My hon. friend can use all the illustrations he likes, but he cannot put words into the mouth of an hon. member which that hon. member did not utter. I used the English language and nowhere did I use such words as those now attributed to me.
The point is this: The Minister of Finance argued that the A plus B theorem was faulty and there was no deficiency of purchasing power in the country as a result of industry. That is the same thing as saying that there was no need of electricity in the community. Why take all this trouble to create electricity? If that is not sufficient, I will take it all back. The trouble is the Minister of Finance did not allow me to finish what I was saying.
Speaking figuratively again, the next statement was that electricity will kill people, it will burn them-inflation.
was that you cannot get a transformer, you cannot get a fuse plug to enable you to control the electric current after you create it. Therefore, do not create it. The objection there was to the just price.
Would my hon. friend permit me to finish without interrupting? I do not remember the exact words of the Minister of National Revenue (Mr. Usley), but I got the impression that he was saying that the Minister of Finance had demolished completely our contention because he had brought in this A plus B theorem. The Minister of Finance demolished nothing by bringing that in. The hon. member for Acadia (Mr. Quelch) dealt unchallengeably with the A plus B theorem, as reported on pages 1304 to 1308 of Hansard. Any hon. member can turn up those pages and find what was said. If you turn to page 19 of the New and Old Economics you will find Major Douglas' reply to Professor Copland of Melbourne and Professor Robbins of London where the same argument is made.
Then about the banks in the west. The right hon. leader of the opposition (Mr. Bennett) made a remark which I think implied that we were endeavouring to discredit the banks. That is not the point at all. Our point in discussing the banks is to show that they create money, that they do not lend savings. The banks are teaching the people that they lend savings, and the fact is that they do not lend savings. As soon as the people realize that this is so they will begin to say, "Why should we owe and pay interest on this credit which they have created?" That is the first intelligent question about money that men will ask. In our discussion we have tried to show what money is, where it comes from, how it comes and what makes it. We used the banks as an illustration to make those points clear to our people.
I should like to turn again now to the amendment. No one can honestly contend under the circumstances that the government is using the monetary resources of the country as they could be used. The only means used by this government to put purchasing power into the hands of the people is through exports, as far as I can make out. We assume
that unless you practically throw great quantities of goods away in order to get rid of them, you cannot use any goods of that kind. Such an argument is a monstrosity. The only other means of providing purchasing power that we are using are relief, pensions, public works and rearmaments. I contend that we must use another .means to put purchasing power into the hands of the people.
In his speech the minister first of all proceeded to give us a fine outline of the banking system. I believe the people of Canada owe 'him thanks for doing that, because it is one of the finest things ever put before us by a public man in this dominion. I appreciated it tremendously. He then turned to a discussion of the proposals of the hon. member for Rosthern (Mr. Tucker), just as though they had something to do with my motion. Why bring him in? I was not ready to meet what had to be said about him. As a matter of fact, the proposal made by the hon. member for Rosthern is not a social credit proposal. His proposal has merit, but it also has its difficulties, and it is not social credit. He proposed that an additional amount of Bank of Canada notes be created to carry on projects of various kinds. The Minister of Finance applied the principle of ten to one to show that we could reach such a tremendous amount of deposits in the banks as six billions of dollars, and he said that that would immediately cause inflation. I will grant that a great amount of money in a country might cause inflation, but in the United States they have over ten billion dollars of gold hidden in their vaults, and is that causing inflation? Of course not. Why? Because it is being handled right. You do not have to have inflation just because you have great quantities of money.
Under our present set-up, money cannot possibly get into circulation unless someone will come and borrow it. At the present time we are told the banks are full of money, and they cannot lend it to anybody, and they will not lend it. The result is that they are buying more government securities. Now will someone who thinks he knows tell us how, if you had six times as much money in the banks as we have now, you could get any more people to come and borrow it or get any of the banks to lend it? It has not been proved; maybe it can be proved, but certainly it was not proved. The question is, who would get the money? And again, where would they invest it?
