June 19, 1934 (17th Parliament, 5th Session)

Mr. JEAN FRANCOIS POULIOT (Temis-couata):

Speaking to the motion, Mr. Speaker, may I quote paragraph 2 of the motion moved in the banking and commerce committee by my hon. friend from Quebec South (Mr. Power), that the committee inquire into;
The general policies adopted by the chartered banks to combat the effects of the depression, and to what extent the said banks are responsible for the drastic deflation from which the country suffered and is still suffering.

Banking and Commerce Report
Last year the rate of interest paid by the banks to depositors was decreased by one-half of one per cent. In return the banks were supposed to decrease the rate of interest to be paid by municipalities on the loans advanced to them by the banks, but before that happened, the banks raised their rate of interest to the municipalities by one-half of one per cent, and then later removed that one-half of one per cent, with the result that the municipalities are paying exactly the same rate of interest as they did before, and the reduction of one-half of one per cent paid by the banks to depositors has served only to cover the losses sustained by the banks. So by paying less interest to the depositors it is now the privilege of the banks to increase their reserve funds and to cover their losses. If banking matters are still to be studied by the banking committee until the end of this session I take the liberty of drawing the attention of the members of that committee to that very important fact.