QUESTIONS

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

Mr. HANBURY:: What is the amount of income tax in (a) Canada, (b) Australia, (c) New Zealand, (d) England, on (1) $1,000; (2) $2,000; (3) $5,000; (4)	$10,000;	(5)	$20,000;	(6)	$50,000;	(7)
$100,000; (8) $150,000?


Mr. MATTHEWS:: (a) Canada: /
Single Married
Income	person	person
$ 1,000	 - -
2,000	-.$	30 00	-
5 000	 180 00 $ 120 00
10 000	
661	50	546	0020 000..'	
2,394	00	2,173	5050 000	
10,363	50	10,069	50100 000!'	
27,846	00	27,447	00150,000	
49,318 50	48,867 00(b)	Not available,(c)	Not available,(d)	England;
Questions
Income	Single	Married
	person	person
$ 1.000			$ 6 25
2,000			106 25
5,000			703 12
10.000			1,828 12
20,000	
5,250 00	5,187 5050,000	
19,487 50	19,425 00100,000	
47,800 00	47,737 50150,000	78,112 50


Mr. COOTE:: What was the amount of incomes of individuals assessed for the purposes of the income war tax reported in the year 1931-1932 from each of the following sources: (a) wages and salaries; (b) business and partnership profits;
(c)	other profit; (d) rents, royalties, interest and dividends; (e) other sources?


Robert Charles Matthews: (a)	Not available.
(b)	Not available.
(c)	Not available.
(d)	Not available.
(e)	Not available.
Statistics are not maintained in such a manner as to give information requested.


WELLAND CANAL
Mr. DUFF:: 1.	How many tons of freight passed through the Welland canal in the year 1933?
2.	What was the cost per ton of freight handled through said canal, including interest on capital expenditure as well as maintenance and operating charges, for the said year?


Mr. MANION:: 1.	9,194,130 tons.
2.	Capital expenditure, March 31,	1933,
$129,088,846.52; no computation of interest on capital investment; operation, fiscal year ended March 31, 1933, $349,626.32; repairs and maintenance, $389,234.18; revenues, $110,357.41.


COAL INVESTIGATION
Mr. RAYMOND:: What was the total cost of the inquiry carried on during the years 1932 and 1933 by Mr. Fred McGregor, registrar, under the Combines Investigation Act, relative to the importation and the prices of English coal?


Mr. GORDON:: 


$40,451.30. CANADIAN NATIONAL RAILWAYS-TIES
Mr. HOWARD:: 1. Did the Canadian National Railways purchase railway ties from Joseph Gobeil and J. L. Audet of La Patrie, Compton county, or from either one of these gentlemen?
2 If so, what price did the Canadian National Railways pay these gentlemen for such ties?
3.	What quantity was bought during the season of 1933-34?
74726-SI J


Mr. MANION:: The information requested is not of record with the Department of Railways and Canals, and the Canadian National Railway management take the ground that it is not in the public interest to publish information of this character.



QUESTIONS PASSED AS ORDERS FOR RETURNS


Mr. DUBOIS:: 1.	What was the number of employees: (a) permanent (b) supernumerary, in the maritime timber yards of Sorel during each month of the year 1933?
2.	What is the total amount of salaries which have been paid: (a) to the permanent employees (b) to the supernumerary employees during each month of the year 1933?


VICTORIA-VANCOUVER ISLAND SERVICE
Mr. NEILL:: 1.	Has the Department of Trade and Commerce a contract with the Canadian Pacific railway for a service between Victoria and the west coast of Vancouver island for the current year ending March 31, 1934?
2.	Does it contain a clause requiring them to carry the mail free of charge as stated in Hansard of March 2, 1934, at page 1241 if SO, how does it read?
at3' PUo,ng,'h,e current fiscal year ending March 31, 1934, has the Post Office Department a contract with the Canadian Pacific railway to carry mail for the same route at htteen cents a mile if so, how much has been paid them for such service for each month in the current fiscal year to date?


Mr. CAHAN:: Return tabled herewith.



LAPOINTE PIER-VANCOUVER

Mr. NEILL:: , l-Was a contract awarded on January 6, by the Vancouver harbour commissioners tor extension to Lapointe pier?
2. Were tenders called for this work; if so trom whom were tenders received and what were the amounts of each tender?


Mr. DURANLEAU:: This question should stand as an order for return, and I will lay on the table of the house any information I receive from the harbour commission.



DEATH OF LORD ABERDEEN

[Stage Direction]
On the orders of the day;
Right Hon. R. B. BENNETT (Prime Minister) :: Mr. Speaker, before the orders of the day are proceeded with it seems to me altogether fitting that some reference should be made in this house to the fact that one who from 1893 to 1898 was governor general of this dominion has passed to the great beyond. Lord Aberdeen succeeded to his great place
Death oj Lord Aberdeen

while still a young man; he was not the elder son of his family but, owing to the death of the elder son, he became the Earl of Aberdeen. It was an old and historic title; it was associated with Canada because he was the ninth baronet of Nova Scotia. He took his duties in life seriously and when, at the age of 46, he came to this dominion as governor general he had, by application, fitted himself for the discharge of those great duties.
That he and the Countess of Aberdeen endeared themselves to the Canadian people I think is beyond question, and when he returned home on the termination of his services in this dominion he continued to be actively engaged in the public life of his country. Twice he was Lord Lieutenant of Ireland, for a few months in 1886 and for a period of ten years from 1905 to 1915. His great services there were rewarded by his sovereign by his being advanced a step in the peerage, to a marquisate. He always identified himself with the interests of his church and was high commissioner of the Church of Scotland on more than one occasion. He was lord lieutenant of his county, and I suppose there is no member of this house who does not recall seeing in the Illustrated London News photographic reproductions of his reception of his sovereign, as lord lieutenant of the county, at the great Highland sports held from year to year. In later years he lived a quiet life; he was an author of some repute. Perhaps the Scots were better able to appreciate the humour of some of his anecdotes than were some of us who are Canadians, but his writings were very widely read and he was very well known in America by reason of some of the anecdotes he told of his experiences both in Canada and in the United States. He was a democratic peer, with a high sense of public duty and obligation. He discharged the duties of his great position in a manner worthy of the great traditions of a name that had given a prime minister to Great Britain. If I think it fitting, as I do, that we should record our realization of the way in which he discharged his duties here, I believe, although there is no precedent, that it is but right that in this parliament, if it be in session, when those who have served the state faithfully as representative of the Sovereign pass to their reward, we should pay some tribute to them, to their services, their worth and their work as they pass from us.
I trust, Mr. Speaker, that you will convey to the Marchioness of Aberdeen and her children the sympathy of this house in the great loss that she and they have sustained

in the passing of a devoted husband, a loving father and one who, by public service, greatly endeared himself to all who believe that service to the state is one of the duties and obligations of high position. I am reminded of words that I am sure pass through the minds of many of us when we contemplate service so great to this empire extending over more than four score years. I think we realize that in such service we have some explanation of the reason why, midst the falling of thrones and institutions, those of our empire continue to exist.
The glories of our blood and state Are shadows, not substantial things,
There is no armour against fate,
Death lays his icy hand on kings.


Right Hon. W. L. MACKENZIE KING (Leader of the opposition):: I rise to associate myself and hon. members on this side of the house with the felicitous tribute which has been paid by the right hon. the Prime Minister (Mr. Bennett) to the memory of the late Marquis of Aberdeen and Temair, who for five years held the high office of Governor General of this dominion. I should like to express my appreciation not only of the tribute the Prime Minister 'has paid but of 'his establishing the precedent of voicing, on behalf of parliament and the oountry, abiding remembrance of those who, as great public servants, have come to Canada from other parts of the British Empire and made worthy contributions to the history of our land. In this, I think the House of Commons will heartily concur.
To speak of Lord Aberdeen and to recall the fact that it is some forty years or more since he came to Canada as the representative of the crown, causes one to recognize that one is referring to a previous era in British history, the era of Queen Victoria and of Mr. and Mrs. Gladstone, an age which occupies a unique place in history. The lives of Lord and Lady Aberdeen were closely associated with those of the Gladstones, and the traditions of that time come naturally before our minds.
I suppose the most appropriate reference at the moment is to remind the house, as the Prime Minister has done, of what was said in our parliament of the late Lord Aberdeen on his return to England, after having spent his five years here. An address was moved in this house by Sir Wilfrid Laurier, the Prime Minister of the day, in which Sir Wilfrid, on behalf of the House of Commons, expressed the warm appreciation felt by the people of Canada of the public services of both Lord and Lady Aberdeen, of the very acceptable manner in

Pool Trains
which in the performance of the different functions pertaining to royalty they had discharged their duties as representatives of the Queen, of the great service they had rendered to art, science and letters during their stay in Canada, and, above all, of their democratic sympathies and close identification with those causes which have to do with human welfare and social well being. Nothing could have reflected better the success of Lord Aberdeen's administration in Canada than his reappointment to the vice-royalty of Ireland in subsequent years.
To many of us in Canada the death of Lord Aberdeen will mean not only the passing of a great public servant, one who has been true to the highest traditions of devoted and disinterested service to the state, and to the church to which he belonged, but the loss of a very dear personal friend. Lord Aberdeen possessed to a marked degree those qualities of generous sympathy, kindly interest and loyalty which win for their possessors many intimate friendships. He never lost touch or association with Canada and its people, but maintained both by the welcome he gave Canadians visiting the old land, and by return visits to Canada of Lady Aberdeen and himself.
Recalling the nature of the life-long services of Lord and Lady Aberdeen to great causes, recalling how closely for nearly sixty years they were united in purpose and in the happiness of their domestic life, and recalling, above all, their devotion and their fidelity to the faith of their fathers, I desire to join in all sincerity in the sympathy extended by the Prime Minister on behalf of parliament to Lady Aberdeen, who has been so greatly bereaved, and to the members of her family.
Like the Prime minister, I would conclude in reference to Lord Aberdeen and his many years of public service with what seems to me to be an appropriate quotation. Recalling his ever sunny nature in the face of vicissitudes and anxieties of which throughout life Lord Aberdeen had his full share, it might truly be said of him, slightly transposing Wordsworth's familiar lines:
His high endeavours were an inward light
That made the path before him always bright.


Mr. E. J. GARLAND (Bow River):: Mr. Speaker, it is perhaps not unfitting that the tribute from this comer of the house should come from one who has lived in two countries in which Lord Aberdeen so well displayed his undoubted talents. It is within my memory as a young man that Lord Aberdeen held sway as Lord Lieutenant in Ireland. I remember very well indeed the kindliness with which the Irish people always regarded him, and I feel certain that I am but expressing the views
of hon. members seated about me when I add my word of tribute to the memory of this man.



POOL TRAINS


[Stage Direction]
On the orders of the day:
Robert James Manion: Mr. Speaker, a few days ago
the hon. member for Quebec East (Mr. Lapointe) made some inquiries regarding the pooling of trains between Montreal and Quebec. I promised at that time that I would get whatever information I could. I telegraphed an inquiry to Mr. C. P. Fullerton, chairman of the board of trustees. His reply points out that the passenger train pooling arranged for in the Montreal-Toronto, Ottawa-Toronto and Montreal-Quebec services, as extended effective March llt, will produce a total saving of approximately 1,000,000 train miles per annum, divided approximately evenly between the two companies, and, on the basis of a conservative estimate, will represent a saving to each company of approximately $900,000 per annum.
The total number of engineers, firemen, conductors, and trainmen affected by the reduction of passenger train mileage is ninety-six. This is also divided approximately equally between the two companies. A number of employees of other classes that incidentally will be affected cannot be definitely determined until services are actually in effect, but these will likewise be divided approximately equally between the two companies. In practically all cases employees displaced by pooling arrangement will retain employment by exercising seniority rights to other positions, resulting in junior employees being returned to freight service. With the improvement in traffic, Mr. Fullerton states that the management is convinced that after the extension of pooling, as arranged for, is in effect, there will be more men in actual employment than at the time the Canadian National-Canadian Pacific Act, 1933, became effective, and that with continued improvement in traffic, there will not be any increased unemployment but rather the contrary. Arrangements as made for the pooling of passenger train services were adopted only after careful consideration of all the conditions involved, so as to effect economies by avoiding duplication of train services and still maintain, with as little disturbance as possible, adequate service to the public.
In regard to the statement as to displacement of all Canadian National service between
Pool Trains

Montreal and Quebec, the Canadian National Railway operates, and will continue to operate, between Montreal and Levis, the Ocean Limited and Maritime Express, two trains in each direction daily, and has arranged to provide another train between Charny and the Palais station at Quebec connecting with the Maritime Express to and from Montreal.
Mr. Fullerton points out in this telegram that he has conferred with the Canadian Pacific, and that this statement which I have just read is a joint statement of the two companies.
May I add that I am advised that 80 per cent of all passenger traffic between Montreal and Quebec has always been carried by the Canadian Pacific railway, as it is an older line and passes through more of the settled communities on the north shore.
May I add as well that in the pooling of passenger trains, the economies and the profits, if any, are split equally between the two railway companies. In this regard it may be well to point out that according to an official statement, which I hold in my hand, the increase in gross revenue, for the first two months of this year, as compared1 with 1933, for the Canadian National and Canadian Pacific railways together, has been $6,700,000, of which $3,900,000 increase has gone to the Canadian National Railways, and $2,800,000 to the Canadian Pacific Railway. I mention this in reply to suggestions, which are sometimes made, that in agreements between the two companies the Canadian National Railways is getting an unfair deal.
These figures of earnings show that apparently the management of the Canadian National Railways is looking after the interests of the Canadian National quite capably, and I have mo doubt that the arrangements made between the Canadian National and Canadian Pacific railway officials are made on a fair and equitable basis to both companies.
In regard to the inquiry of the hon. member for Bow River (Mr. Garland), as to train service between Ottawa and Toronto, I have made inquiries and am informed that while some changes have been made in the time of departure and in the connections, there has been absolutely no change made in the service between the two cities except it is claimed to better it somewhat.


Mr. JACOBS:: Did Judge Fullerton say
how much would be saved if we all walked1?


Robert James Manion: He does not want us to
walk.
fMr. Manion.]


Hon. ERNEST LAPOINTE (Quebec East):: Of course, I am precluded by the rules of the house from making any comment upon what the Minister of Railways (Mr. Manion) has just stated on behalf of the management of the Canadian National Railways, but I should like to ask him how no unemployment will result from this pooling when three trains of the Canadian National Railways in each direction are eliminated from the service between Montreal and Quebec and use is being made instead of the Canadian Pacific trains. The employees seem to believe that the engines will not be repaired in the Quebec shops but that everything will go to the Montreal shops of the Canadian Pacific, and that as a result many men will be deprived of work.


Robert James Manion: The answer of the management to that, as I read it in the telegram, is that the increased traffic which is taking place, and which was shown by the figures I gave in my own remarks, will take up the unemployment which would naturally be caused by the pooling arrangement. There is no doubt that unemployment would be caused by that arrangement, but the traffic, particularly freight traffic, is increasing to such an extent that the men who are displaced from the passenger trains will take the place of certain men who were on freight trains. In other words, their claim is that the increased freight traffic will pick up the slack. I am giving that explanation as Mr. Fullerton gives it to me.


Mr. VINCENT DUPUIS (Laprairie-Napier-ville):: I should like to ask the Minister of
Railways (Mr. Manion) if he has any information to give in answer to the plea that was made by His Honour the Mayor of Montreal for cooperation in the matter of the train service between Ottawa and Montreal. The two trains are running pretty nearly at the same hour, the Canadian Pacific at 3.30 and the Canadian National at 4.20. If there was cooperation one train might be dispatched at 6.15,	.


Robert James Manion: I did look into the matter
a few days ago when either my hon. friend or someone else asked me to do so, and I was informed that the two railways have no reason to doubt that the best times for the trains to run are at the present hours. After all, they are handling the trains, and I cannot instruct them to change the hours. They claim that the only people who wish to travel on trains at other hours are people who travel on passes.


Vincent Dupuis: An exchange of services.

Translations Bureau-Mr. Cahan
FARMERS' STRIKE	BUREAU FOR TRANSLATIONS
On the orders of the day:


Hon. H. H. STEVENS (Minister of Trade and Commerce):: Mr. Speaker, the other day the hon. member for Vegreville (Mr. Luch-kovicli) asked a question about a reported strike among farmers delivering grain at a place called Myrnam, in Alberta. The question is to be found at page 1207 of Hansard. I have an answer from the chairman of the board of grain commissioners which I shall read:
A dispute arose at Myrnam between the farmers of that neighbourhood and the local grain buyers, chiefly over the question of the grading of wheat locally. The farmers organized and on the 4th December declared that they would deliver no more wheat to the Myrnam elevators, of which there are five, until such time as their demands were met. Their demands chiefly centred around the question of buying tough grain, and subsequently narrowed down to a demand that the buyers in the local elevators be removed.
The matters in dispute were not matters over which the board had jurisdiction, i.e. the sale and grading of grain locally and the personnel of the buyers in the elevators. The board, however, took various steps in connection with it. Our assistant commissioner immediately called a meeting of the farmers of the place, and the chief inspector from Edmonton was sent there for a week in an endeavour to establish a correct basis for grading. Commissioner Hamilton subsequently went to Myrnam and met the strike committee and attended a very large meeting of the neighbouring farmers.
As a result of these meetings the board, reeling that there was a certain a-mount of responsibility on the trade for the manner in
[DOT]if j Ahelr. representatives there had permitted the situation to develop, called a meeting ot the companies interested and managed to induce them to change their buyers. There has not yet been time to see whether the strike farmers have accepted this and that business is now' being conducted as usual.
ALBERTA COAL INDUSTRY On the orders of the day:


Edward Joseph Garland: I
desire to ask the Minister of Trade and Commerce (Mr. Stevens) if there will be an investigation into an industry in which there have been serious reductions in wages, very low standards of living, extremely intermittent work, and certain charges now put forward that there is discrimination against union men who are active, namely, the coal industry in the province of Alberta?


Henry Herbert Stevens: If my hon. friend will send
me particulars the matter will be given consideration.
The house resumed from Tuesday, March 6, consideration of the motion of Mr. Cahan for the second reading of Bill No. 4, respecting the bureau for translations.


