I cannot tell the hon. member in a word. I think it would take me more time than this committee is prepared to allow me to give the causes of that depression. As will be recalled, I quoted some of them in the banking and commerce committee, drawn from the economic committee of the League of Nations, and the hon. member was good
Bank Act Amendment
enough to say that they were a valuable contribution to the discussion. Professor Hayek went on to say:
To combat the depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about: because we are suffering from a misdirection of production, we want to create further misdirection-a procedure which can only lead to a much more severe crisis as soon as the credit expansion comes to an end.
I wish now to refer to another matter. I am not satisfied with the statements of the hon. members for Vancouver-Burrard and Parry Sound. This word "inflation" is a bad word. It is something like the word "toadstool"-it has no scientific meaning. But I think in the way the term is now used I can use it to point out that the inflation in Germany was not brought about, solely at least, by a parcel of crooks. There were honest men in Germany-then, at any rate. And there were honest men who advocated the issue of state money to solve their problems.
I spoke of the opinion of von Mises. I have now before me an exact quotation of the arguments of honest men, such as we have here to-day in the house, as to the objective and the desirability of issuing more and more state money. He said that this was their argument:
Let the state create money, and make the poor rich, and free them from the bonds of the capitalists! How foolish to forgo the opportunity of making everybody rich, and consequently happy, that the state's right to create money gives it! How wrrong to forgo it simply because this would run counter to the interests of the rich! How wicked of the economists to assert that it is not within the power of the state to create wealth by means of the printing press!
And during this debate I have thought of these next words several times:
You statesmen want to build railways, and complain of the low state of the exchequer? Well, then, do not beg loans from the capitalists and anxiously calculate whether your railways will bring in enough to enable you to pay interest and amortization on your debt. Create money, and help yourselves.
Those were the statements of men who at that time in that country honestly-quite honestly-believed that they were doing the best thing in the interests of the public.
I should like to say just a few words about the topic discussed by the hon. member for Parry Sound, namely that of hidden reserves- sometimes known as inner reserves, undisclosed reserves or secret reserves. If our banks are wrong in having them and if the Minister of Finance is wrong in permitting the banks to have them, certainly we in Canada are not alone, because they are the
general practice wherever there is a good and efficient banking system. It is the general practice throughout the world.
Topic: BANK ACT AMENDMENT
Subtopic: CONDITIONS GOVERNING TEN-YEAR EXTENSION OP BANK CHARTERS