June 7, 1934

LIB

Wilfred Hanbury

Liberal

Mr. HANBURY:

Then they could pay dividends on that.

Topic:   BANK ACT AMENDMENT
Subtopic:   CONDITIONS GOVERNING TEN YEAR EXTENSION OF BANK CHARTERS
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UFA

George Gibson Coote

United Farmers of Alberta

Mr. COOTE:

The purpose of this amendment is to discourage the banks from trying to make too large profits for their shareholders. It would be a good thing for the banks themselves because every bank is interested in the market price of its stock. If it is known to the public that they are not to pay more than this rate of dividend the public will not run the stock up to too high a price on the stock market, and there will be less fluctuation in the price of that stock on the market. I think in the interests of the public and of the banks themselves the committee would be well advised to add this amendment to section 57.

Topic:   BANK ACT AMENDMENT
Subtopic:   CONDITIONS GOVERNING TEN YEAR EXTENSION OF BANK CHARTERS
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LIB

Wilfred Hanbury

Liberal

Mr. HANBURY:

I regret that I cannot support the amendment of the hon. member for Maoleod (Mr. Coote). I assume that his theory is that he is going to assist the borrowers of money, in western Canada particularly, and I suggest to him that if he is going to limit the dividends which the banks are paying, all of the money in the bank, or most of it, will remain in eastern Canada where the banks will have greater security, and so the producers in western Canada whose security is perhaps not as high as the security in eastern Canada will not be able to borrow money from the banks.

The hon. gentleman refers to the market value of bank stocks. I fail to see where the market value of bank stocks has anything to do with the general business of banking. One is a stock exchange proposition, and the other is strictly a banking business. I suggest that in the interests of producers in western Canada who find it necessary from time to time to come to the bank and pay perhaps a higher rate of interest than the hon. member and I would like to see them have to pay, but which is necessary under the circumstances if they are to borrow money at all, we must not restrict the banks but must enable them to make that extra money so that they will serve that portion of the community in western Canada as well as other parts of Canada where the security is perhaps not as great as the banks might, receive if they were lending their money at a lower rate of interest, on which they would pay perhaps the lower rate of dividend that my hon. friend suggests. Therefore I cannot support the amendment moved by the hon. member for Macleod.

Topic:   BANK ACT AMENDMENT
Subtopic:   CONDITIONS GOVERNING TEN YEAR EXTENSION OF BANK CHARTERS
Permalink
UFA

George Gibson Coote

United Farmers of Alberta

Mr. COOTE:

I do not wish to delay the committee, but in reply to my hon. friend from Vancouver-Burrard (Mr. Hanbury) I would say that some people are foolish enough

Bank Act

to judge the soundness of a bank by the market price of its shares, and for that reason the management of a bank as a rule is a little anxious about the market value of its shares. There is no question about that. When the market price of its shares is falling I am sure the management of a bank is concerned, because the public, not knowing any better I suppose, very often take that as a sign of weakness in that bank. That is not the fact, but if the public are of that opinion it is highly desirable that the market price of bank shares should not be fluctuating outside of very reasonable limits.

Amendment (Mr. Coote) negatived on division.

Topic:   BANK ACT AMENDMENT
Subtopic:   CONDITIONS GOVERNING TEN YEAR EXTENSION OF BANK CHARTERS
Permalink

Section agreed to. On section 59-Cash reserves in dominion notes.


CON

Edgar Nelson Rhodes (Minister of Finance and Receiver General)

Conservative (1867-1942)

Mr. RHODES:

I have an amendment to submit to this section in consequence of an amendment which was made to the Bank of Canada bill. It is as follows:

That the first clause of subsection 4 of section 59 of Bill No. 18 be struck out and the following substituted therefor:-

(4) The next three preceding subsections of this sectiou shall be repealed on and from the date on which the Bank of Canada is authorized to commence business and on and after that date the bank shall maintain a reserve which shall, subject to the provisions of the Bank of Canada Act, be not less than five per centum of its deposit liabilities within Canada and which shall consist of a deposit with the Bank of Canada, and of notes of the Bank of Canada held by the bank;

Topic:   BANK ACT AMENDMENT
Subtopic:   CONDITIONS GOVERNING TEN YEAR EXTENSION OF BANK CHARTERS
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CON

Robert Charles Matthews (Minister of National Revenue)

Conservative (1867-1942)

Mr. MATTHEWS:

I move accordingly, Mr. Chairman.

