Mr. BENNETT:

It has been; that is a

fair way to put it.

Mr. COOTE:

I notice, however, that

Australia was able to pay all her foreign obligations. I remember seeing a statement not long ago to the effect that in every case the Australian government's foreign obligations had been met in the terms in which they were expressed, and Australia has been able to borrow money in Britain at as good a rate as Canada. It is a fair subject for debate, but in my humble opinion Australia has followed the course that made it easier for her primary producers to carry on and meet their obligations than it has been for their Canadian competitors. I ' believe that Canada depends on the agricultural industry more than on anything else, and the financial policy which keeps our price level at a lower level than most of our competitors does make it very difficult for us to carry on.

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Our price level has been pitifully low compared to what it was when our producers contracted their obligations. The prices of our products have fallen lower than the prices of the things we buy. I do not know of any other industry that has taken the same fall in the price level as agriculture has, and the thing for us to have done was to follow the method of our competitors, the Argentine, New Zealand, Australia and Denmark. They felt that they were forced to take this step, and I think we should be well advised to consider doing it even at this late date.

Mr. REID:

I have an amendment to move to section 3 and I shall have another amendment in connection with a subsequent section. I realize that even if these two amendments were adopted they would not go as far as I should like in regard to the valuation or the use of silver. I am not unmindful of the fact that in Bill 101 I cannot go as far as I should like to go in advocating the adoption of silver. The amendment to section 3 is this:

Notwithstanding the provisions of section 29 of the Bank of Canada Act, all gold and silver held as reserve by the Bank of Canada shall be valued by the bank at current market prices.

The only change there is the adoption of the two words "and silver." According to my interpretation of the Bank of Canada act there is no provision in it for the valuation of silver at the market price. When the silver was being turned over by the government to the bank there were three specific clauses dealing with it. The first one, clause (b) of section 25, comes under the heading, "redemption of notes." This refers to silver held by the minister for the redemption of dominion notes valued at the market price of the fine silver content. That was transferring silver to the bank at the market price, and I understand that lias been done. But there was no silver held by the dominion for the redemption of notes. Why that was put in the act I do not know; at any rate that is the information given me by the department, because I inquired. The deputy minister states that no silver was held for the redemption of notes, and I am not quite sure why the act was so drawn up. If you proceed further in the Bank of Canada Act you will find in subsection 4 of the same section the use of the word "never." I think that is a very strong word to put in any act. No country

[Mr. Coote.1

stands to gain more than Canada by the adoption of silver. Canada is the third largest producer of that precious metal in the world, and yet we as a parliament passed last year an act declaring to the Bank of Canada, "You will purchase the amount required, under the London agreement entered into last year, namely, 1,671,802 fine ounces each year for three years, but never any more in any one year." That is a mandatory clause; it says to the bank that no matter what may happen with regard to silver, whether other countries adopt it or not, the Bank of Canada shall never purchase in any year any more than the amount required by the agreement we entered into in 1934.

Mr. BENNETT:

That is only for those years.

Mr. REID:

That is quite correct, but we see at this very moment what is taking place throughout the world in connection with silver. By to-night's newspapers I see that Italy has taken steps to nationalize the metal, and according to the reports I have several countries are now using silver as coverage for their currency. I am speaking now of some of the leading countries, not some of the smaller countries, but such countries as the United States, Germany, France, Colombia, Cuba, Mexico, Peru, Roumania, and Italy, which has now taken steps to nationalize the metal. We now value gold at $35 an ounce in consequence of the action of the United States. But it may interest the committee to know what the United States is doing now with silver. So far as I can see, the action which she is taking in regard to silver will have the effect of raising the value of silver. The Silver Purchase Act of 1934 in the United States authorizes an increase of twenty-five per cent silver to that of gold in monetary stocks. The gold stock of the United States is valued at the present time at $8,230,000,000. The total silver requirements of the United States is 1,433,000,000 ounces. The United States has on hand at the present time, according to the latest figures I can obtain, 400,000,000 ounces of silver, so she has yet to buy over 1,000,000,000 ounces. When one realizes that more than 1,000,000,000 ounces is equal to over five years of the total world production of silver, the average being about 260,000,000 ounces a year, and that the United States has embarked on a policy not only of holding practically all the gold but going out into the world and purchasing all the silver she can, setting a price in that country at $1.29 an ounce, in my opinion the effect will be that silver will

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also rise in price. Therefore, I believe this country would be doing well to take and should, I believe, take steps to take over the mine production of this country and to stop any further export of silver by way of either bullion or currency. We must eventually come to that. Nations are in a scramble just now to get proper coverage for their currencies; they cannot obtain gold, and have turned back to the use of the first precious metal, silver, which was used for currencies, and which has been used for ages.

