June 9, 1925

LAB

James Shaver Woodsworth

Labour

Mr. WOODSWORTH:

Why, then, these words in the bill: "and for public works and general purposes"?

Topic:   PROPOSED LOAN OF $164,000,000
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LIB

James Alexander Robb (Minister of Immigration and Colonization)

Liberal

Mr. ROBB:

I had hoped it would go through without my having to explain that. But I will tell my hon. friend frankly that if

Proposed Loan

we have any spare money left over we propose to go quietly into the market wherever we can and buy outstanding tax free bonds that may be on the market.

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LIB

Samuel William Jacobs

Liberal

Mr. JACOBS:

I am not often in agreement with the hon. member for Centre Winnipeg (Mr. Woodsworth), but there seems to be sound sense in the argument he has just made. It puzzles me to know why a bank can get all the money it requires-or some banks, rather -at 3 per cent and lend it out at 100 per cent profit, while the government of Canada, from which after all, the banks derive their life, has to go on the market and pay, roughly,

5 per Cent for money, and get it outside of the country. Surely the credit of the Dominion of Canada is just as good as that of any bank in this, country. If the credit of the Dominion is worthless, then the credit of the banks is worthless. If we could by some arrangement obtain from our own people in small sums this $164,000,000 at 3 per cent, or even 31 per cent, it would be good business. We would save from a million and a half to two millions yearly and we could use that money in the building of elevators or branch lines or for other useful purposes prior to a general election. The possibilities are tremendous. I would suggest to the minister that before we begin negotiations with these astute gentlemen who have already telephoned him from New York and other outstanding points, we should see whether we can interest our own people in taking up this loan.

Topic:   PROPOSED LOAN OF $164,000,000
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IND

William Charles Good

Independent Progressive

Mr. GOOD:

I think the hon. member is absolutely right in his point of view.

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LIB
IND

William Charles Good

Independent Progressive

Mr. GOOD:

How very unkind! There is no good reason why such a policy cannot be followed. During the sittings of the Banking and Commerce committee last year some attention was given to the postal savings banks and it was apparent to the members of the committee, for reasons I need not suggest, that the postal savings banks had in recent years been considerably crippled. In Ontario about four years ago provincial savings banks or "branches" were established in many centres, as had previously been done in Manitoba, and a large amount

4 p.m. of money has been collected from the people of the province and made available for advances on agricultural loans or any other provincial purpose whatsoever. Four per cent was paid on these deposits, and it is only recently that the

rate has been cut down to three per cent. What was done then and what is being done now at a lower rate of interest in Ontario, what has been done for a good many years in Manitoba, can be done by the Dominion. There is no reason in the world, other than the selfishness of our chartered banks, why the citizens of Canada cannot contribute of their savings for Dominion purposes. I think the present situation is an outrage. The matter of utilizing the savings of the people through our postal savings banks or by means of some other machinery of a similar character should receive prompt and earnest attention on the part of the government and the Acting Minister of Finance.

Let me emphasize one further point: The minister would be horrified if anyone suggested that he print Dominion notes to the extent of $164,000,000 and meet his maturing obligations in that way. But he will give the note of the Dominion to a bank either here or elsewhere which will then issue its printed pieces of paper, and thus probably inflate the currency to exactly the same extent as he would do by printing Dominion notes.

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LIB

Thomas Vien

Liberal

Mr. VIEN:

Does my hon. friend doubt for one minute what the effect would be if the Minister of Finance did issue Dominion notes for that amount?

