[Stage Direction]
Robert Wellington Mayhew, Esquire, member for the electoral district of Victoria, British Columbia, introduced by Right Hon. W. L. Mackenzie King and Hon. Ian Mackenzie.


[Stage Direction]
Bill No. 169, for the relief of Thomas McDade.-Mr. Plaxton.
Bill No. 170, for the relief of Isabel Bovill Clarke.-Mr. Jacobs.
Bill No. 171, for the relief of Bessie Goldberg Katz.-Mr. Factor.
Bill No. 172, for the relief of Eric Thomas Robert Kinney.-Mr. Jacobs.

[Stage Direction]
Bill No. 161, for the relief of Marjorie Ruth Nicholson Lowe-Mr. Walsh.
Bill No. 162, for the relief of Anna Vereszczak Finchuk-Mr. Jacobs,


Mr. G. W. McPHEE (Yorkton) moved:: That the standing committee on miscellaneous private bills be given leave to sit while the house is sitting.
Motion agreed to on division.


Mr. C. E. BOTHWELL (Swift Current) moved:: That the special committee on electoral matters be granted leave to sit while the house is sitting.


Right Hon. R. B. BENNETT (Leader of the Opposition):: Mr. Speaker, there is a
motion on the order paper that this house sit to-morrow morning at eleven o'clock. It seems to me almost incredible that anyone would suggest that a committee should sit while the house is in session, with respect to a matter of such grave importance as the measure to which reference has been made. In fact when we reach that motion I shall have something to say about it. I cannot see how we can do two or three things at the same time.


Mr. SPEAKER:: Is it the pleasure of the house to adopt the motion?


Richard Bedford Bennett: On division.
Motion agreed to on division.



LOAN COMPANIES ACT


[Stage Direction]
Hon. J. L. ILSLEY (Minister of National Revenue-for the Minister of Finance) moved for leave to introduce Bill No. 173, to amend the Loan Companies Act.
He said: This is a short bill to amend section 111 of the Loan Companies Act. All it does is to reduce the maximum rate of interest which may be charged by companies deriving their corporate powers from the parliament of Canada from 2 J per centum to 2 per centum per month.
Richard Bedford Bennett: Is it proposed to proceed with the measure at this session?


Mr. ILSLEY:: If there is time to proceed with the small loans interest act it may not be necessary to proceed with this bill, as to some extent it covers the same ground.
Motion agreed to and bill read the first time.
Questions



QUESTIONS

[Stage Direction]
(Questions answered orally are indicated by an asterisk.)

Mr. GREEN:: 1.	Has the shortage in the accounts of the Ballantyne pier, amounting to $5,587.40, referred to in question answered on the 19th day of March, 1937, been made good?
2.	If so, by whom?
3.	If not, was a settlement made, and with whom, and what were the terms thereof?
4.	Has the official responsible been reengaged by the national harbours board?


Mr. HOWE:: The following information was furnished by the National Harbours Board:
1.	In part (See answer to 3).
2.	See answer to 3.
3.	A settlement was effected after initiation of legal action by the national harbours board whereby the board received $3,000, $1,500 of which was paid by the Canadian General Insurance Company which had bonded said employee from November 6, 1930 to April 20, 1936, and $1,500 of which was paid by Hudson Bay Insurance Company which had bonded said employee from and after April 20, 1936.
4.	No.



QUESTIONS PASSED AS ORDERS FOR RETURNS

[Stage Direction]
.	ROYAL COMMISSIONS

Mr. GREEN:: 1.	To what persons or corporations have permits been issued for the exportation of arms or articles set out in section 290 of the Customs Act?
2.	Upon what dates were such permits issued, what was the value of the articles covered by each permit and the country to which exportation was permitted?


MOTIONS FOR PAPERS
Mr. FAIR (for Mr. Poole):: (a) For a copy of all correspondence, letters, telegrams and other documents, passing between the government of the province of Alberta or any member thereof, and the federal government or any member thereof, regarding the disallowance of any Alberta acts during the year 1938; (b) for a copy of all correspondence, letters, telegrams, communications and other documents from any persons, corporations, firms or banks, requesting or protesting the disallowance of any Alberta acts.


Mr. MACKENZIE KING:: I believe it is understood that the hon. member is prepared to accept a digest of the miscellaneous correspondence. The important correspondence will be brought down in full.


[Stage Direction]
Motion agreed to.

Mr. MacINNIS:: For a copy of all letters, telegrams, reports and other documents passing between any member of the government and the Northern Airways Limited, the Vancouver board of trade, and the council of the city of Vancouver, regarding an air mail service from Vancouver to the Yukon by way of Prince George, Hazel-ton, Maziaden Lake, Dease Lake, Telegraph Creek and Atlin.



BREN MACHINE GUN CONTRACT

Mr. MULOCK:: For a copy of the agreement between the government and John Inglis Company, of Toronto, for the manufacture of Bren machine guns.



GATINEAU POINT RETAINING WALL

Mr. PELLETIER:: For a copy of a contract between the federal government and Rodolph Moreau, Esquire, of Gatineau Point, Quebec, covering an agreement to build a retaining wall or dock at or near Gatineau Point, Quebec.



J. J. BOWLEN-NATURALIZATION

Robert Fair: For a copy of the original certificate of naturalization granted to one J. J. Bowlen, of Calgary, Alberta, at Charlottetown, Prince Edward Island, in or about 1904.


Hon. FERNAND RINFRET (Secretary of State):: I should like to direct the attention
of the hon. member to the answer given to a question put by himself, as reported on page 4167 of Hansard of Thursday, June 23, in which it was pointed out that under the

Business oj the House
statute relating to naturalization in force in 1904, all naturalizations were eifeeted directly by tlie court and not by the issue of a certificate from a government department. Therefore there is no copy of the certificate available in the Department of State.
Motion dropped.



CANADIAN NATIONAL RAILWAYS


[Stage Direction]
Hon. J. L. ILSLEY (Minister of National Revenue-for the Minister of Finance) moved that the house go into committee at the next sitting to consider the following proposed resolution:
That it is expedient to bring in a measure to authorize the Canadian National Railway Company to issue securities not exceeding $17,574,233 in principal amount to provide the moneys necessary to meet expenditures made and indebtedness incurred by the companies or railways comprised in the national railway system during the calendar year 1938; to authorize the governor in council to guarantee the principal, interest and sinking funds of such securities; and to authorize the making of temporary loans to the said company secured by such securities and not exceeding $17,574,233 in principal amount to enable the said company to meet such expenditures and indebtedness.
He said: His Excellency the Governor General, having been made acquainted with the subject matter of this resolution, recommends it to the favourable consideration of the house.
Motion agreed to.


William Lyon Mackenzie King: That on and after Tuesday, June 28, 1938, until the end of the session, the house shall meet at 11 o'clock in the morning of each sitting day and that in addition to the usual intermission at 6.00 o'clock p.m. there shall also be an intermission every day from one to three o'clock.


Richard Bedford Bennett: Mr. Speaker, it has not
been customaiy for the house to sit three times a day when the committees have not completed their work. The general rule has been that the work of the committees shall have been completed or practically completed before such a motion is adopted, for reasons which I think are fairly obvious. For instance, if the special commitee on electoral matters is to consider the measure that is now before it, lion, members who are associated
with me on that committee cannot be there and in the house at the same time. They would like to be in the house, in view of the legislation that is now before us. Under the circumstances I think the government should determine what legislation it will not proceed with, or that we should not sit three times a day unless there is a likelihood of our being able to conclude our sittings this week.


William Lyon Mackenzie King: I believe the committees generally have about concluded their work. It is quite true that one committee will have to sit again, but I imagine that hon. members of that committee might be prepared to accommodate each other and sit from ten to eleven o'clock in the morning if necessary. However, for some time past, all committees have been sitting more or less while the house has been in session. This may impose a slight additional burden, but I am inclined to think that it is one which will be accepted willingly by hon. members if there is a prospect of the house proroguing on Thursday of this week. From what I have been told by the whips I understand there is every reason to believe that we may be able to get through the remaining legislation without undue haste if we begin sittings in the morning. I think in any event it would be best to begin the sittings in the morning and if we find we cannot get through before July, continue them for whatever time thereafter may be desired by hon. members. I believe it accords with the general wish to have the house begin its morning sittings tomorrow.


Mr. WOODSWORTH:: Would the Prime Minister be good enough to tell us now what legislative program he will proceed with?


William Lyon Mackenzie King: I have already stated that the house has before it on the order paper notice of all the legislation that the government intends to introduce or to have it consider. The intention is to proceed with the bills and resolutions on the order paper. There are one or two resolutions which might prove to be contentious, and if such be the case the government would be prepared to consider whether or not they should proceed with them and introduce the bills to be based on them this session. It will not take very long to ascertain whether the measures are likely to prove contentious.


Richard Bedford Bennett: Two of them, at least, will be very contentious.


William Lyon Mackenzie King: I understand there is the possibility of one being contentious, and in that event it is altogether probable

The Late Countess of Strathmore
the measures will be held over for a subsequent session with the object of concluding the business of this session, if possible, by Thursday of this week.


Hon. H. A. STEWART (Leeds):: Mr. Speaker, with further reference to this important matter, I know we are all anxious to conclude our labours as soon as we can, consistently with the proper discharge of the duties that devolve upon us. I would point out that the civil service committee is still sitting, and it is approaching the stage where a report is being drafted; I believe that will be under consideration this afternoon. The committee to which the leader of the opposition (Mr. Bennett) referred, the committee on electoral matters, has still one or two important items to deal with. I know we will all do the best we can, but it is going to crowd things a bit if we have to sit here in the morning, and if committees are sitting both in the morning and in the afternoon.


Hon. C. G. POWER (Minister of Pensions and National Health):: Mr. Speaker, I attended the last meeting of the committee on electoral matters, and I gathered from what was said by members from all quarters of the house that there was a desire perhaps to study a little further the bill to which reference has been made. As a matter of fact I was quite convinced in my own mind that very few members of the committee desired to make a complete and thorough study of that bill this year, but I think there was a desire to examine it a little further in so far as its principle is concerned. When I left the committee-I left before it had adjourned-my understanding was that there would be at least one moTe meeting of the committee before the session closed in order to dispose of the principle underlying the bill. I do not think the government has any desire to press this particular bill this session unless the committee itself is so disposed.


[Stage Direction]
Motion agreed to.


[Stage Direction]
On the orders of the day:
William Lyon Mackenzie King: Mr. Speaker, on Thursday of last week when I learned of the death of the Countess of Strathmore, the Queen's mother, I sent the following cable to her majesty's private secretary:

Ottawa, June 23, 1938.
Private Secretary to
Her Majesty the Queen,
Buckingham Palace,
London.
Will you kindly convey to Her Majesty the Queen the expression of my very sincere sympathy in her bereavement. I should be grateful to have a similar expression of sympathy conveyed to Her Majesty on behalf of members of the government and also other members of the House of Commons and of the Senate of Canada.
On the next day I received the following reply:
June 24,
Buckingham Palace,
London.
Right Hon. Mackenzie King,
Laurier House, Ottawa.
I am deeply touched by your message of sympathy in my great loss, for which I sincerely thank you. Please convey to the members of your government, the members of the House of Commons and the Senate of Canada my heartfelt thanks for their kind words of sympathy.
Elizabeth R.



NATIONAL HOUSING ACT


[Stage Direction]
The house resumed from Friday, June 17, consideration in committee of Bill No. 145, to assist the construction of houses-Mr. Rogers (for Mr. Dunning)-Mr. Sanderson in the chair.
Hon. NORMAN McL. ROGERS (Minister of Labour): With the consent of the committee, Mr. Chairman, I should like to revert to section 4, which was allowed to stand. I have an amendment to paragraph (b) of subsection 2 of section 4, which I will ask my colleague the Minister of National Defence (Mr. Mackenzie) to move.
On section 4-Advances.
Mr. MACKENZIE (Vancouver):: I move that paragraph (b) of subsection 2 be amended by deleting the word "seventy" in line 23 on page 3 of the bill, and substituting therefor the word "fifty".


Mr. ROGERS:: It will be remembered that when this clause was under discussion previously, the suggestion was made that the reduction from seventy to fifty should apply to all loans. The matter was given very careful consideration by officers of the department. The conclusion reached was that it would be inadvisable to make the reduction

National Homing Act
applicable to all loans, but that the reduction might suitably and indeed usefully be made with respect to loans not exceeding $2,500.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
Norman McLeod Rogers: With the consent of the committee, Mr. Chairman, because I take it that it will require unanimous consent, I should like to reopen section 14 of the bill in order to make an amendment which has become necessary in view of certain preliminary discussions with a group in the city of Quebec interested in low rental housing projects.
On section 14-To whom loans may be made.


Ian Alistair Mackenzie: I move to amend paragraph (a) of section 14 by inserting after the word "municipality" in line 3 of page 8 of the bill, the words "or other appropriate authority," and after the word "kinds" in the same line the words "including school taxes and," and by deleting the words "by the municipality" in the fourth line of page 8 of the bill.


Norman McLeod Rogers: It was intended originally that school taxes should be included. It was found subsequently that in the province of Quebec, certainly in some of the municipalities in that province, school taxes were levied not directly by the municipality but by a school board, and in some cases by authority of the provincial legislature. For these reasons it seemed advisable to make the amendment which has just been proposed.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
Norman McLeod Rogers: With the consent of the committee I should like to reopen section 15, paragraph (b). I would ask the Minister of National Defence to move the appropriate amendment.


Ian Alistair Mackenzie: That section 15, paragraph (b) be amended by inserting after the word "unit" in line 37 on page 9 of the bill the words "excluding charges for water and heating."


Norman McLeod Rogers: This amendment is also for the purpose of clarification, in order to make it quite clear that water and heating charges are not included in the rental.


Mr. McNIVEN:: From a perusal of press reports I notice that some municipalities are considering plans and ways and means of building houses which will cost from three to four thousand dollars, and are figuring 51952-270
on rentals varying from $25 to $35 a month. I am sure the minister does not contemplate either a cost of that extent or rentals of that variety, and a statement from the minister would do a great deal to clarify the situation in the country. These reports have given rise to criticism of the act and the intention of the government, it being stated that persons with incomes of $125 to $150 a month do not merit being subsidized either by reduction in taxation or by cheap money. So far as I am concerned, and I believe the house is in agreement, this measure is intended to benefit people whose monthly income varies from say sixty to ninety dollars or not more than a hundred dollars a month, and who have families to keep. The intention of the government is to assist such people in providing homes in which their families can be brought up as good Canadian citizens, not to subsidize persons whose incomes, as indicated in these press dispatches, are from $125 to 150 a month. If that view becomes prevalent, property owners in these centres will be opposed to the act and to any by-law which it may be necessary to submit to the burgesses for approval.


Norman McLeod Rogers: It is clearly the intention to make these low rental housing projects available to members of what are described as low income groups. I am advised that certainly it is not the intention that the loan shall be made available for a house-that is, a family unit-which would cost in excess of $3,000.


René-Antoine Pelletier: Would the minister
explain what he means by " low income group " or " low income "? Just what limit does the minister place upon it?


Norman McLeod Rogers: What would constitute a Jow income group might vary from one district to another. You cannot lay down an arbitrary definition. But the bill itself makes it clear that houses built under this legislation will not be available to those who are able to pay something more than the economic rental. That is stated in the bill itself:
No family housing unit shall be leased to any family whose total family income is equal to or more than five times the economic rental of such family housing unit.
The determination of what is the " economic rental " is set out in the bill.


René-Antoine Pelletier: According to the amendment just introduced, the rental charge for each housing unit is not to include water and heating. I think the minister has made that point quite clear. But I understand that some

National Housing Act

of these will be apartment houses, and they will be centrally heated. What limit will be placed upon the cost of heating? It might be quite possible, for example, to charge an excessive cost for heating purposes when that cost is not included in the rental. I think if the amendment is accepted, some limitation should be placed upon the heating charges.


Norman McLeod Rogers: A point of that kind would have to be dealt with by regulation, that is, in the terms of the agreement made between the governor in council and the municipality concerned.


René-Antoine Pelletier: I quite realize that, and I hope that when such agreements are made, these things will be kept in mind so that no excessive charges will be made for heating.


Norman McLeod Rogers: I can assure my hon. friend that these considerations will be kept very much in mind.


[Stage Direction]
Amendment agreed to.
Mr. PLAXTON:: With respect to paragraph (f), what was intended in respect to the proportion of loss that the lending institution would bear, as opposed to the government?


Norman McLeod Rogers: There is no lending institution referred to in paragraph (f). It is not before the committee.


Hugh John Plaxton: I am sorry. I was on another page.
Section as amended agreed to.
On section 16, subsection 1, paragraph (i)- Orders and regulations:


René-Antoine Pelletier: Exactly what does this mean:
(i) determine what specific items shall be included in cost of construction;
What is meant by the word " items "?


Norman McLeod Rogers: "Cost of construction" is defined in paragraph (a) on page six. This however is intended to deal with questions which might arise as to items which are not covered by that definition. It is intended rather as a safeguard of that section.


René-Antoine Pelletier: It is not intended to lay down a definite rule as to what type of material shall be used, or what particular kind of goods shall be used, or things of that nature?


Norman McLeod Rogers: No, except as to standards.


[Stage Direction]
Paragraph agreed to.
Paragraphs (ii) to (v) inclusive agreed to.

On paragraph (vi).
René-Antoine Pelletier: With regard to the form of guarantee given by the provincial government, have any negotiations been undertaken or has there been any correspondence with provincial governments as to the ultimate working of the act, and if so, what answer has been received from the provinces?


Norman McLeod Rogers: The answer to the specific question asked by the hon. member is in the negative. As provided in the legislation itself, the municipality or the limited dividend corporation, as the case may be, will make application for the loan. So far as the limited dividend corporation is concerned there is no necessity for provincial guarantee, but in the case of the municipality such a guarantee would be required. Clearly, however, until the bill is passed there can be no opportunity for municipal authorities to apply for provincial guarantees.


René-Antoine Pelletier: Then there have been no communications from provincial governments concerning this measure. The bill has been under contemplation for some time, and I understood from certain dispatches I read that objection was being taken by certain provincial governments in view of the fact that they had to guarantee loans to the municipalities. Can the minister clear that up?


Norman McLeod Rogers: The guarantee does not apply in the case of the limited dividend corporation, but only where a low rental project is set up by a housing authority established by the municipality. I am informed that there have been no formal communications from the provincial governments with respect to the matter.


[Stage Direction]
Paragraph agreed to.
On paragraph (vii).
Donald Alexander McNiven: Under this paragraph will it be possible to prescribe regulations that will preclude the income groups to which I have referred from taking advantage of these provisions-that is, the groups who have an income of from $125 to $150 a month? I do not want to labour the point, but it should be emphasized again and again that these groups are not entitled to the benefit of this act, nor should they by any stretch of the imagination think that they have the right to be subsidized by cheap money or reduced taxation. The benefits of the act should go to people of low incomes such as teamsters and those engaged in seasonal occupations

National Housing Act
and others of that kind, good citizens who have difficulty in securing accommodation for their families.


Norman McLeod Rogers: The hon. member has correctly stated the purpose of the bill. As a matter of fact his suggestion is effected in section 15, paragraph (a), which provides that no family housing unit shall be leased to any family whose total family income is equal to or more than five times the economic rental of such family housing unit. I agree that the clause now before the committee might very well afford an additional opportunity for the governor in council to prevent any abuse of the kind to which my hon. friend has referred.


Mr. MASSEY:: There is a point here which should be made clear. I asked the Minister of Finance a question with regard to it the other day when we were discussing paragraph (b) of section 15, and the answer was not satisfactory. If a man and his family move into one of these flats, the man's total income being $900 and the rent $200, it may happen that a son of fourteen a few years later gets a job giving him a few dollars a week, and the total annual income may then be over $1,000. Does that family have to move? The son may be in residence in the flat but a short time and then move away. Are you going to cause the family the inconvenience of having to get out because their income exceeds the limit by a few dollars?


Norman McLeod Rogers: The regulations should
cover the contingency the hon. member mentions. The regulations would normally set out the term of the lease and within that term it could very well be provided that no lessee should be obliged to vacate even if the family income should exceed that laid down as a qualification for the rental of family housing units. Apart from that, however, one must allow a certain degree of discretion in the drawing up of agreements with the municipalities concerned. Certainly it would be well to keep in kind the purpose of the legislation, namely, that these housing units should be made available to those who are in low income groups. The desire undoubtedly would be that if it were necessary for a family to move from a family unit under a low rental housing project this should be done with the minimum of inconvenience, and that could be effectively safeguarded in the regulations.


