Mr. JAMES SINCLAIR (Vancouver North):

Mr. Speaker, I should like to address a question to the Minister of National Defence for Air or his parliamentary assistant. This question is of immediate importance to quite a number of very gallant airmen who are now on operational leave in this country. One of the most gallant of these is Wing Commander Bill Swetman, D.S.O., D.F.C., a veteran of over sixty operational flights over Germany. He is now making speeches in the Toronto area in connection with the victory loan campaign, and he is reported yesterday as having said that "he wasn't trained to give fancy speeches but to fight. When he and others like him came home on leave after a tour of operations-they get thirty days-they wanted to spend it with relatives-not making speeches to persuade people to buy bonds." If people have to be persuaded to buy victory bonds perhaps it is better that we use men like this, who have fought actual battles in the air over Germany, rather than painted actors and actresses who fight their battles on the

Internatinal Finance

screen or in the divorce courts. I should like to know from the minister or his parliamentary assistant if men like this who are home on operational leave and who speak in victory loan campaigns will get extra leave to make up for the time they give.

Hon. CYRUS MACMILLAN (Parliamentary Assistant to the Minister of National Defence for Air):

An airman's leave period is not curtailed by reason of the fact that he gives some time to victory loan committees or to other patriotic services. His regular leave period is extended by the length of time given to such services.

Hon. J. L. ILSLEY (Minister of Finance):

May I just say one word about actors and actresses? The impression given in the paper was that these ladies and gentlemen receive pay for their services in Canada. That is not the case. They give their services free, and so far as my experience goes they are more than anxious to do something to assist the war effort.

Mr. SINCLAIR:

So they should.

Mr. ILSLEY:

I deplore any remarks that depreciate their services, because they are voluntarily given, in a way in which they can best contribute to helping the war effort of the united nations.

Hon. J. L. ILSLEY (Minister of Finance):

Mr. A. M. NICHOLSON (Mackenzie):

Mr. Speaker, I think it was unfortunate that the Minister of Finance (Mr. Ilsley) made the type of speech which he did when introducing this bill a week ago. The member for York-Sunbury (Mr. Hanson) attached some blame to the minister's parliamentary assistant for advice that was given, but I was inclined to think that possibly the minister's associations with friends south of the border while he was on holiday might have been responsible for his change of attitude. I think I speak for members of the house when I say that no member of the government has grown in stature to the same extent as the minister has since taking over his very important responsibilities, and certainly no minister of finance has ever been able to capture the imagination of the Canadian people to the same extent that the present minister has done. I think all he needed to have said last week was that his government had not been elected to socialize the banks; that if the people of Canada wanted to have legislation of that sort enacted they must elect a C.C.F. government in this dominion, but that until that time came he proposed to follow the traditional methods. Then he could have proceeded to outline the unimportant changes that are to be brought about by this bill. But for him to take time out to speak as he did, in the midst of the victory loan campaign, did not in my opinion serve any useful purpose or the public interest.

Bank Act-Mr. Nicholson

There are many people in this country who certainly do not share the views which the minister expressed last Tuesday.

The Minister of Finance has introduced some very unorthodox ideas in war finance since the war started, and I think he was right in doing so. Price controls, rationing, priorities, the foreign exchange control regulations are all very unorthodox. Those who believe in free enterprise would not expect that a free enterprise government would interfere with personal liberties as the Minister of Finance has done. I know that he had to overcome a good deal of opposition before he could put some of these measures into operation. Let me remind the house of the views that were expressed by the Right Hon. Arthur Meighen when he was leader of the Conservative party in the other chamber. He was complaining of the excess profits tax, and said:

Human nature is the same in war time as in peace, and instead of helping the war effort you are defeating it by stripping people of the stimulus to toil and run their business right. Leave the incentive and make the reward greater, the greater the toil and the greater the success. You do not do it under this bill.

Then listen to this:

I do not exaggerate at all when I say that I have had business men by the dozen tell me that they are leaning on their oars; they have nothing to work for. They say: "We might just as well take it a little easier now, for we are only working for taxes anyway."

But in spite of this opposition the Minister of Finance felt that if Canada was to make her greatest contribution in prosecuting the war, the opinions of Mr. Meighen and his friends must be ignored. I think it would be a great calamity if at this stage the minister should soften and decide that those who would like to make greater profits should be given greater freedom, that we should have no price controls, that the sky should be the limit. So that having already introduced unorthodox methods in the carrying on of the work of his department I think it w7as unfortunate that the minister made some of the remarks he made the other day. His attack on the bureaucrats will, I am sure, give to a great many people the idea that in the wartime prices and trade board political pressures were being brought to bear to get special consideration. I think it would be unfortunate to let that impression get abroad, or the impression that after the minister has tried his best to get the Canadian people to cooperate in maintaining the price ceiling and avoiding black markets, in the administration of these controls political affiliations are taken into consideration by men selected by this administration. It would be unfortunate if the impression should get abroad

that when a letter comes to the board from, let us say, Swift Current, Donald Gordon has to ask the Minister of Finance whether the writer is a Liberal, or a Conservative. I am sure that that does not happen, and it was unfortunate that the minister should imply that if we were to have public ownership and control of the banks in this country we could not expect to have them administered in a way that would be in the best interests of the largest number of people.

A good deal of time was taken by the minister in attempting to defend the banking system in this country. He pointed out at page 2540 of Hansard that it was a travesty of economic interpretation to place responsibility for the great depression upon the Canadian banking system. I do not think anyone in this house has ever placed the blame on the Canadian banking system. But I think it also is obvious that the banking system that was in operation in Canada was not able to prevent the depression, and that the governments in office at that time in Canada were not able during the depression years to organize our economic life so that every able-bodied person would have a chance to work and so that the resources of the country could be developed by the people.

