to those who can pay the highest amount. This, in my opinion, is one of the reasons our parliamentarians of an earlier era put a ceiling on the interest rate that could be charged by our banking institutions. It is a notable fact, sir, that notwithstanding the many obstacles that our bankers have had to overcome throughout the years, such as depressions, wars and other things, our banks have not been unprofitable. One has only to look at the financial statements of these institutions to ascertain that. This does not mean, sir, that the banks could not have been more profitable in Canada had successive governments come to grips with the problems confronting the people of this nation in relation to finance companies, and the activities in which they have engaged over a period of years.


Jay Waldo Monteith: You mean successive Liberal governments.


Edward Nasserden: Someone says, successive Liberal governments. It is a notable fact that the Liberal party has been in power for the greater part of the last number of years. I recall that for 22 years they had almost unlimited access to power in the nation's parliament. Today we are faced with problems that have grown up during the last few years, problems that are the result of the actions that have been taken by the government as well as actions the government failed to take in coming to grips with the problems that face Canadians in every part of our land.
In this particular clause before us we see embedded the objective toward which this government has dedicated its life, dedicated every effort for a period in excess of two years. I need only point to the rise in interest rates that has taken place in Central Mortgage and Housing Corporation loans, the higher interest rate that was provided for farm syndicate loans, to indicate the attitude members opposite have toward the development of our nation. Indeed, sir, from one end
March 21, 1967

of Canada to the other and in all the four corners of the world, Canada is becoming known as a high cost economy. This is one of the things with which we will have to live and with which successive governments will have to try to come to grips. It is a problem that has been created as a result of the carelessness of this administration.
Now, on this occasion we have a Minister of Finance coming before parliament with predictions. You know, sir, his predictions in the past have had an unhappy knack of raising false hopes in the Canadian people. We need only think of what he said would happen with regard to inflation. We think of what he thought could be the economic situation in this nation. We think of what happened with regard to the housing problem. We think of the increased rate of unemployment which has set in, but I note that the Secretary of State for External Affairs smiles. This is a fact in the city of Toronto and in other places in this country. People have suffered hardship and privation this winter because of a lack of a housing program which was effective. In addition to that, other Canadians have had to pay more for houses they have bought than otherwise might have been the case.
We see a rise in the number of unemployed. We see contractors viewing the future apprehensively, and then we see the Postmaster General laughing. The increase in the number of unemployed in the province of Quebec is just as great as, if not greater than that in the city of Toronto. What I wanted to say before I was diverted by those smiles from ministers opposite was that the Minister of Finance has had a knack of raising false hopes in the hearts of most Canadians. Listening to him and to his colleagues one would almost think that high interest rates were a virtue. We listened to the Minister of Labour the other day as he sought to brag about the effect high interest rates would have on the housing program in this country. Everyone knows-everyone who cares, knows-that the people of this country are reaching a stage where they cannot afford to buy the homes which are necessary to house their families. We have this arrogant government, the ministers of which smile when these things are mentioned, going on their way, bringing before this parliament a bill which is a further successive step in those they have taken to raise the cost of production in this country, and lessened the productivity of the individual members of our society.
Bank Act
One part of this clause provides that for the period commencing on the coming into force of this act and ending on December 31, 1967, the interest rate shall be per cent. This is li per cent more than the limit which resulted from the deliberations of an earlier committee of the house. Now, sir, we have to ask ourselves what the effect of this action will be on industry and initiative in this country. Who are the people who are going to be able to bid for this money? It will certainly not be the young, with limited resources, because in the minister's own words they are going to be more of a risk than the well established. They will have to pay a higher rate of interest than those who are well established and on the way to building their futures in our nation.
[DOT] (8:20 p.m.)
The problem which has existed in the last several years was that the banking institutions of our country have been unable to bid for the deposits which have gone into the consumer loan and finance companies all across this nation. These companies have been able to do what they have done because the government has not provided regulations forcing them to compete with the banks of our nation. The minister himself has given lip service to another concept. That concept, as seen in this bill and as expressed by the minister before the committee, is that we must bring our banks into competition with the finance and consumer loan companies in this nation. I say to you, sir, that the lack of these regulations will stifle initiative and will discourage the development of our nation. I cannot help but feel that if the measures outlined by the government in the bill which is before us are followed, Canadians in the years ahead will pay and pay, and in many cases opportunities to develop their business will be denied them. Small businessmen, farmers and professionals will all suffer because of that legislation.
It is for this reason that I believe this clause in the bill should be amended. Therefore I move:
That paragraph (a) of subclause (3) of clause 91 of Bill C-222 be amended to delete the words "and ending on the 31st day of December, 1967, 71 per cent; and that the words "6 per cent" be substituted so that paragraph (a) would then read as follows:
"for the period commencing on the coming into force of this act, 6 per cent".
And further that paragraph (b) be deleted entirely, that subclauses (4), (7), (8), (9) and (10) be deleted entirely, that subclause (5) be renumbered subclause (4) and that subclause (6) be renumbered subclause (5).

March 21, 1967
Bank Act
If this amendment is adopted, our banking institutions will be able to operate in the same way as they have in the past without discriminating against the small income groups and will be able to provide the services which they have been able to provide in the years gone by. At the same time the government will continue to have the responsibility of bringing forward legislation to regulate and supervise other financial institutions in the country which live in a jungle of their own. This is what I feel Canadians from one end of this country to the other have waited for all too long.
I will not say anything more with regard to the amendment which I moved. All I will say is that if the present bill is passed, the people of this country will band together before too long to organize banks of their own in order to provide the services at reasonable rates of interest.
Another point which I should like to make is that in the United States interest rates have generally been lower than those prevailing in Canada, and therefore the legislation which is before us may have a detrimental effect on the transfer of funds from the United States to Canada. The minister says that the high finance charges will be levelled out. However, the fact remains that they will be levelled at a higher rate than 6 per cent. This will mean an increase to most of those who have utilized the banking services of our country over a long period of years.


Mr. Gilbert:: Mr. Chairman, clause 91 is the most important clause of Bill C-222. There has been much talk about clause 75 (2) (g) concerning the Mercantile Bank, but clause 91 is the real nub of the bill. I recall that back in July, when the Minister of Finance introduced the bill, serious concern was expressed by the members of his party about the formula he presented at that time determining the interest rate. It was a compromise formula to satisfy the differing views in his party concerning the determination of the interest rate. As you remember, Mr. Chairman, the formula was to add If per cent to the preceding average quarterly yield of government of Canada short term bonds, and if the average yield on the government short term bonds fell below 4J per cent, then the interest rates would be freed.
This formula was presented at a time when the interest rates were rising. In the standing committee on finance, trade and economic affairs the weight of evidence on behalf of the

chartered banks was that the present 6 per cent rate was unrealistic in today's economy and unduly restrictive to the competitive position of the banks. This was the basis of the claim. There was no evidence of any real effect on the profit that the banks enjoyed. Professor Slater indicated the advisability of classifying interest rates into two or three broad categories, namely business loans, mortgage loans and consumer loans, and applying different rates to each class. No action was taken on the recommendation at that time. Professor Neufeld said that the problem would be solved by adding one half of 1 per cent every six months until the interest rate reached 8 per cent. This suggestion also was not acted upon by the government. We in the New Democratic Party felt that a regulatory body should be set up to determine the interest rates and the allocation of moneys to different categories of borrowers. As time went on and more evidence came in we found there was pressure to change the formula that was presented by the Minister of Finance in the first instance. A great deal of the pressure came from the Progressive Conservative members of the committee.


Jay Waldo Monteith: Pressure for what?


John Gilbert: In fact the motion to change the formula was initiated by the hon. member for Regina City. I think he had the support of the hon. members for Edmonton West and Kamloops. It would be fair to say that he probably did not have the support of the hon. member for Perth.
[DOT] (8:30 p.m.)


Jay Waldo Monteith: Thank you.


John (Jack) Henry Horner: Or of the hon. member for Acadia.


John Gilbert: But the initiative came from the Progressive Conservative party.


Jay Waldo Monteith: On the invitation of the government.


John Gilbert: The government lent its support, after the proposal was made.


John (Jack) Henry Horner: Before.


Jay Waldo Monteith: The government requested it.


John Gilbert: The main change was the changing of the base rate on the yield of short-term government loans, changing the rate from 4J to 5 per cent. The compromise formula of 7J per cent would apply to the end
March 21, 1967

of December, 1967. After that time the formula would be to add 1:| per cent to the preceding quarterly average yield for government of Canada short term bonds. If the yield of government of Canada short term bonds fell below 5 per cent-not 44 per cent as set out in the original formula-there would be a freeing of the interest rate. This is the formula we have before us tonight.
The Minister of Finance having presented the original formula to the house in July, when interest rates were high, we now find that there is a downturn in those interest rates, the rate for government of Canada short term bonds now being below 5 per cent. Applying the formula today would free the interest rates; nevertheless the 74 per cent figure applies until December 31, 1967.
The result will be that as of January next year the chartered banks will determine the interest rates for their different types of loans. The evidence before the committee showed that the chartered banks do not adhere to the present 6 per cent figure; for consumer loans the rates average between 10 per cent and 11 per cent, the reason being that the banks include service charges in the determination of the interest. Rather than charging 6 per cent for business loans the banks often demand compensating balances, increasing the percentage.
Once interest rates are freed one can prophesy that the rates for business loans will be probably around 8 per cent, and the rates for consumer loans will probably move up to between 12 and 13 per cent. We have evidence that the chartered banks will enter the mortgage field. With National Housing Act mortgages at around 7J per cent and with conventional mortgages being about 1 per cent higher, we shall find that conventional mortgages from the banks will be around 84 to 8} per cent.
This is the picture Canadians will face in 1968; it is not a happy one. Probably that is why the hon. members for Rosthern and Acadia are not happy with the positions taken by certain members of their party in the standing committee on finance, trade and economic affairs. In the New Democratic Party we realize that there has to be a certain amount of realism with interest rates today. We should prefer returning to the original formula set forth by the Minister of Finance last year-


Jay Waldo Monteith: Is the hon. member adopting a holier-than-thou attitude?
Bank Act


John Gilbert: -where the base was 44 per cent. At the moment the rates on government short term bonds are 4.9 per cent.
There appears to be a fluctuation in interest rates; there is an unsteadiness; and that concerned or troubled the Minister of Finance when he introduced the legislation in 1966. We feel that by leaving the base at 44 per cent the present formula will have more time to adjust itself and to be tried and tested.
Foremost in the minds of many committee members was the need for parliament to review the Bank Act more than once in every ten years. In our party we feel that if the minister's original formula, with the base at 44 per cent, were tested for two years that we should know where we are going with interest rates. Otherwise we shall be left with the formula we have today, with interest rates at 74 per cent until the end of the year, and with the possibility of a substantial increase in 1968, and in the years ahead. After the disposition of the amendment by the hon. member for Rosthern, therefore, we shall move the appropriate amendment.


Jay Waldo Monteith: Mr. Chairman, I do not intend to hold up a vote on the amendment of the hon. member for Rosthern, but I wish to say that I support his motion. It has been clearly intimated that circumstances change rapidly. When we started hearings on the Bank Act last October there was definite evidence before the committee that interest rates were rising and would reach a maximum, and evidence was given to the effect that the rates would probably stay up for about ten years.
We have seen the reversal, as a consequence of which clause 91 (3) (a), fixing the rate at 74 per cent until December 31, 1967, has become obsolete overnight. The situation is completely uncertain. We have these fluctuations, and I think the hon. member for Rosthern was correct in moving his amendment. Apart from some financial institutions encountering difficulties, others, including the banks, are doing all right. For the time being we could well maintain the 6 per cent rate, to see what happens. We were in a position at one time where 74 per cent seemed not unreasonable. Today, as has been said by the hon. member for Broadview, with short term bonds at around 4.9 per cent, by adding If per cent to that figure, as in the original formula proposed by the minister we should not approach 74 per cent.
As I have expressed more than once in this house I am afraid of maximum rates becoming the minimum. I do not believe that, as of
14292

March 21, 1967
Bank Act
tonight, we should authorize this 7J per cent rate to December 31, 1967.