Denton Massey: That is true, but an act such as this can by misuse be made more inelastic than it is designed to be. Here is a family waiting to move into one of these flats, occupied by such a family as that to which
I referred a moment ago. As soon as the boy gets a job these other people can appeal to the municipal authorities to have the family removed at the end of the year. But at the end of the year the boy may be out of work for two or three months and then is back again, so that it causes a certain amount of dissatisfaction. Would it not be better to amend the subsection we are discussing so as to make it read:
. . . prescribe the manner in which total family annual income shall be determined or estimated.
The same idea would apply to paragraph (b) of section 15. As it stands, if for a short time the income exceeds five times the economic rent, then the difficulty arises to which I have drawn attention.


Norman McLeod Rogers: Unquestionably the intention is that income shall be interpreted in the sense referred to by my hon. friend, but it does appear to be desirable to leave this subsection in its present form in order to preserve some flexibility in determining what shall enter into family income and how it shall be estimated for the purposes of the act.


Denton Massey: I do not doubt for a moment the intent of this subsection and also of the other subsection to which I have referred, and it does tend to flexibility. On the other hand, it does lend itself to rigidity also, and it seems to me there is possibility of some difficulty which might be overcome by the use of the word "annual."


Norman McLeod Rogers: If the word "annual" is inserted here it will have to be inserted in a previous section which has already carried.


Denton Massey: It occurs in paragraph (b) of section 15.


Norman McLeod Rogers: It really makes it less flexible. I believe it would be preferable to leave it as it is.


[Stage Direction]
Paragraph agreed to.
Paragraph (viii) agreed to.
On section 16, subsection 2-force and effect.
Hugh Alexander Stewart: This subsection provides that:
All orders and regulations made hereunder shall have the same force and effect as if they had been included in this part and all such orders and regulations as are of general application, or abstracts thereof, shall be published in the Canada Gazette.
I wish to offer a slight amendment which I think would be of advantage, namely, that after the words "all such orders and regulations as are of general application" the words
National Housing Act

"shall be published in full, and abstracts of other regulations" be inserted. The words "or abstracts thereof" would be struck out.


Norman McLeod Rogers: That amendment is quite
acceptable.


Ian Alistair Mackenzie: I move:
That all the words after the word "application" in line 33 be struck out and the following words inserted: "shall be published in full, and all other orders and regulations or abstracts thereof shall be published in the Canada Gazette."


[Stage Direction]
Amendment agreed to.
Subsection as amended agreed to.
Section as amended agreed to.
Section 17 agreed to.
On section 18-Loans in proportion to population.
Hugh Alexander Stewart: What is the reason for
making the termination of the act subject to the decision of the governor in council, rather than parliament?


Norman McLeod Rogers: It appeared to be desirable that some discretion should be left to the governor in council between sessions of parliament. It is possible that there might be a stimulus to housing construction which it would be desirable to arrest at a period between sessions of parliament. It will be noted that a definite termination of the legislation is provided in the bill itself-March 31, 1940-so that the discretion would be exercisable only within that period.


Mr. BAKER:: That would mean that the
governor in council could stop the operation of the act before that time?


Norman McLeod Rogers: Yes.


Richard Langton Baker: Personally I think that is first rate. You might have a good deal of trouble in getting it going and might be glad to put a full stop to it.


Mr. BARBER:: The proportion of the
330,000,000 to be allotted to a given area is arrived at on the basis of the rates of the population of the municipality to the total urban population. What relation has that to the whole population?


Norman McLeod Rogers: About 55 per cent. It was thought desirable to take that as the standard as the construction contemplated in this section would be urban.


Harry James Barber: But still this applies to
loans to rural municipalities.


Norman McLeod Rogers: It is very doubtful whether a rural municipality would take advantage
{Mr. Stewart.3
of this part of the bill. This is designed to bring about the construction of low rental housing projects, and it would be most unlikely that rural municipalities would invoke this section.


Denton Massey: It seems to me, as was
mentioned when discussing the resolution, that, although one can readily see the reason for it, the basis of population is not an adequate or fair basis. There are urban centres in Canada where generally speaking no assistance to housing is required, as against the very great need in other municipalities.


Ian Alistair Mackenzie: What
other basis would my hon. friend suggest?


Denton Massey: I think there should be
provision which would permit of an extreme condition being met, without being bound by the terminology of the section. The minister knows that there are municipalities, in which the need is very great, which would be restricted in carrying out the plan by the limitation in subsection 1. Other municipalities have no great need and $100,000 might meet their requirements. There should be some method of escape from that.


Norman McLeod Rogers: It is not easy to determine a method of escape which would not involve further difficulties. There will be opportunity between now and the next session of parliament to determine whether or not any municipalities are prejudiced as a result of the present wording of the clause, and if so the house can deal with it. I doubt if such will be found to be the case. There appears to be no better means of determining the allocation of the amount available than the population standard. My hon. friend will admit that we have given full weight to the demands of the larger urban centres by making the standard not the total population of Canada but the urban population. That of course works in favour of the larger municipalities.


[Stage Direction]
Section agreed to.
Section 19 agreed to.
On section 20-Report as to contracts and loans to be laid before parliament.
Richard Langton Baker: In regard to subsection 2, it is quite evident that a certain characteristic of human nature is being overlooked. There is a certain element who will take advantage of the act and who, although they are not eligible, will form a greater percentage of the applicants than will those who are in need of this kind of legislation. For instance, there

National Housing Act
will be the foreigner who is out to get everything he can get for nothing, the man who has plenty of money coming in or plenty on hand. The weakness I see is that there is not sufficient safeguard against the man who has no right to take advantage of the bill, and against men who in their make-up have a distinct element of meanness and do not deserve to reap the benefits of this kind of legislation.


[Stage Direction]
Section agreed to.
The CHAIRMAN:: We now come to part III of the bill, headed "Assistance to municipalities in respect of low cost housing."
Section 21, paragraphs (a), (b) and (c), agreed to.
On section 21, paragraph (d)-Municipal taxes.


Ian Alistair Mackenzie: I move:
That paragraph (d) of section 21 be amended by inserting after the word "municipality" in line thirty-six, page 12, the words "or other appropriate authority."
This is in consonance with the other sections.


Hugh Alexander Stewart: And makes the section consistent with the amendments already made.


Ian Alistair Mackenzie: Yes.


[Stage Direction]
Amendment agreed to.
Paragraph (d) as amended agreed to.
Paragraph (e) agreed to.
Section 21 as amended agreed to.
On section 22-Payment of municipal taxes.
Mr. LANDERYOU:: I believe it is the taxation which is creating difficulty so far as housing is concerned. The decrease in the value of construction contracts in Canada has been particularly noticeable in certain years. I have before me construction figures in millions of dollars from the year 1927. They are as follows:
1927		$418,000,000
1928		 472,000,000
1929		 576,000,000
1930		 457,000,000
1931		 313,000,000
1932		 132.000,000
1933		 97,000,000
1934		 125,000.000
1935		 160.000,000
1936		 163,000,000
1937		 220,000,000
Hon. members will notice that there was a sharp drop in 1932, and an increase from 1934. In fact there has been a gradual increase since 1933, when the value of contracts reached its lowest point. Unemployment costs are going up and from year to year are adding to the
taxation. Many municipalities are behind in the replacement of their equipment, and now we are asking the people of Canada to enter into further private and public debt to the' extent of possibly another hundred million* dollars. We are giving them the assurance-that the government will pay one hundred per cent of the taxes in the first year, fifty per cent in the second year and twenty-five per cent in the third year, but what assurance have we that these people are going to be able to pay their taxes in the fourth year? I believe we would be dealing more equitably with the matter and would be taking action which would be more apt to reduce taxation for all concerned if we were to relieve the municipalities of unemployment costs and the heavy burden of unemployment relief. I am not opposed to giving assistance in the manner indicated in the bill, but I must point out that at the end of four years the people are-going to face increased taxation, without any assurance that they will be able to find the money with which to pay it. I would ask the minister to consider some means of reducing taxation in the municipalities other than that of simply paying taxes on a few houses.


Norman McLeod Rogers: The answer to the hon. member's observations is that the measure does two things: in the first place, it provides for an immediate relief of taxation on new construction of the kind contemplated in this part of the bill. In the second place, it is designed to afford a further stimulus to the construction industry. In other words, it is to provide more employment. The more employment we have the less unemployment and relief we will have to contend with in the municipalities. The intention and hope is that the legislation will attack the problem at two points, namely, immediate relief from taxation for those who build under this part of the bill, and new employment in the construction trades and in general labour, thereby in due course reducing the incidence of unemployment relief in the municipalities.


John Charles Landeryou: It would appear that, as Arthur Kitson says, this is like a prison gate which opens only inward. It is just a trap for some people. We encourage them to go ahead and to build so that we may relieve unemployment. But we relieve unemployment only temporarily. Then, back comes the unemployment. At the end of three or four years the taxpayer finds himself with the prison gates closed and no way of escape. He owes money that he will not be able to pay, and the result will be that the government will have the property thrown back on them.


[Stage Direction]
Section agreed to.
National Housing Act
[Stage Direction]
On section 23-Conditions for payment.
Mr. ESLING:: I know of some municipalities in which there are tax rates of sixty mills, because of which, for the purpose *of escaping high taxation, people go outside the corporation limits and build their homes there. Who would be the lending authority in a case of that kind? Who would get the assistance from the federal government? Outside the corporate limits of municipalities we find land owned by the provinces, on which taxes are very low. I can tell of about two hundred families who have done the very thing I have described-that is, they have built or are building their homes outside municipal limits.


Norman McLeod Rogers: Under this section it would not matter where a house was built, whether it was in a city, town or rural municipality, provided the municipality carried out its part of the understanding set out in section 23. If the hon. member is referring to loans he must have in mind another section of the bill with which the committee has already dealt. No loans are contemplated under part III of the bill.


William Kemble Esling: To whom should such people look if they desire assistance in building low priced homes? We will speak of people who may be employed in industrial plants and who, because of high taxation, do not wish to build within the limits of a city; consequently they go outside the limits where the land is owned by the provincial government. On the other hand they can purchase the land from the provincial government, and it would still remain free from municipal taxation. To whom should such people turn for assistance if they want to take advantage of this measure?


Norman McLeod Rogers: The problem which my hon. friend has in mind is dealt with by part I of the bill. A person in the circumstances described by my hon. friend would apply to a lending institution for a loan. It is quite true that it has been found from experience that in certain districts these applications for loans under the old Dominion Housing Act were not as successful as in other districts, but amendments have been agreed to by the committee which are designed to correct that situation. Certain guarantees are added and the adoption of the principle of the home improvement plan will in certain districts meet the situation which previously had not been served effectively by the Dominion Housing Act.


Mr. NEILL:: The minister was going to look into phases of the low rental scheme to which I referred the last time the bill was before us. It does not seem clear that a loan can be obtained except in municipalities, as the bill states that an option shall be given to the municipality. If there is no municipal authority, that cannot be done.


Richard Langton Baker: The point raised by my hon. friend has to do with the unfairness in assessments. I know of hundreds of cases in the city of Toronto along the boundaries where there are substantial variations in the assessment on the same type of houses. On one side of the boundary line a house will be paying taxes of $500, while, within two hundred feet, practically the same house on a lot of the same size will be paying only $200. One lot is vacant and the other occupied because of such inequalities in assessment.


Norman McLeod Rogers: My understanding of part I of the bill, which deals with low rental projects, is that rural municipalities would be excluded very largely from its operation. Perhaps I should say it would exclude them in effect rather than by the actual terms of the legislation. Low rental housing projects will be carried out in overcrowded areas. One of the purposes of giving this encouragement to low rental housing projects is to make it possible for municipalities to relieve overcrowding and proceed with plans for slum clearance. The problem to be met with by this part of the legislation was the problem of building not in rural municipalities, but rather in crowded urban areas.


Alan Webster Neill: The minister does not appreciate the fact that there are places in need of low rental facilities which are not municipalities. There are many settlements greatly in need of this type of accommodation. I was really anxious to have a definite statement. If the minister says that that cannot be done under this legislation, then we know where we are at. One of the conditions is the giving of an option to a municipality, and I do not see why that could not be changed to provide that the option should be given to the municipality or, in the case of unorganized territories, to the provincial government. He must take either one stand or the other. If the minister says it is possible for unorganized territories to obtain loans under this low rental housing legislation, then it behooves him to provide facilities. At the present time the measure is not workable when an option must be given to a municipality where in fact there is no municipality.

National Housing Act


Norman McLeod Rogers: According to section 12,
"municipality" means a city, town or incorporated village.


Alan Webster Neill: That would not take in
many settlements of perhaps five hundred people.


Ian Alistair Mackenzie: I move:
That paragraph (a) of section 23 of the bill be amended by inserting therein after the word "lot" in line 32 on page 13 of the bill, the following words: "or, if the municipality has no power to sell such lots at such price, at not more than the lowest price at which the municipality may sell such lots."


Hugh Alexander Stewart: I assume this amendment will make it legal for a municipality to sell a lot, against which it may have a claim for taxes, at a price below the amount of the taxes?


Norman McLeod Rogers: That is correct.


Mr. CLEAVER:: The point raised by the hon. member for Leeds (Mr. Stewart) would arise only at the time of the tax sale. Once a municipality has exercised its right and actually buys in a property for taxes, then under the assessment act it becomes the owner of that land and has a legal right to sell it at any price. The price is not restricted to the amount of arrears of taxes owing originally against the land. It would appear to me that this amendment would tend to vitiate much of the section as originally drafted. This is not an entirely new experiment; it has been done very successfully by the town of Burlington. This town had on hand a number of tax sale lots which were bringing in no revenue and were depressing the value of other lots privately owned. The municipality decided to sell them at a nominal price to anyone who would contract to build a house within a year. As a result of that mild form of bonusing, last year Burlington had the greatest building boom in its history. If it is the intention of this amendment to stipulate that municipalities must charge the total amount of the tax arrears originally owing against the land, then the benefits of the section will be more or less vitiated.


Hugh Alexander Stewart: I do not think the
effect of this amendment would be to prevent a municipality from selling land for any amount it thought advisable, provided that title had been acquired. The hon. member is quite right in his statement of the law of Ontario, and I can speak only for that province. After title has been acquired by the municipality they can sell at any price they wish.


Norman McLeod Rogers: Perhaps I ought to state that there was an additional reason for this
amendment. In the city of Vancouver particularly, a number of lots are being held against the sinking fund. It appeared to be doubly desirable that we should not exclude Vancouver from the benefits of this legislation simply because there was a legal impediment against their carrying out the provisions of this section as originally drafted.


Hughes Cleaver: I have reread the amendment carefully, and I withdraw my objections.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
On section 24-Duties of municipalities.
Ian Alistair Mackenzie: I move:
That paragraph (b) of section 24 of the bill be amended by inserting therein after the word "lot" in line 12 on page 14 of the bill, the following words:
"or, if the municipality has no power to sell such lots at such price, at not more than the lowest price at which the municipality may sell such lots."


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
Sections 25 to 27 inclusive agreed to.
On section 28-Report to be laid before parliament.
Norman McLeod Rogers: There is an amendment, Mr. Chairman.


Ian Alistair Mackenzie: I move to amend this section by striking out the word "loans" in line 17 and substituting therefor the word "payments."


Hugh Alexander Stewart: It would appear to me that the section should retain the provision with respect to a report on loans. What is the objection to adding the words "and payments"?


Norman McLeod Rogers: There are no loans under this part.


Hugh Alexander Stewart: Then the use of the word "loans" was improper?


Norman McLeod Rogers: Yes, a typographical error.


[Stage Direction]
Amendment agreed to.
René-Antoine Pelletier: I think every member of the house and all who are interested are desirous of seeing this legislation work to the best advantage. Hon. members will receive a vast number of inquiries from their constituents, and I was wondering if the minister had considered supplying that information in convenient pamphlet form to members of the house and others interested. It would be the only way in which we could disseminate
National Housing Act

authoritative information on the legislation and inform people how they could take advantage of it. It might cost a little, but assuredly it would help the legislation forward.


Norman McLeod Rogers: Preliminary arrangements have already been made to have a pamphlet prepared along the lines my hon. friend has indicated. It was done previously with respect to the Dominion Housing Act and the home improvement legislation, and certainly it is very desirable to have it done with respect to this measure.


René-Antoine Pelletier: And it will be sent to all the members?


Norman McLeod Rogers: Yes.


Mr. STIRLING:: The Minister of Finance said that that would be done.


Norman McLeod Rogers: Yes.


Mr. McIVOR:: I should like to ask a question for information. Suppose a carpenter or bricklayer, after working eight hours a day at his regular occupation, puts in time in the evening working on his own house. Can he get wages for that extra time?


Norman McLeod Rogers: Does my hon. friend mean a carpenter building a house for himself under the provisions of this legislation? If so, one of the amendments accepted by the committee this afternoon would meet that situation. Undoubtedly if a carpenter is putting his own labour into the house, full account would be taken of it.


Daniel (Dan) McIvor: Thank you.
Section as amended agreed to.
Bill reported.



BANK OF CANADA


[Stage Direction]
Hon. J. L. ILSLEY (Minister of National Revenue, for Mr. Dunning) moved the second reading of Bill No. 160, to amend the Bank of Canada Act.
Mr. M. J. COLDWELL (Rosetown-Biggar):: Mr. Speaker, I might perhaps at this stage state very briefly on behalf of the group with which I am associated that we are very glad indeed to see this legislation brought before the house, and we will do everything we can to facilitate its passage. The Montreal Gazette of May 30 last was good enough to state in its columns that "this is a victory for the

C.C.F., which has been urging complete nationalization." It went on to say that it was a triumph of no practical importance.
This measure can be of great practical importance. It depends on how the new Bank of Canada functions and to what extent it is made an instrument of public policy. I should like to think that just as in Sweden, New Zealand and other countries where the central bank is under national ownership and control, the Bank of Canada will play an important part in preventing booms on the upswing and deflationary depressions on the downswing. I believe that a central bank publicly owned and properly operated can do much in these directions.
As we look back over the years it will be found that the group with which I am associated has consistently advocated this reform. As early as May, 1922, for example, Mr. William Irvine, who was then a Labour member of this house, moved for the appointment of a committee to investigate the basis, function and control of financial credit. I read those debates at the time and have read them since, and as the hon. member for Grey-Bruce (Miss Macphail) suggests, the proposal at that time was met with ridicule.
In 1924 Mr. Robert Gardiner said:
I think the time is coming when we in Canada will demand that instead of banks being allowed to issue their own notes, they shall have a central bank operated by the government that will be responsible for the issuing of money.
In June, 1925, the hon. member for Winnipeg North Centre (Mr. Woodsworth) spoke on the nationalization of banking.
In April, 1926, Mr. Gardiner moved:
That in the opinion of this house the time has come for the establishment of a national system of banking.
In February, 1928, the hon. member for Winnipeg North Centre moved again for the establishment of a national system of banking.
In 1931 Mr. George Coote moved:
That a nationally owned central bank be established.
In 1932 Mr. Robert Gardiner moved, as a subamendment to the budget, for the nationalization of banking and currency.
In 1934 Mr. Lucas brought the matter forward, and later in the same year Mr. H. E. Spencer moved a budget amendment for the control of credit.
In 1935 Mr. Irvine moved-this was the last resolution on the subject that the U.F.A.- Labour group moved:
That all banking, including the central bank, be nationalized at once.

Bank of Canada
Coming down to 1936 we of this Cooperative Commonwealth Federation group fathered a similar resolution.


Mr. REID:: So did ours.


Major James William Coldwell: I mention these facts because sometimes we and those associated with us are accused of advocating reforms and policies that are impossible of enactment or achievement, and yet over a period of years we often find that those policies which were met with ridicule at the beginning are found to be in the public interest as time goes on and find their place ultimately on the statute books of Canada.
To my mind this reform, for reform it is, and useful as it is, is not going to be found to be quite sufficient. We who have been advocating that the chartered banks of Canada should be brought under greater public control believe that this will ultimately take place. I realize of course that public opinion has to be moulded in order that such reforms may come about, and we shall not cease the educational work we are doing in relation to these matters until the commercial banks are brought under public control and public ownership as well; for, after all, the responsibility for directing most of the country's short term credit rests with the chartered or commercial banks. Their credit policy, as has been stated before, accentuates booms and depressions by easing credit during periods of prosperity and tightening it during periods of depression or deflation. Not only that, but I believe that their position at the present time tends towards the creation of monopolies of which banking is one. The fact that we have now a central bank which is going to be publicly owned and controlled is the bringing of one type of monopoly under public supervision, public control and, to some extent, public ownership. The chartered banks themselves through their interlocking directorates are very largely a part of the monopolistic set up of industry, and that is a matter which, if we are to make this central bank function, we shall have to consider very carefully in the days to come.
As I have so often said, I do not believe that the mere control of banking is the panacea which is going to cure all our economic and social ills. It is only one phase of a many sided problem. But I welcome this reform because it does bring nearer the time when we should be able to bring under control those economic forces which ultimately must minister to the common good. As I said in the debate on the budget, I believe that this
reform should be paralleled as quickly as possible by the setting up of a national investment board. A national securities board was recommended following the price spreads inquiry, and a comprehensive national securities board would do much to direct investments into safe and proper channels.
Just a few minutes ago we were discussing a bill to promote low-cost housing. That has been necessary largely because private enterprise has not entered into the field of low-cost housing, because of the risks and because the profits were not large enough. We have to find money for enterprises of that description. I believe that, with a nationally owned bank and a national securities board or investment board directing, first, the savings of the people, and, ultimately, the financial returns from all our own national industries and economic undertakings, we could do much to bring about improvements in housing and in the general conditions of the people.
This is near the close of the session. I do not wish to make a long speech. All I rose to do was to say that we are in approval of this legislation, which w'e have long advocated, and we hope that as the days go by the operations of this bank will be in the interests of Canada. It can be, as the Montreal Gazette said, of no consequence, or it can be of paramount importance to the people. That is very largely in the hands of the government and of this parliament. We wish to see the central bank operated, as central banks have been operated in New Zealand and Sweden, in accordance with the needs of the nation, for both the producers and the consumers. Thus we hope that the national bank will perform a great service to this dominion in the days to come.


