March 13, 1944

LIB

William Lyon Mackenzie King (Prime Minister; Secretary of State for External Affairs; President of the Privy Council)

Liberal

Mr. MACKENZIE KING:

Yes.

Topic:   BEER-REMOVAL OF FEDERAL RESTRICTIONS OF SUPPLIES TO PROVINCES
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SC

John Horne Blackmore

Social Credit

Mr. BLACKMORE:

I think the Prime Minister will agree that Mr. Low is perfectly

Industrial Development Bank

frank. If he does not understand correctly, the matter can be taken up with him.

Topic:   BEER-REMOVAL OF FEDERAL RESTRICTIONS OF SUPPLIES TO PROVINCES
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LIB

William Lyon Mackenzie King (Prime Minister; Secretary of State for External Affairs; President of the Privy Council)

Liberal

Mr. MACKENZIE KING:

That is right.

Motion agreed to and the house went into committee of supply, Mr. McCann in the chair.

DEPARTMENT OF FISHERIES 69. Departmental administration, $151,660. Item stands.

DEPARTMENT OF LABOUR 100. Departmental administration, $387,318. Item stands.

Progress reported.

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INDUSTRIAL DEVELOPMENT BANK

PROVISION OF ADDITIONAL CREDIT FACILITIES FOR FIXED AND WORKING CAPITAL


The house resumed from Friday, March 10, consideration of the motion of the Minister of Finance for the second reading of bill No. 7, to incorporate the industrial development bank.


CCF

Stanley Howard Knowles (Whip of the Co-operative Commonwealth Federation)

Co-operative Commonwealth Federation (C.C.F.)

Mr. S. H. KNOWLES (Winnipeg North Centre):

Mr. Speaker, I had not anticipated speaking again quite so soon, because I thought I had raised a subject on which other hon. members would be sure to speak, if given the opportunity. However, having moved the adjournment of this debate on Friday evening there are a few observations I should like to make.

Many hon. members who have spoken thus far in the debate have stated that they are prepared to support the principle of the bill, but that they have certain misgivings as to some of its details. My purpose in' speaking is to state as clearly as I can the principle I am prepared to support in agreeing to its second reading. Then I should like to point out as clearly as I can the misgivings I have or, in other words, the reasons for my fear that the bill in its present form will not give full effect to the desirable principles upon which I believe it is based.

Before indicating what I believe to be the principles of the bill, may I say a word as to its effect? As I see it, the effect is to permit the Bank of Canada to engage in a function hitherto not allotted to it. It strikes me a certain amount of confusion has developed through the growing multiplicity of banking and financial institutions. In addition to the chartered banks in Canada we have the Bank of Canada. Now we are to have the industrial development bank; and the parliamentary assistant to the Minister of Finance has indicated that later on there will be something of a banking or financial nature for the assistance of agriculture and, later on perchance to assist in housing development.

This multiplicity is confusing; but needlessly so, for actually in all these banks or financial institutions of a government character we just have different functions of one banking and financial set-up. In other words, if these measures are put through we will have a government bank engaged in various functions. To my mind this confusion emphasizes the need of our establishing one nationally owned and publicly controlled banking system, as an instrument of a national investment policy.

I said I was going to try to state clearly what I believe to be the principle of the bill, and I am prompted to do so because I have heard many hon. members say they are supporting the principle, without defining the principle they are supporting. As I see it, the principle is that a public authority, under the control of the parliament of Canada, should have the say as to the kinds of activity in which at least a portion of industry will engage, or that there should be established a public authority under the control of the parliament of Canada with power to give effect to the necessary financial arrangements to make possible the kinds of industrial activity parliament regards as being socially desirable.

With that principle we in this group heartily agree. In fact we would point out that if to some extent we had not been acting upon that principle we would never have been able to achieve the vast production Canada has achieved during the course of the war. During the war years the government has stepped in and has effected the financial arrangement necessary to make possible, whether it was economic or otherwise, the production of aircraft, guns and tanks, and all the equipment necessary to fight a war. The government has taken the position that these things had to be produced. It has said that our man-power should be applied to our raw materials so as to bring about the greatest volume of war production. The job of the Minister of Finance (Mr. Ilsley) has been simply to effect the financial arrangements to make these things possible.

I repeat that we have had affirmed during the course of this war the carrying out of the principle that underlies, shall I say, or rather that is hidden in this bill, for incidentally that is one of my complaints, that while the principle is there it is almost smothered. We contend that without this principle we could not have achieved the vast volume of production which is to Canada's credit in the course

Industrial Development Bank

of this war, and that equally without this principle we cannot, win the peace. By that I mean that without our setting up a public authority with power to decide in the name of the people the kind of industrial activity in which Canada is to engage we shall not be able to produce the vast quantities of peacetime civilian goods that we need to provide full employment and an adequate standard of living for our people in the postwar period.

Some have said during the course of this debate that we should not worry any more about the problem of production. It has been argued that that problem has been, solved. I do not altogether agree. I believe the war has shown that we can solve the problem of production when we are faced with an allpowerful requirement which we are prepared to try to meet. But that does not mean that automatically when the war is over we shall go on producing in the volume in which we are producing at the present time. We shall be able to continue producing in such huge quantities after the war only if there is the same will to produce in these quantities, and only if we are prepared at that time to effect the necessary financial arrangements.

