I understand that the hon. member for Weyburn was rather charmed with the social credit philosophy a few years ago. I have always maintained that when once a man becomes a social crediter by conviction, he will alway-s remain a social crediter. It is something that gets within his blood and becomes not merely an economic philosophy but a philosophy of life.
I said that I was going to vote for the amendment, Mr. Speaker, because, as I said last year, I really do not believe that it matters very much who owns the banks. The big question is, who is to control the banks? The passing of the ownership from one party to another or from one corporation to another or from the hands of the bankers to the government does not alter the policies of the banking system, and it is the policies of the banking sy-stem that we need to change. Therefore it would seem to make no particular difference to me personally whether the banking system is nationalized or not. What I want is effective control over the banking system for the issuance of currency and credit in terms of public need. That is something which our Prime Minister (Mr. Mackenzie King) promised a few years ago but which he has never seen fit to accomplish. I am going to quote Major Douglas in connection with the nationalization of the banks. He made a speech at Oslo, Norway, in 1935, in which he said:
The institution and keeping of the national credit account does not require any nationalization of the banks. As a matter of fact, such nationalization would be a great mistake. I am not myself, for instance, an advocate of the nationalization of banks. I believe this again to foe one of those misapprehensions so common in regard to these matters, for the nationalization of banks is merely an administrative change: it does not mean a change in policy-, and a mere administrative change cannot foe expected to produce any result whatever in regard to this matter. A change in monetary-policy can be made without interferring with the administration or ownership of a single bank in the world.
I regard Major Douglas, notwithstanding what the hon. gentleman who preceded me said, as one of the greatest economic minds of the age. As the hon. member for Acadia
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(Mr. Queleh) said to-night in quoting Major Douglas, he did say that the day may come when it may be necessary to nationalize the banks, but he suggested that before they are nationalized there must be a change in the banking system itself and in the policy of banking. That is quite reasonable because, if there is no change in the policy of banking, it does not make any difference who owns the banks. The chief function which I believe is required of the banking institutions of a nation is to see that the national income, or shall I say the money in the hands and the pockets of the people, is sufficient that it is able at all times to buy all the goods and services that are available in the nation. The thing I want to know in connection with the banking institutions, and what concerns me in connection with their nationalization, is this: Are we to have any more money? That is the thing. I will answer in a moment the hon. gentleman who preceded me and said that nobody wants a lot of paper floating around as money. But what I am pointing out now is that we want to know whether the banks are going to provide the nation with money enough to buy all that the nation produces. The nationalization of the banks is the same as the nationalization of anything else. A gentleman asked me on one occasion why we did not nationalize the oil fields out in Alberta. The important thing I told him was: Are we to be able to buy the gas and oil when the oil fields are nationalized? Let me picture it for you, I said. A man who believes in nationalizing or socializing the oil fields comes along and says: "We will socialize all the oil fields. I am a good socialist and it will be an extremely fine thing to know that the people own the oil fields." So the oil fields are nationalized. He comes along and sees the oil men drilling for oil and says, "It is great to know that the wells belong to the people." Then later on he sees the oil going to the refinery which has been built out of the people's money, and perhaps he had to pay a little in taxation for the building of the l'efinery. He sees the oil being refined and the oil and gas coming out and transported to a gasoline station. He says, "That is great. Just think; all this belongs to the people!" The next day he drives his car to a gasoline station and says to the attendant, "Fill her up. It is great to know that all this gas and oil belongs to the people." The attendant fills the car with gas and the man starts to drive away, but the attendant shouts after him, "Hi, mister, come back here; you have forgotten something." "What did I forget?" asked the man. "You forgot to pay for your gas", said the 100-1734
attendant. "Oh", said the man, "why should I pay for it? I thought it belonged to the people."
I give that only as an illustration. The point is that it does not make any particular
difference to me particularly who owns the means of production or who owns the banking institutions. What we want is the wherewithal to buy what the nation produces. What we want is the wherewithal, which can only come from the banking institutions. We claim, and I think rightly so, that we must have consumers' purchasing power if we are to consume all the goods that our nation is able to produce.
My hon. friend talked about the false philosophy of printing money. He may, if he wishes, disagree with the logic of some hon. members, but I am going to suggest that when he comes to deal with monetary technique he certainly has need to study it more deeply. I am going to read something from a book published by Major Douglas, entitled, "Warning Democracy", in which he says at page 133:
There is such a remedy. It is not the easy one which might at first occur to you of merely printing more bank notes, since unfortunately that is a method which defeats its own end. The method is a technical one. Jt consists in a simple adjustment, by the use of the technique of credit, of the relation between the average price level and the available purchasing power; and, under existing conditions, the responsibility for making this adjustment most undoubtedly rests with the banking system.
