Mr. W. A. TUCKER (Rosthem):
Mr. Speaker, at the outset I did not intend to take part in this debate, but in view of the remarks of the Minister of Finance (Mr. Dunning), if I did not some hon. members might think that the minister's very able speech had convinced me that I was wrong. On the contrary I am still unrepentant and unconvinced in connection with the suggestion I made during the debate on the motion for an address in reply to the speech from the throne, and I desire to give a few of the reasons why. I cannot go into these at length, as the minister did, because my time is limited. On another occasion the house was most indulgent with me and permitted me to exceed my time, but I do not want to presume on that indulgence.
I am sorry the minister is unavoidably away from the house to-day because I am quite sure I shall not be doing the justice to the subject I would do if he were here to ask the questions he usually asks and make the statements he usually makes to put me right when he thinks I am wrong. I was certainly pleased that the Minister of Finance undertook to deal with the suggestion I made. Although he did not agree with it, I feel it was a distinct step forward when he took it up at all. In the short time I have been following the speeches in this house I have come to the conclusion that when things are brought up first they are generally ignored as being beneath any notice. Then if they are brought up often enough, eventually some notice is paid to them and the first thing we know the suggestion has been enacted into law. I feel that my suggestion has reached the second stage, and I have high hopes that something will be done. For example, when the suggestion was first made that we should have a central bank it was not received with any great favour, but in time it came to be adopted by this house. Even the right hon. leader
of the opposition (Mr. Bennett) had decided that a central bank would be an improvement over our present system. I have no doubt that everyone now agrees that the central banking system as we have set it up is a great improvement over what we had before. Some of our great leaders of public finance disagreed very strongly with the proposal for the setting up of a central bank, but it seems that as a general rule the things they oppose strongly are ultimately carried out to the great advantage of the people. I suggest that when some of our great leaders of public finance strongly oppose some of these ideas we should cast our minds back and see how often they have been wrong before. I would remind the house of the tremendous effort that was made to keep on the gold standard. In England, for example, the high priests of finance and the chancellor of the exchequer were all agreed that every effort should be made to keep England on the gold standard. But England went off the gold standard and immediately began to make a recovery to prosperity that has been nothing short of remarkable.
I do not suggest that the Minister of Finance and the government can learn anything from a humble member from the western prairies, but whether they learn or not, I am glad to have the opportunity of placing my views < before an indulgent group of fellow members of this house. My suggestion is that the national credit should be used for national development purposes. I am quite satisfied that the very able speech of the Minister of Finance has not entirely disposed of that suggestion. The banking system of this country monetizes the credit of the country and we are asked to pay them a heavy tribute because of that duty which they perform. I am satisfied that it will take more than one speech by any member in this house to right that wrong, and it will take a good many hours of thought to realize how it may be fully remedied.
I should like first of all, Mr. Speaker, to make my position plain so far as the motion of want of confidence is concerned. I do not propose to vote in favour of the want of confidence motion. I have never concealed the fact that I should like to see a great deal more done by the government than has been done to date in the way of tariff reductions. Farm implements, for example, which are part of the raw material of the farmer, I should like to see placed on the free list. As to textiles, I should like to see a really substantial reduction made in the tariff on the goods that enter into the manufacture of clothing, especially in these hard times when many of our people are having so much difficulty in
Use of Canada's Financial Resources
getting along. I certainly would like to have seen the tariff left as it was on furniture instead of the action being taken that was taken last session. If in reducing our tariffs we can obtain from the United States a quid pro quo, by way of reduction in the customs tariffs on Canadian goods imported into that country, so much the better, and I hope this government in its negotiations with the United States will be ready to go far enough in reducing the tariff to enable us to gain a real entry for our goods into their markets, increasing, on the one hand, the purchasing power, particularly of our primary industries and so their ability to buy goods in this country, and also reducing the cost of living to our people, who are having such a hard job getting along. I am satisfied that this government intends to go as far as it can in negotiating such a treaty; and if I should vote lack of confidence in this government I would be voting against their carrying on a work which I think is all-important to this country and should go forward. I would also be voting in favour of an alternative government which was not prepared to go even the small distance that was gone at the time the Canada-United States trade agreement was signed. So I could have little hope of any such government going the distance necessary in a new agreement to cure unemployment and the other ills from which we are suffering. I have no hesitation in saying that I owe it to my constituents and the future of this country that I should vote confidence in this administration, even though it has not gone as far as I should like in regard to the tariff.