Therefore I contend that even as during the progress of the war the financial job of this government has been to effect the necessary financial arrangements to enable the production of war goods, so after the war parliament and the government through a public authority must continue to control the direction of investment, must continue to have a definite^ say as to the kind of things that industry is to produce.

' It is also true, as others have pointed out in this debate and as I myself pointed out earlier to-day, that it is necessary to tackle the problem of distribution. We must not think we have solved the problem if we simply do something about the problem of production. We must also get purchasing power into the hands of all our people to enable them to purchase the goods they are capable of producing and are anxious to produce. And so, Mr. Speaker, I affirm my belief in this basic principle that the control of investment, the planning of investment, the effecting of financial arrangements so as to get the socially desirable goods produced is not only a good thing but terribly necessary to our welfare in the post-war period.

Oddly enough, the strongest objections to this principle, if I have heard aright, have come from Liberal members, who for the most part have contended that they were supporting the principle of this bill. They did not say that they were attacking the principle of the bill. They chose, however, to take this debate as an opportunity to attack some of

the policies of this group, and in so doing they have attacked the principle of this bill. We have heard language such as this: We do not want our banking and financial institutions run by politician,?, or by a government monopoly. I say frankly that I find it difficult to understand members of parliament rising in their places and complaining about politicians or speaking about governments doing their duty. If there are members of this house who feel that politics is not one of .the highest forms of social effort and public service they can follow whatever course suits them, but for my part, not only is politics a very high endeavour, but I see it as the people doing their own business. The alternative to politics and the science of government, to democracy as we know it and as we in this group want to extend it, is control of our life economically and otherwise by a few. As matters now stand, there are many things that we politicians so-called, we who are engaged in politics and the science of government, control. We in this parliament, have the say over such matters as war and peace, public health, taxation, housing, justice, labour relations and a whole host of other subjects which come before us during the course of the months that we are in session. Yet though it is felt that we in parliament are competent through the medium of politics and the science of government to control these things in the interests of the people as a whole, the minute the question of business and industry, the question of our economic life, is posed by some of us as a sphere in which the people's representatives Should have a say, tip goes the cry: Don't let the politicians get in there. It is a nice bit of phraseology to use, but it sidesteps the fact that the alternative is to allow a few people-we sometimes call them, and rightly, I think, a few big shots-to control things that are basic to the life of the country as a whole. I refer to our economic affairs, the arranging of our economic life, basic as it is to the amount of money the people will have to live on, to the amount of food they will have to eat and the kind of homes they will live in-everything relating to the life of our people. I suggest that economics, business and industry are just as important to our eleven or twelve million people as are the things which we recognize as matters with which this parliament is competent to deal-perhaps even more important, and I feel that if we are going to carry out the basic principles of democracy we should extend the control of the people into the whole sphere of economics and industry.

That is the reason I am in support of what I have tried to indicate is the principle of this bill, because it seems to me .that this

Industrial Development Bank

principle calls for an extension of the idea that a public authority under the control of parliament should have the say as to the kind of things that industry is to produce. We feel in this group that industry should produce, not for profit to a few individuals, but the things that are socially desirable and necessary for the community as a whole. That is what we have been doing in the war. We have seen to it that there shall be effected the economic arrangements necessary for the producing of guns, planes and tanks, the setting up of air training schools on the bald prairie far away from city services of one bind and another, and so on. We have seen to it that these things are done because we felt it was for the good of the community as a whole, namely, for the defence of the country in this time of war.

Similarly, we feel that when peace comes we should have the power as a parliament, as a government, on behalf of the people to effect financially the production in industry of the things which are socially desirable for the community as a whole. I want to decry not onljr the kind of talk which deprecates governmental activity in the economic sphere, but also the charge that the sort of thing which is proposed in this bill is in any sense a form of dictatorship because the government would have some control over matters relating to industry and finance. It is dictatorship when the few are able to control industry, are able to control finance, are able to decide that funds will be invested where profit is to be made, say in luxury goods, rather than in goods which are socially necessary and desirable for the community as a whole. But when the people through their parliament, through their government, set up a public authority which decides in the interests of the people that socially desirable goods should be produced, that is not dictatorship, it is an extension of the principle of democracy which I feel is one of the things we are fighting for at the present time.

I said earlier that not only was I going to indicate what I believe to be the principle of this bill, and what I mean when I say that I am supporting the principle by agreeing to its second reading, but that I would try to point out what I regard as some of its weaknesses, some of the reasons for my fear that the bill in its present form will not give full effect to this very commendable principle.

First, there is the fact that the bill gives the industrial development bank, or shall I say, the industrial development wicket of the Bank of Canada, no power of issue. To my way of thinking, and as other hon. members who have spoken have pointed out, that is a serious shortcoming.