More recently the minister has announced- and this is a revolutionary theory so far as governments in this country are concerned- that as long as the war lasts, whatever is physically possible is going to remain financially possible. I think to a very large extent that policy has been acted upon. But before the war neither Liberals nor Conservatives were able or walling to carry out that sort of policy. In passing, I should like to hear from the Progressive Conservative party some more constructive suggestions than w'ere heard yesterday from the hon. member for York-Sunbury (Mr. Hanson). He spoke at considerable length, but I think few members of the house had any clear picture when he finished as to what might be expected from the Progressive Conservatives if they were in office. Possibly they are hoping that they can ride into office, with John Bracken milking cows across the country, on the unpopularity of the present administration, but I think they misjudge public opinion if they expect to get back into office on the mistakes of the present government in war time.

As prime minister during-the early thirties we had the Right Hon. R. B. Bennett, a man who had made an outstanding success in business and professional fields, and in Saskatchewan, where I lived, we had a Conservative administration; but we found it impossible in those early thirties to get the

Bank Act-Mr. Nicholson

banks to make available currency and credit so that we could have full employment. We found it impossible to get our governments to launch policies which would make sure that those who wanted to do useful work should have the chance to do it.

I have some returns which were supplied to me by the Department of Labour on June 26, 1940, showing the amount of credit which was made available to some of the farmers who went north while Mr. Bennett was prime minister of this country. Federal and provincial funds were tjsed, anc[ the banks were asked to cooperate in solving this unemployment problem. I have selected the cases of three men because they happen to be veterans of the last war, men who fought for freedom. They had committed no crime. They happened to be carpenters, living in the city of Regina, who did not wish to be on relief, and they were encouraged to go north. The total expenditures which could be made by Mr. Bennett's government and the Anderson government to reestablish a family in one year were S300. One of these settlers has also served in the present war, having gone overseas twice in his lifetime. He was obliged to live in a house which cost $47.85. The items are broken down here: $5.45 for the windows; $5.85 building material, $31.55 lumber, $5.27 for tar paper. His groceries for a year cost $10 per month. As for his stock and implements, he was given a mower and rake which cost $25, fifteen hens costing $7.50, a horse, $25; and three bales of hay, $2.25. During the entire year this veteran of the last war received from federal and provincial funds and the chartered banks of Canada $265.15. Another returned soldier got $285. Another one, with a larger family, did a little better; he received $308. I should have thought it would have been recognized in the early thirties that it was in the public interest to feed, clothe and shelter the citizens in all parts of this country. Two of the boys who were living on the allowance of ten dollars per month are now in the armed services. It is not any wonder that since they joined the army, dentists had to be assigned to them to put their teeth in order, and that they had to have extra food so that they might be built up to do their job.

I mention these cases to indicate that during the thirties the banks of this country were unable or unwilling to make credit available to enable settlement programmes to be carried out so that the people participating would have proper houses, decent food and medical and health services.

So that in peace time it was proved pretty conclusively, I think, that there was something radically wrong with a system which

should be expected to make available to people currency and credit so that they could have goods produced and services performed. In war time, also, our banking system did not meet the test. It was not until the federal government was prepared to guarantee the banks against any loss that they were willing to make large loans to companies which were prepared to go into the production of ships and tanks and guns and planes. Those who believe in free enterprise should have argued that those who were going to make these tanks and guns and other commodities of war should take the risks, but those who were manufacturing thought otherwise, and the government of the day made it clear that those who would take contracts on government account could not lose money; they were guaranteed that they would have every cent they invested and profits on their investments.

The C.C.F. feel that, such large payments having been made to the chartered banks of this country, the time has come when the banks should be taken over and owned, controlled and operated as a public utility. We have never given the impression that we can solve our problems by taking over the banks and printing and circulating large quantities of money. I have never told the house before, but I had the experience of being a millionaire at one time.

Mr. CRUICKSHANK:

Shame.

Mr. NICHOLSON:

It was really a very

simple matter. Any person who had a Canadian dollar could become a millionaire in Austria when I was there, after the last war. When I cashed a $20 traveller's cheque I became a multimillionaire, possessing the equivalent of twenty million dollars. But one million had to go for my breakfast the first morning, and by the time I left Vienna I had quite a large volume of money but it would not have bought me a fountain pen. The people of Austria found themselves at that time in a very difficult position.

The members of this group sympathize with the Minister of Finance in his efforts to try to save the people of Canada from the confusion and distress which were occasioned through various parts of Europe during that inflationary period. An old couple who had saved and saved for a lifetime, and who had perhaps five or ten thousand dollars put away for the evening of life, found, when inflation had done its work, that the accumulations of their lifetime would not buy a toothpick. We have been anxious to avoid in Canada any policy which would result in those who work for their wages having to buy in a very uncertain market and having to sell their labour to those who would be able, through inside

Bank Act-Mr. Nicholson

information available to them, to anticipate demand. We have always urged that the, government should have complete control of our currency and credit so that at all times we would have sufficient available to produce the goods necessary for civilian consumption m Canada, for the prosecution of our war effort, and to exchange in the markets of the world for goods which we want but which we cannot secure here.

It has been said by those who have criticized our policy that under a system of government control of currency and credit there would be no guarantee that savings would _be safe. I ask you, what greater degree of security could you expect than the security offered by the entire country? For a number of years I have kept a small amount of money in the post office savings bank. I do not think anyone can argue that your money would be safer in the Bank of Commerce or in the Bank of Montreal. The post office savings bank gives you a better service for savings than any of the chartered banks. You can withdraw or deposit money in practically any post office in Canada between eight o'clock in the morning and six o'clock at night without any identification papers, without payment of exchange, and without any stamp on your cheque. All you do is to present your post office savings book with your signature and your registration card and you are given the money you wish to withdraw. If you deposit money you receive an official receipt in due course by mail. It would be quite a simple matter to extend the service which is now being given by the post office to serve adequately the savings requirements of the entire country.

