April 11, 1939

SC

John Charles Landeryou

Social Credit

Mr. LANDERYOU:

I did not quite get that question. Will the minister repeat it?

Topic:   LOAN OF $750,000,000 TO MEET LOANS OR OBLIGATIONS, TO PURCHASE UNMATURED SECURITIES, AND FOR GENERAL PURPOSES
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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

I will try again. My hon. friend suggests that, $600,000,000 worth of currency being printed and being paid out presumably for various government purposes, people naturally would not carry around that $600,000,000 in the form of bills in their pockets.

Topic:   LOAN OF $750,000,000 TO MEET LOANS OR OBLIGATIONS, TO PURCHASE UNMATURED SECURITIES, AND FOR GENERAL PURPOSES
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SC

John Charles Landeryou

Social Credit

Mr. LANDERYOU:

That is right.

Topic:   LOAN OF $750,000,000 TO MEET LOANS OR OBLIGATIONS, TO PURCHASE UNMATURED SECURITIES, AND FOR GENERAL PURPOSES
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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

They would want to put it in the chartered banks.

Topic:   LOAN OF $750,000,000 TO MEET LOANS OR OBLIGATIONS, TO PURCHASE UNMATURED SECURITIES, AND FOR GENERAL PURPOSES
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SC

John Charles Landeryou

Social Credit

Mr. LANDERYOU:

That is right.

Topic:   LOAN OF $750,000,000 TO MEET LOANS OR OBLIGATIONS, TO PURCHASE UNMATURED SECURITIES, AND FOR GENERAL PURPOSES
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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

That is right so far. My hon. friend suggests that the chartered banks should not be allowed to base credit upon those

deposits. Therefore he must mean that the banks would have to keep physically in their cash tills $600,000,000. Does he now suggest that the banks under those circumstances could possibly pay any interest on deposits?

Topic:   LOAN OF $750,000,000 TO MEET LOANS OR OBLIGATIONS, TO PURCHASE UNMATURED SECURITIES, AND FOR GENERAL PURPOSES
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SC

John Charles Landeryou

Social Credit

Mr. LANDERYOU:

I do not say they would be in a position to pay interest on deposits; they are under no obligation to do so.

Topic:   LOAN OF $750,000,000 TO MEET LOANS OR OBLIGATIONS, TO PURCHASE UNMATURED SECURITIES, AND FOR GENERAL PURPOSES
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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

Let me go one step further. If they would not be in a position to pay interest on deposits-

Topic:   LOAN OF $750,000,000 TO MEET LOANS OR OBLIGATIONS, TO PURCHASE UNMATURED SECURITIES, AND FOR GENERAL PURPOSES
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SC

John Charles Landeryou

Social Credit

Mr. LANDERYOU:

Possibly not at the moment.

Topic:   LOAN OF $750,000,000 TO MEET LOANS OR OBLIGATIONS, TO PURCHASE UNMATURED SECURITIES, AND FOR GENERAL PURPOSES
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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

-then I suggest they would be entitled to some payment for their services to the depositors under those circumstances.

Topic:   LOAN OF $750,000,000 TO MEET LOANS OR OBLIGATIONS, TO PURCHASE UNMATURED SECURITIES, AND FOR GENERAL PURPOSES
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SC

John Charles Landeryou

Social Credit

Mr. LANDERYOU:

What right have

depositors to any interest on their money? For the banks do not use the deposits anyway. The banks were giving about 2J per cent to 3 per cent interest at one time. They were not forced to give it and they arbitrarily reduced the interest to li per cent. It averages 1 per cent. Now, some three million depositors have an average of $117 in the bank. One per cent is the average that is paid to them, and that is paid only on the minimum amount of the deposit during the three months in which interest is paid. That is not a very large sum of money. I know that the three millions who have deposits in the banks would not miss the little bit of interest they get. I am not suggesting that the banks could not pay it at the moment. I am not suggesting that.

Topic:   LOAN OF $750,000,000 TO MEET LOANS OR OBLIGATIONS, TO PURCHASE UNMATURED SECURITIES, AND FOR GENERAL PURPOSES
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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

How could they possibly earn it if they took the bills in and had tc keep the bills in their tills in order to make payment at any time?

Topic:   LOAN OF $750,000,000 TO MEET LOANS OR OBLIGATIONS, TO PURCHASE UNMATURED SECURITIES, AND FOR GENERAL PURPOSES
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SC

John Charles Landeryou

Social Credit

Mr. LANDERYOU:

They could lend the money on a dollar for dollar basis. There is nothing remarkable about that. It simply means $600,000,000 more in their cash reserves. It would not cause inflation, which the minister is afraid of. He raised that issue and now that I say it would not cause inflation he says they would not be able to pay interest on their deposits. We are not considering that. I am simply stating that it would not cause inflation, as the minister knows.

Topic:   LOAN OF $750,000,000 TO MEET LOANS OR OBLIGATIONS, TO PURCHASE UNMATURED SECURITIES, AND FOR GENERAL PURPOSES
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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

I do not know that. I know exactly the opposite to that.