I could say the same thing with regard to the control of credit. I have never made any secret of the fact, and I do not suppose I would be expected to, that I should like to have seen the Bank of Canada taken under one hundred per cent public ownership as well as control. The suggestion was made, and I still do not think it is sound, that private finance should have representation on the board of directors of the Bank of Canada. Tremendous power has been placed in the hands of the Bank of Canada. By increasing the cash base and thereby increasing the credit extended by the commercial banks of the country the Bank of Canada can cause, as it were, a rise in the general level of prices. Representatives of private finance on the board would know of such a decision, and since they would be elected by private interests, they would think it wise and proper to report to them the making of such a decision. If they hope to be reelected, they know they must serve those interests. When the members of this house are not told what
the intention of the Bank of Canada is from time to time with regard to expanding or contracting the credit base, thus raising or lowering the level of prices and thereby making it either wise to invest, or wise to liquidate securities, I say it is not fair that representatives of private interests should have the opportunity of getting that knowledge. In my opinion there should not be a single representative of private interests on the directorate of the Bank of Canada.
But this government at least went the distance of taking over control of the Bank of Canada, and I supported it in so doing. I have never thought, indeed it is unwise to think, that in a country as broad as this, with so many varied and conflicting interests, any one group or province can have its own way; and if a government is proceeding in the general direction in which we would like to see it proceed I think we should give it our support, reserving the right to suggest that it should go further.
There is another matter in respect of which I feel I can support this present administration without any hesitation. On June 1, 1936, I spoke in this house very strongly in favour of an easy money policy. I sought at that time to cite the opinions of many prominent men all over the world in favour of an easy money policy, broadening the credit base, thereby stimulating the issue of credit and raising the general price level, thus decreasing the burden of public indebtedness and generally putting primary industries in a better position. My study, such as I have been able to make, of the policies of the Bank of Canada, confirmed by what the Minister of Finance said the other night, definitely indicates that the policy of the Bank of Canada for the last two years has been, and their present policy is, one of easy money. I think by so doing they have operated to raise the general level of prices, to improve the position of private industries, and to lighten the burden of debt. I am glad they have done it, and I commend the government because it has upheld them in so doing. The government by its trade policy has caused the value of our exportable surplus of goods to rise materially, and by its monetary policy-taking over control of the Bank of Canada, expanding the credit base, and raising the general level of prices-it has made a great contribution to the recovery that is going on in this country.
Somebody may ask ms: Well, what is your position? As I said at the outset, I still believe -and possibly it is no credit to myself, and may suggest that my mind is not open to persuasion-in monetary reform. I have listened to everybody who held what might be called to-day the orthodox view, although it was
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not the orthodox view five years ago; and the only difference that I can see between the orthodox view to-day and the view taken by people like myself is that we want to go a little further. I do not accept the suggestion that has been made that we have already gone a certain distance and that it would be disastrous to go any further.
What I have in mind and what I suggest is a short range policy and a long range policy. The short range policy would be to issue sufficient currency to put the unemployed to work on a national development program until our long range policy has put them to work in the ranks of industry. That is all I intended to suggest in the speech I made in the debate on the address. This suggestion was not intended to be a definite long range policy, but I know, and I think that every member of the house will agree, that there are in this country to-day young men now reaching thirty years and over, who have never yet been able to find work, who have been out of work ever since they have been able to look for a job, and until our long range policies have time to absorb all the unemployed into industries where they can earn their own living, this government should definitely look after them, should do something in the way of national development work to give such people a job. It should be done not by imposing a further burden on industry but as a responsibility of the country by the use of national credit. In their ranks there are young men who actually enlisted, went overseas and risked their lives for this country without any thought of reward. They came back thinking that a grateful country would see to it that they were at least given a chance to earn.a living, and I submit to you, Mr. Speaker, that it ill behooves members of parliament, who have been very fortunate, to sit back and say we are going to follow steadfastly our present policy without modification, even if it means that those out of work may be out of work another three years or longer. We should take a much more sympathetic attitude towards these young men. We owe a great deal to them. They were all ready if necessary to make the sacrifice of their lives for this country.
Then there is of course a long range policy in regard to monetary matters which I suggest. I shall not have time to go into it at length this afternoon; I have referred to it before. It is a policy either of setting up a separate branch of the Bank of Canada, of splitting that bank in two, as the Bank of England is split into two, or of setting up a separate institution, a national bank which will
monetize the credit of our governmental institutions at cost and avoid the burden of interest on public debt which is weighing down the people of Canada and preventing us from doing the things we should do for those for whom something should be done.
