Wednesday, June 8, 2011

Who owns the Bank of Canada?

Most Canadians are aware of the existence of the Bank of Canada (BoC) but beyond that, very few know little more. It is assumed that the BoC is owned by the federal government, i.e. a public asset. Under Section 3(2) of The Bank of Canada Act, the BoC is described as a “body corporate”. Black’s Law dictionary, 6th edition (page 175) defines a body corporate as “a public or private corporation”. In a recent communication received from the BoC, a representative stated that the BoC “is not a public corporation.” The BoC is, therefore, a private corporation! But who owns it?

The Bank is made up of a Governor, Deputy Governor and twelve directors. The directors are chosen by the Minister of Finance with the approval of the Governor in Council and the twelve directors are responsible for the appointment of a Governor and Deputy Governor with the approval of the Governor in Council. The Deputy Minister of Finance is a member of the board but he has no vote!! There is no provision in the BoC Act for the appointment of elected representatives to the board of the Bank. (I think it is safe to assume from this set-up that the duly elected Parliament has no say in the policies and operations of the BoC). The capital of the bank is divided into one hundred thousand shares with a par value of $50.00 each. (Section 17.1 and 17.2) and the shares are held by the Minister on behalf of Her Majesty in right of Canada! (Section 17.3 of the BoC Act.) It would seem that the BoC is owned by the Queen, a foreign head of state and not owned by the Government of Canada. (This fact was also confirmed by an official of the BoC) It is certainly clear however, that the Federal Parliament and the people of Canada do not own it or benefit from its activities.

So what was the purpose behind the creation of the Bank of Canada? The answer to this can be found in the preamble to the BoC Act. It states “Whereas it is desirable to establish a central bank in Canada to regulate credit and currency in the best interests of the economic life of the nation, to control and protect the external value of the 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 Canada.” Very noble, but has the BoC lived up to its principles? You decide.

Under Section 18(h), (i) and (j) of the BoC Act “Business and Powers of the Bank”, the Bank may make loans or advances to the Federal or Provincial levels of government. These loans can be for any amount, be secured or unsecured and the Bank is free to charge whatever rate of interest it chooses – presumably even a zero rate of interest. There are a number of restrictions, which apply to these loans, a very few of which have been made in the past. BoC correspondence indicates the Bank has made 19 loan advances to the Federal government and one loan to a Province in the past (3 million dollars to Saskatchewan in 1936). The last loan was made in 1961. BoC correspondence states “it is not the bank’s role to be a source of financing for governments nor a source of financing government deficits.” This would seem to contradict the Bank’s primary purpose as expressed in the preamble and renders Section 18 (h), (i) and (j) as redundant. So why does the BoC act this way? To better understand the actions of the BoC, people need to understand how the existing private debt money system works.

The Bank of Canada began as a privately owned institution and at the time of its inception (1934), Alberta was in the midst of a revolution of sorts. A small group of people came to understand the origin of recessions and depressions and the corruption of bankers and were moving with plans to control the vitriolic policies of these same bankers. Big finance moved to have itself established as a central bank in Canada through the passage of the BoC Act, giving it exclusive authority over the money supply of this country. (This was and still is in contempt of our so-called constitution, Section 91.14 and 91.15.) It didn’t take long for people everywhere, especially Alberta to recognize this same group of unscrupulous individuals (bankers) as the ones behind the passage of the BoC Act. The depression was to continue unabated through the twenties and early thirties, but Alberta was determined to get control of what it believed was the ultimate social responsibility of a government – to provide a mechanism of debt free money creation as a means for the people to live and prosper without having the private banks stealing our wealth through usury, the wealth of those who create it in the first place, YOU!. The Alberta Credit House Act – An Act to provide the people of Alberta with additional credit, was passed and led to the setting up of a number of Treasury Branches throughout the Province. (This law has never been disavowed by any government in Ottawa.) Alberta acted according to the terms of the laws of 1867 (our Constitution), which allowed the provincial legislatures to “borrow money on the sole credit of the Province”. That is to say, upon the real wealth of the province, which means that there is no doubt that there is actually a provincial credit. And the Province can certainly establish its own mechanism to use this credit directly, without mortgaging its wealth or going into debt to individuals or corporations like the private banks.

The BoC responded by changing its shares from class shares to completely benign shares and depositing them with the Minster of Finance in exchange for a sum of tax dollars ($5 million). This idea gave the illusion that the bank was now owned and controlled by the government. So how could a privately owned corporation, with the power to bring a government and a country to its knees within hours, be taken over without as much as a whimper? Could it be that the Bank of Canada preferred to appear that it had been taken over (nationalized) while it maintained its independence and powers? Unfortunately, with the start of the Second World War, the Province of Alberta suspended implementation of their credit plan and it was ultimately abandoned.

