April 27, 1950

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Thomas Gordon Towers

Mr. Towers:

That is right. Of course, governments should not always go to the banks in that connection; they should sell their bonds to investors.

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John Charles Landeryou

Mr. Landeryou:

Yes. Now the same thing holds true when the municipality or the province goes to a bank?

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Thomas Gordon Towers

Mr. Towers:

Or an individual borrower.

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John Charles Landeryou

Mr. Landeryou:

Or when a private person goes to a bank.

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Thomas Gordon Towers

Mr. Towers:

Yes.

And later:

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John Charles Landeryou

Mr. Landeryou:

What is the proper way? Is the

proper way this, that when I borrow $100 from the bank as a private citizen the bank makes a bookkeeping entry and there is a $100 increase in the deposits of that bank, in the total deposits of that bank?

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Thomas Gordon Towers

Mr. Towers:

Yes.

Mr. Speaker, that is clear, that during a time of credit expansion money is born into existence by the direct action of banks in making loans, and it exists in figures in bankers' books. When anyone goes into a bank to borrow money, he does not borrow the depositors' savings. That is a fact. He goes into a bank; the bank puts a credit entry opposite his name in the form of figures, and when the man walks out of the bank there is that much more money in existence than when he walked in. There is no dispute on that fact; that is the evidence of Mr. Graham Towers, governor of the Bank of Canada.

Let me read some further evidence which seems to me rather striking. These are questions by Mr. McGeer, who was then a member of the house:

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Gerald Grattan McGeer

Mr. McGeer:

Will you tell me why a government with power to create money should give that power away to a private monopoly and then borrow that which parliament can create itself, back at interest, to the point of national bankruptcy?

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Thomas Gordon Towers

Mr. Towers:

We realize of course that the

amount which is paid provides part of the operating costs of the banks and some interest on deposits. Now, if parliament wants to change the form of operating the banking system, then certainly that is within the power of parliament.

But never once has the government of this country, since we have been here, attempted to change that banking policy whereby they, themselves, would be able to create the money they need.

I have cited that evidence because I believe it is as well for some of these critics of the Social Credit policy who ask, "where would you get all the money from?" to know where the present government gets this money, and how money at the present time-real, good Abbott money-comes into existence. I am not talking about social credit money. And might I add that Social Crediters would get money from exactly the same place whence it is born into existence today. The one thing we would do would be to see that there was not a shortage of money, and that the power to consume, in terms of money, would be equivalent to the production of the country in terms of prices.

There is just one further point I would like to mention, because it is rather striking. At page 771 of that same banking and commerce evidence Mr. Jaques asked this question:

Would you admit that anything physically possible and desirable can be made financially possible?

To that Mr. Towers answered, "Certainly".

I noticed in the Ottawa Journal the other day an editorial taking Mr. Douglas of Saskatchewan to task because he had made a similar statement. I am not going to take time to read the whole article, because I wish to conclude with a statement in respect to the way we are going to vote. But this editorial in the Ottawa Journal of April 15, written by one of the editors-I do not know who-is captioned "Slogans and Realities" and quotes Premier Douglas as saying, "what is physically possible is financially possible." Whether the quotation is correct or not, I do not know; but we Social Crediters add the word "desirable" so that the statement is, "what is physically possible and desirable can be made financially possible." The editorial takes Mr. Douglas to task for that which they call a slogan, and they say it is not true.

I would ask this question: who is the greater authority, one of the editors of the Ottawa Journal, or Mr. Graham Towers, the governor of the Bank of Canada?

Then, Mr. Speaker, I might also call attention to an advertisement which appeared in the Ottawa Journal of April 5, and I believe in other newspapers throughout this country. It was inserted by the Bank of Toronto. It is very significant that a campaign is now being carried on in Canada to discourage any thinking about monetary reform. And why? Because they recognize that we are approaching the point of underconsumption, which they like to term overproduction, when there will not be enough money to buy the goods we are able to produce. Getting in on the ground floor of argumentation, they are attempting to warn the people not to change monetary policies. This bank advertisement is headed, "What happens to the money you put in the bank?" It goes on:

Business men, large and small, borrow it to expand so that they can serve you more fully and provide a wider range of consumer goods you need.

That statement is an absolute falsehood. I do not know whether the publicity directors of this bank know what they are talking about. Those in charge of publicity do not always know, and are not always expert in the things they have to publicize; but that statement is absolutely false. If those who publicized it knew what they were talking about, then they did it deliberately to deceive

The Budget-Mr. Hansell the people of this country. Banks do not loan the money of their depositors. They create money in the form of loans, which afterwards becomes the money of the depositors.

I wish I had time to read all this advertisement; other parts of it are along the same line.

In the few moments remaining at my disposal I want to state our position with respect to the amendments; it will take only a moment or two. There are two amendments before the house. On April 4 the hon. member for Greenwood (Mr. Macdonnell) moved an amendment to the motion of the Minister of Finance (Mr. Abbott) that you do now leave the chair. The hon. member for Rosetown-Biggar (Mr. Coldwell) took part in the debate and moved a subamendment. I should like to say something about each of those amendments, and I shall start by considering the one moved by the leader of the C.C.F. party. The first paragraph of that subamendment reads:

This house regrets that the policies of the government. as announced by the Minister of Finance.