Charles Hazlitt Cahan: Mr. Speaker, the discussion which has taken place on the second reading of this bill clearly discloses that there are members who voted for the six months' hoist who nevertheless recognize that the existing translation system, or lack of system, requires very considerable reform. The existing system has developed without supervision or control in the most haphazard way, and in many respects it functions inefficiently and fails to achieve satisfactory results.
The hon. member for Gloucester (Mr. Veniot) fully recognizes the difficulties of the problem, which he suggests might be solved by a resolution of this house. The government are advised that an act of parliament will best serve to solve the problem.
The hon. member for Richelieu (Mr. Cardin) was forced to invent the plea that on account of my physical stature I might force the blue book translators of this house, over whom I have no direction or control, to do such translation work as I might deem necessary, and if I understood has suggestion aright-he speaks French with a dear enunciation and I think I was able to follow him- he even suggested that I might go into another department than my own and possibly seize one of its translators by the ear and force him to undertake the translation of important official documents which require immediate attention. My hon. friend is very facetious at times but he must recognize that the government of this country cannot be efficiently administered on those lines. Year after year the members of this house and fhe Senate have complained of the inefficiency of the present service. The hon. member for Dorchester (Mr. Gagnon) has quoted a few of those complaints, going back to the years 1902, 1906, 1907 and 1910. If members of the house desire to note the complaints which have been made in another place they may look at the Senate debates for May 26, 1926, and April 13, 1927. I might add to that oral, complaints which I have received that the translation of the Hansard of that other place for September 1932 has only within the last few weeks been presented to the department of public printing for the printing of the French text.	.
In 1909, under Sir Wilfrid Laurier, a committee of this house considering the matter

Translations Bureau-Mr. Cahan
requested that an inquiry be made into the translation service, and Mr. Achille Frechette was sent abroad to Switzerland and Belgium to make an examination of the translation systems which prevailed in those countries. Mr. Frechette was formerly chief of the translation branch of the House of Commons. He made his report in September, 1910, twenty-four years ago, setting forth the results of his official inquiry regarding the translation of debates, sessional papers and laws of parliament of Belgium and Switzerland, where the dual language system prevails. To that report several members of this house have made reference during this discussion, though they do not appear to have read it with sufficient care to have understood its real import.
In Belgium Mr. Frechette then found that a stenographic report of the debates of their parliament is published in extenso under the name of Annales Parlementaires but only in the language in which the respective addresses are made, and in certain cases a synoptic report or resume of the addresses is prepared for publication. The translator prepares the resume only for distribution to the daily press, and he is the only translator belonging to the House of Representatives in that country. In Switzerland stenographic reports are made only of debates concerning federal laws and federal decrees which correspond to our orders in council. These speeches are published at the close of each session in the language in which they are made respectively in the bulletin stemographique, which comprises about GOO pages. As to the rest of the translating, at the close of each speech in parliament the translator sums up the conclusions of the speaker in German if the speech is made in French and in French if the speech is made in German. This is the only translator belonging to the house.
In Belgium there are fourteen other translators distributed among several departments for special work in those departments. The system which prevails in these two countries is so different from ours that Mr. Frechette's report provided very meagre assistance in solving our problem. Our translation work is at least ten. times that of either Belgium or Switzerland. As I understand it, the purport of the conclusion of Mr. Frechette's report is that most of the work devolving upon the translators' branch of the House of Commons should be removed from that branch on the ground that the number employed constituted an abuse which should be remedied-'the term used by Mr. Frechette is "abuse"-but that the translation of the votes

and proceedings might well be retained for the House of Commons branch. Mr. Frechette's report was not acted upon and the centralization of which he then complained in the House of Commons branch still continues. In my humble opinion this requires redress and reform, at least to the extent of which Mr. Frechette complained. I think the conclusions of the Frechette report may well be considered by the select special committee to which I trust this bill will be referred. The centralization of the work of translating departmental and other reports, which was then centralized in the appointees of the House of Commons, still continues and the abuses of which Mr. Frechette complained have never yet been remedied. It was the intention of the government to submit a remedy in this bill now before the house for its second reading.
Reference has been made in this debate to the report of a select committee on the civil service which was appointed by the Senate in 1924. That special committee was set up on the motion of tbe leader of the Liberal government in the Senate, Senator Dandurand, and consisted of the Honourable Senators Beique, who acted as chairman, Belcourt, Bennett, Black, Bradbury, Calder, Dandurand, Sir George Foster, Hardy, L'Esperance, Mc-Coig, Pardee, Robertson, Ross (Moose Jaw), Ross (Middleton), Turgeon, Watson and White. The appointment of the committee was authorized by a resolution which appears on page 12 of the journals of the Senate for 1924. At page 149 appears the circular letter addressed by Senator Beique on behalf of the committee to thei various deputy ministers. Reference to translating is made on page 151, while the final report appears at page 494, et seq of the journals. In the report, as separately printed, the recommendation of the Civil Service Commission appears in appendix 2, page 21. I direct the attention of hon. members who are interested in this matter to this report and I have no doubt that it will receive the careful consideration of the select committee of this house to which I trust this bill will be referred. The report of the committee of the Senate had no results and, in my opinion, matters have gone on from bad to worse.
In connection with another issue which has been raised in this debate, may 1 say that the only work of translating required by section 133^ of the British North America Act, 1867, is, first, for the use of both the English and French languages in the respective records and journals of the Senate and of the House of Commons, and, second, for the printing and publishing of the acts of parliament in

Translations Bureau-Mr. Cahan
both these languages. If printing in the French language, exclusive of the debates conducted in French, were confined to the provisions of section 133, the total cost would be very modest indeed. The annual cost of printing the documents of the House of Commons in the French language, as prescribed by section 133, is as follows:
Journals of house and appendices.. $ 8.800 03
Votes and proceedings	
2,066	34Orders of the day	
1,590	54Bills for second reading	
2,595	10Bills for third reading	
1.312	68Statutes of Canada	
2,792	35Total	$ 19,157 04
These printings in French are under the direction and control of the Speaker of this house and the expense of printing is less than
820,000	per year. But these printings comprise a very small portion of the printings in French for which successive governments have borne the expense. The vast body of printed translations is directly connected with the due administration of government with which the Speaker of the House of Commons is not directly concerned, although the centralized bureau for translation is now under the control and direction of the Speaker of this house and not under the direction and control of the government of the day. I submit that in any case these translations should be under the direct control and supervision of the government which must assume the responsibility, not only for the proper and efficient translation but also for the timely printing, publication and distribution of the same. As I have pointed out, there is sometimes a delay of six months or even a year between the date of the publication of the English edition and the date of the publication of the French.


Mr. MARCIL:: I would point out that
some reports have never been translated into French.


Charles Hazlitt Cahan: I assume that that is so.
I would point out that in the course of time we publish both French and English editions of twenty-eight annual departmental reports. These are of considerable volume and hion. members are quite familiar with them. There are also published twenty or more annual supplementary departmental reports, exclusive of the Canada Year Book-the little blue book, so-called-and twelve to fifteen daily, weekly and monthly periodicals. In addition to these annual, monthly and weekly publications there is a large number of reports relating to the general assembly of the League
of Nations, the labour congress at Geneva, commissions on railways, monetary policies, currency and the like, the translation of which is the direct responsibility of government and in relation to which the authority of government should be maintained. In addition to the publications I have mentioned, of which there is a separate edition in English and French, we publish also a large number of works in bilingual form. These include four annual departmental reports, twenty-two supplementary annual reports, four periodicals such as the Canada Gazette, the monthly bulletin of business statistics, the monthly summary of trade of Canada and the quarterly trade reports. There are also annually published from ten to twenty or more miscellaneous documents of the government printed in bilingual form. This vast body of material, printed in the French language, has increased from year to year under successive governments, not, I think, because of any constitutional obligation arising out of the meagre requirements of section 133, but because successive governments in Canada have really desired to provide for the people of Canada of French descent, printed in their own maternal language, all important official documents of the federal government of the country for their information and instruction. A considerable portion of this work of translating departmental reports is, as I have stated, performed by the eleven blue book translators, so called, who, though they have no part in the proper work of the House of Commons, are unfortunately, and I may say I think improperly, attached to the Speaker's staff, and who are naturally disposed to think that they are not directly responsible to the government, which they appear to serve on sufferance.
The government is held by the public responsible for the efficient and speedy performance of their work, and it has therefore decided to assume that responsibility and to ask of parliament the statutory authority which is necessary for its effective performance. That authority will be conferred by the terms of the bill now under discussion. The government might have proceeded, by order in council and by appropriate votes in the annual estimates, to create a bureau for translations, leaving the existing staff of blue book translators to seek other employment. But as a matter of justice to men who have been long employed by successive speakers of this House of Commons, the bill provides that such employees shall be preferred in the creation of the new bureau.

Translations Bureau-Mr. Calian
I should like to say to the translators who have participated so ardently in the widespread propaganda and lobby against this bill that they must understand from now on that this government assumes responsibility for this bill, and that it will not be moved, on grave questions of public policy, by intimidation or threats emanating from any members of the public service of Canada. I suggest to these gentlemen that they forget the active part which they have taken in propaganda and lobby, that they separate themselves from this unseemly strife which prevails throughout the country, and that they seek hereafter to cooperate cordially with the representatives of the government in a joint endeavour to improve this important branch of the public service, from which the government has no desire to retire them, but every desire to retain their useful services.
It has been clearly explained that the translators who will be transferred to the bureau will not include those discharging secretarial stenographic services in the several departments who are exclusively employed in conducting the English and French correspondence of those departments. The minister who will have charge of the administration of this act, after careful consultation with the heads of the departments and with the civil service commission, has the right to designate the officials and employees who may be transferred to the bureau, but the persons so designated may only be transferred to the bureau by order of the governor in council. Thus every reasonable precaution will be taken that experts required in any department for translating scientific or technical work will not be so transferred if such departmental service would thereby be rendered less efficient.
It has frequently been incorrectly stated during this debate that all the department heads are opposed to the creation of the proposed bureau. I say most postively that that is not a fact. So far as I am aware, ten or more department heads are decidedly not so opposed, while several of the departmental heads who were consulted, such as mines, national revenue, national defence and post office, stated that for strictly technical work they will require the continued services of certain of their translators who are now employed by them and who are trained in the special work in those departments. I have no doubt whatever that the governor in council, after full inquiry, will give favourable consideration to the particular needs of these departments. There should be no difficulty in organizing the work so as to provide fully 
and satisfactorily for all these special requirements.
The hon. member for Gloucester (Mr. Veniot) and his colleague from Richelieu (Mr. Cardin) pleaded in mournful voices, and with a wealth of unfounded assertion, that if this bill is enacted the translators will no longer enjoy the right of promotion to become deputy ministers of departments or chiefs of branches, and that they will be promoted only to petty positions from time to time available in the proposed bureau for translations. In 1887 and 1888 I sat in the press gallery reporting the proceedings of this parliament, and since that time I have taken more than a merely casual interest in parliamentary and governmental affairs. But I have yet to learn, during the last half century, of a single translator who has been promoted to be a deputy minister or chief of any branch of any department of the government in this country.
I wonder if hon. gentlemen opposite who made use of this argument can now recall any such promotion. A few weeks ago a translator of the Senate was appointed a member of the civil service commission, and such promotion is, I believe, unique in the history of parliamentary institutions in this Dominion of Canada. I say deliberately that no translator employed under the provisions of this bill will be deprived of the possibility of promotion to any advanced position in the civil service for which he is otherwise qualified.
In the translation branch of the public service there are a very considerable number of positions with salaries ranging from $3,300 per year to $4,100. The hon. member for Richelieu also contends that this bill provides no remedy for the evils of the present system, which are obvious even to his blinded eyes. These evils, in my opinion, result from an utter lack of authoritative and efficient administration. The essential cure for negligent or incompetent administration is to provide capable administration; and I am personally confident that there are competent men available, of the French Canadian race, preferably those already experienced in the existing translation services, who, under a competent superintendent responsible to a minister of the crown, will make effective the necessary reform.
The hon. member for Richelieu admits that he has never given much attention to matters of translation and that he is sadly in need of enlightenment. This bill, I trust, will go to a select special committee of the house,



S, 1934

[Stage Direction]
Translations Bureau-Mr. Cahan
and as my hon. friend is anxious for enlightenment, possibly the hon. senior member for Ottawa (Mr. Chevrier), who has already by his voice and vote declared against the principle of the bill, might within the prescriptions of standing order 65, seek to substitute for himself the hon. member for Richelieu on that committee, in order that the latter might more successfully seek personal intellectual enlightenment.
Mr. CHEVRIER:: And a very worthy
substitute he would be.


Charles Hazlitt Cahan: The only difficulty is that
he has disqualified himself in the same manner and to the same extent as has my hon. friend who moved the six months' hoist. The senior member for Ottawa in moving the six months' hoist said in a most dramatic manner:
At this moment I defy the Secretary of State to affirm in this house that this bill will be the official recognition of the French language. I am not surprised that the hon. gentleman does not answer.
It was hot my duty to reply in the course of debate, but I deemed the question frivolous because, as the hon. gentleman well knows, the official recognition of the French language at the present moment appears and appears only in section 133 of the British North America Act of 1867.


Edgar-Rodolphe-Eugène Chevrier: Why does the Secretary of State not say that this would be a further recognition of the French language?


Charles Hazlitt Cahan: It' certainly is and I have
said so; I have said so in the house in the most emphatic way in which I am capable of expressing myself in the English language. But as fundamental constitutional acts such as the British North America Act frequently require supplementary statutory provisions for carrying into full effect their constitutional provisions, this bill is brought before the house for the purpose of placing and, if enacted, will place the use of the French language in official documents of the Dominion government on a basis so broad and stable as to exceed the most sanguine anticipations of the fathers of confederation whose maternal language was French.
The hon. member for Nicolet (Mr. Dubois), if I understood him correctly-and I endeavoured to follow him-stated that if I as Secretary of State would declare that this bill increases the guarantees for the use of the French language in the administration of federal affairs, he would regard the bill with more favour. If the hon. member for Nicolet
will read section 133 of the British North America Act of 1867 and read and consider both subsections of section 3 of this bill of which he read to the house only the first subsection, he will appreciate the broad and liberal spirit in which the majority of this house propose to carry into effect the: provisions of section 133 of the British North America Act of 1867.


Vincent Dupuis: What about section 6 of the bill?


Charles Hazlitt Cahan: I am not discussing section 6; I shall discuss it when the bill comes into committee. My hon. friend was so lacking in intelligence in presenting his case the other day, that I do not think it is necessary to refer to what he then said or what he is now saying.


Some hon. MEMBERS:: Order.


Vincent Dupuis: I rise to a point of order. I ask the Secretary of State to withdraw that expression.


Mr. SPEAKER:: To say that a member is devoid of intelligence is not parliamentary.


Charles Hazlitt Cahan: I did not say that he is devoid of intelligence. He has some, but I shall withdraw the remark. The house may anticipate with confidence the vote of the hon. member for Nicolet in favour of the second reading of this bill, for otherwise- and I trust this is parliamentary-I feel I would be disposed to doubt the complete candour of the hon. gentleman in making the statement which I have quoted.
The hon. member for North Timiskaming (Mr. Bradette) frankly admitted that if the bill had been introduced by the hon. member for Labelle (Mr. Bourassa), he, the hon. member for North Timiskaming, did not think any member of the house could possibly vote against it.


Mr. BRADETTE:: Certainly.


Charles Hazlitt Cahan: I regret indeed if the fact that I as a member of the government introduced this bill, should prejudice its sane and sound provisions in the eyes of hon. gentlemen opposite.


Joseph-Arthur Bradette: I rise to a question of privilege. I used those words because of what the hon. member for Labelle said as to the spirit and nature of the French language, and the proposal contained in Bill No. 4.


Pierre Édouard Blondin: That is not a question of privilege. The hon. member's remarks were correctly quoted in the house.
12S2

Translations Bureau-Mr. Cahan


Joseph-Arthur Bradette: I was being misinterpreted by the Secretary of State.


Charles Hazlitt Cahan: The hon. member for Kamou-raska (Mr. Bouchard) insisted that a high standard of French translation should be maintained in this country. I can assure the hon. gentleman that it will be maintained throughout the service by the selection of translators with special technical qualifications to translate technical documents and also by the selection of others who are specially qualified by training and experience to supervise the work of less competent translators before, as is now the case, immature, unrevised and otherwise unsatisfactory translations are sent to the printing bureau for printing.
The hon. member for l'lslet (Mr. Fafard) gratuitously interjected in the course of the debate a reflection upon my knowledge of the French language. I sincerely regret my personal deficiencies in this respect, but though the hon. member for l'lslet has mingled freely with Canadians whose maternal language is English, I would not hesitate to challenge him that I shall, without the use of a dictionary, prepare as exact a translation of French prose into English as he can translate a similar document from English into French.


Mr. BOUCHARD:: Who will be the judge?


Charles Hazlitt Cahan: That is what I am coming
to. The difficulty is in finding a judge, because hon. gentlemen have been complaining time and time again, using no unrestricted words of condemnation, of the translation by a translator of this house of the Address of His Excellency the Governor General at the opening of parliament. I have received statements from certain gentlemen who have qualifications as translators and who are bilingual by education and experience, one of them, for instance, being Mr. Pierre Lefort, special representative of La Presse in the gallery of the House of Commons, who writes:
I have no hesitation in stating that the translation of the speech from the throne delivered at the opening of the present session is in all respects a remarkable one. By its directness of treatment, use of the active form and choice of the right word, it bears the stamp of a translator of the very first order.
The translator has succeeded in avoiding the rut of the passive form, which simply transposes the English form, but is ill-adapted _ to French language, producing therein dull, lifeless sentences. The right word and the proper construction, present throughout the whole of this translation, restore to the French language its true genius, made of clearness, strength and conciseness.
This translation demolishes the current fable that English is more concise than French and
r\Tr, Speaker.]
better adapted to our administrative needs. It would indeed do honour to the translators at Geneva, sometimes offered as examples, and of which the League of Nations is so proud.
Another gentleman, a very eminent man, Canon Emile Chartier, vice-<rector of the university of Montreal, has also written to express his opinion in the same connection. He writes:
I would not hesitate to say that nowhere has the translator distorted the sense of the original text, but rather that he has rendered it with marvellous accuracy, and that moreover he has relieved the heaviness of certain English sentences, either by making their subordinate clauses principal or their principal clauses subordinate.
I consider on the whole that the translator may well be satisfied with his work: the translation of so technical a text exposed him to errors of interpretation that, for my part, I fail to perceive anywhere.


Joseph Georges Bouchard: He is no translator; he is just a literary man.


Edgar-Rodolphe-Eugène Chevrier: Would the minister
permit this question? How did it come about that he received those letters?


Charles Hazlitt Cahan: You will have to seek the
information from them. I am not proposing, and this bill does not propose, any new centralization in the work of the translators. The translation of the blue books and of the large bodies of important material emanating from the administration of government is centralized in this little bureau here. What is really proposed by the bill is not centralization but, as my hon. friend the Solicitor General (Mr. Dupre) said, the coordination, direction and supervision of translation under a superintendent directly responsible to the government and for which the government will be responsible to this house and to the country, as it is not now.
The criticism, as I have already stated, which has been repeated so frequently, that the translation of technical matter will not be made hereafter by specialists in the particular subjects dealt with certainly is not based on facts, nor is that an intelligent criticism in view of the fact that the government will assume the responsibility with respect to such matters. It is the intention of the government that any translators who have specialized in particular subjects shall continue their work in respect of the same subjects, and where possible their services will be utilized to supervise the work of the less competent translators.
The work of translation, as I have already stated in reply to another criticism, does not ordinarily lead to promotion to administrative

Translations Bureau-Mr. Cahan
positions outside of the translation bureau or the translation service. But, sir, I have consulted with the law officers and with the civil service commission, and I am confident that if this measure is adopted there is nothing in the measure or in its administration which will prevent any translator in the public service, however humble may be his position, from obtaining higher offices in the administrative services of government if he can show to the civil service commission that he is properly and fully qualified therefor.


Joseph Georges Bouchard: Would the minister
allow a question? In making this statement has the minister considered the chief translators? Are they to remain as chief translators, or are they not?


Charles Hazlitt Cahan: I cannot say, because I will not have their appointment, but there will be positions in this service that will require the services of chief translators to the full number of, if not a greater number than, those at present engaged on the House of Commons staff. I agree with what was said by the Solicitor General and others, that special attention should be given to the work of the Hansard translators, whose conditions of employment during the session differ from the conditions under which other civil servants are employed, and that such translators should receive special consideration in effecting the proposed reorganization of this bureau for translations.
In closing, Mr. Speaker, I should like to add that there was no partisan or political motive in the preparation and submission of this bill. The superintendent of the bureau and the heads of its branches, to whom my hon. friend refers as chief translators, preferably should be men whose maternal language is French. In any event, in the organization of this bureau the minister and the civil service commission may be reasonably expected to exercise ordinary intelligence and if they do so those whose maternal language is French certainly will have the preferred position. I am confident that the select committee, to which I shall move that this bill be referred, will give its provisions careful and unprejudiced consideration, ever keeping in view the paramount purpose of perfecting means for the radical improvement of this branch of the public service.


Edgar-Rodolphe-Eugène Chevrier: Mr. Speaker, I rise to a question of personal privilege. In the course of his remarks the Secretary of State (Mr. Cahan) said that under standing order 65 I was disqualified from sitting on that committee.


Charles Hazlitt Cahan: That was not what I said.


Edgar-Rodolphe-Eugène Chevrier: If the hon. gentleman will withdraw that statement I shall not press my point, but I want the house to understand that I shall not sit on any committee if there is any doubt in the minds of hon. members of this house as to my right to do so. In the first place I submit that rule 65 does not declare anything; it simply says:
It shall always he understood that no member who declares or decides against the principle of a bill, resolution, or matter to be committed, can be nominated of such committee.
When I was nominated to the civil service committee, sir, I had not declared or decided against the principle of this bill, nor had the bill at that moment been referred. As a matter of fact it has not yet been referred to any committee.


Pierre Édouard Blondin: I think the hon. gentleman is premature in raising the point of order now. The question of his eligibility to sit on the committee, if there is any question, will arise in due course.


Edgar-Rodolphe-Eugène Chevrier: But this is a point which affects my personal dignity, and as a member of this house I will not sit on any committee until this point is settled. I will not sit on this committee unless the matter is settled by the house here and now.


Charles Hazlitt Cahan: Mr. Speaker, I regret very much that the senior member for Ottawa (Mr. Chevrier) cannot allow me to indulge in a bit of humour in discussing this bill. At the time I made the remark I had more in view, the enlightenment which the hon. member for Richelieu (Mr. Cardin) desired to receive during the course of his speech. I am not raising the question of whether or not the hon. gentleman is qualified to sit on the committee; there is no member of the house whom I would rather see sitting on that committee than the senior member for Ottawa.


Edgar-Rodolphe-Eugène Chevrier: Mr. Speaker, I accept those words in the spirit in which they are uttered.
Motion agreed to on division, bill read the second time and referred to the special committee on the Civil Service Act.



