February 7, 1934

?

Some hon. MEMBERS:

No.

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LIB

Thomas Reid

Liberal

Mr. REID:

But I would not be so unkind as to say that. I have heard it stated by some that we were overlauding President Roosevelt to the exclusion of our own Prime Minister. However, I am not unmindful that the leader of the Senate, the Right Hon. Arthur Meighen, has seen fit to hand out a meed of praise to President Roosevelt, and so if I follow him for a few moments surely no member on the other side will criticize me, because he was their leader for many years.

The N.R.A. has at least done this: It has put five million men to work, and that is quite an accomplishment. Talking of the N.R.A. policy in the United States, someone said to me the other day, "I know what Canada's policy should be designated. It should be the N.F.C.-nothing for Canada."

Before dealing further with the resolution itself I should like to refer to a few of the remarks of the Prime Minister in the speech he made at Vancouver. His remarks towards *the close of the speech I think were very ill-timed when he referred to the unemployed as "derelicts." In my opinion it was an insult to the unemployed to refer to them in, that way and to ask: Where was the pioneer spirit of our fathers? Our pioneers, he stated, did not ask governments to wet-nurse them. There axe thousands, Mr. Speaker, in this land who have taken very sorely to heart their being called derelicts, and hon. members who have interrupted, if they found them-

74726-23J

selves destitute and unemployed like many of our good citizens are, would feel just as keenly as they do about it.

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CON

Richard Bedford Bennett (Prime Minister; President of the Privy Council; Secretary of State for External Affairs)

Conservative (1867-1942)

Mr. BENNETT:

The hon. gentleman

knows perfectly well that he is not stating the facts. He knows it perfectly well.

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LIB

Thomas Reid

Liberal

Mr. REID:

Mr. Speaker, it was accepted by many of that audience who heard it as referring to the destitute of our country.

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CON

Richard Bedford Bennett (Prime Minister; President of the Privy Council; Secretary of State for External Affairs)

Conservative (1867-1942)

Mr. BENNETT:

It was not.

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LIB

Thomas Reid

Liberal

Mr. REID:

It was so interpreted not only by myself but by hundreds Who were there.

As to public works that might be carried out, there are many undertakings upon which the unemployed could be engaged at the present moment, and I shall take a few moments to mention some of them.

In British Columbia we have an undeveloped province with the settlers Lacking roads which if constructed would be an asset. They will have to be constructed some time anyway, and to go ahead with that work mow would not only be giving useful work to the unemployed but would be doing a national ser-vince as well. There are man}' public buildings which could be constructed. There is also the question of forestry in British Columbia. I should like to suggest to the government that our large foutmt-over areas be reforested. I am almost afraid ito report what is being done across the line in that direction for fear of being accused of having strong leanings 'that way, but a great work in reforestation is being done in the United States, where thousands of youths have been taken out into the wide open spaces under proper [DOT] supervision and are planting out trees which will be for the benefit of the nation in the days to come. That is a very commendable work which we might also do in this country. It would be a work of national importance and the benefits would certainly be reaped in after years.

I know that I may be asked, where is all the money to come from to provide works on such a large scale? I realize at the outset the danger of turning on the printing press. Past history has shown that the indiscriminate use of the printing press for the turning out of money has been disastrous to many nations.

I am not advocating that we 'turn on the printing presses, but I am going to suggest that we could issue money even if we keep to the Prime Minister's principle of sound money with a backing of gold and so issue many millions more of dominion notes. I am going to place a few figures on Hansard

Unemployment Relief-Mr. Reid

in support of that suggestion, and I challenge any lion, member to call it inflation when I am through.