Topic:   BANK ACT AMENDMENT
Subtopic:   CONDITIONS GOVERNING TEN YEAR EXTENSION OF BANK CHARTERS
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LIB

Ian Alistair Mackenzie

Liberal

Mr. MACKENZIE (Vancouver):

I am entirely opposed to this amendment. In the very dying hours of the committee on banking and commerce, without any previous notification to the members of the committee, an amendment was introduced to the Bank of Canada bill in regard to the five per cent deposit of the chartered banks with the Bank of Canada. The result of that amendment was a tremendous and almost immeasurable concession to the chartered member banks of Canada, and I object to this amendment passing without its having appeared in the votes and proceedings and the committee having been given full and ample opportunity of studying its significance. My own opinion is this. The first conception of the Bank of Canada bill of a five per cent deposit from the chartered banks has been absolutely destroyed by an eleventh hour amendment without any previous notice to the committee, and without the committee having seen that

amendment in print. I know the Minister of Finance is absolutely sincere but I do not like to support the passing of a conjoint amendment to this Bank Act dealing with the same deposit without having ample opportunity of seeing the amendment in print and studying its possible implications.

Topic:   BANK ACT AMENDMENT
Subtopic:   CONDITIONS GOVERNING TEN YEAR EXTENSION OF BANK CHARTERS
Permalink
CON

Edgar Nelson Rhodes (Minister of Finance and Receiver General)

Conservative (1867-1942)

Mr. RHODES:

Without wishing to enter

into an argument as to the merits of the position taken by the hon. member for Vancouver Centre (Mr. Mackenzie) may I point out that if his argument has merit-I do not intend to attempt to deal with the merit- it arises in connection with the Bank of Canada bill. It is necessary that this section must be in conformity with the provisions of that bill. Shall we put it in this way? If, when the Bank of Canada bill is dealt with, in the judgment of the house it is done so in a manner which is inconsistent with this amendment, we will have this bill amended either here or in the Senate if necessary.

Topic:   BANK ACT AMENDMENT
Subtopic:   CONDITIONS GOVERNING TEN YEAR EXTENSION OF BANK CHARTERS
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LIB

Ian Alistair Mackenzie

Liberal

Mr. MACKENZIE (Vancouver):

I know the minister will give us ample opportunity, but it is quite possible that this bill might be past its third reading before Bill 19 is brought down for consideration. To my mind the change which was made with regard to the five per cent deposit is the most vital change which could be made in either bill number 18 or bill number 19. The chairman knows that in the committee on banking and commerce I suggested, and I suggest now, that the amendment would change very radically and comprehensively the features of both bills. I am not criticizing the fact that the minister failed to introduce this amendment, because this bill had already left the committee before the amendment was made to bill 19 which makes the present amendment necessary. I quite realize that, but I think I am within my rights in asking that this particular amendment should stand. We can deal very quickly with the other sections of this bill, but to my mind this is a very important and far-reaching amendment. It is a tremendous eleventh hour concession thrown in without any consideration whatsoever by the banking and commerce committee. I do not think the banking and commerce committee had a proper opportunity of studying the implications of this last minute change. I am not criticizing you, Mr. Chairman, the committee or myself. We had two and one-half months of hard labour to get these bills before this house and committee for consideration. Personally, I should like to give more study to the implications and consequences of the changed structures of both bills

Bank Act

due to the eleventh hour amendment which takes away the five per cent deposit which the chartered banks of Canada were compelled or supposed to leave with the Bank of Canada when the legislation was submitted to this house and to the committee on banking and commerce.

Topic:   BANK ACT AMENDMENT
Subtopic:   CONDITIONS GOVERNING TEN YEAR EXTENSION OF BANK CHARTERS
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LIB

James Layton Ralston

Liberal

Mr. RALSTON:

Subsection 4 also deals

with the reserves against external liabilities and as I understand the amendment which the minister has just read, it leaves out that provision. It is a provision which should be in this bill, because it is possible that these reserves will not be with the Bank of Canada. The latter part of this subsection reads as follows: ,

-and the bank shall also maintain with the Bank of Canada or elsewhere adequate reserves against liabilities elsewhere than in Canada, and furnish such information as may be required by the minister from time to time to satisfy him that such reserves against external liabilities are so maintained.

As I understand the amendment of the minister, no reference is made to reserves against external liability.

Topic:   BANK ACT AMENDMENT
Subtopic:   CONDITIONS GOVERNING TEN YEAR EXTENSION OF BANK CHARTERS
Permalink
CON

Edgar Nelson Rhodes (Minister of Finance and Receiver General)

Conservative (1867-1942)

Mr. RHODES:

Perhaps the fault is mine in not having read the amendment more slowly. My amendment referred only to the first clause of subsection 4. Perhaps it is not properly worded. Perhaps the amendment and the section should stand. I would point out that it must be amended in conformity with the corresponding section in the Bank of Canada bill, and if, when we come to that bill, it is found that that section is altered out of conformity with this amendment, I will undertake to see that a corresponding amendment is made in this bill.

Amendment stands.

Section stands.

Section 60 agreed to.

On section 75-Business and powers of bank.

