Mr. Cameron (Nanaimo):
Yes. They clearly indicate the necessity for some sort of action, whether or not one agrees with the action taken or whether or not one agrees it is an effective action. The increase in the consumer credit from March 31, 1954, to March 31, 1956, shows that the trend is accelerated. From March 1954 to March 1955 there was an increase of $109 million, but in the next year, March 1955 to March 1956, there was an increase in certain selected items, as they were called, of $352 million. When we compare that with the figures for increase in labour income for approximately the same period, we can see that there is something very dangerous in our economy.
I am sorry that I have not been able to compare it with the same dates, but the statistics do not allow that. From May 1955, . from $637 million of labour income, the increase to May this year was only to $676 million, some $39 million. Those two sets of figures compared show that at least in one sector of our economy we are entering very dangerous grounds, but perhaps more dangerous still is the field to which the minister made reference in his remarks earlier this afternoon. That is the field of general bank credit issued in those periods.
I see from the Bank of Canada's report that the total of bank loans in January 1954 was $4,096 million, and in January 1955 there
was actually less, $4,050 million, whereas from January 1955 to January 1956 there was a climb to $4,884 million, or an increase of $834 million, some 20 per cent. When we take the increases after that period, for the rest of this year, we see them climbing even more rapidly, so I think there is perfectly plain evidence that some action ought to be taken by the financial and monetary authorities of this country.
I agree with the hon. member for Eglinton that there are certain weaknesses in the method used. I am not sure that other methods could have been used, but certainly those that have been used have been inevitably used in an indiscriminatory manner so that we have the general curtailment of credit all across the field. Where in many instances it might be certainly to our social advantage to have it curtailed, there may be other areas in which it may not well have been increased. That, of course, is the inevitable result of the set-up of our financial institutions in Canada.
There is, of course, another method that the Bank of Canada uses on occasion to attempt to curb such a period as we appear to be going into. Mr. Coyne told us in the banking and commerce committee that it was, by and large, the most effective method, apart from consultation with the chartered banks; and that is, of course, the method of open market operations. However, he denied the suggestion of some of us on the committee that there was inevitable conflict in the purposes of the bank in open market operations, a conflict between the aim of curtailing inflation and reducing total money supply and the position of government bonds, that that conflict was always there and largely hamstrings the bank when it attempts to deal with the situation by that method.
I would suggest that sooner or later in Canada we are going to have to take some very drastic steps with regard to the channeling of investment in this country. We have all observed the attempts by the government to channel investment into the fields that they think are socially and economically desirable. We have seen the rather desperate efforts to channel it into housing and the various roadblocks they have met in different places, because in the last analysis this government and this parliament has no control over the fields of investment in which those who have control of pools of capital place their funds.
I suggest that the step that was taken- and, I gather, rather deplored by the hon. member for Eglinton-with regard to the Bank of Canada is a step which eventually they are going to have to take with regard
to the whole of the banking system of Canada. We cannot any more say that it is feasible to operate the central bank on a part publicly owned and a part privately owned basis. Sooner or later we are going to have to face the facts that the chartered banks and the central bank are parts of one integrated monetary and financial system and that they also must be placed under one control and under one policy. It is useless charging the chartered banks, as I have heard them charged in recent days, with failing in their social duty, because they also have a conflict in duties. When I hear members, as I have heard them, charging the chartered banks with having failed dismally in entering into the necessary field of consumer credit, I am rather astonished, because those same hon. members would be the very first to object were it proposed that the public authority should tell some of the privately owned institutions what particular business it should engage in, which particular line it should drop and which particular line it should continue.
We can only expect that those who are responsible to shareholders of private institutions, such as the chartered banks, are bound-in fact, it is their duty-to maximize as well as possible the returns to the shareholders of those institutions.
I suggest that we are going to have these conflicts, we are going to have these rather ineffective attempts to control inflation in our economy, so long as we have this rather anomalous situation of an important, perhaps the most important, part of our monetary system and our financial institutions, held in private hands by people whose interests are bound inevitably on occasion to conflict with the public interest. But I for one am very glad that the Bank of Canada has taken this action. I am doubtful as to whether it will be very effective, but it certainly is a warning to the country of the great dangers that lie ahead, a warning that we all ought to heed very carefully. Whilst these increases in total bank loans may not yet, as the hon. member for Eglinton pointed out, have caused any increase in the cost of living, by the time they are realized in investment we may very well be facing a very severe rise in the cost of living and very dangerous inflationary tendencies.
My complaint would be that the Bank of Canada delayed too long in this action and allowed the situation to get too far out of hand before attempting to curb it.