Secondly, I would point out that the amount of money to be provided under the terms of this bill for industrial development is hopelessly inadequate to meet the problem which it proposes to attack, namely, that of sufficient assistance in post-war production to maintain a high level of economic activity, a high level of industrial production. As hon. members know in general terms, there has been a tremendous increase in the value of our national production during the course of the war. According to an answer to questions by the hon. member for Vancouver East (Mr. Maclnnis) to be found on Hansard of March 2, page 1,086, the gross value of our national production in 1938 was a little over $5,000,000,000. In 1943, according to information on the same page, the gross value of our national production was something over $10,000,000,000. In other words, from 1938, the last full year before the war, to 1943 our production has been doubled. If one had the figures to make a comparison between 1943 and 1933 I am sure one would find that the production had been trebled in that ten-year-period.

What was it that made possible the doubling of our national production from 1938 to 1943? There were a number of factors. The huge expenditures of the government in the purchase of war supplies and providing uniforms and pay and allowances and food and care for our people in uniform-all helped. Another factor which, I feel, was of importance was the amount of money which the governments of the United Kingdom and Canada made available by way of capital assistance to Canadian industry, I hold in my hand a copy of Votes and Proceedings of March 26 last year. It contains amongst other things a statement by the Minister of Munitions and Supply (Mr. Howe) as to the amount of capital assistance to Canadian industries by the British and Canadian governments up to December 31, 1942. I point out that that is quite a long time ago; I have not been able to get any figures later than these, but if such figures are available they will probably be a great deal larger than the figures I have here. According to the information from which I am quoting, the total capital assistance at that time amounted to $1,723,827,099. I suggest that that amount of seventeen hundred million dollars of capital assistance by governments to Canadian industries was a quite important factor in bringing about this level of production in 1943 of ten thousand million dollars.

It is admitted by hon. members on all sides of the house that one of our real jobs in the post-war period is to maintain the present level of production. That will involve a great

Industrial Development Bank

deal of changing over of plants from what they are doing now to other kinds of activity for peace-time needs. It will involve the building of new plants to meet other needs and provide for employment if we are to maintain this level of production. I point out that whereas it took more than 11,700,000,000 to do that only up to the end of 1942, the present bill provides the terribly inadequate figure of only $100,000,000. Thus, even if one takes into consideration all the additional money that the bank can get by the sale of bonds, debentures, et cetera, I point out that the present provision is only one seventeenth of the figure that I have quoted from the Minister of Munitions and Supply.

Another shortcoming of this bill as I see it is that it takes this very commendable and desirable principle of a public authority having something to say about effecting the financial arrangements which will make possible the producing of socially desirable goods, but introduces it only into one small end of our industrial setup, only into the end which is regarded as unprofitable and not capable of drawing investment from other sources. I hope, and that is my reason for giving support to the principle of this bill, that the day is not far distant when we shall extend the principle which is now being introduced into one small end of our industrial set up into the whole of our industrial picture, that we shall have a national financial setup, based upon principles of economic planning, to take the initiative and see to it that there is produced in Canada the kind of thing which is socially desirable, the kind of thing which is necessary to provide a high level of economic activity such as we have now and a high standard of living such as our people deserve in the post-war period.

Again, I feel about this bill that it to a large extent nullifies the principle which underlies it, by continuing the principle of interest, of huge debt which will be piled up and which, as I see it, will take away from the benefit that might otherwise be enjoyed from the principle of economic planning, the principle of a public authority effecting the necessary financial arrangements to provide for socially desirable production.

I am disturbed by the sections of the bill which provide for the continuance of the whole idea of private profit to be made out of this investment, even in this supposedly public authority, by virtue of the other seventy-five per cent of these assets which will be acquired through the sale of bonds and debentures.

.

I contend, therefore, that this bill in its present form, based though it is on a principle that is not only good but highly necessary in the post-war period, will fall so far short of realizing the potentialities involved in it that I dare to hope that in the committee a great many changes will be made in it. It is because this bill will not give full effect to the possibilities involved, and to the principle upon which it is based, that some of us have the fear that it is simply a case of borrowing a good principle but distorting its purpose from that of the total social good, to simply salvaging the present economic system. I submit that is not good enough in these times, and certainly it is not good enough for the postwar period.

Our job is not simply to try to buttress one system or another but to tackle the problem of replacing the four or five billion dollars' worth of war production in -which we are engaged at the present time with four or five billions or even more per annum of peace-time production when the war is over. There is no time to lose. What we need is a nationally owned bank capable of doing this kind of thing. What we need is a broad investment policy, vested in a public authority under the control of parliament, with the power to effect financial arrangements so as. to make possible the production of an additional four or five billions a year, or more, of peace-time goods.

In my opinion, as I have said, the principle underlying the bill is not only good but is terribly necessary for the post-war period, and I earnestly hope that when it goes to the committee changes will be made in it to bring that principle out from the restrictions which now all but smother it and to give fuller effect to its possibilities.

Topic:   INDUSTRIAL DEVELOPMENT BANK
Subtopic:   PROVISION OF ADDITIONAL CREDIT FACILITIES FOR FIXED AND WORKING CAPITAL
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ND

Walter Frederick Kuhl

New Democracy

Mr. W. F. KUHL (Jasper-Edson):

My colleagues the hon. member for Lethbridge (Mr. Blackmore) and the hon. member for Acadia (Mr. Quelch), I believe, adequately set forth the attitude of the social credit members toward this bill; consequently all I wish to do, in the few words I shall contribute this afternoon, is to refer to some of the fundamental economic principles that have been referred to by members on both sides of the house with regard to the principles and objectives involved in this bill.