Topic:   BANK ACT AMENDMENT
Subtopic:   CONDITIONS GOVERNING TEN YEAR EXTENSION OF BANK CHARTERS
Permalink
CON

Edgar Nelson Rhodes (Minister of Finance and Receiver General)

Conservative (1867-1942)

Mr. RHODES:

When we were last in committee I suggested an amendment to paragraph (g) of subsection 2, which will be found on page 3582 of Hansard. This amendment is designed to permit a bank's name to appear on prospectuses or advertisements in respect of certain types of securities which are peculiar to the province of Quebec. The word "related" in line three should be deleted, the words "corporation or" should be added after the word "school" and the word "board" should be deleted. The amendment would then read:

That paragraph (g) of subsection 2 of section 75 be amended by inserting the words, "or school corporation or parish trustees" 74726-240

after the word "municipality" in line six of the said paragraph, and by inserting the words "or unless provision is made for the payment thereof and the interest thereon by a province pursuant to its statutes" at the end of the paragraph.

Topic:   BANK ACT AMENDMENT
Subtopic:   CONDITIONS GOVERNING TEN YEAR EXTENSION OF BANK CHARTERS
Permalink
CON

Robert Charles Matthews (Minister of National Revenue)

Conservative (1867-1942)

Mr. MATTHEWS:

I move accordingly.

Topic:   BANK ACT AMENDMENT
Subtopic:   CONDITIONS GOVERNING TEN YEAR EXTENSION OF BANK CHARTERS
Permalink

Amendment agreed to. Section as amended agreed to. On section 88-Loans to certain wholesale dealers.


LIB

Joseph Philippe Baby Casgrain

Liberal

Mr. CASGRAIN:

I think it is my duty

to move again the amendment I proposed in the committee for the purpose of protecting the unpaid vendor. I move:

That subsection 7 of section 88 be amended by adding after the word "months" in the seventeenth line thereof, the following words, "and any claim by an unpaid vendor of or in respect to such products, wares, goods and merchandise to the amounts remaining unpaid" and by adding after the word "remuneration" in the twentieth line thereof the words "and such claim of an unpaid vendor."

Topic:   BANK ACT AMENDMENT
Subtopic:   CONDITIONS GOVERNING TEN YEAR EXTENSION OF BANK CHARTERS
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CON

Edgar Nelson Rhodes (Minister of Finance and Receiver General)

Conservative (1867-1942)

Mr. RHODES:

I am sure my hon. friend will not consider me as lacking in courtesy if I do not go over the ground we covered when the amendment was considered in committee. He will recall that the principal argument used against it there was that it had the effect of nullifying the intent and purpose of the whole section, and it was the judgment of the committee that for that reason among others it should not be accepted. For the same reasons I would ask this committee to reject it.

Topic:   BANK ACT AMENDMENT
Subtopic:   CONDITIONS GOVERNING TEN YEAR EXTENSION OF BANK CHARTERS
Permalink
LIB

Joseph Philippe Baby Casgrain

Liberal

Mr. CASGRAIN:

Those were the reasons

given by the banking institutions this year before the committee, and the same reasons were advanced in 1923. I know, as a matter of fact, that a good many members of the committee at that time wanted to be present when the amendment was being brought forward before the committee. Apparently, at that time, there was only a slight attendance in the committee, but the matter was considered at some length; it took two hours to discuss it. In my opinion it is worthy of consideration because there are many cases where apparently people who want to borrow money from the bank, under section 88, have to become bankrupt themselves and assign everything they have before they can get a penny, with the result that the unpaid vendor goes away without a chance of being paid. If it is a case of insolvency the bank takes it all. We know of instances where the claims of widows and orphans have been left unpaid because, the trustees stated, there was hardly any money to meet the bankruptcy proceedings, and the bank, under sec-

Unemployment Relief

tion 8S, came and took all the rest. The banks have always had advantages under the act and we do not want to curtail their privileges. But they should be very careful to find out, when they receive a document signed by certain persons who want to borrow and offer certain security, that the goods upon which they give guarantees are all paid for and are their property. It is up to the bank to find out that this is so. The amendment should be considered further, because there are other members who wish to speak on it.

Topic:   BANK ACT AMENDMENT
Subtopic:   CONDITIONS GOVERNING TEN YEAR EXTENSION OF BANK CHARTERS
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CON

Edgar Nelson Rhodes (Minister of Finance and Receiver General)

Conservative (1867-1942)

Mr. RHODES:

It is obvious that we cannot make further progress to-night and I therefore move that the committee rise, report progress and ask leave to sit again.

Sections stands.

Progress reported.

Topic:   BANK ACT AMENDMENT
Subtopic:   CONDITIONS GOVERNING TEN YEAR EXTENSION OF BANK CHARTERS
Permalink

RAILWAYS AND SHIPPING

June 7, 1934