will be in the custody of the central bank and the private institutions will not reap the benefit of the unearned increment. Perhaps theoretically the ownership of the gold will be in the new bank, but the unearned increment is the thing that bothered the chartered banks, who wanted to be paid at the rate of $35 per ounce. I wonder what government, or what party, would dare pay the chartered banks of this country that unearned increment on a commodity in which they were not dealers.
think the hon. member for Sherbrooke had anything else in the 'back of his mind when he used the term "confiscation." If he did not mean that there was no point in bringing up the matter at all. Either he meant the confiscation of a commodity on which there was a large premium or his argument meant nothing at all. I suggest to the committee and to the country that this matter was given the very fullest and frankest consideration by the banking committee over a long period of time, and that this provision should have the support of the people of Canada.
question, Mr. Chairman, I should like to say a few words on this subject which has been discussed a good deal in this house, in connection with the bill now before us and at other times. I do not think I can add to the discussion anything that has not been brought forward by someone else or mentioned on previous occasions by myself, but I do desire to congratulate the hon. member for Vancouver Centre (Mr. Mackenzie) upon having offered this amendment, and I am very glad to note the enthusiasm of those who support him. As one who has always believed in
Bank of Canada
the public ownership of financial institutions I am very glad to welcome these gentlemen to the ranks of public ownership.
I do not care, of course, whether the job is done by the present government or by some other government; I want to see it done, and I am ready to vote for the men who are going to do it. Let me point out to my hon. friends that there are no new powers in this bill which have not been exercised by the private banks of Canada ever since their organization. Certainly up to the time of the Finance Act they had entire and abso-' lute control of the financial institutions, just as it is proposed now to give control to the central bank. And while of course I am going to vote for the amendment, because I believe in the principle involved therein, and while I am going to vote for every amendment which makes towards that principle, nevertheless I wish to take this opportunity to say that the central bank, as a private institution, as pointed out by the hon. member for Vancouver Centre, is a very excellent idea. There are some fine advances made in the measure now before us, and even if I cannot have all the amendments I should like, I certainly will vote for the bill when it comes up for third reading.
For a moment or two let me remark upon the arguments advanced by the Prime Minister. He set forth three arguments, the first being that the experience of the world would lead us to adopt the present form of private ownership of banks. In that connection may I observe that the experience of the world has been very meagre, in the matter of public ownership of banks, and secondly that all the experience of private ownership of banks has not been attractive. The methods adopted in financing, in other countries of the world, and especially during the period of and since the great war, as I say has not been attractive. Indeed, the mismanagement of the financial institutions by private corporations in various countries of the world has led to the necessity for the legislation now before the committee. I do not think we can draw our inspiration even from the historic old Bank of England in handling the financial affairs of the British nation, especially during the past decade or so.
Then, the second point made by the Prime Minister was that of having freedom from political control. I do not believe there is anything under heaven free from political control. I do not believe we can have anything free from political control. While I agree with what the Prime Minister said- and I state that so far as it went his argument in that connection was very forceful,
indeed-I think his argument was more of an indictment of the present parliamentary system than an argument against the public ownership of banks. I would say that there is only too much truth in what he said. So far as the party system is concerned-and perhaps we will not get the full working of the social ownership of banks until the C.C.F. comes into power-nevertheless, as I have said on many occasions, I would rather have bank governors and directors appointed by the Prime Minister or by the leader of the opposition than by any group of private bankers we might find anywhere.
The third point was that the presently proposed bank is really, in fact, a public institution, inasmuch as the government has the appointment of the governor and certain [DOT]functionaries of the institution. Of course, there is truth in this, that the private control of the banks is in many respects very strictly limited, and that those features of the bill are of course acceptable as a bill providing for a private institution. But the fact remains that the entire control of the central financial institution of this country is being reposed in a private concern. In my opinion that is not a wise thing to do and I would urge that the Prime Minister who, as he says himself, believes or had the opinion at the outset that the proper thing to do was to make this a government bank in reality, would give further consideration to the arguments which have been put forward this afternoon, and that he will make this bank wholly and entirely a socially owned, nationally owned, publicly owned-whichever term you desire to use-institution, so that we may control, and so that the financial policies of the country may be in the hands of the representatives of the Canadian people. I would point out to the Prime Minister that if under government control poor governors were appointed, governors who were incapable of carrying out their duties, we certainly would have direct recourse and ultimately, at least, could effect the necessary improvements by removing the incapable officials and appointing others in their places. But under a private institution we will have no such power. They will find their own governors and their own directors who will do business in the way they want them to do it. I urge that further consideration be given, and that the amendment be accepted.