This bill and others of a similar kind seem to me to be designed to stimulate production, the whole purpose being to increase the amount of goods we shall have available, and I think the remarks which were made by the

Industrial Development Bank

hon. member for Vancouver-Burrard (Mr. MeGeer), in his excellent speech, with most of which I heartily agree, as well as some of the remarks made by other hon. members including the leader of the opposition (Mr. Graydon), should receive careful consideration. They stated that the real problem with which we shall be confronted in the post-war world will be one not so much of production as of ability to consume. When they drew attention to that fact they drew attention to what will be the real problem once we endeavour to revamp our peace-time economy.

That thought brings us back to some of the fundamental principles which I believe we shall have to keep in mind if we are to come to logical conclusions as to what we are going to do. I agree completely with the hon. member for Vancouver-Burrard and the leader of the opposition when they say that we shall have to tackle the problem of consumption or to devise ways and means to enable the people to consume the production of the country up to the limit of their desires to consume.

While I agree with the point of view expressed by these hon. gentlemen and by others as well, I did observe that they did not follow up their statements to indicate in what manner consumption could be stimulated to the point where people would be enabled to purchase all they produce. That is a conspicuous omission.

I wish to call attention again to the point which, in common with the members of my group, I have made repeatedly on the question of production. Those w-ho are responsible for this bill-the Minister of Finance (Mr. Ilsley), if he is responsible, or the assistant to the minister, or any in the department responsible for it-seem to me to assume that all that needs to be done to have a balanced economy is to set up a business, to finance that business undertaking, to get it going, and automatically it will take care of itself, automatically purchasing power will come forth from that industry sufficient to enable the people to buy what they have produced. But that is the very point wherein the endeavour that will be made to carry out the objectives of the bill will fail, as it failed prior to the outbreak of the war.

As I have indicated again and again, what we have to reconcile ourselves to is the fact that no individual industry-and the same is true of all industry collectively-ever issues in the course of production an amount of purchasing power sufficient to buy back its own product. As the hon. member for Lethbridge pointed out in his speech, in the thirties, before the war broke out, we had no problem of production. There was nothing wrong with

our ability to produce the goods we desired. We had, on every hand, goods of every type which -the people had any desire to consume. Goods were there either actually or potentially, but what was lacking was effective demand in the hands of the people to buy the product.

The same situation will certainly obtain when once the war is over and the government is no longer the greatest purchaser of the products of industry. We shall again be back to the position where the value of the total production of consumable goods will be far in excess of the total amount of money which the people will have as a consequence of assisting in making that production. I believe that is an aspect of our economic system which certainly will have to be investigated by the committee when it studies the proposals in this bill, as well as any other of a similar nature which may be introduced later. I believe the members of this house must take this point into consideration, investigate it, draw their own conclusions on it and then act accordingly.

There is another angle that must be considered. I, as well as other members of my group, have referred to it again and again. It is stated that we must sustain our national income at a high level and provide full employment if we are to have a set of conditions to our liking. I do not wish to repeat all the arguments I have advanced in the past with regard to the question of full employment; but as long as the government or individuals in the opposition, or professors of economics outside of the house, or individuals anywhere, continue to contend that the purpose of the economic system is employment and jobs, I feel obliged to continue to raise objections to that idea and principle. The hon. member for Vancouver East (Mt. Maclnnis) in speaking on this bill last Friday evening said, as he has done on many previous occasions along with others of his group, that private enterprise had failed to feed, clothe and shelter the people. Private enterprise is held responsible for providing jobs, for maintaining full employment, for keeping people at work. I think that is an issue which we shall have to discuss in this house more extensively than we have in the past. I consider it basic and fundamental. Thus far neither the government nor the opposition and many others throughout the nation have come to a logical conclusion as to the purposes of the economic system. I wish to reassert, as I have done on many previous occasions, that as long as we insist that the purpose of the economic system is to provide jobs rather than goods, we shall never solve

Industrial Development Bank

our problem. I repeat that it is not the purpose of private enterprise or government enterprise, if you wish, or enterprise of any kind, to find jobs. The only legitimate function of the economic system is to produce goods and to produce them abundantly. Our banking system and our banking policy should be aimed with that object in mind.

Topic:   INDUSTRIAL DEVELOPMENT BANK
Subtopic:   PROVISION OF ADDITIONAL CREDIT FACILITIES FOR FIXED AND WORKING CAPITAL
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CCF

George Hugh Castleden

Co-operative Commonwealth Federation (C.C.F.)

Mr. CASTLEDEN:

How about distributing them?