BANK OF CANADA

[Stage Direction]
Hon. E. N. RHODES (Minister of Finance) moved the second reading of bill No. 19, to incorporate the Bank of Canada.
William Lyon Mackenzie King: Mr. Speaker, owing to the exceptional importance of the
1284	COMMONS
Bank oj Canada-Mr. Mackenzie King
measure before us and the necessity of avoiding the possibility of any misunderstanding or misrepresentation concerning the attitude of the official opposition on the second reading of this bill, I have thought it advisable to follow the example set by the Minister of Finance (Mr. Rhodes) at the time of introducing the resolution on which the bill is based, and to reduce to writing that which I wish to say at this stage.
We propose to allow the government to proceed with this bill in the manner which was followed a week ago to-day by all parties in the house with respect to the bill on banks and banking, which is the customary procedure of the House of Commons with respect to measures of this kind, and to permit the bill to go immediately to the select standing committee on banking and commerce where its provisions may be studied in detail, in relation to each other, and to those of the bill on banks and banking, which has already been so referred. It is our intention not to delay or obstruct its progress to the committee on banking and commerce by proposing any amendment which would have the effect of dividing the house, and which, without doubt, would be certain to promote lengthy debate at this stage. Our attitude at this stage, second reading, continues to be that which I outlined on the resolution which preceded the introduction of the bill, and which was based on the assurance given by the Minister of Finance and the Prime Minister (Mr. Bennett) that in allowing the resolution to pass without debate we were committed to nothing beyond the principle of the establishment of a properly constituted central bank for the control of credit and currency in the public interest, and for other functions as set forth in the preamble to the bill itself.
May I at this point quote the words in the preamble of the bill, which is designated, An, act to incorporate the Bank of Canada:
Whereas it is desirable to establish a central bank in Canada to regulate credit and' currency in the bast interests of the economic life of the nation, to control and protect the external value of the 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.
And so on. The statements of the Minister of Finance and of the right hon. Prime Minister to which I have just referred appear in Hansard of February 22. The quotation I should like to make from the remarks of the

Minister of Finance are to be found at page 830, and are as follows:
In conclusion, I desire to assure the house that the government has given careful thought and study to the drafting of this bill. At the same time, in submitting it to the banking and commerce committee, it invites that committee to give it the most careful examination and scrutiny, and if in its judgment any amendments can be made which will be designed to accomplish more fully the purposes of the measure or to strengthen its provisions, they will be not unwelcome.
Following the Minister of Finance, the Prime Minister is reported at page 837 as follows:
We are merely pronouncing in favour of a central bank, and when the measure has been introduced and the bill given the first reading the house will have an opportunity to consider later the extent to which it approves of the details as they appear in the measure.
Then, again, at page 839:
As the minister has indicated, to the extent to which this house in committee, that committee representing every section of Canada, concludes that amendments to be made there will enable this bank properly to discharge the functions of a central banking authority, such amendments will be welcome.
I might refer to another statement made by the Minister of Finance, and reported at page 843 of Hansard as follows:
I believe the statement I made at an earlier stage, when moving the house into committee, will indicate that the government is prepared to deal sympathetically with any suggestion towards strengthening the bill, and which has in mind the main object of the bill, which may emanate in committee.
It is because we base reliance on statements made by the Minister of Finance and the Prime Minister to the effect that in committee every opportunity will be given hon. members on this side of the house to move such amendments as they deem necessary to further the object of the bank as a properly constituted central bank, properly constituted that is from our point of view-a subject which will have to be considered very carefully-that we think it proper to discuss the matter in committee rather than to provoke a debate at the moment which might be protracted and would prevent the bill reaching the committee for some time to come.
When second reading of the bill is passed, we understand it is to be referred at once to the select standing committee on banking and commerce where full discussion may be held on each and all of its provisions; also that when the bill is reintroduced in committee of the whole, and upon third reading, we shall be free to propose any amendments which we may regard as appropriate and

Bank of Canada-Mr. Coote
necessary. Were support of the second reading of the bill as it stands to be construed or capable of being construed as committing those who support the second reading to private ownership or private control as against public ownership or public control of a central bank, we would not be prepared to allow the bill to go to committee without prolonged discussion at this stage, or without immediately presenting or supporting one or more amendments.
It is perhaps as well that I should make perfectly clear at once what the matters are to which we believe the committee will have to give very special attention, and mention of which will the better serve to make our position known.
A central bank, as we view it, differs from other banks in that its function is primarily regulatory and controlling-and not commercial in the sense of being intended primarily for private profit or gain. In other words, the functions of a central bank in the world of banking and finance, as we view it, is that of subordinating the special to the general interest or, to express the matter more concretely, that of subordinating the private interest in banking and credit to the public interest. In no sense should the bank be, or be permitted to become, a banker's bank. It is and ought to be a government bank, the government being representative of the interests of the country as a whole. Its main purpose is and should be to protect the public interest in banking and credit.
We believe the provisions of the present bill, as drafted, do not go far enough to secure these ends, and that, as the bill now stands, there is a possibility of private interests exercising the control which, under a measure of the kind, should be secured to the state. How the regulatory powers necessary to effect such control in the public interest, as contrasted with private interests, may best be effected, is something to which the committee will have to give special attention and to ensure which we feel will necessitate change in some of the provisions of the bill as they now stand.
There is one other matter on which we of the official opposition are also agreed. It is that the provisions of the bill should be such as to ensure that the Central Bank of Canada will in no way be in danger of becoming subordinated in the discharge of any of its functions to the banking institutions either of Great Britain or of the United States or of any other country. We believe that the personnel of its board of directors, including the
governor, deputy governor and assistant, deputy governor should not only be British subjects, but persons ordinarily resident in Canada. With Canada's experience and reputation and position in the banking world what it is, we are confident there can be secured for a Canadian central bank an efficient and highly qualified personnel wholly Canadian.
I hope the government will realize that in taking this attitude we are trying to expedite the consideration of this measure in the one-sphere in which it can be most carefully studied in detail, and seeking to avoid the development of difficulties until that is absolutely inevitable. We do this in a desire to further what we feel is an all-important public-measure, and in order to afford as great a measure of cooperation as adherence to our views as to what should be the governing principles will permit.


George Gibson Coote: Mr. Speaker,. I regret that I did not, like the minister and' the leader of the opposition, reduce my remarks to writing. Had I known I was privileged to do so perhaps I could have made a better job of presenting our views to the house. However, I hope hon. members will bear with me while I present those views in the best way I can.
The occasion of the second reading of any-bill, we are told, is the time at which the principle of the bill should be passed upon by the house. The proposed bank is to perform a function of government. It is to be given the power to issue legal tender for Canada,, a function which since confederation has been performed by the state itself. Since ancient times the issue of money was the prerogative-of the crown and zealously guarded as such. It is the most important thing in our whole economic system. The issue of all money is to be turned over to this bank, and it should' be noted that this bank is to be given a perpetual charter. To me the principle to be-decided in connection with this bill is whether the institution which is to be given this very great power shall be established under private-ownership or public ownership. In other words, is it to be another private bank, or is. it to be owned by the people of Canada and operated by a body of men representing the-various economic activities of the Canadian people and responsible to parliament? In reality is it to be an arm of the government?'
The leader of the opposition (Mr. Mackenzie King) I think stated that it was in the public interest that this should be a government bank or words to that effect. I believe that that is a correct statement of the:
Bank of Canada-Mr. Coote

position, and that is a vital principle which should be decided upon the second reading of the bill. In 1931 I moved in this house a resolution asking for the establishment of a central bank, but I said emphatically that it should be a nationally owned central bank. Those are the words that were used in the resolution. While this bill would establish a central bank it does not provide for national ownership and control. I say again that I consider that a vital principle. Control is perhaps the most vital thing but the way to ensure national control is to provide for national ownership. I think beyond a doubt it is fair to say that one of the outstanding principles to be decided now is whether this bank is to be under private or public ownership, and therefore, Mr. Speaker, before I conclude I intend to move:
That all the words after "that" in the main motion be struck out and the following substituted therefor:
In the opinion of this house the government should give further consideration to the matter of providing that the stock of the proposed central bank should be owned by the government and that the governor and directors of said bank should be appointed by the governor in council.
I want to make it clear, Mr. Speaker, that I am not opposed, and we are not opposed, to the setting up of a central bank. We think this step should have been taken years ago but we believe that it is vital that the bank should be a publicly owned institution. The bank as proposed in this bill represents the view of a minority of the members of the commission. That is something that should not be forgotten. The two members of the commission who recommended the setting up of a central bank as now proposed in this bill were neither of them Canadians. They were both from outside of Canada, and one of them was a director of the Bank of England.


Richard Bedford Bennett: I might correct the hon.
gentleman. He had been a director of the Bank of England, not was.


George Gibson Coote: I am glad to accept the
correction of the Prime Minister and I regret if I misstated the case. Two members of the commission were opposed to the setting up of a central bank, and the Hon. Mr. Brownlee, while approving of the idea of a central bank, was quite emphatic that it should be publicly owned and controlled. Perhaps I might quote in part what he said. After referring to the recommendation as made by the other two commissioners, Mr. Brownlee said:
I dissent from this suggestion and recommend that the capital be subscribed by the government of Canada, and that all directors

and executive officers be appointed by that government, each appointment to be for a fixed number of years.	...	.
The source of capital is in itself of little significance. The control of the bank is of great significance. The election of directors by private shareholders means private control, and notwithstanding the limitation of the rate _ of dividends, this control might place earning capacity as & first consideration. The only reason advanced in favour of private, as against national, control is the fear of political influence. I am not impressed by this argument. I believe the selection of directors and executive officials by a government would be as wise as that of a body of shareholders, the majority of whom might vote by proxy. It is admitted that the state must ultimately retain sovereignty in matters affecting currency. Emphasis is placed upon the necessity of close accord between the bank and the government in all that pertains to the external value of the country's currency. The primary purposes of a central bank are, in paragraph 206 of the report, defined to be the regulation of the currency in the best interests of the state, and by wise and timely cooperation with similar institutions in other countries to mitigate as far as possible fluctuations in the general level of economic activity.
In times of stress the policies of the state must prevail, whatever may be the constitution of such a bank. In normal times I am of the opinion that the function of the governor, deputy governors and board in carrying on all the functions of such a bank would not suffer as a result of appointment by the government. It is suggested, in the plan in the appendix that the government should exercise partial authority in the selection of the executive officers of the bank. In my judgment it should exercise full authority.
So far as I am personally concerned I am heartily in agreement with the Hon. Mr. Brownlee, and may I again quote from the report of the commission, page 93:
The state must ultimately retain sovereignty in matters affecting currency.
The control of currency and credit can in no sense be defended as a legitimate form of private enterprise. Surely no one is going to dispute that. It seems to me a backward step, and not a step forward. The bank shall be given control of credit. Credit is the lifeblood of industry, and through credit, employment and purchasing power is controlled. Real power is exercised by those who control credit. They would have more power than the government itself. The very life of the nation economically speaking, is to be committed by this bill to the care of a privately owned institution. The control of credit is really the control of the nation, and any government that leaves the control of credit in the hands of a privately owned institution, in the hands of a private bank such as this, will find itself unable to control the political policy of the nation unless it

Bank oj Canada-Mr. Coote
happens to coincide with the policy of the financiers. I think we should be clear on this point, that the issue confronting us today is whether the government or a privately owned institution is to be in control of the economic activities of the nation and economic conditions in Canada.
Quoting again from the report itself, "The powers exercised by a central bank are very great." I think it is a matter of supreme importance that the bank shall be established in such a way as to ensure that -its powers will at all times be exercised in the best interests of the people of Canada. The great power of a central bank is due to the fact that it is given sole control of currency, and it is also given control of the volume of credit outstanding at any time. Through the control of credit it can control price levels and general economic conditions. Many people fail to realize the extent to which economic conditions are affected by the policy of our banks. To those who have never given the subject much thought the following sentence from a speech delivered by the Right Hon. Reginald McKenna, at a recent meeting of the shareholders of the Midland Bank, London, should be of very great interest:
Nothing in monetary practice is more certain than that contraction of the volume of money, or even failure to secure an adequate increase, tends both directly and indirectly to put a brake upon business of every kind, and to produce the very troubles-unemployment, unremuncrative commodity prices, unbalanced budgets and general depression-which have been apparent in almost every country of the world in the past four years. With expanding population and production we need some expansion in the supply of money, or it will inevitably follow that consumption will not keep pace with production. There may in any circumstances lie temporary maladjustment between production and consumption of individual commodities; but if the supply of money is adequate the price level of all commodities taken together will be kept approximately stable, and general consumption will be maintained.
I want to draw the attention of members of the house to this last sentence. Mr. McKenna
says:
It follows then, that the policy of the Bank of England is of the utmost concern to everyone, for no one escapes the effects of general depression and not one of us fails to benefit from sustained prosperity.
If the policy of the Bank of England is of the utmost concern to everyone in England, and Air. McKenna is in a good position to know, it follows just as sure as night follows day that the policy of the Bank of Canada will be of the utmost concern to everyone in 74726

Canada. That being so, it surely follows that the Bank of Canada should be owned by the state and controlled by a body of men responsible to the representatives of the people and subject to our criticism instead of responsible to the shareholders of a privately owned bank. Let us not underestimate the power of privately owned banks. I should like to quote the Right Hon. Ramsay MacDonald, now Prime Minister of England, as follows:
Finance can command the sluices of every stream that runs to turn the wheels of industry, and can put fetters upon the feet of every government that is in existence.
I should like to quote from another authority, a former king of a European country. He was reported last year in a Toronto paper as follows:
"You think," he said, "that the Bank of England' is a national institution. The French think the Bank of France is a national institution. The Germans think the Reichsbank is a national institution. And the truth? The truth is, they are all controlled to some extent by a group of international financiers whose one interest in life is power. The power to rule the world. I tell you they rule the world."
I think this former king knew what he was talking about and, therefore, we should be careful in setting up a Bank of Canada to see that it is owned by the nation itself. I think it is fair to say that the international bankers were very successful in controlling the world up to 1931 by means of the gold standard. But that standard has broken down and they now hope to control the world through a system of central banks. There is a growing conviction in the minds of many Canadians that the setting up of a privately owned central bank would be a step to bring Canada under the sphere of influence of the Bank of England, in other words, under the domination of the Bank of England in so far as monetary policy is concerned. This would be Canada's contribution toward setting up an imperial money power of which the Bank of England, because of its long experience and influential position, would be the dominant influence. I view with alarm such a situation and I think we should be warned by the experience of Great Britain and British governments with the Bank of England. Their policy has not been one of close cooperation with governments to raise the standard of life of the British people. They may cooperate but they seem to do so to carry out the policy laid down by the Bank of England. The

12S8
Bank of Canada-Mr. Coote

words of the Right Hon. Mr. Churchill, as delivered less than two years ago in the British House of Commons, were referred to by the hon. member for Camrose (Mr. Lucas) in his speech delivered on January 31, 1934. I think it is very clear from his statements that England was put back on the gold standard on the advice of the bankers. He and his government had been warned by such outstanding men as the Right Hon. Mr. McKenna, Mr. John Maynard Keynes and many others that if they did so unemployment would be increased in Great Britain and it would be impossible for that country to balance its budget. In spite of everything they followed the advice of the bankers and returned to gold. I think the last sentence of the speech of Mr. Churchill already referred to is worth repeating. It is:
I say quite seriously that this monetary convulsion has now reached a pitch where I am persuaded that the producers of new wealth will not tolerate indefinitely so hideous an oppression.
So far as we can gather, the results which followed were brought about by the government following the advice of the Bank of England. The policy of the Bank of England has been the policy of the British government. The deputy governor of the Bank of England is reported as having testified before a committee in England last year that the difference between the treasury and the Bank of England was the difference between tweed'ledee and tweedledum. I think it is also fair to say that the policy of Sir Montagu Norman is the policy of the Bank of England. This control by Sir Montagu Norman is now referred to in England by a great many people as the second Norman conquest. Are we to have a Norman conquest of Canada? Sir Montagu Norman is quoted in Hansard of February 9, 1932, as follows:
Unless drastic measures are taken to save it, the capitalist system throughout the civilized world will be wrecked within a year. I should like this prediction to be filed for future reference.
Since that time he has been reported as saying that he was not at all sure that he could see daylight ahead. However, England seemed to be following his policy. But there are lessons to be learned from the experience of England. We find such a good Tory as Lord Beaverforook stating in his paper the Daily Express in April, 1932:
The time is long overdue for a reversal- and a dramatic reversal of the monetary policy of Great Britain.
The national need is for a steady expansion of credit facilities. The Bank of England is the obstacle in the way of that need, and

because of its vested power it has imposed upon the government for ten years a policy of deflation.
In other words, the Bank of England, which owes no responsibility to the electorate, dictates the government's financial policy.
The system is definitely wrong. It has played an enormous part in bringing about the postwar economic distress, and the men who conducted the bank's affairs then are still in charge.
It is no use tinkering with the question of reform. The present situation should be brought to an end.
The government must be master in its own house; tils'government must dictate the nation's monetary policy; and the Bank of England must be relegated to its rightful place as the servant of the nation.
Are we taking advantage of the advice contained in that editorial by Lord Beaver-brook. About the same time, in another issue of his paper, after pointing out that he is a banker of practical experience, he says:
We must abandon the policy of the Bank of England, which has been frankly directed to lowering the standard of life in this country.
And again:
It should be our policy to make money both plentiful and cheaper. It may be fairly cheap at the moment. I do not deny that. It is certainly not plentiful. Until we have made it plentiful we will not be able to maintain the standard of wages here. How can it be made plentiful?
Here is his suggestion:
Send the Bank of England about its business! Let it continue to perform the functions of a joint stock bank.
Establish a central bank, owned by the nation, equipped with all the powers necessary to provide abundant credit and hedged about by all the restrictions required to safeguard the permanence and stability of the structure.
That is the solution.
Give us the right to establish reasonable credit and sufficient banking facilities for the people, and you will get the present wage-level, stability of commodity prices and prosperity for our people.
I suggest that the first step towards providing prosperity for the people of Canada would be to make the Bank of Canada a servant of the nation. It should be publicly owned and controlled and be hedged about by all the restrictions suggested by Lord Beaverbrook in his editorial.
I think we could well take to heart the experience of the United States in connection with its federal reserve banks. This experience should help us in deciding for a publicly owned and controlled Bank of Canada. There has recently been introduced in the United States congress a bill to establish a central bank in that country. The control over this bank would be exercised by a board of seven

Bank of Canada-Mr. Coote
directors to be appointed by the president with Senate approval. These directors would be representative of agriculture, industry and business generally and would be headed by a governor and deputy governor in the manner of a central bank. The authority would then be free from any control except that of the government. All profits from its operation, after deductions, for reserve, would go to the treasury. In short, it will be equivalent to a state appointed and a state owned central bank directed to control credit and currency on what has been loosely described as a "commodity dollar" basis. I think we should profit from the experience of the United States and establish this central bank under state ownership and control. The federal reserve banks of that country are bankers' banks; the stock is owned by the banks and the system has not been found to be satisfactory. They are now proposing to set up a nationally owned central bank. Personally, I do not want to see Canada in the position of having to go hat in hand to a privately owned central bank, as an individual now has to do, to obtain money to carry on the services which the people should have.
Speaking of the United States naturally brings to mind the national recovery plans that are under way in that country, and there is a growing need and growing demand for some national recovery plans to solve some of the problems that are facing Canada-the farm problem, the unemployment problem, the debt and interest problem, the railway problem. In the solving of any of these problems the matter of money and money policy stands out prominently like a sore thumb. We shall find it impossible to deal effectively with any of these problems without the application of an entirely new money policy.
For the last few years money has been our master. Whether or not we could institute new policies has always been determined by money policy. I submit that money should be made to serve the needs of the people. This bank will control credit, and if governments are to be held responsible for economic conditions, surely they must have something to say about the control of credit. The chief duty of the bank will be to control the amount of credit outstanding at any time. The policy governing the operations of the bank would unquestionably be a matter of concern to the government, for the control of credit is the central problem of economic recovery. The wise use of national credit is 74726-82^
the most important factor in establishing prosperity and happiness among the people. We have no reason to believe that the national credit will be used to the fullest extent possible if handed over to a privately-owned central bank, and for this and other good reasons I say that the bank should be owned by the nation. For every nation to-day, currency policy is or should be an administrative or government problem. For that reason the closest form of cooperation between the Finance department and the central bank is absolutely essential.
May I quote a few sentences from the February issue of Lloyds Bank Monthly of London. I read the following:
At the present time currency policy is virtually an administrative problem rather than a policy determined for the nation by the gold standard, and for that reason the closest form of cooperation between the treasury and the bank is rendered essential. . . . The currency policy that is desirable in the future must be determined by the primary needs of the nation.
That being so, who should determine the policy, the government or a privately-owned bank?
The first need is to do all that is possible to facilitate and accelerate a recovery from the present trade depression and to employ to the fullest extent our resources of labour and capital. The second is to promote a rise in prices to approximately that level which prevailed before the advent of the depression.
. . . The third need is to establish and maintain a monetary system which will prevent the recurrence of the disastrous events of the last four years.
And let us not forget that the disastrous occurrences of the last four years have come while we have been under the direction of privately-owned monetary institutions.
I would also quote the following words from the Right Hon. Mr. McKenna in his recent speech at the annual meeting of the Midland Bank. He said:
The Bank of England on its own responsibility acts from day to day as it thinks proper. But such freedom in a matter vitally affecting the whole community should obviously be subject to limitations set by higher authority. . . . Even while operating on the gold standard the Bank of England had a considerable field for the exercise of independent judgment, but with the removal of the statutory obligation its powers over the quantity of money were so wide, whether in the direction of increase or decrease, as to be for practical purposes unrestricted. It therefore became urgent that the Bank of England should be given some definite guidance as to its future policy, and obviously the government alone could have the necessary power and authority to instruct the bank.
But if that is necessary in England it is necessary in Canada also; the government of
Bank of Canada-Mr. Coote


Hon. E. N. RHODES (Minister of Finance):: Mr. Speaker, may I say at once that I am in entire agreement with the leader of the opposition (Mr. Mackenzie King) in respect to the attitude he has taken this afternoon in regard to this measure. While we will agree to disagree with respect to certain features of the bill, we are in agreement, I assert, with respect to the appreciation he has of the character of the debate which ought to take place upon the second reading of a bill.
I am sorry that I am not in a position to say the same to the hon. member for Macleod (Mr. Coote) who has, I respectfully submit, failed to appreciate the distinction between a debate upon the principle of a bill and the question of the details of a bill, however important or vital they may be, because the fact remains that at the moment the principle which we are discussing is: shall we have a central bank?


