July 13, 1903


House in Committee on the following proposed resolutions : 1. That it is expedient to provide that the security to be held by the Minister of Finance and Receiver General, for the redemption of Dominion notes, issued and outstanding at any one time, up to and including thirty million dollars. shall be an amount in gold, or in gold and securities of Canada, the principal or interest of such securities being guaranteed by the government of the United Kingdom, equal to not less than twenty-five per cent of the amount of such notes so issued and outstanding, the amount so to be held in gold to be not less than fifteen per cent of such amount so issued and outstanding ; and for the redemption of Dominion notes, issued in excess of thirty million dollars, an amount in gold equal to such excess. 2. That all expenses incurred or required to be paid in connection with the engraving, printing or preparation of Dominion notes, or the signing, issue or redemption thereof, shall be paid out of the Consolidated Revenue Fund of Canada. And in case the amount held as security for the redemption of Dominion notes should not be sufficient to pay the Dominion notes presented for redemption, or in case the amount so held should be reduced below the amount required to be held, as provided in the aforegoing resolution, the Governor in Council may raise by way of loan, temporary or otherwise, such sum of money as may be necessary to pay such notes, or to provide the amount required to be held as security for the redemption of Dominion notes issued and outstanding. The Minister of Finance.


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The MINISTER OF FINANCE (Hon. W. S. Fielding).

Mr. Chairman. This is a resolution of which some announcement was made and upon which some explanations were given at an earlier stage of the session. I am glad to know that so far as my information goes the change proposed is one which has met with the general approval of financial men. The resolution proposes to increase the amount of Dominion notes which we are at liberty to issue with a twenty-five per cent reserve from 2024 . ,

$20,000,000 to $30,000,000. Our currency is to a large extent a paper currency as a matter of convenience, but it rests upon a safe gold basis. It is understood that we shall have a reasonable proportion of gold at all times in reserve to meet demands that may be made for the redemption of notes. Just what amount of notes we may properly issue in this way would have some reasonable regard to the general growth, development and progress of the country. We have not made any change in the limit since 1880, twenty-three years ago, when the amount was fixed at $20,000,000. By the legislation of that time we were authorized to issue $20,000,000 having as a reserve twenty-five per cent, either in gold or imperial guaranteed debentures, being the equivalent of gold. For all sums over that amount we have been obliged to hold dollar for dollar. As the country grows and we have larger wealth and larger resources, it is only reasonable to assume that that limit may be increased.

I think we would be justified at present in making the limit larger, but in matters of this kind it is always well to proceed slowly and cautiously.

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CON

David Tisdale

Conservative (1867-1942)

Hon. Mr. TISDALE.

How much does the minister propose to Increase it ?

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The MINISTER OF FINANCE.

The present law is that we may issue $20,000,000 on a! reserve of 25 per cent. We propose to increase it to $30,000,000 on a reserve of 25 per cent.

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IND

William Findlay Maclean

Independent Conservative

Mr. MACLEAN.

Does the hon. gentleman propose to issue five dollar notes, and thus increase the denomination of his issue ?

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The Minister OF FINANCE.

That very point is under consideration, -but it is not touched by the resolution because it is a matter of regulation.

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IND
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The MINISTER OF FINANCE.

I am not prepared to say that we may not before the year is out issue a five dollar note if the -demands of the country are as great as we imagine they will be. I am inclined to think that we may have to do what my hon. friend (Mr. Maclean) suggests. The denomination of note will not, of course, affect the amount to be issued. We can issue a four dollar note as we do at present, but it has been represented to us that the five dollar note is more convenient than the four. It is a mere matter of business and if we find that the banks are not able to issue enough ' fives,' we may supply the five dollar note -instead of the four, or continue to issue the four.

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CON

David Henderson

Conservative (1867-1942)

Mr. HENDERSON.

The country would not hail with any degree of satisfaction any further issue of four dollar notes, because they are much disliked by the business community and the banks. They look so much like a ' one ' that when money is being kur-

riedly passed, mistakes are made. I believe the Minister of Finance will have the gratitude of the country if he discontinues the issue of four dollar bills.

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The MINISTER OF FINANCE.

That matter was brought to my notice some time ago, and although I thought there was a substantial difference, still, having regard to the representations made to me by business men, I caused a change to be made in the form of the four dollar note which I think makes the distinction clearer. So far as that point is concerned, I think we have met the criticism. But on the point of public convenience I think that the five dollar note is more convenient than the four.

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Some hon. MEMBERS

Hear, hear.

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The MINISTER OF FINANCE.

This is so strong in our mind that we may find it necessary to issue a five dollar note. In the year 1880, when the limit of $20,000,000 was fixed, the total circulation of Dominion notes was only $13,500,000, so that the limit then fixed was about 50 per cent in excess of the total circulation. But things have so changed that to-day we have a circulation of $39,000,000. That in some degree is a measure of the progress of the country since that time. At the time the limit was fixed at $20,000,000, our revenue was $23,300,000, so that the limit was close up to our revenue. To-day when we are proposing to fix the limit at $30,000,000. our revenue, I am glad to say. for the year just closed will be in the neighbourhood of $66,000,000. It will therefore be seen that we are adopting a moderate and conservative policy in the extent of our increase. As an indication of the wealth of the country I may say that in .1880 the deposits in chartered banks was $70,000,000, whereas the deposits in the chartered banks at the close of last year was $370,000,000. The total trade of the country in 18S0

and it is for the convenience of this total trade that this currency system is needed-our total trade in 1880 was $174,000,000, whereas in the year just closed it was about $450,000,000. These few figures show in a striking way the great progress that has been made in the trade, in the commerce, and in the wealth and resources of Canada since 1880, and it would be seen that in making this proposal we are on very safe and sound lines.

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IND

Jabel Robinson

Independent

Mr. ROBINSON (West Elgin).

Can the minister issue a larger denomination than the five dollar notes ?-why not issue 'tens'?

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The MINISTER OF FINANCE.

If the public demand existed there is no reason why we should not do it, but as a matter of fact the banks issue the ' tens ' and I have so far had no representations that there is any shortage of them. We did have representations made at the height of the currency demand last autumn that there was some anxiety as to the banks supply-

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CON

David Henderson

Conservative (1867-1942)

Mr. HENDERSON.

ing the currency; however, if it were found necessary there is no reason why we should not issue ' tens ' or any denomination the public might require.

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IND

Jabel Robinson

Independent

Mr. ROBINSON (West Elgin).

I think it would be better for the government to issue all the bills. If you did so you would make money out of it because no( doubt a great many bills are lost and destroyed and I think the people should have the benefit of that.

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CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BORDEN (Halifax).

The position of the matter as I understand is this : The

present circulation of Dominion notes amounts to $39,000,000. There is a reserve of gold or Dominion securities guaranteed by the government of the United Kingdom of not less than $24,000,000 against that.

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The MINISTER OF FINANCE.

About that.

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CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BORDEN (Halifax).

The result of the proposed legislation will be to decrease the amount of that security by $7,500,000 ?

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The MINISTER OF FINANCE.

Yes.

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July 13, 1903