Well, those who knew and understood the bankers and how their monetary policies and system operated weren’t fooled. Hundreds of pages of evidence was brought before a Standing Committee in 1939 which showed clearly how deeply indebted the Provinces were to the private banks as a result of the depression and the monetary policies in effect at that time. (The first Governor, Graham Towers was also present at these hearings to answer questions as well.) Provinces had been seeking loans from the BoC but were being denied and forced to borrow from the private banks and abroad. The reason finally given for the BoC’s unwillingness to lend to the provinces was that the provinces were not willing to enter into an arrangement with the BoC similar to that of the arrangement the BoC had with the federal government. This arrangement gave the BoC the lofty position of being the government’s fiscal agent. Only the BoC sells government securities - bonds and T-bills. The BoC also "sells" notes at face value to financial institutions for circulation throughout the country. If the Bank of Canada wants a tight monetary policy, the Bank of Canada can limit the amount of money the government can borrow by decreasing the number of securities it sells. The BoC uses other measures to tighten the money supply as well, such as increasing the interest rates and making it more difficult for borrowers to borrow money. Through these actions, a recession is born. The effect is the government receives less in taxes at every level and, of course, the demand for government assistance rises. To compound the problem, the government has no ability to refuse the high interest rates the BoC imposes on it and the taxpayers. The government has no ability to circumvent the decisions of the BoC. All revenue to the government flows through the Receiver General, who happens to be a servant of the BoC and not the government.

The Bank of Canada appears to have other controls over government. While reading the evidence of the Standing Committee on Banking and Finance held in 1939 and Hansard, members of the committee raised the issue of the bank’s control over spending decisions of the government. There was reference to questions by low-profile backbenchers of the House of Commons about why this was so. Or, why any other policy was not being carried out even though it would greatly assist the economy. The response in the House of Commons would indicate that, although the government wished to proceed, the money was not available because of decisions made outside of government! This was confirmed many years later when the governor of the BoC told the government on more than one occasion that Canada was in no position to kick-start the economy. (As if the government could have done it without the blessing of the BoC.)

During the Standing Committee on Banking and Finance in 1939, Graham Towers admitted the only thing that would limit Canada’s involvement in the war was manpower. Money would not be a problem! Yet the Bank of Canada refused to put out money for any job creation, infrastructure expansion, or aid for the poor, the old, the sick, the unemployed, the farmers, small business or any other policy suggestions that had been put forth by the federal or provincial governments.

The reality is that the federal government can’t by pen and paper without the permission of the Bank of Canada, and all money the public considers “waste” is willingly and culpably paid out by the Bank of Canada. When Canada is in a recession (created by the BoC), the Bank of Canada will do nothing to help the country out of it until it considers the timing to be right and the solutions offered are usually a further detriment to the economy over the long run for most of us except those on the “inner circle” who really know what is going on and can profit from it.

Canadian banks and Credit Unions are now controlled by both the Bank of Canada and the Bank of International Settlements (BIS) as well. Located in Switzerland, the BIS holds deposits (i.e. they control) of about 120 central banks and other international financial institutions throughout the world, including the Bank of Canada. In other words, the BIS financially controls the globe. It has direct influence over the direction of the economy of every country and, indeed, the world through its banking and monetary policies.

The weapon that all banks have is the power to withhold loans, thus driving an economy into the ground in a hurry. Personal and corporate bankruptcies, lost jobs, disintegrating social programs and other unpleasant consequences are a direct result of these policies. There is no government that can afford to offend its central bank. The Bank of Canada will do what it wants to do, and what the BIS wants it to do. No amount of pressure from anyone will influence it in any way.

A quote from a 1924 edition of the American Banker's Association not intended for the public sums up what is currently happening all around us:

"Capital must protect itself in every possible way, both by combination and legislation. Debts must be collected, mortgages foreclosed as rapidly as possible. When, through the process of law, the common people lose their homes, they will become more docile and more easily governed through the strong arm of government applied by a central power of wealth under leading financiers. These truths are well known among our principal men who are now engaged in forming an imperialism to govern the world. By dividing the voter through the political party system, we can get them to expend their energies in fighting for questions of no importance. It is thus by discreet action we can secure for ourselves that which has been so well planned and so successfully accomplished."

The bottom line is that our present situation will not improve, ever, until we have significant reform to our banking and monetary policies. What has happened in this country is a result of lack of knowledge as to how we are being shafted by the present system and it must be changed. We must all make the effort to educate ourselves and our family, friends and neighbours as to the truth behind the financial demise we face today. Again, this is the purpose of this website, to inform and educate. Please take time to read through and understand how we are being robbed under the present system and how we can change it for the benefit of all Canadians.

1 comment:

Unknown said...

Excellent summary. Thank you for the work and time it took to publish this article.

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