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IND

William Charles Good

Independent Progressive

Mr. GOOD:

I seriously doubt the implication of my hon. friends question; but I do admit that without proper regulation the policy is a risky one. What I want to point out now is that the government, rightly I think, hesitates to adopt a policy that they allow the banks to adopt and pay them five per cent interest for. Now this is the situation: My

hon. friend the Acting Minister of Finance will rightly hesitate to throw into circulation $100,000,000 worth of Dominion currency, but he will go to the Bank of Montreal and pay tliat bank $5,000,000 for doing the very thing that he will not do, the very thing that he is ashamed to do. Not only does he allow the bank to do that, but he pays them a nice round figure if they inflate the currency by $100,000,000, as they may well do, and have done in the past. I admit that in fact it may not be quite that extent of inflation, but the Acting Minister of Finance does not know that it is not inflation to the full extent of the $100,000,000. That is my point. Here we are complaining all the time about the possibilities and the dangers of inflation or deflation, and rightly so, because the issue of currency must be regulated, and carefully regulated. But while we thus shrink we are permitting the banks in an unregulated way to commit

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COMMONb

the very same sin that we are ashamed to commit; and not only do we allow them to do it, but we pay them a nice round sum for doing it. I know how we are deluded, how the Minister of Finance and the people generally are deluded, because we think, and usually wrongly think, that this money is money that has been gathered in as we gather in money through our savings branches. It may be so sometimes, but frequently it is not at ail! that. It may be simply the writing of new money, and, as I said before in regard to the crippling of our postal savings branches, I think our present custom, outrageous, of allowing our private institutions, which have practically a monopoly of issuing new currency to do the very thing that we would regard as a sin if we did it ourselves. We had a bill up yesterday in connection with the counterfeiting of money, and my hon. friend from Bow River (Mr. Garland) liaised the question whether it Should not be criminal to depreciate the value of the dollar. It is judged criminal to write purchasing power on a piece of paper, and rightly so, but that is what we allow our banks to do, and we often pay them, five per cent interest for doing it, for just writing purchasing power on pieces of paper! I do not want to delay the committee any further just now, but that is the situation.

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LIB

James Alexander Robb (Minister of Immigration and Colonization)

Liberal

Mr. ROBB:

Hon. gentlemen seem to be under the impression that we have been paying. and propose to pay, five per cent and more for this money. I would direct their attention to the fact that the $98,000,000 maturing is now on a four per cent basis, and $60,800 of the Joan made iast year is on a 3J per cent basis. That does not mean I am not in favour of borrowing money at a lower rate. I propose to be generous with hon. members of this House. If we get through here before the first of July, it will be pay day, and I make an offer now to every hon. member of this House to borrow his indemnity of $4,000 and pay four per cent interest for it. That includes the hon. member for George Etienne Cartier (Mr. Jacobs), who comes from a race of financiers.

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LIB

Samuel William Jacobs

Liberal

Mr. JACOBS:

Mine is already spent. I am like the government in that respect.

(Mr. GARLAND (Bow River): That point raised by -my hon. friend the Acting Ministei of Finance is a most ridiculous one and has nothing to do with the case we are discussing, except that it would perpetuate the evil to which we have been addressing ourselves. The proposition as we see it, very briefly, is this: The Dominion of Canada is mow in the position of wanting to secure some money with

which to pay debts. It is proposed to get that money by pledging the credit of the Dominion. We went over all this last year and pointed out to the minister that what he was getting back in return for our real credit was either a book entry or another promise to pay on the part of some financial house; in other words, another credit slip. All we are getting is a credit Slip and we are paying interest on that credit slip. The real asset is the credit of .the whole of Canada which is pledged to some financial house, and we are going to pay them interest and keep on paying them. It is this system which has helped to bring Canada to its present position, and the effect of which will increase as the years go by. To-day Canada has a debt of about $380 for every man, woman and child. It amounts to twice as much as the total per capita debt of France prior to the war. That fact alone ought to be enough to shock hon. members of this House, especially when we realize that France at that time had the largest national debt in the whole world. To-day Canada, this large country with a small population, has a per capita debt equal to, in fact Slightly .greater than, the .per capita debt of France before the war, and that country at that time had the largest debt in the world. We are making no attempt to reduce our debt, to get out from under the system .that is carrying us .further and further into debt.

I do not wish (o reiterate all the arguments that have been made by hon. members around me year after year. All I wish now is to register again my protest against the continuation of the present system, and the lack of any honest, sincere, earnest attempt by the minister or his department to find some better system.