I wish first of all to deal very shortly with the long range policy of the government. As I understand it, there are still 132,000 employable unemployed receiving public aid in the dominion. Our long range policy is, I believe, absorbing the unemployed. If we in western Canada have a crop; if we make a proper treaty with the United States which sufficiently opens up the channels of trade with that country; if we continue the policy of the present administration and further lower tariff barriers in respect of other countries, these unemployed in my opinion will be absorbed into industry within the next eighteen months. But in the meantime, if we have the situation so well in hand, and if we need roads, for example, so badly, can we not safely get busy on a program for that purpose and look after these people?
Here I might say a word for the national park in my own province. People who have been through the Prince Albert national park know that it has one of the finest golf links in Canada, and splendid fishing, swimming and boating facilities. Two hours after you arrive there you can be at a lake where, probably, for days at a time you will not meet anybody; certainly in that park you can get solitude away from all the troubles of civilization. I have been told by persons who have visited all the national parks in Canada that ours has more recreative facilities than any other in the dominion. But what is the situation? One must travel over more than three hundred miles of dusty gravelled road in proceeding from the international boundary to that park. Time and again when people in the United States have been attracted, by the good publicity work done in advertising our national parks, as far as the boundaries of Canada, they have found this terribly dusty gravelled road ahead of them and have turned back. They are doing that by the hundreds. I submit that a policy which would look after our unemployed until they are absorbed into industry, and would hard-surface that road so that we would get thousands of United States visitors to the park where now we are getting only hundreds, would be good business, and is something to which this house and this government should give attention.
There is also the matter of irrigation. I do not know to what extent we can go into that, but I suggest that some of this money might
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be used for irrigation work, and if by this means homes were provided out west for several thousands of Canadians, homes would be made also for several thousands required to service their needs in other parts of the country, and anything which serves to increase the population of Canada is really worth while in the world troubled as this is troubled, and where it might be said by land-hungry powers that we are not making use of the resources with which Providence has endowed us.
I wish to deal shortly with some of the objections of the Minister of Finance to my suggestion. The minister stated in his speech the other evening something which I understood had been denied by most people in this house up until the time the Minister of Finance stated it. I may be wrong about that, but I am going to read the statement and then I will comment upon it. He said:
As we have seen, the Canadian chartered banks as a group think it expedient to maintain an average reserve of ten per cent, and consequently if, as a result of the purchase of ten million dollars' worth of securities by the central bank, the reserve of the chartered banks has been increased by ten million dollars, the chartered banks will seek to expand their assets and deposits by approximately one hundred million dollars.
I can remember when the suggestion that the banks loaned out ten dollars for every dollar of cash by which they increased their cash reserves was treated with a great deal of derision. The question was asked, how can anybody lend ten dollars if he has only a dollar? And I can remember it seemed to be assumed that that settled the whole matter. I should like to read what was said in this house, which indicates perhaps that. If I am wrong, I am in the judgment of the house in this respect. In the first speech which I had the privilege of making in this chamber, at page 349 of Hansard, volume 1, 1936, I said:
I find by this Macmillan report, Mr. Speaker, that in July, 1933, the average daily borrowings of the banks under the Finance Act was $48,552,000. What does that mean? It simply means that, under the Finance Act, if the Bank of Montreal or any other bank had one million dollars' worth of government bonds which were paying at that time in the neighbourhood of 5i per cent, they could go to the Minister of Finance and get one million dollars' worth of new money for which they paid at that time 2J per cent. They get that new money against the credit of this country; then on the basis of established banking practice they are able to buy nine million dollars' worth of government bonds. Let us trace what happens. The bank pays 24 per cent on one million dollars, but, mark you, it is drawing
5J per cent on ten million dollars' worth of bonds. And they call that w-ise public financing! There is no doubt about it at all; it is right here in this Macmillan report.
The minister is reported to have said:
No, it just isn't so.
Now at that time it was quite all wrong to say that a bank could take a million dollars, borrow a million dollars' worth of new currency under the Finance Act from the Minister of Finance, and thereby increase cash reserves and then buy another nine million dollars' worth of government bonds. That is just what I was suggesting at that time. Of course in order to do that the banks have to pay interest to their depositors on the money that is redeposited. But the bare fact remains that it is apparently now admitted that the banks do increase their loans or their purchases of investments-one or the other-to the extent of ten dollars for every dollar increase in their cash reserve.