Thomas Reid: It was not my intention to speak at this time; but as the hon. member who has just resumed his seat has taken credit to the Cooperative Commonwealth Federation party, to which he belongs, for the fact of the central bank becoming a government owned national central bank, I for one am going to dispute that statement. I was not in the house when the Old Age Pensions Act was passed, but I know that his party made great political capital out of the assertion that members of that party were the means, so it was stated, of bringing about old age pensions.


Major James William Coldwell: I think that is true.


Thomas Reid: I dispute the statement of the hon. member that the Cooperative Commonwealth Federation party brought about government ownership of the central bank. A larger
Bank of Canada

number of members of the Liberal party than all who comprise the hon. member's party have long advocated this reform. The hon. member's statement is not correct; it is just a political speech.


Mr. VICTOR QUELCH (Acadia):: I wish to make only a few remarks about this measure. Many spokesmen of the party represented by the group to our right, the Cooperative Commonwealth Federation, have been carrying on for the past two or three years a campaign of misrepresentation regarding the attitude of our group on this question. For instance, they have repeatedly stated that we voted against the nationalization of the Bank of Canada. Of course that is an absolute misstatement of fact. This is the first time a motion has been brought into parliament for this purpose. A motion was formerly brought in to give parliament greater powers of control, and we as a group voted solidly for that motion. On the other hand these speakers have stated that when a motion was introduced by the hon. member for Rosetown-Biggar (Mr. Coldwell) to nationalize the Bank of Canada and the private banks of the country, we as a group voted against that motion. That statement is also an absolute misstatement of fact.


Major James William Coldwell: I rise to a point of
order. The hon. member for Acadia (Mr. Queleh) is not stating the fact. We have stated and do state that they officially spoke against the introduction of that motion. That, I think, is substantiated in Hansard.


Victor Quelch: I was referring to speakers of the party. I do not necessarily say it was said by members of this house. I said that these speakers have stressed the fact time and again throughout the country that we as a group voted against a motion which was introduced by the hon. member for Rosetown-Biggar for the purpose of nationalizing the Bank of Canada and the chartered banks. There is no truth in that statement. We did not vote against that motion. A recorded vote was never taken. Moreover, had a recorded vote been taken, a very large majority of the members of this group would have voted in favour of that motion. We have stressed over and over again that we do not regard nationalization as a question of major importance. What we regard as the most important point is the effective control of policy. We believe that the present policy of the banking system should be changed, because under the existing policy the amount of money in circulation does not necessarily have any relationship to the requirements

of the people. We desire a change to be brought about so that money shall be put into circulation to make the present physical demand of the people an effective demand against the production of the country.
What is the main purpose of this motion? Public ownership of the Bank of Canada just to save interest on one hundred thousand class A shares? That is desirable, but it does not really mean very much. On the other hand, was the resolution introduced chiefly to help out with the Saskatchewan election? It is strange that it was introduced about that time; it is strange that there was no notice of it in the speech from the throne. It is interesting to note the attitude on this question of the Prime Minister (Mr. Mackenzie King) in 1936. As recorded in Hansard at page 3S08, he stated as follows:
. . . and I repeat it now: I think the question of ownership is debatable, for reasons which appear in what I have said repeatedly in this house. I do not think the question of effective control is debatable. I think if you have effective public control it matters relatively little where the ownership rests, but if you have not effective public control then ownership in full may be desirable should it prove to be the only way to acquire it.
I would agree with that. The Prime Minister did not think ownership was absolutely essential. Why a change now? Is he convinced that we have not effective control? And if the Prime Minister is convinced that we have not, does he think for one minute that this measure will provide it? He said:
. . . ownership in full may be desirable should it prove to be the only way to acquire it.
And yet the Minister of Finance (Mr. Dunning), speaking on February 28, 1938, as recorded in Hansard at page 891, stated:
. . . this parliament through instruments which it has created and which are now in operation does control currency and credit in Canada day by day, week by week and month by month.
That statement is definite. Then why this amendment? The Prime Minister said that ownership would be necessary only if control could not be acquired otherwise. It is interesting to note that shortly after that date the Minister of Agriculture (Mr. Gardiner), speaking in Edmonton in the Edmonton East by-election, said on March 16:
"There are cries on all sides to change the banking system," said Mr. Gardiner. "Changes are being made, and I say the time cannot come too soon for me when the government has control over credit and currency in this country. I mean control entirely in the hands of the government of Canada. If no other party interferes with present legislation passed by the Liberal government, such control will be in effect in 1945."

Bank of Canada
The Minister of Finance, speaking on February 28, said that we had control; the Minister of Agriculture, speaking in Edmonton on March 16, said that we would not have it until 1945. There appears to be a great deal of confusion in the minds of members of the cabinet as to exactly what control means and whether or not this government has control.


An hon. MEMBER:: They are learning.


Victor Quelch: They may be learning, but I say that this government has absolutely no control over the issue of currency and credit, and this amendment will not give it.


An hon. MEMBER:: Vote against it.


Victor Quelch: We are not going to vote against it; we will support it as a very small step in the right direction. I shall refer to that later on. It is interesting to note that while the Minister of Finance on February 28 said that we had control, nevertheless in his speech on March 8 he shows quite clearly that we have no effective control over the issue of currency and credit. Let me quote his words:
Mr. Dunning:	. . . We come back, then, to
the question whether the present volume of currency and credit in circulation in Canada is adequate for the needs of business and whether a further increase would be beneficial. It must first be understood that an increase in Bank of Canada note issue does not mean more notes in the hands or pockets of the public. Whatever medium be used for issuing the new currency or credit, such as the proposed one of financing the construction of public works, the central bank's notes would be immediately deposited with the chartered banks. An increase of, say $350,000,000 in chartered bank holdings of Bank of Canada notes would increase their cash reserves from the present figure of about $250,000,000 to $600,000,000, and their cash ratio from about ten per cent to roughly twenty-one per cent.
The sponsor of the suggestion contends that no inflation is intended or would result by thus increasing bank cash, so long as the gold cover of the Bank of Canada did not fall below the twenty-five per cent minimum. This factor, however, is not a test of inflation. If the banks use their increased cash in the normal way, as a basis for the extension of roughly ten times as much in loans to the public, or for the acquisition of ten times as much in investments, bank deposits would expand by approximately an equal amount until the cash ratio was brought down again to approximately ten per cent. This would mean an increase in bank deposits from the present level of about $2,387,000,000 to something like $0,000,000,000, or more than 2-6 times the level of December 31, 1929. Am I merely old fashioned or orthodox when I say that this would mean a colossal measure of inflation?
Let us suppose that the increase in the amount of money adequately to meet the needs of business is 8350,000,000. Then, as
the minister points out, there will be the danger that the chartered banks may expand this to $3,500,000,000, thereby causing inflation. They may not do so, but on the other hand they may. How, then, can the minister possibly claim that we have effective control? As I pointed out on March 14, the kind of control that we have at the present time is similar to the sort of control that we might have over a high-powered car with a defective steering gear. It would be absolutely impossible to hold it on a given course because the reaction to any turn of the wheel might be exaggerated.
This amendment does not increase control, and therefore I urge that the Bank Act be amended so as to compel the chartered banks to maintain 100 per cent cash reserve against checking deposits. This reserve might be made available by the government through the national bank purchasing from the chartered banks a sufficient quantity of government securities to provide that backing. Then the chartered banks henceforth would be compelled to maintain permanently a cash reserve of 100 per cent against their demand deposits. The result would be a great reduction in the national debt followed by a reduction in taxation. The Minister of Finance speaking some time ago said, I believe, that 43 per cent of all taxation went towards the payment of interest. The result would be 100 per cent control over the issue of currency and credit. The amount of money required in circulation would be decided by the Bank of Canada and so regulated. Money required for public works would be issued by the Bank of Canada without danger of inflationary action on the part of the chartered banks.
This proposal has been endorsed by prominent men who have made an exhaustive study of the question of money such as Professor Irving Fisher, Professor Soddy, and Robert Hemphil, former credit manager of the Federal Reserve Bank of Atlanta, and many eminent bankers throughout the United States. On the other hand it has been said that the banks could not operate on this basis because it would mean a great curtailment of their profits. But, as has been pointed out on former occasions in this house, the profits of the banks at the present time are excessive, and their expenditures on many lines are extravagant. When we consider the tremendous privileges the chartered banks enjoy, I would say that they are not rendering to the people the service they have a right to demand. I have in mind the closing of many branches throughout western Canada in the past nine
Bank of Canada

or ten years, and more recently one might describe their action as being tantamount to blackmail; for they have been using their power to compel or persuade the people to demand from the government that certain legislation shall be annulled under the threat that if such action is not taken they will close certain branches in Alberta. The hon. member for Melville (Mr. Motherwell) the other day gave a good talk on this matter, pointing out that the banks were trying to exercise a form of dictatorship. I do not think such a condition is desirable in a so-called democratic country. So I would say that if the chartered banks refuse to cooperate on that basis, the whole banking system should be nationalized.
There are many other things one might discuss, but as we are trying to finish the session by the end of the month I shall merely say that in our opinion the main monetary policy of this government should be to put in the hands of the people sufficient money to make the present physical demand of the people into an effective demand against the production of the country, and as that production increases, to see that the ability of the people to procure that production shall be increased in like degree. While we in this corner intend to support the motion as a step in the right direction, we point out that it is absolutely valueless for the purpose of giving the government effective control over the issue of currency and credit.


Mr. J. S. TAYLOR (Nanaimo):: promptly develop serious results. The explanation involves a big story, which I do not intend to give, but I can open it out and leave the details to the imaginations of hon. members. There is a system, albeit a bastard one, of social credit, already at work within our economy. It constitutes the whole structure of the wages of money. For example, a light and power company is producing electricity and can sell it at a price much less than is now being paid. But a large section of the citizens of the country are already, in consideration of money introduced, receiving all or nearly all of the social credit which it is possible for that particular light and power company to contribute; and, therefore, the destruction of its capital structure must be insisted upon, or it must be left out of the social credit plan for the country. This is most serious; for practically all businesses and all industries are wedded to this admittedly bastard form of social credit, and the dividends already being distributed to the citizens of the country leave no profits on which the social credit of my hon. friends may be based.
It is no lessening of the force of this argument to observe that the idea that the social credits of which I have spoken are raggedly and quite unfairly distributed to the citizens, and the instances are not few which demonstrate that the actual worker is robbed of his wages to support this peculiar social credit structure.
Upon the unquestioned force of this argument I declare that the social credit of the hon. members cannot possibly be imposed upon the present economy, not only because there is no place for it that is not already filled, but because of its very nature, if it is to be conceived of as a purely concocted panacea of the economic ills which flesh is heir to. Every citizen who can produce, every citizen who would produce if opportunity afforded and every citizen who is accepted by the citizenry as a non-producer, whether by grace or by reason of personal incompetence or incapacity-and these categories are intended to include the whole of the citizenry-are fully entitled to the benefit of a pure social credit. It can only be developed, however, in those fields of our economic activity where the profits of production are developed for the benefit of the whole citizenry. This represents pro tanto the advantages of a socialist economy, and I therefore assert that only in some form of socialism in our economy can we look for social credit to function properly.
I am prepared at this stage of my review of the situation to declare that the irresistible forces of our civilization are driving us rapidly

into a form of national economy which will grant first one and then another of our productive and distributive functions for the unrestricted benefit of the citizens as a whole. Only in such cases can social credit ever be adequately established, and by the same token only in such cases can socialism ever become available to advance the condition of our people.
And this will be true just as certainly if, unhappily, civil revolution be invoked to bring it about; for revolution in itself can and will accomplish nothing. It is what is built on the ruins of a revolution which will determine the future of the unlucky people who have to pass through it. And, too, often in such case the reconstruction of society proceeds haltingly because of the irrevocable and irrecoverable loss of those elements of government which, by virtue of their essential worth, constituted the cementing properties of the government now overthrown, while of necessity new cementing elements will take a long time to accrete, and thus properly to perform their function.
It may still be advanced that I have not yet fully covered the phase of the problem developed by the social credit formula which proposes to introduce to our economy nonrepayable sums at the free disposal of every citizen. I am urging that in effect all I have said covers this matter. But let me observe that the whole financial system of the country in its multifarious ramifications always adjusts itself and seeks its own level, and does so by the age-old governing rule of debit and credit. It is tied definitely at the one end to the consumer, and at the other end to the producer. The social credit formula now introduces a medium of exchange which is tied only at the producer end and which leaves the consumer end floating free. It is through or by this free floating end that the nonrepayable dividend created out of nothing by the social credit government will flow into the otherwise balanced, though admittedly badly adjusted, economy. This will create a condition never before practised, and it must be studied with great care.
For our study we can think of the $25 per month proposed to be given as social credit to every citizen of Alberta. Of course we must admit and agree that, when given, that sum must, either at the outset or later, be related definitely and scientifically to the spread between the cost of production and the ability to purchase within that province. In effect each Alberta citizen is made, by the free flowing ink of the pen of a ready writer, richer by $300 per annum. Let us sense the repercussions. First, of course the

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spread between the cost of production and the price of purchase will vary considerably with every product. Second, of course the citizens will be neither constant nor consistent in their unrestricted choice of the products purchased. Therefore, I unhesitatingly declare that it will be practically impossible to equate these inconstant elements. No arbitrary monthly payment of money to citizen purchasers will in itself justify or equate a scientifically ascertained just price for the above cogent reasons. However, my social credit friends may believe the plan to be really practical; I do not.
I describe given money and non-repayable dividends as being inferior to earned money and, therefore, liable to the vagaries of inferior money in a financial system, in spite of the fact that in use it will be undiscoverable from the ordinary money of the economy. I assert that there is grave danger to an existing financial structure in padding it with an inferior currency. All hon. members will sense the concern with which the manufacturer will view the new situation presented by a supposedly easy market for his products when he remembers how he pared down his cost of production and profit margins in order to satisfy the market before the new credit was introduced. All hon. members will sense the chagrin of workers who accepted lower wages to help their employers meet the competitive market when they discover the products on which they worked entering an easy market. The inevitable result in both cases will be a definite readjustment of prices until an equitable condition obtains for worker and manufacturer alike. This equitable condition will not be reached without a very much increased distribution of so-called dividends.
There is another highly important problem. Hon. members know that the S25 per month will represent pin-money to one citizen, while to another it will represent almost an adequate living allowance. And so we beat the devil around the stump, and we turn to the arguments first cited for this problem. The hon. member for Vancouver-Burrard is so earnest in his efforts to awaken the people and the government to the advantages of both to be discovered in the newer financial economy that I dislike finding myself in disagreement with him. However, I am unable to travel with him in his statements as recorded on page 4197, column 1, paragraph 2, of Hansard, for the following reasons. If an individual banking institution finds to-day that it requires 10 per cent of its total deposits as till money for the safe and reasonable conduct of its business, no legislation of the government can change the bank's empiric findings. The
Bank of Canada, however, by virtue of section 27 of the Bank of Canada Act, 1934, and also subsection 4 of section 59 of the Bank Act, 1934, has assumed the guardianship and sufficiency of till moneys and demands that 5 per cent of all deposit liabilities shall be in either a Bank of Canada deposit account or in Bank of Canada notes, which means that the said 5 per cent must be in such liquid condition as the Bank of Canada might be legally accountable, answerable and responsible for. A reference to the liquid reserves with which the chartered banks can conduct their business would reveal the fallacy that they build up 8100 of loan deposits from $5 of Bank of Canada notes.
Further, a close study of section 26 of the Bank of Canada Act, 1934, will reveal the dangers attending any banking practice which would avail of all the legal limits assigned to it. There is an interesting point in the speech of the hon. member for Vancouver-Burrard, as reported' in Hansard at page 4068, column 1, paragraph 2. This reads:
. . . but I do commend to the Prime Minister and his government serious and fair consideration of my statement to-night that the major weapons of control, by which we were told the government through the Bank of Canada would regulate the volume of currency and credit in the interests of the economic life of the nation, are not effective; because I am satisfied that the majority of the members of the government will not permit that statement to go unchallenged, if my conclusions, from the facts I have analysed to-night, are justified and correct.
On this I make vigorously this important observation. The legally established functions of the Bank of Canada do appear to have strengthened the financial structure of the country to resist the destructive force of an impending recession. But the other side of the picture is not equally clear. The ability of the central bank to place large funds at the disposal of the banks does not necessarily bring about a stimulus to flagging business or flagging industry. Economists of every kind will have to learn that in our present economy of practical plenty the stimulus will have to be applied to the individual citizen. Stimulate the individual who wants something which his country has made it possible for him to obtain, and we shall hear no more of the frustrations of poverty; we shall hear no more of unemployment; we shall begin to make of our country the glorious dwelling place it is capable of becoming.
Pierpont Morgan, the banker, told the commission which inquired into the conditions surrounding the collapse of 1929 that he would not hesitate to loan S5.000 to any man whom he believed honest and capable, without consideration of security. In essence this
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is done frequently by bankers. I submit that this leads us logically in the direction of economic security for our people, and points the way by which it can be developed. While absence of sufficient money will bring about a recession of business, a pentitude of it in the hands of bankers or the central bank will not act per contra. If every citizen in Canada were rich but miserly, our business would be relatively small; nevertheless, if every citizen in Canada were poor, but could be persuaded that his social security was being established and guaranteed by the government, his economic wants could be gradually built up until he reached a more just and reasonable distribution of the productive and distributive capacity of our wonderful country.
What, then, is my aim and to what end should we mould the legal functions of the Bank of Canada? The essentials of life in this or any country are food, shelter and clothing.
There is in Canada an average w'age. This average wage represents the general standard of achievement of our citizens. Of this average wage, food, shelter and clothing each demand a definite percentage which varies only fractionally within well-defined limits. These are the pegs upon which we can hang the social security of our people.
For this reason I say that it is now possible to extend the operations of our banking system through the functions of the Bank of Canada, widened for that purpose, so as to provide a series of automatically recurring credits to every citizen of our country, which credits shall become loans as they are availed of and only for the amount availed of. Every such loan will be repayable to the country in one form or another, and, what is most important, such credits and loans will be related to and used only for one branch of our economic necessities at a time until it has justified its existence and completely proven its practicability.
In this manner, by an internal currency, can we quickly bring to everyone according to his need, and demand from everyone his share. Employment will increase at once. Initiative will in no sense be destroyed, and, as I have said, an economic standard can be automatically raised in scientific adjustment to the material development of the country.
Such credits introduced gradually and scientifically will differ altogether from the Aberhart and Douglas conceptions, and will be freed basically from the faults already elaborated.
It will revolutionize the present system, not by overthrowing it but by bringing to it

a commercial understanding which recognizes its essential values and the complexities of its structure, and it will be definitely coordinated to it.
It will be tied at both ends-tied to the producer and tied to the consumer alike- and will carry the unquestioned and inescapable responsibility of a repayable loan.
It will be accepted freely by all honest citizens, and the dishonest orfes will very quickly learn their lesson when deprived of its blessings. All this lies within the possible use to which we can bring our Bank of Canada, and I say this after much thought and after study of the trend of financial and industrial thought and practice everywhere. When the opportunity occurs in which I may extend my observations along this line, it will be with a developed plan, the outcome of much careful study and preparation.
No one can boast happily of his country unless he has himself enabled it to be and to become the provider of adequate and continuous sustenance to every citizen, male or female, adult or of tender years-unless he has assisted to bring to his people a secure existence in the midst of its plenty.
Finally, creation is an unhappy word to use to explain the physical functions of banking or credit or any other expression of our economy. Unless we produce and distribute at a profit by human effort, we must produce and distribute at a loss, and that way lie inefficiency, chaos and despair, notwithstanding all the claims of orthodox socialists for the elimination of the price system. It will eliminate itself when the right time and the right social conditions come together, and we have it in our power to make the Bank of Canada speed that happy day.