The hon. member for Rosedale (Mr. Jackman) asks about the poor bank clerks. The hon. member for Cape Breton South (Mr. Gillis) will say something about them; otherwise I would take time to do so. The poor bank clerks have not shared in the prosperity of the banking institutions. The banks of Canada have been able to show very favourable balances at all times. They have been able to build expensive head offices and branch offices; in nearly every community in Canada the most expensive building is the bank. Take the bank of Commerce, with a paid-up capital of 830,000,000. They were able to pay dividends of eight per cent, according to the last return I have, and even during the depression years, in 1932 and 1933, they paid ten per cent, and from 1929 to 1932, thirteen per cent. The Bank of Nova Scotia did a little better, because during the depression they paid fourteen per cent and twelve per cent. The Royal

bank did very well during those years, having paid fourteen per cent before the depression and twelve per cent up to 1932.

The bank clerks, however, did not fare so well. I recall- a conversation I had with an air force officer some time ago. When he found that I was a member of this house he was curious to know what plans were being made so that when the war is over he might have a chance to do useful work in society. He told me that when he finished high school he wished to be a civil engineer, and he tried to borrow money, but the banks were not interested in lending money to enable a student to go to university. However, he found employment in a bank, and after a considerable period he received S80 a month. Then he wanted to marry, but the bank regulations would not allow him to do so until he received S100 a month. Since he has joined the air force; the taxpayers of the country have spent 825,000 training him to be a pilot, and he is now receiving over 8200 a month. He told me he could not understand how it was possible for the taxpayers . to raise $25,000 to train him to be a pilot when a few years ago he could not get enough money to go to university to become a civil engineer.

I think the minister might have taken time to offer some justification for the low salaries which have prevailed in the lower brackets among bank employees. He did take time to defend the bank directors of the chartered banks in Canada, and he said that it would be an unfortunate thing if the successful men of the country should be barred from taking part in directorates. I have the Financial Post directoiy of Canadian directors for 1944, and it is really difficult for me to understand how some of the gentlemen listed here can take an active interest in the different companies they are supposed to direct. Here is Morris Wilson who is:

President and managing director, Royal Bank of Canada; vice president and member of executive of the Montreal Trust Company; director and member of the executive of the Canadian Pacific Railway Company; director of: Sun Life Assurance Company of Canada, Ogilvie Flour Mills, Limited, Dominion Bridge Company, Limited, Dominion Engineering Works Limited, Consolidated Mining and Smelting Company of Canada Limited, British Columbia Power Corporation Limited, Canada Cement Company Limited, Consolidated Bakeries of Canada Limited, Canadian General Electric Company Limited, Beauharnois Light, Heat and Power Company, Shawinigan Water and Power Company; chancellor of McGill University.

How can any one person give careful consideration to the very complex problems that are considered by so many of these companies?

Bank Act-Mr. Nicholson

Here is Leighton McCarthy, our ambassador at Washington, who is a director of the Bank of Nova Scotia, among other things. One would imagine he would have a full-time job in Washington, but it does not appear so, because in 1944 he is listed as:

Member McCarthy and McCarthy, barristers; chairman of the Canada Life Assurance Company; National Trust Company Limited; vice president and director of: General Canada Loan and Savings Co., Toronto Savings and Loan Company, Aluminium Limited, Saguenay Power Company Limited, Union Carbide Company of Canada Limited, Canadian National Carbon Company Limited, Prest-O-Li.te Company of Canada Limited, Dominion Oxygen Company Limited, Electro Metallurgical Company of Canada Limited; director of the Bank of Nova Scotia, British American Assurance Company, Western Assurance Company; member of: Board of Governors, University of Toronto, Board of Trustees, Toronto General Hospital, Board of Governors, Ridley College; trustee: the National Foundation for Infantile Paralysis of the United States of America, the Georgia Warm Springs Foundation.

There are a number of others whose names might be mentioned. Let me cite, the president of the Canadian Pacific Railway Company. He is:

Chairman, president and member exec. comm. Canadian Pacific Railway Company; chairman of: Associated Screen News, Canadian Pacific Air Lines Limited, Canadian Pacific Steamships Limited, chairman exec. comm, and dir. Consolidated Mining and Smelting Company of Canada Limited; president of: Canadian Airways Limited, Canadian Australasian Line Limited; Quebec Salvage and Wrecking Company Limited, Scottish Trust Company, Seigniory Club Community Assoc., Limited; vice pres. Toronto, Hamilton and Buffalo Railways; (alternately) pres, and vice-pres. of: Northern Alberta Railways Company, Toronto Terminals Railway Co., Vancouver Hotel Company; director of: Bank of Montreal, Canadian Arena Company, Canadian Pacific Express Company, Metropolitan Life Insurance Company, Minneapolis, St. Paul and Sault Ste. Marie Railway Company; member Canadian comm. Hudson's Bay Company; chairman executive comm. Bishop's University; governor of McGill University, Montreal General Hospital, Royal Victoria Hospital, Notre Dame Hospital.

I think that many of these well-known Canadians must be used as window dressing for many of these companies. Take a farmer from Saskatchewan like Charles Dunning-and by the way, I think the cruelest barb of all hurled at the minister yesterday came from the member for York-Sunbury (Mr. Hanson) when he expressed-the fear that the Minister of Finance was going the way of Charles Dunning.

Mr. HANSON (York-Sunbury):

Which

way did Dunning go?