Topic:   INDUSTRIAL DEVELOPMENT BANK
Subtopic:   PROVISION OF ADDITIONAL CREDIT FACILITIES FOR FIXED AND WORKING CAPITAL
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ND

Walter Frederick Kuhl

New Democracy

Mr. KUHL:

That is the real problem. That is the problem on which we ought to be concentrating our efforts. The orthodox economist holds that industry produces sufficient purchasing power through production to distribute its own goods. That is a false premise. I have placed the figures on the records in the past; I can do so again to-day. But it does not seem to make much difference whether one substantiates his contention with figures or not. They are not accepted. I am satisfied that if individuals, members of this house and all those interested in economics, will examine the balance sheet of any individual company, or examine the aggregate of the balance sheets of all companies, they will discover that industry is not self-liquidating and that, no matter how much production you have, the people are never able to buy the total product of industry with the purchasing power which is paid out in the course of the production. Therefore that leaves us to consider methods of accomplishing the distribution. which is a problem to which the leader of the opposition and the hon. member for Yancouver-Burrard pointed out, but indicated no way in which this could be achieved.

Topic:   INDUSTRIAL DEVELOPMENT BANK
Subtopic:   PROVISION OF ADDITIONAL CREDIT FACILITIES FOR FIXED AND WORKING CAPITAL
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SC

Robert Fair

Social Credit

Mr. FAIR:

John Bracken does not know.

Topic:   INDUSTRIAL DEVELOPMENT BANK
Subtopic:   PROVISION OF ADDITIONAL CREDIT FACILITIES FOR FIXED AND WORKING CAPITAL
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ND

Walter Frederick Kuhl

New Democracy

Mr. KUHL:

Therefore I say that instead of concentrating our efforts on devising legislation and concentrating our thoughts on amending legislation designed to stimulate production we ought to be concentrating our efforts on ways and means of stimulating consumption; for I am completely satisfied that if consumption is taken care of, production will automatically take care of itself. Take care of consumption and production will take care of itself.

In conclusion, I wish to remind the house once more that we shall reach no logical and sound conclusion as to how we shall bring about distribution unless we examine carefully the relationship of the income of the people to the value of the production which they are expected to buy. I wish to remind hon. members we shall also have to concentrate our attention on the question of the

substitution of power machinery for human effort. I am perfectly convinced that we are not logical if we contend that we can have both jobs and machinery. We cannot have both. If we are to use the power machines, then we certainly must reduce the amount of man-hours on the work.

Topic:   INDUSTRIAL DEVELOPMENT BANK
Subtopic:   PROVISION OF ADDITIONAL CREDIT FACILITIES FOR FIXED AND WORKING CAPITAL
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LIB

James Lester Douglas

Liberal

Mr. DOUGLAS (Weybum):

Or produce more goods and raise the standard of living.

Topic:   INDUSTRIAL DEVELOPMENT BANK
Subtopic:   PROVISION OF ADDITIONAL CREDIT FACILITIES FOR FIXED AND WORKING CAPITAL
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ND

Walter Frederick Kuhl

New Democracy

Mr. KUHL:

There is plenty produced as it is.

Topic:   INDUSTRIAL DEVELOPMENT BANK
Subtopic:   PROVISION OF ADDITIONAL CREDIT FACILITIES FOR FIXED AND WORKING CAPITAL
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LIB

James Lester Douglas

Liberal

Mr. DOUGLAS (Weybum):

Oh, no.

Topic:   INDUSTRIAL DEVELOPMENT BANK
Subtopic:   PROVISION OF ADDITIONAL CREDIT FACILITIES FOR FIXED AND WORKING CAPITAL
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ND

Walter Frederick Kuhl

New Democracy

Mr. KUHL:

We are told that if we use the machinery of production that existed in 1929 it is capable of producing an income of $4,400 worth of consumable goods for every family of four in the United States; and that is without any additional plant equipment. That is certainly far in excess of what the people had been enjoying. Therefore I believe the matter of the constant technological displacement of human labour and the disparity between total income and total prices is something that will have to be taken into consideration when we consider trying to balance our economy by merely stimulating production through the use of a bank such as this bill contemplates.

Topic:   INDUSTRIAL DEVELOPMENT BANK
Subtopic:   PROVISION OF ADDITIONAL CREDIT FACILITIES FOR FIXED AND WORKING CAPITAL
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LIB

John Mouat Turner

Liberal

Mr. J. M. TURNER (Springfield):

I find myself in a difficult position this afternoon. The Prime Minister (Mr. Mackenzie King), having fixed up the beer business, has left me without a subject; nevertheless, I wish to say a few words about the proposed industrial bank. Along with many others in western Canada I have endeavoured from time to time to advance the idea of getting more equal distribution of the industrial business of this nation, particularly in western Canada. On more than one occasion in the past, when dealing with matters of finance, unemployment, relief and so on, we have emphasized this point. Last year in speaking on the budget, as recorded in Hansard for March 18, at page 1384, I said:

I need not remind you, sir, because you have been hehe many years longer than I have, and I have heard it said many times in this chamber, that the west has asked time and time again for more factories, more industrial plants. I mention it now for this reason, that a committee has recently been set up here to study the problems of rehabilitation and reconstruction. Judging from the personnel of that committee, we shall have a progressive and worth-while report on the industrial needs and opportunities of western Canada which will be well studied by that committee. I would refer to the Defence Industries Limited plant near Trans-cona which is in my own riding; T do'not want to see this plant closed down or salvaged

Industrial Development Bank

immediately after the war. The same can be said of many plants all through western Canada. I hope at least to have a chance to obtain for the constituency which I represent some plants for western Canada. In my opinion it would be a shame and a disgrace to see that fine plant, in which two or three thousand men are employed, shut down and those men thrown out of work at the end of the war. I wish to pay tribute to those men for the fine work they are doing in this war effort, because we must remember that they were taken trom the villages, the municipalities and the country; that many of them never saw the inside of a plant before, and that they are doing a splendid job, and it is my pleasure to pay them this little tribute to-night. When the war is over, these men will have had these years of extra experience and be fully prepared and equipped to carry on in similar capacities after the war. Therefore I urge with all the strength I have that that part of western Canada be kept in mind by the committee and the government.