Mr. J. H. BLACKMORE (Lethbridge):: Mr. Speaker, it is indeed a very great pity that the hon. member for Nanaimo (Mr. Taylor) chose this time, when we are all anxious to close this session, to precipitate a discussion on the principles of social credit after he has sat here for five months during almost every day of which he might have debated the matter.
I am going to present my case straightforwardly to the house and to those who read Hansard. We do not wish to protract this session, and consequently are not at this time going to go into a discussion of the details of social credit, but if the hon. member will bring his ideas up next session we shall deal with them until there will not be powder left of them.
I am just going to read three or four quotations which need to go into Hansard because

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they are vital, and then I shall turn for a very brief period to a discussion of the Bank of Canada.
The other day the hon. member for Vancouver-Burrard (Mr. McGeer) gave a quotation which I am going to read into Hansard again because of its bearing on what the hon. member for Nanaimo has said. It is this:
The first important thing to bear in mind is this, that money can be created.
The chief reason why the social crediters have used the banks as an illustration of the creation of money is simply to show that this can be done.
I am going to read now the quotation from John Maynard Keynes as given the other day on page 4194 of Hansard by the hon. member for Vancouver-Burrard. If the hon. member for Nanaimo wishes to question Mr. Keynes on this matter, he is at liberty to do so. Mr. Keynes said:
The creation of legal tender has been and is a government's ultimate reserve; and no state is likely to decree its own bankruptcy or its own downfall so long as this instrument remains at hand unused.
Thus we accept Mr. McKenna's contention that an expansion of credit is the key to the situation. But we conclude that if whilst an increased volume of bank credits is probably a sine qua non of increased employment, a program of home investment which will absorb this increase is a sine qua non of the same expansion of credit.
All I wish to say this afternoon in the contribution I desire to make to this debate is included in that statement. All one has to do is to enlarge upon it. Again, as reported at page 4195 of Hansard the hon. member for Vancouver-Burrard gave this quotation from the Right Hon. Mr. McKenna's report to his bank:
The quantity of our money is no longer governed by the fortuitous supply of gold and the degree to which hoarding is practised by central banks and others. The quantity of money is subject now to pure management with first regards to the needs of commerce and industry.
That again expresses the whole contention of the monetary reformers and the whole contention of the social credit movement, because it is a movement of monetary reformers.
Again, as reported on the same page of Hansard, the hon. member for Vancouver-Burrard quoted from the London Economist of May 21, 1938:
There are distinct signs that the policy of cheap plentiful credit-
The hon. member for Nanaimo will notice that the word " credit " is used there.
-is being continued and intensified so as to combat the recession, and also so as to facilitate the financing of rearmament.
May I break in there to point out that if credit is sufficiently sound money to finance rearmament, it will finance dividends at any time.


Richard Bedford Bennett: That means that the Bank of England discount rate is kept low so that the joint stock banks have ample credit facilities-cheap credit.


Mr. McGEER:: It does not mean that at all.


John Horne Blackmore: The quotation from the London Economist continued:
Such a deduction is not at variance with the occasional reaffirmations of monetary policy which from time to time have emerged from official quarters.
I am going to read again from an address by the Right Hon. Reginald McKenna on January 29, 1936, in the following words:
We learned that a shortage of money may be just as vicious in its effects as an excess. It is becoming more and more widely recognized that greater productivity calls for an increased supply of money, for otherwise prices will fall, business will stagnate, and the growing productive capacity will be unused. For money to be thoroughly sound, there must be enough of it to finance an ordinary growing volume of trade, yet not so much as to give rise to an inflationary movement of prices.
The whole social credit idea is involved in that statement. Let me draw attention particularly to these words:
It is becoming more and more widely recognized that greater productivity calls for an increased supply of money.
Too frequently men lose sight of the fact that we are in an age of abundance in which we are producing more goods than we are now able to sell, and in which we are capable of producing many more goods than we are now producing. Consequently, it is abundantly manifest that our productivity has increased. The social credit contention is that at the present time there is no adequate device, no adequate government control, by means of which that increase of money is made which is necessary as a result of the increased productivity; and even if the amount of money is increased, there exists at the present time no means whereby that money can be put into circulation in such a way as to enable the people who need the goods to buy the goods; consequently, to enable the people who have the goods for sale, to sell the goods. When the hon. member for Nanaimo

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or any other man in Canada thinks he can argue that away, he is welcome to try it next session.
It is extremely necessary that I should not take very much time, and I am going to leave that, letting anyone who wishes to read it, do so. I am going to give another extract, from an article in the London Times of January 30, 1936, by the Right Hon. Reginald McKenna, at page 23:
Additional currency, however, can now be furnished by the authorities, if they choose to exercise their powers, without reference to the central bank's holdings of gold. Thus the nineteenth century, which brought into general use a means of payment hitherto scarcely known outside London, . . .
He is manifestly referring there to credit.
. . . brought also the machinery whereby it could be subjected to intelligent control.
The chief contention, apparently, which the hon. member for Nanaimo was making was that social crediters were running along unsound lines in contending that governments can create money and that the amount of money they can create depends upon the country's productivity. That quotation strongly supports our case. After you have created money, it is simply a matter of deciding how you are going to use it.
May I now turn to a consideration of the bill? The hon. member for Acadia (Mr. Quelch) has expressed our opinion as a group. We are going to support this measure, but our views in large measure agree with those recently expressed by the hon. member for Rosetown-Biggar (Mr. Coldwell). Unless this Bank of Canada is correctly used, it is not going to do us the good that we hope it will do. Those people who have persuaded themselves that the mere ownership of the bank by the dominion government is going to solve their ills, are labouring under a delusion. Consequently it becomes extremely necessary to point this out at this stage. This bill is a step in the right direction, so we are going to support it.
May I hasten to say that we have no means of determining what the government are going to do with this bank. I assume they are going to use it wisely. I have no doubt about that; so I am not applying any criticism; I am merely pointing out the reason why I intend to support this measure.
There are two functions formerly performed by private persons which, on account of the rapid oncoming of the age of plenty, they are no longer disposed to undertake. The government, therefore, if disaster is to be avoided, must be prepared to supplement both of these functions. The first is that of capital
fMr. Blackmore.]
being invested in new concerns, factories and the like. Since 1929 capital has literally gone on strike; it appears no longer available or free to invest in new enterprises to produce goods. The banks would seem increasingly indisposed to lend money for those purposes. The other day, while we were quietly discussing this matter, I asked a man this question, "If you were a banker, would you lend money to go into sheep?" "Why," he said, "I should say not." I said, "Why would you not?" He stopped and thought about it for quite a little while. I intended he should. "Now," I said to him, "I am going to turn right around and ask you this question: "If you were a shrewd, intelligent farmer, would you borrow money with which to go into sheep?" He thought a very few minutes and finally said, "I do not think I would." "Now," I said, "will you tell me why, in both cases? And when you get done telling me why, you will be ready to consider the proposals which I have." I will state briefly what we arrived at after about fifteen minutes. "Well," he said, "if I were a banker I would not lend money because I would be afraid I would not be able to get it back." I said, "Why?" "Because," he said, "the farmer would not be able to sell his goods." "Very well," I said, "your trouble is selling your goods. And that is the reason why the farmer will not take the money. Then your difficulty is concentrated on the question of consumption."
We can talk all we like about "confidence." President Roosevelt, I am told, spent a good deal of time the other night talking about it. People say it is because a certain government is not in; it is because of this, that and the other, that confidence is lacking. As long as they continue to have that idea, they will labour under a delusion, because the reason for the lack of confidence is that men fear they cannot sell. Capital, I say, has gone on a sort of sit-down strike since 1929. May I cite some figures which I found the other day in a most interesting bank letter? In the United States the figures of new corporate financing of-late years are as follows:
Year	Amount
1928		$5,500,000,000
1929		 8,000,000,000
1933	 180,000,000
1935		 400,000,000
1936		 1,200,000,000
1937	 1,500,000,000
Many people tried in 1937 to persuade themselves that we were back to the 1929 level. All we need to do is just glance at the two figures. In 1929 United States business men invested $8,000,000,000 in new corporate financing. In 1937 they invested $1,500,000,000.

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What we ask is this: What is the matter? Well, it is abundantly clear, is it not, that capital has gone on strike? The question for us to determine, therefore, is why and how we can overcome the difficulty. That very small figure in 1937 is the more striking when we remember that during all the years of the depression there has been insufficient expenditure of capital in new corporate financing. The result has been that there must have developed a distinct deficiency in capital production, a distinct lack of factories; notwithstanding that stimulus, however, there is no tendency whatever to pick that up by anything like an adequate expenditure. There is no tendency to make up the loss. How is that loss to be made up? That is the problem which faces the United States, and it faces Canada and. indeed, all the civilized nations of the world.
We do not need to argue about if's and but's, about the A plus B theorem or anything of that sort. There are the facts and they must be faced. What did the United States do to make up the loss? There are many people who are finding fault with Mr. Roosevelt's extravagant spending program, but these people never for a moment undertake to show how he could solve the problem without that spending. They do not realize that unless he can get that money without borrowing, then his nation is doomed, but they cannot see how he can get along without spending money. Social credit puts its finger on that problem. It says: There is your problem; you simply must have money, and if you cannot get it without borrowing or without taxation, then you might as well close up and get ready for your funeral, because it is coming and no amount of sneering or levity will dispose of the situation.
When, therefore, people say that we are not keeping our eyes on reality they are simply deceiving themselves; that is all. In 1932 in the United States the government went into debt about $3,000,000,000 distributing the money in every direction, in relief, and for every kind of project which would enable them to put the money out so that people could buy goods that industry wanted to produce and sell. Every year from that time forward until 1936 they spent a similar amount. In 1936 they spent $4,400,000,000, with the soldiers' bonus, and the money was expended in their WPA and CCC projects and in a great many other ways, all designed to put money right into the hands of the needy people in order that goods might be sold to the greatest advantage. Anyone can see in that program a dividend, though a very crude
51952-271^
sort of dividend. It is not scientific at all, but it is there. In 1937 they cut down this $4,400,000,000 to about $1,500,000,000, apparently because in the United States uninformed people behind Roosevelt began to clamour so vociferously for retrenchment, the balancing of the budget and all that sort of thing that the pressure exerted upon him was more than he could resist. The result was that he cut down the amount he was spending, and, behold, a recession. It may be said that the recession did not come because of that, but that would be something very difficult to prove. You notice that confidence is picking up and prices are rising as soon as a great amount of money goes out; and those who read the press in the last two or three days have read of Roosevelt's intention to rush recovery with $3,000,000,000. It means only one thing. They have discovered that one way out of the depression is by government spending of money.
If that $3,000,000,000 is being created in the United States by the banking systems, and if it could just as well be created by the government, then why not? That is a vital question which faces us as practical Canadian statesmen. Let me read what the Royal Bank of Canada says after a fine review. This is from the Royal Bank of Canada's letter of October, 1937:
Unless private expenditures of a capital nature can be stimulated it would seem that the, government will be compelled to increase its spending, or as an alternative, to permit a decline in national income.
The same applies to Great Britain. Most of us were interested in a certain powerful movement that took place over in Great Britain this year. I understand that a resolution was passed calling upon the government to declare what they were going to do in case the rearmament program ceased. The same question can be asked in Canada. What has the British government done? It has spent vast sums on rearmament, vast sums on rehousing, vast sums in divers social services and so on and so on, with the result that there is apparent recovery and prosperity, and those who are only superficial enough imagine that good times are coming back. But it is quite obvious that this is not so- obvious to those who read the words of people who are best informed.
I have said enough about the sit-down strike of investors. Now I will turn to the walk-out of consumers. They have quit buying; they have been compelled to, and the result is stagnation. The government must finance consumption. These measures which the United States has been adopting, the

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measures which Great Britain has been adopting, are all designed to finance both production and consumption. In my opinion the Bank of Canada must definitely and positively aim at two things. In the first place it must be prepared, by machinery which it will set up by and by, to finance production. The hon. member for Nanaimo began to talk a great deal of wisdom toward the end of his speech when he spoke about spending money to produce. That proposal is sound. May I say with regard to this good man that he is one of the best students I have ever met, and one of the most earnest men. I do not hold it against him that he does not see eye to eye with me on social credit; the day will come when he will; for the simple reason that the ideas, whether you call them social credit or not, are sound inasmuch as they go to the basis of the difficulty which confronts us.
Since it is necessary that we finance both consumption and production, we can readily appreciate what the hon. member for Melville (Mr. Motherwell) felt the other day in a very fine outburst towards one of the greatest and most important utilities in our country, the utility of banking. We can understand why he implied-he did not exactly say it- that you should not allow a particular bank to go out of a certain little community. "Well," the banker pleads, "we are losing money." " Never mind whether you are losing money or not, you cannot destroy me and the community," he replies. Read his fine words, and remember the honour and respect which are universally accorded to that man, and the long practical experience he has had. He is not one who can be called an impossible idealist or a dreamer. He rises in his place in this house demanding exactly what the people of Alberta demand, namely, that the function of banking shall be subjected to an adequate measure of government control to prevent disaster from coming to the people. How well the hon. member expressed it. Perhaps, without violating the rules of the house, I might read one or two of his expressions. On page 4177 of Hansard for June 23 he is reported as saying:
Why should a man have his whole life work interfered with by a ruthless bank outsider who knows nothing and apparently cares less about the rural areas of the country? Is it any wonder I am furious and indignant? And then there is no redress.
Those might be the words of the province of Alberta; that is exactly the way we feel, and Saskatchewan, Ontario and every other province will feel that very thing after a while.

All that is necessary is to realize that banking is a public utility. Now consider his words as reported at page 4178:
If the banks will not correct this situation, what am I going to do?
Alberta is as it were speaking.
I am going to suggest to the Minister of Finance, the Prime Minister and all the government, that they take into careful consideration the desirability of having a board of bank commissioners, so that when a bronco banker like this one breaks out, a snub twitch or a lariat can be put on him. Do you think Canadians should have to submit to such tyranny? I do not. I would be ashamed to think that Canada had degenerated to that extent.
Those, Mr. Speaker, are exactly the views of Alberta. Yet some hon. members talk about Alberta being in open rebellion against Ottawa, and all that sort of thing; and say that the acts which Alberta passed in order to enable her to struggle against that very situation and bring it under some sort of control have to be disallowed immediately, with no redress from Ottawa whatsoever. The province is left to fight its way, just as this poor man and that little community where he lives. As soon as we as Canadians come to realize that Alberta, and men like the hon. member for Melville, are fighting for a real right, people will stop all this nonsensical talk.
I turn again to the policy of the Bank of Canada. My group have said time and again in this house that it is the policy of the bank which counts. Ownership is good, but you must have a right policy. You must recognize first that it is a public utility. After recognizing that, you will begin to be prepared to finance consumption; for example by pensions to the aged, to the blind, to the sick and incapacitated, to widows, mothers, orphans; greater and greater. Why? Simply because that is a means of financing consumption. You put the money into the hands of the people who wish to spend it, and who therefore will. The result is to develop markets to a fair degree. We shall follow that up with state medicine, state dentistry, and money for things which will tend to remove from the people the terrible burden they are now bearing. We are doing the most stupid things imaginable. One need only look at people who are raising families of five or six children. Do we want those families? Surely we do. But we place on them the burden of the sales tax, the burden of medicine, dentistry-one could go on and enumerate the great number of abuses as a result of which we put the burden on the very people who ought not to be bearing it-and we say that all is well. It is strange that

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people all over the earth except Anglo-Saxons are able to see these injustices. But we shall see them by and by. Then we shall use this new state-created money in the reduction of prices; we shall subsidize consumers. It sounds silly, but is it? It is the common sense thing to do. Then we shall not be far away from dividends for all. It will all be paid for by the creation of new money. Let me revert to a quotation from Right Hon. Reginald McKenna in January, 1936:
Additional currency, however, can now be furnished by the authorities, if they choose to exercise their powers. . . .
It is additional currency, not old currency; it is not taxed from anyone; it is not borrowed from anyone.
My time has expired. I have already talked much longer than I had intended. I shall close with a little quotation which I think the longer hon. members consider, the more meaning they will find it has. It is from page 99 of Stuart Chase's book, Government in Business, quoting Arthur H. Adams, in the Key Ratio to Balance, published in the American Federationist of November, 1934:
The unbalance we have reached this time is so big that natural or automatic restoration of balance, or recovery, cannot occur. The buying power of all consumer goods workers in the United States-
And the same is true of Canada, of course.
*

needs to be raised about 35 per cent on the average, and with no increase in their producing power, before an intelligent man should even hope for business to become self-sustaining at normal levels.
That, too, is the situation which Canada faces. The Bank of Canada must be used for (he working out of the policy, first, of financing production, and second, of financing consumption.
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock. BANK OF CANADA



ACQUISITION BY THE GOVERNMENT OF SHARES NOW IN HANDS OF THE PUBLIC

[Stage Direction]
The house resumed consideration of the motion of Hon. Mr. Ilsley (for Mr. Dunning) for the second reading of Bill No. 160, to amend the Rank of Canada Act.
Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Sanderson in the chair.
On section 1-Short title.
Richard Bedford Bennett: Perhaps I had better say what I have to say at this time, because the title involves the whole question I wish to discuss. When the resolution was before the house I made such observations as I thought necessary with respect to the general principle of the measure. I endeavoured to point out that it is rather a commentary on our institutions that in 1936 we should have adopted what was regarded by the minister at that time as being the best possible method of effectuating public control over the Bank of Canada. When I heard him say the other evening that he still thought that this was so, but that the measure now before the committee was being put forward for the purpose of eliminating and removing criticism of the bank, I realized that while the reason is in itself sound, it is difficult to appreciate it in its entirety. I am afraid that the pressure of a near-by election had about as much to do with the matter as the public discussion as to the methods of the measure itself.
But there are two or three matters which I think might be considered to be of some importance. When I was in Australia I looked into the question of the Commonwealth Bank, and the conditions under which it was operated. It came into being without capital at all, borrowed a few pounds, relatively, from the government, and started into business. In 1937 a royal commission which was appointed in 1935-36 made a report, and with respect to the Commonwealth Bank they made the following recommendations which I think are of some importance:
1.	The governor should be chairman of the board by virtue of his office and should possess qualifications and receive a salary commensurate with the importance of the office. The appointment of the governor should not be made on the basis of seniority nor is it even essential that he should already be in the service of the bank.
2.	The six directors other than the governor and the secretary to the treasury should be appointed for a term of six years instead of seven as at present, one should retire each year, and be eligible for reappointment, but provision should be made that no director shall continue to hold office after reaching the age of 70.
3.	The limitation on the field of choice of directors in section II (2) (b) of the act should be removed. The members of the board should be selected for capacity and diversity of experience and contact, and not as representatives of special interests.
4.	The "Commonwealth Bank Act 1911-32," section 12B, which provides that there "shall be" *a board of advice in London, should be made permissive. This board is not at present constituted, and there seems to be no nceessity-for such a board in present circumstances.
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Our new board will be thirteen in number. There are eleven to be appointed; the governor makes the twelfth, and the minister or his representative we will say, makes the thirteenth.


James Lorimer Ilsley: The deputy governor makes the thirteenth.


Richard Bedford Bennett: 
James Lorimer Ilsley: It has not been below 8'6 per cent in the last ten years.


Richard Bedford Bennett: I said about 8, and the minister now tells me it has not been below 8-6 per cent in the last ten years. The only question that confronts us is: How can we make this bank more useful to the Canadian people and more responsive to their needs and necessities? There was a statement, which I think originated with the hon. member for Vancouver-Burrard, as to public credit. If I remember rightly, this was adopted practically as a slogan by the government during
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the election of 1935. This had to do with the utilization of the bank to the greatest possible extent in service to the people. But when it is suggested that the bank can make credit, there have to be conditions that permit of credit being made. The difficulty is that these conditions have not arisen in this country. Until they arise there is only one thing can be done-and the Minister of Finance made it perfectly clear that he at least was not prepared to do that-and that is by statutory enactment to provide what the Minister of National Defence (Mr. Mackenzie) said would be done after the last election, namely, to issue paper money in relation to the gold reserve that is in the bank, which would permit hundreds of millions of dollars being issued. A portion of that money, he said, would be used to liquidate the national debt, and a portion used for other purposes. That has not been done although, remember, it was done in this country once. In 1915 we passed a statute legalizing the acts that had been done by the government of 1914. We issued $26,000,000 of Dominion of Canada bills, $10,000,000 of which had nothing behind them, $10,000,000 had behind them Canadian Northern securities which were worthless, and $6,000,000 had Grand Trunk Pacific securities behind them which were also worthless, and that $26,000,000 you will find referred to in chapter 4 of the statutes of 1915, where you will find these words; I shall not take time to read it all:
Whereas for the purposes set forth in orders in council of date the fifth day of September, 1914	(P.C. 2326), the twenty-sixth day of
September, 1914 (P.C. 2451), the twenty-fourth day of October, 1914	(P.C. 2671), and the
twentieth day of November, 1914 (P.C. 2922), and pursuant to said orders, advances to the amount of six million dollars ($6,000,000) in the form of an issue of dominion notes were made to the Grand Trunk Pacific Railway Company, against a pledge by the company of its guaranteed securities issued in pursuance of the provisions of the Grand Trunk Pacific Guarantee Act, 1914, by placing the sums so advanced to the credit of the Minister of Finance for payment out under the provisions of the deed of trust securing the issue of these securities;
And whereas pursuant to an order in council of date the second day of November, 1914 (P.C. 2750), dominion notes to the amount of ten million dollars ($10,000,000) were issued, in order that certain obligations of Canada might be met as they matured;
And whereas with respect to the greater part of these issues of dominion notes security in the form required by section 5 of the Dominion Notes Act 1914 was not held-


Ian Alistair Mackenzie: The total increase was $46,000,000. There was an increase from $30,000,000 to $50,000,000 in 1914.


