Mr. SLAGHT:

Ask the minister.

Mr. FRASER (Northumberland):

I will tell you what took place. I submit to the hon. member for Parry Sound that the minister explained that through the stress and burden of victory loans in connection with war finance and the handling of the domestic business of Canada he was two or three months behind in seizing an opportunity to

Bank Act Amendment

scrutinize these statements. Naturally, with the stress of work and lack of time, he was three months, or two months, or whatever it was, behind. It was not because of anything that was said in the banking and commerce committee, because the statements would have been checked, as there is an obligation under the act to check them every year. It was because of overwork on the part of the Minister of Finance. I say to my hon. friends in this house: Why try to permeate and saturate this whole question and to cover it with suspicion. This is not a matter of porchclimbing; it is a matter of discussing an important function, obligation and responsibility of certain institutions, and it is the duty of the intelligent representatives of the people of Canada to come to a judgment in this matter.

There were over forty sittings of the banking and commerce committee where the whole question was considered, and I suggest that we should decide now whether the charters should be renewed or not. If we have not discussed the matter sufficiently to be in a position to reach a conclusion, it is for one of two reasons; either lack of mentality to absorb on the part of certain hon. gentlemen, or straight obstruction on the part of some other hon. gentlemen. It can be for only one of those two reasons, because you cannot carry this thing on forever. Every question has been asked that could be asked; every witness has been called who was requested; the zenith of courtesy has -been extended to members of the committee; there has not been a general manager of one bank who objected to any question; there has not been a question directed at the deputy minister or the minister himself to which they have refused to reply. They were as open-minded as they could be, and I suggest that no effort should be made to tar this queston, to tar the whole subject with suspicion and to try to spread suspicion across the dominion. We as businessmen and as members of parliament can unquestionably make our decision., and I for one have come to my decision, namely, to vote for the renewal of these bank charters for another ten years. In .my opinion that is what should1 be done in the interests of the banking institutions, in the interest of the depositors and in the interests of the borrowers and of the people of Canada who are receiving from the chartered banks the best banking service given to any population in any country in the world.

Let me say in that connection that, notwithstanding what has been, said in this committee and in the banking and commerce

committee, the dominion to-day is paying only a service charge on over one billion dollars which it is receiving through the Bank of Canada and1 the Canadian chartered banks. I have not tried to remember the exact figure, but the service charge is 1-2 or 1-3 per cent. Surely the labourer is worthy of his hire. The banks are retailers of credit. They have a function to perform; they have thousands of employees across the dominion, and the government as borrower has to pay a service charge for the service it receives. There is no mystery about that. You cannot do funny tricks with money. You cannot make money out of paper unless you have something behind the paper. No one has ever done that successfully and no one ever will.

I repeat, in conclusion, that there is every reason why hon. members should renew these charters. Let us get away from the uncertain position in. which the banks have found themselves for the last three or four months. Let us renew these charters so that the banks can get on with their business and so that the people of Canada may enjoy full confidence in them, in a banking system which has rendered excellent service and over which there is, in my opinion, ample control through the Bank of Canada.

Mr. ADAMSON:

With the greater part of what the hon,. member has said I agree, but he and other members as well have compared the profits of the banks with the profits of the mines, and he said that the Lake Shore mine in 1926 made a profit of 164 per cent; I think that is what he said-. There is a very important point that we should realize with regard to the difference in financing as between banks and mines. First of all, your bank stock is $100 par stock, whereas your mining stock is, generally speaking, $1 par; and- your mining companies, generally speaking, have an issued capital of from two to five million shares.

The ACTING CHAIRMAN (Mr. Golding):

Order. I must ask the hon. member to stick to the section.

Mr. ADAMSON:

I am speaking about the matter of bank profits, which is the subject we are on at the present time. For a mine like Lake Shore, which has an issued capital of two rfillion shares, to make a profit of 164 per cent it is only necessary for them to make a profit of SI.64 per year per share, and I submit that it is totally unfair to make a comparison of that kind. I am entirely in agreement with what the hon. member has just

Bank Act Amendment

said, but do not let us compare the profits of mines with the profits of banks, because the financing is totally different.

Mr. FRASER (Northumberland):

I agree

with that.

My. ADAMSON:

Mining capital is generally risk capital. You buy a stock for a few cents to-day, hoping they will find an ore body; or you buy stock for a dollar or so, hoping it will increase in value. On the other hand, you buy the stock of a bank, which is an established institution, and pay $100, $150 or $200 per share. One year Lake Shore actually paid 600 per cent profit, but that dollar stock was then selling at $60 per share. Mind you, Lake Shore was perhaps the most successful of all the mines in Canada, and to mention this mine apart from all others is a great mistake, and just as misleading as to talk about the hidden reserves of the banks.