And later on:

There is something not quite right in regard to our western industrial set-up when one considers even casually the immense possibilities for industry in the prairie provinces. Consider it only from the point of view of natural resources; look at what we have to offer industries; coal, timber, oil, the natural gas of Alberta in untold quantities, thousands of units of unharnessed electrical power, minerals of all kinds, and in my own constituency that new chromium deposit now in the experimental stage. It is well advanced; I believe 200 tons have been shipped. If this proves successful, I understand this will be the biggest development in recent years in Manitoba. These are only a few of the many things we have to offer. We have two of the best equipped and managed railways in the world to take care of the needs of industry. Behind all that we have great agricultural production in all its branches, capable of supplying a population five or ten times, possibly fifteen times what we have now. with the finest food this world can produce. There is only one answer, more and more factories because, if you get the factories, you get the population.

As everyone in this house knows, Manitoba and Saskatchewan are now threatened with the loss of seven of their representatives in this parliament, owing mainly to the drift of population from the west to the east which has resulted from the heavy centralization of our war industries in the two eastern central provinces. I believe this measure will help to some extent to overcome that situation, if it is wisely administered and given a real chance to operate. It should also help to prevent large, wealthy corporations from controlling and monopolizing certain lines of industry to the detriment of the whole of Canada, by preventing special privileges of controlling the manufacture and distribution of certain goods in defined areas with no interference or competition whatever. The town of Beausejour, in my constituency, ran into a difficulty of this kind some years ago.

They had a glass factory operating there which was the only industry in that town with the exception of a small brick plant. Naturally this glass factory started out in a small way, but gradually it grew larger. Winnipeg, being nearby, was the chief market for its product. It was not very long, however, before that industry was gobbled up by the big eastern interests. Not only was it closed down the week after that; it was torn down, throwing everybody out of work and forcing the people t/o buy glassware manufactured in other provinces, -while acres of the best glass sand stand idle with a fence round them. The brick plant there also has been torn down. If this act had been in operation at that time the town, in conjunction with some of its enterprising citizens, might have saved those industries. These incidents could be multiplied many times in western Canada. The west has starved for the need of capital. To give another instance, the Tyndall and Garson stone quarries, in my riding, from which the stone used in the interior of this beautiful building was quarried1, have not been operating for about twelve years, and I should think this measure would encourage the reopening of those famous quarries. To illustrate how government and private enterprise can cooperate in establishing factories with genuine benefit to all, I should like to read what I said in this house on April 17, 1939, as reported in Hansard for that year at page 2860. Speaking about the establishment of a sugar-beet industry in western Canada, I said:

I turn now to the subject of sugar-beet and canning factories. Here also we have an opportunity to put many men to work. As I have said before in the house, the Manitoba government has already gone on record as backing the bonds of a sugar-beet factory to the extent of $600,000. I understand a sugar-beet factory will employ about fifty permanent employees, about 250 temporary employees, and also a gre.at many more during the tending operations and at harvest time.

A few years later a group of enterprising, public-spirited Winnipeg business men took advantage of that offer and to-day we have near Winnipeg one of the finest sugar-beet factories in Canada. This is a great help to farmers, workers and consumers alike, particularly during a war period. After the war it will help to stabilize the price of that commodity in the area now served. In my opinion this industrial development bank is definitely a step in the right direction, though I think the $100,009,000 allotted is far too little for the demands that will be made upon it, particularly when we remember that the Canol oil project in the northwest territories has already cost the government of the United States well

Industrial Development Bank

over 1130,000,000. However, I suppose we have to crawl before we can run; and since I believe the principle of the measure is right and sound, certainly I shall give it every support.

Mr. GORDON B. ISNOR (Halifax): Coming as I do from Halifax, Mr. Speaker, I feel that I should take part in this debate if for no other reason than to place on record the part which has been played by Halifax and the merchants of that city in the establishment of the banking system we now enjoy throughout Canada. I do not imagine that many hon. members are familiar with the background of the old Halifax Banking company, but I think we can claim that we have in Halifax the oldest bank building in Canada. In 1812 a building was erected which later housed the old Halifax Banking company, which was formed by a group of Halifax merchants headed by a Mr. Enos Collins. There the first so-called bank was incorporated and carried on for a number of years, until it was taken over by the Canadian Bank of Commerce, if I remember rightly, about 1903. Even after that the bank continued to operate in that building until it was moved to a large new building on George street, some years later. In connection with that bank I remember an incident which has been a topic of conversation in that city for many years. During a circus parade in Halifax thieves entered the bank and committed a robbery. I was inquiring of my colleague from Halifax (Mr. Macdonald) to-day, and he said he thought that robbery took place about fifty years ago. At that time the bank was in charge of Mr. H. A. Fleming, who was later with the bank of Nova Scotia and who recently passed to the great beyond. When one realizes that the Halifax Banking company was organized 132 years ago, or fifty-five years before confederation, he sees that we have a real background, so far as banking history is concerned.