(1) indicate that the government is prepared to accept the present level of production as adequate for this country and as placing a limit on the services and security to be provided for our people:

There is no doubt in our minds that the Liberal government is afraid of abundance. For many years they have demonstrated that they have mentalities geared to scarcity. Times without number, almost, we in this Social Credit group have complained against Liberal policies which without question have had the effect of discouraging production. Liberal taxation policies have definitely limited the extent of Canadian production. I go so far as to say, and I do not think anyone can successfully contradict me, that had it not been for the war Canada never would have reached, under Liberal policy, a gross national product of $16,000 million as it did last year. As the consequence of an accident as far as Canada was concerned, but which might have been a deliberately planned war, our people put forth a supreme effort to win the war. Of necessity national production soared to unprecedented heights. We reached a yearly production of $16,000 million of all kinds of goods and services. Now, however, it is clearly evident that the government is as scared as a certain friend of mine who found himself for the first time boosted on the back of a saddle horse. As the horse started to gallop down the road my friend held on to the saddle horn with both hands, fervently wishing that he was safely on the ground again. I am quite sure the government, with their mentality of scarcity, would feel much more at home if Canada's total production were to shrink somewhat below its present

The Budget-Mr. Hansell level. At any rate, no one reading the budget speech carefully can get any other impression than that the Liberals have decided we have reached the limit of their ability to manage an economy. If it gets any bigger it will be beyond them, and someone else will have to take over. They would rather strangle growth than let that happen. Their trade policies; their decided and almost tragic lack of national fuel, steel, sugar, and agriculture policies; their ineptitude in the field of finance: all stand as vocal evidence of the truth of the contention embodied in the first paragraph of the subamendment.

We Social Crediters are apostles of abundance. We sincerely believe there is no good reason why any artificial limit should be placed upon production in Canada. Our production of all kinds of wanted goods and services should be limited only by the extent of our manpower and natural resources. And when we as Social Crediters are entrusted with the management of the people's affairs, the affairs of government, we will stimulate all-out production. What is just as important, or even more so, we will know how to manage a financial policy that will be able to distribute that abundant production equitably to our people so that none will be wasted. For these reasons we find ourselves in complete agreement with clause 1 of the subamendment, and we could vote for it.

Now we come to clause 2, which reads:

(2) make no provision for increased national production through economic planning, public control of investment, public ownership of monopolistic industries, and the full and proper development and use of our resources, so as to ensure a rising standard of living and comprehensive social security for the Canadian people.

I am sure I speak for all my colleagues when I say we are in agreement with the objectives that seem to have been envisaged by the C.C.F. when they drafted this clause of their amendment. Over the years I have noticed that the Social Crediters and the C.C.F., and other groups, have championed the cause of the downtrodden, the underprivileged and the ordinary fellow in the street. I think it is fair to say that both our groups have been fighting for social justice. But, while we seem to be seeking the same objectives in the economic field, there is a very great difference in the methods we would use in trying to reach those objectives.

The C.C.F. subamendment criticizes the government for making no provision for increased national production through economic planning. I think probably that statement is true; but, if I correctly understand the C.C.F. term "economic planning", it is to be done by a planning board whose

powers are set out on page 150 of the book "Make This Your Canada," where I find this-

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Gérald A. Beaudoin

The Acting Speaker (Mr. Beaudoin):

Order.

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SC

Ernest George Hansell

Social Credit

Mr. Hansell:

I should like to read that statement, if I may:

The task of the commission will be to plan for the production, distribution and exchange of all goods and services necessary to the efficient functioning of the economy: to co-ordinate the activities of the socialized industries; to provide for a satisfactory balance between the producing and consuming power, and to carry on continuous research into all branches of the national economy in order to acquire the detailed information necessary to efficient planning.

My time is almost gone, and I want to add just one statement. To get the full significance of this definition one has to look at examples of the application of the socialistic planning idea. Let us take Britain as an example. In that country they have had a national planning commission consisting of a small group of economists, engineers and statisticians. They have tried to plan the national economy. When the plans were made by this commission they were pretty much in detail. The next step in the process was to see that the plans were enforced; and, though many thousands of people were opposed to the plans, they were forced or compelled to submit to them. In other words the whole basis of the socialistic type of planning is compulsion.

We Social Crediters believe it is necessary that economic planning be done, but most of it should be done by individual enterprise. We have constantly criticized the government for not having given proper leadership in the development of national policies such as fuel policies, production policies of various kinds, transportation policies and so forth. But our idea of planning so far as government is concerned is that it should be a planning of objectives, with leadership being exercised by departments of government or commissions established by the government and responsible to parliament. When it comes to the realization of those objectives that have been planned, Social Crediters have consistently taken the position that inducement ought to be used instead of compulsion. Human beings will do their best under inducement; they will nearly always do less than their best under compulsion. It is because of this fundamental difference in the approach to making and applying economic plans that we cannot support paragraph 2 of the C.C.F. amendment. Our approach to public control of investment, public ownership of monopolistic industries, and the development of our resources is also fundamentally different from that of the C.C.F.