I quote that to my hon. friend to show that the highest authority perhaps on the philosophy of social credit does not advocate the printing of more money. What he says is that there must be a credit relation between the average price level and the available purchasing power. He further says that under the present banking sj'stem the banks have that responsibility.
I say to the Minister of Finance (Mr. Ilsley) that I see no great change in the new bank bill. I agree with the hon. member for York-Sunbury (Mr. Hanson) when he stated this afternoon that the bill includes no vital change. If that is so, the responsibility of equating consumption with production by issuing enough money and putting it into the pockets of the people must rest with the present banking system.
A year or so ago I was at a meeting at which representative social creditors of Alberta were present, including the members of the legislature and the ten members of parliament, and we devised a series of resolutions which we thought would give us a picture of our post-war needs. For the purpose of financing post-war reconstruction we passed a resolution from which I will read. For the sake of
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brevity, I will omit the "whereases", the description of the present system and the failure of the banks. The declaratory portion of the resolution was as follows:
Therefore he it resolved that the entire programme of post-war reconstruction, covering all spheres of the national life, should be financed in accordance with the following provisions:
(a) The control of the monetary system and the issue of all currency and credit shall ibe vested in a national monetary commission responsible to the people through parliament.
I claim that if that proposal were adopted it would not be necessary to nationalize the banking system.
(b) All government expenditures, whether for capital development, social services, security measures or any other purpose shall be financed by the issue of money by the national monetary commission without debt to the nation. Taxation shall be used for the sole purpose of withdrawing surplus purchasing power.
May I digress to say that, even though this bank bill should pass, and we know it will, no fundamental change will be made in the present banking system. I say to the Minister of Finance-and he knows the truth of what I am going to say, for a schoolboy could say it-that so long as a high rate of income taxes and, if you will, corporation taxes exists, there will be less money in the people's pockets wherewith to buy the goods which are available. That is one reason why in that section of the resolution we claim that taxation should be used for the sole purpose of withdrawing surplus purchasing power.
(c) Adequate monetary supplies shall be made available for financing construction programmes, with due regard to maintaining a proper relationship between capital production and the production of consumers' goods.
(d) Proper and scientifically adjusted safeguards shall be instituted to avoid both deflation and inflation, to ensure an orderly price structure, and to provide an adequate and equitable distribution of purchasing power.
(e) All the foregoing shall be carried out without interference with the freedom of the individual citizen.
It seems to me that if that were adopted the banking institutions would not have to be nationalized, but they would have to be willing to take instructions from what is known here as the monetary, or credit, commission, which would investigate yearly and report to parliament all the intricacies of the financial system as it is operating from day to day.
According to the law the revision of the Bank Act takes place only once every ten years. A lot can happen in ten years, especially while we are moving in a very fast, progressive age. If a monetary commission were set up to deal with monetary matters, hearing at all times and any time cases which
came to them from any financial expert who wished to give evidence., the necessary instructions could be issued from time to time. That would keep the banking system in such a state that it would progress with the general progress of the years. Personally I believe that would be a far better proposal than the nationalization of the banks.
My hon. friend who preceded me suggested that we were inclined to 'blame money for everything, and. said that the one thing which is essential is that everybody shall have a job. I do not criticize the idea of everybody having a job; I like to see people doing the things they wish to do, but there is one fundamental principle of monetary technique of which my friend is evidently not aware. It is this, that out of the process of production, from the time the raw materials are gathered together until the finished article is on the shelves for sale, there is never enough money coming into the hands of consumers to buy back all the goods at the prices at which they are for sale. Even though there were no profit there still would not be sufficient money, because there are production loans fed to the producer which have to be paid back. He has to pay depreciation costs, certain taxes, interest, and a lot of other things, and by the time all these are paid there is not enough money coming from the process of production to buy back all the goods produced. It does not make any difference, therefore, if everybody has a job; if that is the only way you [DOT] have of putting money into the people's pockets, eventually your goods will pile up and people will be thrown out of work again. That is the particular technique which my friend did. not realize.