Then there is another feature which I believe brings us in close contact with the present banking system. I refer to the number of men from eastern Canada who have played an important part in what we know as the "big four." Until quite recently we found at the head of the Royal bank Mr. M. W. Wilson, who was a native of Lunenburg. He unis succeeded by Sydney Dobson, also a Nova Scotian, born in Sydney. We have at the head of the bank of Montreal a native of Nova Scotia, in the person of Mr. George W. Spinney, who was born at Yarmouth. Then, heading the bank of Commerce, as president and general manager is Mr. S. H. Logan, who was born at Debert.. Nova Scotia. Then, heading the bank of Nova Scotia is Mr. J. A. McLeod, who is a maritimer.

Topic:   INDUSTRIAL DEVELOPMENT BANK
Subtopic:   PROVISION OF ADDITIONAL CREDIT FACILITIES FOR FIXED AND WORKING CAPITAL
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NAT

Alfred Johnson Brooks

National Government

Mr. BROOKS:

New Brunswick.

Topic:   INDUSTRIAL DEVELOPMENT BANK
Subtopic:   PROVISION OF ADDITIONAL CREDIT FACILITIES FOR FIXED AND WORKING CAPITAL
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LIB

Gordon Benjamin Isnor

Liberal

Mr. ISNOR:

Topic:   INDUSTRIAL DEVELOPMENT BANK
Subtopic:   PROVISION OF ADDITIONAL CREDIT FACILITIES FOR FIXED AND WORKING CAPITAL
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LIB

Gordon Benjamin Isnor

Liberal

Mr. ISNOR:

Mr. Speaker, before the house rose at six o'clock I was discussing Bill No. 7, an act to incorporate the industrial development bank, and I had outlined Canada's banking system from the early days when a bank was first established in Halifax 132 years ago down through the years and referred to the facilities that were afforded by the eleven private banking institutions existing in Canada to-day, mentioning particularly the facilities extended by the bank branches extending from the Atlantic to the Pacific. I stated that I felt there was a definite place in our economic system for the private bank. I also

stated and I feel that there is a definite place in our commercial life for a bank such as is proposed by this bill which has been introduced and explained in such an able manner by the parliamentary assistant to the Minister of Finance (Mr. Abbott). He outlined the bill in such' a way as to make it clear to us all what facilities would be provided through the medium of this bank in our post-war development. He pointed out that on account of the reconversion of a large number of the present war plants to peace-time activity a bank such as this would be necessary because under our present banking system long-term loans are not made by the private banks today. He also outlined the objects of the bill, with which I shall deal in discussing the bill in a more detailed way and he stated what he felt were objects of a worth-while nature.

When I was dealing with the issue of bank notes, I mentioned that there had been a' gradual reduction in the amount and number of bank notes in circulation after the establishment of the Bank of Canada, the reduction being from something like $135,000,000 to $42,000,000 at the present time.

I should like to point out in connection with our banking system extending over a period of 132 years, particularly to those members who sometimes question whether private enterprise has served this country properly, that during the past sixty years not a single dollar has been lost to any banknote holder in the dominion. That is an interesting fact which speaks well for the integrity of the banks and the experience of the men at their heads and the manner in which they have carried on this important branch of our financial and commercial life.

One feature of a bank's activities that we are apt sometimes to overlook is the great part which the banks have played in Canada's war effort. I do not know just what we would have done in Canada if we had not had a banking system such as we have extending from the Atlantic to the Pacific and serving every little hamlet and every district in our vast domain. The banks have played a very important part particularly in the victory loan campaigns, when they have placed their whole organization at the disposal of the Canadian government to serve the public in the best possible manner. The banks have taken orders for victory bonds, given information and advice to their customers as to the manner in which they should subscribe, and also have assisted them from time to time in financing their loans. Because of the experience and resources and organization of these banks I believe that thousands and thousands of people in this country invested in ths

Industrial Development Bank

recent victory loan who would not otherwise have bought victory bonds, and in that way the banks have helped the war effort. They have also played an important part in selling war savings certificates, as well as in the larger effort of selling victory loan bonds.

The banks have also established branches in a large number of the camps throughout this country, thus making it possible for men in the armed forces to enjoy the same banking facilities that would be open to them in civilian life in the cities and towns. Many members of the armed services were thus able to purchase victory bonds.

From a commercial and business point of view the banks are also doing a great service. It does not matter whether one is in business in a large or small way. Once he has established his business connection he can go to .the bank and arrange, alter a purchase of goods, to accept a draft in payment of the goods with the least possible trouble. I do not know just what our commercial progress would have been had we not had at our disposal the banking facilities provided by the eleven private banks throughout Canada.

