John James KINLEY

KINLEY, The Hon. John James, V.D.

Personal Data

Party
Liberal
Constituency
Queens--Lunenburg (Nova Scotia)
Birth Date
October 15, 1881
Deceased Date
August 23, 1971
Website
http://en.wikipedia.org/wiki/John_James_Kinley
PARLINFO
http://www.parl.gc.ca/parlinfo/Files/Parliamentarian.aspx?Item=63603592-a656-4876-8bc2-dceb6a41d1ca&Language=E&Section=ALL
Profession
industrialist, pharmaceutical chemist

Parliamentary Career

October 14, 1935 - January 25, 1940
LIB
  Queens--Lunenburg (Nova Scotia)
March 26, 1940 - April 16, 1945
LIB
  Queens--Lunenburg (Nova Scotia)

Most Recent Speeches (Page 5 of 120)


August 12, 1944

Mr. KINLEY:

That is unfortunate, but

this is no good to them.

This inflation business never succeeded anywhere it has ever been tried-and it has been tried. They tried it in Mexico. The people got hold of United States cheques, and they would not do business except with United States cheques. They passed them, one to the other, and it became their money, and was the only money that was any good.

Germany had to resort to inflation; defeated countries all do it. It is a sign of weakness. They had to do it in China. Poor China is in travail to-day because of it. An hon. member passes me one of these German reichmarks. It took a barrel of them to buy a cup of tea.

We have before us a revision of the Bank Act. We sit in judgment on the banks in Canada, which have done a good job. They have been the pride of Canada in days of adversity. The banks are not perfect. The human element enters into them. They are in competition, but they have a record of which we may be proud.

It seems to me that in the future, and that in facing days of peril and adversity we should be careful of what we do at this time, and we should hold fast to that which is good.

Topic:   BANK ACT AMENDMENT
Subtopic:   CONDITIONS GOVERNING TEN-YEAR EXTENSION OF BANK CHARTERS
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August 12, 1944

Mr. KINLEY:

If they gave that money

to the people, and at the end of that year they got $1.04 back, it might be different; but they made them work for it. They paid schoolteachers with it, and it is fifty-two per cent money. If I got one dollar from the bank and then put it into the bank I would get one and a half per cent interest. If I

Bank Act Amendment

get this certificate I have to put fifty-two cents on it. It is hot money; the longer you keep it, the less it is worth. If I wish to cash it to-day it would cost me $1.04 to cash it.

I am a practical business man. This whole talk about debt-free money in this country gets us nowhere. This is what we judge them by, because they issued this money and told the people that they might use it, but the people would not use it, and they had to withdraw it.

Topic:   BANK ACT AMENDMENT
Subtopic:   CONDITIONS GOVERNING TEN-YEAR EXTENSION OF BANK CHARTERS
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August 12, 1944

Mr. KINLEY:

At six o'clock the hon.

member for Parry Sound brought up a point of order, which was that he thought we ought to stick to section 59, which deals with cash reserves of the bank, and while I shall perhaps go farther afield than this section indicates, I think he has done the same. I want to read this section so that there will be no mistake about it:

Cash reserves

59. The bank shall maintain a reserve which shall, as provided in the Bank of Canada Act, be not less than five per centum of such of its deposit liabilities as are payable in Canadian dollars and such reserve shall consist of a deposit with the Bank of Canada and of Bank of Canada notes held by the bank; and the bank shall also maintain with the Bank of Canada or elsewhere adequate reserves against liabilities elsewhere than in Canada and furnish such information as may be required by the minister from time to time to satisfy him that such reserves against liabilities elsewhere than in Canada are so maintained.

The hon. member for Vancouver-Burrard, in quoting this section, said that the law required that a reserve of five per cent should be maintained against this sort of banking business, and he said that the bankers, with a disdain born of greater knowledge, decided that they would not conform with the law but they would use ten per cent. In my business, where

Bank Act Amendment

we deal with materials and have to take into account stresses and strains, we always allow for what we call a margin of safety to provide against disaster. For instance, if engineers tested the elevators in this building for 2,000 pounds, do you imagine they would allow you to put 2,000 pounds in these elevators? They would test those elevators for 3,000 pounds-

Topic:   BANK ACT AMENDMENT
Subtopic:   CONDITIONS GOVERNING TEN-YEAR EXTENSION OF BANK CHARTERS
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August 12, 1944

Mr. KINLEY:

The other day I had a call from Doctor Richter, a professor at Dalhousie university, who is interested in the provisions of this bill for research, and he left with me a little memorandum which I should like to read in order to present the matter intelligently. He says:

, It is generally recognized that the productivity of many industries could ibe greatly increased by the application of scientific research.

