Mr. Speaker, I have not made any observations on this bill since its introduction, for very obvious reasons, but after listening to the speech of the Prime Minister (Mr. Mackenzie King), delivered yesterday, I think it is desirable that I should make some very brief observations upon the attitude which the present government assumed on the public platform during the election of last year when dealing with this question. First, in various parts of Canada which I visited I found that this bank had been held up as a privately owned bank. It was stated that, by contrast, it was to be a publicly owned bank. I agree with the Prime Minister when he says that he did not use the word "nationalized'; he did not use that word, so far as I know, but the effect of the words "publicly owned" upon the public mind was to induce the people to believe that the bank was to be nationalized.
A publicly owned bank means a bank owned by the people. The bank created by the late government was a bank privately owned; the bank that will be in existence after this bill emerges from this parliament will be still a privately and publicly owned bank. It will not be a publicly owned bank. Therefore, the promise that this will be a publicly owned bank has not been honoured. There can be no gainsaying that.
Secondly, it was stated that it would be a publicly controlled bank and that currency would be issued in terms of public need. Of course that meant only one thing, and that one thing has not been accomplished by these amendments, and it is not proposed to accomplish it. Those of us who read the delightful utterances of the Minister of National Defence (Mr. Mackenzie) recall the statements he made with respect to what this bank would be. I cannot help but think that his understanding of it was entirely different from the observations made by the Prime Minister yesterday. It may be that he did not properly appreciate what was meant. If he did not, is it any wonder that the ordinary, average elector looked upon it as somewhat different from the terms of the bill now before the house?
The next point that was made was that we would have, in effect, a publicly controlled bank. I cannot do more on that point than direct the attention of this house to the fact that the executive committee is the governing body of this organization, and the executive committee has not been modified or changed. Under the former act it consisted of the governor, the deputy governor and one director to be named by the board of directors. The deputy minister of finance was to attend, although he had no power of voting; he was to attend as the liaison officer between the government and the bank. When this bill is assented to in a few days it will perpetuate an executive committee consisting of the governor, the deputy governor and one director selected by the board of directors. The deputy minister of finance will still be the officer who relates the policy of the government to that of the bank. Therefore, there has been no change in the executive committee and the control of the organization from day to day is a control exercised by the executive committee. The board of directors will be able to meet but seldom, because the distances are great and they are scattered over the whole country.
The next point is the power of veto. It is perfectly clear that the governor in council has now assumed the power to veto. To veto what? To veto resolutions that may have
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been arrived at by the executive committee when there has been a difference. How can that difference arise? Remember, the committee consists of three members, two of whom are selected by the government while the third may be a government nominee. There being only three members, any differences that will arise must be, first, differences between the governor and the deputy governor on the one side and the director on the other. In that event the governor would not disallow it and the resolution would stand. In the other case it would be the deputy governor and the director against the governor, and in that event the governor in council would have to decide between its own governor and its deputy governor and director, who might or might not be a government nominee. Could anything be more ridiculous than the suggestion that an executive committee thus composed can ever run foul of the governor in council unless there is a conflict between those who are operating the bank and the government of the day, a division of opinion between the executive committee and the government itself? In that event the powers conferred by this bill will not have modified in any sense the provisions that now exist, except that the governor in council may exercise a veto with respect to differences where the governor is on one side, as I have said, and the deputy governor and the director are on the other side. The government will have to choose between the two.
It was said further in the course of the explanations given the public last year that this was a private bank, entrusted with the power of issuing money, and to which had been transferred the gold of the country to hold as security for the issue of the currency of Canada. All of this was true, but only partly true. It will be recalled that under the provisions of the statute creating the bank, the bank was made responsible for the issue of the paper currency which it took over. In addition, that responsibility was secured and assisted by the issue of Dominion of Canada bonds which were placed in the treasury of the Bank of Canada and which have been a vital factor, contributing as they do to the revenues from which the dividends are paid. Is there any change in that? No. The gold still belongs to this bank, owned partly by the people and partly by private shareholders. The paper money is still issued by the bank, owned partly by the people and partly by private shareholders. The liability of the bank for the Dominion of Canada notes still exists; it has not been changed. The guarantee given by the deposit of bonds in the dominion with the bank to
secure its obligations still continues. There has been no change, none whatever. There still continues the relation between the bank and the private shareholders that existed when this bill was introduced into this house.
