March 13, 1944

LIB

Thomas Vien (Speaker of the Senate)

Liberal

Mr. SPEAKER:

We are not dealing with

tariffs in this bill. I do not think remarks ol the hon. gentleman on that matter are relevant.

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

Frederick Davis Shaw

Social Credit

Mr. SHAW:

That is referring to the west.

-was worse than ignored by a policy which plundered the western provinces while it strangled the opportunity for western settlement and development; and the result was reflected in the industrial and commercial paralysis of the dominion from sea to sea. Manufactures languished from lack of markets; mechanics, unable to obtain employment, tramped the streets of Ontario cities under the gruesome signal of starvation; foreign capital held aloof from the unpromising field, while thousands of Canadian-born fled to the United States to find the opportunities of livelihood denied them at home.

Then it refers to the change of policy, namely the opening up of western Canada, and in another short paragraph it notes the beneficial effects which this had brought to central Canada:

The marvel of the west is its productiveness, the inrush of population, most of all the consuming capacity, the consuming possibility of that population for manufactured goods of all kinds. The farmers of the west-

Remember that this applies, Mr. Speaker, to a period at the turn of the century'.

-do not haggle over prices, they have the money to buy all kinds of things, and with their rapidly increasing numbers they can support an immense population in some other portion of the dominion better suited for industrial and manufacturing purposes.

Then in a short sentence it states that the central provinces are the parts of Canada particularly adapted to profit from this large increase in population on the prairies.

I read that simply for this purpose. I contend that when the west was opened the primary _purpose was that the industrial life of central Canada was in need of stimulation; in other words, in need of support which the editorial indicates would be forthcoming from the west. Ever since- that day forces have been at work in central Canada preventing the west from becoming industrialized, in order that that support might be continued on behalf of the central provinces of Canada. I think it has been proved beyond question that all the western provinces and all the provinces in what we regard as the maritimes are capable of supporting a greater number of secondary industries than they now enjoy.

Unless it is recognized that the government must take definite and concrete action to prevent the forces, both industrial and financial, which are consolidated in this part of Canada from maintaining the strangle-hold- I will call it that for want of a better word -upon western Canada, western Canada will wait and wait for its proper recognition in connection with secondary industry.

I do not desire to take very much more of the time of the house upon this occasion. I am not unduly impressed with the possibilities which such assistance to industry will give to employment and to the matter of effective demand and consumption. It was pointed out very well this afternoon by the member for Jasper-Edson (Mr. Kuhl) that the mere fact that we stimulate industry in order to create a certain amount of employment will only create such employment as long as the people of Canada are in possession of the purchasing power necessary to buy the products of industry. To think that industry can function while the people of Canada are not in possession of the means whereby they can procure the products of industry is to live in a day-dream. I could quote extensively from reports, which I believe would command the attention of the house, to show, as the hon. member for Jasper-Edson said this afternoon, that industry in itself does not pump into the system of purchasing power sufficient purchasing power to buy the goods which modem industry is capable of producing.

I do not say that the measure will not provide a degree of relief; but is not the mere fact that we are introducing a measure such as this clear enough proof that the financial facilities which have been available in the past have not met the requirements of industry or of the workers or of the people of Canada at large? In connection with the same point, I do not know' what is going to happen eventually, w'ith all the banks that the government find it necessary to establish. For my own part I would say that if it becomes necessary to establish more banks it is only because they must beforehand have reached an agreement to the effect that the present banking facilities are not meeting the requirements of the people.

We have a bank of international settlement. It is known that we have a Bank of Canada. Jt is also known that we have some provincial banks. It is a fact that on the statute books we have a central mortgage bank, though it has not become a reality. There are credit unions, referred to by the hon. member for Cape Breton South. Now we are to have an industrial development bank, and it has

Industrial Development Bank

been hinted that there will be an agricultural bank. What is the ultimate outcome to be? Is there or could there be an attempt to establish so many banking institutions in Canada that we shall never be able to segregate one to criticize it?

I would say, as was pointed out by other speakers in this group, that we have undoubtedly reached the stage where there must be drastic revisions in the Bank Act. I would say that such revisions should be carried on until such time as the banking institutions that we have in the country serve the purpose for which I believe banking institutions should be established. This idea that, after all, the chartered banks can make only short-term loans, therefore cannot possibly meet the situation, and that, as a result, we must have another bank, is just talking in circles.

