I say I made the suggestion to the Minister of Finance eight or nine years ago that no bonds should be issued payable in gold or in anything but lawful money of Canada. I want to suggest to the minister, if he has not already so decided, that the bonds to be issued under this act should be payable only in lawful money of Canada, not in gold or in foreign funds.
Then I suggest to the minister that these bonds contain a provision under which the government may call them in at any time. I think the minister will realize the wisdom of such a provision.
Incidentally, I also urge that- our money policy be such as to maintain as nearly as
possible stable purchasing power for money which is paid in interest to the bondholder. I think that would be one of the first steps to lower interest rates in Canada. I do not think it necessary to remind the minister of the necessity of lowering these rates. One step has already been taken by lowering interest rates on savings bank deposits. The chief factor governing interest rates in Canada, particularly on long term obligations, is the rate paid on Dominion of Canada bonds. I would just like to remind the minister that our public debt, that is provincial, municipal and dominion, now amounts to over six and a half billion dollars, which at an average rate of five per cent-I think we are paying more than that-means an annual interest charge of $325,000,000. I just mention these figures to impress upon the minister and the house the necessity of lowering interest rates.
Lastly, I want to suggest to the minister that the new loan should be floated at a very much lower rate of interest. I think he should fix three per cent as the rate to be paid on these bonds. I believe that rate is justified by the price level obtaining in Canada now. Whatever the government may decide as to the rate, the principle enunciated by the Prime Minister three or four years ago should be followed now, and banks and insurance companies, particularly insurance companies, should be compelled to invest a percentage of their reserves in such bond issues. I understand that the minister must meet this year treasury bills amounting to $110,000,000 bonds maturing, $169,000,000, and budget deficit $100,000,000, roughly $380,000,000 in all. My last suggestion to the minister is that if he does not get sufficient subscriptions from the public to cover this amount at the rate of interest I have suggested, he should issue enough Dominion notes to make up the balance. He has now ample precedent for that in the action which has been taken in the United States, where the president is authorized to issue three billion dollars of United States notes to retire maturing obligations. I think that as the government has been following a so-called "sound money" policy for the last two or three years, that of keeping our money good in the United States, the minister might now very well follow the United States precedent and meet part of these maturing bonds with an issue of Dominion notes. If public subscriptions are not sufficient, he should at any rate meet the remainder with an issue of Dominion notes. I think the rate of interest should not exceed three per cent.
Motion agreed to and bill read the third time and passed.