July 4, 1961

L L

William Moore Benidickson

Liberal Labour

Mr. Benidickson:

I thought the minister would give it in due course.

Topic:   BANK OF CANADA
Subtopic:   CREATION OF VACANCY IN OFFICE OF GOVERNOR
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PC

Donald Methuen Fleming (Minister of Finance and Receiver General)

Progressive Conservative

Mr. Fleming (Eglinion):

-in reply to the question raised by the hon. member for Burnaby-Coquitlam. The hon. member for Burnaby-Coquitlam said that there was no right to discuss budget questions with Mr. Rasminsky without the approval of the governor of the Bank of Canada. I agree. Mr. Rasminsky has been completely loyal to the institution that he serves. Mr. Rasminsky is the manager of the exchange fund which is a government fund. The government takes full responsibility for management of the exchange fund but the manager of it is Mr. Rasminsky.

Mr. Rasminsky was going to Washington at the time of the budget and I authorized him to acquaint Mr. Per Jacobsson, managing director of the international monetary fund, with the nature of the proposals in the budget in regard to the external value of the Canadian currency. In justice to Mr. Rasminsky I wish to make it very clear that he was not consulted about the budget as such. He was acquainted with the contents of two chapters in the budget in relation to the proposals in the budget in regard to the external value of the dollar so that he might discuss these with Mr. Per Jacobsson.

He had a confidential meeting with Mr. Jacobsson late in the afternoon of Tuesday, June 20. On Wednesday, June 21 there was a meeting of the executive board of the international monetary fund where Mr. Rasminsky, the budget then having been made public, was in a position to review with his fellow executive directors of the fund exactly what was proposed in the program announced in the budget speech in this regard.

That is the whole matter. When I was asked in the house questions or rather was not

asked questions but was faced with an assertion by the hon. member for Bonavista-Twil-lingate later, based on a news report out of Washington on the basis of which he made an assertion that we were in trouble with the international monetary fund, I then made a firm denial and I repeat that denial now.

I think I have dealt with the questions that have been asked thus far, Mr. Chairman, I shall now be glad to answer any further questions hon. members may wish to ask. I think the hon. member for Trinity should probably have the first opportunity.

Topic:   BANK OF CANADA
Subtopic:   CREATION OF VACANCY IN OFFICE OF GOVERNOR
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LIB

Lester Bowles Pearson (Leader of the Official Opposition)

Liberal

Mr. Pearson:

Before the minister sits down, would he confirm-1 think I have him right- that the exchange provisions of the budget were told the director of the international monetary fund, an international organization, before the budget was made public?

Topic:   BANK OF CANADA
Subtopic:   CREATION OF VACANCY IN OFFICE OF GOVERNOR
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PC

Donald Methuen Fleming (Minister of Finance and Receiver General)

Progressive Conservative

Mr. Fleming (Eglinion):

Mr. Chairman, in confidence the general nature of the proposals were made known to Mr. Jacobsson late in the afternoon of Tuesday, June 20.

Topic:   BANK OF CANADA
Subtopic:   CREATION OF VACANCY IN OFFICE OF GOVERNOR
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L L

William Moore Benidickson

Liberal Labour

Mr. Benidickson:

That is why I asked the question.

Topic:   BANK OF CANADA
Subtopic:   CREATION OF VACANCY IN OFFICE OF GOVERNOR
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PC

Donald Methuen Fleming (Minister of Finance and Receiver General)

Progressive Conservative

Mr. Fleming (Eglinion):

Are you not a

bright boy?

Topic:   BANK OF CANADA
Subtopic:   CREATION OF VACANCY IN OFFICE OF GOVERNOR
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?

Some hon. Members:

Oh, oh.

Topic:   BANK OF CANADA
Subtopic:   CREATION OF VACANCY IN OFFICE OF GOVERNOR
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LIB

Lionel Chevrier (Official Opposition House Leader; Liberal Party House Leader)

Liberal

Mr. Chevrier:

From what the minister has said in reply to questions put from this side of the chamber, it is quite clear that he has not only backwatered considerably during the course of this discussion,-

Topic:   BANK OF CANADA
Subtopic:   CREATION OF VACANCY IN OFFICE OF GOVERNOR
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PC

Donald Methuen Fleming (Minister of Finance and Receiver General)

Progressive Conservative

Mr. Fleming (Eglinion):

Oh, no.

Topic:   BANK OF CANADA
Subtopic:   CREATION OF VACANCY IN OFFICE OF GOVERNOR
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LIB

Lionel Chevrier (Official Opposition House Leader; Liberal Party House Leader)

Liberal

Mr. Chevrier:

-that he has not only reversed himself but that he has also swallowed himself.

Topic:   BANK OF CANADA
Subtopic:   CREATION OF VACANCY IN OFFICE OF GOVERNOR
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PC

Donald Methuen Fleming (Minister of Finance and Receiver General)

Progressive Conservative

Mr. Fleming (Eglinion):

Oh, no.

Topic:   BANK OF CANADA
Subtopic:   CREATION OF VACANCY IN OFFICE OF GOVERNOR
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LIB

Lionel Chevrier (Official Opposition House Leader; Liberal Party House Leader)

Liberal

Mr. Chevrier:

In the light of what the minister has just said, I would ask him to explain these statements which appear in answer to questions he was asked in the house. On November 13, 1957, he was asked this question by the then hon. member for Coast-Capilano:

Mr. Speaker, I wish to direct a question to the Minister of Finance. Actually it is a repetition of a question he was asked last Monday in Oakville, which he refused to answer on the ground that he could not answer it outside the House of Commons. Since he is now inside the House of Commons I should like to ask him, has there been a clash of opinions between the Bank of Canada and the government on economic policy?