Richard Bedford Bennett: That was covered by the expansion of dominion note issues. But this was covered by the issue of notes by the dominion to liquidate three obligations: one to the Canadian Northern, one to the Grand Trunk Pacific, and the other to the nation generally; one being for $10,000,000, one being for $6,000000, and the other being for $10,000,000. The other $20,000,000 stands on a somewhat different basis because the gold coverage was used for the purposes of protecting that issue. It was in order to avoid any discussion of that, that I referred to this particular statute. The hon. gentleman will realize that the gold coverage was behind the $20,000,000. The first recital deals with the $10,000,000 to the Canadian Northern, and that is validated by the legislation.
It is within the knowledge of all the members of this committee that if a bank found itself in need of cash it deposited with the Minister of Finance certain securities which it held, and the Minister of Finance handed out to that bank Dominion of Canada notes. For this accommodation the bank paid certain interest rates, sometimes 31 per cent, sometimes 4 per cent and sometimes 2i per cent. That issue of dominion notes was not protected by metallic coverage. That had nothing to do with it. It was only a temporary advance, and it will be observed that it was supported only by the securities which were deposited with the Minister of Finance for the purpose of enabling the advance to be made.


Mr. VIEN:: Would it be a rediscount operation?


Richard Bedford Bennett: The hon. member has anticipated what I was going to say. That we did not continue. It will be remembered that Sir Thomas White, in his dissenting opinion from the conclusions of the royal commission, said that that was quite ample for our purposes, but the bulk of professional as well as lay opinion was that that was not an easy or a safe way to carry on our operations. I use the word "safe," not from the standpoint of financial stability but as indicating a safe, sound way in which to carry on.


René-Antoine Pelletier: To complete the picture which the right hon. gentleman is giving, will he tell us how the issue of $26,000,000 was finally withdrawn from circulation?


Richard Bedford Bennett: As a matter of fact, it was not withdrawn from circulation. It was covered by the statute passed during the regime of the late government wihen we dealt with the note act and the legal tender act

Bank of Canada
and the coverage act after the conference of 1933, when 25 per cent of metallic coverage was regarded as safe coverage, and to that I shall refer presently. The notes were part of our authorized and legal note issue, and they became part of the note issue which was taken over by the Bank of Canada and for which it assumed responsibility.
J have given that illustration merely as indicative of what might be done when necessity compels, as it did in 1914. As I read the observations of the present Prime Minister (Mr. Mackenzie King) and of my hon. friend the Minister of National Defence, I certainly concluded that he contemplated the utilization of the national credit in much that way. The Prime Minister had assured me that I was wrong in my conclusion as to that, and I have not joined issue with him on that because, after all, what one man understands from what another man says is not always the test of what one may regard as what was intended by the man who spoke the words.


William Lyon Mackenzie King: Does my hon. friend mean the Prime Minister or the Minister of Finance?


Richard Bedford Bennett: The Prime Minister during the campaign of 1935, and it will be recalled that in 1936 when I was dealing with the Bank of Canada the Prime Minister said that at no place would it be found he had said they would be responsible for the operations of the bank, but he said it should be a publicly controlled institution. If he will turn up Hansard he will see what I mean.


William Lyon Mackenzie King: I said publicly controlled but not publicly owned.


Richard Bedford Bennett: Quite. It was that distinction which the Prime Minister pointed out in this house in answer to the observation I was making, and it was read this afternoon, that he was not concerned how control was effected as long as the bank was controlled by the government.


William Lyon Mackenzie King: Effective control is more important than ownership.


Richard Bedford Bennett: That was what was said anyway.
Now let us go a step further. We have substituted for the provisions to which I have referred a provision with respect to rediscount, and so I get back to what I pointed out at the very start, that when there is no occasion for rediscount, when business conditions are such that there is no opportunity for the banks to use the enormous deposits they have, there is no opportunity for the Bank of Canada to function as a rediscount bank any more
than there would have been for the finance department to function in emitting credit to the banks. That is the first difficulty we must face, and until we can restore the confidence of the people of this country in business we cannot expect this bank to function as a bank of rediscount. It is there; it is on the statute books; we have provided for it; but all you have to do is to look at the statements of the banks to-morrow and you will find that the banks have enormous holdings of our securities.
I want to say this, and I am sure that the Minister of Finance (Mr. Dunning), if he were here, would agree with me. Of course we are getting money on treasury bills cheap.
I remember when we started doing this. We were told we could not do it; that nobody would want to buy our treasury bills. We started in a very modest way; but as there was no demand for money, as the banks were unable to place in profitable loans the money of their depositors, the demand for shortterm treasury bills increased and the rate decreased. It is a bad sign when treasury bills are cheap. The cheaper they are, the less business there is in the country. I remember once watching the upturn of business in London, where they sell treasury bills on an enormous scale, far beyond anything we can appreciate or understand. There was an upturn of business, whereupon the treasury had to pay more money to sell treasury bills. But as money accumulates and is unable to be utilized by those in whose custody it is placed, treasury bills become cheaper and the rate is lower. That is the story. There cannot be any question about it. All one has to do is make himself familiar with the day to day transactions in respect to these matters.
I am hopeful, as I think every man is, that with increasing confidence on the part of the Canadian people in the business of developing their country there will come a greater demand for credit. But that demand will reflect itself in what? In deposits being converted, not into government loans, but into loans to business, to individuals, to factories, to various things of that sort,-and not for capital, either. That is what I think the hon. member for Lethbridge (Mr. Blackmore) must always keep in mind: the banks do not provide capital. Why? Because they do not know when they will be called upon to honour the cheques of their depositors. The maintenance of that equilibrium between time loans and time deposits, and demand loans and demand deposits, is the basis of all sound banking, and departure from it, by putting bank deposits into capital securities or into long-term loans, means inevitable disaster, as
428S
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has been proved in this country on more than one occasion. That is the position which we occupy. Despite all that may be said to the contrary, it just gets down to this. We can by appropriate legislation repeat what was done in 1915. We have, rightly or wrongly, a public opinion as reflected by a universal rule of less metallic coverage behind sound money than existed prior to 1915. There is no legal metallic coverage by statute in Great Britain, but England has more gold behind her currency to-day than she has had for a very long time, possibly more than she ever had. The Bank of England has more gold to-day than ever before; and when you see the bank's return, remember that it values gold at $20.67 an ounce and not at $35. The stabilization fund has absorbed, for the moment at any rate, the difference between $20.67 and $35 per ounce. I cannot speak as to the position this week, but about eight weeks ago there was more gold in the Bank of England behind its currency issue than there had ever been in its history. There is no longer the issue of "Bradburys." That paper money which was established when the war broke out and was called "Bradburys" has been wiped out. All the notes that are issued south of the Tweed are issued by (he Bank of England, and as I have said, these are covered at the moment by a larger deposit of gold than at any other time in the bank's history, although England is off the gold standard.
Our currency to-day is just as sound as it was at the moment of its greatest soundness. Canadian paper money is covered by metal to the same extent or to a greater extent than it has been at any time in our history.


Ian Alistair Mackenzie: Much
more.


Richard Bedford Bennett: Much more than at some times in our history. There was a time when we had very much more gold than we have now. I was looking at the figures the other night.
That being so, the only question, I repeat, is how we can utilize to the greatest possible extent the credit that springs from the resources over which this country now has control. I do not see any provision in the bill which contemplates any change of policy. I see nothing that contemplates any change in the conduct of the bank. Instead of the $5,000,000 of shares being scattered all over this country, they are going to be lodged in the treasury. Instead of directors who have to hold shares, and who have some sense of financial responsibility, they now are appointees of the government. I would point out how desirable it is to endeavour to realize, as the commis-
sion in Australia stated in its report, that the directors should be representative of all forms of business and that so far as possible the political factor should not be one to be considered. I am not going to repeat the details of the experience which I had in connection with the organization of the Bank of Canada, but I do not think it could have been successfully organized if it had been subject to the continuance of the tremendous pressure that rs described by the one word "patronage"-not the best word, perhaps, to define it. For instance, some people thought that the Bank of Canada should be an institution which at once would provide them with loans of anywhere from $1,000 to $1,000,000. I see that two of my friends opposite nod their heads; they come from rural constituencies, and they were asked on some occasions why they were not able to get money for their electors. I have received many letters of that type.
The Bank of Canada is not at all that sort of institution. It has no accounts of that kind; it reflects its activities and the power of its position only by indirect methods on the banking system of the country. Again I say I can only hope that we may be able to devise some method whereby this great untouched reservoir of credit can be utilized for the public weal. That is the problem before us, just how that can be brought about-on the one hand, to preserve the solvency and reputation of the country; on the other, to utilize to the most the accumulated good will and reputation of the country, which after all is credit. I am not here to solve the problem- it is not my responsibility-but I desire only to point out that great results have followed in some parts of our empire from the efforts which have been made in that direction.
One word more, with respect to the acquisition of the bank. I pointed out in 1936 that if the country desired to take the bank, they should expropriate it and acquire the shares. They have taken the shares now at 120. or a little short of that, and those who sell their shares will have made 41 per cent dividend and 20 per cent profit on their venture, which is not bad in these days.
In New Zealand, if my memory serves me aright, they did not provide so large a profit to those whose shares they took. It was just shortly after the state took over, that I visited New Zealand, and I inquired of the governor of the bank precisely how matters were being worked out. Will the hon. members keep in mind one thing that differentiates us from all these countries and prevents us from making a comparison of the type that I have sometimes made here to-night with the type

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that others make. Australia has her debt domiciled in two places only, London and Australia. They did have a small loan in New York, but that is not important at the moment; it was an experiment. New Zealand's debts are domiciled in London and New Zealand, and all sales of produce of New Zealand find payment in sterling lodged in their banks there for the purpose of servicing their debt, paying interest on their debt there. Then, when the exchange is made, the pound, New Zealand and Australia, is practically on a 81 basis with us. One can get some idea, therefore, how it stands with respect to sterling.
It is a purely technical matter how they maintain the exchange rate. The governors of the banks told me how simple it was to maintain it. The suggestion has been made- I remember the Minister of National Defence having made it-that we should have depreciated our dollar. Well, heaven only knows it was depreciated enough by causes over which we had no control without our wanting to depreciate it more; and the gentleman who made representations to the royal commission at Winnipeg, who was not a Canadian, was confronted with the situation that we had a third creditor which these other countries have not. We have the great country to the south of us as our creditor, a country where we owe enormous sums of money, federally, provincially, municipally and by corporations. When England went off the gold standard we still had, in terms of our contract, before the United States took the action they did, to pay our debts there in gold; and having to do so was what brought about the greatest strain that this country has ever had to undergo. Fortunately, with the good will of some of the United States banks and a combination of fortuitous circumstances. we were able to meet every obligation in terms of our contract, and that is the reason that ultimately we were able to restore our credit in face of the difficulties we had to meet.
We must never forget, however, that the action taken by the United States was really the determining factor in changing the picture as a whole. That third factor-not England, not Canada, but those debts in the United States that were payable in gold-was the factor which created such a serious situation in our economy. That difficulty no longer confronts us in the way it did. Why? Because of the action taken by the United States with respect to gold, with respect to paper, with respect to all these matters; and their action has had the effect, of course, of releasing us from a tremendous burden which frankly at
one time it looked as though it might be almost impossible for us to bear. That differentiates our position from that of Australia or New Zealand. They have no such situation as we have.
There is another factor that was mentioned the other day. We have a great favourable commodity balance with Great Britain; we have an adverse balance with the United States; and the utilization of that balance in London to discharge the adverse balance in New York is, of course, the basis of international trade; only you have to multiply it by several ' countries in addition to those; here an adverse balance, and there a favourable balance; the utilization of this favourable balance with respect to that adverse balance, and so on. Largely, however, it was a matter between London and New York. That is a factor which can never be forgotten.


James Lorimer Ilsley: There has been a favourable balance with the United States at least until very recently, if we count gold.


Richard Bedford Bennett: Yes; but I have been
leaving gold out of the question. Gold, becoming a commodity pure and simple as it now is, has made the situation very much belter and simpler for us in every way. To-day gold is a commodity like tobacco or pulpwood or anything of that kind. That is all it is at the moment. There is in the library a book that gives a wonderful history of the reason why gold-has kept the place it has through all the centuries. It is not that it is money alone but that it has always represented something *which in the eyes of all generations has had a peculiar value. It is that it has been very much admired for its beauty and also, because of its rarity, that it has had a value which no other metal has had.
How this problem can be approached without impairing our credit on the one hand and our reputation on the other is a question which I am sure must be engaging the attention of the government in view of the declarations of policy which they so earnestly made before the last election. I am sure that the Macmillan report, which was substituted for the psalms of David by my hon. friend the Minister of National Defence, has become quite worn by much perusal, but a solution of the difficulties has not been found.
I am only going to suggest, as we reach the sections, that thirteen directors are too large a number. There is one other point which I might touch upon. Are we not entitled to have back our bonds now? When the Dominion of Canada handed over to the Bank of Canada various assets we gave them
Bank of Canada

our bonds to guarantee them from responsibility with respect to the assumption of liability for our note issue. Do we contemplate by the language of this bill the transfer of those bonds back to the country? I have looked at it earnestly on more than one occasion, and I am not sure whether it is open to that construction.
These, Mr. Chairman, are the principal matters to which I desire to direct attention.


Gerald Grattan McGeer: The leader of the opposition has pointed out, as did the Minister of Finance the other evening, that one of the problems which face the government in the exercise of its control over the currency and credit of the nation is to get into circulation an effective amount of the huge amount of credit and currency that is to-day available. The tremendous amount of credit now available was referred to in a rather indirect way by the Minister of Finance the other evening. I was questioning his statement that the control of the circulation of currency and credit could be exercised through the discount rate and he replied:
I intended to say then just what I am saying now, that the conditions which create that tremendous volume of available credit in all three of these great countries have for the time being rendered any rediscount rate an ineffective weapon. . . .
He was referring to Great Britain, the United States and Canada.
It must be apparent that "that tremendous amount of credit" comes from some direct source, and as a matter of fact, the conditions to which the Minister of Finance referred and which were mentioned indirectly to-night are conditions such as arise when a country abandons gold and goes upon a managed paper standard. Under such conditions the volume of credit is directly under the control of whatever authority is issuing the currency on a managed paper standard. That control has been assumed to be in this government through the Bank of Canada.
Before I go on to deal with that feature, may I point out the extent to which, under the policy of the Conservative party when the Bank of Canada Act was passed and the Bank Act was amended to establish a paper standard, the limits of credit creation were fixed by parliament. In the Bank of Canada reports for May of this year it is disclosed that the total resources are $211,300,000. Of this total $182,300,000 consists of gold, leaving $29,000,000 in foreign currency, mostly United States dollars and pounds sterling. Of the bank's gold holdings only $97,250,000 are

in use as currency reserves leaving $84,850,000 of gold reserves idle and unemployed. That is saying nothing of Canada's annual gold production, from which a substantial increase in that unemployment of gold can be developed. From my own calculations I find that during the last three years, over and above our debt repatriation, payments for goods and all other things, we have exported gold as a commodity to the value of $116,000,000. This means that if there is anything in the Bank of Canada Act with regard to this provision of 25 per cent gold coverage and 5 per cent reserve in the chartered banks, we have actually sabotaged the credit of Canada to the tune of several billion dollars by exporting gold as a commodity, which I think is a serious mistake; for although reserves of gold are being accumulated in England to-day, they are being accumulated not for currency purposes, but for international emergencies, because gold can play a real part in the defensive equipment for the nation.
I estimate that under our Bank of Canada Act we have available to-day a total credit currency of $10,495,000,000. This is made up in this way. Under the Bank of Canada Act the bank may issue four times its gold reserves in Bank of Canada bills, that is, $182,300,000 multiplied by four, or $729,-
200,000.	Against this the bank has issued and has on demand call a total of only $389-
800,000.	This amount subtracted from the total issue authorized by law of $729,200,000 leaves $339,400,000 of Bank of Canada money unissued and unemployed, or sufficient for twenty times that amount in bank deposits, or a total of $6,788,000,000 in bank deposits as provided in subsection 4 of section 59 of the Bank Act. These figures I know are stupendous, but they are within the limits that parliament has fixed for the creation of bank credit currency. Here, then, is the source of some of "that tremendous volume of credit," that the Minister of Finance said made the rediscount rate inapplicable.


James Lorimer Ilsley: The utmost limits.


Gerald Grattan McGeer: No, not the utmost. All I am using here is the gold reserves available now held by the Bank of Canada. There are a great many other reserves available for the same purpose at this time. So that when I use these figures do not let the Minister of National Revenue (Mr. Ilsley) make the mistake of saying that I am using maximum figures; that would be another one of the mistakes which he is making about this issue.

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James Lorimer Ilsley: Is the hon. member not suggesting now that the ratio of gold held by the banks to their deposit liabilities should be 25 per cent and no more?


Gerald Grattan McGeer: No; I am not suggesting that at all. I am suggesting nothing; I am stating a fact. I am explaining to the committee the amount of credit currency that parliament made available on existing gold reserves as the national working capital of this dominion when it amended the Bank Act in 1934 and established the Bank of Canada. I am stating a fact that can be confirmed by the Bank of Canada reports.
But that is only one item in the plentiful supply of money that was intended to be created by the adoption by Canada of the British Empire currency policy, which as the leader of the opposition knows was defined at the world economic conference in July, 1933. We have, according to the Bank of Canada report, the following distribution of the issued bills:
Bank of Canada bills issued or on
demand	$389,800,000
Owned outright by the chartered
banks	 247,000,000
Held in the tills of the chartered
banks	 53,400,000
Held on deposit with the Bank of
Canada by the chartered banks. .	194,100,000
Total owned by the chartered banks 247,500,000 Amount required under the Bank Act 5 per cent cash reserve to support the reported $2,884,000,000 of alleged bank deposits. ..	144,200,000
Bank of Canada bills held by the chartered banks in excess of reserve requirements	 103,300,000


James Lorimer Ilsley: On a 5 per cent basis?


Gerald Grattan McGeer: Parliament fixed the 5 per cent basis, and it is parliament that ought to rule the reserve limits of this country, not the dictation of the banks.


James Lorimer Ilsley: Parliament never fixed it as a practical working minimum, but fixed it merely as a legal minimum. The hon. gentleman knows that no commercial banking system in the world goes down to a 5 per cent reserve ratio. They go to about 10 per cent. They do so in England and in this country.


Gerald Grattan McGeer: Does the hon. gentleman wish to make any more speeches? He is letting himself fall into a nice little bankers' trap. Until this 5 per cent reserve came into the Bank Act, there never was any rule or regulation in Canada as to what the banks should hold by way of cash reserve.


James Lorimer Ilsley: Certainly not.


Richard Bedford Bennett: There was as to legal tender.


Gerald Grattan McGeer: If the hon. minister will keep quiet and listen to me for a little while, he will probably know more when I get through than he knew before I started. I think he has a delusion which is common among a great many people. When the Macmillan committee report was first issued, what happened was they said that as a matter ol banking practice in England, to meet til money requirements, out-of-pocket expenses international exchange requirements and the settlement of inter-bank balances, the banks usually held Bank of England notes to approximately 10 per cent. But they also pointed out that this 10 per cent was largely a windowdressing proposition; that those reserves were built up on bank report days and were never an actual reality. This 10 per cent fiction of the Macmillan committee report has been seized upon by Canadian bankers as bank propaganda.


James Lorimer Ilsley: Has the hon. gentleman-


Gerald Grattan McGeer: Just a moment, let me finish. In a debate of this kind interruptions are not in place.


James Lorimer Ilsley: Neither is discourtesy.


Gerald Grattan McGeer: I do not think the hon. member can lay that charge against me. All I would say to him is that probably one of the most discourteous things that can happen is for a minister on the front bench to intervene as against a back-bencher, when he is dealing with a somewhat difficult and technical matter. I do not think I need to-


Frederick George Sanderson: I would ask the hon. member for Vancouver-Burrard to address his observations to the chair.