John (Jack) Henry Horner: the facts, so that we can pass legislation with our eyes open and not with our eyes closed.
I urge the minister to put himself in an agreeable mood and keep this committee well informed. We can only judge by the figures that are available. The ones we have show that short term interest is 4.3 per cent, and with the specified addition it will be 6.5 per cent for the next quarter. The Secretary of State for External Affairs is always in an agreeable mood. I can vouch that the Minister of Transport is always in an agreeable mood when he is trying to have legislation passed. And with this being centennial year the Secretary of State should be in an agreeable mood. I would hope those three ministers could convince their colleague to inform the house that interest rates are going to go up, that 7J per cent is going to be the halfway house between what is now the statutory 6 per cent and the 8 per cent after 1968.
The minister should read his own words as recorded at page 14057 of last Thursday's Hansard and then take a look at the formula in this clause. If he does so I believe he can accept the amendment moved by the hon. member for Rosthern. Interest rates play a great part in the rising cost of production. The cost of borrowing money is an important factor in inflation. No government wants to be branded as a high interest government. Governments like to be considered as being concerned with the problems of money borrowers. I know that deep down in his heart the Minister of Finance must be concerned about the people who borrow money, but under this clause he seems to suggest he is only concerned with the money lenders.
As recorded at page 3505 of committee proceedings No. 51 the minister admitted that he was concerned about this particular clause. I urge him to accept the amendment and, if he cannot, to come half way and be agreeable to a compromise.


Jean-Thomas Richard: Order. For the information of hon. members who have entered the chamber since the amendment was moved I think I should read it. It reads:
That paragraph (a) of subclause (3), of clause 91 of Bill C-222, be amended to delete the words, "and ending on the 31st day of December, 1967, seven and one quarter per cent; and" and that the words "six per cent" be substituted so that paragraph (a) would then read as follows:
"for the period commencing on the coming into force of this act, 6 per cent; and further that paragraph (b) be deleted entirely, and that subclauses (4), (7), (8),	(9), and (10) be deleted
23033-903a
Bank Act
entirely, and that subclause (5) be renumbered subclause (4), and that subclause (6) be renumbered subclause (5)."
I would also remind the committee that the hon. member for Broadview has indicated he will have a further amendment, and also the hon. member for Compton-Frontenac. So that we may have some order I hope that hon. members who speak at this time will co-operate and direct their speeches to the amendment being proposed.


Mitchell William Sharp: Mr. Chairman, I begin by commending your advice to the committee. I believe it would be very helpful to the orderly consideration of this clause if we decided what to do about the amendment that has been proposed which in effect maintains the act in the form it is in today, namely with a ceiling on bank interest rates of 6 per cent.
I would remind the committee that this question was discussed at some length on second reading and in the committee on finance, trade and economic affairs. I would also remind the committee that the recommendation that the ceiling should be removed entirely was made originally by the Porter commission, which was appointed by the government that preceded us in office. I shall read just a few words from their principal recommendation. It gives the reason for the removal of the ceiling. These are the words I would draw to the attention of the committee:
-the ceiling stands in the way of flexible lending by the banks in that it frequently prevents them from making loans on which higher rates must be charged to cover administrative costs and risks. Obviously, this is to the banks' disadvantage; more importantly, however, it discriminates against borrowers such as small businesses which, if they are to obtain funds at all, must turn to other lenders which charge rates well above those the banks would ask if free to do so.
That, essentially, is the argument for removing the ceiling. This argument was supported by the Economic Council of Canada in its Second Annual Review, when the council said:
At the same time, the instabilities which have arisen in Canada's financial markets during the past year urge a careful reconsideration of both the needs and possible methods for improving and strengthening Canada's existing framework of financial institutions. More generally, to minimize distortions and instabilities in credit and financial markets and to ensure easier access by homebuilders, consumers and small business to credit, various recommendations of the Royal Commission on Banking and Finance deserve careful attention-including measures to promote more competitive credit conditions and removal of the arbitrary 6 per cent interest rate ceiling which currently forces many small borrowers into loans at much higher rates.

March 21. 1967
Bank Act
[DOT] (9:00 p.m.)
Essentially that is the argument for removing the ceiling. I hope the committee will deal first with the amendment which has been proposed, which in effect restores or continues the 6 per cent ceiling. Then, if that should be defeated, perhaps we can discuss the second question concerning the form of the arrangement which might substitute for the 6 per cent ceiling.


Some hon. Members:: Question.


Jean-Thomas Richard: The
hon. member for Villeneuve.


David Réal Caouette: 
Mitchell William Sharp: Mr. Chairman, may I ask the hon. member whether he is aware that Mr. Rasminsky supported the removal of the ceiling on the interest rates?


David Réal Caouette: So, in one place or the other, Mr. Chairman, Mr. Rasminsky lies. If he said the interest rate should be raised, he said exactly the opposite on March 13, 1967, according to the paper he Soleil of Quebec. Mr. Rasminsky is not consistent for, on the one hand, he says the government should take the means to fight inflation and that one of the means of doing so is to see that credit is not too costly. If the hon. minister maintains that the governor of the Bank of Canada tells us we absolutely must allow the banks to raise their interest rate, then the governor of the Bank of Canada is not logical.
March 21, 1967

March 21, 1967
Bank Act
Mr. Chairman, the accrued interest enables them to take more money out of the pockets of Canadians, to deprive those who are building Canada, for the benefit of those who are exacting their pound of flesh. That is why we object to the increase in the interest rate and support wholeheartedly the amendment moved by the hon. member for Rosthern (Mr. Nasserden).


Mr. Gregoire:: Mr. Chairman, I should like to support also the amendment moved by the hon. member for Rosthern in order to maintain the interest rate at 6 per cent.
I would like to use the answer given by the Minister of Finance and Receiver General (Mr. Sharp) himself, to the committee on finance, trade and economic affairs, on Monday, February 6, 1967. As recorded in the proceedings and evidence of the committee on finance, trade and economic affairs, volume 43, page 3012, in answer to a question asked by the hon. member for Compton-Frontenac (Mr. Latulippe) the Minister of Finance and Receiver General said:
The process of credit creation is a familiar one. The banks make loans.
Now then, Mr. Chairman, whenever banks make loans, they create credit. According to the very statement of the Minister of Finance and Receiver General, what banks lend is money they create. Now if the banks lend money they create, that money does not cost them anything. If a bank creates $100 and that $100 does not cost it anything and if it charges a 6 per cent interest, it makes a net profit of 6 per cent, since that money does not cost it anything. It does not cost the bank anything, since it is money it creates. The Minister of Finance and Receiver General admitted that himself and I will read his answer once more:
The process of credit creation is a familiar one. The banks make loans.
It is credit creation and the banks lend money they create. Therefore, that money does not cost them anything.
Let us see what happens in the case of trust companies, savings banks or caisse populaires. Well, conditions are entirely different. When the caisse populaire wishes to lend money, it must first of all have a deposit. It pays an interest on such a deposit, then it lends it at 6J or 7 per cent interest. And it is only the spread between the two that represents its profit. On the other hand, whenever the chartered bank lends money at 6 per cent, it is
[Mr. Caouette.l
the whole 6 per cent which constitutes its profit, since it is money it creates, as the Minister of Finance and Receiver General admitted himself before the committee on finance, trade and economic affairs. In fact, he said this:
The process of credit creation is a familiar one. The banks make loans.
Banks grant loans and the minister admits that in granting loans, they create money. Therefore, they lend credit and money which does not exist, and this costs them nothing but they make a 6 per cent profit.
No other organization in Canada or in the world can do the same. The caisse populaire charges 7 per cent interest because it starts by giving 4 per cent to its depositors, while the chartered bank creates money to lend it; it does not pay interest on the money it lends. That makes all the difference in the world. And this is the reason why I find that this idea of allowing banks to increase the interest rate, while allowing them in advance to create the money lent, is an abuse on the part of the Minister of Finance. He is giving to the banks too many privileges.
There is another argument in favour of the 6 per cent interest. At present, under section 91 of the act, the situation has become more complicated. According to section 91, the interest rate is established at If per cent, plus the average of the market-yield on short term bonds of Canada. And that rate is computed quarterly for a period of three months.
That amounts to saying, Mr. Chairman, that every three months, that is on December 31, March 31, June 31 and September 31, after working out their computations, the banks may change and vary the interest rate charged to their customers.
[DOT] (9:20 p.m.)
In that case, the citizen who deals with the banks will never have a chance to know what rate of interest the banks charge unless he inquires once every three months.
This will bring the following disadvantages: just before each new trimester, should the banks find out that the average yield of government bonds has increased substantially during the preceding quarterly period and that this will enable them to raise their interest rate for the next one, they will stop granting loans for the rest of this period and await the next one, where the interest rates will be higher. This means that for some seven, eight or 10 days, banks will arrange the restriction on credit so as to draw a better
March 21, 1967

profit on the credit created at the beginning of the next three-month period.
This will also mean, Mr. Chairman, that the banks will no longer be interested in giving loans for a longer term than three months because, if the market were to improve or if the interest rates were to increase in the following three months, all the money lent before this period would bring in less than money lent after these three months.
And if the banks decide that they had better not make loans for a longer term than three months, in order to benefit from increases in the interest rate every three months, they will then reject a whole category of loans, such as mortgage loans, loans to finance the purchase of furniture, and so on.
Now, we are also told, Mr. Chairman, that when government bonds have reached the 4J per cent level, for a three-month period, restrictions will be removed and banks will then be free to make loans at any rate of interest.
That aspect had not escaped the Minister of Finance when he introduced this bill nine or ten months ago, at a time when rates were very high. Today, banks seem to lower deliberately their rates in an effort to bring back the average yield of short-term government bonds to 4J per cent so that the ceiling on interest rates may be removed.
But on the day-and it might come soon- when the average return on government bonds stands at 4J, per cent, then the limits on the interest rate will be abolished and the banks will be able to make loans at whatever rate they choose, 4, 8, 9 per cent.
That is why I say that various methods should not be used to calculate the interest rate for banks; it should be a fixed rate and 6 per cent seems reasonable in view of present market conditions. That is why we will support the amendment moved by the hon. member for Rosthern (Mr. Nasserden). I support it not because I agree with the rate of 6 per cent or because I find it reasonable, but because I prefer to see the banks kept to a fixed interest rate rather than allowed to increase or decrease it as clause 91 enables them to do.
Only, I think that even at 6 per cent, it is an unreasonable charge for the banks on the money that they create. It might be a reasonable rate on the money they have on deposit, but not on the money they create, and I think there will be an amendment about it, later, upon which I shall also express my opinion.
In regard to the present amendment, after what I have just said, I think that parliament
Bank Act
would not act cleverly if it left the banks the privilege of varying the interest rate as they wished, and that it is preferable to determine this interest rate once and for all. This, I think, will be the purpose of the amendment presented by the hon. member for Rosthern, and therefore, I shall second it.


Jean-Thomas Richard: Is the
committee ready for the question?


Some hon. Members:: Question.


Mr. Peters:: Mr. Chairman, I should like to say a word or two on this amendment. I would recommend it to all members of parliament who are interested in retaining a reasonable level of interest at which persons can borrow money. I would also ask those interested in the borrowing of money by the average person to consider several propositions which I shall put forward. It seems to me that with regard to short term borrowing that now takes place under the Bank Act, namely at 6 per cent interest, we have found the government reluctant to make the act effective. In a number of ways we have found that the banks are not lending money at 6 per cent but in most cases at a very much higher rate of interest. It is therefore surprising to me that the committee should agree to allow even short term borrowings from the bank to be subject to an interest rate beyond 6 per cent.
In my opinion it was a fallacy when we enacted legislation to subject overdrafts and the right to borrow from the bank to an interest rate of 6 per cent without a provision for premiums and subsidies being paid on that 6 per cent. It seems to me that we really changed the interest rate without changing the law. I was surprised to go into a bank and to find the bank manager, when I asked if I could borrow money at 6 per cent for a specific purpose, say, "No, that is not the rate we get." I asked him whether it was not true that, the bank rate being set at 6 per cent, he would have to charge only 6 per cent. He said, "No. I will tell you what the rates are for all the banks." He pulled out from his desk a slip of paper and indicated to me what the rate would be at every bank at that particular time. This rate changed from week to week. He could tell me whether there was any advantage in borrowing money from the Bank of Nova Scotia under the small loans legislation, whether it was wise to borrow