Topic:   BANK OF CANADA
Subtopic:   CREATION OF VACANCY IN OFFICE OF GOVERNOR
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PC

Donald Methuen Fleming (Minister of Finance and Receiver General)

Progressive Conservative

Hon. Donald M. Fleming (Minister of Finance):

I am not aware of anything that could be called a clash.

During the whole period that he has answered our questions he has left the impression that the comprehensive program of the

government, on the one hand, was not receiving co-operation and collaboration from the Bank of Canada, on the other.

On November 21. 1957 the then hon. member for Coast-Capilano asked this question:

Mr. Speaker, may I direct a question to the Minister of Justice. Yesterday, in his absence, I put a question to the Minister of Finance about a C.B.C. report of a speech made by the Minister of Justice at the University of British Columbia. The Minister of Finance pleaded ignorance of what was in the mind of the Minister of Justice-

Topic:   BANK OF CANADA
Subtopic:   CREATION OF VACANCY IN OFFICE OF GOVERNOR
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PC

Donald Methuen Fleming (Minister of Finance and Receiver General)

Progressive Conservative

Mr. Fleming:

No, he did not.

Topic:   BANK OF CANADA
Subtopic:   CREATION OF VACANCY IN OFFICE OF GOVERNOR
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?

John Ewen Sinclair

Mr. Sinclair:

Now I should like to ask the Minister of Justice what are these definite steps which have been taken by a Conservative government to relax monetary restrictions of the Bank of Canada.

Topic:   BANK OF CANADA
Subtopic:   CREATION OF VACANCY IN OFFICE OF GOVERNOR
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PC

Edmund Davie Fulton (Minister of Justice and Attorney General of Canada)

Progressive Conservative

Hon. E. D. Fulton (Minister of Justice):

Mr. Speaker, I have not seen the dispatch on which the C.B.C. news story is based, but I understand it was a report of a speech which I made at the University of British Columbia on Tuesday. In the course of that speech I said the government had been moving in the matter of monetary policy and credit restrictions ever since we took office. I outlined the various measures we have taken, including the provision of $150 million of new credit for housing loans. I also pointed out that there had been continuous review of monetary policies and discussions with the Bank of Canada with regard to credit restrictions and monetary policy generally.

I emphasized that the results of these discussions, and of the policies followed by this government since taking office, were now becoming evident in the reductions in interest rates which have been reported recently and which should do much to create an economic climate in which the restrictive trends initiated by the previous government would be reversed, and the Canadian economy could move forward again on that sound program of expansion which is the goal of this government.

How does the minister explain away that statement, together with the earlier answer which he himself gave? I come back to the two questions which I put to the minister earlier and which he did not answer. The questions were as to whether he agreed with two of the statements made by his colleague, the Secretary of State, which in my opinion, were clearly in complete contradiction to what the minister had said. I am now asking the minister, in the light of the two questions which I put on Hansard, whether he accepts the opinion of the Secretary of State in this respect.

Topic:   BANK OF CANADA
Subtopic:   CREATION OF VACANCY IN OFFICE OF GOVERNOR
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PC

Donald Methuen Fleming (Minister of Finance and Receiver General)

Progressive Conservative

Mr. Fleming (Eglinion):

Mr. Chairman, let me begin with the matters raised by the hon. member regarding the 1957-58 period. The answer which the hon. member has quoted draws attention to some of the fiscal steps that were taken in that period which had the effect of easing conditions and relieving some of the rigours of the tight money policy.

Topic:   BANK OF CANADA
Subtopic:   CREATION OF VACANCY IN OFFICE OF GOVERNOR
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?

Some hon. Members:

Hear, hear.

Topic:   BANK OF CANADA
Subtopic:   CREATION OF VACANCY IN OFFICE OF GOVERNOR
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PC

Donald Methuen Fleming (Minister of Finance and Receiver General)

Progressive Conservative

Mr. Fleming (Eglinton):

It was in August, 1957 that we moved first to provide $150 million under the provisions of the National Housing Act to assist in providing credit by 90205-6-475J

Governor of Bank of Canada way of mortgage loans for the construction of houses in Canada. The answer also refers to other measures that we had either taken or were in the course of taking in the fiscal field. Reference is made in one of the answers to what was being done in the monetary field. But here, Mr. Chairman, we are back again on the same question. It is true that the Bank of Canada was doing certain things in the monetary field. I have never said they were not. It is true that some of the things they did were parallel to what the government was doing in the fiscal field. But the government was not given control over monetary policy. It was not given authority over monetary policy. That is the point, and that point has not registered with hon. members opposite.

The hon. member for Laurier also asks me to make comment on the views expressed this afternoon by my colleague, the Secretary of State, in one of the most effective, forceful, eloquent and convincing speeches heard in the house for a long time. One of the things I enjoyed about that speech was the way it completely flattened out hon. members opposite.

Topic:   BANK OF CANADA
Subtopic:   CREATION OF VACANCY IN OFFICE OF GOVERNOR
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LIB

Lester Bowles Pearson (Leader of the Official Opposition)

Liberal

Mr. Pearson:

It flattened out the Minister of Finance too.

Topic:   BANK OF CANADA
Subtopic:   CREATION OF VACANCY IN OFFICE OF GOVERNOR
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July 4, 1961