June 21, 1934

LIB
CON

George Brecken Nicholson

Conservative (1867-1942)

Mr. NICHOLSON:

Just one last word. As a business man whose business will be directly affected by the control of credit in this country-this bank is to have rediscounting privileges-I am not going to risk my business nor am I going to risk the business of any other man and put it in a position where it can be destroyed by political actions. That is what a politically-controlled bank could do.

Topic:   BANK OF CANADA ACT
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LIB

Charles A. Stewart

Liberal

Mr. STEWART (Edmonton):

Mr. Chairman, I am rather surprised at the statement of the last speaker that there is to be no political control. Surely the governor and the deputy governor are going to run this bank, and they are to be appointed by the government for a definite period. If that is not political control and political appointments, I do not know what it is. Those two gentlemen are going to have the most control over this institution, and they are to be appointed by the government. Every hon. gentleman who has had to do with boards of directors knows how much influence such a board exercises. I am not very much concerned about the influence they will exercise.

fMr. Nicholson.]

We are being asked to give up two controls which parliament has exercised over the private institutions of this country. We are being asked to give up every vestige of control and the inspection of banks which has oeen carried on in recent years under the Finance Act.

Topic:   BANK OF CANADA ACT
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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:

No.

Topic:   BANK OF CANADA ACT
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LIB

Charles A. Stewart

Liberal

Mr. STEWART (Edmonton):

Yes. That becomes a function of this so-called private institution, using my hon. friend's description. It becomes a function of that institution to regulate other private institutions.

Topic:   BANK OF CANADA ACT
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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 inspector general

still continues.

Topic:   BANK OF CANADA ACT
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LIB

Charles A. Stewart

Liberal

Mr. STEWART (Edmonton):

Of course he does, but he will operate under the Minister of Finance. I want to be corrected if I am wrong in that.

Topic:   BANK OF CANADA ACT
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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:

Yes, he does.

Topic:   BANK OF CANADA ACT
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LIB

Charles A. Stewart

Liberal

Mr. STEWART (Edmonton):

Then the gold reserve of the government is taken by this private institution and the gold reserves not required by the private banks are also taken. What particular power has this private institution? My hon. friend is worrying for fear his business will be injured with a change of government, but the fact is that he will not be able to borrow a sou from this bank. The only corporations that can borrow are the governments of the day. I do not see anything very drastic or striking in that.

Topic:   BANK OF CANADA ACT
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CON

George Brecken Nicholson

Conservative (1867-1942)

Mr. NICHOLSON:

Has not this bank the power to rediscount the bills of commercial organizations?

Topic:   BANK OF CANADA ACT
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LIB
CON
LIB

Charles A. Stewart

Liberal

Mr. STEWART (Edmonton):

I have

never discovered that in the bill. It is to have power to do business with the federal and provincial governments and the banks. I am speaking without full information because the bill has been amended since I gave it some considerable attention.

Topic:   BANK OF CANADA ACT
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LIB
LIB

Charles A. Stewart

Liberal

Mr. STEWART (Edmonton):

Then it

takes the place of the Bank Act in regulating the private institutions.

Topic:   BANK OF CANADA ACT
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CON

George Brecken Nicholson

Conservative (1867-1942)

Mr. NICHOLSON:

The hon. member

should read paragraph (h) of section 21.

Bank of Canada

Topic:   BANK OF CANADA ACT
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LIB

Charles A. Stewart

Liberal

Mr. STEWART (Edmonton):

It is to have complete control of the note issues. I am not quarreling about that; I am merely mentioning these things in passing. My own position is that this institution should not lend to any government, federal or provincial; it should do its business with the private banks so long as they remain private banks and carry on the commercial business of the country. This view is not shared by many of the hon. members with whom I am associated, but I think such a safeguard could well be thrown around this institution. It would avoid what my hon. friend is complaining of. In the functioning of the central bank, as provided for in this bill, I cannot see why it should not be under government control. The Finance Act has functioned fairly successfully under the Minister of Finance and the government, and I cannot see any radical difference from the point of view of administration. Certainly I have never heard of politics being played in connection with it.

My hon. friends have had a good deal to say lately-and I hope that we shall have some occasion to discuss the matter-with regard to the political control of the national railways. I would point out to hon. gentlemen opposite that there is one thing that is lost sight of entirely in the discussion of railway matters and that is that in Canada at the present time, as well as over a considerable period in the past, practically from the inception of the control of the national railways by the government of the day, lower freight and passenger rates have prevailed in Canada than in the United States, and we have had the benefit of that. But you never hear a single individual voicing that opinion or saying anything about it; yet no one can estimate what that has meant to the people of this country. I should deplore political control of the national railways, but I do not think it seriously interferes with the national railways to change administration, to change the directors on a change of government so long as you have in charge men who are capable of managing that institution. I do not think there is anything very serious in a change of directors and therefore I do not view with alarm that aspect of the matter. But if we are to trade away the control we now have by setting up an institution which will perform these functions, then I am entirely opposed to putting it in any measure at all under private control-and not only private control but private ownership. I say this because I am convinced that the operation of the Finance Act has been carried out to the benefit

of the whole country. It has functioned very acceptably, and if we are to set up another institution, even with additional powers, it should still be under the control of the government.

Topic:   BANK OF CANADA ACT
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CON

George Brecken Nicholson

Conservative (1867-1942)

Mr. NICHOLSON:

Hon. gentlemen have questioned my statement that the central bank will have authority with regard to the rediscounting of commercial documents. Section 21 provides, in paragraph (h) of subsection 1 that the bank may buy and sell for rediscount bills of exchange and promissory notes endorsed by a chartered bank, and so on.

Topic:   BANK OF CANADA ACT
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LIB
CON

June 21, 1934