Gerald Grattan McGeer: In Canada we have this great difference in the banks holdings of currency, as against England. Our banks are allowed to issue their own bank-note currency, which to-day they do to the tune of a hundred million dollars. In other words our banks have, for till money and out-of-pocket transactions of the people, a hundred million dollars of bank-note bills issued by the chartered banks, which the English banks have no privilege of issuing at all.
As a matter of fact, five per cent of Bank of Canada bills is far more than our chartered banks need to carry in their reserve accounts, and that is clearly evidenced by the value of the bank bills they have on deposit with the Bank of Canada, and the value of the Bank
Bank of Canada

of Canada bills which they carry in their actual tills. As a matter of fact, if hon. members will notice, the only amount of Bank of Canada bills that the banks have in their possession for the purpose of meeting public needs, international exchange and interbank transactions, is $53,000,000. The other amount of $194,000,000 they have on deposit with the Bank of Canada. In addition to those combined totals, the Bank of Canada has issued to the people $102,000,000. which amount is to-day circulating in the possession of the people. So that if you will take down the figures you will find that the reserve requirement of 5 per cent is far more than the chartered banks are actually using to-day.
But the point I wish to draw to the attention of the committee is that there is to-day in the possession of the banks $103,000,000 of Bank of Canada bills, against which they can issue $2,060,000,000 of new bank deposits. There is, however, no control in the Bank of Canada or in the government over that $103,000,000 of Bank of Canada bills, which the chartered banks of the dominion own outright. They can use that money if they wish as reserves for new bank deposits, but there is no way by which the government through the Bank of Canada can assert any authority to force them to do so. That Bank of Canada legal tender cash is now being hoarded up by our chartered banks.
It is idle, and though on deposit with the Bank of Canada for the purpose of increasing the nation's currency and credit powers is absolutely under the control of the chartered banks. Let me say again that this does not exhaust the supply of available working capital in Canada, because of the $2,884,000,000 of reported deposits only S6S7,000,003 are on current account; $398,000,000 are on deposit abroad and $1,631,000,000 are in savings accounts. These savings deposits at the present time are drawing on the average not more than one and a half per cent. This means that under this system the banks get the savings of the people as working capital from depositors at one and a half per cent. But that huge amount of money is locked up, as the right hon. the leader of the opposition has pointed out, because nobody has any faith in the future of the country, and nobody is prepared to invest their savings even in government bonds at the present time. Everyone who has a savings bank account knows that this $1,631,000,000 is available for the purchase of government bonds by each owner of the amount to his or her credit in the savings bank account, so that to arrive at the total of Canadian money available for [Mr. McGeer.l
Canadian defence or development, we must add the $1,631,000,000 in the savings accounts to the other amounts I have already mentioned.
Here then is a recapitulation of "the tremendous amount of credit" to use the language of the Minister of Finance, or "the great amount of credit available," to use the language of the right hon. the leader of the opposition, that is now available. The amount available of gold reserves not in use and Bank of Canada bills not issued is $6,798,000,000. The amount which chartered banks may issue on the reserve of Bank of Canada bills not in use, but on deposit with the Bank of Canada, is 82,060,000,000. The amount of savings accounts amounts to $1,631,000,000, or a total of $10,529,000,000.
Under the Bennett monetary policy of 1934 this huge reserve of new currency and credit created by our change in monetary policy was handed over as a public concession to the privately owned Bank of Canada and the privately owned chartered banks. That policy was repudiated in 1935 when the King monetary policy, which declared for "the control of currency issued in terms of public need" and. "to determine the supply of currency in relation to the domestic, social and industrial requirements of the Canadian people," was endorsed from coast to coast.
The issue is no longer inflation; for we in Canada adopted inflation in 1934. The real issue is: Shall our inflated currency and credit be controlled to serve Canada, or shall it remain a concession to Canadian bankers? Surely the answer to that issue must be that Canada's plentiful supply of money should be used for Canadian development, and it must be used to advance and sustain the peace, order, progress, prosperity and security of the Canadian people who are the actual owners of the nation's currency and credit resources.
Any government can grant a concession. Governments have a like power to make concessions so granted valuable by buying back with the taxpayers' money what the concessions yield. It is in the misuse of this authority that democratic governments give way to the oligarchy of privilege, and lose that most important of all things to democratic governments, namely the right to control the great resources of the state in the service of the people. Thus, in the misuse of this authority, democratic governments lose their power, become mere sycophants of monopoly, and wrongly exercise their authority to aid the privileged few in the improper exploitation of the wealth of the state, and of the rights of individuals unable to protect themselves.

Bank of Canada
One of the worst examples of this kind of mistake by democracy is to be found in the Canadian bank policy of 1934, which I hope the present bill aims to cure for under that policy a privately owned bank, the Bank of Canada, was given the exclusive right to issue the full legal tender currency of the Dominion of Canada, which carried with it the right to expand gold into Canadian full legal tender paper money on a basis of one to four. It also gave to the chartered banks the power to use the Bank of Canada not as a national bank but as a mere filling station. Acting in that capacity it has issued free to the chartered banks more Bank of Canada bills than the chartered banks require for their legal reserve purposes. That is. the Bank of Canada was made not an institution of the state, but a mere servant of the chartered banks. Now, when the chartered banks may use Bank of Canada bills by expanding SI Bank of Canada bills into S20 of bank credit money, and exchange that type of money for interest bearing government bonds, it seems to me that we have gone the limit in adopting the course of keeping the government, the state and the people poor, and in making one isolated group in the community rich, by giving it possession of all the money wealth of the nation.
It is an extraordinary thing, but true, that under the policy now in effect the chartered banks can exchange mere bookkeeping entries for government bills bearing interest, and government bonds. But it was in this great concession that some of iis saw one of the great mistakes the Dominion of Canada was making under the Conservative government of 1934.
I came to Ottawa and laid such views before the banking and commerce committee, urging that the Bank of Canada be nationally owned and be made an arm of government to control the issue and circulation of the currency and credit wealth of the nation. It is because we are now coming to the adoption of the very things that were advocated then, and that I advocated in the election of 1935, that I think this parliament under Liberalism is starting on the way to establish a real Canadian democracy and to free the people of the Dominion of Canada from the oligarchy of money power which has dominated it for every year of its existence.
By way of illustrating the evils of this concession which was granted in 1934, and which we in this house I hope are now moving to correct, may I point out that any one of our chartered banks possessed of S5 of Bank of Canada bills can now buy, under the authority of our laws, 8100 of national treasury certificates or government interest bearing
bonds by merely entering in its books a deposit credit in favour of the government. In this way parliament, back in the days of 1934 under the Conservative administration, authorized our chartered banks to issue alleged bank deposits as an effective substitute for Canadian money. The great prerogative of the state, the right to create legal tender and the medium of exchange of the government and the people was then handed over to a private monopoly. Is it any wonder that under such a system the banks have continued to pay their dividends?
Now that our chartered banks are allowed to buy government securities with bookkeeping entries, it should not be surprising to learn on an examination of their books that they own
SI,155,000.000 worth of interest bearing securities issued by our dominion and provincial governments, nor should it be surprising to learn that from 1934, when this concession was granted, until to-day. they have increased their holdings of provincial and dominion government securities by S471.000.000. Every dollar's worth of those securities has been purchased with a bookkeeping entry of alleged bank deposits, which analysis will show, instead of its being a deposit, is merely a practice where the banks are trading short in money and long in credit. That is all it amounts to. That is a service which should be appropriated to the use of the state through its own banking system. But even if the bankers perform that service for the government, they are entitled to a proper service charge, but they are not entitled to charge interest as though they were lending the government their own or their depositors' money.
The vital importance of correcting such a situation should be recognized as imperative once it is realized that if the government securities amounting to $1,155,000,000 now held by the chartered banks carry interest rates on the average of three per cent, the taxpayers are paying the chartered banks S33,-
450,000	a year for merely converting government securities into bank deposits by bookkeeping entries. This bonus of taxpayers' wealth is out of all proportion to the service rendered to the state by the chartered banks. The banks do use debt-free money, and they do use interest-free money through the exercise of parliament's power to create an effective medium of exchange. Could there be a more perfect scheme to make bankers rich and keep the government poor?
This government, by continuing the Conservative policy of 1934, sanctions the vesting in privately owned banks of parliament's power to create and control the issuance of the nation's credit, and to convert it into
Bank of Canada

bankers' bank deposit currency, which is tantamount to the transfer of the government's power to mint money to a private monopoly. The direct result is that both government and people are under the control of men who employ the nation's credit as the stock in trade of the business of making money by manipulating the nation's debt-free money and the nation's interest-free credit. Thus, by our own laws, this parliament has placed mass usury in control of the nation. Under the circumstances we cannot expect balanced budgets, but we should expect unemployment and destitution, stagnation in national development, debt repudiation, confiscatory taxation, municipal and provincial bankruptcy, class and sectional dissension and waning faith in our country's future, because the present Prime Minister has correctly informed this house and the people of the land that "usury once in control will wreck a nation." This is not usury in the ordinary sense; it is mass usury gone mad. It is one reason why this vast country, with its wealth and its future, with its industry and its capacity, stagnates and wallows in a world that is going ahead all about us. I believe we can go forward if we will but manage our national currency and credit in the service of the state.
May I just take one or two minutes to confirm the conclusions I have arrived at from what was undoubtedly a very carefully prepared speech of the hon. Minister of Finance delivered on March 8. On page 2 of the copy of that address which has been circulated, he acknowledged that bank deposits created by bookkeeping entries in the books of our chartered banks are being substituted for money by saying:
As every one knows the story of the last century ... is a story of the general rise of bank deposits to perform the monetary work of the business world.
"And," he should; have added, "the monetary work of the government world," because our governments now use cheques transferring bank deposits in the place of money, as does everyone else. He then referred to the power of the chartered banks to expand Bank of Canada bills into alleged bank deposits. At page 3 he said:
Speaking .of the banks as a whole, the proportion or percentage of cash which the banks keep is in practice about ten per cent, and by law it must be at least five per cent. . .	.
Suppose, for example, that the Bank of Canada buys $10,000,000 worth of securities. Then, no matter from whom it buys those securities, the reserves of the chartered banks as a whole will rise by the amount of $10,000,000.
[Mr. McGeer.l
Then, after explaining that this was an example of open market operation and presenting some details to prove that proposition, he went on to say:
Thus it is that the security purchases by the Bank of Canada tend to expand bank deposits in the country by approximately ten times the amount of the transaction.
Or, in a word, whenever the Bank of Canada issues $10,000,000 of Bank of Canada bills to buy gold or government securities, the law gives to the chartered banks the power to issue $200,000,000 of chartered bank buying power in bank deposit money in the form of alleged bank deposits. However, the banks, as the Minister of Finance points out, have allegedly overruled the law of parliament and instead of expanding bank credit on a 5 per cent cash reserve basis, they profess to have increased the reserves held to 10 per cent, which, of course, if a true statement, would reduce the amount of bank deposits authorized by parliament on a reserve of $10,000,000 of Bank of Canada bills to the $100,000 000 the minister mentioned. Then the minister went on to explain just how the chartered banks could use that $100,000,000 of bank deposit money to purchase government bills and interest bearing bonds. At this point he said:
You may ask just how the chartered banks will expand their assets and deposits as a result of open market operations by the Bank of Canada. If the chartered banks can find good borrowers they will tend to increase their ordinary commercial loans, and by so doing increase their deposit liabilities by a similar amount. Otherwise they may buy investment securities which will usually earn them a considerably lower rate, or they may expand partly in one way and partly in the other. Either move will increase the aggregate of deposits of the banking system as a whole.
Now investment securities are government bonds. Therefore, when the Bank of Canada issues $10,000,000 of Bank of Canada bills under our banking laws, the chartered banks are empowered to create $200,000,000 in bank deposits which may be exchanged for treasury bills or any other form of interest-bearing government bonds. So, on the authority of the Minister of Finance, we find that parliament has authorized the chartered banks to create their own buying power with a bookkeeping system which they use to buy government bonds. The bankers thus use the tremendous volume of credit, created by our managed currency system, for which they do not pay interest. It offers a splendid illustration of what we call orthodox finance. It

Bank o/ Canada
is one of the most dangerous concessions that has ever been issued by a democratic government to private capital.
I know that a long time is going to elapse between the time we establish national ownership of the Bank of Canada and the time when we shall have the fruits of a really national currency policy. But we are on the way. Just as men must know that they cannot run their homes without money and could not run them if those unfriendly to them controlled their money resources, we in government must come to recognize that government cannot afford to be out of control of the nation's currency and credit. I grant that there will come much heavier responsibilites upon government in the administration of a managed currency system where there is no longer the security of the restricted nineteenth century gold standard system. There will be public demands and temptations to overcome, but the standard of intelligence of government to-day is a little different from what it was in John Law's time, or two hundred years or more ago. The problems of managed currency and credit that face us to-day belong to the twentieth century, and it is because they are of the twentieth century that twentieth century democratic government must rise superior to the challenge that these problems present. We cannot go on in the midst of opportunity, worshipping a' the shrine of things that are obsolete and ignoring the opportunities for progress that exist. We must find the practical and effective way to finance progress.
I would say that with the establishment of the national ownership of the Bank of Canada we should be able to meet the problem put up to this committee by the leader of the opposition to-night, namely, that of finding a way with this huge reserve of managed currency at our disposal, to put into circulation the funds necessary to give security and peace and order and progress and the production and the use of wealth to Canada and the Canadian people. How can that be done?
With this enormous credit wealth under the control of government, we can reestablish the social services of this dominion, modelling ours along the line of the British plan. I would say that we could greatly improve and extend our old age pension system into a much more generous and Christian practice than it is to-day. Possibly we can adopt the sixty year limit, as the leader of the opposition advocated during the election of 1935. We can give definite aid in unemployment insurance and health service programs, and take 51952-272
from the overburdened provinces and municipalities the cost of unemployment relief. We can give contributions in aid of financing needy mothers and children, and contributions in aid of education, which needs to be brought up to twentieth century standards. We can give contributions to the provinces and municipalities for the maintenance of law and order. We can aid in the protection of those who suffer from physical disability, which lessens their capacity for gainful employment. We can do all these things if we will only recognize that we are no longer poor. We can give grants in aid, as Great Britain is doing, for municipal reconstruction and expansion. If these things can be done in Great Britain and other European countries, why cannot we with all our wealth do them? We can improve our urban and rural housing. We can aid in the promotion of better health in the dominion. We can create health centres, gymnasia, amphitheatres equipped with effective health, recreation, and educational facilities.
We can develop our tourist trade. The leader of the opposition has said that we have to meet our national obligations in the United States. No more effective way could be found than in the development of our tourist trade. A great national highway system could be developed, including the building of truly modern highways from all the gateway points on the international boundary line, leading northward to Canadian cities and to our tourist attractions. The beautification of our cities and countryside would give employment and new life to the dominion, and we should give special attention to the commemoration of many places of historical interest, and our unemployed should be at work developing tourist accommodation around Canada's many places of scenic beauty and natural wonder.
National defence is a thing we cannot ignore. We should develop the production at home as far as is practical of every conceivable form of equipment and accoutrement required in the services.
Probably the time has come when we should have a vigorous campaign to reestablish loyalty on the part of Canadian youth to our Canadian country and democratic government, under our constitutional sovereign.
The passage of this bill will mark one of the great milestones in the economic life of Canadian civilization. It is not a step that is going to be retraced. If it is followed with a national currency policy that will put into effect the declarations and promises which the Liberal party made in 1935, we shall have a

Bank of Canada

new Canada, a Canada of a happy and united people, a Canada that will be worthy of everything that the fathers of confederation dreamed we would accomplish in the future.
We lack one thing and one thing only- the means of financing Canadian progress, and with the establishment of national ownership of the Bank of Canada that now comes to us. It will make us not only a happy and united people but something more. It will give us the right to stand forth as a nation on the North American continent, worthy of the traditions of the two great races from which we came, playing our part in partnership with other nations to do something not only for the development of ourselves but for the good of the world that is sadly in need of the kind of leadership which we of the British empire should offer.
I venture to say that if we will look forward to cooperating in the great celebration that is going to take place in the United States next year, when our neighbours celebrate the 150th anniversary of their nation's birth, we can make a contribution to world peace that will be worth while. If. for instance, we were able to induce an international exchange of courtesies that would come to pass with a visit of His Imperial Majesty the King of England and his gracious queen to the north American continent next year, a visit that would include both Canada and the United States, we would be doing something that would send a message of good will throughout all the world! When we realize what is taking place under the tripartite agreement and the very many obligations of France and England to-day, we should, as we pass this bill, dedicate ourselves to something more than a consideration of merely Canadian affairs. Let me say that in our world the progress of human enlightenment. bringing in its wake a more generous measure-


Frederick George Sanderson: I am sorry to interrupt the hon. member but he has exhausted his time.


Some hon. MEMBERS:: Go on.


Frederick George Sanderson: By unanimous consent.


Gerald Grattan McGeer: I just want to say a few words in conclusion. I have studied finance in theory for something over seventeen years. I have had the privilege of sitting in provincial houses and in the executive offices of council chambers, and in all these places I have never known the time in the public life of this dominion when the problem of financing was not the greatest difficulty of government. Every man who has ever been charged with the responsibility of public affairs has found
rMr. McGeer.)
himself face to face with this difficulty. Things that should have been done, things that should have been improved, could not be done or could not be improved because the public authority did not have the money. I think one of the greatest handicaps of democracy has been the apparent refusal of public men to study the problems of practical public finance. They have been treated as something akin to the weather, something over which we had no control, something we did not have the capacity to understand. I sat in the gallery and heard two ministers of finance, being introduced to their chairs, proclaiming the fact that they did not know anything about money; that they never hoped to know anything about money, and that for that reason they expected to be good ministers of finance. Of course that attitude is silly, because our financial institution does not come from on high; it is man-made in every particular of its machination, and every law that has been passed by any parliament or other lawmaking authority at the behest of the financial world has always proven pernicious to posterity and disastrous in the end. For that reason I say that with the nationalization of the Bank of Canada we are moving to a new day for humanity. But I want to confess that in our world the progress of human enlightenment, bringing in its wake more generous measures of human service and wider understanding of social justice, spirals upwards with disheartening slowness.
Old habits of thought, old customs and old-established institutions die hard, if they die at all. Loyalty to the things we know and fear of the new help even bad institutions to persist long after their disturbing and baneful influence is acknowledged by common agreement. Such institutions, particularly those born of self-interest, never die at all, and it seems that they pass away only when we mix the blood of life and the sweat of toil together in the tragedy of death-dealing revolution and war. Yet it is a world in which we cannot lose faith; for its histor}' and tradition, its present and its future, lend it a baffling dignity that inspires us with the nobility of service even in the moments of our greatest trials and defeats.
Ineffectiveness, the handmaiden of impatience, will at times lead us into paths of intolerance and indulgence-those treacherous twin demon offspring of despairing futility. But if we will always remember that while men come and go like bubbles on a stream, a worthy idea once sown in the social consciousness of a people will in time bear good fruit and live on forever, and the will to do

Bank of Canada
well in public service is not likely to perish. If our faith in the destiny of our country is good and true, we are certain to find encouraging consolation even in those irritating delays and disappointing reverses which we ought to know are the steadying and essential punctuation marks of timely and orderly progress. I look upon the nationalization of the Bank of Canada as something of real encouragement.
Yes, I have taken time to-night to put a few moments on some things I wanted to say. I for one believe that Canada can be rebuilt. It is my hope and wish that it will be rebuilt under the kind of leadership which the Liberal government of the day, through its capacity, gained from long years of experience in Canadian affairs, has to offer. The reconstruction of Canada is bound to come. In my humble opinion it will be better if it comes under experienced Liberalism than in any other form. That this Liberal government is now taking upon itself the great responsibility of administering the nation's currency and credit as a public utility in the service of the nation and its people is an indication that the Liberalism of Canada is keeping pace with the progress of the twentieth century. I for one have only one desire, and that is to lend to this government and to the Liberal party whatever service I may have to offer to help to make this government a truly democratic government, serving Canada with all the power and means that the government of Canada has within its power to advance every section of our nation and to help every class of our Canadian people.


James Lorimer Ilsley: Possibly it will be the part
of wisdom to permit the committee to address its attention to the sections one by one; but some of the remarks which were made, first by the leader of the opposition (Mr. Bennett) and next by the hon. member for Van-couver-Burrard (Mr. McGeer), call for, I think, a few observations from myself. In attempting to deal with them I shall have to ask the indulgence of the committee, because I am merely acting in the absence of the Minister of Finance (Mr. Dunning), who, I am sure, had he been here, would have wanted to say a few things about the record and functions of the Bank of Canada. The only reason I wish to say anything about it is that I would regret to have the impression go abroad that the Bank of Canada has failed to discharge its functions and to carry out the purposes for which it was incorporated.
The purposes of the Bank of Canada are set out in the preamble of the bill:
... to regulate credit and currency in the best interests of the economic life of the nation, to control and protect the external value of the 51952-272^
national monetary unit and to mitigate by its influence fluctuations in the general level of production, trade, prices and employment, so far as may be possible within the scope of monetary action, and generally to promote the economic and financial welfare of the dominion.
The leader of the opposition expressed his disappointment that one of the means by which those objectives might be expected to be attained, that is the use of the rediscount rate, had not been used by the Bank of Canada.


