Mr. McNEVIN:

I have not discussed that situation for some time-

Mr. McNEVIN:

Take the figure of

$2,700,000,000 which was given in the banking and commerce committee as the amount which the dominion government has borrowed from the chartered banks. Mr. Tompkins, the inspector general of banks, said that that was costing the Government an average interest rate of 1-59 per cent. The hon. member for Vancouver-Burrard suggested that by this means we could save a great deal of money, but when you are comparing the taking over of savings banks deposits, the comparison should not be with the bonds borrowed from the Canadian people, but with money borrowed by the government from the chartered banks; and what is the result? According to his computation, he admitted an interest rate of one per cent and one-half per cent service charge, or one and one-half per cent; in the other case the amount is 1-59 per cent; so that all we are discussing is the possibility of saving the difference between one and one-half and l-59 per cent.

It is possible that if the discussion is prolonged I shall have something further to say later in this debate. I commend the Minister of Finance for the way in which he is carrying a tremendous burden in the successful financing of the war effort of Canada, an effort which compares very favourably with that of any other country, through a financial system which, while I do not say it is superior, is second to no other financial system in the world.

In conclusion, I would sound a note of w'arning with regard to inflation. Not many weeks ago a friend of mine returned from war-torn, war-ridden China, a country where infla-

Bank Act Amendment

tion is eating the very heart out of the people and seriously hampering the war effort of the valiant Chinese, as well as causing some concern to the Americans who are endeavouring to assist them with their finances. Let me give this illustration. A missionary friend, when he was working in the mission field of China back in 1941, was finding it difficult to get milk for his two or three children. A friend said, "Why do you not buy a otw?" He said, "I think I will." Even at that time this cow cost up in the thousands of dollars in the currency of that country. Several months ago, when about to leave China, and not wanting to keep the cow, because he had no one to look after it while he was away, a friend said to him, "If you do not want to keep your cow I will buy it." What do you think he got for the cow? Fifty thousand dollars in Chinese money. That illustrates the heights to which inflation can reach. Of course, before returning to Canada he transferred the fifty thousand dollars of Chinese money into Canadian money and he did not have any more, nor indeed quite as much, as one would get for a cow in this country.

I believe that the Minister of Finance through price control and sound financing has protected the interests of the vast majority of the people.

Mr. McNEVIN:

Perhaps it was three billion dollars, but it does not affect my argument. An interest charge of one per cent on one billion dollars would amount to ten million dollars, and an interest charge of one per cent on two billion dollars would amount to twent3r million dollars. The hon. member then said that a charge of one-half of one per cent should be allowed for servicing deposits. Then he- went on to say that if the government took over that amount of two billion dollars at that rate of interest they would save a great deal of money, because the government were paying three per cent on the bonds which had been subscribed by the Canadian public. I want to dissipate that fallacy. At the present time the dominion government has borrowed from our chartered1 banks a total of not $2,000,000,000 but $2,700,000,000.

Mr. McNEVIN:

Was not the minister's action endorsed by several others, including Mr. Clarkson and Professor Jackson?

Mr. McNEVIN:

I was not speaking from

that angle at all. The suggestion had been made that there might be eight hundred families in Toronto without shelter this winter. You cannot get enough houses built under any scheme between now and Christmas to take care of people in those circumstances, and I was saying that we had in Ontario, in the small municipalities, hamlets and villages, a substantial number of good, habitable houses now vacant which would enable us to take care of an emergent situation. I am in full

Housing

accord with what has been, said of the necessity of a large housing scheme for the Dominion of Canada as one of our post-war objectives.