Before the vote is put, and without wishing to take up the time of the committee, I should like to place myself on record in support of the amendment
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offered by the hon. member for Vancouver Centre (Mr. Mackenzie). I happen to be paired with the hon. member for Athabaska (Mr. Davies), who has had to leave the chamber this afternoon. For that reason I should like to state my position as probably a vote may take place shortly. I agree entirely with what has been said in support of the necessity for making this a publicly owned bank. The matter was thoroughly discussed in the committee on banking and commerce, and there can be no advantage in repeating it here. May I place myself on record as being entirely in favour of the amendment.
Don't be so anxious. Hon. gentlemen opposite are quite free to express their opinions, and I claim the right to express mine. I am opposed to the amendment for the very reason advanced for its adoption by the ex-Minister of Justice (Mr. Lapointe), namely the provisions in the preamble of the bill under which the Bank of Canada can control the credit and currency, meaning the commercial credit and currency, necessary for carrying on the ordinary business of the country. As between a privately owned and controlled institution, with all the safeguards thrown around it by this bill, and a politically controlled institution which would govern the credit provided the business interests of this country, I must favour the privately controlled, or privately owned, publicly controlled and, if you like, privately managed institution for which there is provision in this bill. As a matter of fact, I would go farther than the bill has gone, and in addition to setting up a stock issue of $5,000,000 in shares of $50 each, or whatever they may be when the bill has passed, I would in addition make an issue of common shares representing a small proportion of the total capital of the bank, with the provision that the persons who purchased those shares, whether or not they be the same persons who purchased the preferred shares, would have an added interest in the success of the institution by the further possibility of sharing with the state the profits accruing to the State. Under the provisions of this bill the profits, such as they are, or whatever they may be, accrue one hundred per cent to the state, and when hon. members talk about the institution being managed, and talk about confiscation being effected to the advantage of private individuals they overlook entirely the fact that as now provided all of the profits arising out of the operation of this bank accrue to the state. When we
look at the experience which this country has had and is now having with publicly owned and directly parliamentary controlled institutions, we cannot hope to have an independent institution so long as it remains within the hands of any government, no matter what side of politics it may be on. A politically controlled bank could destroy the industry of this country in six months through unwise actions. That possibility rests within the provisions of the bill.
What has been our experience with our national railways? The hon. member for North Waterloo (Mr. Euler) has left the chamber but he knows what that experience has been. The first board of directors of the Canadian National Railways were still holding office when the government was changed in 1922. When the new government came into office the president and the entire board were dismissed and a new political board appointed. As was testified to by the then president, Sir Henry Thornton, that board continued to operate in a political manner. The commission which investigated the whole situation used the term, "the thin red line of political activity." We have a similar situation to-day in the province of Ontario. The management of one of the greatest publicly owned institutions are to be dismissed and political appointees put in their places. What guarantee have we that the same thing would not happen in the case of this bank? Should there be a change of government, the governor, the deputy governor and the board of directors who controlled, this great central bank would be automatically dismissed.
Will not the hon. gentleman admit that the hydro commission of Ontario, a publicly owned institution, has saved the people of that province hundreds of millions of dollars when it is considered what they would have had to pay for power had it been owned by private parties?
At the moment I am not discussing the merits of hydro electric in Ontario; I am discussing the management. The governor, the deputy governor and the directors of a bank such as the central bank of Canada is to be should not be subject to political dismissal. I grant that a government may be trusted to find the best men available for these positions, but there can be no continuity of policy or that direction which is required in the managing of an institution of this kind when the governor and all the officers are subject to dismissal when a political change occurs. My hon. friend knows that the whole organization of the hydro electric in Ontario is to be subject to political dismissals.