The discussion during the past few days has taken an interesting turn as far as the subject of money is concerned. But I cannot understand the attitude of the leader of the opposition. He is apparently criticizing the heavy taxation under this budget, but in the past he has consistently attacked the idea of the creation of money, and there is no alternative. The only alternative you might say is borrowing money from the people who have it, but if any people during this war are making large amounts of money they are the people who should be taxed.
The pay-as-you-go policy is no easy way. If you are to have that, and that is what I believe the committee wants, there is no easy way to accomplish it. We have never at any time contended that the pay-as-you-go policy is easy. We have always emphasized the fact that during a war there is bound to be heavy taxation, and I am not criticizing this budget on account of its being heavy, although I think in some respects the burden should be more evenly distributed.
But the stand this group has taken is that after you have raised the taxation to as high a point as you can without endangering the efficiency of the people and after you have allowed the people to put aside a little for a rainy day, then to the extent that the revenue so derived fails to meet the government's expenditures the services of the Bank of Canada should be utilized. That is the time that you should have the creation of credit, but not until you have applied taxation in war time to a point at which any increase in taxation will endanger the efficiency of the people.
I do not wish anyone to suggest that this group is advocating an easy way of financing the war by the creation of credit without taxation, because at no time have we advocated that policy. I think that the trouble brought about by the people selling their bonds to the banks is a result of the ignorance that has been caused by the type of propaganda circulated by the orthodox press and by the banks. The banks and the orthodox press have continuously told the people that the
banks can lend only their depositors' money. The people therefore feel that if they go to the chartered banks and borrow money they are merely borrowing somebody else's money, and consequently not increasing the amount of money in circulation.
When the minister replies I suggest he should point out that when the people take their bonds to the bank they are not borrowing somebody else's money. They are borrowing newly created credit, or money that has been created by the chartered banks. Therefore, when they sell their bonds to the banks the amount of money in circulation will be expanded by the amount that the bank lends them. If the minister would explain that to the people he would remove a great amount of misunderstanding. I do not believe that the great majority of people in this country to-day realize that when they take their bonds to the banks and borrow money from the banks the amount of money in circulation is being increased by the amount they get. They have been told in the past that it is merely a question of making a loan of money already in existence. I suggest that the minister do a bit of educating in that regard, and probably through such action dissuade people from selling their bonds to the banks.
Subtopic: INCOME WAR TAX ACT