1926-06-01

PEACE RIVER ELECTION


[Stage Direction]
On motions being called, the following report was presented:
The Clerk of Petitions has the honour to report that he has examined the following petition, viz.:
Of James Arthur Collins of Chisholm, province of Alberta, lumberman; praying that the House of Commons will investigate the conduct of the Chief Electoral Officer of Canada, the returning officer for the electoral district of Peace River, the deputy returning officer, and such other officer or officers as may be necessary, in connection with the establishing of a polling place at Brule Mines, poll No. 4 aforesaid and (the taking of, the counting and recounting the votes cast at such poll in the said district of Peace River, and that such Chief Electoral Officer, returning officer, deputy returning officer or other officer or officers be directed to take such action as may be requisite and necessary to secure the return to the House of Commons of the candidate who secured the greatest number of votes in the said electoral district of Peace River on the 29th of October, 1925, and finds that:
The prayer of this petition consists of two parts viz,-(1) That the House investigate the conduct of certain officials in connection with the election of a member to represent the constituency of Peace River in the House of Commons of Canada, held on the 29th October, 1925.
(2) That the House direct the proper officers to take such action as may be necessary and requisite to secure the return to the House of Commons of the candidate who secured the greatest number of votes cast by the electors of the said electoral district of Peace River on the 29th October, aforesaid.
The form of this petition and its contents so far as the first part of the prayer is concerned are within the requirements of the 75th rule, and refer only to such matters as are within the right and competency of the House to deal with, should the House desire to do so; should, however, the course suggested in the second part of the prayer be taken by the House it would apparently have the effect of authorizing other persons to - exercise a power which the House has already ^legated by statute to the exclusive jurisdiction of the courts.
Apparently the first part of the prayer of this petition is only of a preliminary nature leading up to the main request as contained in the second part, consequently the prayer, considered as a whole, brings this petition within the ruling of Mr. Speaker Lemieux given on the 6th May last, in a somewhat similar case, which ruling was subsequently sustained by the House on appeal, viz, that a petition which prays for any action to be taken by tffe House that might involve in any respect an interference with the provisions of the Controverted Elections Act, chapter 7, R.S.C., 1906, cannot be received.
Under these circumstances I have therefore the honour to report that this petition should not be received.

[Stage Direction]
Hon. CHARLES STEWART (Minister of the Interior) moved for leave to introduce Bill No. 154 to amend the Yukon Quartz Mining Act.
Sir HENRY DRAYTON:: Explain.


Mr. STEWART (Edmonton):: The object of this bill is simply to bring in line the provisions of the regulations which existed before the introduction of the bill in 1924. There was considerable doubt as to whether the act of 1924 had provided that all the agreements under the regulations with individuals who had staked claims should be carried out, and this is for the purpose of clarifying that matter. So far as the provisions of the bill are concerned, it is made retroactive to the date mentioned in the bill.
Motion agreed to and bill read the first time.



BUSINESS OF THE HOUSE


Right Hon. W. L. MACKENZIE KING (Prime Minister):: Mr. Speaker, I beg to move, in accordance with the notice given:
That when this House adjourns on Wednesday, the 2nd of June, 1926. it stand adjourned until Friday, the 4th of June, 1926.


[Stage Direction]
Motion agreed to.

William Lyon Mackenzie King: I beg to move, in accordance with the notice given:
That on and after Monday, the 7th of June, 1926, until the end of the present session, the House shall meet at two o'clock in the afternoon of each sitting day.


[Stage Direction]
Motion agreed to.

[Stage Direction]
Right Hon. W. L. MACKENZIE KING
(Prime Minister) moved:
That on Wednesday, the 2nd of June, 1926, and subsequent Wednesdays to the end of the session, the sittings of the House shall in every respect be under the same rules as provided foT other days.
Mr. G. G. COOTE (Macleod):: Mr. Speaker, I desire to protest against this motion. I know of no other body of men in this country who have to work both night and day. We have been here for nearly five months; we have spent six weeks in I think useless debate on the Address, about five weeks more on the budget debate, to which only a few members listened and those who did listen did so simply that the House might have a quorum. Now at this late hour in the session, when we are doing business, we have just accepted a motion from the Prime Minister to sit an extra hour each day-I heartily approve of that-but I certainly think a protest should be made against this resolution to