Next there was an attack upon social credit. I am not going to deal with that at all at the present time because there are other
Use oj Canada's Financial Resources
matters which need attention. We did not bring social credit into the debate at all. We did not even mention the words social credit -not once.
There is a scriptural quotation which could be used, but I shall not quote it now. We did not bring social credit into the debate at all because we had not reached the point where we were ready to consider the details of social credit. We were rather considering the question whether you could take the energy in our productive stream and convert it into money, because until you get that principle settled it is idle to take up other points of social credit.
Then the hon. member (Mr. Dunning) demanded concrete results. He said: These are only principles. But Mr. Speaker, before mankind could fly, you had to show men that it was reasonable to suppose they could fly, and we were simply discussing whether it was reasonable that Canada should be able to fly -that you could get electricity out of this great stream that is flowing by. That is what we were contending, and when that question is discussed openly, sincerely and frankly, hon. members will find that we shall be ready to take up other principles of social credit.
With respect to the speech of the Minister of Finance and the principles he enunciated, he said in the first place that money should be issued according to the needs of business. That is absolutely right, and I say that the real cause of the trouble in Canada to-day is that this government is not doing that very thing, and it cannot show that it is doing it. There is a great deal of agitation apparently for the purpose of making it appear that social credit principles are mysterious and difficult of understanding and all that sort of thing, that social credit would change everything, disrupt the whole of society. That is just pure nonsense. I am told that the Wright Brothers, in order to perfect the aeroplane, had to discover just one simple thing, and that was how to warp the tips of the aeroplane's wings. Everything else was there. And we contend, Mr. Speaker, that everything else that is necessary for social credit is here, that all that is required is just a slight change.
of time to develop that. What business needs above all else in this country to-day is that there shall be markets. If you could manage 51052-119
to give an adequate dividend to every man in this country, you would take care of markets inside of a month; and if you bring in the just price principle you would take care of the problem of a stable price to a tremendous degree. To bring about prosperity we must have an even price level. The best thinkers realize, and have done so for hundreds of years, that you can take care of the price level mainly by the amount of money in circulation.
Next, business wants lower taxes. If the government could manage somehow or other to create money to finance some of the things which are breaking the backs of the taxpayers to-day, it would remove a great deal of t's trouble with business; and it can be done.
The question of inflation was also raised. I maintain, sir, that there is no inflation in the .social credit contention. Major Douglas has stated time and again that he is entirely opposed to inflation. The only way in which you can possibly prevent inflation is by the introduction of social credit. I know there are many people who will say that that is not so; but that is so. And if I had more time I could read quotations from great authorities who cannot be questioned. I will refer to just one on this point of inflation. I quote from Paul Einzig, the great world economist, in his book World Finance Since 1914, published in 1935, where at page 17 he says:
The more advanced definitions (of inflation) duly allow for any change in the volume of real wealth. Thus if the volume of currency and credit increases, and the production of real wealth increases in the same proportion, then there is no reason why the expansion of currency and credit should produce an inflationary effect.
Is not that just as clear as it could be for him who runs to read?
Money properly distributed does cause more goods and services to come into being; where there are plenty of goods the money can be expanded, and it must be expanded. Otherwise, you have a fall in prices; you have deflation. That can be proved by reference to any number of authorities right down to the present moment. I have not time to refer to them all, but I am going to refer to Paul H. Douglas, professor of economics at Chicago, and his book, Controlling Depressions, written in 1935. I will give hon. members the page number, to save time-page 137. There he points out that when you increase the money in circulation you automatically increase goods and services, because there are vast quantities of unused resources, great numbers of men unemployed, great amounts of productive equipment being only partly used, and the minute you distribute money
Use oj Canada's Financial Resources
wisely and get it to the right people, you set your productive machinery into operation and make it possible immediately to issue more money without causing inflation. In Paul Douglas's book, at page 126, you will find another comment of the same kind.