Mr. NICHOLSON:

I will tell you in a minute. He is:

President' Ogilvie Flour Mills Company Limited; chairman Allied War Supplies Corpora-

tion; member Canadian Comm. Hudson's Bay Company; dir. of Canadian Investment Fund, Consolidated Paper Corp., Consolidated Bakeries of Canada Ltd., Steel Company of Canada Limited, Bank of Montreal, National Liverpool Insurance Company, Liverpool and London and Globe Insurance Company Ltd., Liver.pool-Manitoba Assurance Company, Globe Indemnity Company of Canada, the Consolidated Mining & Smelting Company of Canada Limited, the Royal Trust Company, the Bell Telephone Company of Canada, Sun Life Assurance Company of Canada, Canadian Pacific Railway Company, chancellor Queens university.

I do not think it is very convincing to say that because Mr. Dunning is a director of all these companies we have the best possible banking system that can be devised by Canadians. I suggest that the minister would be better advised to carry on along the general line he has been following in his department with a view to having those policies acted on in Canada which will guarantee the greatest production of consumer goods in peace time as in war time.

In the report of the Bank of Canada for the present year the governor of the bank outlines views that scarcely coincide with those advanced by the minister in his argument the other day. In discussing the adjustments which must be faced in the immediate future the governor of the bank points out that in 1939 we had about 4,000,000 Canadians gainfully occupied, and that at least 300,000 who were available for work were not employed. He goes on to say:

By the end of 1943 the gainfully occupied population had risen to approximately 5,100,000 but about 1,900,000 of these were engaged in the -armed forces, in supplying the weapons of war, or in producing the food required for special war time exports. The number available to meet civilian needs had therefore fallen to about 3,200,000, but at the same time the average standard of living had risen materially and. was probably higher than it had ever been. This increased output of consumption goods by a smaller working force can be accounted for in part by longer hours of work, favourable crop conditions and the -abnormally small number now employed in private capital development and maintenance work.

After the war, some of those who are now employed will voluntarily withdraw from the working force, and the armed services may -be maintained at a level considerably above their pre-war strength. It seems likely, however, that at least 4,700,000 workers will be available for employment in civilian jobs, or at least 1,500,000 more than the number employed in that sector of the economy at the present time.

The question that all Canadians must be worrying about these days is this: Have we the machinery to guarantee that the nearly two million who are now in the armed services and war industry can come back and find useful employment? It is our opinion that we cannot give any such guarantee unless we

Bank Act-Mr. McGeer

are prepared in peace time as in war time to plan our production so that the resources which are here will be developed as a part of a national plan.

I have been told that a company like Canadian Industries Limited employed about 4,500 in the pre-war years. They have been employing about 45,000 during these war years; but their reconstruction plans call for the employment of about 6,000. That will mean they will be employing about one-third more than they did in the pre-war years; but what of the 39,000 who have been employed and who will be turned into the ranks of the unemployed? Similar figures may be cited to describe what will happen in the shipbuilding industry and aircraft production in a great many industrial areas in this country. I hope the minister will, if he is in charge of his department when the war is over, be willing to have as his slogan, "Whatever is physically possible must be made financially possible."

It has been suggested by some who have taken part in the debate that we cannot look for prosperity in Canada unless we have a very large export trade. The members of the C.C.F. party look forward to international relationships so that the nations of the world will trade extensively; but I submit that Canada can provide a higher standard of living for her people than we ever had before, regardless of her foreign trade. Therefore I think it is imperative that the resolution moved by the leader of this group be supported by the house so that we shall have plans afoot when the war is over to enable the government of this country to be in a position to control the development of our resources, and have available at all times the currency and credit necessary to guarantee full employment and to maintain the highest possible standard of living.

Mr. G. G. McGEER (Vancouver-Burrard):

them as freely and with the same spirit as against Hitler, we shall really be making progress.

I know that the remarks I shall make will not find a happy echo in either St. James street or Bay street. But I do feel rather happy to be able to travel in the company of the men I have quoted this afternoon.

We live, Mr. Speaker, in grim but inspiring times. Our day of decision in this parliament must follow and be complementary to the D-day of invasion. For upon our decisions in parliament will depend, not the success of the invasion that is coming, but the success of the fruits of the victory which we hope is not far off. The great crisis of the war for us is close at hand. The day nears when the weight of the fighting power of the United States and the British empire, accumulated in years of determined preparation, will be thrown in all its force against the enemy.

We have good reason to be confident that the declining strength of nazism may be soon overwhelmed. Germany, we trust, will not be able to survive another winter of war. Japan has already lost control on the seas and in the air. Before this summer passes no ship flying the flag of Japan will be able to move with safety on any part of all the seven seas. Many now competent to express an authoritative opinion are predicting that the Japanese war machine may collapse in a welter of hara kiri, even before the disillusioned and defeated nazis throw down their broken arms.

We await anxiously the day of the grand attack, and when it comes we regret that the shadow of sorrow will pass over the doorstep of many more Canadian homes. But the day of unconditional surrender will not be denied. Let us hope that we at home, in safety, have already been given the light to appreciate the nobility of the character which the fighting men and fighting youth of our generation proved was theirs in the darkest days of freedom's danger. Let all of us, particularly those of us who are in our war parliament, remember that our men on the seas and in the fighting lines, and the boys in the air who are crusading as youth never crusaded before, are fighting for the institutions that have flourished under the flag they love. They have gone forth with daring and courage, and with dauntless hearts and matchless fortitude not to conquer but to save. Fighting to protect the security of their homes and loved ones, and to preserve free enterprise as the greatest of all their liberties, in victory they will gladly offer all the liberties which they enjoy and cherish to enslaved mankind, wherever oppression and aggression rule. They are adding new lustre to the glorious traditions of our race;

[Mr. McGeer.)

they are writing new pages in the records of our long and valiant service in the cause of freedom. No reckless ambitious pride or buccaneering selfishness tarnishes the escutcheon of the armies of liberty that they are bearing with unconquerable valour. When men struggle in the clash of arms in that spirit, their war is holy. The blood spilled in that cause is sacred. The lives laid down in sacrifice on that altar of service are forever consecrated to immortal glory. Ours is not only the justifiable pride of those closely associated with the heroes who are enacting the greatest episode in our glorious history. Ours is not only the tender memory of the loved and lost. Ours is the solemn duty so to fulfil the purpose and opportunities of our lives that the victory they fought and died to secure will not have been won in vain. It is for us to dedicate our lives to the preservation and advancement of all they gave their lives to save. Out of their sacrifice so freely offered and gladly given, and out of the welter of human carnage which has drenched so many lands with the blood of innocent millions, may there come to us new understanding. Yes; may we be given the understanding that will bring us under the guidance of the golden rule and release us forever from the alluring selfishness of the rule of gold.