Topic:   LOAN OF $750,000,000 TO MEET LOANS OR OBLIGATIONS, TO PURCHASE UNMATURED SECURITIES, AND FOR GENERAL PURPOSES
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SC

John Charles Landeryou

Social Credit

Mr. LANDERYOU:

Permit me to make another statement in regard to inflation. So much wheat is raised in western Canada every year and it takes so many freight cars to move that wheat to the market. To suggest that we should have more oars than are needed, considering the velocity of cir-

Loan oj $750,000,000

culation, to move that wheat, would be foolish. You need only a certain number of cars considering velocity of circulation. We recognize that in Canada there is a shortage of purchasing power and we urge the government to issue, not unlimited quantities of printed money, but sufficient money or credit to enable Canada, to produce to the utmost of her ability the goods and services required and to distribute them to the people. It is not a matter of having unlimited supplies of money, as in Russia or other countries where inflation was experienced. At the moment I am thinking of those countries where the people stood in the stares with pockets bulging with money, but those people could not buy anything. Why? Because their world trade had been cut off by war and revolution. Their money had been sabotaged by revolution and there were no goods in the country.

Topic:   LOAN OF $750,000,000 TO MEET LOANS OR OBLIGATIONS, TO PURCHASE UNMATURED SECURITIES, AND FOR GENERAL PURPOSES
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LIB

Malcolm McLean

Liberal

Mr. McLEAN (Melfort):

The money was no good.

Topic:   LOAN OF $750,000,000 TO MEET LOANS OR OBLIGATIONS, TO PURCHASE UNMATURED SECURITIES, AND FOR GENERAL PURPOSES
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SC

John Charles Landeryou

Social Credit

Mr. LANDERYOU:

Yes; I agree with the hon. member. But here we have hundreds of thousands of people going into our stores with no money in their pockets while the shelves are laden with goods. We suggest that the government have our monetary system reflect our ability to produce and distribute goods and services needed in the country. The national income is going down while the national debt is increasing. The national income dropped SI,123,000,000 to $1,125,000,000 from 1927 to 1937. Our ability to pay does not keep pace with the increase in the debt. Theoretically speaking, the national income can be measured by national production, but to-day we are not using our idle labour and the materials required to increase production. Our workers are unemployed, our materials are unused, our factories are running part time. That is why the national income is lower. We must increase the national income if we want to decrease debt and taxation. I

I wish to move an amendment to the resolution. The amendment reads:

That the following words be inserted after the figures 1931, "and by the issue of currency by the government of Canada"; and that the following words be added at the end of the motion "provided that the amount required for public works and general purposes be met by the said issue of currency."

The resolution as amended will read:

That the governor in council be authorized to raise by way of loan under the Consolidated Revenue and Audit Act, 1931, and by the issue of currency by the government of Canada an amount not to exceed in the whole the sum of Seven hundred and fifty million dollars for paying or redeeming the whole or any portion of loans or obligations of Canada, and also

71492-168i

for purchasing and withdrawing from circulation unmatured securities of Canada, and for public works and general purposes, provided that the amount required for public works and general purposes be met by the said issue of currency.

Neither the amendment I moved the other day nor the amendment I now propose is part of a social credit scheme; it is simply a proposal recognizing that something must be done about the tremendous debt burden that the country is now carrying. It simply means that whatever funds the government intends to spend on public works and for general purposes shall be raised "by the said issue of currency." It may amount to $100,000,000. Under the present scheme, as I understand it, the government intends to borrow the money by selling bonds or securities. Those bonds and securities are issued against the word of the people of Canada. We ask the government to raise in the same way, the amount required, against the word or the credit of the people of Canada. And this money would be spent in the same way as money would be spent if derived from the sale of securities.

I do not fear that this proposal, if adopted, would give rise to inflation. I simply say that it would be a step in the right direction, fulfilling the Liberal promise to issue money and credit in terms of public need. There is need now for public works and the money that will be expended is for that purpose. If proper steps are taken to ensure adequate control over the issue of credit, there will be no danger of inflation.

I have asked the minister many questions, and before the committee rises I should like to know exactly what we borrowed the money for when it was originally obtained, and how much interest has been paid on it since we borrowed it. I should like the minister to give us a complete review of the $750,000,000. We do not know how much will be spent on public works and for general purposes.

Topic:   LOAN OF $750,000,000 TO MEET LOANS OR OBLIGATIONS, TO PURCHASE UNMATURED SECURITIES, AND FOR GENERAL PURPOSES
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LIB

Robert William Gladstone

Liberal

Mr. GLADSTONE:

May I ask the hon. member a question? Will he discuss the effect of his amendment, in its practical operation, on (1) the value of bonds involved; (2) the value of home property in the city; (3) the cost of foodstuffs to the consumer; (4) the cost of manufactured products-for instance, the price of iron and steel.

Topic:   LOAN OF $750,000,000 TO MEET LOANS OR OBLIGATIONS, TO PURCHASE UNMATURED SECURITIES, AND FOR GENERAL PURPOSES
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SC

John Charles Landeryou

Social Credit

Mr. LANDERYOU:

My hon. friend wants to know what would be the effect of issuing $175,000,000 worth of bonds. Before I can really answer that question intelligently I should like the Minister of Finance to tell us just how much money is involved in connection with public works and general purposes.

Loan of 5750,000,000

Topic:   LOAN OF $750,000,000 TO MEET LOANS OR OBLIGATIONS, TO PURCHASE UNMATURED SECURITIES, AND FOR GENERAL PURPOSES
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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

Mr. Chairman, I do not think I should be asked to give over and over again information which I have already placed upon Hansard as fully as our present basis of information will permit. I do not want to seem discourteous to the committee, but my hon. friend can find in the record of these discussions, in which he himself took part, the information he now seeks. I have it before me, but I do not think it fair that one member should have the right to take up the time of the house asking the same questions over and over again and eliciting the same information.

Topic:   LOAN OF $750,000,000 TO MEET LOANS OR OBLIGATIONS, TO PURCHASE UNMATURED SECURITIES, AND FOR GENERAL PURPOSES
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April 11, 1939