It might interest the house also regarding the issue of the new Canadian silver dollar to know even today in Canada and in Vancouver particularly, it is at a premium of twenty-five cents. They are offering SI .25 just now for the new Canadian dollar; although there has been a. third' issue of $100,000, they have not yet reached the pockets of the people. Most of the issues have been taken up as souvenirs. When one realizes that out of every $100,000 issued, the government make a profit of $70,000, one cannot understand why they did not take the whole production of our mines and issue it as coinage or as coverage. The people are hungry for silver money and cannot get it. Of course I know the people are to-day hungry for any kind of money if they could get it, but here is the government making a profit of $70,000 on each issue of $100,000 and yet we are just putting this out in little driblets.

Mr. BENNETT:

Just as fast as the machines are making it.

Mr. REID:

I hope they keep on as fast for many years. In connection with the new Canadian bill, I might point out that it costs about four cents to issue, and I would draw the attention of the Prime Minister to how fast the colours in the new bills are fading. Whoever did the printing on the dollar bill in my opinion did a very poor job; it means that in ten years it will cost the Canadian people about fifty cents for the issue of every paper dollar, whereas if the government issued silver dollars, these would last for practically all time. I maintain however that now is the time for the government to take the necessary steps and before silver goes up, because with the demand made for it by all countries,^ including the policy laid down by the United States, silver cannot do other than reach a higher market value.

My amendment-and I am not going to discuss it at very great length-provides that silver as well as gold be valued at the current price. There is nothing in the Bank of Canada Act or -any other act to compel the

Bank of Canada to value silver if it goes up. As I have said, the only thing it did was to provide that when- silver was transferred, it had to be transferred to the Bank of Canada at the then prevailing market price. We are looking these days for employment for our citizens. I believe if we went out after this precious metal silver, we would find employment for many thousands of our people, and we would not be as we are with wheat, wondering where we are going to find a market, because the countries of the world are just hungry for this precious metal and there will be no overproduction of it for many years to come. The annual production has dropped during the past few years. In this country at one time we produced 26,000,000 ounces, which dropped to some 16,000,000 ounces last year, of which amount I might -point out that British Columbia produced about fifty per cent.

We speak sometimes about the sanctity of -contracts, but I cannot help thinking what would have happened had the United States Supreme Court kept to the sanctity of the gold -clause. I am afraid we in Canada would not have been as well pleased or as well -off to-day because we have saved many millions of dollars by the fact that they said that although the bonds carried that gold clause it was not mandatory to pay it. If Great Britain had been asked to pay her complete war debts according t-o the sanctity of contract, I am afraid she would have been extremely hard pressed to pay.

I am going to ask the government to consider seriously the suggestions I have made.

I know the arguments I am using go beyond the scope of the amendments I have offered, but the present bill limits me to amendments I can offer with any assurance of their being adopted.

Mr. BENNETT:

Perhaps the hon. gentleman has overlooked the provisions of paragraph

(a) of subsection 2 of section 26:

1. The bank shall always maintain a reserve, as hereinafter provided, as security against its outstanding notes and deposit liabilities.

2. The reserve required by this section to he maintained shall consist of gold coin and bullion in the unrestricted ownership of the bank equal to an amount not less than twenty-five per centum of the ( notes and deposit liabilities aforesaid; and' may in addition include-

(a) silver bullion received from the minister under the next preceding section or purchased under the authority of subsection four hereof, valued at the market price of the fine silver content thereof.

So that the value for the purposes of the reserve statement issued by the bank is the

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current market price. That refers of course to the fact that the bank is allowed to purchase only in 1935, 1936 and 1937 newly mined Canadian silver to the extent of 1,671,802 fine ounces in the year and shall not, during that period only, and not forever, purchase more.

Mr. REID:

That is quite true; the right hon. gentleman has quoted the act, but is it not a fact that in the purchase of this, the bank will have to pay the market price? Why not purchase all the silver at one time? We are going to make purchases for the next three years. The act says in subsection 4:

The bank shall never be required to purchase more than 1,671,802 ounces in any one year.

But they purchase it at the market price. When the first 1,671,802 ounces was purchased it was valued, I believe, at the market price of some forty cents.

Mr. BENNETT:

A little higher.

Mr. REID:

It is going up now so that we stand to lose by our delay.

As regards the silver bullion received from the minister under the next preceding section, that is the silver to be turned over to the bank and held for the coverage of dominion notes, as I pointed out, we have no silver for the purchase or redemption or coverage of dominion notes.

Mr. BENNETT:

Yes, we have.

Mr. REID:

There is silver by way of currency throughout the country.

Mr. BENNETT:

Silver bullion.

Mr. REID:

We hold no bullion for reserves.

Mr. BENNETT:

The statute says that we do.

Mr. REID:

Where is it?

Mr. MACKENZIE (Vancouver):

It says " may include."

Mr. BENNETT:

As a matter of fact that was specially added to the statute in view of what took place at the conference in 1933. Section 26 permits in addition to the holding of twenty-five per cent of the notes in gold- May in addition include-

(a) silver bullion received from the minister under the next preceding section.

Some of the silver bullion transferred to the Bank of Canada cost this country, if my memory serves me aright, in the case of a few ounces as high as SI .50 an ounce many years ago.