Until we in parliament win that great battle against the selfishness of privileged monopoly, all the tragedies of revolution and war will be repeated over and over again. Wars are won on the battlefields, but they are bom of the misguided action of men in parliaments. Until parliament dominates and subdues the blind greediness of privileged monopoly, the lot of our own and future generations will be but a repetition of the dismal past, its envies and its hatreds continuing, its false gods prevailing, its poverty, squalor and misery enduring, its revolutions and its wars beclouding the future and turning every horizon that beckons mankind onward and upward into the bitter anguish of illusion and disappointment.

It is ten terrible years since parliament approached the revision of the banking laws- ten years of depression and of war. And while I know it is easy to say that things are so bad they cannot be worse, I have always believed it was better to remember that things can never be so good but what they might be better.

I remember appearing before the banking and commerce committee back in 1934, advocating some very heretical doctrines against orthodox finance. I came under the guidance of the like of Lincoln, and I laid down his programme with regard to the approach to national currency, when he said back in 1839:

Bank Act-Mr. McGeer

We say that no duty is more imperative on the national government than the duty it owes the people of furnishing them a sound and uniform currency.

To achieve that, as our objective, we went before the banking and commerce committee; and the Liberal party coined the great expression, "Liberalism stands for the issue of currency and credit in terms of public need, not private gain." My hon. friends do not think that we have gone far enough, but let me say that the picture to-day is very different from what it was then. Liberalism has achieved much.

In 1934 we advocated a publicly-owned national bank that would become the centre of Canada's greatest public utility, her monetary system. That has been accomplished. We advocated the removal of the gold reserve limitation in the issue of full legal tender and national paper currency. That has been accomplished. Some of my hon. friends will laugh when I say that we have ownership of the Bank of Canada. Not only have we ownership of that bank; to-day there is in issue from that bank 81,400,000,000 of national currency serving this nation in war. We advocated the control and regulation of the international movement of currency, credit and investment. That has been accomplished. Our foreign exchange control board has proved to be an institution of tremendous power and invaluable service to the nation in this crisis.

We advocated then, not the rigid regimentation and controls necessary in war time, but that wages and prices and production and distribution and rents should be kept within the bounds of reason. We have proved that with the cooperation of the people these things can be controlled, and those controls are now in operation. AVe advocated also the use of taxation to aid in the regulation and circulation of the medium of exchange and to avoid inflation. It has been proved that that is a practical administrative power of government. All these reforms have taken place under a Liberal administration, and I venture to say that there are few nations to-day in the world that have a sounder foundation of finance upon which to approach the period after the war than Canada has under Liberal government.

Let me go just a little further and point to some of the other lessons that we have learned as a result of our experience in this war. AVe were always told that once we were a young country, and had not accumulated the money wealth that older civilizations possessed with which to build railways, canals, harbours, cities, villages and industries, we must conform to the rate of progress and the standards of government expenditure and

taxation that would satisfy the money lenders in Berlin, Paris and London. It was there and there alone that money for capital investment was available. AVe were told that we must keep our credit good in the lending financial centres of the world. Well, we borrowed; we went into debt for everything we did, and we came out of the last war the most heavily indebted people in the world in proportion to our wealth and population. We carried an international debt which was proportionately greater than that of Germany.

AVhat happened in this war? Of course our financial experts told us that we could finance only a hundred million-dollar war at the start. When we took on the British empire training scheme we were told we would have to cut down a portion of our other war work. Because of that bad advice by the financial experts of this country the preliminary war effort was crippled beyond measure. Following the retreat from Dunkirk, the collapse of France and the terrifying exposure of England's weakness, we came to the conclusion that Canada must defend herself, and our government wisely declared that no monetary consideration would stand in the way, that no limit would be placed upon the resources and energies of the people of Canada in this war effort.

What happened? We lifted our war budget from a hundred million to nearly a billion, then to two billion, then to three billion, and this year and last year it ranged in the vicinity of five thousand million dollars. AVhat about these older centres that were supposed to possess the money wealth that we did not have? We lent England seven hundred million dollars and then found a billion dollar's worth of goods and services which were created by Canadian finance and energy. We did not borrow in Berlin because they had closed their door, and the Bank of France crowd in Paris had collapsed. We could not borrow in London because London did not have anything to lend us. Is anybody going to say that out of that experience Canada has not found her financial independence? Are we to go crawling to some international banker for money to put our people to work after this war for a better Canada? I think that would be just as ridiculous as to suggest that we might finance this war by issuing the five and a half per cent tax-free bonds that came from that banker Minister of Finance, Sir Thomas AA'hite, during the first war. That practice was during the years when the orthodox financiers ruled and it was said to be the soundest money that Canada ever issued; certainly the most expensive.

Bank Act-Mr. McGeer

That kind of nonsense will never be repeated. Let us hope that no government will ever say that we have to borrow abroad to finance Canada's development when this war is over.

I am disturbed however because I am not so sure that what I think is excellent advice by our chief fiscal adviser, the governor of the Bank of Canada, has found the right kind of hearing in the ears of our Department of Finance. Let me quote what Mr. Towers has said to this government, which will be found in his annual report covering the work of the bank last year. He said:

I do not wish to suggest that public debt could be increased at the present rate for an indefinite period without placing intolerable strain on our economy. I do feel, however, that the war debt, and the increases which will inevitably take place for a time after the war ends, can be handled without serious embarrassment.