William Lyon Mackenzie King: And that is
the only principle.


Edgar Nelson Rhodes: That is the only principle. The point whether this bank should be publicly or privately owned as well as questions respecting the numerous other details incidental to the bill are matters of detail which can be dealt with by way of amendment in the regular course as we proceed in committee on banking and commerce, or in committee of the whole house, or upon motion on the third reading of the bill.
The hon. member has moved an amendment. Let me say at once that I think he has in so doing placed himself in an indefensible position. In the first place his amendment is strictly out of order and contrary to the rules of the house. On that point I do not ask for an immediate ruling; possibly Your Honour may wish to study the matter over the dinner recess or even longer, and I do not press for a ruling at the moment, but I wish for a few minutes to discuss the question of procedure and to refer the house to May, 13th edition, at page 391, from which I shall cite but one sentence which comes under the provisions headed Second Reading of Bills. It reads:
Nor may such an amendment deal with the provisions of the bill upon which it is moved,
Bank of Canada-Mr. Rhodes

nor anticipate amendments thereto which may be moved in committee, nor attach conditions to the second reading of the bill.
That main thesis is followed by two authorities which are cited in a footnote upon the page from which I have just read. The first is to be found in the Hansard of Westminster, third series, for the year 1868, at page 1571, in which the Speaker makes the following ruling:
Before the hon. member moves his resolution I wish to point out to him that it exceeds the limits prescribed for such motions by the rul.es of the house. It is a resolution which in reality anticipates discussion on every clause of the bill.
The other citation is with respect to the second reading of a bill and is to be found in the British Hansard, fourth series, 1905, at page 1149. It is with respect to a motion moved by Mr. Arthur Henderson by way of a resolution on the second reading of a bill just as the one my hon. friend proposes to move to-day. The Deputy Speaker, who was at the moment presiding, ruled:
The motion of the hon. member is out of order, for the reason that it anticipates amendments embodying the same principle which may be submitted in committee on the bill.


Mr. WOODSWORTH:: Would the hon.
gentleman permit a question? In his judgment is it permissible for any member other than a minister in committee to move an amendment of this kind?


Richard Bedford Bennett: That is what the committee is for.


Edgar Nelson Rhodes: I propose in my discussion on the question of procedure to make that very clear.


James Shaver Woodsworth: This involves an expenditure of money.


Edgar Nelson Rhodes: It has nothing to do with that at all. The hon. member for Macleod was in another respect unfortunate in moving this motion. He professes, as does every hon. member of this house so far as I know, to believe in the principle of a central bank; indeed, he has advocated it for years. Yet in moving this motion he moves a vote of want of confidence in the government which brings in a measure to introduce a system which my hon. friend has advocated for many years. Furthermore may I point out that he has been unfortunate in another circumstance. If it were in order for him to proceed with his amendment he places himself in this position: It is a well known and established rule of practice not only here but at Westminster as well that you may not proceed twice in the same session with the same [Mr. Rhodes.!
matter. If my hon. friend's amendment were to carry it would have the effect of defeating this bill and of preventing the accomplishment of the very measure which my hon. friend has consistently advocated for so long.
I do not propose to weary the house with citations or to use them to any greater extent than is necessary to establish my argument, if not to the satisfaction of my hon. friends opposite and to my right at least so far as is necessary in my judgment to satisfy myself. I will say, however, that if hon. gentlemen will refer to page. 299 of May, thirteenth edition, they will find that it has been an established principle at Westminster for over three centuries that the same matter may not be introduced twice in the same session. There are decisions on that point without number, not only in the House of Commons but in the House of Lords as well.


Mr. IRVINE:: How does that apply to this particular motion?


Edgar Nelson Rhodes: Because if this motion were to carry it would mean the defeat of this measure and it would not be possible to introduce this same measure again this session. That is according to well established practice. I have just given the citations; if my hon. friend cares to look them up he will find that what I have said is correct.


Edward Joseph Garland: Only, may
I submit quite respectfully, if the principle of this measure is definitely that of private ownership, but I thought the hon-. gentleman was contending that it was not so definite.


Edgar Nelson Rhodes: I do not know whether
or not my hon. friend was present when I mentioned that point a moment ago. The principle of the bill is not the question of private ownership; the principle of the bill is whether we shall have a central bank. I care not how vital the question of ownership may be in the mind of my hon. friend; the fact remains that it has not to do with the principle of the bill. It is a detail, whatever importance my hon. friend may attach to it.


Edward Joseph Garland: Then may I ask the minister a further question. Why should it be regarded as a defeat of the bill if an amendment is adopted that does nol affect the principle of the bill?


Edgar Nelson Rhodes: Perhaps my best answer
would be that this is the practice of parliaments, and that it has -been so for a great period of time. The reason is obvious; the motion is that the bill be read a second time. My hon. friend has moved in amendment that it be not read a second time, and if his

Bank of Canada-Mr. Rhodes
amendment were to carry all we would have would be a pious resolution of this house, and we would have lost the second reading of this bill. He would have killed the bill, in plain English.


Edward Joseph Garland: Not necessarily.


Edgar Nelson Rhodes: Yes, absolutely, my hon.
friend to the contrary notwithstanding.


William Irvine: Could not the government adopt the principle? That would save it.


Edgar Nelson Rhodes: Of course my hon. friend may think it is competent for him to make the rules of the house as he proceeds, or that they are a mere matter of argument or of his own opinion, buit whether or not my hon. friend attaches any weight to the decisions of tills house I may point out to him that the matter has been the subject of decision in this house on different occasions. I will refer my hon. friend to the journals of the House of Commons for the year 1884, where this Specific point was dealt with on April 17 of that year. The citation is to be found at page 462 of the journals. Objection was taken under similar circumstances on the ground that the same question had been negatived by the house on a previous occasion during the same session, and Mr. Speaker said:
-the same question had been before the house on the 18th March last, and the house decided that the Liquor Licence Act should not be repealed, and it would not be reconcilable with that previous decision if the house were now to agree to consider the proposed amendment.


William Irvine: I should like to ask the hon. gentleman a question, and I quote from May:
It is also competent to a member who desires to place on record any special reasons for not agreeing to the second reading of a bill, to move, as an amendment to the question, a resolution declaratory of some principle adverse to, or differing from, the principles, policy or provisions of the bill.
Would my hon. friend kindly indicate to me what sort of amendment could be moved here?


William Lyon Mackenzie King: What is the
principle of my hon. friend's amendment?


Edgar Nelson Rhodes: May I ask my hon. friend to be good enough to bear with me until I have finished my argument. Then if he wishes to submit any questions, if Mr. Speaker does not object certainly I will offer no objection either. I would refer the house also to the British Hansard for 1890, third
series, No. 347, at page 743, where the order was called for the second reading of a bill which had for its purpose the parting with the island of Heligoland under an agreement with Germany. There the Speaker ruled that it was competent for an hon. member to move a resolution superseding the motion for second reading but that it was not competent to add words to the motion that the bill be now read a second time.
Let me just indicate the anomalous position in which my hon. friend from Macleod (Mr. Coote) has placed himself. Being a consistent proponent of the idea of a central bank he now takes the only constitutional course which would prevent our securing a central bank in Canada, and he does so despite the fact that he has three opportunities open to him to move a motion which would have the effect of making law what he now attempts to say by way of resolution. In the banking and commerce committee it is competent for my hon. friend to move that the shares of this bank shall be publicly owned exclusively, he may make that motion again when the bill is in committee of the whole house, and he may make it, on the third occasion, when the bill stands for third reading, by moving that it be reported back to the committee of the whole, with instructions to amend in a certain particular.
I put this question to my hon. friend: Is he prepared to take the position that unless this is a central bank constituted entirely as he, and those who think with him, desire, he will deny a central bank to the people of Canada? Because, unless he is prepared to take that position, he is entirely inconsistent in his motion, in view of the fact that these opportunities are open to him on three subsequent stages to make the motion I have indicated.
Mr. 'COOTE: May I say to the minister that in the past I have been told I was out of order in moving directly a motion which entailed the expenditure of public money.


Mr. STEWART (Leeds):: That is, the introduction of a bill.


George Gibson Coote: Unless, of course, it is introduced by way of resolution.


Mr. GUTHRIE:: This is introduced by way of resolution.


Edgar Nelson Rhodes: Yes, this bill is before the house by way of resolution. My hon. friend may be surprised, but it is a fact nevertheless, that with an absolutely open mind I entered upon a consideration of the respective merits of public ownership versus private sub-
Bank of Canada-Mr. Rhodes

scription of capital and independent management under strict government supervision. I want to say to this House of Commons, with all the solemnity I possess and in all sincerity, that I am just as strong in my convictions in favour of the provisions contained in this bill as is my hon. friend from Macleod with respect to his attitude to the contrary. Let me say to my hon. friend that while he has placed himself in an anomalous position I know he has been actuated by the best of motives. I am prepared at once to accord to him sincerity of purpose, and to believe that he has had in mind only the rendering of the best service to the people of Canada. All I ask is that he shall accord to me that same sincerity of purpose in presenting my views.
I wish briefly, and not as fully as I might, to discuss the question of procedure. Many people unthinkingly are jumping to the conclusion that the question is one of judging between the merits of public ownership and unbridled private ownership. Only this morning I picked up a newspaper published in Ottawa which said the following:
In the proposal before parliament this session to set up a central bank of Canada, sovereignty over the monetary system is to be transferred almost entirely to private interests.
Mr. Speaker, this is an absolute misstatement; it is not the proposal at all. The proposal is that the capital which shall be supplied for this bank will come from private sources, but it by no means follows that there will be unbridled private control. It would be equally fair if this same newspaper had said that the board of railway commissioners were exercising private control over our railway rates in Canada, because parliament in its wisdom had seen fit to delegate to that body certain authority which parliament theretofore had possessed. It would be equally true to say that we had handed over to the tariff board, a body of private persons, certain powers by parliament. It would be equally true to say that we had handed over to irresponsible private persons the important functions and duties now performed by the civil service commission. It would be as true to say all these things as to say, as this newspaper has said, that we are going to hand over to private interests the sovereignty of our monetary system. Under the measure now under consideration it is proposed to clothe the management of the bank of Canada with certain authority, to provide that they shall have certain independence of action, certain independent scope within which to conduct thqir, operations, but we have placed a very

strict series of controls over the management and control of that bank. May I say here and now that, so long as they will not cripple the operations of the bank, the government will be only too happy to give favourable consideration to further suggestions of a salutary and desirable character.
The hon. member for Maoleod (Mr. Coote) at the outset of his remarks quoted, if I mistake not-because owing to interruptions in the chamber I could not hear everything he said-quoted from Right Hon. Reginald McKenna. It so happend that only a few days ago the monthly review of the Midland bank for the months of January and February came to hand. In this publication there is a front page article by Right Hon. Reginald McKenna from which I propose to quote two paragraphs. He states:
In several previous addresses I have spoken on monetary policy, a subject which has necessarily involved discussion of the functions of the Bank of England. I have done so because the matter is of immediate concern to the shareholders of a clearing bank; our daily operations are directly influenced by the policy of the central bank, and the whole trade of the country is deeply affected by it. Happily, the Bank of England has acquired an unrivalled reputation for complete disinterestedness. It is actuated, no-t by motives of profit, but, within the limits of its independence,

And I emphasize the word "Independence"- -bj' its view of what is best in the public interest, and its action has therefore to be judged solely by the test of economic need.
Then, on the following page:
Within definable limits its action is prompted by its own independent judgment; that is to say, the Bank of England on its own responsibility acts	from day	to day as it	thinksproper. But	such freedom in	a matter	vitallyaffecting the whole community shquld obviously be subject to limitations set by higher authority, and for the reasons I have given it becomes of great importance to the business community no less than to	the joint	stock	banks to	knowwhether such	limitations	exist	and, if so, what
they are.
My hon. friend from Macleod referred to the fact that there are some thirty-six central banks in the world, and of these only six are publicly owned and controlled. My right hon. friend the Prime Minister (Mr. Bennett) referred to this fact on a previous occasion, but I think it is well that we should bear in mind the particular countries and their experiences and then make deductions therefrom.
It is true that the only British country in which there is a central bank publicly owned is Australia. That bank was established by a labour government, not for the purposes of a central bank at all, but as a commercial bank in the ordinary sense in competition

Bank oj Canada-Mr. Rhodes
with privately owned banks in Australia, and it has only recently evolved as a central bank. It may be-it is not for me to say-that the Australian people have the genius to operate a publicly owned bank and escape the dangers inherent in that system, many of which I shall point out as I proceed; but certainly they have not operated it as a central bank for a sufficient length of time to enable us to make any deductions of the kind-admitting, if you will, for the sake of discussion, that they have succeeded up to the moment.
The other countries in which central banks are publicly owned are Sweden, Latvia, Finland, Bulgaria and Russia. Of the remaining thirty countries seventeen have central banks which are wholly privately owned, and this list includes such leading countries as England, France, Italy, Belgium, Holland, Germany and Switzerland. In addition, in the United States the federal reserve system is owned by the private member banks. In the Union of South Africa the reserve bank is owned jointly by the banks and by private shareholders. In Chile, Colombia and Peru the central bank represents a combination of public and private ownership. In Czechoslovakia, Greece, Japan, Jugoslavia, Lithuania, Roumania, Poland and Esthonia, tlhe state owns only a limited portion of the shares of the central bank, but even in some of these cases there is provision for the state gradually disposing of its shares. While the tendency during the nineteenth century, particularly as regards actual statutory provisions, was somewhat to stress the control of the state over the central bank, the trend of recent years has set very strongly against granting the state power to interfere with the functions of a central bank. This reaction from the earlier tendency is due to the experience of many countries during the war period, which exhibited in extreme degree the danger of direct state ownership and control. In the League of Nations reconstruction schemes for Austria and Hungary, the independence of the central bank was stressed as a cardinal feature, as it was also in the new statutes devised during the post-war period, for instance, in Esthonia and Greece by the Financial Committee of the League of Nations. In other countries where central banks had existed before the war the tendency has been to divorce the institution from active political control. Thus when the Reichsbank was reorganized in 1924 the necessity for independence was stressed to such a point that the new German Bank Act was made to begin with the following sentence:
The Reichsbank is a bank independent of government control.
Mr. WOOnSWORTH:	Does the hon.
gentleman say that that is time of the Reichsbank to-day?


Edgar Nelson Rhodes: I say that the statement
I have just made is true.


James Shaver Woodsworth: Does he say that
the statement holds true to-day?


Edgar Nelson Rhodes: My hon. friend may have his own opinion as to how well they have lived up to their objective in that regard.
In Czechoslovakia a partly independent national bank whose stock is owned only in part by the state has replaced the banking department of the ministry of finance. The National Bank of Bulgaria affords another illustration of a state owned bank which is gradually, undergoing evolution in the direction of emancipation from government control. In the new Bank Act for that country for the year 1924 the bank was given a greater degree of independence by the Ministry of Finance than it had previously enjoyed. I mention these facts as evidences of the trend away from complete government operation of central banks. A further amendment was made in 1926 to the Bank Act of Bulgaria introducing for the first time an independently elected element into the administrative council. Finally, in 1928 the Bulgarian government entered into an agreement with the League' of Nations undertaking to "safeguard the independence of the Bulgarian national bank from any political influence whatsoever."
The Esthonian Bank Act also provides for gradual disposal to the public of the shares held originally by the state.
I think it would be well, Mr. Speaker, if we took cognizance of the attitude of those who ought to be able to speak with at least some considerable degree of authority on this subject. At the International Financial Conference held at Brussels in 1920 the following resolution was passed:
Banks, and especially banks of issue, should be freed from political pressure and should be conducted solely on the lines of prudent finance.
The economic experts responsible for the report of the committee on currency and exchange at that time included A. C. Pigou, of England; Charles Gide, of France; Professor M. Pantaleoni, of Italy; G. Bruins, of the Netherlands-I shall not vouch for my pronunciation but the spelling will appear correctly in Hansard-also the eminent Swedish professor, Gustav Cassel, whom, if I mistake not, I have heard quoted very frequently, with a rolling of the tongue as if it were a sweet morsel, by hon. gentlemen opposite and hon. gentlemen to the extreme right. So
Bank of Canada-Mr. Rhodes

his view upon this question is at least not in accord with their own, and as they quote him with approval on so many occasions I do not see how they can disown him upon this.
At Genoa in 1932 the international economic conference resolved as follows:
Banks, and especially hanks of issue, should be free from political pressure and should' be conducted solely on lines of prudent finance. In countries where there is no central bank of issue one should be established.
At the world monetary and economic conference, which was held last year and was participated in by representatives of some sixty-four countries, the following resolution, which again emphasizes the necessity of independent central banks, was passed:
The conference considers it essential in order to provide an international gold standard with the necessary mechanism for satisfactory working, that independent central banks, with the requisite powers and freedom to carry out an appropriate currency and credit policy, should be created in such developed countries as have not at present an adequate central banking institution.
The hon. member for Macleod and his associates have quoted very frequently certain conclusions of the Macmillan Committee on Finance and Industry which was set up in the United Kingdom. No doubt the house Is well aware that among the members of this committee were the Right Honourable Reginald McKenna, Professor J. M. Keynes, and Professor T. E. Gregory. These gentlemen are frequently cited as authorities by hon. gentlemen opposite. Paragraph 33 of the report of this committee, which appears on page 17, reads:
In the sphere of central bank legislation two tendencies may be observed. The first concerns the degree of elaboration of the constitutional code by which the bank is to be governed. There are what may be called the British and continental traditions in these matters: The first leaving the bank much more free to develop its constitution in accordance with changing circumstances, and limiting the degree of state interference to a minimum; the second regulating machinery in detail, emphasizing the subordination of the bank to the organs of the state, and admitting some, in certain cases much, state participation in the affairs of the bank itself. Such detailed' regulation is explicable in many cases on the ground that the bank has been set up in an environment generally favourable to state paternalism or under circumstances, such as a disorganization of the currency, which made detailed regulation appear advisable. Nevertheless, rational consideration of the problem will show that a central bank which is able to adjust itself to new necessities and exigencies without requiring an amendment of its constitution or powers on every occasion when innovation is considered desirable possesses the inherent

advantages which an elastic structure has over a rigid one.
While it is true that the recommendations of the Canadian Macmillan commission with respect to the ownership of the capital stock were not unanimous, I think some respect must be paid to the recommendations of the two distinguished British members, not only because of their attainments and great ability but because of their wide experience and knowledge and the study they have given to this matter. I think I should quote paragraph 219 which will be found on page 65 of the report. It reads:
The functions discharged by a central bank being of such vital importance to the economic and financial life of a country, it is perhaps natural to ask whether they could not be adequately performed by some direct oi'gan of government. It has in practice been found that a central bank can give most effective service to the community if it is free from the fear of interference for political ends in operating the delicate mechanism of the national monetary and financial machine. Certain statutory limitations have almost invariably been adopted m order to emphasize the national character of the bank. Thus, apart from the detailed provisions of the legislative act constituting a central bank, we may refer to the customary provision that the profits of the note issue should accrue, either directly or indirectly, to the state; that in most modern instances a limit is set to the profits which may be distributed to the shareholders; and lastly, that the state should have a final voice in the appointment of the governor and deputy governor and sometimes of certain of the directors. Within this legislative framework it has been found that there are preeminent advantages to the state in entrusting the special and highly technical functions of a central bank to a body not subject to the vicissitudes of political life.
If there may be said to be a leading authority upon central banks, I think that is to be found in the book entitled Central Banks by Sir Cecil H. Kisch and Mr. W. A. Elkin. It would well repay hon. members to read this book with some care. I should like to quote one or two short passages therefrom, as follows:
Monetary policy should be independent of political contingencies and the surest way to secure this result is to place the control of the note issue in the hands of a bank.
And again:
Central banks have more and more come to be looked upon as analogous to large public trusts and less and less as departments of state.
I should like to quote from another authority which should be of particular appeal to hon. gentlemen immediately opposite. During the sessions of the Liberal summer school at Port Hope last year, the only monetary expert