Richard Bedford Bennett: No, that there was no
opportunity to use it. It was not the bank's fault.


James Lorimer Ilsley: Exactly.


Richard Bedford Bennett: It was because of conditions.


James Lorimer Ilsley: The right hon. gentleman went on to say that the open market operations had not been on the scale expected.


Richard Bedford Bennett: For the same reason.


James Lorimer Ilsley: And as a result of neither one of these methods being utilized, at least to the extent expected, I gathered that he felt some disappointment, perhaps not with the bank, but with the way in which the situation had developed.


Richard Bedford Bennett: The conditions made it impossible for it thus to function.


James Lorimer Ilsley: With regard to the rediscount rate, it is true that the rediscounting of securities of the banks has not been resorted to, at least to any substantial extent. The reason is that the banks have had no occasion to come to the central bank with their securities for sale or for discount or rediscount. But this does not mean that that method of controlling credit and currency is obsolete-


Richard Bedford Bennett: Oh, no.


James Lorimer Ilsley: -or that it is permanently out of use. The time may come when the fixing of a rediscount rate either at the low level or on the high level, or the raising or lowering of the rediscount rate, may powerfully operate upon the volume of credit and currency in circulation in Canada. For instance, if there were a boom, the present deposits in the Bank of Canada of commercial banks and the bank notes held by the commercial banks might be regarded by them as entirely inadequate as a base for the amount of their deposits; if that were the case they undoubtedly would wish to rediscount their securities with the Bank of Canada, and the Bank of Canada then would be using that
Bank of Canada

method of control. The same might be true in different circumstances, if the boom were succeeded by a depression.
Now with regard to open market operations-


Gerald Grattan McGeer: If the minister is through with that, will he let me ask a question?


James Lorimer Ilsley: Well, yes.


Gerald Grattan McGeer: We might overlook the exchange of courtesies. What I want to point out is that the minister has indicated there is no need for the banks to get new cash currency. Could he explain why the banks have Bank of Canada cash now amounting to S243.000.000 as against $203,000,000 in 1934, or why there has been an increase of $40.000000 during four years?


James Lorimer Ilsley: I was coming to that. The other method of control is by open market operations; and, as the hon. member for Van-couver-Burrard has pointed out, the amount of deposits of the commercial banks in the Bank of Canada in bank notes has increased between the end of March, 1935, the first month in which the bank was in operation, and the end of April, 1938, by something over $43,000,000. That increase has come about largely by open market operations, that is to say, by the purchase of securities by the Bank of Canada.
I wish now to deal for a moment with the matter of the 5 per cent and 10 per cent. When the Bank of Canada was set up it was never contemplated that this institution should issue its notes and carry deposits to the full extent of four times the gold coverage. The section of the act that relates to the gold coverage is section 26, subsection 2, which reads:
The reserve required by this section to be maintained shall consist of gold coin and bullion in the unrestricted ownership of the bank equal to an amount not less than twenty-five per centum of the notes and deposit liabilities aforesaid; and may in addition include

Certain securities are named. It has been suggested, not only by the hon. member for Vancouver-Burrard but by others, that the bank should see to it that its gold reserve was not more than 25 per cent of its notes and deposit liabilities.


Gerald Grattan McGeer: I never said anything like that.


James Lorimer Ilsley: The suggestion is that, or it is nothing. Does the hon. member want to deny it?


Gerald Grattan McGeer: Absolutely. I never made such a suggestion.
rMr. Ilsley.]


James Lorimer Ilsley: Other hon. members have suggested it if the hon. gentleman has not. I am glad to hear that he did not make that suggestion, because it was not intended, when this institution was set up, that it should necessarily approach the 25 per cent. I am not sure, but there was some stipulation regarding the matter at the world economic conference of 1933.


Richard Bedford Bennett: A resolution was passed, and the suggestion was that it was hoped that it would not be used to that extent.


James Lorimer Ilsley: The other reference was not to the 25 per cent but to the 5 per cent, which is also mentioned in the act in a later section. Section 27, subsection 1, reads:
Every chartered bank shall on and after the day on which the bank is authorized to commence business maintain a reserve of not less than five per centum of its deposit liabilities within Canada and such reserve shall consist of a deposit with the bank and of notes of the bank held by such bank.
The hon. gentleman said that the commercial banks had an excess reserve of $103,000,000. That figure is erected upon the basis of the 5 per cent. If 10 per cent were taken as the proper and reasonable reserve ratio, then the banks have no such increased sum, no such unutilized amount at all. As a matter of fact, this legal minimum reserve has never been regarded in this or any other country as the practical reserve, the working reserve, and it is a great fallacy to confuse a practical working reserve ratio with a legal minimum ratio. If you look at the records of the English banks, you will find the reserve ratio from month to month running 10-1, 10-2, 10-1, and so on; and for this country in the last ten years the reserve ratio has been as indicated by the figures I shall now give. In 1926, although there was no legal minimum at all, no law governing the reserve ratio, the banks were of the opinion that it was necessary to maintain a reserve ratio of 10-1. The figures
are:
1927
1929
1931
1933
1935
1937
9-4
9-2
8-6
10-1
10-2
10-1
In other words, the banks are maintaining only the reserve ratio that is necessary in the light of experience, namely, approximately 10 per cent.

Bank oj Canada


Mr. CAHAN:: Sufficient to keep them, from day to day, from going into bankruptcy.


James Lorimer Ilsley: 
Mr. HEAPS:: I understand that the government intends to buy back the outstanding shares from the public at 859.20. In other words, it will cost the government 8920,000 more to buy back the shares than the public paid for them. If, in 1934, the government of the day had accepted the advice of those who sit in this section of the house, the country would have been spared that expense. Is 859.20 the price the government is going to pay for those shares? Personally I think they ought to be bought back at the price at which they were issued plus accrued interest. Can the minister give any information as to that?


James Lorimer Ilsley: That is dealt with in a later section of the bill and perhaps can be discussed when we reach that section. But the price is fixed at 859.20. The hon. gentleman said that the shares were bought by the public at $50. It is true they were issued at 850,. but of course a great many purchases were made by present shareholders at much more than 850. In fact 859.20 is the average of the prices paid for the shares since the beginning of the present year.


Mr. COLD WELL:: But the point made by the hon. member for Winnipeg North (Mr. Heaps) is that had the bank been made a national institution at the beginning, that increase would not have to be paid by the government; that amount would have been saved to the Dominion of Canada. The Dominion of Canada is paying 89.20 a share for having issued these shares to the general public.


James Lorimer Ilsley: It is true, of course, that if there had never been any shares issued, the question would not have arisen; they would not have been bought or sold.


William Lyon Mackenzie King: I do not wish to interrupt the committee; but the government are anxious to devote a little time to-day to the elections bill, and if it is agreeable to hon. members I would ask that the committee rise and report progress.


Richard Bedford Bennett: Might I make just one-statement first?


William Lyon Mackenzie King: Yes.

Elections and Franchise


Richard Bedford Bennett: I have been amazed, as have most hon. members, at statements made this evening. The chartered banks owe:
Their shareholders for the sums they have put into the enterprise;
Their customers the amount of their deposits, payable either on demand or on notice.
To meet those liabilities the banks own buildings, cash, loans and government securities. In no case, by any legerdemain, can a bank ever have government or other securities in excess of its deposits. And if hon. members will take the trouble to look at the returns of the chartered banks, they will find that deposits are liabilities on their balance sheets and not assets.
Progress reported.



ELECTIONS AND FRANCHISE


[Stage Direction]
The house resumed from Friday, June 24, consideration in committee of Bill No. 91, respecting the franchise of electors and the election of members of the House of Commons- Mr. Power-Mr. Sanderson in the chair.
On section 14-Qualifications.
Charles Gavan Power: When this bill was last being considered by the committee, section 14 was allowed to stand at the request of the hon. member for Comox-Albemi (Mr. Neill). Subsection 1 of that section refers to electors who ordinarily reside in the division. My hon. friend objected to the use of the word "ordinarily," and to meet his objection I am prepared to offer an amendment to subsection 1 of section 14, that the word "ordinarily" be deleted from line 45, page 11.


Mr. MacNICOL:: Will the minister explain?


Charles Edward Bothwell: When the committee were considering this, the intention was that an elector would have to be in the electoral district on the date of the issue of the writ of election. Subsection 1 provides that he must be not only in the electoral district but also ordinarily resident in the polling subdivision. If we leave that word out the section would read:
Save as hereinafter provided every person, man or woman, shall be qualified to vote and be entitled to be registered as an elector on the list of electors for the polling division in which he or she resides at the time of the preparation and revision of the list of electors therefor if he or she
I Mr. Mackenzie King.]
(d) was ordinarily resident in the electoral district at the date of the issue of the writ for the pending election; and at a by-election has continued to be ordinarily resident therein until polling day.
It is considered that it would be hardly fair to require that although a man resided for a number of years in an electoral district, he should be prohibited from voting if he had moved even temporarily into a different polling subdivision in the same electoral district.


Hugh Alexander Stewart: I do not follow the chairman of the committee at all. There is no word that has caused more difficulty in connection with the franchise than the word "residence," and what shall be deemed to be residence and constitutes residence under different conditions. I take it that the purpose in using this word "ordinarily" was to clarify the situation and make it clear that what was meant, and what I think should be meant, is a man's ordinary residence; not an extraordinary residence, not a temporary residence, not a residence that has been recently acquired or may have been acquired for some particular purpose, but where he is ordinarily resident in the ordinary course of things. It seems to me that goes right to the root of the whole matter. We have to consider 245 constituencies and what is of sound application to the great majority of those, rather than what might arise in one or two or half a dozen of
them.	It seems to me there is very sound reason for retaining the word "ordinarily." There was not a question about it in the committee at all.
Paragraph (d) reads:
Was ordinarily resident in the electoral district at the date of the issue of the writ.
Surely that means ordinarily regularly resident.


Charles Edward Bothwell: That remains. We are striking out the word "ordinarily" only in the first subsection on page 11. We also retain paragraph (d) on page 12, and also all of section 16, which defined "ordinarily resident" and "ordinarily resided." We are referring only to the word "ordinarily" in line forty-five of page 11, the third to the last line.


Charles Hazlitt Cahan: Why muss up the matter
then,	as you are doing?


Charles Edward Bothwell: The only objection to having "ordinarily" in that particular place is that it compels the elector to be resident in the same polling subdivision in the same electoral district. He has to reside in the same electoral district.

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Charles Hazlitt Cahan: Certainly that is not the
statute as it stands. We fought this all out at great length in committee. Section 14
states:
Save as hereinafter provided every person, man or woman, shall be qualified to vote and be entitled to be registered as an elector on tlie list of electors for the polling division in which he or she ordinarily resides at the time of the preparation and revision of the list of electors therefor.
If an elector applies to have his or her name placed on the list, or if the enumerators place a name on the list, it should be placed on the list for the polling division, which I assume is the polling section, in which that person resides. There is no doubt about it.


An hon. MEMBER:: Subsection 3 of section 16 goes pretty far.


Charles Hazlitt Cahan: That is all right. When we considered the matter the debate ran something like this, that an elector might at a general revision be placed on the list for a particular polling section or division, as it is called here; then the same lists would be the lists for a subsequent by-election. If there had been removal in the meantime of the elector from one polling section to another in the same electoral division, then under subsection 3 of section 16 that elector could vote in the polling section in which he was registered, although in the meantime he may have removed to another polling section in the division.
But certainly it seems to me there can be no objection to the fact that an elector is registered for the polling division in which he ordinarily resides. If you change it, it means this, that, although not ordinarily residing in the polling division, an elector may be placed upon a list in a polling division five or ten or fifty miles away from the place where he resides, in which there can be no supervision over his identity, and no neighbours who know as to whether or not he is properly on the list.
But if, when the general revision of the lists takes place before a general election, he is entered on the lists for the polling division in which he resides, and then subsequently, before the next by-election, moves into another polling division in the same electoral district, then subsection 3 of section 16 preserves his right to vote. It seems to me that if you make a change you are complicating matters very much.


Alan Webster Neill: The trouble arises from the close definition placed on the words "ordinarily resident." Under section 16 it now practically requires that a man be registered in the place where his wife lives.


Charles Hazlitt Cahan: Not necessarily.


Alan Webster Neill: Yes, necessarily. Section
16, subsection 3 states:
A person can have only one place of ordinary residence. . . . Although, generally, a person's place of ordinary residence is where his family is. . . .
Then it goes on to refer to the case where he might be permanently separated from his family. The putting in of the word "ordinarily" will deprive a large number of people of their vote, and would open the door to make it easier for a certain amount of impersonation. We are asking to go back to the law which was in force in 1930. and for a number of years before that. No abuse had ever taken place under it, and no persons-


Charles Hazlitt Cahan: I differ from that. The
statement show's that the hon. member is not acquainted with affairs in some of the other provinces.


Alan Webster Neill: Then the hon. member admits that this regulation has been in force before?


Hugh Alexander Stewart: He admits it has been
abused.


Alan Webster Neill: And we only ask that we go back to the law as it was in force prior to the changes made in 1934. The hon. member says there would be no supervision about his being put on the list. Certainly there is supervision. If his name is placed on the list in a logging camp, there is a rural registrar there who knows every man in the camp. It may be a small community not exceeding a hundred people altogether, and certainly the registrar, w'ho is generally the bookkeeper, is in a thorough position to know whether a person is entitled to be put on or not. The fact that he is there is evidence of that portion of it.
As I say, we are only asking to go back to the conditions which existed before. Much attention has been directed to the words "ordinarily resident" in the Dominion of Canada and in the electoral district. But I should like to emphasize the fact that there are three conditions imposed. One is that he must be ordinarily resident in Canada. We are not proposing to interfere with that at all. The second is that he must be ordinarily resident in the electoral district. We are not proposing to interfere with that at all either, although I would like to. We only ask that he be allowed to be registered in the polling division in which he is then living.
The other night I gave an illustration of North Vancouver, which is part rural and part urban. A man has his wife there. The term
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"ordinarily resident" is interpreted, according to section 16, to mean the place where he has his wife and family. He is registered in North Vancouver, and in order to get a living-which is the right of every man, surely-he moves away to a logging camp in the northern part of the district, and goes to poll in the logging camp. If he comes there before the issue of the writ, he should be eligible to be registered in that polling division. The employer knows he is there, and there is no possibility of putting in names which should not be put in. He is well known and he is identified. Further on, when he comes to take the vote, under section 46. he has to be identified by a man then on the list.
I would ask the hon. member for St. Law-rence-St. George to point out where the use of the word "ordinarily" has led to abuse in the past-


Charles Hazlitt Cahan: There were great abuses
which were remedied by the use of the word "ordinarily."


Thomas Reid: What would the answer of
the hon. member be to a situation like this: We will say there are three hundred fishermen from a district away up north when registration takes place. They would be registered perhaps three hundred miles away from that district, if the word "ordinarily" were taken out. But on voting day they would be in the New Westminster constituency. I am just afraid that under this proposal they would be disfranchised because they would not be anywhere near the place they were registered when the registration took place.


Alan Webster Neill: I appreciate what my hon. friend has said, and I should like to join with him in having it apply, not only to the polling division but to the electoral division, in order to allow a man to go from one electoral district to another. However, I realize that this would be difficult to get through this house this year because it would meet with a lot of objection. So we have accepted the lesser possibility of having it apply. only within the electoral district. If a constituent of the hon. member moves from New Westminster to some other part of his district, he will be allowed to vote if his amendment passes; but if he moves to another electoral district, he could not vote, with the way the measure reads now.


Charles Hazlitt Cahan: I think the hon. member is taking an entirely erroneous view of subsection 3 of section 16 which reads:
A person can have only one place of ordinary residence and it cannot be lost unless or until

another is gained. Although, generally, a person's place of ordinary residence is where his family is, if he is living apart from his family, with the intent to remain so apart from it in another place, the place of ordinary residence of such person is such other place.
I suggest that if a voter's family is in Vancouver and he is employed in some other part of British Columbia-


Alan Webster Neill: Of the electoral district.


Charles Hazlitt Cahan: Out of the electoral district.


Alan Webster Neill: It must be the same electoral district; it can be only a different polling division.


Charles Hazlitt Cahan: I w'as dealing with subsection 3. If he is employed in some other place, then the real purpose and intent of subsection 3 of section 16, as we discussed it, is that he might be resident apart from his family and employed for the time being in another place. Then, whether he was in that electoral district or in another, he could register in the place where he wras temporarily employed, even though that was apart from the family residence. But when you come to enumeration, unless you register the proposed voter in the polling division where he is resident at the time, grave complications will certainly ensue; for you will be faced with great difficulty in verifying the identity of that person if he is allowed to register anywhere in an electoral district, despite the fact that he is ordinarily resident in only one polling division of that electoral district.


Charles Gavan Power: The objection taken by the hon. member for Comox-Alberni (Mr. Neill) is one that would apply to all far-flung constituencies. For instance, it would apply in the constituency of His Honour. The Speaker, Charlevoix-Saguenay. A man from Murray Bay might move down the north shore to be employed during the late summer, the autumn and the winter in a lumber camp. The hon. member for Comox-Alberni wishes to make a distinction between that residence and ordinary residence, as defined in section 16. To his mind "ordinary residence" is perhaps too narrow and too strict a destinction. If we take section 14 and leave out the word "ordinary," we would be providing that he is to be registered in the polling subdivision where he resides, and not where he ordinarily resides. Under paragraph (d) of subsection 1 of section 14 he must have been ordinarily resident in the electoral district. So that the man from Murray Bay who is living at Comeau Bay at the time of the registration could register and vote at Comeau Bay provided he was ordinarily resident in the electoral district of Charlevoix-Saguenay.

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Charles Hazlitt Cahan: That is perfectly proper.


Charles Gavan Power: That is all that the hon.
member for Comox-Alberni is asking for. Let us see if we meet him.


Charles Hazlitt Cahan: You are giving him more
than that.


Charles Gavan Power: Let us see if we have tried to meet him. I understand the hon. member for St. Lawrence-St. George has no objection to a man being allowed to vote in another electoral subdivision provided he remains in tlu same constituency in which he ordinarily resides. We all agree that that difficulty should be dealt with.


Charles Hazlitt Cahan: Yes, except that he should be registered in the polling section in which he is residing at the time of enumeration.


Charles Gavan Power: The hon. member for
Comox-Alberni contends that the words "ordinarily resident" are perhaps too narrow, because the man from Murray Bay who is in the lumber camp at Comeau Bay or working in the mill there would not be residing with his wife, would not be residing in his ordinary domicile.


Charles Hazlitt Cahan: That is true, but it is not necessary that he should be residing there, under the section as at present drafted.


Charles Gavan Power: The hon. member for
Comox-Alberni was referring to subsection 3 which states that the place of ordinary residence of a man is where his family is. In the ease of the Murray Bay man, his place of ordinary residence would be there.


Charles Hazlitt Cahan: The statute in section 16, subsection 1 makes provision for him.


Charles Gavan Power: If he is living apart from his family with the intent to remain so apart from it in another place, the place of ordinary residence of such person is such other place. He must be living apart with intent to remain apart, not with the intent to come home at Christmas and so on.


Charles Hazlitt Cahan: There is the difficulty. If you put it that he is living apart from his wife with the intent to remain apart until the election, all right, but then he should also not be registered in the polling section in which he ordinarily resides.


Charles Gavan Power: That is all we want to do.


Charles Hazlitt Cahan: That is common ground, but the suggestion of the hon. member for Comox-Alberni seems to go far beyond that because he misreads another section.


Charles Gavan Power: In the 1930 act section 29 read exactly the same as section 14 in this bill, except that the word "ordinarily" was left out. Section 16 of this bill was section 29A of the act of 1930, and it reads exactly the same. The reason why I referred to the constituency of Charlevoix-Saguenay was on account of the fact that some discussion arose at that time. His Honour, the Speaker, brought this matter to the attention of the house, and the only thought we had then was to allow a man to vote in the same electoral .district. Should he have been residing in the same electoral district at the time of registration, he could register at the place where he was actually in residence. The definition of "ordinarily resident" is too severe to cover the case of that man. There was never any question of allowing him to vote in another electoral district, nor will that be the effect of the proposed amendment.


Hugh Alexander Stewart: Looking at section 16,
which has been read in connection with this, you will find that all it proposes to do is to define residence. It does not give any qualification whatever. It purports to explain the rules, principles and facts upon which you determine residence.


Charles Gavan Power: Ordinary residence.