March 21. 1967
Bank Act
from the Canadian Imperial Bank of Commerce, or whether I should go across the road to the Royal Bank. I found that in no case were they talking about loans with an interest rate of 6 per cent.
In my opinion the 6 per cent loan legislation has not been in effect for probably a long time. I think it is safe to say that all the banks have found ways of getting around the 6 per cent interest charge, and they will probably continue to do so. For the government to get pushed into the position where it cannot enforce the legislation and has to allow big business to dominate the legislation of this nation, and is not able to amend the legislation to provide a ceiling of 6 per cent on certain types of borrowings from the banks, seems to me to be an odd position for a government to find itself in.
I have listened to this business about the banks being poor. I would suggest that the banks are certainly not poor. I know of one case where I was very concerned about the difficulties in which a finance company might find itself. I found that this finance company, if it ever went bankrupt, would take with it two of the major banks of Canada. The banks are lending money to the finance companies and the finance companies are lending that money at 28 per cent or 29 per cent interest. The banks own the finance companies. Therefore, in effect the banks supply the money to the finance companies and there is no money left at an interest rate of 6 per cent. Why should there be? Why should there be any money at 7 per cent for a farmer who wants to borrow when his collateral is not sufficient to cover the loan? The banks do not want to take any risk, and therefore there will not be any money available to the farmer even at an interest rate of 7J per cent. What bank will lend money on a federally guaranteed bank loan at 5 per cent for farm improvement? The bank manager would be fired if he lent money at 5 per cent when he could obtain an interest rate of 10 per cent on it through one of the finance companies. Any bank manager would be in trouble if he made loans of any size without taking full advantage of the money market.
* (9:30 p.m.)
I think the government should be in a position to come before parliament to enact legislation that would provide money to those who need short term loans with a 6 per cent ceiling of interest. I refer to the chartered banks

of Canada. I believe we should make an exception with respect to mortgage money, because mortgage money has not been available for some time, and will not be available in the future, at an interest rate of 6 per cent. Probably an interest rate ceiling of 8 per cent on first mortgages would provide a reasonable return for loans made in this respect. I think there are many banks and many insurance companies that would get back into the housing field and eliminate the difficulty in which the government finds itself in raising mortgage money for housing. I believe, too, that the interest rate on consumer loans covered by collateral should be limited by the government to 12 per cent. No one imagines that the loans that are made by the finance companies are going to be made at 12 per cent. I believe if the banks were allowed to charge 12 per cent on chattel mortgages they would be able to cut immediately into the small loans business of the finance companies. This would eliminate what no one can doubt is profiteering and gangsterism or stealing of money from people who cannot afford to borrow from other institutions. These finance companies charge 25 per cent interest and all the while hang on to the kitchen sink or the refrigerator in order to see that they get their money.
In my opinion, Mr. Chairman, when the minister raises the interest rate to 7i per cent he is giving in to the banks. Every time I feel that the banks may be hard up I take a look at the new buildings they are constructing; I take a look at their expansion. I should like to be smart enough to be able to examine the financial structure of the banks and their relationship to other financial institutions, including the hundreds of insurance companies they are financing. I suggest that if one were sufficiently competent to make this examination he would find a close relationship between the directorates of finance companies, banks and probably 50 other companies. These companies in fact control the Liberal government, control this parliament and control the financial institutions of this country. They make it impossible for us to pass legislation that will allow the little guy to go into the financial market and borrow money at a reasonable rate, which will enable him to repay his loan in 20 years without increasing the amount of the original loan by 100 per cent.
If the average worker earning $3,000 or $5,000 buys a home for $25,000 today even at the rate of interest Central Mortgage and Housing Corporation charges, that house does
March 21. 1367

not cost $25,000 but $60,000 by the time he repays the loan. I suggest it is bad business for any worker to go into debt to that extent. This does not represent 25 per cent of his income; it represents all of his income for the rest of his life. It is my opinion that members of parliament, if they are really representing the majority of the people of this country, if they do not represent the financial institutions and if they do not recall who made financial contributions to their election campaigns, are surely going to provide banking institutions that will allow people to borrow mortgage money at a reasonable rate of interest. This should be done, even if the government itself has to get into the banking field as some members have suggested. I suggest that members who think they are going to bring down the cost of living by sitting in judgment when prices go up, and saying it is the fault of this one or that one, should take a close look at this government's action in increasing the interest rate by 1J per cent.
The provisions of this bill uphold the unfairness, the dishonesty that has been taking place in banking institutions. A businessman may borrow $50,000 but he has to put $10,000 in an account and continue to pay on the $50,000. The bank will use that $10,000, so the borrower really only gets $40,000. The interest rate may be 6 per cent, but if anybody is smart enough to calculate how much interest that borrower really pays, then I feel we should think about that. Surely, in this country we can make a division between the risk borrowing that the banks had to undertake in the past when they went into the mortgage field so deeply. For instance, a few years ago the federal government had entered the mortgage field to such an extent that 40 per cent of the housing constructed in this country was constructed under federal loans. The government got themselves out of that field, but they were not replaced by lenders in the private sector. I am sure that the 7J per cent is not going to provide this type of lending. Surely, we are going to have to take a look at some of the things that will permit us to arrange our financial institutions in such a way that people can make short term loans at 6 per cent, which will mean more than doubling the amount of the loan in 20 years, and at the same time allow these financial institutions to make a profit.
I think we should give consideration to some of the other types of banking in which our banks should indulge, but which are not occurring now. Does the Minister of Finance 23033-904
Bank Act
never look at himself at night in the mirror, when he has returned from a walk downtown where he has seen these trust companies erecting new buildings one after another? Does he never wonder what he is doing which is permitting these companies to construct these buildings? There are so many trust companies downtown that they will give you a piece of silverware if you make a deposit, or they will give you a set of coins. Most of the buildings on Sparks Street today are owned by trust companies that were unheard of 10 or 12 years ago. These buildings have been erected with the money the companies have obtained from people who desired loans. The money that was lent was borrowed from the banks. I am sure that the directors of the trust companies are not unrelated to the directors of the banks. It is not difficult to transfer money from one place to another, and then lend it out at twice what it cost you.
I suggest, Mr. Chairman, that the people of this country are going to be looking at this legislation and wondering what happened to the members of parliament who failed to give any protection to the little person who has to enter the mortgage field. I am sure those people are going to find this legislation wanting in protection for the borrower, under ideal conditions, that is if he really did not need the money badly but was going to substitute it for his assets and repay it at 6 per cent interest. We know this type of borrowing is very limited, but people should be able to borrow under these circumstances when the need arises without having to pay the higher rate of interest which we are setting by the passage of this bill.


Jean-Thomas Richard: Is the
committee ready for the question?
[DOT] (9:40 p.m.)
Amendment (Mr. Nasserden) negatived: Yeas, 38; nays, 54.


John Gilbert: Mr. Chairman, I indicated that I would be moving an amendment to clause 91. The amendment is as follows:
That Bill C-222, an act respecting banks and banking be amended by striking out lines 3 to 18 inclusive on page 79 thereof and by substituting therefor the following:
"or advance referred to in subsection (2) is,
(a)	for any part of the interest period ending on the thirty-first day of March, 1967, 6 per cent; and
(b)	for any part of an interest period commencing on or after the first day of April, 1967, one and three quarters per cent plus the average of the market-yield on short-term bonds of Canada

March 21, 1967
Bank Act
for all Wednesdays in the averaging period immediately preceding such interest period, calculated to the nearest one quarter of one per cent or, if the result would be equidistant from two multiples of one quarter of one per cent, to that multiple thereof that is the lower."
Mr. Chairman, this was the amendment which was brought forward by the Minister of Finance when he introduced the bill in July 1966. Through this amendment the minister persuaded many members of his party to reach his compromise position. A great deal of pressure was put on the minister to lift the ceiling completely, and this was the formula that he devised to overcome the difficulties within his party. We have seen the fluctuations of the interest rates from July 1966 until the present time. The hon. member for Acadia had attempted to quote the rates on government bonds. However, he was quoting the rates on long term government bonds rather than on short term government bonds. At present the rates on short term government bonds are 4.9 per cent. If you were to add If per cent, the rate would be approximately 6f per cent. We must be realistic with regard to the interest rate. This was the proposition which the Minister of Finance advanced at the time he introduced the bill. He indicated that it was necessary so as to improve the competitive position of the banks in the business world. Their plea was that the rate did not meet the demands of the business world. We have found that the rate of 6 per cent was not being applied by the banks through the use of services and charges that were being imposed.
All I am asking is that the minister revert to the original position which he took in July, 1966 and give his formula a chance to be tested and applied. Let me say again that we should not bind ourselves to a decennial revision, but that we should review the situation in one or two years time.


Mitchell William Sharp: Mr. Chairman, I think the committee should have some explanation of the amendment that has been proposed. As the hon. member for Broadview has just said, the government introduced the clause in the form that he has now recommended as an amendment to the report of the committee. When the bill was before the committee on finance, trade and economic affairs there was a long discussion about the formula. At that time I said-and I know hon. members will be able to verify this-that I did not think this was a matter of vital importance and that I was not pressing for any 
amendment, but that if the purpose of the legislation was to move towards freedom, that is to provide for a transitional period followed by complete freedom-which was certainly the purpose that the government had in mind in introducing the legislation-then I thought there was a good deal to be said for varying somewhat the formula that had been put forward in the original bill.
One of the hon. members has quoted the remarks which I made at that time when I said that the ceiling could drop from 7-j- per cent to 6| per cent and that I had some concern about this. The reason I had concern about it was that we could probably get ourselves into the farcical situation that at the outset the ceiling would be set at rl\ per cent, it would then decline to 6J per cent and then be removed completely, so that we would have this quite useless fluctuation in the ceiling when the whole purpose of the exercise was to provide a transitional period and then move to freedom. That was the context in which I made this explanation, as the hon. member who drew attention to it will confirm.
On the whole I am inclined to believe that the variation of the ceiling formula proposed by the committee is superior. This was not my particular formula; it was worked out by the committee acting jointly. The original questions were raised, I believe, by the hon. member for Eegina City or by another member of the Conservative party who participated very actively in the committee. I believe the hon. member for Nanaimo-Cowichan-The Islands recognized the nature of the problem, even if he did not support the amendment-


Mr. Douglas:: He opposed it.


Mitchell William Sharp: Although he never said what he would do.


Thomas Clement (Tommy) Douglas: Mr. Chairman, on a point of order. I understood the hon. member to have stated that he asked the committee chairman to record his opposition to that amendment. I state this for the record.


Mitchell William Sharp: It really does not matter what position the hon. member for Nanaimo-Cowichan-The Islands took, but I do think he recognizes the anomaly if the formula were to work in the manner I have described. I wish to remind the committee that it was the hon. member for Nanaimo-Cowichan-The Islands who did something very unusual in this house. He admitted that he had been persuaded by some of the discussions that had taken
March 21, 1967

place in the house to change his mind about the ceiling. Let me again quote to the house his words on second reading when he said: "There are compelling arguments for the removal of the 6 per cent limit". I believe this was the spirit in which that hon. member worked in the committee. He took an objective, non-partisan view, and for this I give him full credit. I believe that he continued to take that position even in relation to the formula for the ceiling.
Briefly, Mr. Chairman, I believe that it would be in the interest of the borrower and it would be in the interest of an orderly transition to freedom, which has been so strongly recommended by all of those who have made a thorough study of the situation, if we were to adopt the committee's report.


Some hon. Members:: Question.
[DOT] (9:50 p.m.)


John (Jack) Henry Horner: 
Julia Verlyn (Judy) LaMarsh: Now, now; the hon. member will never make a leader.


John (Jack) Henry Horner: I heard a comment from the Secretary of State, but I did not hear it all. If she wants to make a speech she is welcome to. I have found her easy to get along with.


Some hon. Members:: Hear, hear.


John (Jack) Henry Horner: She is prepared to compromise on definitions.


Julia Verlyn (Judy) LaMarsh: Now, now.
23033-904 J
Bank Act


John (Jack) Henry Horner: The question confronting the Canadian population is, where are we going. We have seen increased taxes, increased interest rates affecting home construction. We have seen this government coming in with a major breakthrough, providing for increased interest rates on farm loans. Even the Farm Credit Corporation has increased its rates over the 6 per cent figure. One can only assume that this government is a high interest government. High interest rates affect the cost of production.
Some years ago, and I speak of 1961, 1962 and 1963, we found ourselves in an advantageous position because of the devaluation of the dollar, which gave us an 8 cent advantage in world trade. The governor of the Bank of Canada in his annual report sounds the warning that if we are not careful we shall cause increases in costs to take place. I do not know the exact page on which he states this, but he says that we must be careful, that we have overloaded our society because costs are increasing more rapidly than in the United States. The United States, it must be remembered, is fighting a war in Viet Nam.
Is there any justification for the Minister of Finance to say that the committee in a genial mood agreed that in the light of everything the interest rate of 7J per cent was justified. Is it justified in the light of government spending, increased interest rates affecting house construction, farm loans, even farm syndicate loans, to say nothing of increasing the sales tax from 11 per cent to 12 per cent for manufactured goods?
I point out that the 12 per cent tax on manufactured goods was applied at the place of origin of the goods. Talking to builders, and contractors all across Canada before the price spreads committee, I learned that the 12 per cent, when multiplied through the various trades, ended up by being 25 per cent. One can only assume that this government is blind to what it is doing to the Canadian public. It is a high interest government, a high cost government blind to inflation.
It is all well and good for the minister to say that the committee reached the agreeable conclusion that the 7J per cent interest rate is justified. It is not justified. The committee's job is to solicit evidence, not to reach conclusions. We, as legislators in this house send various members from each party to a committee; that committee solicits and hears evidence. That evidence must be made available; but any judgment shall be reached through debate in the House of Commons, where everybody-those who have served on the

March 21. 1967
Bank Act
committee and those vrho have not-can participate in the discussion.
May I call it ten o'clock.