The present gold coverage in possession of the government is roughly $70,000,000. I have the exact figures here, but I will use only round figures. The present gold coverage amounts to 38 per cent, and dominion notes issued amount to $184,427,000. That has been represented by the Prime Minister and by other speakers as sound money, with a backing of gold. Whether we like it or not, the fact of the matter is that our gold is worth more than that, as is evidenced by the export of gold during this past year from the gold mines of Canada, which drew some $23,000,000 extra owing to the fact that the dollar had been devaluated in the United States, or the price of gold raised to about $34 an ounce. Our gold to-day has a world market value, and Canada could obtain for it at least $34 an ounce; that is the gold which we keep in the vaults as coverage. However, if we took that gold at $34 an ounce, the present gold price, it would have a value of $120,000,000, and with a forty per *cent coverage it would mean that we could issue up to $300,000,000 dominion notes, which would mean that we could then issue approximately a further $115,000,000 of dominion notes. No one can say that that would be inflation if they .hold to the idea that there should be a forty per cent coverage in gold. Again, if the present gold coverage were reduced to twenty-five per cent, as advocated by the banking commission, we could issue at least $100,000,000, even though we held to the idea that our gold was not worth more [DOT] than previously.

I am rather surprised that the Prime Minister has not taken steps to seize all the gold in this country. Evidently Great Britain is trying to capture as much gold as she can, and the United States is adopting the same course. I notice in to-day's press that aeroplanes have been carrying gold from France to Great Britain. If we are going to follow the financial program of a country like Great Britain, it is passing strange to me that the Prime Minister has not placed a ban on gold and has not gone further and appropriated all gold in the country. I suggest to him that he take note of the $23,000,000 extra which the gold mines received this year. I think that amount should at least be taxed and a great deal of that profit accrue to the government and not to the private mine owners.

In order to carry out this idea a little further, I should like to place a few more figures upon Hansard. If the gold that is

lying in the banks and the present gold coverage of some $5,000,000 on deposit in the treasury by the banks were taken over by the Dominion government, it would mean that we would have a total coverage of over $100,000,000 in gold at the old figure. If our gold coverage were put at twenty-five per cent instead of forty per cent as at present, it would mean that we could issue up to $400,000,000 of dominion notes against that gold coverage. With a coverage of twenty-five per cent we would still have what is termed by some, sound money. As I have stated previously, gold is worth from $34 to $35 per ounce at the present time.

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CON

Richard Bedford Bennett (Prime Minister; President of the Privy Council; Secretary of State for External Affairs)

Conservative (1867-1942)

Mr. BENNETT:

How much did the hon.

gentleman say?

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LIB

Thomas Reid

Liberal

Mr. REID:

Between $34 and $35 per ounce.

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CON

Richard Bedford Bennett (Prime Minister; President of the Privy Council; Secretary of State for External Affairs)

Conservative (1867-1942)

Mr. BENNETT:

I wanted to be sure of

what was said.

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LIB

Thomas Reid

Liberal

Mr. REID:

If we valued our $100,000,000

of gold at $34 to $35 per ounce we could then issue up to $400,000,000 of notes. This Mr. Speaker would be along the lines of the argument used by the Prime Minister that we must have a coverage of gold. No one could call this uncontrolled inflation. It would not be turning on the printing presses as we would still have the gold to act as a bulwark or brake against the issuing of unlimited dominion notes.

It may.be of interest to the house to know that the banks retain a considerable portion of the gold while still having the privilege of coming to the Dominion government and depositing provincial and dominion bonds for dominion notes. According to the returns made by the chartered banks for December there is some $38,000,000 in gold coin, etc., and over $5,000,000 in gold coin has been deposited as security. This represents a total of a little over $41,000,000 in gold. We could keep our gold coverage, without being accused of inflation and could still issue many millions of dominion notes. I believe that this will be done before long; in fact it should have been done before this.

The interest alone upon the total public debt of Canada is well over $400,000,000 per year. How long are the people of this country to keep going to the money changers for that with which to pay this debt? In putting on a program of public works, the first thing the government should consider is how to make it possible for us to pay our debts. At present we have a debt burden of some $9,000,000,000 with interest charges of four and a half, five and a half and six per cent. According to this

Unemployment Relief-Mr. Geary

report, the government has advanced since 1930 some $137,000,000 for relief. The interest on this amount for three years would be approximately $20,000,000 if computed at the rate of five per cent. If the scheme I am putting forward were adopted we would easily save the total amount of money which the Dominion government has put out in connection with relief.