And lastly, upon that phase of it, it will be recalled that the present Minister of National Defence introduced in the banking committee, when the bill was under consideration, an amendment by which he proposed-and it struck me at the time it was a proposal that was in the minds of many hon. members- that the country, if it so desired, might secure the shares of the bank-secure them by taking them over at any time. This proposal was negatived by a vote in the committee-why? The answer is obvious. For this parliament had power, as it had in the case of the Grand Trunk Railway, to enact a statute to provide for the expropriation of these shares, for the taking over of the shares, and for the fixing of the value of the shares by arbitration or otherwise. That power rested with this parliament, and the Minister of National Defence will remember that the amendment he proposed was negatived for the very obvious reason that it was a declaration of a power which rests with this parliament, which has always rested and always will rest with it, the power on the part of parliament to enact legislation, if it so desires, to expropriate or compulsorily take any property which in the national interest it should possess. And when, during the progress of the election campaign, it was suggested that this should be a publicly owned bank, I took the trouble to point out to the people on more than one occasion-on many occasions in fact-that so far as the government was concerned its first view had been that these shares should belong to the Canadian people as a whole, publicly owned.
But having regard to what became apparent with respect to methods abroad, the invading of the privacy of governments and the insistence that patronage should be utilized in the creation officially of positions in the bank,
I told the committee myself that we could not possibly undertake properly to create this bank if we as a nation undertook to hold the shares, that the pressure of all sorts of people for all kinds of positions was such that the bank itself must assume responsibility for its organization. And I pointed out, as I do now, the sort of pressure that was used: (a) geography; (b) rates; (c) religion; (d) polities, and, after all, sometimes, merit-not so often, but sometimes, merit. Now these differences pressed upon us so strongly that we believed that this bank could be properly organized only if it were done under the auspices of directors, the bank being privately
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owned; and that was the method we pursued. I told the banking committee that; I told the people of the country that; and I said that if after a fair trial it was found desirable that the bank should be owned by the people I would be the last man in the world to interpose any obstacle or to suggest any difficulty; because, if the people desired to follow the policy pursued in some countries instead of adopting the policy followed in other countries, if they preferred the policy followed in great nations rather than to adopt a new policy followed by a smaller number of countries, I was content. New Zealand was organizing its bank about the same time that we were, and adopted in the first instance the very idea that we did, namely, that the organization might be carried on best under private auspices; and then came the change of government and the same cry for public ownership, but not the same result, for they did one thing there that one would expect them to do if they were to make it publicly owned. They took over the shares.
I come now to the next point. The sum of $5,000,000 was the capital of this bank. In Australia it was pointed out that capital as such was unnecessary, inasmuch as a loan from the state was all that was essential to enable the bank to function; and the central bank in Australia carries on more than a central bank business: it carries on the general business of banking, having secured in the first instance, from the state itself, sufficient money for the purpose of enabling it to discharge its function. But it earned large profits, and these profits have now become the nucleus of its capital with respect to its general transactions of savings bank business. It well may be that the experience of nations is not of value in relation to financial matters, for each country has peculiar conditions which may possihly require different treatment from any other country in the world. But we did know, in the light of history, that the publicly owned central banks were few in number and that their success had not been greater than, if as great as, that of the privately owned institution. The circumstances connected with the coming into being of the Bank of England perhaps differentiate that institution from other central banks; but in Europe there are many central banks, and when it was suggested that the Liberal party was in the van of the movement for the creation of a central bank in Canada, I could not but think that the language used by those who sit to my left must have carried conviction, because we do recognize that in the early days immediately after the war-
the Minister of the Interior (Mr. Crerar) will recall this-those who sat to the extreme left then urged the creation of a central bank. Why? I am not referring to his party; I am speaking of the smaller group, notably Mr. William Irvine, if the hon. gentleman wishes me to mention any names.