George James McIlraith: Mr. Chairman, may I ask that you rise and report progress for the purpose of asking the committee to continue sitting for another hour?
Progress reported.


George James McIlraith: Mr. Speaker, I would ask the house to continue sitting for another hour, to get on with the bill.


Some hon. Members:: Agreed.


Mr. Deputy Speaker:: Does the house agree to sitting for another hour?


Some hon. Members:: Agreed.



BANK ACT


[Stage Direction]
The house resumed consideration in committee of Bill No. C-222 respecting banks and banking-Mr. Sharp-Mr. Batten in the chair.
John (Jack) Henry Horner: Mr. Chairman, I intend to speak for only another few minutes. I intend to make clear to the Canadian taxpayer, the Canadian voter and to the Canadian public generally just how badly the Minister of Finance and his cabinet colleagues are disregarding the facts affecting our economic society.
Here we have an important piece of legislation; we have an amendment which would, in effect, provide for the 1| per cent addition formula. This would affect interest rates from April of 1967 on. We see, looking at the Wood-Gundy Securities Limited report for the week ending March 17, 1967, that the average interest rate yield on government bonds ranged from 4 per cent to 4.7 per cent. Averaging this out, as the minister did on page 14057 of Hansard for last Thursday, we can come to the conclusion that the average short term interest rate today in essence is 4.3 per cent. Taking the 1.75 per cent and adding it to that we arrive at a 6.05 per cent interest rate.
There is absolutely no justification for the 7J per cent rate for the interim period. I listened to the hon. member for Broadview on the amendment he sought to move. His is almost the same amendment I had intended moving. I listened carefully to the minister, and he at no time said that the 7| per cent

rate was too high. He said it was the interim rate, and that once we are working on the flexible formula things will take care of themselves. I can only reach the conclusion that once we work under the flexible formula of If per cent plus the short term bond rate that the rate in Canada will eventually reach 8 per cent.
[DOT] (10:00 p.m.)
If this is so, the minister should serve notice that he recognizes the course he is taking and is prepared to support it. First, this government has increased taxes. Second, it has increased the cost of housing construction. Third, since it came to office it has increased the cost of farm loans as well as interest rates generally to farm syndicates. Fourth, it has increased rates under the National Housing Act. Fifth, it has imposed an 11 per cent sales tax on building materials and manufacturing machinery. The last budget increased this to 12 per cent. Remember, this tax is placed on the original goods, so it amounts to a 25 per cent tax to the consumer, as we were told by an Edmonton contractor who gave evidence before the committee which is studying the question of the cost of living to the Canadian consumer. This man had been responsible for the erection of a huge building. Forty trades worked on it and each added the 12 per cent sales tax to its cost before counting profit. This is the practice in the industry. So the eventual cost of the sales tax to the consumer is 25 per cent.
If the minister continues to stumble along, refusing to accept amendments such as this, I can only conclude that government policy today is one of high interest, high taxes and high costs. I believe this needs to be repeated again and again because the minister seems unaware of what he is doing to the Canadian people. Here we have an amendment which accepts the minister's formula of one and three quarters plus the market yield on short term bonds. In essence this would provide the banks with an adjustable interest rate.
When the interest rate goes above 5 per cent clause 91(9) will come into effect and in essence we will have a 6.75 per cent interest rate. By right today the interest rate would be 6.05 per cent if the amendment were accepted. But the minister says he cannot accept it even though, as recorded at page 3505 of committee proceedings No. 51, he expressed concern about this provision. Since then he has returned to this dogmatic position that high interest rates are necessary. He is not even paying attention to his own words,
March 21, 1967

as recorded at page 14057 of Hansard, that there has been a drop from 5.20 per cent to 4.30 per cent.
The minister has become blind to the effect of high interest rates on our society. The governor of the Bank of Canada has warned us, in his 1986 annual report, about pricing ourselves out of world markets. I urge all hon. members to support this amendment. I urge government backbenchers to protect their own cabinet ministers. If they vote for this amendment they may stay in office a little longer. If this provision stands I hope the Canadian public will say, "Enough, enough. Let us go no further with a high interest rate government".


Joseph Jacques Jean Chrétien: Is the hon. member aware that the committee was persuaded to do this by the hon. member for Regina City?


John (Jack) Henry Horner: I am not prepared to admit that. The minister appeared before the committee and his evidence appears, starting at page 3502 of volume 51, continuing on to page 3503, and it was his suggestion that 7J per cent be the interest rate for the interim period.


Raymond Langlois: I do not wish to delay a vote on this amendment. I agree with it, but would like to express my views on it, particularly the first part which aims to retain an interest rate ceiling of 6 per cent.
[DOT] (10:10 p.m.)
I have listened attentively today to some of the discussion, particularly in respect of clause 91, and I cannot help but agree with most of the hon. members who spoke. I have made a note of some of the arguments brought forth by the hon. member for Acadia, and particularly by the hon. member for Timiskaming who made some true statements concerning the effect of the interest rate and who also gave a pretty clear picture of the banking situation which prevails across the country at the present time.
I am strongly opposed to the raising of the interest rate. When the Minister of Finance brought in his mini-budget I remember the intention at that time was that it would curb inflation and the rising cost of living in this country. I cannot understand how the minister can turn on the gas with his left hand, and then with his other hand turn another valve. This is the way in which he has been operating. I remember when he brought in his mini-budget the minister was talking about the boom, and that we must slow down but must not break the boom. With one
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breath he says one thing and then with another breath he says something else. The minister seems to have this ability, to switch from one side to the other.
I told the minister at that time that when the appropriate measure came before us, if he intended to place restrictions across the board he should not forget to take action to lower the cost of living. We are not stupid; we know that the entire production of Canada is financed through the banks, if not directly at least indirectly. The interest rate is reflected in the cost of production and in the retail price, no matter how we look at it. The minister may attempt to tell me a different story, but he cannot fool me. If he should try to make the people believe a different story, then I do not believe he would be fooling them either. Whenever the interest rate increases, the cost of production increases.
The representatives of the banks say that if they had an interest rate which would be more competitive they could lend more money. This is utter nonsense. Representatives of the banks have appeared before the committee and have spoken to different members. When the officials of the Laurentide Bank appeared they told us their bank would be a bank for the small loan borrower. They said that they wanted to help the smaller borrower. They said that the other banks are not helping these people. At that time I told them that the only reason they appeared before members of parliament to ask for a charter for this Laurentide Bank was that they wanted to obtain more credit for the Laurentide financing operations. That was the reason they appeared before us with the same singsong we hear from every chartered bank.
I do not believe for a moment that by increasing the interest rate to 7J per cent we will be helping anybody in this country. This will place the banks in a better bargaining position among the other financial institutions. We are not by act of parliament at this time permitting the mortgage companies, the trust companies, the finance companies or the insurance companies to increase their rates. What we are doing is allowing the banks to put themselves in a position of saying to these various lending institutions that they can now get 7J per cent on small loans. This will mean they can withhold more money from these other financial institutions. Obviously they would sooner make 100 loans of $1,000 at the higher interest rate than one loan of $100,000 to one of these financial institutions. They are then in a position where they can tell these companies to look elsewhere for their money.

March 21, 1967
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I fail to understand why members of parliament do not open their eyes to this situation. They should pay a little more attention to what is happening. The chartered banks at this time are the only financial institutions in Canada permitted to create credit in any real form. Other financial institutions must borrow their money from the chartered banks.
The presently proposed increase in interest rates will not in any way assist those individuals who are forced to make small loans. If anyone is not convinced of the fact, let me refer him to what has happened in respect of the Central Mortgage and Housing Corporation. That corporation began making loans at a rate of interest which varied between 2J per cent and 3 per cent. It is still making a profit because it is still in operation.
I should also like to know why chartered banks do not have to pay a similar initial interest rate on the money they lend. They are creating credit with the use of money for which they are not paying as high an interest rate. Why should the chartered banks be empowered to make loans by using money for Which they pay less? If the banks are poor they should come forward and say they are starving, and require this increase in interest rates in order that they will be able to make loans.
The passage of this measure will put chartered banks in the position of refusing to provide money to these small lending companies. They will indicate to these companies that they also can make small loans at a higher rate of interest than they would receive on the money they could provide to these companies. Perhaps it would be wrong to suggest that this is a form of blackmail, because the banks are being given the authority to do this by an act of parliament. Surely the net result of this increase will be an increase in the cost of living in this country, just as the 11 per cent sales tax on construction materials has caused an increase in the cost of living.
[DOT] (10:20 p.m.)
We have seen interest rates rise all across the country. To now open the back door to all financial institutions to raise their interest rates will cause a general increase in the rate charged by all financial institutions across Canada. What will happen to the cost of living? If you raise the interest rate 1 per cent at the production level, when it comes to the retail level that rate has increased to 5 per cent. If you do that twice, you are increasing the rate to 10 per cent. Will this help the consumers of this country? Will we assist in
(Mr. Langlois (Megantic).]
reducing the rising cost of living if we increase the interest rate on loans from the banks?
This government certainly has a tendency to cause difficulty. The only group this provision will help will be the banks, period. We may say we are entering a more realistic financial situation and our financial institutions will be more competitive with each other; but you cannot separate the directors of the chartered banks from the directors of our finance companies. You find that if you look at the directors of the banks and those of the finance companies, they are sometimes the same guys. If you go to the directors of mortgage companies, you find the same guys. This also applies to some of the major producing companies of Canada. You see the same faces in these fields.
Some figures were given to us in the committee in this respect. We learned that those who were directors of the banks and were also directors of these companies were concerned with a total of about 30 per cent of bank loans. One realizes what a fantastic amount of money this involves when in a friendly, family sort of way the same people are involved in the same interests. I do not have to go too far to illustrate my point. You can go across to the other place and find out how many of our distinguished senators are sitting on the boards of major financial institutions and companies in this country. You can look at those in the House of Commons. There is one cabinet minister who was a director of several companies. I remember that when he was appointed a cabinet minister he was a director of many companies. He was a good businessman, and I have nothing against him for this. But I realize that his companies involved a turnover of $14J billion in one year in production. This is approximately one quarter of the total Canadian production.
He is a very prosperous man. He exercised a great deal of control and had a great deal of say-so in these companies. He had much more say-so in this respect than the small individual who has to borrow from this type of company. Often a bank refuses a small loan to an individual because the work in which he is engaged does not produce enough money and a great many guarantees are involved in giving him a loan. Often the bank manager says to this person, "I do not think we can make this loan; go and see the finance company". The loan at 6 per cent interest is refused by the bank. This person goes to the finance
March 21, 1967

company and borrows the money he needs at an interest rate of 24 per cent, 27 per cent, 28 per cent or 30 per cent. Depending upon whether he has a little difficulty in meeting one or two payments, the interest rate may reach 35 per cent before the loan is paid off. How is it that his name is good when the interest rate involved is 35 per cent, when it was not good when the interest was 6 per cent? I will tell the committee why. It is because the bank was not interested in collecting 6 per cent interest. They knew damned well they would collect 35 per cent the safe way, because these finance companies have the same directors sitting on their boards as the banks. If the minister and his colleagues are not afraid to admit this, I am sure they would see the truth in what I have said.
This is one of the most important pieces of legislation to go through this parliament for years. This legislation has to be revised every 10 years, and now is the time to consider it seriously and not after it has been passed. I agree entirely that the amendment before the house, if it will only curb the rising cost of living that now faces this country, is well worth while. But I do not for a single moment believe that if we were to increase the ceiling of the rate of interest to 74 per cent we would help solve this situation. 1 do not believe that passing this legislation would in any way assist the individual who wishes to borrow a small amount of money. It will just give the chartered banks a better bargaining position with these big financial institutions.
The banks are not suffering. One just has to get out and see where the banks stand with regard to new buildings. I think many of the Canadian people are faced with more serious financial crises than the banks will ever have. If the banks ever reach a period of real hardship, there will be a lot more hollering on the part of the public than we are hearing now. They are in good financial condition at the present time. The banks control the whole system, and they not only control the system but they control the government. We can see this from the legislation the government is bringing before the house.
We saw the Minister of Finance introduce his mini-budget, and he was just about in tears. It was the only time I did not see a smile on his face. He was begging the Canadian people to be understanding and to make every effort to save the Canadian economy, to stop the boom before there was a bust. The people were asked to tighten their
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belts in order to cut down the cost of living. The minister came in with taxes here and taxes there. We now have the bank bill before the committee, and what is the minister doing to reduce the cost of living? He is permitting the banks to increase the interest rate which will increase the cost of production in this country. It will affect everything. The minister does not speak, he just bows his head. One can only judge that the master has spoken and the servant has listened. If the minister wants to be a servant, then certainly I do not want to be a servant, and for this reason I will support the amendment.


