March 22, 1938

CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

But that is not what I

am dealing with. I now come to the next paragraph.

The sponsor of the suggestion contends that no inflation is intended or would result by thus increasing bank cash-

"By thus increasing bank cash"-note that.

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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

Yes.

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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

-so long as the gold cover of the Bank of Canada did not fall below the twenty-five per cent minimum-

That is $150,000,000, being twenty-five per cent of $600,000,000.

This factor, however

And here are the words:

-is not a test of inflation. If the banks use tljeir increased cash in the normal way, as a basis for the extension of roughly ten times as much in loans-

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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

Yes.

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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

Mark you, ten times as

much in loans. That is, $3,500,000,000, as the minister himself points out on the

succeeding page.

-to the public, or for the acquisition of ten times as much in investments, bank deposits would expand by approximately an equal amount-

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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

Yes.

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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

Is that not absurd?

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LIB

James Lorimer Ilsley (Minister of National Revenue)

Liberal

Mr. ILSLEY:

Equal to the loans. The

deposits will increase-

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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

But the loans, he says,

will be ten [times $350,000,000, or $3,500,000,000.

Listen:

This would mean an increase in bank deposits from the present level of about $2,387,000,000 to something like $6,000,000,000, or more than 2-6 times the level of December 31, 1929. Am I merely old fashioned or orthodox when I say that this would mean a colossal measure of inflation?

There is the language of the minister.

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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

And that is right. I still stand by every word of it.

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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

The hon. gentleman might be compelled to, I should think.

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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

If I made a mistake I

would admit it. I am willing to have it pointed out.

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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

And I am going to

point it out. The language used by the minister is:

Bank deposits will expand by approximately an equal amount-

That is, $350,000,000, and that there would be a credit expansion of $3,500,000,000. Now, everywhere in this country men have been going to and fro telling the people: " All you have to do is to have deposits, and the banks can lend ten times that much money."

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LIB
CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

That is what has been

going on all over Canada.

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LIB

James Lorimer Ilsley (Minister of National Revenue)

Liberal

Mr. ILSLEY:

Reserves.

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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

Ten times the amount- that is what the minister said.

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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

He did not; no, he did

not.

Use of Canada's Financial Resources

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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

Let us read it; let us

have no misunderstanding. He will not deny what is written here.

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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

Exactly.

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March 22, 1938