The governor is taking in a fairly wide range of territory, because no one can predict with certainty when this war will end or what its repercussions will be when it does end, or what their cost will be. If we are able to handle an increase in our debt of anywhere from seven to ten billion dollars, why was it that we could not handle a debt of four billion dollars without bankruptcy and unemployment in 1935 and 1939? He goes on to say:

A vastly increased volume of consumption and capital development will be necessary if this output is going to be fully absorbed and high employment maintained.

But here is the warning:

The adjustments required wrill clearly be of unprecedented magnitude, and bold planning on the part of labour, farm and business organizations, as well as governments, is urgently needed.

Just why he left out the banks I do not know; for it does seem to me that their responsibility is just as great as that of the others mentioned.

Let me put the problem as I see it. We now face a world with tremendously improved capacity to produce consumers' goods. We now face a nation with a burden of debt unprecedented in history. Our cities are overtaxed and moving with difficulty under a debt load of one billion dollars; our provincial governments are carrying another debt load of two billion dollars; our federal government carries already a debt of eleven billion dollars, making a total of fourteen thousand million dollars of debt, which is the first fixed charge upon the payment of the taxpayers' money into the consolidated revenue. I have no hesitation in saying that if we are going to sustain full employment or high employment after the war and avoid the disastrous consequences

of a post-war depression, government spending must continue on almost as large a scale in the period of adjustment as during the war years.

What are the programmes so far put forward? There is the $25,000,000 industrial development bank. I disagree with that, because I do not believe that a bank of that kind should be formed to go into competition with our commercial banks or private financing organizations. I do believe that we can repeat the experience of the United States in the establishment of a government agency- not a government bank-like the Reconstruction Finance Corporation which can give to this dominion the same tremendous assistance that the Reconstruction Finance Corporation has given to the United States. When I look over the unprecedented changes in our proposed revision of the Bank Act to-day, the only fundamental change, Mr. Speaker, that I can find is the raising of the rate of interest to small borrowers from 7 to 91 per cent. Here again you have the old doctrine of making the poor pay for the service of the rich. If that provision comes out of the banking and commerce committee, it will come out only after I have given to it all the opposition that I can give. These provisions of finance fail to conceive, fail to apprehend and fail to present to parliament financial adjustments described in the language of the governor of the Bank of Canada as of unprecedented magnitude.

Let me indicate some of the things which we might do to meet the coming situation. There is a causeway to build across the straits of Canso, connecting the great industrial area of Cape Breton with Nova Scotia, There is a canal to build between the bay of Fundy and the gulf of the St. Lawrence. There is a tunnel to build between New Brunswick and Prince Edward Island. There is a great St. Lawrence river to develop. There is Beauharnois already in action, and not supplying the needs. The St. Lawrence waterway and the powers of the Ottawa river have been crying for decades for development. Down our Canadian rivers flow in waste countless thousands of horse-power energy. Yes, Mr. Speaker, we can electrify our railway system and from that electrification distribute electricity to the rural areas. In the electrification of our railways, in the streamlining of our tracks, in the rebuilding of our railway equipment, obsolete for years, we can find employment for that vast army of highly trained technicians and artisans who have made a contribution in this war that

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has given us an industrial revolution we could not otherwise have achieved in probably a hundred years of peace.

If we are to move forward and live in this new world that is to come, it is the financing of expansions of that type, of unprecedented magnitude, that our Department of Finance and our monetary system will be called upon to do.

I want to say this in conclusion. When we were before the banking and commerce committee we advocated, in addition to the things that have been accomplished, something more. We advocated that the Bank of Canada should be the national bank, that it should be responsible for financing the federal government; but we also advocated that a suborganization of that bank should be established in every province, and that the responsibility of that suborganization would be the financing of our provincial and municipal governments. We did not propose to take over commercial banking or to socialize private finance, but we did ask for a complete segregation as between public finance, the financing of public enterprise, and the financing of private enterprise and acting as custodian for private money.

We have made, of course, great progress. But we can go farther. We can finance the building of a Canada that will stand out as one of the foremost nations of the world, because our twelve million people, Mr. Speaker, are I believe the richest twelve million people anywhere in the world. We have more in our possession and more work to do than any other people in the world, and unless we allow ourselves to be hobbled and fettered as we have been in the past by the bad advice of our financial experts and by the misguided theories of orthodox finance, we can not only give a lead to our own people but make Canada an example for the whole world to follow, and make it one of the brightest parts of the world of English-speaking people.

Let me say, on social services and taxation, that with a proper management of our national currency and our monetary system we can give the government more power and we can impose less taxes on the people. We must have peace with progress; we must have peace with progress and prosperity. We can do away with things like the cost of living sales tax. We can eliminate the need for taxing wage earners to the point where they have not enough left to maintain a decent standard of living. We can raise the wages of our school teachers. We can raise the wages of our postmen and of our policemen.

Yes; we can finance these things with the same ease with which we have financed the war; we can bring about progress and prosperity for Canada through the budgets of our federal, provincial and municipal governments, and keep our economy moving forward on an even keel. It is along these lines, Mr. Speaker, that I feel we can approach with safety the revision of our Bank Act and monetary laws.

I do not think that I have by any means all the answers, but I believe the answers are there to be found, and that if we approach this great problem freed from the spirit of partnership, and uniting together, not in any spirit of critical antagonism to the Department of Finance, but more in the spirit of cooperative good will, we shall find the answers, we shall produce solutions, and we can look fonvai'd to the avoidance of that pitiable disruption which has swept over so much of the world in which we live.