Bank oj Canada-Mr. Rhodes
firom outside of Canada who was heard was Professor T. E. Gregory. I should like to quote from a memorandum which this gentleman wrote in 1930 as an addendum to the report from the select committee on the central reserve bank bill to the parliament of Australia. He said:
In discussing the form of government of a central bank, the first point which necessarily arises is the ownership of the bank. The present reaction against state-owned central banks finds its origin naturally in the difficulties to which central banks were exposed in the war and post-war period-difficulties to which most banks were subject, indeed, but which naturally are most acute when the state is the sole owner, because this means that the power of appointment is vested in political hands. That there exists in certain countries a strong political feeling in favour of state-owned banks cannot be denied, but the strength of that feeling can be modified if the following points are borne in mind and brought prominently before the public:	(a) The inherent
danger that a state-owned bank will under political pressure be made a mere instrumentality of unsound finance; (b) The case for a government bank is obviously weakest where there is a broad capital market capable of providing all the initial capital required, and where there is a fund of banking and general business experience upon which the bank can draw for its executive personnel. This applies without doubt to all British dominions.
Now I wish to deal, not with all but with some of what I deem to be the more important objections in practice to the government ownership and operation of a central bank. The first danger, in my judgment, is the inescapable danger of political pressure, of partisan interference in the administration of the bank. As the Macmillan report indicates, it is vital to the effective working and operation of a bank of this character that not only should there not be the fact of, but also that there should be removed the very fear of, political interference with the operation of such a delicate and complicated piece of mechanism as a national monetary and financial machine; and that, because its operations are of such tremendous importance as affecting price levels and consequently the incomes of every individual citizen of the country.
To my mind-I say this with all deference -there is a deadly danger which I could illustrate by referring to the conditions that obtained in the year 1929, when the world was having that wild monetary jamboree. Admittedly it would be the function and the duty, and perhaps the main purpose of a central bank, to control a period of inflation such as took place during that time-to apply the brakes, to "mop up" all the loose credit,
and to endeavour in every way possible, which would be open to a central bank, to restrict and curb the operations of such a period. There may be some day a government so ideal as to be prepared to consider solely the interests of the state and to forget party interests. But I doubt it. I believe governments will always be composed of human beings, and being human they will exhibit the frailties of human nature.


Mr. WOODSW ORTII:: Is not that true of bankers also?


Edgar Nelson Rhodes: I should assume that even my hon. friend would accede to the truth of that statement, that bankers are human-


James Shaver Woodsworth: I hope so.


Edgar Nelson Rhodes: -and that being so I do
not see the force of his interjection. Now, let us assume that we had a central bank wholly state-owned and operated during that period, with an election four or five months in the offing. The government then would be placed in a most equivocal position. It would have its plain duty to the country to consider on the one hand, and on the other hand it would be looking to its political future; and I leave it to the judgment of the house what the decision would be under those circumstances. To my mind that is a vital objection to the complete operation and control of a central bank by a government which, I care not how well intentioned it may be, is bound to give heed to political considerations of a larger or a smaller character, to a greater or a lesser degree.
Furthermore, a bank controlled by the government would inevitably be subject to sectional pressure and influence, a pull and haul from different parts of the country for certain special consideration and treatment; and again I leave it to the judgment of the house what the result would be if a government were supported by a slender majority and a certain group, not necessarily my hon. friends opposite and to the right, but any party, came to the government and said, "If you don't do thus and so as a matter of monetary policy we will vote you out of office." What would happen then? I do not need to elaborate on the danger of the position I have just indicated; all I have to do is to point it out.
There is another vital objection to complete governmental operation and control of a central bank, and that lies in the danger of lack of continuity of policy. I do not think I need labour that point except to say this: first, that continuity of policy is necessary
Bank oj Canada-Mr. Rhodes

because, in the operation of any credit or financial institution, the confidence of the public is absolutely essential to success, and that confidence is more than apt to be lacking if there creeps in political management or political interference with policy, with frequent changes as a result of political influence. In the second place, I think we shall all agree that one of the major functions to be performed by a central bank is to control the total volume of credit and currency with a view to achieving a greater measure of stability in our economic life, and more specifically with a view to smoothing out as far as may be possible, by means of monetary action, both short run and long run fluctuations in the general level of commodity prices, which have been a serious difficulty if not indeed the curse of our modern system of free economic enterprise.
Now, there is one other objection. I know that many hon. gentlemen will not agree with me, but I wish to say with all the seriousness at my command that it is my firm conviction that we cannot successfully operate a government central bank in Canada which is subject to patronage. Why did parliament divest itself as it did and hon. members divest themselves of the right to make political appointments in the public service, many of them of an important and some of a minor character? It was because there was an appreciation of the evils inherent in the system of patronage. I can speak with some little experience upon this point not only bcause of the number of years that I have been in public life, but also because I think I could fill a bushel basket with the numbers of letters from individuals and their uncles and sisters and cousins and aunts with respect to persons who seek employment in the new central bank of Canada. I already have, I think, applications sufficient to staff at least two dozen very large institutions of that character, to say nothing of letters from people who want to sell real estate, to furnish supplies, to rent buildings and whatnot. I have replied to every one of those individuals, no matter how deserving they might be, and how much I might, wish to be of service to some whom I knew, in every' case the same, that their applications will be placed before the management of the central bank when it is established and their chances of selection will depend entirely upon the judgment of the management. In my opinion there would be no surer method of killing or at least of crippling the central bank to such an extent as to render it useless as the exercise of patronage in appointments to its personnel, because I know of no
	-
other institution where men and women must be selected solely upon the basis of their fitness, qualifications, integrity and ability to give service apart altogether from political considerations whether they be of a personal or party character.


Mr. SPENCER:: Does that argument
apply to appointments of deputy ministers by the government?


Edgar Nelson Rhodes: It may in degree, but I
would answer my hon. friend by saying this, that I venture to think any government worthy of the name, whether it would be this one or any other, or a government of which my hon. friend was a member, would have to select men solely for their fitness for the post, and I venture to prophesy that no appointments will be made of deputy governors or governors except of individuals who have not applied for them; in other words, the government will seek the man and the man will not get the job because he has sought it.


Henry Elvins Spencer: I did not mean the deputy governors of the bank; I meant the usual practice of the government in appointing deputies to the different departments of the. public service.


Edgar Nelson Rhodes: My hon. friend means
deputy ministers. If he wants to carry the argument to that length, he might very well say that members of the judiciary are partisan because they are appointed by the government. There must be some reasonable measure of discretion in dealing with the question of patronage and it should not be carried to the lengths my hon. friend is suggesting, The government might select for a high post in the judiciary a man who has held marked political leanings, but I have never heard it suggested, and certainly I have known of no instances in practice, that when his appointment has been made, that man has not brought dignity to the bench, certainly in the majority of cases, and has shed his political partisanship.


James Shaver Woodsworth: Is that also true
of bankers?


Pierre Édouard Blondin: An hon. member should not interrupt a member who is addressing the chair.


Edgar Nelson Rhodes: Not only do I believe
bankers are human, but I really think some bankers are honest. This statement may surprise my hon. friend, but I think in Canada he will find just as high a degree of honesty,.

Bank oj Canada-Mr. Rhodes
integrity and probity amongst members of the banking profession as amongst any other group of people of whom I have knowledge.


Mr. WOODS WORTH:: The minister did
not catch my point. My suggestion was that if the bankers were appointed by the government, would they not them exercise independence just as the judges, I believe, exercise independence, and not be subject absolutely to the whims of whatever political party might be in power.
Mr. RHODE'S:	My hon. friend must
surely know that when I was talking about patronage in the matter of appointments I had no reference to and I had not the slightest idea of discussing appointments of governors or deputy governors. That was not what I had in mind, and my hon. friend should know that. I was referring to clerks and employees, the purchase of supplies and printing, the securing and location, of premises; where credit should be extended, and a thousand and one other things. I know my hon. friend is more intelligent than his question would indicate.
There is another grave objection, and to my .mind it is just as serious as some of the others which I have urged. In giving utterance to these objections I am not for a moment suggesting that I have exhausted the field; I am drawing to the attention of the house only some of the major ones. The objection to which I would now ask the house to give consideration is that which would arise out of incompatibility between the government as a borrower in the public markets and the government as a regulator of the volume of credit and currency. Canada this year has a heavy refunding program. What would be the attitude of the Minister of Finance or of a government confronted with a heavy program of refunding?
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock.


Edgar Nelson Rhodes: Mr. Speaker, when the
house rose at six o'clock I was dealing with the possible, and indeed I almost feel like saying the probable, conflict of interest which would be bound to arise between the government, as the regulator of credit through the management of a government owned bank on the one hand, and its interests as a borrower upon the other. There is an incompatibility of interest here which cannot possibly be avoided. With a state owned central bank
this fundamental incompatibility is inevitable. If the government is in control of the administration of money market policy it is bound to find itself in the equivocal position of being called upon to choose between two courses, one of which may be immediately convenient to itself and the other conducive to the ultimate interests of the country as a whole.
In its most extreme form this weakness or danger of public ownership is, in my judgment, illustrated by the case of a government which, unable or unwilling to finance itself by other methods, leans too heavily upon the central bank, forcing the latter to make excessive advances and usually bringing about financial disaster both for the bank and for the community. Historical instances of this, particularly in war time, are not uncommon. Kisch and Elkin, in their book on Central Banks, to which I made reference this afternoon, refer to two interesting illustrations in the history of Spain and France, and even at the risk of wearying the house I will quote one rather long paragraph from that work, illustrative of this point. They say:
In the latter part of the last century the proceedings of the Bank of Spam were prejudiced by obligations imposed on it by the state, and even before the Spanish-American war it had only been by advances from the bank entailing currency expansion that the treasury was able on occasions to meet its engagements. The result was seen in a heavy depreciation of the exchanges and in the price of public stocks. Resolute efforts were required later to restore the position. Developments in France "between 1923 and 1925 also offer a striking example of the same phenomena. The advances by the Bank of France to the treasury were limited by law, the maximum having been raised from time to time as appeared desirable. During the war and in the following years increases became frequently necessary as the purchasing power of the franc fell and the exigencies of the government increased, but even the enhanced power to borrow from the bank wa-s insufficient to satisfy the needs of the government. Acting under government compulsion, the bank eventually exceeded the legal limit for advances to the treasury, and published balance sheets devised to hide the fact. When the situation was made public, in April, 1925, the Minister of Finance admitted that the legal limit had been exceeded by 1,200 million francs in December, 1923, and that by the following June the excess had' increased to 2,325 million. Early in 1925 the excess rose to over 3,000 million francs. This had inevitably involved further issues of paper currency, with the result that the volume of notes in circulation rose to 43 milliard francs, although the maximum issue had been fixed in 1920 at 41 milliard francs. There can be no question that the power of the government to force increased loans from the Bank of France intensified the depreciation of the franc and contributed to the financial crisis that culminated in 1926. Such extreme abuses of govern-
Bank of Canada-Mr. Rhodes

ment power are of course only possible when a country has ceased to be on a gold basis. As long as convertibility is maintained the worst evils resulting from government intervention in banking and currency control are avoided. Doubtless the governments which have laboriously dragged themselves out of the morass of inflation will not readily slip back; nevertheless, if the control of the operations of the central bank lies directly or indirectly with the government, it becomes fatally easy for the government to finance itself for a time by means of book entries and short loans from the bank, a course which is the first step towards currency depreciation and inconvertibility.
I have spoken from the viewpoint of the dangers inherent in government operation, but there are also objections to unrestricted private operation. I am quite ready to admit the evils of the principle of purely private ownership, but I should like to remind the house that the fundamental principle of all the banking legislation which the government has brought down this year is that, for the first time in this country, the control of currency and credit should be taken out of the hands of purely private institutions, that is to say, of private, profit-seeking corporations. No doubt there are others, but I think there are three main objections to the purely private ownership of a bank. If it is to have the sole right to issue and control legal tender paper currency it is felt that it would be inappropriate to give such right to an institution not owned by the state. Professor Gregory has stated the answer to this objection in a paragraph which is both succinct and forceful. He says:
The fact that the central bank ought to be State owned because of the right to issue and control the currency is deficient, in so far as it neglects to prove that the state ought not, in its own interest, to delegate these powers. Granted that the power to issue and control currency is a matter of prerogative, it is still open to question as to what is the best instrumentality for this purpose. The state has the power to determine what is the best instrumentality, but it does not in the least follow that a state bank is the best instrumentality. Indeed, all experience goes in the contrary direction. The terms upon which the state ought to delegate its powers ought to be such as to allow the management of credit conditions to be undertaken with the least danger of abuse. What those terms are can best be gathered from economic experience, and is a matter upon which political science can throw no light.
The second objection is baaed on the undesirability of allowing excessive profits to accrue to private shareholders, or indeed of allowing the profit motive to obtain at all. But it by no means follows that this motive shall prevail in the case of a privately owned institution, and we believe that in the measure
TMr. Rhodes.]
now before the house we have guarded against that danger. In the bill it is provided that the maximum dividends payable upon the stock of the bank shall be 6 per cent, which would be an annual charge of $300,000. It will be recalled that in their recommendations the royal commission said the rate might be either 5 per cent or 6 per cent. If in the judgment of the committee or of the house it is deemed desirable to reduce that rate from 6 per cent to 5 per cent the government will be entirely in accord with such action being taken.
The final and perhaps the greatest objection which can be lodged against private management is that the bank might be dominated by bankers and their interests or by other financial interests. In the measure before the house we believe we have absolutely safeguarded against that danger.
In the remarks I have already made I have on the one hand dealt with the objections to public ownership and on the other with the objections to uncontrolled private ownership. It is our belief however that there is a happy medium, a middle course which may be adopted with the greatest degree of advantage. It by no means follows that we should go either to one extreme or to the other. We should free ourselves on the one hand from the evils of political interference and on the other from the danger of control by selfish private interests or management on the basis of the search for private profits. In this connection I would direct the attention of hon. members to the safeguards we have provided in the measure.
First, the shares of the Bank of Canada cannot be held directly or indirectly by a bank or by any bank director, officer or employee. It is believed that adequate power has been provided to enforce these prohibitions. I may add further that if amendments can be suggested which will provide further safeguards in respect of the matters dealt with in these provisions, they will be entertained without any equivocation so far as the government is concerned.
The second factor is that the amount of stock which any individual may hold is limited to fifty shares, representing a total investment of $5,000. This, it is believed, will ensure a wide distribution of stock ownership, and the impossibility of the stock being controlled by any individual or group of individuals.
May I point out further that power is given to the Minister of Finance to exercise discretion in the matter of the distribution of stock, and may I say that if I am the one who has to deal with the allotment-and any

Bank of Canada-Mr. Rhodes
responsible minister occupying this portfolio would, I am sure, deal with it in the same way-it will be my endeavour to see that the stock is distributed among individuals and throughout the country aa widely as possible


Mr. BOURASSA:: Would the minister permit a question on this point? So far as I understand him, he reserves to himself, as Minister of Finance, the right to control the allocation ,of shares. Would that go the length of controlling the individual subscriptions, or simply the apportionment of the amount of each subscription?


Edgar Nelson Rhodes: I do not think it would go to the extent of discriminating as against individuals, but it would have to do with giving favour to the smaller subscriber, and where there was oversubscription the scaling down of subscriptions would be upon a basis which would make for the largest number of subscribers and the widest possible distribution.


Joseph Henri Napoléon Bourassa: I should not like to be disagreeable, but in order to help the minister make the point clear may I ask this further question: Suppose some corporation had twenty or possibly fifty different persons each subscribing small amounts, what degree of control could the minister exercise over such collective subscriptions, which would be tantamount to one large subscription?


Edgar Nelson Rhodes: My hon. friend will be the first to admit that no measure or no precaution can avoid a possible odd abuse. But I would say this, that in the first instance the provisions of the measure guard against ownership of the stock by banks or those who hold stock, as individuals, indirectly for the banks. Furthermore anything in the nature of a concerted move of that kind would be bound to 'be disclosed. At all events, I am sure there would be a most careful scanning of the subscription lists to avoid, if possible, the arising of just such a contingency.


William Lyon Mackenzie King: Would the list be made public?


Edgar Nelson Rhodes: Yes, the list of shareholders, and their holdings, would be made public. The criticism might be urged that those shareholders who lived near the great centres, such as Montreal, Toronto and the eastern section generally, would have an advantage in group action as compared with the smaller shareholders who live in the more distant portions of the country. To guard against any danger in that respect an unique provision in this measure has been provided whereby the individual must give his proxy to the Minister of Finance. It goes beyond
the usual method, which obtains in most companies, of giving a proxy to an individual who is, as a rule, designated by the corporation or by the board of directors, inasmuch as it provides that the individual in giving his proxy to the Minister of Finance may indicate to the minister the desire of the shareholder as to what method of treatment shall be accorded his vote, and the Minister of Finance will instruct the scrutineers in accordance with the wishes of the shareholder in question.


Mr. LUCAS:: Will there be any supervision in connection with the allotment of these Shares so far as the various parts of the country are concerned? My point is this: As the capital is limited, it might easily happen that unless there was some supervision over the allotment of shares, the central part of Canada might secure the total amount. In such circumstances there would be no shareholders in the outlying parts of the country.


Edgar Nelson Rhodes: The hon. member's question is eminently fair, and I would answer it in this way: While it would foe impossible to make with exactness a territorial division, it will be the endeavour of the Minister of Finance to see not only that the shares are distributed as widely as possible, so far as individuals are concerned, but that they may be spread over as great an area of the country as possible, so that even the small subscriber in the most outlying portions will not be overlooked to his prejudice and to the advantage of those living nearer the large centres.
Another safeguard is that the governor, the deputy governor and the assistant deputy governor are, in the first instance, to be appointed by the governor in council, and that thereafter when they are selected by the board of directors their appointment must be approved by the governor in council. Another provision which will have a beneficial effect in the matter of continuity of policy and assurance of the benefit of experience of those who have served as directors, is found in the provision for rotation.
The sixth provision is that all by-laws of the bank must foe approved by governor in council, and when so approved such by-laws have the same force and effect as if enacted by an act of parliament.
The seventh provision is that the profits of the bank are definitely limited, and the private profit-seeking motive has been entirely eliminated.
Bank oj Canada-Mr. Rhodes

In view of these provisions I believe it may be fairly said that ample safeguards have been erected against the dangers which some people fear may arise or exist in a bank owned by private shareholders. At the same time, we have avoided the evils which both logic and experience have revealed as appertaining to direct government ownership. In other words, we are setting up in Canada, to perform a most vital function, a new kind of organization, a quasi-public institution, which can best be defined as a public trust. It is the considered view of the government, I may add, that only by such form of institution can the Bank of Canada have its most likely chance of assured success.
In introducing this measure a question was submitted to me as to what would happen if there should arise a conflict of view between the management of the bank, on the one hand, and the government of the day on the other. I replied at that time:
Unquestionably the authority of the governor and the board of directors of the bank would prevail.
In answer to a further question implying that this would mean the negation of responsible government in Canada, I replied:
Well, Mr. Chairman, the authority and power of parliament is always supreme, and it is none the less supreme because of the fact that parliament, in its wisdom, may delegate a portion of its authority in this instance, as it has done in numerous other instances.
I believe that my answers were absolutely in accordance with the position. I do not think it is necessary for me to reaffirm the fact that parliament is always supreme, and if through an institution of this kind an abuse should arise it would always be open to parliament to correct it. Upon this point I should like to quote from the evidence given by Professor Gregory before the Royal Commission on Banking and Currency:


The Chairman:: Indeed, in emergency situations the government has to take drastic measures which may, I suppose, override the policy of the central bank.
Mr. Gregory:	I think that the history of
European central banks in the last few years has rather tended to show that in moments of emergency the central bank is almost bound to be subordinated to wider considerations of national safety, national honour and other considerations of that kind.