The hon. member for Acadia (Mr. Quelch) asserted clearly that it would take only a revision of the Bank Act to make it possible for these long-term loans to be made. I find myself a bit confused by government policy. I wonder what the ultimate objective is. It may be a case of just wait and see; but I have been doing that now for almost thirty-five years. I hope that by the time another thirty-five years have gone by I shall have seen something more satisfactory than the various financial proposals which have been made by the orthodox governments of Canada from time to time since there was a Dominion of Canada.

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

Frederick George Hoblitzell

Liberal

Mr. F. G. HOBLITZELL (Eglinton):

With regard to this bill I would say that the small business man has not been entirely forgotten though he has been almost so. While I have not made myself heard in this chamber very often, I have on numerous occasions approached those in charge with reference to what we could do to build up the small business man and his morale. If this bill is designed to give assistance to small industries it can be very helpful indeed; but, Mr. Speaker, I have very much doubt. I will give the reasons for that. This bill No. 7, to incorporate an industrial development bank, has been drafted by the Minister of Finance (Mr. Ilsley) or his department. They still have in that department some advisers who are also administering the wartime prices and trade board, and I am going to make this suggestion. I think the two of them should get together, because one is proposing to bring forth a development bank to assist the small business man, to help to establish him in the post-war years. It seems to me, however, that an effort to prevent things from happening is far better than to establish something later on.

I have before me the edition of March 1, 1944 of the Canadian Grocer. I hope the parliamentary assistant to the minister will correct me if I am wrong. I am going to quote:

The wartime prices and trade board paid $460,618 to Canadian chartered banks for services in connection with ration-coupon banking for the period March 1 to November 30, 1943- a period of nine months. This information was recently given out by Hon. J. L. Ilsley, finance minister. On the other hand,' grocers who handle more than two billion coupons annually for the board get nothing for their services.

I remember, the first time I rose in the house to speak, I made the statement that labour is worthy of its hire. I certainly do not object one iota to paying for services rendered, and 1 do not object to this money being paid to the chartered banks, but I would ask this question. If the small grocer or the small business man, who has been handling two billion coupons annually, which he has to tear out of books and then lick them and paste them in, is willing to do this gratuitously, why should the chartered banks be paid? On the other hand, if the chartered banks are paid this sum of money, why do we not offer the small business man the same compensation for the services rendered? One or the other is wrong. In my opinion they should all be paid because it is a service rendered.

War brings casualties of all kinds, and the most sorrowful of all are those who have made the supreme sacrifice. Our deepest sympathy goes out to those who have lost their loved ones. But we have casualties at home among our small business men. Speaking in Toronto before one of the service clubs, one of the managers of the R. G. Dunn Company, a large mercantile agency from coast to coast, gave figures, which I believe he was in a position to give, showing that approximately ten thousand small business men had closed their doors. This is a large number of casualties.

I have repeatedly objected to some of the regulations put into force not only by the wartime prices and trade board but by some of those other boards which have been created and which are presided over by some of those dollar a year men. I shall qualify my statement somewhat with regard to those dollar a year men. Some of the dollar a year men who have been working here have given wonderful service. On the other hand, some of the regulations issued by some of the boards do not even make horse sense, let alone common sense. It is pretty hard to establish confidence in many small business men when things of that kind are carried out.

I have been in business as a small business man for some years. I do not mind going out

Industrial Development Bank

into the field of enterprise and fighting my way against competition. I believe that if this government wants to do something to assist the small business man it should not pass legislation for the benefit of the few in preference to the masses. If we legislate for the benefit of the few, then there is no alternative, in my opinion, but state control. I am not one of those who agree with government control.

I believe in private enterprise where one's initiative can reap the rewards of one's own efforts. In that connection I shall quote a definition which I clipped from one of the magazines. It is as follows:

What is private enterprise?

It is the natural desire to make your own way, as far as your ability will take you: an instinct that has brought to this continent the highest standard of life enjoyed by any people on earth. It is the spirit of democracy on the inarch.

Before this bill goes to the banking and commerce committee I should like to see the Minister of Finance meet with the wartime prices and trade board, because it looks to me, judging from this bill and the regulations, as if they are working at cross purposes. I think we shall all be confused until something is done one way or the other.

