If I remember rightlyand I am speaking more now from hearsay- the government of the United States of America in 1937 increased the cash reserve requirements of their banks to 20 per cent. The cash reserve requirements of the banks in Canada could be increased to 12 or 15 per cent or to whatever degree was necessary to prevent the chartered banks from taking advantage of that new issue of money further to increase their loans.
Some people may argue that it would not be fair to the chartered banks, that it would seriously decrease their profits if we took such action. On the other hand, when one considers the profits of the chartered banks for the past ten years, I think it will be agreed that they are in a position where they can readily stand a reduction in their profits. I have figures taken from the "Canada Year Book'' showing the profits of the various chartered banks over the past ten years, and I find that on their paid-up capital the profits are as follows for the ten-year period:
Bank of Montreal 9-35
Bank of Nova Scotia 13-15
Bank of Toronto 10-6
Dominion bank 10-6
Imperial bank 10-6
Royal bank 9-35
War Appropriation Bill
That is the profit on their paid-up capital, and that ten-year period includes one of the worst depressions this country has ever known. No one can say that a business which is making 10 per cent profit over a period that includes the worst depression ever known is not doing very well indeed. In addition, they have built up their reserves and built up a number of fine capital structures; they also have their hidden reserves. I think the position of the banks so far as their profits are concerned is a very satisfactory one, and that their profits are greater than necessary, especially when one considers that they were made over the period of the depression. If one takes the period just prior to that ten-year period, they were then making as high as 14 to 16 per cent. It was the depression that brought their profits down to approximately 10 per cent. I have not seen tlhe figures for 1940, but I have no doubt the profits of the banks are now increasing. The Financial Post stated that their assets were increasing, although their liabilities might be increasing in the same proportion.
Subtopic: PROVISION FOR GRANTING TO HIS MAJESTY AID FOR NATIONAL DEFENCE AND SECURITY