Jean-Thomas Richard: Is the
committee ready for the question?


John Gilbert: March 21, 1967
Bank Act
his party to accept this formula. We are prepared to accept it for a period of two years after which it would be reviewed. At that time we would be able to bring forward a more positive policy with regard to interest rates.


Some hon. Members:: Question.


Jean-Thomas Richard: Is the
committee ready for the question?
Amendment (Mr. Gilbert) negatived: Yeas, 24; nays, 59.


Mr. Latulippe:: Mr. Chairman, at this stage in the consideration of Bill No. C-222, we still have something to say. We have an amendment to move on the interest rate.
A while ago we had the pleasure of voting with the Conservatives to maintain the interest rate at 6 per cent. Unfortunately, I think some Conservatives who are in cahoots with big finance went into hiding and did not vote. That is why the amendment was defeated.
Mr. Chairman, I do not know whether there is some joking in this house or whether people are serious. Had the Conservatives been serious, they would certainly have voted on this important bill.
They want the people to believe they are working for them, that they are on their side, but they are against them. We on this side of the house, Mr. Chairman, are with the people and we can certify we are with them. Whenever we move an amendment, we are here to vote, even if we are few in number. We are not in such great number as the Conservative members, but our amendments are moved with conviction and by true representatives of the people.
As regards this clause 91, it is felt that the profit margin and the stock increase are not sufficient, with an interest rate, the ceiling of which is set at 6 per cent. Now, if we remove the ceiling and if the rate of interest goes up to 7-j, 8, 9 and even 10 per cent, and perhaps up to 12 per cent, or if there is no ceiling at all, the bank shares at a $10 par value will certainly go up to $100 and even more. Dividends will perhaps go up from $4 to $5 per share, which will represent a profit of 50 or 60 per cent on $10 shares.
Then, where will the ambition of the financiers end, since they are already enjoying an exclusive privilege belonging to the parliament of Canada, which represents the people, and not only to bank presidents and directors and to their shareholders?

Again, we would like to set the interest ceiling at more than 6 per cent on money created by means of guarantees from individual borrowers, companies, corporations, and federal, provincial and municipal governments.
Therefore, Mr. Chairman, I wish to bring forward an amendment to clause 91. When it comes to allowing chartered banks to lend banking credits at more than 6 per cent, do we not feel that this is going to result in a federal increase in the rate of interest? We asked all the financiers, all the bankers who appeared before the committee whether they did not feel the increase in the rate of interest would result in an increase in the cost of living and they answered: No. They also answered that more money had to be put into circulation, that it would be easier for the small industrialists or for the small wage-earners to have more money.
Therefore Mr. Chairman, when one knows that Canadian citizens are up to their ears in debt at present, when one knows that they can hardly borrow, that the credit of three quarters of the people is not good any more, because they are far too indebted, in brief when one knows that the majority of the people do not want to borrow any more, since they are sure that they will not be able to repay, such are the conditions our friends opposite are creating. With every means at their disposal, they protect high finance and high society at the expense of the people. They are working against the people and the people will become aware of it one fine day.


David Réal Caouette: Quite true.


Henry P. Latulippe: This is the banks' main argument: they are asking for the removal of the 6 per cent ceiling on the interest rate so as to be able to compete with other financial institutions not subject to the same ceiling. Would it not be advisable, Mr. Chairman, to also set a ceiling for the other financial institutions, thus preventing at the same time an increase in the cost of living, in production costs and the rise of the whole economy?
The Minister of Finance resorts to this argument. He says it would be unfair to freeze the interest rate at 6 per cent if other institutions have the advantage of lending their money at higher rates. To my mind, that is not a valid argument. The duty and the responsibility of this parliament was to set a ceiling and to put all institutions on the same footing. That is what we should have done, but we did not do it. We did not face up to our responsibilities.
March 21, 1967

Gentlemen opposite, you have voted against your responsibilities. You have overlooked your responsibilities to the people in order once again to protect high finance, which already has everything, controls everything and exploits everything, and nobody can even breathe without its consent. You have forgotten that, hon. members opposite.
It is a known fact that the cost of an issue now totals from 10 to 20 per cent: the advertising, the sale, the printing. The capital is issued as new money and entered into the books of the chartered banks purchasing such bonds and the interest is paid out of taxes on the people and it is the system of eternal interest, debts and capital created by a stroke of the pen.
Well, Mr. Chairman, it is the responsibility of the state to differentiate between the two economic sectors-the private and the public sectors. And the major role is played particularly in the public sector. It is mostly in the public sector that the banks have the advantage of using their pen to create money. It is in the public sector that the various bonds of public bodies, the federal government as well as all other governments, provincial, municipal, school and parishes, are issued and it is through such bonds that the large financial institutions create credit and multiply credit with the ink in their pens.
That, Mr. Chairman, is fictitious money. That is money which should not be created by the financiers. That should be the responsibility of the Bank of Canada. In fact, it was the responsibility of our friends opposite and their Conservative neighbours to vote a moment ago to maintain the interest rate at 6 per cent. I think the Leader of the Opposition (Mr. Diefenbaker) went hiding because he is in collusion with high finance.
Mr. Chairman, we could still make important speeches. Take the case of the Cuban government. When they needed $2 billion to refinance their country's economy, they tried to secure money from the United States. They could not have it unless they were ready to pay 5, 5J and 6 per cent. So they asked Russia and that country is now financing the Cuban government at an interest rate of 1 per cent. If the communists are able to finance different nations at a rate of 1 per cent, Canadians should be able to finance their institutions at a reasonable rate of interest and not at 7, 8, 10 or 15 per cent, in other words, at all sorts of rates.
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e (10:40 p.m.)
It is unfair to the people to refuse to fix a 6 per cent ceiling on the interest rate. I think this is the greatest injustice ever witnessed by parliament, and it will have serious consequences.
Today, the people are beginning to know, to understand, in other words, to read between the lines. There are people who have known extreme poverty, who have been sabotaged by high finance, and who remember it, who remember the interest rate they had to pay and how they lost their property.
A great number of citizens are going bankrupt right now, because the present system is taking away from them their property, all they possess, is taking away from them the work of several generations. In fact the present system does not hold water, since it cannot operate otherwise than by elevating a group of citizens and bringing down another one.
There is another group that has to go bankrupt, because it has to reimburse money created with nothing and on which interest is required. In fact, they require the repayment of capital created with pen and ink; they require money from the Bank of Canada, they require actual money in return.
The present system does not hold water, and this is why we see bankruptcies of all kinds, people who are turned out on the street, on the road, people who lose all they have.
This is what the gentlemen opposite voted for. It is the situation with which we are familiar at the present time.
And there is talk of changing this situation. You would not change it for all the tea in China because of your ties with big business. I think a certain number of people among you are bank shareholders living off the interest paid on their capital. And that is why you do not want to change this situation. But tomorrow morning the people will ask that it be changed.
Why, Mr. Chairman, is dissatisfaction rife in Canada nowadays? Why are unions mushrooming out in every sectors? To try and organize structures to help their members make a living. These structures could have been established by the governments, but they did not assume their responsibilities, they did not set up the structures, and these unions have to unite, to organize and come before the government, and face the people who have these responsibilities and who did not want to assume them.

March 21, 1967
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You have seen that happen today with the Farmers' Union. They came over here; they are all on the verge of bankruptcy. They are deeply in debt. Therefore, to help them out, lend them money at a higher rate of interest. Mr. Chairman, it is like throwing a drowning man an anchor to submerge him further instead of throwing him a life-saving jacket.
The people are being submerged further into debt by all kinds of financial schemes, by raising interest rates thereby increasing the over-all cost of living and depreciating the purchasing power of our currency in foreign countries, in all the countries of the world, thus placing Canada in an unfavourable position.
This financial system of ours does not hold water; it works in favour of a few financiers to the detriment of 99 per cent of the people, perhaps more.
Therefore, Mr. Chairman, many reforms should be made, but the government failed to introduce them. As far as we are concerned, we moved many amendments, but you have voted them down. They would have opened the way to do so many things for the people; we could have helped the citizens to have a more decent living, to benefit from the present system, to take advantage of scientific progress, to get an education and improve themselves from all points of view. Alas, we cannot even develop our natural resources.
Our present financiers do not even bother to develop our natural resources, and we are forced to let our Canadian fellow countrymen beg on their knees for the Americans to come in and develop our public and private wealth, our natural resources, because we have no money. The federal, provincial, municipal governments as well as the school boards endeavour to tap the people's savings, but there is not a single cent left in our society.
When one wishes to create or expand industries, develop our natural resources, well, there is no more capital, because it has all been absorbed by the present system to pay interest to financiers, to pay interest on money that does not exist, on fictitious money.
This is our situation, Mr. Chairman. These are the fields where great improvements would be necessary. And you were not willing to assume your responsibilities, you, members opposite, and you, Conservatives, and even you, New Democrats. In fact, you voted against almost every amendment we moved and which would have meant so much for the people. You all protect high finance.
[Mr. Latulippe.l
I therefore move an amendment to maintain at 6 per cent the interest on private loans, and at 2 per cent, the rate on public loans, because government bonds do not cost anything to those gentlemen, the financiers. Citizens have to make sacrifices to pay interest, to maintain the present system which is so bad for society, for the citizens, for the families, and which prevents the development of Canada in every respect. Now, you should vote for this amendment because you refused to allow the Bank of Canada to take over the control of money and credit, to create the credit required to finance public undertakings. We ask financiers to take their responsibilities. We ask the government that the financiers be forced to deprive themselves a little and loan that money at cost. It is claimed that costs amount to a little over 1 per cent.
That is why we have set at 2 per cent the rate on the money which will be created to finance the provinces, the municipalities and the public bodies.
Mr. Chairman, I would very much like to see those who were elected to represent the citizens really and properly, assume their responsibilities so that every Canadian might live decently.
I know quite well this amendment will be defeated. On the other hand, I shall have had the satisfaction of moving it. I shall have had the satisfaction of saying that I work for those who elected me, for the people and not only for the financial interests. I am not against high finance: I even want to give it the right to live. But I also want it to allow the citizens to live.
[DOT] (10:50 p.m.)


Some hon. Members:: Question.


Jean-Thomas Richard: those in favour of the amendment please rise.


Gilles Grégoire: Mr. Chairman, I would like to say a few words-


Jean-Thomas Richard: Does
the hon. member for Lapointe wish to rise on a question of privilege?


Gilles Grégoire: Mr. Chairman, I would like to speak on the amendment.


Jean-Thomas Richard: I have asked the house if it was ready for the question.
March 21, 1967


Gilles Grégoire: Mr. Chairman, when you took your seat, you asked the house if it was ready for the question. I got up and said. "Mr. Chairman", but the assistant clerk was directly in line between us at the time and you did not see me.
Mr. Chairman, I am not responsible for circumstances and I think that-


Jean-Thomas Richard: I will say to the hon. member for Lapointe that I have taken the necessary arrangements to hear hon. members. As for me, I am ready to hear you, but I do not think the committee is. Therefore, I will-


Gilles Grégoire: Mr. Chairman, is it the wish of the committee that we do not speak on the amendment? Pardon?
Mr. Chairman, I would like to say a few words.


Jean-Thomas Richard: I will ask the hon. member for Lapointe to speak right now.