Wednesday Evening Sittings
take the one night which we have in the week. I believe this House could do its business far better if we did without night sittings altogether. I see no reason why a body of sensible and reasonable men could not devise rules under which we would not need to sit both night and day.
I have read lately with much interest a speech which was delivered in this House in the year 1907. I would like to present to the House, and I will guarantee not to take more than a few minutes, a few of the statements made on that occasion by Mr. Wright, the then member for South Renfrew, because they deal with this particular question and they seem to me to be very pertinent.
Mr. Wright on that occasion called attention to the long hours that had to be put in and the arduous work that a private member had to do if he took his duties seriously, as I think everj'- member of parliament should. I know personally of one member of this House, who was at work yesterday morning at twenty minutes to nine. That member was still here last night at midnight, and was then asked to vote on a motion to adjourn the debate. Any member who voted against that motion was liable to the censure of a large number of the members of this House. That member had to be here again this morning to attend to his correspondence, then he had to attend a certain committee at 10.30, stay there until one o'clock, then rush out and get his lunch, and get back to this chamber at three o'clock this afternoon, and possibly he will be required to stay here until midnight again to-night. I ask the House and the government if that is a sensible way to carry on the business of this country. If these remarks apply to the private member, they apply with even greater force to the Prime Minister and to the members of the government. What chance have these men to get a decent night's sleep under such conditions? What chance has the leader of the opposition? The leader of the opposition, as we all know, to our regret, has been confined to his home through illness recently, and I have no doubt that it was largely brought on by the arduous duties he is called upon to perform and the long hours he is compelled to spend in this House.
I would also draw the attention of members of the House to the fact that we have here in this chamber a large number of pages, most of whom I understand are orphans, or boys without fathers. They come here because it is necessary for them to earn a living. In most of the provinces in Canada we have an act to prevent children being employed after certain hours at night in factories, but in this

"factory of words and phrases," as Mr. Wright describes it, these poor boys are compelled sometimes to stay all night-on Wednesday night as well as other nights if this motion carries.
I have no hope, Mr. Speaker, of preventing this resolution carrying and of preventing this House from being compelled to sit on Wednesday night, but I think a protest should be made on every possible occasion against the procedure which compels members to stay here both night and day.
What I propose is this: Let us meet, say. at one o'clock in the afternoon and sit till six. If we did that, with proper rules, we should get through the business of this House in four months. As Mr. Wright pointed out in his speech in 1907, almost every parliament in the world, with the exception of those of Great Britain and Canada, carries on its 'business without night sessions at all. I think it is high time that private members on all sides of this House should exercise a little bit of their power and demand of all parties in the House that some reform of the rules shall be made so that we shall not be compelled to sit here four, and now five, nights in the week to most unearthly hours. Mr. Wright said on that occasion that we were citizens of a Christian country and were supposed to do our work in daylight and sleep at night. I think I cannot do better than simply impress that idea upon the House before I sit down. I think that all parties are equally guilty of allowing the business of this House to drift until we get into this position, where it seems necesary to sit every night in the week, and before the end of the session, no doubt, we shall sometimes have to sit all night.	*


An hon. MEMBER:: Move an amendment.


George Gibson Coote: I do not think I should move an amendment. The leader of the opposition said a week ago that he was quite willing to sit on Wednesday night, and I think possibly the House wishes to sit on Wednesday night so as to get through, but I do want to emphasize this: If we had adopted suitable amendments to the rules early this session, or at the last session, we would not now be required to sit five nights a week.


[Stage Direction]
Motion agreed to.


[Stage Direction]
On the Orders of the Day:
Right Hon. ARTHUR MEIGHEN (Leader of the Opposition):: Mr. Speaker, I wish to

Peace River Election
call to your attention the report read, on Motions, by the clerk, which is said to come from the Clerk or the Examiner of Petitions, in which I submit the examiner has taken very much upon himself-more than has been assigned to him by this House-and has sought not only to perform his own duties, but those of Your Honour and of the House as well. How he came to do this, I am at a loss to understand, but I submit that it is not for the Examiner of Petitions to report on anything save the form of a petition. If the examiner has the right to go into the substance and purpose, and to say to parliament whether or not it shall receive a petition, we have come to a very fine pass in responsible and democratic government. I submit to you that the form alone comes within his disposition; that if it is within his functions to dictate to this House now that we must not even receive the petition of Collins, then it must have been his opinion on the first presentation of the petition that we should not receive it and apparently his opinion at that time differed from that of Your Honour. However, I am not concerned with what his opinion is. It is for this House to decide whether the petition should be received or not, at the instance of His Honour the Speaker of this House; it is not for any examiner or clerk of petitions or any other subordinate of parliament. I therefore will ask you now, or if this occasion is not fitting, on a suitable occasion, to rule that this report from the examiner is entirely beyond his power and to instruct him to report within his powers and duties.