Armand Renaud La Vergne: In its relation to the executive government of the country where it functions it must always occupy a subordinate position?
Mr. Gregory: Subordinate but not necessarily *dependent.


Armand Renaud La Vergne: I think the words are well chosen. Subordinate in that the ultimate executive responsibility for the country's policy lies with the government of the day, but the
fMr. Rhodes.]
view you have stressed is that there ought to be an independent adviser, accessible to the government at all times, with a special fund of knowledge and able to give special authoritative advice.
Mr. Gregory: Yes. I should like to formulate it in this way, that in the end, since the government of the day possesses sovereign legislative power, it must necessarily have the last word in disputes, if they unfortunately arise, between itself and any other agency whatever in the state.


Armand Renaud La Vergne: I agree.
Mr. Gregory:	But I would also urge that
the fruitful functioning of a central bank depends upon the government or governments insisting upon objectives which are within the scope of the instrumentality *which it has created. Furthermore nothing to my mind could be more fatal to the prestige of a central bank than constant interference with the details of its administration, or with its day to day operation of any policy whatever. I do not think any man with self respect is going to act as the office boy of the administration if he is going to carry out his work properly.
I have occupied more of the time of the house, Mr. Speaker, than I had expected to take, and I regret very much that I have had to use so many quotations, but I felt that the importance of the measure warranted my doing so. I have only this last word to say, that the bill of necessity had to be introduced as a government measure. But that being so I hope that it will not in any sense develop into what might be termed a party or political measure. I do not for one moment assert that the bill is a perfect bill, but representing as it does long study and careful preparation I believe that it is a well balanced measure. We may improve it as we proceed in committee, but this one thing is sure, that it would be most unfortunate if an agency such as a central bank, which is fraught with such great possibilities of service to the people of this country, should be handicapped in its initial steps by having attached to it anything in the nature of party difference or acrimony. I do not say that by way of lecturing. I say it in all seriousness and without any desire to impute the slightest suggestion that there may be any party viewpoint attached to its launching. If we launch this bill along the lines we have indicated and it develops in the light of experience as we proceed that the measure can be improved, it will be open at all times to parliament to strengthen its provisions. We shall grow and gain with experience. I trust, therefore, that the bill will be considered on its merits and that it may be expedited in its passage to the committee on banking and commerce.


William Lyon Mackenzie King: On the point
of order which has been raised by the minister, I should like to ask a question, if I

Bank of Canada-Mr. Bourassa
may, of the mover of this amendment, and that is what declaration of principle is there in the amendment that he has moved?


George Gibson Coote: I tried to make it clear
when I spoke this afternoon that there was a vital principle contained in this bill and that was the principle of private ownership, the turning over to a privately owned bank of the right to issue legal tender in Canada, a right that has been exercised by parliament for the last sixty odd years. It seems to me that nearly everybody in the house is agreed on the subject of a central bank, but there is this vital principle involved: Is the central bank to be the bank of Canada or a private bank? I do not know whether I have made myself clear to the right hon. gentleman.


William Lyon Mackenzie King: My hon. friend is speaking about the bill; I am speaking of his amendment. What is the declaration of principle in the amendment? That is what I should like to know. So far as the bill is concerned it has been made perfectly clear by the ministry, and the official opposition so regard it, that the only principle in the bill is the principle of the incorporation of a central bank. But my hon. friend has moved an amendment, and as I read it I cannot see any declaration of principle in it at all except the declaration that this bill shall not be given second reading. That is what the amendment says, that the bill shall not be proceeded with, but that the government should further consider. There is another statement which is equivalent to saying that the government shall go on considering whether they shall reintroduce it once it is thrown out. There is no declaration of principle in the amendment that I see. If there is I ask the hon. member to explain what it is.


George Gibson Coote: With the permission of the
house, which I must have in order to answer, the amendment asks that the government shall give further consideration to the question of providing that the stock of the proposed central bank shall be owned by the government, and that the governor and directors of the bank shall be appointed by the governor in council. We are asking the government to provide for public ownership before they proceed with the bill. We have to use what might be called roundabout language, because if we specifically asked that the ownership of the stock be vested in the government the amendment would be declared out of order on the ground that the motion called for the expenditure of public funds. So in order to come within what I might call
diplomatic language we are requesting the government to give consideration to this question.


Joseph Henri Napoléon Bourassa: May I intervene between my right hon. friend (Mr. Mackenzie King) and my hon. friend to my left (Mr. Coote)? I think the point of order raised is well taken. My hon. friend from Macleod (Mr. Coote) puts us in this position: Either to vote against his amendment, which would make us appear as being opposed to the principle of public ownership, or to vote with him and thereby prevent the second reading of the bill, which would mean that we did not want the establishment of a central bank. Surely my hon. friends do not want that. May I suggest that the only proper method in which my hon. friends to my left can express their view as being in favour of the establishment of a central bank is, first, to vote for the second reading of this bill. I assume that most hon. members of the house are in favour of the establishment of a central bank. That is all we would be voting for at the present time. The principle of a bill is usually expressed in the preamble. Now, in the preamble of this bill, there is not one single word, or the slightest intimation, as to the character of the bank, as to whether it is to be a government owned or a privately owned institution, under the control of the government. Let me suggest a remedy to my hon. friends. After we have voted for the second reading and when the bill comes back from the committee, they would have the right and, according to their views, the duty to ask the house to refer the bill back to the committee in order that there shall be introduced the principle which they desire to introduce. They can ask that a clause be inserted to the effect that the bank shall be publicly owned instead of the clause which provides for private ownership. From my little experience of parliamentary procedure I think this is the only manner in which a clause in this bill can be changed.
I had not expected to take part in this debate. I did cot bring down my notes; but now that I am on my feet I shall express some of my views on the matter. I have studied this question for several months, not to say year's. I have read more than once the report of the commission. I have consulted men of t)he money trade-all this, in an effort to enlighten myself, but I am afraid that the more I have read and the more I have consulted, the more doubtful I have become. Nevertheless, for the one reason given by the Prime Minister (Mr. Bennett),



Bank of Canada-Mr. Bourassa
although somewhat late in his political career,
I am in favour of the establishment of a central bank. Such an organization seems necessary to carry on our international relations in financial and commercial matters. After many years, the Prime Minister found out that which men who are not in business knew already: that Canada is really at the mercy of either London or New York in its dealings, not only with foreign governments, not only with central banks abroad, but in all its commercial dealings with foreigners. The Canadian banker, the Canadian exporter and the Canadian importer are all practically at the mercy of the bankers of London or of Wall street. This is my main reason for voting in favour of the second reading of this bill. We should have the means of helping ourselves, not in antagonism to American or English finance, but on a ground of approach which may put us on a footing of equality with the bankers of the British Empire, the bankers of the great republic to the south and the bankers of the world at large. This one object is worthy of our attention and approval; and for that reason I am entirely in favour of the second reading of this bill, as are, I am sure, my hon. friends to my left. There should be no division of opinion as to the principle of the bill as contained in the preamble. The second reading simply means that the House of Commons of Canada has decided to establish a central bank.
I shall not endeavour to enter into a discussion of the details of the bill. It will come back to us after passing through the scrutiny of the committee; and we then will be either enlightened, or perhaps more puzzled than ever, by the findings of the committee and ithe further evidence brought before it. I am not prepared to-night to pronounce myself either for or against public ownership. In principle and theory, a central bank, the object of which is to control the issue of currency, credit and foreign exchange for the benefit of Canada at large, for the benefit of the federal treasury and the various provincial exchequers, for the benefit of all Canadians, consuming, exporting and importing, should be a public institution. This should be a department of state, just as the defence of the land is in the hands of government, just as the making and the application of laws remain in the hands of public powers, either federal or provincial, according to their respective jurisdictions. In theory, it seems to me uncontrovertible that this bank should be a public institution. But in this respect, as in many other instances, I find myself again more British in my tendencies and

tradition than a large and growing number of my fellow citizens and fellow members of English origin. I do not believe in theories applied rigidly. Actual and concrete circumstances must always be considered, and also, the characteristics or the shortcomings, if you like, of a people, of a civilization or of a form of government. I am afraid that with the spirit now prevailing in this country, to exploit the public treasuries, federal, provincial and municipal, and to expect from governments and their various departments a remedy to all evils, a publicly owned and publicly operated bank would be at the mercy of those people who expect to get all the money they want or desire. The administrative body at the head of the bank would be subject to all influences, political, industrial, financial and commercial, to a larger degree than a body of individuals having a relatively small private interest in an institution remaining under the authority that has constituted it, the parliament and the government. On the whole, in practice, it will give us a greater guarantee of good administration than would be the case with a government operated bank. Under different circumstances, after some years of experience, after the people of Canada have grown wiser, when they have recovered some of the self-confidence they had in the past, and retraced their steps on the wrong path they have followed, ever since the war, of looking to governments for everything, then it might become possible and might be desirable to change the constitution of that bank and make it a full fledged, publicly owned institution. That is all I have to say in that regard at present; and for that reason at least, unless something new develops, which I do not expect, I could not support my friends in their amendment, apart from the objection I mentioned a moment ago.
On the other hand, may I avail myself of my old age, of my long experience in public affairs in Canada, and fair knowledge of public matters in some other countries-France, England and the United States especially, and I might add as well Italy, Switzerland and Belgium-to say that I would not put too much emphasis on the statement made so eloquently by the Minister of Finance (Mr. Rhodes), with regard to the exercise of authority by parliament. We know in practice what the authority of parliament means, once a body of this importance is created; we know that the authority of parliament remains largely theoretical. Look at the railway commission ; look at the new body instituted last year-and of this I speak freely, because I voted with the government and with the

Bank oj Canada-Mr. Bourassa
Minister of Railways. But every time a casual question is put to the minister, with regard to any matter, large or small, relating to railways, he gets up and says, if I may put words into his mouth: "Although I am the Minister of Railways I have nothing to do with railways; I have no control." I am afraid that to a certain extent the authority of parliament and of the government over the new bank will be something akin to the authority of the Minister of Railways over the Canadian National railway system; though it must be admitted that there are a few points in this bill which invite, nay, force the Minister of Finance to interfere, first, in regard to the constitution, and then in the working of the bank.
I put a couple of questions to the minister with regard to shares, and he answered very courteously, as usual. It seems to me that a good deai of care must be exercised in that regard. My hon. friend said that it would be difficult to scrutinize the personality of each subscriber; nevertheless, more care should be taken than usual. The names of all subscribers should be well known. The circumstances surrounding their subscription could be easily ascertained by representatives of the government in the various centres in which the subscription lists will be opened. Not only should the list of subscribers be published after their subscription had been accepted, but, like banns of marriage, they should be published beforehand, so that if anyone feels that eight or ten or twenty subscribers on the list, in the city of Montreal for example, or in Toronto, or in Winnipeg, are likely to be disguised representatives of some private bank or some other concern, then the minister will have ample time to make inquiry before the certificates are delivered to the subscribers in question.
With regard to the powers of the bank and its reserve, I have a single observation to make. I congratulate the minister on having taken one precaution which he indicated on the first reading-he may have repeated it this afternoon; I was not here. In the Macmillan report, there was a recommendation which struck me at once as extremely dangerous, as capable of defeating the main object which I mentioned a moment ago, namely, that through the central bank we should make ourselves, as far as a small and indebted nation can be, masters of our finances. I am referring to the recommendation that, among the powers of the bank, the directors might at their will dispose of any portion or all of the gold reserve, and exchange it for foreign securities. That power would be extremely dangerous. I understand that the bill remedies it;
but I hope it will be made quite clear that if the directors should in any way, directly or indirectly, try to evade their responsibility in this regard, they will be liable to the severest penalties that can be imposed. From my point of view it would be the gravest breach of faith with the people of Canada that that body could commit. What would it mean? What would it mean in times of stress such as we have passed through, since the war as well as during the war itself?-I hope no such event will occur again-but what would be the significance of the suggestion contained in the Macmillan report? The directors of our bank could at a particular moment transfer all our gold to London, New York or Paris for whatever purpose they chose, taking in exchange foreign values, good, bad or mediocre.
Now, we know what role the great central banks play, very beneficent at times, a great safeguard for the governments of the countries in which they function, under some degree of state control. But we know also that foreign governments make use of these central banks for political purposes. We know the glorious but tremendous role which the Bank of England and the Bank of France have played in international affairs, both in peace and in war. If the safeguard which the minister has introduced is not made absolutely imperative, if it is not guaranteed in such a way that it cannot be evaded, nothing could prevent at any particular moment the governor and thft board of directors-I forget the proper designation of the Bank of England-	-


Richard Bedford Bennett: It is the court of the bank.


Joseph Henri Napoléon Bourassa: Yes, the court of the1 Bank of England or the regents of the Bank of France-nothing, I say, could prevent them from making a private arrangement with our central bank to draw our gold to Paris or London, giving us paper in exchange, paper which might be valuable or valueless but which undoubtedly, in the mind of the French or of the English government, would have for its object to tie us financially and politically to any policy they might pursue. That was done before the war: it was done during the war, and it is being done now, in London as well as in Paris, in Berlin as well as in Rome. Well, situated as we are, being, as the Prime Minister has so well said, an immense country with a small population and with a tremendous debt, we should make the directors or governors of this bank understand that their role is not to play the game of international finance in connection with interna-

Bank oj Canada-Speaker's Ruling
tional politics, but to play the role we assign to them: to be the guardians of 'Canada s credit, federal and provincial; to see that no province by its extravagances endangers not only its own credit but that of the rest of Canada. One province in bankruptcy means the shaking of the credit of all the other provinces and of the dominion as well. The bankruptcy of such a large city as Montreal or Winnipeg would not only endanger the credit of Quebec or Manitoba, but react upon the credit of Canada. The main duty we expect from the governor and directors of the bank is to see with a clear eye and to make use of a firm hand to give justice to all. Any undue favour to one or two or three municipalities or provinces at the expense of the credit of Canada, would be an injustice to all, including that province or that municipality receiving such undue favour; because it is not doing a favour to a debtor on the verge of bankruptcy to entertain him in that state; better wipe off or reduce his debt; better make the operation, cruel as it may be at the moment, than to let the canker worm penetrate through the whole body of the nation, and thereby endanger our national credit.
I have spoken at much greater length than I intended, but I hope in the committee those few points will be considered. I hope that the governor and directors of the bank will be paralyzed, so to speak, in the matter of political finance, internal or international; that they will be given ample power, first, to deal with international finance having for its sole object the maintenance, as much as possible, of the currency of our country in proportion to the currency of the countries with which we deal, France if you like, but especially the United States and England, second, to help as much as possible the exchange of trade between Canada and the various countries which are likely to be interested in trading with us, not only for a short time but for a long period; and third, to endeavour if possible to reestablish on a proper footing the whole credit of Canada, federal, provincial, municipal and corporative, so that we may look in the future to some years of sound finance, sound production, fairly distributed consumption; or, in other words, so that some degree of social and economic justice will result from the application of this bill when it becomes law. I will therefore vote for its second reading with the greatest pleasure.


Pierre Édouard Blondin: 
Mr. R. W. GRAY (West Lambton):: Mr. Speaker, the house has listened with interest this afternoon and evening to the remarks of the Minister of Finance (Mr. Rhodes) on the second reading of this very important bill to create a central bank of Canada. The minister has indicated that the house should cooperate with him and the government by making suggestions how we may, if possible, improve the various sections constituting the bill, and I hope anything that I may say to the house may be taken by the minister and the government as being in the nature of constructive criticism.
I propose to discuss the measure not as an expert in banking or finance, but from the point of view of the average citizen, to ascertain whether in the setting up of this corporate entity through which the very foundation of our national credit structure is to be controlled, we have given it the powers by which it may become an effective force nationally and internationally. If I should ask the house to-day what is Canada's greatest need, I think I could sum it up in one word-trade. Slowly recovering from the madness of economic nationalism which beset almost every country including our own, the world is gradually realizing once again the need 'for world trade. Leading economists have been outspoken in the matter and I quote but one, Sir Arthur Salter, an economist whose words have frequently been quoted in this house on other matters. Sir Arthur Salter on October, 1932, had this to say:
Further development of world organization lies between greater freedom of trade and intercourse between nations and large economic units Not more in the way of isolation.
The former will help to remedy currency and price situation in a normal way; the latter would aggravate that situation and bring certain nations to bankruptcy. The former *would lead to peace and progress; the latter almost certainly to civil and international strife. The world is the only real economic unit.
Even this government, with its progressive nationalism and the introduction of policies w-hich have helped to reduce the trade of Canada by almost two-thirds since they came into power in 1:930, recognized this fact when they set up the commission on banking and currency. In the order of reference, P.C. 1562, we find the following:
That it is also advisable to consider whether and in what respects the banking institutions and the monetary system of Canada may be
modified, extended or developed for the purpose of facilitating intra-imperial and international cooperation in public policies designed to promote the revival of domestic and foreign trade and enterprise and the general increase of employment and to ensure a greater measure of stability in respect thereto.
Lord Macmillan recognized trade as one of the most important services that could be rendered by the central bank. At page 63 of the same report he said:
The services which a central bank may perform in the international sphere are even less easily dispensed with in the modern world than those which it can render within the borders of a state. Whatever changes may occur in the volume of international trade and the comparative positions of various countries, there has never been a time when external financial inter-relationships have assumed more importance than in the last decade. The reason for international monetary cooperation is urgent and constant.
Again in section 164 of the same report we find the following:
Canada presents a number of prominent economic characteristics which determine the special nature of her financial problems. These characteristics are mainly:
1.	Excess production in relation to population:
2.	Dependence on international trade;
In paragraph 166 we find this statement:
Within her borders are immense and varied natural resources. The exploitation of these resources by an active and enterprising people has led to an output of commodities of many kinds greatly in excess of the consuming power of the existing population.
167. In order to dispose of this surplus, Canada has necessarily to find markets abroad for a considerable proportion of her production.
I need scarcely say here, because I do not wish to get into anything controversial, that the liberation of external trade has been and ever will be, I hope, one of the chief planks in the platform of the Liberal party. If liberation of external trade is one of our greatest needs and under this act we are marshalling the resources of the nation into one corporate body, what powers are we giving to that body in order that it may perform this very important function? I wish to direct your attention, Mr. Speaker, to section 20 of the bill, under which the business and powers of the bank are set out. I think that in. respect of those functions which I have just, outlined we are indeed falling far short. I. shall read only clauses (e) and (f) of subsection: 1 of section 20:	j
(e) buy and sell short term securities issued by the United Kingdom, any British dominion, the United States of America, or France, having a maturity not exceeding six months from the date of acquisition by the bank;


Mr. BOWMAN:: Does the hon. member
object to those loans?


Ross Wilfred Gray: I certainly object to that one, namely the loan for general administration purposes.


James Langstaff Bowman: What about the rest of
them?