I have another paragraph to read, Mr. Speaker, but I see that you are anxious.

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LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. Abbott:

Finish your statement.

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Some hon. Members:

Go ahead.

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SC

Ernest George Hansell

Social Credit

Mr. Hansell:

You have only to look to the Social Credit policies in action in Alberta, with its outstanding achievements and most excellent results, and the C.C.F. policy in action in Saskatchewan, to see what I mean. In the Social Credit province of Alberta development has been phenomenal, and the people of the province have benefited away beyond their expectations. In Saskatchewan development has lagged away behind, and the government and the people face financial difficulties and stringencies as a result. We will not, therefore, be able to support the C.C.F. subamendment, although taken merely as a statement of objectives we find ourselves pretty much in agreement.

I thank you for your patience, Mr. Speaker. I thank the house for its patience, too. May I conclude by simply saying that this is indeed a great country, and under proper financial policies we believe it could be taken on to a destiny far more glorious than has ever been envisioned before.

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CCF

Angus MacInnis

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

Mr. Angus Maclnnis (Vancouver East):

Mr. Speaker, I did not intend to take part in this debate, but realizing the dilemma in which our amendment has placed the member for Macleod (Mr. Hansell) and his party, I think I should try to do something, if not to remove the dilemma at least to enlighten him and show him some of the contradictions in the argument that he was just making. A little while ago he accused the government of not taking steps to control the banking system of Canada, so that the government itself could make the money at the point of a fountain pen instead of having the banks do

it. Does the member for Macleod really expect a government that believes in a policy of scarcity, as he said, would do anything that would obviate that scarcity? To do that would be asking the government to do something which it is not in its nature to do.

The member for Macleod further believes that a government that is operating in the interests of free enterprise, of a system that believes in scarcity, and as a matter of fact cannot be prosperous in times of plenty, would do something against its own interest. He has said that the present government is a government that believes in scarcity. Why scarcity? So that there will be an inducement for the people to meet the needs that scarcity creates. The moment you create plenty you take away that inducement. Now the hon. member believes that by the adaption

The Budget-Mr. Maclnnis of a free enterprise that believes in scarcity to the Social Credit money policy, we would have abundance; but since free enterprise does not want abundance, obviously it is not going to adopt the Social Credit financial policy. The peculiar thing is that Social Crediters believe free enterprise would do for them what free enterprise will not do for the people who have been operating it for generations, that is, that it would create plenty and keep on creating plenty. That is just a fantastic dream.

So far as compulsion is concerned, I may say that I did not know this sort of speech would be made, although I could have suspected it because it is the sort of speech my friends on my left always make. Less than a year ago in this house I showed that the compulsion that would be imposed by a C.C.F. government would be the essence of liberty, in comparison with the compulsion that would be necessary under a Social Credit system. I showed, by reading from Social Credit literature, from Major C. H. Douglas's plan for Scotland, that a census would be taken of every bit of capital in the country. I showed that the compensating price would of necessity mean price control on every article. Surely if compulsion is all they are afraid of, my friends should not have any difficulty in supporting the C.C.F. subamendment. They admit to agreeing with one-half of our amendment; that is more, I am convinced, than they understand of the policies which they advocate. As they are continually talking about things they do not understand, I do not expect them to understand anything as simple as the policies of the C.C.F., or the policies of democratic socialism.

My friend referred to Britain, and the mess they were making of things there. Let me tell him that I was talking to a woman who just came from the British isles today, and what she told me I am sure the member for Macleod already knows, and if he doesn't know he can find out. She said that the people of Britain today, despite their many difficulties, despite the obstacles that they have had to overcome since the end of the war, taken by and large, are better off than they ever were before. For the great mass of the people of Britain, she said, who .never in their lives had been free of poverty poverty does not exist today.

Then the hon. member credits the Social Credit party with the present prosperity in Alberta. Remember that Social Credit policy is purely financial, and I should like any Social Credit member to show me one monetary change the Social Credit party has so far made in Alberta, one item of monetary

The Budget-Division

policy that is any different from the policies of other governments that administered the affairs of Alberta.

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SC

Solon Earl Low

Social Credit

Mr. Low:

We have been demonstrating it for the last fifteen years.

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CCF

Angus MacInnis

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

Mr. Maclnnis:

You have been demonstrating it not by producing money at the end of a fountain pen; you have been demonstrating it because you found oil in Alberta. If oil was found in the Sahara desert, there would be prosperity there too. 'Social credit does not enter into the picture at all. If the oil wells in Alberta dried up tomorrow, so would social credit.

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SC

Solon Earl Low

Social Credit

Mr. Low:

The oil wells came into existence because of social credit policies.

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CCF

Angus MacInnis

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

Mr. Maclnnis:

No. Social credit did not put the oil in the ground. God did that.

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Gérald A. Beaudoin

The Acting Speaker (Mr. Beaudoin):

Order.

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April 27, 1950