Hugh Alexander Stewart: Exactly. It gives no qualifications whatever. Section 14 comes under the heading "qualifications and disqualifications of electors," and reads in part as follows:
Save as hereinafter provided every person, man or woman, shall be qualified to vote and be entitled to be registered as an elector on the list of electors for the polling division-
That means any polling division in any electoral district. You cannot get away from that. He is entitled to be registered in any polling division-


Charles Gavan Power: But go on to paragraph (d).


Hugh Alexander Stewart: Subsection 1 continues:
-in which he or she ordinarily resides.
What is contended here is that if you leave out the word "ordinarily," the person would be entitled to register in any polling division in which he or she resides, not within the constituency at all.


Charles Gavan Power: You have to read that with paragraph (d)-in the constituency in which he was ordinarily resident.


Hugh Alexander Stewart: No.


Charles Gavan Power: You have to read it with paragraph (dl.
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Hugh Alexander Stewart: I have read it with paragraph (d), and I cannot read it as the minister does. Paragraph (d) states:
(d) was ordinarily resident in the electoral district at the date of the issue of the writ for the pending election.


Charles Gavan Power: Read subsection 1, which
provides that every person shall be qualified to vote and be entitled to be registered: ... as an elector on the list of electors for the polling division in which he or she ordinarily resides.
Leave out "ordinarily," and say "in which he or she resides." That is, where they have their actual place of residence at the time of the preparation of the list of electors. And then follows paragraph (d)-if he or she "was ordinarily resident in the electoral district." That is the way it would read. So he cannot be registered outside the electoral district in which he is ordinarily resident, and "ordinarily resident" is defined as being resident in the electoral district where his family lives, and so on.


Hugh Alexander Stewart: You get back to the fundamental principle that it is in the interests of a proper election that a person should vote in the district where he is known and resides.


Charles Gavan Power: Does the hon. member mean electoral district or polling division?


Hugh Alexander Stewart: Polling division also.


Charles Gavan Power: Then my hon. friend does not agree with the hon. member for St. Lawrence-St. George. I thought the hon. member for St. Lawrence-St. George and I were in agreement, that he had no objection to a man voting in another polling division provided he bona fide was ordinarily resident in a certain electoral district. Am I right in that?


Charles Hazlitt Cahan: That is the statement which I am contending against. I am contending that he should be on the enumerators' list in the polling section in which he ordinarily resides.


Charles Gavan Power: Make a distinction between residing actually and residing ordinarily.


Charles Hazlitt Cahan: I know that residence and domicile have an almost infinite number of meanings, and the words "ordinarily resident" were used in both cases in order to be consistent all the way through.


Charles Gavan Power: Quite.


Charles Hazlitt Cahan: If my hon. friend will allow me to make my case, then I am done. Take my own constituency, a very large one. With a great deal of time and care and watchfulness I can verify the identity of those who are
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enumerated in a certain polling section of that constituency; but if you allow a man or a woman to be registered in other polling sections, even in the same electoral district, I cannot verify the identity of these electors, and the reason why I was so anxious to retain the word "ordinarily," is that it is one of the best safeguards against impersonation. If he ordinarily resides in the polling section, he is more likely to be known in that polling section.


Charles Gavan Power: The case would hardly arise in my hon. friend's constituency, I submit, because a man would hardly have his family on St. Catherine street and he himself be an actual resident of St. Antoine street; I am just assuming these streets are in my hon. friend's constituency. Or, let us say, a man would hardly be actually-not ordinarily-but actually and physically residing on Guy street and have his family on St. Catherine street. Would he? It would not occur, would it?


Charles Hazlitt Cahan: I will not deal with the federal electoral list, but I could show you in St. Lawrence-St. George several hundred cases of that sort of thing. A family may be' resident in a certain street. The man is employed away and lives and sleeps a greater part of his time in another street, with the result that under the former description there were not only hundreds but possibly thousands of men-men especially-who were entered on the city lists in the polling divisions in which they worked and resided part of the week, and it was difficult to follow them. If there is difficulty with section 16, subsection 1, I am quite willing to agree with the hon. member for Comox-Alberni, and will amend the twenty-first line on page 14, "if he is living apart from his family, with the intent to remain so apart from it in another place" by adding "pending the election," or similar words.


Charles Gavan Power: If you leave out, "if he is
living apart from his family-"


Charles Hazlitt Cahan: "with the intent to remain so apart from it in another place."


Charles Gavan Power: I have no objection to allowing the section to stand.


Charles Edward Bothwell: I should like to explain the conflicting views in connection with this clause. In considering it the special committee had to take into consideration this fact, that some people were going to be disqualified in any event when the election came on. The hon. member for New Westminster has just given an illustration of a case that might arise in his constituency where, on the date of the issue of the writ, people were residing in another part of the constituency. If the amendment that is suggested went through,

Elections and Franchise
when it comes to election day, they are back home where they ordinarily reside and not where they were residing when the writ was issued.


Abraham Albert Heaps: Could they not be registered at the time of the enumeration?


Thomas Reid: They would be registered three hundred miles away.


Charles Edward Bothwell: We had to fix some date for residence. This matter was discussed in committee at great length, and in spite of the amendment which is being proposed to meet conflicting views and to get a decision from this committee, I am quite prepared to vote for the clause and support the members who agreed on the clause in the special committee, because we considered it all there. The question, however, is open to argument, and I believe that some people are going to be refused the ballot when election day comes, either in the case described by the hon. member for New Westminster or in the case described by the hon. member for Comox-Alberni.


Hugh Alexander Stewart: One feature of this which I overlooked, and as to which I think we shall all agree, is the necessity of as far as possible avoiding duplications of names upon the list. Let us see what will happen. An enumerator comes to a house, and he asks the names of all the members of that family who are entitled to vote. He puts them down on his list, and under the provisions of this bill he is entitled to include any member of that family who is temporarily away and who intends to return.


Charles Gavan Power: That covers the fishermen.


Hugh Alexander Stewart: So he puts down the
name of A.B. in his polling division, as he has a right to do and as the legislation contemplates because that is his ordinary residence. But A.B. is away in another polling division, and under this amendment he, being there, would have a right to say, "I want my name on that polling division, the polling division where I am." What is the result? You have him on where he ordinarily resides, and you have him where he temporarily resides. You have duplication and the possibility of impersonation. The measure is all framed on the basis of a man being qualified to vote where he ordinarily resides, and to adopt the amendment will result, I submit, in many instances of duplication. When you get duplication, you have the door open for personation and for double voting.


Mr. ROBICHAUD:: It seems to me that if we drop the word "ordinarily" out of
section 14, subsection 1 of the bill, everybody would come in under the exceptions as cited in section 16-clergymen,	teachers and
students. Where they are really resident in two places they have the option. I am sure that was not the object or purpose of the committee.


Charles Gavan Power: I moved the amendment
only in order to try to meet the wishes of the hon. member for Comox-Alberni, who seemed to have made out a fairly good case. If, as appears, the committee is almost unanimously against it, I am quite willing to withdraw the amendment.


Alan Webster Neill: The hon. member sitting behind me said that this might come in under the provisions of section 16. I would be quite agreeable if he would kindly insert " miner, logger, fisherman and seaman " along with " clergyman, teacher and student." That is what I am objecting to. It is class legislation. You let these three classes in under exactly similar conditions, or rather with fewer qualifications. To hon. members who are so afraid of a man from one electoral district voting in another let me say we are not asking for that, but under the provisions of section 16 a minister, a teacher or a pupil can vote not only in another polling division but in another electoral district. We are not asking for that. We shall be satisfied if you will allow these classes I have mentioned to vote only under circumstances where they are living in the same electoral district but have moved into another polling division. Some of the explanations are down at the bottom of the page and some are at the top of the next page. This is the way the old act would read if the word " ordinarily," was left out. We will just take it out and see if there is any objection as we go along: " Every person shall be qualified to vote in the polling division in which he resides at the time of the preparation of the list "[DOT]-that is after the issue of the writ-"if"-these are the conditions-"(a) he is twenty-one years old, (b) a British subject, and (c) has been ordinarily "-we will leave that word there-[DOT]" resident in Canada for the twelve months immediately preceding polling day," and "(d) was ordinarily resident in the electoral district at the date of the issue of the writ." Those are the conditions when, even with the word " ordinarily" removed, a man could register only in the polling division in which he was then living. That was the old act. It worked well before; why should it not act now? If you strike out these men, you are going to disfranchise-one of the hon. members for Vancouver contradicted me when I said twenty per cent would be disfranchised; he said, more than that. From
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my knowledge of conditions I suggest that if you are going to disfranchise those men you will kindly disfranchise the parson and the teacher and the student as well. We will treat them all alike if you are going to treat these men on a bad basis.


Charles Hazlitt Cahan: Will the hon. gentleman, in view of section 16, subsection 1, explain how you disfranchise them?


Alan Webster Neill: Because when a man goes to register in a logging camp, let us say, the man there says to him, " I would be glad to put you on; you have been here since the day of the issue of the writ, but I have to follow the wording of the act, which says ' ordinarily resident,' and according to section 16 your home is the place to which you intend to return."


Charles Hazlitt Cahan: And how far would the logging camp be from the home?


Mr. MacNEIL:: Three hundred miles.


Alan Webster Neill: It might be two hundred miles. Section 16 says " ordinarily resident ": the place of his habitation or home whereto, when away therefrom, he intends to return. He does intend to return. The man could be registered by the one who employs him or by a brother employee who knows he is on the paylist. I do not see how any corruption could occur, and the best proof is that it has not taken place, at least in British Columbia.


John Ritchie MacNicol: I should like to ask the hon. member for Comox-Alberni how this example I am going to give would be taken care of if the word " ordinarily " is left out. I have in mind a family who lived in Uxbridge, Ontario. The head of the house worked during the election away up in northern Ontario, that is the northern part of the riding of Ontario, perhaps a hundred miles away from home.


Alan Webster Neill: The same electoral district?


John Ritchie MacNicol: The same electoral district. His wife, naturally, registered him at the home in Uxbridge, because he was away only for a few months working on roads in Muskoka, and he was also registered where he worked up in Muskoka. Therefore his name is on both lists. How could you prevent him from voting in both places? How would you prevent impersonation?


Alan Webster Neill: The only place where he
could vote would be the place where he was. He would not be put on at his home town.


Charles Gavan Power: Oh, yes, * he would. His
wife would put him on.


Hugh Alexander Stewart: I do not want to take
up the time of the committee, but I think the hon. member for Comox-Alberni has overlooked an essential difference between the case we are considering and that of a clergyman. The case we are considering under this section is based upon the fact that there is no change of residence, for the man is a resident of the electoral district all the time. But in the case of the clergyman, the school teacher and the others to whom he has referred there has been an actual change of residence. These men have gone out of one constituency into another and have thereby lost any right to vote. It is for that reason that there is a saving clause in connection with cases of that kind.


Alan Webster Neill: In order to give them the
vote?


Hugh Alexander Stewart: Yes, because they have
lost it, because they have changed their residence.


Alan Webster Neill: So has my man.


Hugh Alexander Stewart: No, he has not. That is just the difference. He is still a resident of the electoral district. The hon. member's whole argument is based on the contention that his man is still a resident of the electoral district. Therefore he has not lost his vote as the clergyman and the teacher and the others referred to have lost their votes, through having moved into another constituency. That is why there is a special provision to take care of them.


Alan Webster Neill: Yes. The only difference is that the ease made by the hon. member for Leeds is a great deal worse. He wants to give the vote to men of the classes he mentions when they have moved to another electoral district altogether. We only say that the man should be allowed to vote at another polling division when he is living in the same electoral district. According to the hon. member's argument, if you allow it in his case you must allow it with greater force in mine. The primary object should be to give every man a vote, and that is why the parson is allowed to be reregistered in an electoral district into which be has moved. We are not going as far as that, but we are satisfied to say that as long as a man remains in the same electoral district he should be given a chance to vote in the polling division in which he resides. The hon. member for Leeds says that he has not forfeited his right to vote in the place where he started from, but he is prevented, because a poor working man cannot afford to go back 100 or 150 miles to vote. It would

Elections and Franchise
cost him $25 and he would lose his job. The question is, Do we or do we not want to have him vote. Do we want the proletariat, a word so often abused, to have a chance to vote? I know a good many of these men would vote against me, and I do not intend to run again, anyhow. I am merely fighting for the general principle. We fought this matter out ten years ago; the provision was made, and no harm came of it. A couple of thousand people in British Columbia alone will be affected.


Charles Hazlitt Cahan: We wish every man to have a vote; but the committee has taken strong ground against permitting one man to have two votes, one man to be entered twice on the list, so that he can vote in one place himself, and offer facilities for somebody else to impersonate him where his name is on the other list. That is the evil we have to meet.


Mr. DUPUIS:: What is in the mind of the law? Who is going to establish the ordinary residence of an elector? The elector himself, I submit. Even if he is temporarily absent from the real, ordinary residence of his family, and if he informs the officer that the other place where he lived is his ordinary residence, who will condemn him for having so declared and for voting there, even though, with the words "ordinarily resident," his family are allowed to have his name registered in his absence? I do not see much difference.


Angus MacInnis: I rise to support the
amendment, and the arguments in favour of it put forward by the hon. member for Comox-Alberni. In British Columbia we have recognized for the past twenty-five years that there were a great many people entitled to vote who could not vote on election day where they ordinarily reside. That is, in the polling division or even in the electoral district where they live. As a matter of fact, the amendment, although it helps some, will not make it possible for a great many in British Columbia to vote. We have miners, loggers, fishermen and sailors who go away from their homes for six, seven, eight or nine months, and they may be away on election day. We shall have to find some means whereby these people can vote, if elections are to have any meaning to them at all. What is the use of talking about democracy and democratic methods to a man who cannot vote on election day? That is what these men will say. They will tell you. "I have been in this province for so many years and have not yet been able to cast a vote." As the hon. member for Comox-Alberni pointed out. if we have made provision for teachers and preachers to vote, why not make provision for more useful people to vote, the people who do the world's work?


Charles Gavan Power: Look behind you.


Angus MacInnis: It is not necessary for me to look behind me; there are so many lawyers in front of me.


An hon. MEMBER:: What is the hon. member's solution?


Angus MacInnis: In British Columbia we have worked out a solution which we have observed for years, and which no one would think of discarding. In the last federal act we were able to have it included in a partial way, but we were told that there was the question of expense. There was a cost of so many dollars per vote.


Hugh Alexander Stewart: Sixty-three dollars.


Angus MacInnis: Yes; I have known of votes that were cheaper and votes that were dearer than that. I am satisfied that it would not cost half that if the officials carrying on the election were properly instructed. I submit that this committee, if they are going to attach any value whatever to elections, will have to find ways by which people who are away from home on election day, and indeed for months before and months after that day, can exercise their franchise.
Mr. O'NEILL:	I support the remarks of
the hon. member for Comox-AIberni and the hon. member for Vancouver East. In the constituency which I represent in British Columbia, if there were an election right now, there would be from four to five hundred men who would not have a vote. That condition should not obtain, and I think it can be remedied. The hon. member for St. Law-rence-St. George is fearful that some fellow may vote twice. I think it is far more injurious to democracy for one man to be deprived of his vote than for some fellow to have voted twice. After all, there is a law that protects us, and if a man votes twice he can be sent to penitentiary. That is a consideration which will restrain most men.


Charles Gavan Power: It was with a view to obtaining peace and making a certain amount of progress that I moved the amendment suggested by the hon. member for Comox-AIberni. Perhaps we could settle our difficulties 'if we had a division. Personally, I am willing to vote for the amendment, which I moved merely as a matter of compromise. If we have a vote, I think we shall get on a little faster.


Alan Webster Neill: Does the minister not think that if we slept over it to-night, better thoughts might prevail to-morrow? Suppose we allow it to stand and go on to some of the
Elections and Franchise

other sections? When hon. members read in Hansard the report of these proceedings they will appreciate the situation and they may take a different view. The hon. member for Vancouver East very properly raised the point that it should apply also to the electoral district. If we are to have a scrap, let us have a substantial one, and that would meet the objection of the hon. member for New Westminster as well. That was our ambition to begin with. For the sake of peace we gave away a third of our birthright, and we are satisfied to accept this condition that it should apply only to the polling division within the electoral district. That was going a very long way out of our way; and as the hon. member for Kamloops (Mr. O'Neill) says, Why should men be disfranchised? If we are going to make provision for people away from home as we have done in section 16, for the parson-I have every respect for the parson- and the teacher and the student, why should we not make provision for the sailor and the farmer and the logger and people of that kind, especially when we want it done only inside the electoral district, whereas these others are going to get the privilege of moving from one electoral district to another? There is no doubt that paragraphs (c) and (d) of section 14 are ancillary-I do not think that is the word-are a condition of the words used in subsection 1, which states:
Save as hereinafter provided every person, man or woman, shall be qualified to vote and be entitled to be registered as an elector on the list of electors for the polling division in which he or she ordinarily resides-*
Or "resides," if justice prevailed.
-at the time of the preparation and revision of the list of electors therefor if-
Now "if" means there is a condition attached. There happen to be quite a number.
-he or she
(a)	is of the full age of twenty-one years or will attain the full age of twenty-one years on or before polling day at the pending election ; and-
This is another condition:
(b)	is a British subject by birth or naturalization : and
Here is a further condition:
(c)	has been ordinarily resident in Canada for the twelve months immediately- preceding polling day at the pending election; and
That covers the provision about ordinary residence in Canada, and (d) deals with the electoral district:
(d)	-was ordinarily resident in the electoral district at the date of the issue of the writ for the pending election; and at a by-election has continued to be ordinarily resident therein until polling day.

The word "ordinarily" is allowed there. That ties him down to the electoral district. The amendment comes in only as regards the polling division. The effect will be as it was in 1930; ordinarily resident in Canada, ordinarily resident in the electoral district and resident in the polling division. I might quote the affidavit, form 45 to illustrate. That has been in force ever since I have been in politics I think:
Oath of person whose name is not on the official list of electors for a rural polling division and who is qualified to vote.
(sec. 46)
(1)	You swear (or affirm) that you are a British subject of the full age of twenty-one years; that you have been ordinarily resident in Canada for the last twelve months and that you were ordinarily resident in this electoral
district on the	day of	 19..
(naming the date of the issue of the writ of election) ; (and, at a by-election, you have continued to be ordinarily resident in this electoral district until to-day).
He has to take that oath, so it is fully protected.
(2)	That you now reside in this polling division.
That form has been like that since 1921; they only had to take the oath that they " now reside " in this polling division. Why we should change it at this date. I do not know.
(3)	That you are not within any of the classes of persons who lack qualification or are disqualified by reason of appointment to judicial office, employment in this electoral district for pay or reward in reference to the pending election, race, crime, mental incapacity or disfranchisement for corrupt or illegal practices;
(4)	That you have not received anything nor has anything been promised to you directly or indirectly, in order to induce you to vote or to refrain from voting at this election; and
(5)	That you have not already voted at this election or been guilty of any corrupt or illegal practice in relation thereto. So help you God.
Then there is a note that when the elector is a clergyman, teacher, pupil or summer resident, there will, at his request, be substituted for the first paragraph of this oath the appropriate alternative. That shows that it was originally intended, and has been all down the years since 1921 at any rate, that they were to be given the opportunity of voting in the polling division in which they then reside. I call attention to the fact that the explanation offered on the page opposite page 60 reads as follows:
Section 46. No change. At present these provisions appear in s. 46A of the act.

Seeds Act
That is, to put it mildly, a false statement, and possibly led some members of the committee to agree to the insertion of this word " ordinarily," because they looked and said, " Oh this is the same as it was before; there is no change." It is not the same as it was before, because the word " ordinarily " has been put in and it changes it substantially. I would not be surprised if that influenced the members in the committee, because on Friday when we were going through this bill and came to a section and read the explanation " no change," someone said, " Carried," and it went right through. But where it said there has been a change, someone wanted an explanation and the thing was threshed out. There is the no doubt inadvertent misstatement that there is no change. There has been a change. All we are asking is that the provision be left as it was before. It might be possible to put in an amendment to the effect-as it seems to be inimical to our good friends from Quebec rather than the west- that it apply only to British Columbia and possibly the northern part of Ontario, because there must be similar conditions there. I am sorry we have not heard from hon. members from that section. I was hoping to hear from the hon. member for Nanaimo (Mr. Taylor), because I think his district contains similar conditions.


James Samuel Taylor: I am supporting the hon. member.


Some hon. MEMBERS:: Question.


Charles Grant MacNeil: It is eleven o'clock.


An hon. MEMBER:: Half a minute.


Alan Webster Neill: Well, I will raise this further point: We will not have any snap vote just when the clock is striking; it upsets one's judgment. It is now eleven o'clock.
Progress reported.


[Stage Direction]
At eleven o'clock the house adjourned, without question put, pursuant to standing order.
Tuesday, June 28, 1938