Ross Wilfred Gray: I do not except from this
statement my own province of Ontario. In that province to-day some municipalities are defaulting, commissions are being set up by the provincial government to supervise municipal affairs, at a time when the provincial burden of debt is weighing heavily upon the taxpayers. I say that it is time that the provinces, individually, put their houses in order. It is time that, if possible, in every case they were doing their own financing; it is time they realized that they must pay as they go. If not, and this subsection remains, may I repeat that I fear whether the bank is privately or publicly owned we will make of it a political institution for the support of political friends.
The purpose of the central bank is the handling of credit for the benefit of production and distribution, rather than the earning of excess profits. How can control be exercised over drastic fluctuations in our commodity price structure in such a way as to ensure stability? It can be done only in this way, Mr. Speaker, namely by the government being able to appoint as governor of the central bank a man with the proper perspective of conditions internal and external, in order that he may determine just where the cleavage begins between sound banking and the avaricious manipulations of monetary and currency credits of profit making financial institutions. Where are we to find a man to fill this position? I hope to show in a moment or two
that if we permit this legislation as at present framed to become law we may be setting up a virtual dictator.
Before turning to that point) however, may I refer hon. members to clause 6 of the bill describing those men who would be qualified and those who would be disqualified for appointment. In the first place, the governor and deputy governor must be men of proven banking experience, and each shall devote the whole of his time to the duties of his office. I have no complaint as to that. I point out again, however, that he shall be a man of proven banking experience, and that he must devote his whole time to his office. Then, in clauses (a), (b), (c), and (d), disqualifications are outlined. The first is that he shall be a British subject, and second that he shall not be a member of either houses of parliament or of a provincial legislature. Mr. Speaker, I protest that it is becoming a popular pastime of late for commissions-and even the government, if we recall the tariff board bill-to reflect upon the integrity and policy of members of the House of Commons and the Senate. If the officials to whom I have referred, are to devote their whole time to their work, of course a member of either house could not act. But, as I shall demonstrate in a moment or two, that is an absurd supposition when we are speaking of bank directors. If a necessary qualification is that a person's whole time shall be devoted to his work, then that person could not be a member of the House of Commons or the Senate. I say to you, sir, that men of ability might easily be found in either house of parliament and, as I said before, I protest against the inclusion of this particular subsection.
Then, turning to clause (d) I must ask the minister the definition of a " financial institution." We have indicated as being disqualified all those who may be directors, officers or employees of any bank or financial institution, or have interests as shareholders in any chartered banks or other financial institutions in Canada. What is a " financial institution "? Is an insurance company a financial institution? Apparently so, because Lord Macmillan so described them at page 29 of the report of the commission. Or are our large manufacturing institutions with heavy bonded indebtedness to be considered financial institutions? Again, we find the expression " or has an interest as shareholder in any chartered bank or other financial institution in Canada." May he be a shareholder or director of a financial institution in the United States? If he is a shareholder of a bank or a financial institution ir

Bank of Canada-Mr. Gray
Canada he is barred; is he barred if he is a shareholder or director of a bank or other financial institution in the United States? Where is our red-blooded Canadian?


An hon. MEMBER:: He has just gone out.


Ross Wilfred Gray: Is he barred if he is a shareholder or director of a bank or financial institution of the United Kingdom? In short, Mr. Speaker, are we to eliminate Canadians as the governor and deputy governor of this bank unless we accept retired or discharged bankers? I hope the minister will give earnest consideration, as my honoured leader said this afternoon, to the appointment of Canadians before adopting the alternative proposed under this bill of entrusting the finances of this nation to someone out of touch and out of harmony with business conditions in this dominion.
Let me look for a moment at section 7 of the bill. This is the section giving powers to the governor of the bank, and as we have it before us to-night these powers may mean virtually the setting up of a dictator. Are we to set up as we did under Bill A, which became the railway act, a man in whom vast power is centralized? Section 7 provides:
The governor of the bank shall be the chief executive officer and shall on behalf of the board have the direction and control of the business of the bank, with authority to act in connection with the conduct of the business of the bank in all matters that are not by this act or by the by-laws of the bank specifically reserved to be done by the board or at a meeting of shareholders.
It is not enough that the by-laws should be made by the governor in council. In the creation of this corporate entity that is being set up, we as a parliament should know what the by-laws are and what powers are specifically reserved, but under the section as now drafted we do not know. From a casual reading the governor is given all the powers that could possibly be vested in one man. The safety valve, I think you will agree, Mr. Speaker, in the business life of a nation is the fact that one man's mistakes are balanced by another man's wisdom. If we constitute this bank as the bill proposes I very much fear that a dictatorship will be the result. Distrust in the world to-day is due in large part to the concentration of power in the hands of small groups of individuals. The concentration of power, whether it be in the hands of the governor of the central bank or in any other institution, is inimical to the best interests not only of the people of Canada but, of the peoples throughout the world.
[Mr. Gray.J
Where are we to find this superman? Can we discover him out of the debauch of American finance? It is unthinkable. Can we decide between the two diametrically opposed schools of thought in England to-day, and pick our man from Lombard street? Can the government out of the morass of international finance pick a man capable of filling this position? Can we pick a man charged to manage the central bank and control the agricultural and industrial credit structure of this dominion in such a way as to ensure uniform and uninterrupted progress of production and distribution, and so that at no time will the individual or collective interests of the people be jeopardized either by unsound expansion or too greatly contracted credit. This is a momentous task that we are setting ourselves.
Let me give this note of warning. The soundness of the chartered banks in the dominion to-day has been maintained through the suffering of the Canadian people. How did they do it?
When the financial storm clouds broke, the octopus known as the Canadian chartered banks sucked through hypothecations and the powers given to them under section 88 the lifeblood of our people. The people of Canada did not find themselves in that position as a result of lack of business acumen on the part, for instance, of our hard-working agriculturists. It was not because of a lack of business ability on the part of our professional men that they found themselves sold out day after day by the managers of their banks. It was not even the aftermath of individual Canadian optimism. It was the disastrous result of taking the advice of bank presidents, bank directors, and bank managers, men whom we had been taught since our school days to look up to for guidance and advice in our financial and investment affairs. We have learned, Mr. Speaker, by painful results that there are no supermen.


Mr. MACKENZIE (Vancouver):: Not even in the government.


Ross Wilfred Gray: This bill is being sent to the
committee on banking and commerce and I should like to impress on the minds of the committee the need for so fortifying the administration of this controlling institution as to leave no doubt that the soundness and safety of the Canadian financial structure will be maintained. By this I mean that dictation or influence by our present privately owned chartered banks must be eliminated. Neither must this central institution 'be subjected directly or indirectly to the force of indi-

Bank oj Canada-Mr. Irvine
viduals or corporations from the outside. The Canadian central bank can serve a useful purpose, but it must be put in a position to serve the interests of the Canadian people as a whole nationally and internationally.


William Irvine: Mr. Speaker, referring to the speech of my hon. friend who has just taken his seat (Mr. Gray), and who has expressed so forcefully the opinion that the present bankers should not have any control of the central bank, may I say to him now that it is my opinion that there is only one way to stop that, and that is by public ownership of the bank. If he knows of any other way to stop it, he failed to say what it was. Ten or fifteen or twenty years hence he or somebody else in the seat he now occupies will have to admit that what I am saying now is true, that your financiers, whether they be the present chartered bank owners or the bankers to be created by this legislation, will control the destiny of the financial life of Canada.
May I say, Mr. Speaker, that we in this corner of the house have very greatly appreciated the force of the argument for private ownership put forward by the hon. Minister of Finance (Mr. Rhodes)? May I also say that we very highly appreciated the fine spirit which he exhibited and the courtesy which he extended to us in the debate. We just as frankly say to him that while we heartily disagree with the principle of private ownership of the financial institutions of Canada, nevertheless we realize, of course, that the government ds perfectly sincere in giving us this legislation. We frankly disagree with the private ownership of this bank and we advance our opinions just as the hon. minister himself advanced his.
May I at the outset, Mr. Speaker, say that this bill on the basis of private ownership is surprisingly good, and I question very much if hon. members of this house rvhen it is considered in committee will find very many sections of the bill which they will be able very greatly to improve. Judging the central bank solely as a private institution, the government has presented us with a most excellent bill. I think it is revolutionary in one or two of its aspects. For instance I doubt whether there has ever been in the history of Canada a banking bill presented to parliament which was more against what the present bankers want. When I say that I realize fully that this bill contains even now too much of what bankers desire, but should not have.
This bill provides that we shall change from a gold basis where we redeem our notes
in specie, to a bullion gold basis. It provides also that we shall reduce our gold reserve behind our notes to twenty-five per cent. It provides that this provision may be set aside temporarily by order in council or completely by parliament. The central bank is to control all gold and the profits therefrom are to go into the coffers of the state. The central bank is to issue all currency and to have some measure of control over credit. All of these things are excellent as far as they go, and indicate that there is a tendency towards the financial policies which have been advocated for at least twelve years from this corner of the house. I regret to say that it is only a tendency, although I congratulate the government on the distance it has gone. I must say that the bill is far from what I think it ought to be in matters of great importance, to which I shall refer in a few moments. However, the bill goes far enough to justify the policies which we have advocated for many years, and I do not think that the proposed legislation has come to where it is to-day without having encountered great resistance from certain quarters. There have been other governments in this country which either refused to face that resistance or did not realize that they ought to have faced it. The fact is that they did not. We needed a central bank at the last revision of the Bank Act eleven years ago just as badly as we need one now, but no member of the government at that time came forward to give us even a central bank even as good as the one proposed. I can remember that the Minister of Finance of that day contented himself with defending the position of the bankers and stating that the Finance Act as it existed in those days performed all the functions of a central bank and, therefore, such a bank was superfluous.
When the Minister of Finance was speaking this afternoon and when he spoke on the resolution upon which this legislation is based, he indicated that the mind of the government was open for suggestions for the improving of this legislation and would welcome constructive criticism. I accept that invitation just as frankly as it was given by the minister, and I want to make one or two observations. I must thank the hon. member for Labelle (Mr. Bourassa) for enlightening me as to the great difference between a principle proper and a principle in legislative parlance. I find that the principle of this bill is a central bank privately owned, to have absolute control over the financial policies of this country. I trust the

Bank of Canada-Mr. Irvine
leader of the opposition (Mr. Mackenzie King) will find out sooner or later that the principle of this bill is much greater than is to be found in the preamble.
After having stated my view on the private ownership of a central bank, I shall have something to say in regard to the gold standard principle which is accepted by this legislation and the implied absence of a change in our monetary policy sufficient to furnish purchasing power for the consumers. I am at a great loss to know why the government should have gone to such great pains to try to take power away from the hands of the present bankers and then to deliberately put it in the hands of a private corporation to be created by this bill. That is precisely what is being done. The powers that are given to central banks in general and to this one in particular are very great indeed. This bank will have the sole power of issuing all currency and will have a certain prescribed measure of control over the credit of the country. Having control of the issue of currency and having control of the credit, this central bank will have the power to determine the nature and exent of our national industrial system. It will have the power also to influence and probably to determine entirely what shall be our international policy. With the powers which this legislation places in its hands, this central bank will be able to make credit cheap or dear, scarce or abundant; it will have the power to supply credit to industries here and to withhold credit from industries there; it will have the power to cause or prevent industrial expansion at will. Controlling currency and credit as it does, this central bank will determine not only our national but our international policies. In addition, it is to have the right to advise the government and to make the government take that advice. It will have the power to make connections with central banks in other parts of the world and it is anticipated that it will connect with other countries in a great financial network of financial imperialism, the centre of which in all probability will be the bank of international settlements. It is unthinkable that such tremendous powers having such far-reaching effects upon the social, business, political and economic life of this country should be placed in the hands of a private institution.
Let me refer to the functions of this bank as specifically defined in paragraph 206 of the report of the royal commission on banking and currency. This reads:
In the first place, from a national point of view, the central bank, within the limits

imposed by law and by its capacities, should endeavour to regulate credit and currency in the best interests of the economic life of the nation and should so far as possible control and defend the external value of the national monetary unit. In the second place, from the international point of view, the central bank by wise and timely cooperation with similar institutions in other countries, should seek, so far as may lie within the scope of monetary action, to mitigate by its influence fluctuations in the general level of economic activity.
These are laudable objectives for a central bank, but I submit that they are entirely beyond the scope of a privately owned institution. These are prerogatives which belong specifically to government and should under no condition be delegated, even for a moment, to a private institution. Surely no one in this house will question for a moment that the government should control the credit of this country. The royal commission frankly recognized that principle in paragraph 207, which says:
A central bank is at the same time an instrument and a force. As an instrument it is the means by which the state-which must necessarily retain ultimate sovereignty in matters affecting the currency-can give effect to the national policy.
That the power to control the national policy has passed from the state to the banking institution that is proposed, there can be no doubt. I asked the minister this question :
Supposing the central bank was endeavouring to regulate the control of credit in Canada, and supposing the policy it adopted in order to do so was contrary to the policy of the government of the day, and they clashed, which authority would make the decision?
The minister replied:
Unquestionably the authority of the governor and the board of directors of the bank would prevail.
Discussing his answer to my question tonight the minister went on to say that of course his answer presupposes that this parliament is always supreme. Yes; this parliament has been supreme in the same way for the last ten years. But who controlled the financial policy of this country? The chartered banks have controlled it, and the mere talk about the supremacy of parliament does not alter the facts of the matter; for the bankers, not only for the last ten years but for a great many more years, have had full control of the financial policy, the power having been delegated to them by this parliament, and I am not very much interested in the abstract question of the extent to which parliament has yielded its powers. I am not interested in that; I am interested in the fact

Bank oj Canada-Mr. Irvine
that these powers, which properly belong to the government and to parliament, are being exercised by private institutions for their profit and to the detriment of the economic life of the dominion.
If this legislation is passed I hold that this government is yielding sovereignty in matters of financial control. True, this parliament may have the power to recapture that sovereignty; I am not questioning that. But I am saying that by delegating these powers we are practically yielding sovereignty in the matter of control of financial policy. And, if you please, we are to yield this power to a private institution because of a thing called political influence. Let me remind the minister and this house that it was the abuse of power by private bankers and by none other that has led to the great and universal agitation for public control of finance to-day. Let me offer an example or two of maladministration of finance, both in this and in other countries, by private banking during the last few years, to go no further back. Everyone will realize that the drastic deflation policy of the post-war period was a policy of the bankers, universally applied, entirely destructive in its influence upon the business and industry of every country where applied. That policy, followed for years, indicates the stupidity of bankers, the incapacity of bankers, an incapacity that was frankly acknowledged by the leader of the greatest central bank in the world, Sir Montagu Norman. I am just reminded that he was getting married at that time, and his vision ought to have been clearer then than at any other time.
Another example of the bankers' failure is this. Take the world's debt, which stands to-day at over four hundred billion gold dollars. Who devised the system by means of which that tremendous debt was pyramided? Private bankers. And who were the people who actually administered that system and made the loans represented by these debts? The private b'ankers. The private bankers of the world have made the greatest mess of the world's history, and we are in the middle of it now. And now we are going to start another group of private bankers and put into their hands the power to guide the financial destiny of Canada. Not only have the bankers been the greatest failure in history, accounting more than any other class for the present economic position of the world, but it is true to say that there is no class in this country in which the people have less faith in the handling of the financial situation than they have in the bankers at the present time.
It would appear that the government is aware of the incapacity and unpopularity of the bankers, from the manifest effort to exclude them from even holding shares in the central bank. Let me quote the minister in this regard-and here is a splendid principle, which I regret to say was forgotten in the drafting of the bill. When speaking on the resolution, commenting on one of the functions of the bank being to give expert advice to the government, the minister said:
It cannot be too strongly emphasized that the exercise of these functions lies outside the power of any simple commercial institution or group of commercial institutions.
Now, this is what I want you to listen to particularly:
No purely profit-making institution, operating in a competitive system, can afford to place social interest before its own in regard to credit policy.
Now, sir, that is truth; that is a statement of a great democratic and honest principle, and I regret to say that the minister has not followed it in the drafting of the legislation. But I would raise this question:	Can the
present bankers be excluded from holding shares in the central bank? I submit that they cannot, that there is no legislation which this government or anyone else can pass that would prevent them from getting control; and I propose to indicate how they will get it. Take the National Trust Company and the Montreal Trust Company; both are subsidiaries of banks in this country. These companies have 832 directorships in a number of business concerns, and in addition to that there are 183 companies in this country that have a president and directors on one of the big three banks in Canada. Now, these companies may buy shares in the central bank stock. So far as I know, there is nothing in the legislation which will prohibit individuals in these companies from doing so. So that such individuals, being already directors on one of the various banks of the country, will also have control of the stock and control of the directors of the central bank. That is only one way in which the bankers may overcome the legislation now before the house in so far as it tries to exclude them from holding shares in the central bank. The government however shows continued faith in private ownership, in creating a new group of private bankers. The minister admits the danger of this, and he thinks that safety lies in the limiting of profits. I quote him:
Limitation of profits removes dangers inherent in private ownership.
He is referring to the private ownership of the Bank of Canada. Well, the answer to

Bank of Canada-Mr. Irvine
that is this, that so far as the central bank is concerned, if the shareholders are heavy holders of interest bearing securities, which in all probability they will be, they could very well afford to dispense entirely with profit on their central bank stock in exchange for the more lucrative possibilities of increasing the value of their securities. This they could do by controlling monetary policy through the central bank, and that is the real danger in the proposed act. The sincerity of the government notwithstanding, this profit-limiting provision amounts to throwing a sprat to catch a mackerel. Let us ask by what magic officials of private corporations supposedly become wiser and more virtuous as public servants than men and women who have been elected by the public and charged with the specific duty of giving the public service? In what is that extra wisdom or virtue to be found? Does it lie in the mere buying of a share of stock? Is it to be found in the fact of private ownership of a share of stock or where is the difference to be found?
Suppose, for instance, the government sell central bank stock to 50,000 Canadians and the directors and governor of the bank are elected as provided for in the bill. Does any one for a moment suppose that by that method we may feel assured that we shall get a wiser or more honest or able governor of that bank than we would if he were appointed by the Minister of Finance, or the governor in council, or the leader of the opposition, or any other gentleman who might be entrusted with the powers and duties which now devolve upon the present administration? I do not think anyone will actually say that we could expect to get a wiser or more virtuous governor of a bank by having him elected by 50,000 shareholders of a private corporation than if he were selected by the elected representatives of the Canadian people.
Political influence is the scarecrow in the name of which public ownerships is condemned. Frankly I do not pay much attention to that. I admit the argument of the Minister of Finance this afternoon was one which would blast all parliaments and all governments whatsoever; it had no other effect, for if we are to take him seriously- and I believe he meant that we should do so, because I believe he was speaking fervently and sincerely-then he is simply indicating in greater eloquence than he is aware of that this institution is bankrupt and the sooner we say so, the better. I regard this political influence story pretty much as a scarecrow, but if political influence is so bad that we cannot make our institutions honest and efficient, then let us cleanse out the bad influence, or stop

the whole business, and start another kind of institution. Personally I think this is more or less old wives' fables. The Canadian people have a greater need to regret the influence of bankers over governments than to regret the influence of governments over the banks. I do not speak of the present government in that regard; I mean Canadian governments in general and at all times.
It is true that government appointees are suspect. Party strife in this country as in others sometimes has gone to unreasonable limits, and the people of Canada, being true democrats, have been inclined to believe what both sides said. One side blamed the other for being corrupt; the other blamed the first for being corrupt, and the people came to believe them both. That, I say, has more or less destroyed the good faith of the people in all governments. The private institutions of this country, sensing the tendency towards socialization in every department, are exploiting the exaggeration of political conflict to which I have referred in order to hold on a little longer to their private privileges. Before I leave that point, supposing what the minister said this afternoon is true and that a private corporation can run this banking system better than can the government, then frankly, why not start a new corporation for all government whatsoever? Let us have $10,000,000 of capital stock instead of $5,000,000 which is the amount of stock fixed for the Central bank, but in every other respect organize a company to govern Canada just as we propose in this legislation to organize one to govern the financial part of government, and thus take out of the hands of a political institution such as this parliament all government whatsoever; then we shall have applied in government that efficiency and that holiness which supposedly belong exclusively to private institutions. Then we shall have government by corporation, and end political influence forever. Why not do that? If what the minister said this afternoon is true in regard to a bank, it is just as true in regard to every other department of state, and the same inefficiency which he anticipated in connection with a bank must be found in every other department, so that the sooner we admit that frankly and form a national private corporation to govern Canada, the better. But let me say that I would rather take my chance as a Canadian with a nationally owned bank and its governor and directors appointed by the present government or the opposition than with a bank the governor and directors of which were appointed by the shareholders of a private corporation.