Mr. FRASER (Northumberland):

I should like to tell my hon. friend that my only purpose in bringing it up was because it was an incorporation, the child of a government, and that in its incorporation it received certain concessions from the government. No reflection was intended upon either the mining industry or Lake Shore mine. I simply wanted to show that it was established under a charter granted by a federal or provincial government, just as the banks are. I quite appreciate everything my hon. friend is saying.

Mr. ADAMSON:

I realize that my hon.

friend understands these matters, but I did not want to let the impression get out that these mining companies were making terrific profits. That is not the case. It was the case with Lake Shore, which was probably the richest and most phenomenal mine on the continent of North America.

Mr. FRASER (Northumberland):

The

minister will take all the profits, anyway.

Mr. ADAMSON:

He is certainly doing so now. It must be remembered that with a bank the capitalization remains static, which is not the case with a commercial organization if it is a profitable operation. In the majority of the corporations of Canada, in order to make the shareholders' equity a better equity you will have a stock split, so that instead of one share of $100 par value, you will have four shares of $25 par value, to make it more easily salable on the stock exchanges. I think the proposal that the banks do the same thing is excellent. I merely wanted to clear up this matter, because several hon. members have mentioned the Lake Shore mine in particular and said. "Look at the terrific profits

of that mine; 600 per cent in one year." I believe the bank of Nova Scotia paid sixteen per cent during a certain number of years, but we must remember that while the stock of the bank of Nova Scotia had a par value of $100, it had been selling for more than $200 for some years. To compare the sixteen per cent profit paid by the bank of Nova Scotia with the two or three hundred per cent paid by the Lake Shore mine is unfair, and I do not think is a proper comparison to make as to the payment of profits.

Mr. CLEAVER:

Mr. Chairman, it is a

popular thing with the masses to attack the banks. We are approaching a general election. I do not think any hon. member will make any speeches in defence of our banking practices and banking system unless he is actuated by the most sincere motives, and feels compelled to do so.

As we look at the picture, the allied nations are fighting a war of survival, fighting the costliest of all wars. It is no exaggeration to say that during the first three years of this war we were fighting with our backs to the wall. The best financial brains in Great Britain, the United States and Canada have been directing this war from a monetary point of view, and I think I am safe in saying that these men have devised what they believe to be the best method of financing it. Recently in the banking and commerce committee Canada's financing of the war effort has been under what might be called a two-pronged attack. I will deal with the lesser attack first. That was in regard to inner reserves. Under these circumstances, I think at least we should be careful of our facts. As I listened to the hon. member for Parry Sound talking about hidden reserves this evening I was positively shocked to hear him state that the banks might have tucked away in their vaults $300,000,000 of Bank of Canada cash as these hidden reserves, as he calls them. I well remember the hon. member in the banking and commerce committee referring to hidden reserves as loot, and in another place he said that sums of money were tucked away.

I am going to make a statement which I think will shock the hon. member for Parry Sound, but I know it is positively true. I say that not a bank in this country has not disclosed in its financial statement, for everyone to read, eveiy security that it holds, every dollar of its cash, and the value of all its bank property. I picked out at random from my banking and commerce folder the statement of the bank of Montreal, on which I should like to make some comments. The assets of any Canadian chartered bank in the main are

Bank Act Amendment

these. First there is the bank property, their real estate, furniture, office fittings and the like. Next comes their Bank of Canada cash, in the form of deposits with the Bank of Canada or aotual cash. Their third asset is securities.

Mr. McGEER:

What has the bank of

Montreal in its hidden reserves, and of what do they consist?

Mr. CLEAVER:

I shall be glad to follow

through, but I have thought this thing over, and I believe we should approach this matter in a studious, careful, quiet and sane manner, that we should not get in any passion about it.

Mr. McGEER:

Not at all, but that is a

very simple question, and you can give me an answer.

Mr. CLEAVER:

I shall be glad to.

Mr. McGEER:

Then why hide it?

Mr. CLEAVER:

I will give it to you when I am ready. I do not intend to be led astray from my train of thought. I would ask the committee to be good enough to follow it with me, for I am quite prepared to prove the statement I made a moment ago, that there is not a bank in this country with a dollar of loot, or a dollar's worth of securities, or of cash in any of its vaults in the form of inner or hidden reserves.

Mr. SLAGHT:

Mr. Tompkins, the inspector, says that there is.

Mr. CLEAVER:

I will prove that there is not, and I say to the hon. member for Parry Sound that Mr. Tompkins did not say that.