Hon. E. N. RHODES (Minister of Finance):
Mr. Speaker, in answer to a question submitted yesterday by the hon. member for Battle River (Mr. Spencer) I desire to say that the Dominion government is not charged under the Bank Act with the duty of determining the rates of interest allowed by chartered banks on deposits nor with the rate of interest charged their customers for banking accommodation. However, believing that it was of the utmost importance to business and trade generally that interest rates should be lowered, the government has reduced the interest rate paid on post office savings bank deposits by one-half of one per cent effective May i, thereby cooperating in the general program to lower interest rates paid on savings deposits by the chartered banks and other depositories in Canada. The government participated in this matter in order to lay the ground for an effective reduction in the cost of money to all classes of borrowers and to promote the stimulus to business recovery which should result therefrom.
My understanding is that while the Canadian Bankers' Association has made no official statement as to a general policy with respect
to a reduction in interest rates to borrowers, substantial reductions have already (been effected.
I may add further that I propose to bring to the attention of the Canadian Bankers' Association the question submitted by the hon. member for Battle River.