I bring these things forward in the best spirit and in the hope that notice of them will be taken by the government. I realize that the proposal does not offer a solution for our unemployment problems, but it is at least a palliative and would help very considerably during these times.

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CON

George Reginald Geary

Conservative (1867-1942)

Mr. G. R. GEARY (South Toronto):

Mr. Speaker, if I understood the last speaker (Mr. Reid) aright, he intimated that one hon. member who sits to your right, and that there may be more, had entertained hopes of the failure of the recovery plans now being promulgated in the United States. I have not heard of any such hope being expressed by any person, and I cannot for the life of me see why anyone should express such a hope. The two countries are so closely interrelated that the failure of a tremendous scheme such as that of the president of the United States could not fail to have consequences on this side of the line. If it succeeds, we are certain to receive some benefit. Why then should any man in his senses pray for its failure?

There is a difference between the two countries. The other night I heard the Prime Minister (Mr. Bennett) say that even if this spending program of the United States, involving some $15,000,000,000, were put into effect and that amount added to the debt of the United States, that debt still would be less per capita of the population of the United States than is the present debt of .the Dominion of Canada per capita of our population. For some time the United States has been a creditor country while Canada is and has been a debtor country. In forming any plan we must keep these differences in mind. To consider that we should follow slavishly an example set by the United States, is absurd when we consider the differences between the positions occupied by the two countries. If we can get something out of what they are doing to enable us to adopt a course which is good for our own country, we would be extremely unwise not to do so-

I am sure the hon. member for Macleod (Mr. Coote) will credit every hon. member in this house with the same sympathy for the

plight of the unemployed as that he has expressed. I regret that the hon. member for New Westminster (Mr. Reid) does not seem inclined to credit the Prime Minister with entertaining the same sentiments. His remark in that connection was entirely unjustifiable, and I should resent it very much if it were made to myself or of myself; and I am sure that the Prime Minister has every right to feel the same way, if indeed he has paid any attention to it at all. If you turn to the speech from the throne you will find towards the close of that document the following words:

My government propose further to promote employment by expenditures on essential public works ancl undertakings throughout the dominion.

So that we have at the inauguration of this session a declaration by the government that it proposes to do something along the lino suggested by the hon. member for Macleod (Mr. Coote). I am not so sure myself that expenditures in that way will have the good effect which many people hope for from it. To me it savours rather of a stimulant, in medical parlance a shot in the arm, the effect of which is very likely to wear off, leaving the patient worse than he felt at the beginning. If it is the view of the government that, to the extent indicated, it will be a good thing towards inaugurating rapidity of circulation or augmenting the purchasing power of the people, I am perfectly prepared to subscribe to their better judgment in that regard. But when my hon. friend speaks of large scale undertakings, I assume that he means something which is not necessarily selfsustaining or necessarily, in the words of the speech from the throne, essential public works and undertakings, but something that is designed to go on and on and on until I suppose there will be no harm done by its withdrawal because conditions will then have improved to such an extent that it is not required. That however contemplates an outlook on the future expenditure of money which I cannot reconcile with good business at this moment. My hon. friend from Macleod takes that view I am sure because he does not propose that any such scheme should be financed through the ordinary method of issuing bonds and paying interest upon them. Rather, he reverts to that well known theory of his, that we could issue a great deal of money in this countiy without coverage, as I have heard him declare on some occasions, or at all events in a manner quite dissimilar from that we. are pursuing at the present time. There again I must leave the hon.

358 COMMONS

Unemployment Relief*-Mr. Geary

gentleman; the proposal suggests too much what my hon. friend from New Westminster spoke of-turning on the printing press. If we look at the speech from the throne, on the preceding page we will see that His Excellency speaking of the world monetary and economic conference, said:

The conference adjourned without dealing with many important subjects, but arrived at conclusions of especial interest and concern to Canada in respect to central banks, the gold standard, and the percentage of metallic coverage essential to the successful functioning of gold as a medium of international exchange.