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PRO

George Gibson Coote

Progressive

Mr. COOTE:

There is just one point I

would like to bring to the attention of the minister, and that is to ask that in cases where loans are being refunded the holders of the maturing bonds should be given an opportunity to exchange their holdings for bonds of the new issue.

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LIB

James Alexander Robb (Minister of Immigration and Colonization)

Liberal

Mr. ROBB:

That will apply if they are

Canadians.

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PRO

George Gibson Coote

Progressive

Mr. COOTE:

In 1923 there was a loan

refunded in Canada, and a circular was sent to the holders of the old bonds notifying them that they would have the privilege of exchanging, but certain cases have been brought to my attention where the holders of the old bonds were not able to secure bonds of the new issue in exchange, although they had handed their bonds into the bank on the 2nd day of October, and the bends did

Proposed Loan

not. mature until November 1st. They have not been able to secure any redress since from the Department of Finance or the banks, and I think the people have been misled. It would seem that when these loans were sold to certain syndicates, the public were not fully protected in that they were not given a proper oppor unity for exchanging for bonds of the new issue. I certainly think it is desirable that the bonds of this country should be spread as widely as possible amongst our population, and I certainly think it is imperative that the holders of these bonds, particularly the small holders, should be given a fair opportunity of exchanging for the new bonds, and when circulars are issued to that effect, the government should see that proper provision is made in the contract with the syndicate for the exchanging of the bonds. I have already had correspondence with the minister in regard to two or three cases, and I hope he will see that in future such cases as these do not occur.

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PRO

Henry Elvins Spencer

Progressive

Mr. SPENCER:

I am very glad to hear

the Acting Minister of Finance say that he will take under due consideration the possibility of giving a higher rate of interest on post office savings deposits.

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LIB

James Alexander Robb (Minister of Immigration and Colonization)

Liberal

Mr. ROBB:

I did not say that. I understood my hon. friend to ask me to enlarge the limit. That is all my hon. friend asked at the time. There was no question of the rate of interest being raised as his remarks came across :he floor to me. He simply said that the limit now was $1,500, and he wanted that limit enlarged.

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PRO
LIB

James Alexander Robb (Minister of Immigration and Colonization)

Liberal

Mr. ROBB:

I did not catch that.

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PRO

Henry Elvins Spencer

Progressive

Mr. SPENCER:

I would like to refer to

the statement the minister made the other day with regard to the government of Canada not guaranteeing deposits in the ordinary chartered banks of this country. Considering the great losses which have been incurred during the last twro years of savings which have been deposited in a certain bank in Canada, it is of great importance for the people, particularly that class of people who deposit their savings-and you might count them in very large numbers-to know that they have some place, such as the government post office savings bank, where their savings can be guaranteed. The government from time to time has preached the advisability of thrift. I do not know of any greater encouragement that the government could give to the people of this country to be thrifty than offering them one

per cent higher rate of interest on their savings in the post office savings bank than the rate the people are receiving at the present time.

I was somewhat surprised the other day when :he minister made the statement most emphatically that the government of this country would not guarantee savings in the ordinary bank.

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LIB

James Alexander Robb (Minister of Immigration and Colonization)

Liberal

Mr. ROBB:

I stated the fact-and my hon. friend has a responsibility in that matter, as he is a member of the Banking and Commerce committee-that under the banking laws of Canada the government are not responsible in such cases.

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PRO

Henry Elvins Spencer

Progressive

Mr. SPENCER:

That makes my case all the better. In 1923 the hon. member for Macleod (Mr. Coote) proposed an amendment to the Bank Act before the Banking and Commerce committee, suggesting that a notice be placed in each bank advising the public that the government. of Canada did not assume any responsibility for the safety of deposits in that bank. At that time the amendment was strongly opposed by the government and (its supporters, and it did not carry. If, as the minister has informed the House and the public in the last few days- which I admit is correct-that the government will not^ guarantee deposits in the banks, why was the amendment not allowed to go through? I make this statement now because the two attitudes seem to me to be opposed. I hope that before the minister comes to this House again desiring to float other loans, whether to pay for public works or to meet indebtedness, he will consider the question of increasing the rate of interest given by the government on post office savings.

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June 9, 1925