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

Roy Theodore Graham

Liberal

Mr. R. T. GRAHAM (Swift Current):

Along with many others who have spoken on this particular bill I am convinced that it is very important, important because it is a departure from the policy pursued by Canada in the matter of credit institutions during the whole course of its history. I realize, of course, it is meant to be a part of the reconstruction programme that without exception the members of this house are anxious to see the gov-vernment undertake. I realize also that the wording of the bill would indicate that it is meant to assist small industry; yet, probably it has a greater desire to assist small industry only in order to give employment and to increase the productivity of the business activities of the whole of the people of Canada, so that the production of that particular group may swell the total of our national income and thus permit some of the legislation that has been referred to in the speech from the throne to be of fruitful benefit in the postwar period. On the other hand, by the very nature of the legislation it would appear that it is expected that this particular lending institution will take a certain measure of risk in the lending of money that would not be expected of our commercial banks, mortgage and loan corporations, or insurance companies, or any other of the privately owned or chartered lending institutions.

I think all of us will agree that commercial banks, trust and loan companies or insurance companies, being the trustees either of their depositors or of their policyholders or of their shareholders, cannot, without risk to the structure that they are managing, take undue risks in the lending of other people's money; and to the extent, therefore, that it has been found necessary in the reconstruction programme to take care of that group of business activities which is not already served by the existing institutions, I, of course, agree that the government has done well to tackle and to try to meet that particular situation.

In addition to the institutions to which I have referred, I would point out, as the hon. member for Cape Breton South (Mr, Gillis) indicated, that there are at present in this country credit unions which are part of the great cooperative system that performs in a small way in an individual community and contribute for many needs a useful service in the lending field. It is, indeed, an important part of the business growth of Canada. But I would point out that in my opinion he has failed completely to appreciate the real base upon which the credit union system operates and thrives and plays a very real part when he suggests that we can make it an adjunct of this industrial development bank. I agree with him that perhaps in the development of our financial system we shall do as the United States has done and institute banks for the very purpose of making loans to cooperative enterprises. That particular business has grown to an immense size in the United States. In 1942, the sixteen organizations whose function it is to lend to the cooperative enterprises, lent an amount of some $330,000,000. Believing as I do in the very great contribution that cooperative enterprise has to make in Canada, I have no doubt that this will be another development which will have to be undertaken by government in this country. Nevertheless I wish to point out to the Minister of Finance and to his parliamentary assistant that there is a great deal of weight in the comments made by the hon. member for Yancouver-Burrard (Mr. McGeer), when he suggested that we should be careful to remember the purposes for which the Bank of Canada was created and to see that those purposes are not lost sight of, and that the Bank of Canada's usefulness is not enmeshed in enterprises for which it was not intended.

I wish, like the hon. member for Vancouver-Burrard, to recall to the house the basic principle underlying the creation of the Bank of Canada. It was created for the purpose of regulating the volume of credit and of cur-

Industrial Development Bank

rency in this country. It was not intended as hon. members know, to become a bank to transact lending business with individuals. It is not a bank of deposit in which you and I can leave whatever savings we have after the payment of our income tax. Like the hon. member for Vancouver-Burrard, I think the Minister of Finance and the banking and commerce committee should look carefully into the question of whether this bill will in any way impose upon the Bank of Canada duties it was never intended that the central bank should undertake.

Since this bill provides that the capital stock of the bank is to be subscribed by the Bank of Canada, after which it will be permitted to sell to the public bonds or debentures to an amount not exceeding $75,000,000, we shall have a partly publicly-owned and partly privately-owned institution. The bonds or debentures issued by this bank to the public will not be guaranteed by the dominion; and as I went over the provisions of the bill it struck me that we should be careful not to involve the credit of the Bank of Canada in a financial venture to which the public are invited to subscribe through the purchase of bonds, unless we are prepared to see to it that the venture will be a success and that there will be a reasonable return on the money invested by the public. Having in mind the purposes of the bill, the rate of interest paid on the bonds will be small. This institution will make loans for fairly long periods to at least some individuals who may not be considered A-l risks but who will have a good prospect of succeeding in their ventures and making a contribution to the productive life of this country. Therefore it stands to reason that if the purposes of this bill are to be carried out there will be an element of risk and that at some stage of the bank's career there will be losses. It seems to me, therefore, a dangerous thing to have the Bank of Canada in close association with an institution which may find it impossible to pay a reasonable return to those who invest in it, and which, in fact, may find itself at some period facing a substantial deficit in its capital structure.