We are all agreed on that. The memorandum goes on:

Canada lags in that respect behind other countries. The government bill, therefore, aims at encouraging research by declaring as deductible the expenses for scientific research prodded the research is directly or indirectly related to the taxpayers' business. Another restriction is implied by the term "scientific research" as used in the bill: only expenditure for research in the field of natural and applied science is deductible while all types of social research are excluded.

The distinction is arbitrary and unfair and may seriously impair the effect of the clause as a whole. The purpose of the measure is to increase industrial productivity by means of research. Productivity is determined by two factors: one is technological, the standard of plant and equipment and their utilization. The second factor is just as important: the human element in industry, the efficiency of the worker and the contribution which they make to the success of the enterprise.

The bill as it stands is only concerned with the technological elements of production and disregards the 'human factor. This is not in keeping with the repeated statements of the Prime Minister about the aims of the government's labour policy.

The distinction made by the bill will often prove unworkable and may cause some great injustices. The clause applies, for instance, to research on problems of speeding up production. It denies the tax privilege to research concerned with the effects of the speed-up on the worker.

Research on the technological causes of industrial accidents is covered by the clause, research on the causes of accidents brought about by the behaviour of the worker is excluded. This is all the more regrettable as it is mainly the second group of accidents which, according to expert opinion, is capable of further reduction.

The whole field of industrial morbidity which is concerned with health conditions in a particular industry will have to do without the tax privilege and will probably remain as neglected as it is at present.

The clause as it stands militates against the smaller firms. Large industrial concerns have for a long time through their personnel departments _ conducted research on the "working conditions of the employees and have always regarded the expenses involved as deductible.

If, however, smaller businesses join together for that purpose or commission a university to do the research for them, they will be hampered by the present bill.

The proposed amendment attempts to remedy these defects by extending the tax privilege to research on working conditions of employees in the taxpayers industry. The technological and human factors of production are thus treated alike. An unwarranted use of the clause is made difficult by the concise definition of the purposes of research.

The terms used in the government bill are taken from recent British legislation. But conditions in Canada require a different approach. In Britain Lord Nuffield, Lord Leverhulme and other benefactors have made ample provisions for research on the conditions of industrial workers. No such sources for the financing of that type of research exist in Canada and as a result the country lags sadly behind Britain. It is the purpose of the amendment to facilitate the provision .of the necessary funds in this country.

I have an amendment here which I understood was to have been submitted by somebody, but I was not in the house at the time and I do not know just what has happened in regard to it.

The memorandum I have read is from this teacher at Dalhousie university, and while I cannot speak with a knowledge of all the facts I should like to see encouraged the research activities of these smaller universities which coordinate the practical and the theoretical, bringing the activities of the worker and the teacher together. That is a splendid thing and they have been doing that at Dalhousie university for the last two years with beneficial results. It seems to me that anything that can be done to forward the search for knowledge, especially on the practical and humane side, should be done, and I hope that the minister will see his way clear to considering this appeal and, after consultations with his officers, that he may be able to bring in something to meet the conditions outlined in the memorandum.

Topic:   INCOME WAR TAX ACT
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August 12, 1944

Mr. KINLEY:

-and then they would probably allow you to put in a weight of 2,000 pounds. If I build an engine of 150 horsepower, I always have a margin which I can use in an emergency; probably it would develop 165 or 170 horse-power. So with a boiler; if you are going to test a boiler for 200 pounds, do you think any engineer would allow you to put steam into that boiler up to 200 pounds? The boiler would first be tested for, perhaps, 300 pounds, and then he might let you use it with a safety valve up to 200 pounds. Much the same principle applies here. My hon. friend misquoted the act. The section does not state that the reserve shall be five pep cent; it says that it shall not be less than five per cent. The bankers in their wisdom think they should have a margin of safety, and put it at ten per cent, and the hon. member uses that fact as a reason for arguing that the bankers are disdainful of the laws we create to control them.

There is a distorted opinion in the country of what banks can do. Some people have the idea that banks can create money ad libitum. According to the hon. member for Yancouver-Burrard, they can create money with a fountain-pen. If that were true, I do not see why bankers would have to stay in business very long, why they do not get rich and be done with their vocation altogether.

I do not intend to explore this realm of banking on a plane which almost comes into the region of mystery; I am going to get back to the old country store. You know a great deal can be said for the old country store; in the old days it was a place where a good deal of sound philosophy and many wholesome truths were learned. They are the people who must be convinced about the banking situation and therefore we had better talk in language that they will understand. The old country store was a good institution and performed many duties that usually belong to the bank, and until the days when the chain stores took away their cash business and compelled them to deal only in credit the country stores were found throughout the country almost at every corner.