I stated and I wish to repeat that I am in favour of a banking system such as we have in Canada. I feel that it has served our commercial economy in a very, very satisfactory manner. I also feel that the Bank of Canada, established as it was not as a private bank but rather to regulate the activities of the chartered banks, has done excellent service. I also believe that the proposed industrial development bank or loan company, if you wish to call it that, will perform a very useful service in the postwar period.

I do not wish to discuss details, because we are now discussing the general principle of the bill and the details can be considered when the bill is taken up in committee clause by clause. I must say, however, that the objects of-the bill as outlined by the parliamentary assistant to the Minister of Finance should1 in my opinion not only include loans for the purpose of building ships but, as was suggested by the hon. member for Queens-Lunenburg (Mr. Kinley), also provide means for their operation. I have particularly in mind, as no doubt the hon. member for Queens-Lunenburg had, the fishing fleets and the larger type of ship that operates on the Atlantic coast. Just as we provide funds for the earning on of agricultural operations, I believe that funds should be made available by this new bank to assist the fishing industry to carry on its operations on both east and west coasts, thereby adding to the wealth of our dominion.

Dealing more particularly with the bill, I observe that the objective underlying the setting up of the bank is to make credit available to industrial enterprises, which means a business carrying on the manufacture, processing or refrigeration of any goods, wares and merchandise, or the building of ships or vessels, or the generating or distributing of electricity. That is a fairly wide scope, but I would commend to the thought of the parliamentary assistant that he should enlarge it so as to take care of the fishing industry.

I am in accord with the hon. member for Springfipld (Mr. Turner) who, speaking before six o'clock, questioned the adequacy of the amount. The provisions of the bill call for a capitalization of $25,000,000, of which $10,000,000 is to be paid up, and three times the amount of $25,000,000 to be issued in the way of bonds, which would place at the disposal of the bank, if the capital is fully subscribed, something like $100,000,000. I am just a little concerned as to whether this bill will be sufficient to meet the requirements of our post-war era, because it has been stated time and time again that the purpose of the government is to ensure the provision of employment for all. It may be that $100,000,000 will be too small an amount, and I question whether it is wise to limit it to the figure mentioned in the bill.

There is another feature to which reference has been made by at least one other speaker; and although it may be regarded as a matter of detail to be considered by the committee, it is open to criticism whether, by there not being provided a ceiling or limit to loans, the full amount might not be taken up by fifty or one hundred large manufacturers, and thus many others who would like to take advantage of the provision would find that the amount provided for had already been taken up. I suggest that hon. members should consider that question when the bill reaches the committee stage.

There is one feature which I would draw to the particular attention of an hon. member who spoke the other evening. He said that the facilities provided in this bill are also provided by private banking institutions and that they can make long-term borrowings. I think it is definitely stated in the Bank Act that loans shall be of a liquid nature, and that no loan shall be made on real estate. I am pleased to note that in this measure, apart from long-term borrowings or loans, there is a definite provision for borrowing on real estate.

Industrial Development Bank

I recall the experience about twenty years ago of a young business man in Halifax, and I commend it to the notice of some hon. members who are continually talking against private enterprise and advocating public ownership- which, if there were only one bank, would be a monopoly in the truest sense. This young business man had beeen engaged in business in a certain building in Halifax. He found that the executors of the estate wished to dispose of that property, and a man came from Boston for the purpose of selling the building. Our business man heard about it and interviewed the representative of the executors. He procured a forty-eight hour option, and his next worry was as to where he was to get the money to purchase the building. He felt that, having learned the business and having earned, as he thought, the right to stay there, he should make every effort to maintain his stand in that particular section of the city. It was on a Friday, after banking hours, that he called on his banker and made a request for a certain amount of money. That particular bank manager could not see his way clear to advance the necessary funds. What did the young man do? He was a little disappointed for a few moments, until he realized that there were other banks which could be approached. The following morning he turned his attention to another banking institution and the necessary funds were made available from that source. Therefore I say that, with our eleven separate private banking institutions operating throughout Canada, any person who can present a good claim and has a clear background can obtain the assistance which will enable him, provided he has the ability, to make a success of his business. I contend that those who advocate doing away with our present banking system and embarking on a wholly publicly owned policy would do well to reflect upon the splendid record of our private banking institutions, which have carried on over the last 132 years.

Other features of this bill, Mr. Speaker, I should like to mention in passing. I have referred to long-term loans, which we do not have an opportunity to enjoy under our present system. I have referred to the amount of capital; I have mentioned the matter of the building of ships. I believe I have covered the main purposes of this measure. I believe in the principle as outlined in the bill, and that it will certainly help Canada to bring into effect post-war activities which should take care of the employment problem to a very large extent. *

In closing, let me reiterate that I agree with those who favour a banking system such as we

have to-day. I agree that there is a place for public ownership. But I am satisfied that, as we have competition between the Canadian National Railways and the Canadian Pacific Railway Company, between the privately-owned radio stations and the publicly-owned radio system, so we must have competition between the private banks and the public banks if we are to have that keen rivalry which makes for the maximum of efficiency.

Topic:   INDUSTRIAL DEVELOPMENT BANK
Subtopic:   PROVISION OF ADDITIONAL CREDIT FACILITIES FOR FIXED AND WORKING CAPITAL
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March 13, 1944