April 14, 1926

LAB

James Shaver Woodsworth

Labour

Mr. WOODSWORTH:

I take it, Mr. Speaker, that even although a man should go to sleep for twenty or thirty years, if money is as stable as we have been informed it is, his money would be there when he awoke. That is the point. To-day his money has vanished. If money is as unstable as that, we need to know what group of people is sending money up or down in value. I should like to quote another paragraph for the benefit of my hon. friend from a pamphlet by Professor Irving Fisher entitled "Ethics in the Monetary System." This is along the very lines that he gave us before the Banking and Commerce committee three years ago. Professor Fisher altogether exonerates any individual from responsibility for the vanishing of these dollars, but he points out that the dollars do vanish and that the system is responsible.

The robber dollar does the stealing, the social injustice. The extent of this subtle robbing is prodigious. Professor W. I. King, one of the best statisticians I know, when appearing in favour of a bill in congress on this subject a year or so ago, said that as nearly as he could reckon it, there had been a sort of pocket-picking to the tune of forty billions of dollars in the United States during the last half dozen years. What would we in America do if we realized that fact to-day? Supposing there had been a forty billion dollar robbery, or a (tenth

National Banking System

thereof, a four billion dollar robbery, such a robbery would be on the front page of every newspaper. And yet a forty billion dollar robbery, which you could not personify and localize, and which is due to our unstable monetary system, is something which as such we do not think anything about, because we do not realize it.

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Subtopic:   NATIONAL SYSTEM OF BANKING
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CON

Charles Hazlitt Cahan

Conservative (1867-1942)

Mr. CAHAN:

What is the date of that,

please? Mr. Fisher changes his opinion so frequently that one would like to know the date of that announcement.

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LAB

James Shaver Woodsworth

Labour

Mr. WOODSWORTH:

The pamphlet is

not dated, but Mr. Fisher gave evidence of this character before the Banking and Commerce committee three years ago.

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CON

Charles Hazlitt Cahan

Conservative (1867-1942)

Mr. CAHAN:

No man in America changes his opinion more frequently than does Professor Fisher.

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LAB

James Shaver Woodsworth

Labour

Mr. WOODSWORTH:

I should like for a moment to refer to the question of the gold standard, simply because there are gentlemen in this House and throughout the country who still believe that it is the gold standard which gives something like stability to the value of our money. Let me again quote Mr. McKenna, the chairman of the Midland Bank. I do not know whether he changes his opinions, but he said:

A managed currency has been kept more stable than one based on gold.

But he remarks somewhat cynically:

So long as nine people ouit of ten in every country think the gold standard is the best, it is the best.

I should also like to quote the opinion of Mr. John A. Hobson on the gold standard, as published in The Nation of April 29, 1925:

Stability of the internal level of prices is to be achieved by a "managed money" independent of the vagaries of gold values.

And again:

It is at least significant that neither Britain nor America is regulating her money system on the previously accepted goto basis. Not only is gold no longer used for internal currency in either country but the credit issue and general volume of purchasing .powers are not regulated by relation to quantity of gold.

And again:

For experience and statistical research have made at evident that the old notion that quantity of gold regulated the total volume of money and so -the level of prices, by a reliable automatic operation, was never true, and that the acceptance of the falsehood was responsible for grave errors in banking policy reflected in needless fluctuations of prices and industrial activity'.

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Subtopic:   NATIONAL SYSTEM OF BANKING
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CON

Charles Hazlitt Cahan

Conservative (1867-1942)

Mr. CAHAN:

May I interrupt my hon. friend for a moment?

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LAB

James Shaver Woodsworth

Labour

Mr. WOODSWORTH:

Just a moment.

Again Mr. Hobson says:

There is a new and strong argument that money can and should be managed by national financial

controls, with as much international co-operation as can be got, and that this control will involve, to a [DOT] constantly diminishing extent, the use of gold, either as a store of values or as a standard.

In quoting Mr. Hobson it mi^ht be well to give the following:

A protective policy which undertakes to stop payment, by adjusting the tariff to meet every cheapening of fore.gn goods seeking to enter the American market, removes the natural check upon the efflux of gold which seeks to correct a falling exchange by stimulation of exports.

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CON

Charles Hazlitt Cahan

Conservative (1867-1942)

Mr. CAHAN:

I was going to ask the hon. gentleman whether that statement, which is destructive of the quantitative theory of money, is not equally destructive of the premises with which the hon. gentleman opened his argument.

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LAB

James Shaver Woodsworth

Labour

Mr. WOODSWORTH:

Not at all; this

statement is not destructive of the quantitative theory of money.

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CON

Charles Hazlitt Cahan

Conservative (1867-1942)

Mr. CAHAN:

It says it was not a theory that was ever true.

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LAB

James Shaver Woodsworth

Labour

Mr. WOODSWORTH:

The trouble is that the older economists, in applying the quantitative theory of money, thought only of gold because originally gold was the standard. Since that time a large quantity of new money, that is to say, bank note money, has also come into existence. Not only that, but still later we find a third kind of money, cheque money. According to my understanding, the quantitative theory must be taken in view as applying not merely to gold money but also to bank note money and cheque money.

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CON

Charles Hazlitt Cahan

Conservative (1867-1942)

Mr. CAHAN:

Were not cheques and bank notes in existence when Taussig created his theory, from which the hon. gentleman has produced his premises?

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LAB
CON

Hannes Marino Hannesson

Conservative (1867-1942)

Mr. HANNESSON:

Have they asked for

that?

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LAB

James Shaver Woodsworth

Labour

Mr. WOODSWORTH:

I am suggesting

certain things that might be done. In this connection I might say that even in Great Britain, which is supposed to be very conservative, people's banks are being encouraged. There is, for example, in Birmingham a municipal bank. You can imagine the horror with which our people in this country would view the advocacy of the establishment of a municipal bank, and yet they have it in England.

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CON

George Reginald Geary

Conservative (1867-1942)

Mr. GEARY:

Is there not one in Toronto at the present time? The Penny bank?

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Subtopic:   NATIONAL SYSTEM OF BANKING
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LAB

James Shaver Woodsworth

Labour

Mr. WOODSWORTH:

I do not know

whether you call the Penny bank a municipal bank.

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CON

George Reginald Geary

Conservative (1867-1942)

Mr. GEARY:

It is run by the municipality.

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LAB

James Shaver Woodsworth

Labour

Mr. WOODSWORTH:

I have heard of

the Penny bank, but I am not sure how far that goes; *1 would be glad to hear more about it from the hon. gentleman when he speaks.

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CON

George Reginald Geary

Conservative (1867-1942)

Mr. GEARY:

It is a good start.

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April 14, 1926