But let me give you this warning. This land has no special dispensation against revolution or class conflict. Its seeds are already here. We have to face a world which is on the march forward, and if democracy as we know it is to survive, it will only be because it serves mankind as well as if not better than any other system of government.

Mr. JEAN-FRANCOIS POULIOT (Temis-couata): I congratulate the hon. member for Vancouver-Burrard (Mr. McGeer) upon his very fine speech, and I should like to say a few words about this bill. Looking at it, one sees that the proposed changes are not numerous. It is not so long ago that the Liberal party included in its platform the proposal to establish a national central bank to control rediscount, currency and credit. Some time afterwards the then prime minister, Mr. Bennett, stole that plank from the platform of the Liberal party and himself established a central bank, which was the Bank of Canada. The leader of the opposition at that time, the leader of the Liberal party, complained that Mr. Bennett had stolen the banking programme of the party. Mr. Bennett was gifted as a speaker, and his imagination gave him lots of opportunity to find rich metaphors of speech, but when it came to constructive ideas for the building of this country or the improvement of business he often fell short. When the matter came before the Liberal party I was opposed to it, but finally I bowed to the majority of my colleagues who were in favour of that bank.

So many views have been expressed about credit that it is time to say what is usually meant by the word. Credit is not money,

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though money is often called credit; nor is it currency. Both money and currency are not principals; they are accessories to a transaction which is no less than a barrier. In the old times when there was no money, rich men exchanged camels, cattle, et cetera, for services or goods. Afterwards carved stones or other objects came into use, but there was something to offer in exchange for goods or services rendered. So many things have been said on this subject that people are under the impression that there is a spontaneous generation of credit, and that, for instance, when a man goes to the bank to secure a loan, an entry is made in the books and it is called credit, when in fact it is a debt of the bank to the individual, and the asset which the bank has to cover that debt is the guarantee which is given by the customer for the amount that is advanced to him by the bank. Therefore there is a transaction which is made by the bank in favour of a customer; but it cannot be extended indefinitely. It is done in certain cases.

One thing to be praised in banking is the decentralization of responsibility. There are managers located in various places, and they know the people; they know what their needs are, and they try to help them as much as they can. I will never say that the banking institutions which we have now are perfect, but they can be compared favourably with those of any other country, particularly with the banking system of the United States.

1 have here a quotation from what was said by the Prime Minister (Mr. Mackenzie King) not so long ago, on March 3 of last year:

There is no doubt that society as it is organized to-day does enable those who are economically strong to become stronger, and at the same time does have the effect of causing the economically weak in many of the great struggles of life to become weaker. While the wealth of the world has vastly increased, its distribution has become increasingly disproportionate.

On the same occasion the same gentleman spoke as follows:

And if, as a result of the institution of private property, whether it be ownership of Jand or of capital, a special condition may develop which is inimical to the community as a whole, that institution has either to be modified in some particulars, controlled in some dealings, or make way for some other system.

On February 21, 1941, I mentioned in the house that there was considerable intrigue to bring about a union government in order that the rich might become richer and the poor be poorer. Two years later the Prime Minister declared that society as it is organized to-day does enable those who are economically strong, et cetera, to become' stronger and has the effect of causing the economically weak

to become weaker. The raison d'etre of the Bank of Canada was to control rediscount, currency and credit. Was it not established ten years ago? If it failed of its purpose, why is it not abolished?

Here I have some remarks to make about the right of ownership and the distribution of wealth. It will be very difficult to establish a proportionate distribution of wealth, but the suggestion that wealth should be distributed in a certain proportion to all necessarily implies the right of all to ownership. It is clear that if no one has the right to own, no one would have the right to own any proportion of -wealth, and if it is true that the distribution of wealth has become increasingly disproportionate, it is not because the wealth of the world has vastly increased, but precisely because the wealth of the few has vastly increased. Such a condition is due not to society as it is organized to-day but to society as it is disorganized to-day. Society as a whole should not be impeached for the excessive greed and unruly ambition of a few. If society is so much disorganized to-day, who is responsible for the fact that the greed and ambition of a few have not been checked1 in time? Who also is responsible for the fact that the strong became stronger and the economically weak, weaker, and if it was society that enabled them to become respectively stronger and weaker, how was it done? What was the length of the process in each case?

It is not the institution of private property, whether it be ownership of land or ownership of capital, which might develop into a social condition inimical to the community as a -whole. It is the abuse of the institution of private property by the few which could do it. Therefore it would be illogical and unjust to conclude that the institution of private property must "be modified in some particulars, controlled in some directions, and should make way for some other system." The matter is too serious. It cannot be left like that. One should be ready to answer other pertinent questions with regard to the institution of private property, whether it be the ownership of land or of capital. First, in what particulars should it be modified and by whom? Second, in what direction should it be controlled and by whom? Third, for what other system should it make way?

There should be no mental reservations, no demagogic appeals. Social security will never be artificially established, it will never exist unless the causes of social insecurity are suppressed. This is a most important point. If there is something wrong in our banking system, what is it? It cannot be only the increase of interest on small loans. That is

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unfortunate, and I hope it will be corrected, as my hon. friend who has just spoken said. But there are other things. We must go to the source of the evil. We must see what is the best that can be done with regard to banking. .

At the present time the Bank of Canada is apparently independent of the Minister of Finance as well as the House of Commons. When the question was up before, the Minister of Finance said, on June 2, 1941-time passes very quickly-that the Bank of Canada is independent of the finance department and of the House of Commons. Sir, I regret very much that I cannot agree with such a theory.

I find it unsound, and for the information of the minister I will quote Hansard, page 3376, 1941:

Mr. Blaekmore: Do I understand the minister to say that the Bank of Canada is not directly under the control of the Department of Finance?

Mr. Ilsley: Correct.

Mr. Blaekmore: That it is independent of the finance department, and therefore independent of this house?