Gilles Grégoire: Mr. Chairman, I would like to say a few words about this amendment. The hon. member for Compton-Frontenac (Mr. Latulippe) suggests that while maintaining the interest rate at 6 per cent, on the loans made to a public body-namely the federal and provincial governments, municipalities and school boards-the banks should have a 2 per cent interest.
And this is justifiable, Mr. Chairman, since our present system, as the hon. Minister of Finance admitted according to my previous reference, the new money lent by the banks is simply created money. Since banks do not have to pay any interest on it, but draw some, they can lend this money at the rate of 2 per cent to the governments and still make a profit of 2 per cent.
If the amendment were carried, the banks could lend the money they have on deposit, at the rate of 6 per cent, and that portion of money they create, which represents the yearly advance of the Canadian economy, could be loaned at 2 per cent to the government only.
Mr. Chairman, was any thought given to all the savings that could thus be made in municipal, provincial and, indeed, federal budgets? For instance, when you think of the fact the federal government alone pays $1,280 million a year in interest, you can easily imagine what kind of savings it would make if it could get a 2 per cent interest rate, that is three times less than what it now pays. In
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fact, instead of paying $1,280 million interest per year, it would pay only $400 million, which would mean additional available funds of some $800 million each year. Those additional funds could be used for many more useful things than what it is now used for.
In this way, the government, for instance, could give back to the provinces part of the tax revenue, to enable them to develop the field of education. Such amounts could be spent on public works which would allow the hiring of the unemployed we now have. They could also be used to increase family allowances and old age security pensions. When you think of what $800 million per year means, you realize that it is an amount which could be of tremendous usefulness to the Canadian people, as the hon. member for Compton-Frontenac (Mr. Latulippe) said a while ago. I think that measure would be a compromise between those who support the present system and those who advocate a new system of debt-free money. At least with the amendment moved by the hon. member for Compton-Frontenac, it would only be a reform of the present system and at that time, instead of interest-free loans by the Bank of Canada, the chartered banks would again continue to make loans and get an interest of 2 per cent-instead of not getting any at all-only when it comes to loans to public bodies.
If you stop to consider the savings it would mean for the federal, provincial and municipal governments, it would represent money available to the Canadian citizens.
Mr. Chairman, I want to support that amendment because I am convinced that if the house approves it the chartered banks might not benefit from it-although that will not make them poorer-but rather the 20 million Canadians.
The house can choose between the chartered banks and 20 million Canadians. By its vote, the house will indicate if it prefers to serve the chartered banks or 20 million Canadians.
Personally, Mr. Chairman, I will vote for the amendment because I prefer to vote for the interest and the welfare of 20 million Canadians rather than for the chartered banks.


David Réal Caouette: Mr. Chairman, I only wish to say a few words in support of the amendment just moved by my colleague, the hon. member for Compton-Frontenac (Mr. Latulippe). As the hon. member for Lapointe (Mr. Gregoire)

March 21, 1967
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said earlier, what we are asking for, and what the hon. member for Compton-Frontenac is suggesting, is to maintain the interest rate at 6 per cent, in order to finance the private sector of the Canadian economy, and to establish at 2 per cent the interest rate in the public sector. This would enable the federal government, the provinces, the municipalities and the school boards to finance their projects through loans obtained at 2 per cent.
As the hon. member for Compton-Frontenac was saying earlier, if it is true that a small country like Cuba can borrow millions at a 1 per cent interest rate from the Russian National Bank, it seems to me that the Minister of Finance and the government should take that fact into consideration.
Shall we wait, here, in Canada, until we have communism, when the banks shall be under state control as they are in Russia where all banks are now state property? Is it not possible, in a private enterprise regime to have an adequate financial system that would make it possible to finance the public sector at a lower interest rate than that we are now paying; in short, at an interest rate that would allow the country, the provinces, the municipalities and the school boards to finance themselves more easily?
Mr. Chairman, I am convinced that the government can bring the Canadian banks to their senses, and if they are reasonable enough, they should look around them and across the Iron Curtain. They will suffer tomorrow the consequences of their present attitude; if not in five years, then in ten years. If this ends in bloody revolution, the banks, the "controllers" of the economic blood of the nation will be responsible for it.
Mr. Chairman, it is time to take the necessary steps to have the Canadian public protected and respected. Therefore, I ask the members to second the amendment introduced by the member for Compton-Frontenac. It is a logical amendment intended to keep the interest rate at 6 per cent, in order to finance the private sector and to establish a 2 per cent rate to finance the public sector of the administration and Canadian development.
[DOT] (11:00 p.m.)


Some hon. Members:: Question.
Amendment (Mr. Latulippe) negatived: Yeas, 11; nays, 67.


Jean-Thomas Richard: I declare the amendment lost. Shall the clause carry?
[Mr. Caouette.l


Jay Waldo Monteith: On division.


Gilles Grégoire: On a point of order, Mr. Chairman. A while ago, some members were not present when the question was put, but they came in just the same while others were standing up for the vote.
I think that it is contrary to standing orders and I would ask those who act in that way to adhere to the standing orders. In fact, I think that it behooves you, Mr. Chairman, to call them to order.


Jean-Thomas Richard: would ask hon. members to follow the rules and, from now on to vote only if they were in the house when the question was put.

Shall clause 91 carry?


Jay Waldo Monteith: On division.


Jean-Thomas Richard: Is the
committee ready for the question?


Some hon. Members:: Question.
Clause agreed to: Yeas, 61; nays, 26.


Jean-Thomas Richard: I declare the clause carried.


Gaston Clermont: On a question of privilege, Mr. Chairman.
This afternoon during consideration of clause 88 of Bill No. C-222, I called the attention of the Acting Chairman to the fact that the French and English texts were not in agreement with regard to subclause (5) (b) (i), and I asked him whether or not I should move an amendment. The Acting Chairman replied that it was not necessary, but I am now informed that it would be better to move an amendment. Accordingly, I ask for the indulgence of the house in order to move an amendment that will not give rise to any debate, Mr. Chairman.


Jean-Thomas Richard: Is it
agreed that the French version of the bill should be amended to conform to the language of the English version?


Some hon. Members:: Agreed.


Gaston Clermont: Mr. Chairman, I thank the house for bearing with me. This is the amendment I should like to move: that the
March 21, 1967

word "three" appearing in line 45, sub-paragraph (i) paragraph (b) subsection 5 of clause 88 be replaced by the word "six", in compliance with the amendment made by the committee on finance, trade and economic affairs.


Mr. Clancy:: I should like to have the amendment read in English. I do not speak French.


Jean-Thomas Richard: Order, please.
The hon. member for Labelle (Mr. Clermont) moved that the word "three" appearing in line 45, sub-paragraph (i), paragraph (b) sub-section 5 of clause 88 be replaced by the word "six".

For the benefit of those who did not understand my speedy French, line 45 on page 79 of the French version, the numeral 3 is to be replaced by 6. Shall the amendment carry?


[Stage Direction]
Amendment agreed to.
Clause as amended agreed to.
On clause 92-Definitions.
Gilles Grégoire: Mr. Chairman, before the vote is taken, I will only put a question to the Minister of Finance and Receiver General (Mr. Sharp). Clause 92 (1) (a) reads as follows:
(a) "cost of borrowing" means, in relation to a loan or advance,
(i)	the interest or discount thereon, and
(ii)	any charges in connection therewith that are payable by the borrower to the bank or to any person-
Thus, the "cost of borrowing" includes first the interest and second the related charges. And subsection (4) reads as follows:
The minister may make regulations
(a)	respecting the manner in which the cost of borrowing shall be disclosed to a borrower:
(b)	respecting the manner of calculating the cost of borrowing;
I should like to ask the Minister of Finance and Receiver General what are his intentions in that field, not necessarily with respect to interest, since it has been defined in section 91, but especially with respect to charges on loans payable by the borrower to the bank and for which the minister has the power to establish regulations. Does the minister intend to restrict charges other than interest levied
Bank Act
by banks? Has the minister already established a series of regulations and could he tell us what are his intentions in that connection?


Mitchell William Sharp: The function of this section is to disclose to the borrower the cost of borrowing, and it would be my intention to make regulations similar to those being made in the provinces so that there is available to the borrower a direct comparison of costs between the cost of borrowing money from a bank, the cost of borrowing from a finance company or from an acceptance company, and so on. I have not yet drafted these regulations. I can assure the house that they will be in conformity with the practice being followed by the provinces. Indeed, as the committee may know, in the province of Nova Scotia there has been great pressure to extend provincial regulations to the banks, and it was on the assurance that the banks would be required to follow a similar practice that no action has been taken against them.
[DOT] (11:10 p.m.)


Gilles Grégoire: Mr. Chairman, I have a supplementary question. Is it the intention of the minister, when setting up rules, to limit the loan charges that banks may require? Is it the intention of the minister to restrict these loan charges, beside the interest rates?


Mitchell William Sharp: No, Mr. Chairman, this was solely for the purpose of disclosure.


Mr. McCleave:: Mr. Chairman, the minister has mentioned the progressive legislation which has been adopted in Nova Scotia as well as in other provinces, although credit has not always been given to Nova Scotia. My question is simply whether the regulation under clause 92 (4) goes as far as to include advertising?


Mitchell William Sharp: Mr. Chairman, is the hon. member asking whether I would go so far as to regulate the form of advertising or the cost of advertising? What is the hon. member's question?


Robert Jardine McCleave: No, it relates to the method of advertising the interest rates or the cost of loans. Sometimes this is put in very general terms and the person applying for the loan may be led to think that the rate is lower than the one with which he is actually confronted, so that this is where the sales job is

March 21, 1967
Bank Act
done on him. This point has been raised by several people in Nova Scotia and the suggestion has been made that the actual figures be used in advertising.


Mitchell William Sharp: Under paragraph (e) of subclause (4) I would have authority to do that, and I will bear this suggestion in mind. However the main purpose is to ensure that the borrower knows how much he is paying before he enters into the transaction.


John Gilbert: Mr. Chairman, at the hearings before the standing committee on finance, trade and economic affairs the minister undertook to refer the regulations to the standing committee, after they had been passed by the governor in council. I should like to ask him whether he still intends to follow that undertaking.


Mitchell William Sharp: Mr. Chairman, I am a man of my word, and if I said that I shall certainly carry it out. It is my recollection that I made such a commitment.


[Stage Direction]
Clause agreed to.
Clause 93 agreed to.
On clause 162-Coming into force.
Mitchell William Sharp: Mr. Chairman, I would ask the Minister of Transport to move amendments to this clause. These amendments arise out of the fact that this act is being approved at a much later date than we had originally intended. I would ask that the following motion be made:
That Bill C-222, an act respecting banks and banking be amended
(a)	by striking out lines 29 to 32 inclusive, on page 108 of the bill and by substituting therefor the following:
Saving.	"(2) This section shall come into
force on the day that this act is assented to and section 6 shall come into force with respect to the banks to which the Bank Act, chapter 48 of the Statutes of Canada, 1953-54, applies, and section 6 of that act is repealed, on the coming into force of this section.": and
(b)	by adding at the end of line 35 on page 108 of the bill the following:
and notwithstanding section 10 of An Act to Incorporate Bank of British Columbia and An Act to Incorporate Bank of Western Canada, respectively, sections 5 to 9 of those Acts, respectively, do not cease to have effect until section 54 of this Act comes into force".


John Whitney Pickersgill: I do so move.


[Stage Direction]
Amendment agreed to.
Clause agreed to.

On clause 1-Short title
Edward Nasserden: Clause 1, Mr. Chairman, deals with the title of the act. I suggest that the title ought to be "the fluctuating interest rates act-an act to abdicate the government's responsibility for monetary policy".
Fluctuating interest rates are not conducive to stability and the orderly development of this nation, its industrial and economic life. This measure introduces a new factor of instability into monetary policy. It robs the Minister of Finance of some of the powers he now has to control monetary policy and it surrenders to the banks part of the responsibility that should and must remain in the hands of the government, through the Minister of Finance.
Interest rates can now work at cross purposes with those of monetary policy. This is not a good nor a worthwhile development. In my opinion it cannot have any but undesirable effects; in extreme circumstances such a policy could have disastrous effects.
This measure as it stands is a monument to this government's careless abdication of its responsibilities. It is another indication of this government's lack of sound monetary policy.


[Stage Direction]
Clause agreed to.
Title agreed to.
Bill reported.
Mr. Deputy Speaker:: When shall the said bill be read a third time.


Some hon. Members:: By leave, now.


Michael Starr: Would Your Honour call the yeas and nays.


Mitchell William Sharp: the third reading of the bill.


Stanley Howard Knowles: Mr. Speaker, we do not object to the motion for third reading being called tonight but we do think the house should take another moment or two to consider the importance of clause 91 of this bill. We regret that the committee of the whole was not prepared this evening to accept one or the other of two alternative proposals that were made. We feel that this bill has not yet dealt, as it should have, with the question of the interest rate.


John (Jack) Henry Horner: Hear, hear.


Stanley Howard Knowles: We feel that either the ceiling should have been maintained or that something rational should have been put in its place. To give the house an opportunity to
March 21, 1967

consider once more the importance of the interest rate question to the people of Canada for the next ten years, I move, seconded by the hon. member for Broadview (Mr. Gilbert): That Bill C-222 be not now read a third time but that it be referred back to the committee of the whole house for the purpose of reconsidering clause 91 thereof.
[DOT] (11:20 p.m.)


Mr. Speaker:: I declare the amendment lost. Is the house ready for the main question?