Bank of Canada-Mr. Irvine
The bill provides for private ownership; it doss not, however, provide against political influence, because the government appoints the first officers of the bank, but it appoints
those it cannot control after the appointment is made. The minister tells me that the word of that appointee becomes final when there is a clash in policy between the government and the bank directors he has appointed. Therefore the very worst kind of political influence still remains in the legislation. The government retains just enough influence to get the blame, but has not enough power to determine policy, and it may find itself in a position where there will be a strong man following a policy detrimental to the government's interests, and it will not be able to stop him because he has been elected in the manner provided by this legislation which gives a private company power to control him. Such a situation is not only possible, but, I should say, very likely to happen; for does anyone hold that the interests of a private bank always run parallel to the national interest?
Instead of the interests of private banks running parallel to the interests of the state, they more often run across or contrary to public interests. Let me take the Bank of England as an example. We have in that institution one of the oldest and most efficient private banks and central banks in the world. Let me, as hastily as I can in order to get my thoughts expressed before my time is up, refer first of all to what contemporary statesmen of Great Britain think of the central bank of that country. First I refer to the words of the Right Hon. Ramsay MacDonald, the present Prime Minister, They were quoted this afternoon, and I must not stop to quote them again, much as I should like to do so; but hon. members who heard the hon. member for Maoleod (Mr. Coote), will recall how he quoted Mr. Ramsay MacDonald to the effect that the banking institutions of any country had full control over any government. Let me turn next to the Right Hon. David Lloyd George who, as .usual, is fearless and outspoken on the matter of the Bank of England. Speaking in the British House of Commons, on February 12, 1930, he said:
I want to urge the Chancellor again not to be too frightened of the city of London. Since the war the city of London has been invariably wrong in advising the government. . . . Rapid deflation was a mistake, and it had an injurious effect. . . . The precipitate establishment of the gold standard was another thing which undoubtedly dealt a staggering blow at our export trade.
They have been wrong every time. . . . Now there is no doubt at all that they are using the whole of their tremendous influence for the purpose of restricting the raising of money for national development. Take the cause of depression throughout the world at the present moment. There is not a man who has examined it who will not tell you that a very large part of it is due to the mishandling of monetary questions on the advice of the money barons.
These men who have mishandled this monetary question not merely advise what to do, but establish a veto upon every proposal which is made for national development. We got rid of the veto of the House of Lords. Take care that you do not establish a more sordid one.
If you go to the city of London, what is their only remedy for depression? Their only remedy is by placing artificial barriers to prevent plenty from reaching want.
The same right hon. gentleman, in an interview in Forward on January 7, 1931, said:
The city is the stronghold of reaction. All the time when I was chancellor of the Exchequer up to 1914, I had to fight tile city. And then in 1914 the city had to come crawling to the government for assistance.
Talk about public control! It -was that that saved the city in 1914.
ho government will ever get a big program through unless it is prepared to face up to the reactionary money interests in the city of London.
Then Right Hon. Philip Snowden, speaking on the Gold Standard Bill on May 4, 1925, said:
Since the report of the Cunliffe committee, the government and the Bank of England have begun a policy of very rapid deflation, in the course of which, few people will dispute, there have been very serious consequences. It has ruined thousands of businesses, and it lias greatly enriched those who were the holders of fixed interest bearing securities. It is in a large measure-certainly I would not be so foolish as to say wholly-responsible for the grave trade depression and the widespread unemployment that we have had during the last three or four years. We fear that this precipitate return to the gold standard may have similar consequences though not of course to the same extent.
The same right hon. gentleman, in Labour and the New Social Order, published in 1926, wrote:
The banking business of Great Britain is rapidly developing into a great monopoly. Private banks have disappeared, and five great banks now control the great bulk of the business of the country. Since July, 1918, the big five have absorbed twenty-one joint stock and private banks. This money trust, together with the Bank of England, which is at the same time a private concern and a semi-public institution, fixed the bank rate and the rate of discount for treasury bills which, in their turn, determined the price of money to traders and other borrowers. The nationalization of the banking system would effect economies of administration; it would give greater security to depositors; it would secure for the state the

Bank of Canada-Mr. Irvine
enormous profits made by the joint stock banks, and it would give to the state more effective control over the regulation of prices.
Now may I turn from contemporary statesmen to one whose words, I am sure, will meet with considerable approval in this house. I refer to Right Hon. W. E. Gladstone, and I quote from his life by Morley:
From the time I took office as Chancellor,
I began to learn that the state held in the face of the banks and the city, an extremely false position as regards finance .... The hinge of the whole situation was this, the gpv-ernment itself was not to be a substantive power in matters of finance, but was to leave the money power supreme and unquestioned. In the conditions of that situation I was reluctant to acquiesce, and I began to fight against it by financial self-assertion from the first.
I was tenaciously opposed by the governor and deputy governor of the bank, who had seats in parliament, and I had the city for an antagonist on almost every occasion.
That indicates that this is not a new fight. The right hon. gentleman lost the fight then, and no one has ever won it since. I could multiply these quotations; they would all go to strengthen the conclusion that the interests of central private banks do not run parallel with the interests of the state, and that when they cross each other, when the interests of the state clash with the interests of private banks, then the wisdom and advice of private bankers carries the day, because they have the power. Now we are about to build up in this country a central bank constructed largely on our concept of the central bank in Great Britain. That institution has a great [DOT] heritage of confidence; it has a great good name for honesty and efficiency; it has given more advice to governments than any other institution; it has forced its advice on governments to a greater degree than any other institution, and it has been wrong oftener than any other institution of which I have knowledge. We would do well to take warning from British statesmen at this stage.
If I had time I should like to quote other authorities, but let me point out that the central bank legislation as it is proposed now is legislation which will give to a private institution the power to control credit, industry and national policy, both internal and external. The institution which controls the credit of this country will control the policies also, whether or not it wants to or whether or not it has the brains to do so. It will do that because - it will have in its hands the very helm of the whole national life. The government should and must control policy. I should like to quote Sir Thomas White who advocates, if we are to have any bank of this kind at all, that it

should be publicly owned. Reference has been made also to Hon. J. E. Brownlee; I intended to quote that hon. gentleman, but my time is almost gone and as yet I have not had a chance to deal with the second point which I intended to develop.
My second point, sir, is that of the financial principle underlying the policy of the bank regarding credit control. In my opinion that is even more important than the general question of control, for we might have a government controlled bank with a wrong policy, a policy of deflation as bad as that of the present banks. So the policy that is to be followed for the next few years in Canada in regard to the control of national credit is of supreme importance. What is that policy? Judging from the statement of the delegates of the British Commonwealth of nations, who met after the conference in London, which statement was quoted by the royal commission and which seems to have had a tremendous influence upon the government in bringing forward this legislation, the policy that will govern the money policy of Canada in the near future and perhaps for a long time to come will be the old time, rigid, sound money policy which has been played out for half a century. Those delegates stated that they:

now reaffirm their view that the ultimate aim of monetary policy should be the restoration of a satisfactory international gold standard.
Who ever heard of such a basis as the ultimate aim of the monetary policy of a nation? Certainly we can understand a bank having a monetary policy of that sort, but never a nation. With such a policy our credit will be controlled in the interests of the money markets; it will be controlled in the interests of the sound money policy of the bankers.
I turn for a moment to deal with this question from another angle. I think we may take it for granted, from one statement made by the minister, that the gold standard is to be used alone for international exchange, though when we look at what he says in another place we begin to wonder which of the two principles he wants to follow. He made that statement in one speech, but in another he said:
The ability of central banks to maintain any monetary standard largely depends upon its control over internal credit policy.
If that means anything it means that our internal credit in Canada will be controlled by the gold standard to which this legislation is committed, and that, sir, is a dangerous policy to follow. Are we in this country to commit ourselves to a policy which will pre-

Bank oj Canada-Mr. Garland (Bow River)
vent us from producing abundance when we have abundant means with which to do it, and which will prevent us from consuming the goods that may be provided merely for lack of a bookkeeping system called money? This policy of making the gold standard the basis of our credit control is just as stupid for international relations, in my opinion, as it is for internal economy. That was the reef which wrecked the world economic monetary conference. President Roosevelt refused to pare down his internal economic policy to some artificial gold standard set up by the nations of the world.


Mr. NICHOLSON:: What has been the result?


William Irvine: It is too soon to speak of
the result, but if my hon. friend knows anything about it at all he known that the little increase in prosperity in Canada is merely a reflex of the increase that has taken place in the United States.


Some hon. MEMBERS:: Oh, oh.


William Irvine: I am not defending the
policy of President Roosevelt; I am pointing out that stabilization of exchange on the gold standard was the reef which wrecked the conference. President Roosevelt refused to do it; he devoted his policy to the internal economic problem of the United States, and by his actions he said, "We will establish a gold basis, if we have to, in keeping with the economic life of the state." He flatly refused to limit economic development in the United States to any gold standard basis of stabilization.


Ian Alistair Mackenzie: May I correct my hon. friend's remark? Roosevelt changed his policy in regard to stabilization of currencies, confining his policy to raising internal price levels; it has not anything to do with gold.


William Irvine: My hon. friend has said better than I could what I have tried to say. I hope he will look at Hansard and discover that fact. I am simply trying to point out that President Roosevelt refused to have anything to do with gold.


Ian Alistair Mackenzie: Gold was not a factor, as far as Roosevelt was concerned at that time.


William Irvine: Gold was a factor in the international policy which wrecked the international conference. As I have said, President Roosevelt refused to bind his economic policy to that, and proceeded on an entirely new basis of national policy.


Edward Joseph Garland: Mr. Speaker, it is with some natural humility I follow the excellent oration to which we have just listened, and may I be the first to extend my congratulations to the hon. member for Wetaskiwin (Mr. Irvine) upon the devastating manner with which he dealt with the argument of the Minister of Finance (Mr. Rhodes) this afternoon. In the years I have sat in this house I do not believe I can remember a ministerial pronouncement having been so utterly torn to shreds.


An hon. MEMBER:: Oh, oh.


Edward Joseph Garland: The loud laugh that speaks the vacant mind. No doubt I shall have more hollow interruptions before I have finished.
May I at the outset deeply deplore the fact that for some reason or other the Macmillan commission in Canada, quite unlike the commission of the same name which acted in the United Kingdom, did not undertake a comprehensive and thorough survey of the entire banking and credit system of Canada, nor did it make recommendations which would be of assistance to this House of Commons in revising the Bank Act. Apparently it contented itself-evidently, according to instructions-with an examination of the field in respect of the possibility of creating a central bank. That appeared to be the purpose to which it devoted its major attention. True, it heard a great deal of evidence, and listened to pronouncements from many people who appeared before it on various matters, but it devoted its constructive efforts almost entirely to the question of setting up a central bank in Canada.
I now wish to direct the attention of hon. members to some of the statements made in the report of the commission which bear out what I have just said. "We conceive" said the commission, "that our larger concern is with the question of the establishment of a central bank. That, no doubt, is why we are required to consider the advisability of establishing some form of central bank in Canada." It is to be regretted however, that in the wording of a section which follows shortly after this one a most unhappy conclusion may be drawn, for the report says that the creation of the central bank is to be "with the single aim of improving and strengthening the Canadian banking and financial structure." I submit that under no circumstances should a commission of this character have regarded as the sole aim either of its activities or of a structure it proposes to erect that it should
1318	COMMONS
Bank of Canada-Mr. Garland (Bow River)
strengthen and perpetuate the Canadian banking and financial structure. If these were the instructions received from the government, then I venture to say that they were the most stupid, unintelligent, ill informed and destructive instructions which could have been given to any body with such a task in hand. The commission's chief aim should have been to devise the most suitable monetary and credit system for the people of Canada.
Further on, at paragraph 13, the commission points out that the question of socialization was brought before them by several witnesses. This angle of the matter, however, was not regarded by the commission as coming within the terms of their reference. Yet in the report I find this expression: "The world will not return to the status quo ante," and again: "In such a time of difficulty, experiment is justifiable." The world was not going to return to the original status in respect of monetary or any other matters, said the commission, and in the next breath that experimentation was justifiable, immediately following a statement that it had no power to experiment or recommend experimentation in nationalization. What is before us is not an experiment; it is simply the establishment in Canada of another of the chain of central banks which to-day, subject to a few very powerful ones, because of their preeminence and long standing, are taking over the very world itself and vesting power in the hands of an increasingly small number of private, powerful groups in the world's financial field.
Following that, as to the question of socialization I refer to the quotation offered by the hon. member for Westaskiwin and attributed to the Minister of Finance, who, speaking to the original resolution, said that no purely profit making institution operating in a competitive system could afford to place social interests before its own in regard to credit policies. I submit the words "in regard to credit policies" are unnecessary. The minister could have left those words out and simply said: "No purely profit making institution operating in a competitive system ;an afford to place social interests before its own." Of course, that is true. It is true of every institution under the present system. We are proposing through this act, to superimpose firmly upon a privately owned banking system a privately owned central bank. The present commercial banks will continue to possess the immense and profitable power of the allocation of credit. The central bank is to have the great controlling power over the volume of credit. The central bank will
[Mr. E. J. Garland.1
determine within the limitations provided, the volume of credit within the country. I say that in so far as internal affairs are concerned, the allocation of the credit is as important as a determination of the volume of credit. We are thus placing in the hands of private individuals power over the very economic life and stability of our nation.
A feature which to me is most interesting is the precipitateness with which the government suddenly changed its mind in respect of the important question of a central bank. It is only a few years since the Prime Minister of Canada said it might be possible in fifty years from that time-1931-to think of such an institution, and that doubtless if they were in power at that time the necessaiy action would be taken. Well, only three of those fifty years have elapsed, and yet we have the government introducing this bill to the house having for its purpose the establishment of a central bank. It is true that at the time he made that speech it was made on the proposal of the hon. member for Macleod that we would have a nationally owned central bank, and not a privately owned one. There is just the possibility that the Prime Minister may have intended to refer to the principle of private ownership of a central bank. However, as I said a minute ago, before three years of the fifty have elapsed we are asked to consider the establishment forthwith of a central bank.
Again, at page 1551 of Hansard for 1931 the Prime Minister said:	" I should like to
know just wherein the central bank would at this time better serve our conditions than the present Finance Act?" No one in this house has yet answered that question. Neither the Minister of Finance nor any other hon. member has indicated to the Prime Minister wherein the central bank is going to serve better the interests of the country than did the Finance Act. And, a little later on, having given full illustration and complete description of how the Finance Act had been administered, the same right hon. gentleman said: "What more than that could a central bank do?" Now, I ask him: What more than that is it proposed that this bank will do? The chief difference between the two institutions is, in my opinion just this: Under the old Finance Act the government, through the Minister of Finance, was able to exercise a certain power in respect of the volume of credit in the country. The treasury board could, in relation to the administration of the act determine upon a great increase in the credit volume or a contraction in the credit volume. Now we are asked to delegate to a

Bank of Canada-Mr. Garland (Bow River)
private institution this very control, giving over the last vestige of what was referred to as the sovereignty of the people of this country over their credit power.
I wonder if the speed or haste with which the change of mind occurred had any purpose or intent behind it. Hon. gentlemen will remember that in June last the Prime Minister declared his intention of appointing a royal commission for the purpose of investigating the whole banking and currency and credit system in Canada. The right hon. gentleman then left for England. Most hon. members, probably all of us, know the troubles into which he got over there. But to resolve our deliberations	into	mere facts thecommission that	was	to have been
appointed immediately after June was not appointed until August. I do not yet know why. When it was appointed the Prime Minister of this country selected from Great Britain certain eminent but extremely orthodox gentlemen-men like Sir Charles Addis, for whose reputation I have a very great respect, but for whose orthodoxy in matters of finance I have nothing but the deepest regret and, contempt. When I find men like Sir Charles Addis, who all his life has been an associate of big business and related to banking in a direct way, selected to come over here to determine what our financial institutions are to be in Canada, I am frankly shocked.
Shortly following that, we learned the Prime Minister had succeeded in negotiating a loan, doubtless financed through -the Bank of England, for fifteen million pounds, and it is significant that that was the first loan of importance that Canada had been able to secure in London since the Grand Trunk scandal. I wonder if these really are unconnected matters. It would be as well if these things were cleared up. I will tell the Minister of Finance why I would like them cleared up and of the fear I have in regard to their possible implications.
We find-but not until a certain dinner was held at Canada House in London-that two estimable gentlemen, Messrs. Kershaw and Fisher, accompanied the royal commission during its travels throughout the Dominion of Canada. They were neither heralded nor sung. No one knew of them or what they were there for. No publicity attended their travels, and yet it now develops, as a result of after dinner speaking at Canada House, that Messrs. Kershaw and Fisher were two officials of the Bank of England, and it is suggested that
these gentlemen had a great deal to do with the drafting of this very bill and of the report. These facts are to me extremely significant. The occasion upon which this dinner was held was a celebration in honour of Lord Macmillan. I have also heard it suggested that Mr. Kershaw will probably be the first governor of the Bank of Canada. I would like the government to take the house into its confidence in regard to these matters.
I am raising these issues because of this fact: There has never been a central bank in existence in this world that has had the tremendous and overwhelming power at all times of the Bank of England. In only one period was her supremacy in' international finance challenged, and that was when, following the war, New York attained a position in foreign exchange markets comparable with that of London. But that lasted for only a brief period, and even the great money market of New York is now shrinking once more to second place. Let it be noted that men associated with the treasury and directly associated with the bank itself have time and again indicated that the policy of the privately owned Bank of England, could determine not only the position of England in respect of financial matters but quickly thereafter the policy of every money centre in the world.
I happen to have adopted this country as the place in which I was to live and bring up my children and to die. It was one of my aspirations when I came to understand and to know Canada that it should be not only politically free but economically free, and that implies financially free. But I say to the Prime Minister and to the government that if they establish a private central bank in Canada of the character that is proposed in this bill, it will, in the very nature of things, become to all intents and purposes a subsidiary of the Bank of England. Its policy will be dictated and decided by the Bank of England, and we shall through the Bank of England be involved in the future in international commitments. The matter is serious. It is so serious that I decline to support the second reading of any bill for a central bank if it is to be privately controlled or to turn over this power to private individuals. If Canada is proud of the position she has to-day attained as a nation free and equal in all respects with the mother country within the ambit of the union known as the commonwealth, then I say to the Prime Minister and those associated with him that he is sacrificing what is more important than political freedom if he sacrifices the

1320	COMMONS
Bank oj Canada-Mr. Garland (Bow River)
financial autonomy or invites the possibility of losing the financial autonomy of Canada. It is true that in actual practice up to this stage Canada's financial policy has in no small degree been determined by other private banking institutions, notably the federal reserve of the United States of America. It is not many years ago that some hon. gentlemen opposite were shocked and showed annoyance when I submitted to them that our financial policy in Canada had been for years, and was at that time being, directed from New York. They did not like the truth, but they are getting the truth to-day even from the mouths of their own government. But while that was true, we did still possess the power to reassume the control of our own financial institutions and to conserve and reserve them for Canada, and for Canada beyond anything else, first, last and all the time. It is my contention, Mr. Speaker, and I repeat it in closing this section of my remarks, that if we now set up a privately owned central bank it is inevitable that sooner or later it will become a part of the ring of central banks that may become a sterling union, and whether it does enter the union or not it will be subjected to the powerful influence and credit policies of the Bank of England.


Richard Bedford Bennett: It is entirely improper to make that observation in respect to the Bank of England, especially in view of the fact that last year the hon. gentleman voted to tie Canada to sterling as a condition of the Ottawa agreement.


Edward Joseph Garland: Not at all-


Richard Bedford Bennett: That is exactly what you voted for.


Edward Joseph Garland: 
Richard Bedford Bennett: I suppose the hon. gentleman knows that that includes more than
870,000,000 of capital and rest in the liability column.


Edward Joseph Garland: I give the following figures showing the comparative total assets and total liabilities of each of the chartered banks:
Comparison of total assets, and total liabilities of each chartered bank.
Bank	Total assets	Total liabilities	Excess assets	Share of C.P.R. loana) $ 761,375,702 273,368,244 118,430,178 45,863,404 570,943,398 719,471,977 124,530,334 135,453,649 132,132,986 7,896,046	(2) $ 759,824,543 272,668,632 117,737,176 45,487,446 568,605,481 717,653,478 124,195,968 134,972,748 130,844,789 7,888,926	(3) $ 1,551,159 699,612 693,002 375,958 2,337,917 1,818,499 334,366 480,901 1,288,197 7,120	(4) $ 22,404,000 5.180.000 2.632.000
Commerce					10.524.000 12.280.000 2,808,000 1.500.000 2.632.000
Dominion	 Canadienne Nationale	 Imperial					
Totals					
	$2,889,465,918	$2,879,879,187	$ 9,586,731	$ 60,000,000
I have wondered, since I read the figures of the excess in the assets of the banks and of the amounts they had taken up of the Canadian Pacific loan, whether it was not because of the position in which the banks found themselves that this government undertook to make a guarantee of the Canadian Pacific loan. This is an interesting matter which should be and, I hope, will be discussed in the house before the end of the session.
In closing I submit that the terrific power to dominate society that rests in the hands of private institutions which have control over the lifeblood of industry, over that without which the exchange of goods cannot take place, over that without which people cannot buy the goods that are produced nor can the goods be produced, that power the control of which permits individuals to determine whether there will or not be employment of our citizens and to determine our international policy in trade matters, should at no time be delegated by responsible parliaments to private individuals. It should be retained for the people and exercise.d by a publicly owned independent body created by the government and responsible to parliament, and to no other body than that. I am opposed to the passage of this bill which embodies the private ownership principle.


Pierre Édouard Blondin: The hon. member has spoken for forty minutes.


Edward Joseph Garland: I am opposed to that principle and I propose to vote against private ownership of a central bank in this dominion.	,


James Shaver Woodsworth: Mr. Speaker, will you call it eleven o'clock?
On motion of Mr. Bennett the house adjourned at 10.55 p.m.
Friday, March 9, 1934