When the hon. member for Lethbridge (Mr. Blackmore) kept telling him that you had to sell your goods and that you could not sell them unless people had money in their pockets, my hon. friend said, "I will tell you where to sell your goods. You will be able to sell them to a foreign country", and he cited Russia. No one wishes more than I do to have an equitable balance of trade with Russia, with China and with any other country. But my hon. friend evidently thinks that when you export a couple of billion dollars' worth of goods to another country that country immediately sends us a couple of billion dollars which we can then spend to buy our own production. That is not so. My hon. friend must know that the only way in which one country can pay another for the goods it receives is to ship goods in return. If goods are received by us in payment, some of our own people are going to be out of work. So that his philosophy of jobs is a wrong
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philosophy. I should like to see everyone at work, but in addition to that you must put into the pockets of everybody a further amount of purchasing power to buy back all that you are able to produce. If that social credit technique were followed you would have the highest standard of living it is possible for a nation to have, the highest standard of living that your productive capacity is able to give you.
The other day I was talking with a gentleman who was in the banking business-well, I should not say that he was in the banking business; he worked in a bank. I asked him one question: What is the purpose of an economic system? Well, he stumbled for a while. I do not suppose he had ever asked himself that question. I said, "It is very easy to answer that question. The purpose of an economic system is that people may live, and the purpose of a right economic system is to give people the highest standard of living.'5 He said, "What do you mean?" I said, "Is there any reason why people should not own their own homes?" At once he replied, "You do not mean that every one should own his own home, do you?" I said, "Why not?" He said, "Do you mean that we should give everyone enough money to buy his own home?" I said, "I did not suggest that we should hand it out exactly in that way, but if there were an additional amount of purchasing power coming to all workers, to the aged, the sick or whoever it might be who was in need, there would be that additional purchasing power which would give us the highest standard of living, homes and everything else." He did not understand that it was possible for everybody to have his own home and, in fact, anything that the country is able to produce.
That is the purpose of an economic system. Why should we live in scarcity, with thousands of people in the bread-line; why should we live in apparent poverty, all because we do not manage properly our economic system, all because we do not bring proper arrangements to bear upon our banking system, all because we do not say to the banker, " This is your responsibility and if you do not meet it we shall have to change the system"? That is something that our governmen seems reluctant to do. The Minister of Finance, when speaking the other day-I have not the exact words, but I think I am quoting him correctly -said that the depression of the thirties was the result of the last war.
Let us see if that is so. I do not know whether he can answer that point to satisfy me; but with this nation's shelves stocked high with goods, with storekeepers standing at their doors waiting for customers to come in, not
being able to sell their goods, and with thousands of people in Canada going to the relief offices, and if they wanted an extra pair of shoes going to the Red Cross, are you going to tell me that a peculiar anomaly of this sort was the result of the war? Personally, I cannot see that it is.
It seems to me to be a very simple problem. What these people wanted is money. We all recognize this, and it has- been mentioned a good many times, that when this war broke out there was money. Why should not money have been produced before, in order that people might be able to buy the goods on the shelves? To tell me that it was the result of the last war seems perfectly futile. If the depression of the thirties was the result of the last war, the minister comes along now and does not change the Bank Act materially, and therefore the question arises, what is going to happen after this war? Surely if the condition I have described was the result of the last war, and if the system is not changed, the same thing will be true following this war. Indeed, as the hon. member for Vegreville (Mr. Hlynka) and the hon. member for Cape Breton South (Mr. Gillis) say, it will be four times worse. It cannot help being four times worse.
These are the things we have to face. This parliament is here to change the legislation. We know it is of no use for any private member or any group in the opposition to bring down legislation, because it has not the ghost of a chance of being passed. The government is the only body of people that can bring down legislation, and it is the responsibility of the government to change the existing legislation, so that the banking system will fit into that new legislation in order to bring about the desired effect. If the government is not going to change the legislation, then the banking institution will go on as it has done throughout the years.
There is the alternative which my hon. friends of the C.C.F. propose, namely, to nationalize the banks. It does not make any difference who owns the banks; the government could simply say, "We are going to control the policy of the banks and set up a commission in order that the policy of banking in Canada shall be such that this Canadian people will get the results they desire."
I am going to vote for the amendment, although under existing conditions the government is responsible for the entire monetary policy of Canada.
On motion of Mr. Nicholson the debate was adjourned.
Topic: BANK ACT AMENDMENT
Subtopic: CONDITIONS GOVERNING TEN-YEAR EXTENSION OF BANK CHARTERS