Mr. Ilsley: Correct.

Mr. ILSLEY:

But I modified that later in a very careful statement. I answered Mr. Blaekmore a little hastily that day.

Mr. POULIOT:

Yes. But on the other hand, when I asked the minister's predecessor-not his immediate predecessor, but the one before, Mr. Dunning-for some information on the Bank of Canada, I was denied that information. I was told that it was none of my business to know about the expenses of a Bank of Canada doorman who travelled around the world. I do not know what are the relations between the Minister of Finance and the Bank of Canada. It is impossible for a member of parliament to attend all the sittings of the house and to read Hansard from the first page to the last, but there was something abnormal in the condition under which the Bank of Canada was created and left on an ivory tower.

I hope the minister will make clear what are the relations between himself and the Bank of Canada, but at the present time he should not be the only intermediary between the Bank of Canada and the House of Commons. He should have control over the Bank of Canada and he should submit to the control of the House of Commons.

We hear about the nationalization of banks. It is often mentioned in public that our banking system should be nationalized. W hen the Bank of Canada was created, it was created under private ownership and Mr. Bennett gave the reason for establishing it in a way-contrary to the system that had been operating for years. The capital was privately

owned, and the policy of this government afterwards was different; they made it publicly owned. The government purchased the shares and we were told that the Bank of Canada was a public, a national institution. It is a mushroom. It is impossible to know what is going on there, and those people are not in contact with the House of Commons at all. We" must have certain information from them, and also from the Minister of Finance, but in the present stage it is impossible to get information. How many times did I ask questions about the Bank of Canada and was told that, as in the case of the railways, the government did not have to answer? This is the old story. So long as the capital stock of the Bank of Canada was privately owned, while there was not exactly a raison d'etre there was something like a raison d'etre for establishing it; but as soon as the government bought the private stock and made it government owned, then the Bank of Canada had no longer a raison d'etre and we should have dispensed with it. It could be easily done. It is done in other countries. The government has control over banking in other countries. The position of the Chancellor of the Exchequer with the Bank of England is an example to follow in this dominion. In England they would never stand for a sy-stem such as the one w-e have here. Their policies are not made by experts; they are made by the government. This government may consider the suggestions that are made to them by the experts of the various departments, but, sir, is it not essential that the policy itself be made not by these experts but by the government? At the present time we can see where it differs from the past. In the old days when a member went to see the minister, the minister used to call the official in charge and ask him what was his answer to the complaint of the member, and then the minister decided what had to be done. But now conditions are entirety different. The same official is called and the minister asks him to decide what to do. The minister is there just as an intermediary between the member and the department, and the one w-ho is always right and makes no mistake is the official in charge. I do not believe that the Bank of Canada will serve any purpose so long as we have that system of irresponsibility.

I should like to have the gift of speech of my friend the hon. member for Vancouver-Burrard (Mr. McGeer) to describe the future as I should like it to be for the boys and the girls in the armed services, as well as for all our fellow citizens. But there were two things he said that seemed to be contradictory. He said that we have a burden of debt unprece-

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dented in this country, which is true. He then expressed the desire that we should impose less taxes in the future. How can it be done with such a heavy burden of debt? Then he said that the Bank of Canada should be a national bank. So long as it is constituted as it is now, the Bank of Canada will never be a national bank. Even if the Bank of Canada is an international bank, our credit should be controlled by the nation. That is why it is important that the Minister of Finance should iiave a check on the Bank of Canada, and that he should be responsible to parliament for the general policies that are followed by that organization.

It would be a great mistake to put into the heads of our fellow citizens the thought that they will be given as much credit as Santa Claus distributes in Christmas gifts if a certain party comes into power. Those things are most dangerous. We should not expose our fellow citizens to disillusion. I recognize the sincerity of all my colleagues, although I do not agree with many of them. They want the redressment of wrongs. Wrongs will be redressed when the supremacy of parliament is recognized as the medium to correct the evils. Canadian citizens have a right to petition parliament for the redressment of a wrong. How can they petition parliament for the redressment of a wrong done by the Bank of Canada when there is no link between parliament and that bank? There may have been mistakes in judgment, and even mistakes of policy, on the part of some banks at certain times; but what is the remedy? It is easy to say to anybody: we will see to it that you will get unlimited credit. It was done in France. It was done at the time of the French revolution, and assignat fell down to nothing. It was done in Germany after the war, and the mark fell to next to nothing. It was easy to be a millionaire in Germany, to have a million marks. You could get them for a few cents. We shall not expose our country to such depreciation of money.

I may have some questions to ask when the committee sits, and I shall ask my good friend, the hon. member for Ontario (Mr. Moore), who is the chairman of the committee, to afford me the opportunity of asking some questions of the witnesses when they appear. But let us be very careful about making a change in what has been going rather well. When there are not too many complaints it is dangerous to make a change. It was dangerous to change the rules of the house. Would it not be dangerous to make too many changes in the banking system?

Let us not forget, sir, that the so-called prosperity which the Canadian people are

[Mr. Pouliot.j

enjoying is superficial. There are expenditures in large brackets, but sooner or later it will have to be paid. It cannot go on like that all the time. There are high wages paid and contracts are let here and there, but we are in a very precarious situation. There are many people who worry about the future, and who ask themselves what will happen when the war is over. It is time to think of that and to be very careful about the adoption of new schemes, whether they are proposed by financial wizards or others. When I speak of "financial wizards" I speak of the experts who are the advisers of the government. Sooner or later the day will come when the huge amount of taxation that is increasing will have to be paid, and it will not be a service to render to the boys who are fighting now in all corners of the world to welcome them with financial embarrassments as soon as they are discharged from the army. That is a matter for serious consideration, and I hope, sir, that no one will forget that the burden of taxation will be harder to decrease so long as the Canadian people are not told the truth in very simple language.