Suppose a man were helping in the building of a railroad in some country district. The farmer wanted to use his team on the job and he would call up the storekeeper and ask for a double harness. The storekeeper would say, "All right; it is worth $100 and I will send it over. I will charge it on the books." He then instructs his bookkeeper to charge John Jones with $100 for that harness. A few days afterwards the contractor calls up the merchant and says that he would like to get some potatoes. The merchant calls up John Jones and tells him that he would like to have 100 bushels of potatoes for this man who is engaged on the road. The price, let us say, is $1.25 a bushel. And so he credits John Jones [DOT] on his books with $125 for his potatoes. Now there are two transactions. He calls up the contractor and tells him that he is going to deliver 100 bushels of potatoes and asks him if he will give him a cheque. The contractor sends the storekeeper a cheque which he puts in the bank and the bank gives him credit for $125. The contractor in turn wants some money and he calls up his debtor, who sends him a cheque which the contractor takes to the bank and deposits it and is given credit for the money he places there. Now all these transactions have been completed and there is no cash, no Bank of Canada money involved. Who says that is getting something for nothing? Who says that is not a splendid way of doing business?

The bank is a place where you exchange obligations; it is a credit exchange, and when it performs that function and collects a service charge therefor, it seems to me it is carrying on in a way which is beneficial to the business of the country. Take a manufacturer. I want to buy a certain quantity of raw material and I send him an order and get thirty days credit on that raw material. The man I bought it for makes a draft through the bank and I accept it at thirty days. When the draft is due the banker charges that to my account on the debit side and sends a credit along for the manufacturer, and the goods are dispatched. Is there anything wrong about that? There is no money used. A week afterwards I have to pay my men and I send a cheque to the bank and get $1,000 in bank notes. That is where you need real money, for pay envelopes. I go to the bank and they charge that to me. And so the transaction goes on.

Every transaction involves a debtor and a creditor; one brings and another takes. You can read that in any of the books on economics. The hon. member for Vancouver-

&EVISED EDITION

Bank Act Amendment

Burrard said! that a bank could buy- a $50 Dominion of Canada bond and all they hadi to do was to make an entry in their books; they did not need to put up any more than $5 as a reserve against it, in other words, 10 per cent. So far so good, but the hon. gentleman did not follow that transaction through. Suppose the government owes my hon. friend $50 and issues him a cheque on that bank and he takes it to the bank. He can demand for that cheque fifty Bank of Canada bills, or he can give it to the banker with instructions to have it placed'to his credit, thus transferring the credit from the bank to himself, or he can take the cheque to another bank and cash it. If he takes the cheque to another bank the first bank must meet the clearing-house the next day and give Bank of Canada bills for the cheque. It will be seen, therefore, that the hon. member went only half way in telling about such a transaction; he did not follow it all the way through. If he followed it through he would find that the bank must meet their obligations or be in peril at the clearing-house when they get there.

As I said before, the bank is the medium for the exchange of the country's business. It is true it creates deposits and credits and there is an enormous amount of business done without money at all, but a distorted idea is conveyed that the banks create money, that in their function as an exchange for the business of the country they create money, which is only credit and confidence. We must not break down credit as an institution for carrying on the business of the country. This five per cent reserve is a reserve against break-down. It is what one might call a degree of safety in the exchange of confidence and credit. Nor must we forget the power of association. The Creator Himself when he made the world had regard for the power of association. To make life it takes two people; one man cannot make life. Two people have to be properly equipped to make life; every living creature is of the same kind, and so is most agricultural production. Money is the economic bloodstream of the nation, and to control the economic bloodstream you need association; because there is power and there is virtue in association. I might do something that was criminal if I did it alone, but if I did it in association with others, and if it were done in a manner agreed upon, that would be all right. I say, therefore, that we had better be careful above a government-monopolized bank working all by itself instead of having a bank working in association with the people of Canada for the purpose of carrying on the business and commerce of the country.

My hon. friends say that there should be a 100 per cent reserve. What would you think of the country storekeeper who, when he charged the harness on the books, told his bookkeeper instead to go and get $100 in cash and put it in the safe so that he might have a reserve against the harness, or who, when he sold the potatoes, ordered his bookkeeper to go and get $125 in cash and put it in the safe so that he might have a 100 per cent reserve in that transaction? To hear our friends talk, to hear what some people said before the banking committee, one would think that banking was the only function in this country. There is a feeling that if you could fool with money, and have an easy time with it, you would be happy and the business of the country would be all right. Banking is only the handmaiden of business in this country; it is only the instrument that business uses for its convenience. As a rule, any troubles from which the country suffers do not come from banking; industry and business support the country. Banking in itself, in my opinion, will have very little to do with the prosperity or advancement of the nation.

Then the hon. member for Parry. Sound, with considerable heat and! fervour, almost in the style of a stump speech at election time, referred to these inner reserves. He pretty well rang the changes in regard to them, and his words could create a good deal of alarm in this country in this connection. He calls them secret reserves.

Topic:   BANK ACT AMENDMENT
Subtopic:   CONDITIONS GOVERNING TEN-YEAR EXTENSION OF BANK CHARTERS
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