Mr. McKinley:: Mr. Speaker-
Messrs:
Barnett	Maclnnis
Bell (Carleton)	(Cape Breton South)
Caouette	Maclnnis (Mrs.)
Churchill	(Vancouver-Kingswa
Clancy	MacRae
Code	McCleave
Crouse	McCutcheon
Dionne	McIntosh
Fane	Madill
Fawcett	Monteith
Forrestall	Nasserden
Gilbert	Nugent
Godin	Peters
Gregoire	Prittie
Herridge	Regimbal
Horner (Acadia)	Scott (Victoria (Ont.))
Horner (Jasper-Edson)	Smallwood
Johnston	Starr
Knowles	Thompson
Langlois (Megantic)	Wadds (Mrs.)
Laprise	Webb
Latulippe	Winkler-42.
NAYS	
Messrs:	
Allmand	Greene
Asselin	Guay
(Richmond-Wolfe)	Habel
Basford	Harley
Batten	Hellyer
Bechard	Honey
Benson	Hymmen
Blouin	Jamieson
Boulanger	Laflamme
Cameron (High Park)	Laing
Can tin	LaMarsh (Miss)
Cashin	Laverdiere
Chatterton	LeBlanc (Rimouski)
Choquette	Leboe
Chretien	Lefebvre
Clermont	Legault
Comtois	Lessard
Cote (Dorchester)	Lind
Cote (Longueuil)	Loiselle
Cote (Nicolet-Yamaska)	Macdonald (Rosedale)
Cowan	Mcllraith
Crossman	McWilliam
Deachman	Matheson
Dube	Matte
Emard	Morison
Forest	Neveu
Foy	Pelletier
Gendron	Pickersgill
Goyer	Pilon
Gray	Prud'homme


Mr. Speaker:: Is the hon. member for Huron rising for the purpose of announcing a pair?


Robert Elgin McKinley: Yes, I was paired. Had I voted I would have voted for the amendment.


Mr. Ballard:: I was paired. Had I voted, I would have voted in favour of the amendment.


David Réal Caouette: Mr. Chairman, now that almost all the members are back in the house, I would not want to delay further the business of the house and prevent the passage of the bill. However, I should like to draw the attention of the house to clause 72 of Bill No. C-222, dealing with the reserves which the banks must maintain in the Bank of Canada in order to create more credit in the country.
This law, or this Bill No. C-222, will, when passed, remain in force for ten years, which is quite long. I think it is time for the house to come to a decision as to these bank reserves which we have allowed to decrease instead of increasing, thereby giving the chartered banks considerably greater powers than before.
I then move, seconded by the hon. member for Compton-Frontenac (Mr. Latulippe) that Bill No. C-222 be not now read a third time, but that it be referred back to the committee of the whole house for the purpose of reconsidering clause 72 relating to bank reserves.


Mr. Speaker:: Is the house ready for the question on the amendment? All those in favour please say yea.


Some hon. Members:: Yea.


Mr. Speaker:: Those opposed say nay.


Some hon. Members:: Nay.


Mr. Speaker:: In my opinion the nays have it.
14314	COMMONS
Division


Mr. Speaker:: Is the house ready for the question on the amendment? All those in favour please say yea.


Some hon. Members:: Yea.


Mr. Speaker:: Those opposed say nay.


Some hon. Members:: Nay.


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


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


Some hon. Members:: Agreed.


Mr. Speaker:: I declare the amendment lost.	
Is the house ready for the question on the main motion?	
The house divided on the motion (Mr.	
Sharp) which was division:	agreed to on the following
 YEAS Messrs:
Allmand	Laflamme
Asselin (Richmond-Wolfe) Laing	
Basford	LaMarsh (Miss)
Batten	Laverdiere
Bechard	LeBlane (Rimouski)
Benson	Lefebvre
Blouin	Leboe
Boulanger	Legault
Cameron (High Park)	Lessard
Cantin	Lind
Cashin	Loiselle
Chatwood	Macdonald (Rosedale)
Choquette	Mcllraith
Chretien	McWilliam
Clermont	Matheson
Comtois	Matte
Cote (Dorchester)	Morison
Cote (Longueuil)	Neveu
Cote (Nicolet-Yamaska) Pelletier	
Cowan	Pickersgill
Crossman	Pilon
Deachman	Prud'homme
Dube	Reid
Kmard	Richard
Forest	Rideout (Mrs.)
Foy	Robichaud
Gendron	Rochon
Goyer	Rock
Gray	Roxburgh
Greene	Ryan
Guay	Sharp
Habel	Stafford
Harley	Stewart
Hellyer	Tardif
Honey	Thomas (Maisonneuve-
Hymmen	Rosemont)
Jamieson	Tolmie
March 21, 1967	COMMOl
Tremblay	Watson (Chateauguay-
Trudeau	Huntingdon-Laprairie)
Wahn	Whelan
Walker	Yanakis-80.
 NAYS Messrs:
Bell (Carleton)	Maclnnis (Mrs.)
Caouette	(V ancouver-Kingsway)
Churchill	MacRae
Clancy	McCleave
Code	McCutcheon
Crouse	McIntosh
Dionne	Madill
Fane	Monteith
Fawcett	Nasserden
Forrestall	Nugent
Gilbert	Peters
Godin	Prittie
Gregoire	Regimbal
Horner (Acadia)	Scott (Victoria (Ont.))
Horner (Jasper-Edson)	Smallwood
Johnston	Starr
Knowles	Thompson
Langlois (Megantic)	Wadds (Mrs.)
Laprise	Webb
Latulippe Maclnnis	Winkler-40.
(Cape Breton South)
[DOT] (12 midnight)


Mr. Speaker:: I declare the motion carried.


Robert Elgin McKinley: I should like to announce, again, that I was paired. Had I voted, I would not have supported the bill.

Quebec Savings Banks Act amendments made to the Bank Act. They relate to ownership and they provide, as was provided in the amendments to the Bank Act which were approved today, that no shareholder who owns more than 10 per cent of the shares of a bank may subscribe for any shares issued by that bank. This is the purport of the amendment to clause 46, and the amendment to clause 26 is the same as the consequential amendment which followed in the Bank Act.
I would point out to the committee that this bill was studied very carefully by the committee on finance, trade and economic affairs and it does not contain any principle different from those contained in the Bank Act. It simply applies those principles to the savings banks in Quebec which are under federal jurisdiction.


Jay Waldo Monteith: I agree with what the Minister of Finance has said but I am wondering what amendments he has to propose.


Mitchell William Sharp: Mr. Chairman, the only reason I did not ask that the amendments be made is that I was not sure how you wanted to proceed. These amendments are to be made to clauses 26 and 46. I would be happy to suggest that the other clauses be approved en bloc.


Harold Raymond Ballard: I was paired. Had I voted I ti(^r' Monteith: 1 would second that sugges-would have voted against the motion.	10n'


Herbert Wilfred Herridge: I was paired with the Minister of Energy, Mines and Resources. Had I voted I would have used my best judgment.



QUEBEC SAVINGS BANKS ACT


Mitchell William Sharp: that the house go into committee to consider Bill No. C-223 respecting savings banks in the Province of Quebec.
Motion agreed to and the house went into committee thereon, Mr. Batten in the chair.
On clause 2-Definitions.


Mitchell William Sharp: This bill parallels very closely the Bank Act which the house has just approved. In order to expedite its consideration I should like to say that I have two amendments to propose to clauses 26 and 46. The main amendment is to clause 46 and there is a consequential amendment to clause 26. These are in exactly the same form as the


Herman Maxwell Batten: Is it agreed that all clauses of Bill C-233, with the exception of clauses 1, 26 and 46 be carried en bloc?


Some hon. Members:: Agreed.
Clauses 2 to 25 inclusive, 27 to 45 inclusive and 47 to 131 inclusive, agreed to.


Mitchell William Sharp: I would appreciate it, Mr. Chairman, if you would call clause 46 first, where the substantive amendment is to be made.
On clause 46-Limit on shares held by nonresidents.


Mitchell William Sharp: Mr. Chairman, I would ask the Minister of Transport to move:
That Bill C-223, an act respecting Savings Banks in the Province of Quebec, be amended
(a)	by striking out lines 29 to 31, inclusive, on page 20 of the bill, as reprinted, and by substituting therefor the following:
"thereof;
(b)	by any person if, at the time the share Is subscribed for, the total number of shares of the capital stock of the bank held by such person and by other shareholders associated
March 21, 1967

Quebec Savings Banks Act with him, if any, exceeds ten per cent of the total number of the issued and outstanding shares of such stock; or
(c)	except as otherwise provided in subsection (5), in other circumstances where if the subscription"; and
(b) by striking out line 39 on page 20 of the bill, as reprinted, and by substituting therefor the following;
"(5) Subject to paragraphs (a) and (b) of subsection (4)


John Whitney Pickersgill: I so move.
Amendment (Mr. Pickersgill) agreed to.
Clause as amended agreed to.
On clause 26-Offer of shares of capital stock.


Mitchell William Sharp: Mr. Chairman, I would ask my colleague, the Minister of Transport, to make the following motion:
That Bill C-223, an act respecting Savings Banks in the Province of Quebec, be amended by striking out line 39 on page 9 of the bill, as reprinted, and by substituting therefor the following:
"by reason of paragraph (a) or (b) of subsection (4)".


John Whitney Pickersgill: I so move.
Amendment (Mr. Pickersgill) agreed to.
Clause as amended, agreed to.


Mitchell William Sharp: Mr. Chairman, you should also call the schedules at the back of the act, which I suggest should also be approved en bloc.
Schedules A, B, C, and D agreed to.
On clause 1-Short title.


Mitchell William Sharp: Mr. Chairman, before the
committee rises I would like on this occasion to express the thanks of the house, and in particular of the members of the committee on finance, trade and economic affairs, for the services performed for us over many years by Mr. Clayton Elderkin who is sitting in front of me this evening. Mr. Elderkin was formerly the inspector general of banks, from which position he retired a few months ago, and he consented to stay on with the department as a consultant in order to see these bills through the house and through the Senate, and I would like personally to thank him very much for his great services to the government.


Some hon. Members:: Hear, hear.
[DOT] (12:10 a.m.)


Jay Waldo Monteith: Mr. Chairman, I wonder whether I might have the privilege of saying just a word or two at this time. Having been

a member of the committee in 1954, which at that time was known as the committee on commerce and finance, and at which time we last examined the Bank Act, Mr. Elderkin was inspector general of banks. I should like to add my word of commendation to that person.


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


Some hon. Members:: By leave now.


Mitchell William Sharp: the third reading of the bill.
Motion agreed to and bill read the third time and passed.



PROCEEDINGS ON ADJOURNMENT MOTION

[Stage Direction]
A motion to adjourn the house under provisional standing order 39A deemed to have been moved.

Mr. Andrew Chatwood (Grand Falls-White Bay-Labrador):: Mr. Speaker, my question to the Minister of Fisheries with regard to the seal fishery grew out of my amazement at the distorted coverage being given to the seal fishery in the news media, due to the actions of some misdirected persons who have very little knowledge of the facts.
1 was startled and shocked, Mr. Speaker, at the actions of the members of the Conservative party who demanded the abolition of the seal fishery. Sealing is a very vital part of the livelihood of thousands of Canadians, and even though the amount of income is not large, it does represent to many of my constituents an important part of their dollar income. Sealing also enables many people by their own effort and by risking their own lives to acquire goods which they could not afford to buy and for which there are no substitutes.
The action of the Conservative party through their leader in calling for a prohibition of sealing is, I am sure-


Donald MacInnis: Mr. Speaker, on a point of order-


Mr. Deputy Speaker:: Order. Is the hon. gentleman rising on a point of order?
March 21, 1967


Donald MacInnis: Yes, Mr. Speaker. I have been under the impression that this portion of our time is set aside for members to bring up questions with a minister of the crown. When a member uses this time to read a prepared speech in criticism of members of this house I do not think he is following the order of business which is before the house.


Mr. Deputy Speaker:: The hon. member for Grand Falls-White Bay-Labrador may continue.


Andrew Chatwood: Mr. Speaker, if I may, I will refer to my notes. This action, I am sure, is based on their ignorance of the importance of this historic hunt to the lives of thousands of Canadians, not only in the riding of Grand Falls-White Bay-Labrador-


Donald MacInnis: Mr. Speaker, on the point of order.


Mr. Deputy Speaker:: Order, please. The hon. member who now has the floor is putting the question to the house. He has the right to put it in any way he wishes. There is no point of order.


Donald MacInnis: Mr. Speaker, on a question of privilege; I should like someone who has responsibility for the government to explain that this particular time is set aside for members to put questions to the ministry, when they have not been satisfied with the answer given during the question period.
For that reason this time should be devoted to obtaining information from ministers, not to criticism of opposition members for any action they have taken. This time has been set aside for the purpose of obtaining information because that information could not be provided during the ordinary question period. I suggest what the hon. member is now doing is reading a prepared text for the purpose of criticizing opposition members, rather than seeking information. I submit this is not the purpose of this time set aside by the house.