Having that pronouncement in mind, we may rest assured that none of the possibilities contemplated by my hon. friend from New Westminster will be overlooked. The government and those entrusted with handling the financial affairs of the country will have all that in mind, and it may be that it will result in a further issue of money, either by reason of the increased value of gold or by reason of the decrease from 40 to 25 per cent in coverage. Whatever effect it may have on the issue of money, I can assure my hon. friend, both as t,o public works and as to the consideration of the advisability or the necessity, or however you like to put it, of an issue of further money with the gold we have now in hand, we can pass from these subjects, feeling that they are under consideration by the government.

My hon. friend from Macleod again invoked some of the names which are becoming almost household words in this chamber. Again I heard the names of Keynes and Clay and Fisher, and I don't know how many more. Someone acquainted with the doings of these people in England told me that there is a body of them numbering five who meet in Oxford quite often, and that from every conference they hold there emerge six diametrically opposed opinions, of which as a rule Keynes holds two. I do not for a moment suggest, however, that we must not listen to these men; I do not suggest that we must not listen to those who have opposing views. I do feel, despite something the Minister of Finance said the other day, that this matter of money, the monetary system, has been so thoroughly discussed by all and sundry in this country in the last two or three years that we must by this time have developed some expert knowledge of the subject, at any rate enough to enable us to say in this house that we are in a position to discuss the matter with some assurance, at all events, that we know what we are talking about, and that if we do not know what we are talking about we at least know what we want to say. These

{Mr. Geary.}

gentlemen are so varied in their views that there come to my mind the words of Dean Swift-I forget just where he said this: "If the fleas had been unanimous they would have pulled me from my bed." It may be therefore that if we ever could secure from these people some sort of unanimity-and I do not speak of them disparagingly as fleas-they might pull us out of our difficulties.

If you engage in the exploration of an entirely unknown field such as that suggested by the hon. member for Macleod, I think we should pause to think very seriously whether this should be the country to pioneer in that regard. So far as I know, and I am subject to correction, there has been no issue of what is called stamped scrip by any country. My hon. friend said that he knew of none, and I ventured the remark that I could-cite many instances of the issue, not of stamped scrip but of scrip. I remember in the closing days of the war every little municipality in France had its own scrip, and some people who were fond of albums bought enough to cover the pages of a first class album-scrip issued by municipalities, all of which went wrung. The method has not proved itself to have been efficient either as a means of accelerating currency or as taking the place of the ordinary currency.

Then it is suggested that we should simply issue money without any interest being paid upon it. That is a very attractive proposition and I do not see why, if it is sound, it should not be extended to our whole debt. Germany did it by the simple process of running her mark down to nothing. By repeated applications of the printing press she discharged the bonded debt of her industry at absolutely no cost at all. But I take it we have not got to that stage in this country; as I say, it savours too much of the printing press. I do not boggle at the word inflation. We have, goodness knows, inflation to a large extent now. It is recognized that the United States dollar has been depreciated; there has been inflation over there to 40 or 60 per cent of the original dollar. Now, we carry along with the United States. If you look at the exchange lists to-day you will find that our dollar is very close to the dollar of the United States, and if that dollar is depreciated our dollar is depreciated to the same extent. My hon. friends opposite were very keen last year on tying the dollar to the par value of sterling. At that time this looked like quite a good thing, because for a pound sterling one could get in this country only some S3 or $4. It worked out in this way, that if you sold so much wheat over there for so many pounds

Unemployment. Relief-Mr. Geary

sterling and. we raised our currency to parity with the pound, you would get so many more dollars over here for that number of pounds. But if we had done that and stuck to $4.86f as was proposed, we would be losing at the present moment a considerable balance in exchange. This only goes to show-and I do not use it as an argument in this matter particularly-that when you try to tie up to anything that has not a definite and sound yardstick to measure it, you have to follow it up and down through its various vagaries until at no time can you tell where you will be if you want to sell a bill of goods to be paid for next month.

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UFA

George Gibson Coote

United Farmers of Alberta

Mr. COOTE:

Will the hon. gentleman

mention anyone who suggested tying our dollar to the pound?

