March 20, 1941 (19th Parliament, 2nd Session)


Victor Quelch

Social Credit


I quite agree, but the minister will admit that under the 100 per cent system the banks would be in a safe position because they would have one dollar of cash behind every dollar of their deposits. A run on the banks would be absolutely impossible. That is why so many bankers support the idea of the 100 per cent system in the United States. They got such a cleaning up through what happened in years gone by, that no doubt it would relieve their anxiety if there were no danger of a run. Under those circumstances they could very well suffer a decrease of profits. There would be under this system no danger of insolvency, because any time the banks needed money for this purpose they could obtain it from the Bank of Canada. That bank would have absolute control.
What happens at the present time? The Bank of Canada issues a certain amount of money, or the government through the Bank of Canada issues a certain amount of money, and they do not know what the result will be.
The banks may expand it by ten times, or they may not. There is no direct control under this system.
I have heard this argument advanced against the proposal, that in view of the fact that people bought shares in the chartered banks in good faith, in the belief that the same system would be maintained in operation and that, therefore, they could expect to continue to draw the same profits, it would not be fair to the shareholders of the chartered banks to change the system to one whereby those profits would be reduced. That may be a fair argument. In that event, however, the only thing would be for the government to undertake to buy up the shares of the chartered banks and then there would be a government-owned system. I am very much in favour of buying up the shares of the chartered banks and having a publicly-owned banking system, because I do not believe it is a desirable state of affairs to have any body of private persons in a position where they can increase or decrease the amount of money in circulation. When you are in a position to do that you are also in a position to raise or lower prices.

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