Andrew Chatwood: Mr. Chairman, this matter is of importance not only to the whole province of Newfoundland and Labrador, but to Prince Edward Island, Nova Scotia, New Brunswick, eastern Quebec and all areas where seals are taken from the shore, as well as to those firms in Halifax and other centres which buy the pelts and provide employment to residents.
Individuals who are writing to the press fall into many categories; some are vegetarians and do not eat meat of any type or in any
Proceedings on Adjournment Motion form, and protests from those people are legitimate. They are loyal to their beliefs. I do not agree with them, but I respect their rights. I cannot agree with those who try to prevent hard working-


Donald MacInnis: Mr. Speaker, I rise again-


Mr. Deputy Speaker:: Order, please. I must point out again to the hon. member for Cape Breton South (Mr. Maclnnis) that the hon. member has seven minutes in which to make his statement, and he has the right to make that statement in any way he wishes, so long as he abides by the rules of this house. Let me suggest to the hon. member for Cape Breton South that he allow the hon. member for Grand Falls-White Bay-Labrador to continue.


Donald MacInnis: Mr. Speaker, I would prefer that you make a ruling as to the reason for setting aside this time. In my opinion it is set aside for obtaining information from ministers who were not able to answer questions asked in the normal question period. I respectfully ask that you make a ruling that hon. members use this time for the purpose set aside by the house.


Mr. Deputy Speaker:: Let me remind the hon. member for Cape Breton South that the hon. member who was interrupted was making a statement before asking the minister his question.


Donald MacInnis: Let me
again request the Chair to give me a ruling as to whether-


Mr. Tardlf:: Sit down.


Donald MacInnis: Are you
through?


Mr. Tardif:: When I am through I will let you know.


Donald MacInnis: Mr. Speaker, I am trying to find out whether I am right in assuming that this time has been set aside for members to obtain answers to questions which could not be answered in the house. If the time is to be taken up by hon. members who wish to make political speeches, then all I can suggest is that many of us may be here every night of the week making political statements in opposition to actions taken by the government. Surely members of this house during this time should not be permitted to make statements of a political nature. This time, as I understand it, has been set aside for the express purpose of members obtaining information.
14318	COMMONS
Proceedings on Adjournment Motion


Mr. Deputy Speaker:: Let me remind the hon. member that this time has been set aside tor the discussion of questions, and that the hon. member who was speaking has seven minutes in which to pose his question to the minister.


Donald MacInnis: I request the Chair respectfully to make a ruling as to the amount of time a member can use to make a speech of a political nature before posing his question.


Mr. Deputy Speaker:: The hon. member has seven minutes in which to make his statement and I suggest to the hon. member for Cape Breton South that he allow the hon. member for Grand Falls-White Bay-Labrador to continue.
[DOT] (12:20 a.m.)


Donald MacInnis: I would remind you, sir, that the hon. member's time has now expired.


Andrew Chatwood: I cannot agree with those, Mr. Speaker, who try to prevent hard-working, God-fearing men from earning an honest living by the sweat of their brows as their forefathers did before them. I cannot agree with those who stand either in this house or outside it and say "prohibit sealing", and then sit down to a meal of chicken, pork, beef, duck, lamb or any other meat-the same people who would hunt a deer or a wild bird for sport, or give chickens or baby bunnies to their children for Easter, well knowing that these baby chicks and baby bunnies will be starved or crushed to death by over-loving children. Where are last year's Easter chickens?


Donald MacInnis: Mr. Speaker, I rise on another point of order.
I would again remind the Chair that despite whatever develops in the house during the seven minutes allotted to any hon. member- and the Minister of Transport (Mr. Pickersgill) can verify this by referring to a time when he tried to intimidate the C.B.C. into making a move for him-if the time is used by reference to any matter, the seven minutes allotted to an hon. member expires and there is no more time allotted to him. I raise my point of order on this particular matter now, and the Chair must rule on it. The hon. member is not permitted to read word for word from a prepared text.


John Whitney Pickersgill: I wonder whether I might remind Your Honour that when this rule was established it was clearly understood that no

DEBATES	March 21, 19G7
member of the house was permitted to interrupt or to speak during this period except the hon. member to whom the Speaker had allotted the seven minutes to express his grievance, and the minister or the parliamentary secretary in reply. The hon. member has deliberately and persistently defied Your Honour's repeated ruling that he should take his seat, and I suggest that he be asked to desist from interrupting the most junior member of the house. An experienced member usually extends to a junior member the courtesy of allowing him to be heard.


Donald MacInnis: On that point of order, Mr. Speaker, I would point out to the Minister of Transport that to raise his point of order he had to break the rules himself.


Mr. Deputy Speaker:: Order. Perhaps I should read to the hon. member for Cape Breton South the standing order which applies.


An hon. Member:: You don't know what you are talking about.


Donald MacInnis: Shut up. You are talking cheap.


Mr. Deputy Speaker:: Order, please. 1 refer to standing order 39-


Donald MacInnis: It is too
bad hon. members opposite cannot back up some of the things they say.


Mr. Deputy Speaker:: Order, please. Standing order 39 provides as follows:
A member who is not satisfied with the answer given to a question asked on any day at this stage, or a member who has been told by Mr. Speaker that his question is not urgent, may give notice that he intends to raise the subject matter oi his question on the adjournment of the house.
As far as the question of time is concerned, it has always been the ruling in this house that when an hon. member is speaking and a point of order is raised, that time is not charged to the hon. member. If, however, he were to allow questions, that of course might be quite another matter. The hon. member for Grand Falls-White Bay-Labrador.


Andrew Chatwood: Some of the people who are complaining most vehemently against the seal fishery would think nothing of using a rod and line to hook a salmon and play the poor unfortunate fish for hours just for sport. The practice of catching the salmon or trout on a line and playing it for an extended period of time before finally bringing it to shore to allow it to gasp itself to death is accepted, as
March 21, 19G7	COMMONS DEBATES	14319
it should be; and it certainly cannot be compared to the quick, merciful killing of a seal. It is unfortunate that animals must die to sustain life, but it is necessary in order that man can have food and clothing and that he can feed and educate his children.
I returned just last week from a brief visit to my riding where I reviewed the sealing practices with many of my constituents, all of whom ask only for the right to work for a living and the right to use the best possible tools to do the job. I can assure this house that there is no cruelty in the seal hunt. Seals are killed either by a sudden blow or by a quick shot, and are killed instantaneously-faster by far than the death of some of our domestic animals.
The Department of Fisheries and the Minister of Fisheries (Mr. Robichaud) have done excellent work in bringing in regulations and in getting agreements from other countries to control the size of the herds, and the need for regulation is recognized. If the herds were allowed to become too large the effect on the commercial fishery would be disastrous. The amount of bait fishes, of salmon and of shell fishes that would be consumed by these animals would deplete the supply to a tremendous extent. It should be remembered, Mr. Speaker, that even today it is necessary in some cases to provide a bounty on certain seals in order to protect certain of the fishes. The same people who now complain about the killing of seals would soon complain if the number of salmon and other game fish in our rivers were reduced by the appetites of an excessive seal population.
It would be impossible, Mr. Speaker, to speak about sealing without thinking of the gaff, the traditional tool of the sealer which has saved many a sealer's life on treacherous icefields both in preventing him from falling into the water and in assisting him in recovering on an occasion when he might fall in. Because of the importance of the hunt for those taking seals from the shore, it is imperative that the use of shotguns and shells be continued, as expensive rifles are not available to everyone and slugs are not as effective as shot. The thought of high powered rifles being fired from small boats on a misty morning is one that brings visions of possible tragic results, and is something that is not necessary. The fisherman taking seals from the shore must be allowed to use the equipment that is best suited for the task at hand. He must be able to use the best boats that he has for the job and the boats to which he is accustomed.
Proceedings on Adjournment Motion
I must urge the minister to consider the stories being told as what they are-foibles of people who wish to attract public attention to themselves for reasons of their own. They have no knowledge of the matter under consideration and no feeling for the many people whose livelihood depends on this important section of our economy, both in dollars in income and materials necssary for their livelihood. I ask the minister to do everything possible to insure that the seal fishery continues and maintains its important place in our economy, and that all possible assistance be given to the sealers taking part in the seal hunt.


Mr. Richard Cashin (Parliamentary Secretary to Minister of Fisheries):: Mr. Speaker, I can assure the hon. member that the Department of Fisheries is very much interested in the welfare and in the well being of the fishermen on the eastern coast of Canada, as well as the western coast of Canada. However, the Department of Fisheries has taken steps in the past, and will continue to do so, to ensure that this fishery is carried out in as humane a way as possible. While it is unfortunate that certain unfounded publicity from time to time has been spread about regarding certain aspects of the seal fishery, there is also ample evidence to suggest the killing of seals is carried out in a way which, in many instances, is more humane than that carried out in the killing of other animals.
I might say that personally, like the hon. member for Grand Falls-White Bay-Labrador, I sometimes find it a little inconsistent to hear big game hunters and big game fishermen advocate the abolition of the seal fishery while they find it easy to spend an hour or an hour and a half playing a fish on a line. I think it may be helpful to some people if there were a clear distinction between the two forms of killing. Perhaps some would even suggest the seal fishery was not as cruel, if that is the right way of putting it, as sport fishing.
In conclusion, I can assure the hon. member the Department of Fisheries has and will continue to have a great interest in fishermen in all types of fishery and at the same time will hope to see to it that as fair and as humane regulations as possible are introduced in this aspect of the fishery, as in all other aspects.
14320	COMMONS
Proceedings on Adjournment Motion



HEALTH AND WELFARE-RESEAECH INTO ILLNESS CAUSED BY NOISE

Herbert Wilfred Herridge: Living, as I normally do, in relative solitude, I notice the city noise in all its amplitude and it is tor that reason I have taken a particular interest in the damaging effect of the noise of modern society. This is important to communities, to working people generally and to the general public. It is for that reason I have been interested in the subject. I have read the report on noise published by the World Health Organization, and its effect as a public nuisance as shown in studies of occupational research. I have also read the final report presented to parliament by the lord president of the council and minister for science, by command of Her Majesty, July 1963, in the parliament of Great Britain, which deals with this question in a very interesting way and makes some recommendations.
[DOT] (12:30 a.m.)
My attention was directed to this subject the other day on account of an editorial which appeared in the Globe and Mail of March 15, 1967 entitled: "Sue over noise, workers urged". It reads as follows:
Thousands of persons working in British factories may be in a position to claim compensation for damage to their hearing caused by noise.
J. B. Cronin of the Southampton University law faculty told a scientific meeting at the Royal Society in London that employees could successfully claim for bodily injury caused by employers' negligence. Yet no employee had ever taken such action.
"I don't know what the trade unions have been at," Mr. Cronin said.
Professor E. J. Richards, of Southampton University's institute of sound and vibration research, told the meeting that there was already ample evidence that many a worker's hearing was being permanently damaged by noisy working conditions-and as the power and size of machinery increased, the noise problem would get worse.
Mr. Speaker, the general effect of noise is, in the first instance, on the physical health of the body. For the most part people's well being is diminished by noise. In this sense of the term there is no doubt that noise affects health. It has been proven to affect the mental health of some people and to affect the
DEBATES	March 21, 1967
enjoyment of communication based on sound in relation to hearing. It can affect working efficiency, and also the incidence of industrial accidents. I have had some personal experience in connection with the operation of mine compressors and machines of that sort-not that I have worked in the place, but I was an observer. In my opinion noise is an occupational hazard and a public nuisance in modern society. Research is required in an effort to provide remedies and compensation for those who suffer from noise in industry and in other segments of our communities.
It was for that reason that on Wednesday, March 15, I asked the parliamentary secretary to the Minister of National Health and Welfare whether any research is being undertaken in Canada at the present time in damage done to the human body as the result of noise.
The fair lady listens with dignity and poise,
To my inquiries about research and noise,
I hope her reply will be complete and good Based on homework well done, as it should.


Mrs. Margaret Rideout (Parliamentary Secretary to Minister of Natonal Health and Welfare):: Mr. Speaker, the answer to the hon. member's question is yes, the government is concerned about the effects of noise, both on the human body and on the mind. For example, over the past several years research assistance from the public health research grant has been given to a number of studies on the relation of noise to hearing loss. I understand that the Medical Research Council and the Defence Research Board have also given grants for research in this area. In addition, we do know of various university activities in this field. We would be pleased to have a list of these research activities prepared for the hon. member for Kootenay West, if he so desires.
Mr. Speaker, if I may end this very brief reply on the same note as that of the hon. member for Kootenay West, I would say that: The hon. member for Kootenay West Asks lots of questions, as do the rest.
In this long, long day, It has been one of my joys, To answer his questions about bodies and noise.
Motion agreed to and the house adjourned at 12.37 a.m..

Wednesday, March 22, 1967