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CON

George Reginald Geary

Conservative (1867-1942)

Mr. GEARY:

I thought my hon. friend who has just spoken, did. I understood that was his idea last session.

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UFA

George Gibson Coote

United Farmers of Alberta

Mr. COOTE:

I never advocated such a

proposition; I advocated that our dollar should be worth at least as much as the pound. I advocated that our currency should, possibly, be at least on a parity with Australian currency.

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CON

Richard Bedford Bennett (Prime Minister; President of the Privy Council; Secretary of State for External Affairs)

Conservative (1867-1942)

Mr. BENNETT:

On one of our agreements last year the hon. member moved an amendment to tie the dollar to the pound.

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CON

George Reginald Geary

Conservative (1867-1942)

Mr. GEARY:

I cannot say just from whom

the idea emanated. All I can do in that regard, because I do not have the record before me, is to stand in the judgment of Hansard; that will settle all questions between us. If I am doing my hon. friend an injustice in saying that he suggested tying our dollar to the pound, of course I accept his word.

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UFA

George Gibson Coote

United Farmers of Alberta

Mr. COOTE:

All I wanted to do was to make it clear that I did not advocate tying our dollar to the pound. I may have advocated that our currency should be at least as high as the pound. That is a distinct difference.

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CON

George Reginald Geary

Conservative (1867-1942)

Mr. GEARY:

I think we are rather quarrelling over words. That was the essence of the proposal made, perhaps not by my hon. friend, but I am quite sure, supported by him if he did not make it. Of course I shall accept his correction at any time he chooses to make one.

It is suggested by my hon. friend that it is quite legitimate for the government to issue money for expenditure on public works, taking those public works as a sort of security. I have never been able to see that argument. Public works are no security so far as I can understand; they are not realizable; they are not saleable; they have no market value; they have no value at all unless to the person who puts them up, except in very rare cases where perhaps they might be available for sale. Where one talks of issuing money against, as my hon. friend says, the security of a public building, one does nothing of the sold; one simply issues the money on the taxpaying ability of the people of Canada.

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LIB

William Daum Euler

Liberal

Mr. EULER:

Is that not pretty nearly the case as regards all our currency? As a matter of fact, there is not enough coverage.

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CON

George Reginald Geary

Conservative (1867-1942)

Mr. GEARY:

While we are not to-day redeeming in gold, the security as recognized by the world is there. I >am not wedded particularly to coverage. Whait I am wedded to is the view that we should not by legislation change the value of our currency so as to put it on a basis that is manifestly inferior to what it is at the present time, because when one does that, he is deteriorating our currency and the result would be bad. I have said in the house before-and it is no new thing-you may inflate by the printing press or otherwise, as you please, and if there were an iron ring around Canada, your exchange might be anything; it might be *wampum, one dollar bills, ten dollar bills, sharks' teeth, anything you can name as long as we do not go outside our own country. I do not think, however, we claim to be economically selfsufficient and I do not think we expect to be. We must depend upon our international trade, our international relations, and it is beyond my ken that in any country whidh trades internationally there can be any system of currency which is not capable of being measured against that of another country by some sort of yardstick. The United States has now gone back, not to the old pre-war gold standard, but to a gold standard; it has gone back to a measuring stick which is gold, and we must all look forward to going back to something of the same sort.

My objection to my hon. friend's motion is not as to the public works program. The government has .apparently a program of public works under consideration, but the hon. gentleman has spoiled his motion, it seems to me, by a system of financing it which is not sound. By his system a great deal of money will 'be issued by unsound means; the farmers may get so many more dollars for their ton or bushel of wheat, but with those dollars they cannot buy any more than they could before the dollar was inflated.

I do not intend to attempt to go into this question exhaustively. I cannot agree with

360 COMMONS

Unemployment Relief-Mr. Stewart (Edmonton)

the method suggested by my hon. friend for raising the money, and the question of the expenditures themselves and how they should be made is, according to the speech from the throne, a matter which is now under consideration by the government.

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February 7, 1934