For this reason, Mr. Speaker, I suggest to the parliamentary assistant to the Minister of Finance (Mr. Abbott) that he and his departmental officers consider whether or not the suggestion made by the hon. member for Vancouver-Burrard is not of value. This institution is intended to serve a purpose which we think should be served, but we should dissociate it from that great central bank of ours. We want this bank to be courageous in making these loans; we want it to recognize

the small industry, the small business man who needs money with which to start an enterprise which will have a reasonable hope of achieving success. For that reason I suggest to the parliamentary assistant that it might be well to revise the machinery set up in this measure and, instead of the public being invited to subscribe any portion of the necessary funds, to have the government create an organization completely apart from the Bank of Canada, with all the money necessary for the working capital subscribed by the government. I believe we can look to the future with great hope; yet the experience of the past surely tells us that there may be periods of stress again in the world which may impose upon our banking and financial institutions, as upon all our institutions, a load some cannot carry. In the past this central dominion authority has proved a great source of strength when our municipal and provincial governments found the going too hard. Fortunately for us we had the solid stability of the central institution which was able to supply the help necessary to carry us through t.o better days. Therefore I leave that thought with the parliamentary assistant, that he reconsider the set-up of this institution.

May I express my satisfaction at the announced intention of the government to set up a similar type of credit institution to deal with agriculture. In common with all other speakers from western Canada and the mari-times, in the past I have deplored, as I deplore now, the centralization of industry in Ontario and Quebec. Let me assure you, Mr. Speaker, that it is not mere provincialism that dictates this attitude on my part, nor, I am sure, on the part of those other hon. members who have spoken in the same way. I believe the people most concerned with finding a solution to this problem are, strangely enough, not those who live in the outlying provinces. In their own interests, and particularly in view of the larger stake they have in this country, the people most interested in solving the problem of the centralization of industry and finance in Ontario and Quebec are the very people of those two provinces. I think it essential that hon. members should keep this in mind, and that we should all work with the government and with each other to find a way out of this difficulty, because in doing so we shall bring about less criticism, greater harmony and more prosperity for the whole of Canada, of which these two provinces form such an important part.

Had I the time, I should like very much to deal with the remarks of the hon. member for Cape Breton South. As always, I listened to his address with a great deal of interest, but

Alcoholic Bevemgi:<

I am afraid he labours under a good many illusions. I think he fails to understand that socialism is the very antithesis of democracy, and that you cannot have democracy under statism or socialism.

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:

Will the hon. member permit a question?

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

Roy Theodore Graham

Liberal

Mr. GRAHAM:

No; I am sorry, but I have not time.

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:

Did the hon. member ever hear of democratic socialism?

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

Roy Theodore Graham

Liberal

Mr. GRAHAM:

The hon. member for Cape Breton South and others who hold his views make the very great mistake of believing that the cooperative movement is part and parcel of socialism. I say to them that nothing could be farther apart than the true spirit of the cooperative movement as I know it and the spirit of statism or socialism. So that the whole argument advanced by the hon. member falls because his premises are wrong. He states, for instance, that the difficulties we met during the depression were the result of the failure of the present system, which is sometimes called capitalism and sometimes free enterprise. Let me suggest that the reverse is true, and that if we look back over the history of that period we see that nation after nation made the mistake of so planning its economy that the rest of the world would be excluded and it alone would reap some benefit from that policy. The Bennett government that was in power from 1930 to 1935 brought in its Canada-first programme which, to the extent that it was carried into effect, was a planned economy. All hon. members know the result. I say that the closer we keep to the natural laws which govern the economy of the world and all countries therein, just to that extent shall we have fewer depressions, and depressions of less intensity when they do come. I cannot imagine anything which would be more likely to bring about a depression, or which would make the depression of the thirties look like a picnic, than would statism or socialism, if it were put into effect in this country in the future.

There are other matters I should like to mention, but I rose chiefly to bring to the attention of the parliamentary assistant to the Minister of Finance some of the things which should be carefully considered before we finally adopt the very fine idea expressed in this bill.

On motion of Mr. Jackman the debate was adjourned.

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

At eleven o'clock the house adjourned, without question put, pursuant to standing order. Tuesday, Marclf 14, 1944


March 13, 1944