Hon ERNEST LAPOINTE (Minister of Justice):: Mr. Speaker, may I suggest that
this discussion by my right hon. friend today is not in order.


Arthur Meighen: When would it be in order?


Mr. LAPOINTE:: Perhaps to-morrow, but
not to-day. Rule 75 says that after a petition has been presented and is referred to the examiner:
On the next day following the presentation of a petition the Clerk of the House shall lay upon the table the report of the Clerk of Petitions upon the petitions presented and such report shall be printed in the Votes and Proceedings of that day. Every petition so reported upon, not containing matter in breach of the privileges of this House and which, according to the rules or practice of this House, can be received, shall then be deemed to be permitted to be read and received.
Obviously the members of the House cannot to-day know what the report of the examiner is without reading that report from the Votes and Proceedings, although we have heard a little of what the Clerk Assistant has read.


Arthur Meighen: I understood it.


Ernest Lapointe: May I suggest that this
matter should at least stand?


Arthur Meighen: All I have to say in reply is that I was able myself to understand the English of the clerk as he read the report, and I would hesitate to ascribe to other hon. members less intelligence than I possess. The rule simply says that the report shall go in the Votes and Proceedings; that goes without saying. But on the reading of a report, if in that report there is an excess of jurisdiction by an officer of the House surely that is the time for the Speaker to rule that the report shall be referred back to him and that he be told to do in respect to that report nothing but his duty.


Hon. LUCIEN CANNON (Solicitor General) :: Mr. Speaker, I wish also to call your
attention to rule 75, paragraph 9, which says that no debate shall be permitted on the report.	,


Arthur Meighen: I was not debating the
report.


Lucien Cannon: What are we debating?


Arthur Meighen: 1 am debating the point of order.


Lucien Cannon: It is not debatable.


Arthur Meighen: Points of order are debatable. My hon. friend the Solicitor General is just a little weak on the application of the nde. It is merely a point of order that I bring to your attention. Mr. Speaker,
I put myself in your judgment, Sir, as to whether or not the time is appropriate and say again, as I said in the first place, that if this is not the appropriate time the matter shall be brought up the first time it is.


Mr. SPEAKER:: As regards the action
of the Examiner of Petitions I may say this to the right hon. leader of the opposition:
I do not know what to infer from the statement he made that he does not know how the Examiner of Petitions came to make this report. I have just read the report, but may I say I have not inspired it and I would not think of inspiring a report from one of the officers of the House. In the next place I think-as was stated by the Minister of Justice-that the question might come up when that report is published in the Votes and Proceedings. Very clearly, according to rule 75, that is the proper procedure.
As regards the subject matter of the petition, if it is the desire of the House that 1 should give a ruling, I am willing to give it now. Nobody can doubt for one moment as to what that ruling would be. I have read the prayer of the petitioner. It is'

Civil Service Superannuation
with a slight difference the same prayer as was contained in the petition presented on May 4. Being the same prayer-that is to say the petitioner claiming the seat for himself through action other than the action of the courts of the land-the prayer and the petition are absolutely irregular and cannot be entertained. I base my ruling on Bourinot, pages 133, 134 and 135. May I be allowed to read that citation again: Perhaps I may read the prayer of the petition now. The prayer of the petition presented on May 27 reads as follows:
Wherefore your petitioner prays that the House of Commons of Canada will investigate the conduct of the Chief Electoral Officer of Canada, the returning officer for the electoral district of Peace River, Edward Henry Sheppard, aforesaid, the deputy returning officer, Peter A. Robb, aforesaid, and such other officer or officers as may be necessary in connection with the establishment of a polling place at Brule Mines poll No. 4 aforesaid and the taking of, the counting and recounting the votes cast at such poll in the electoral district of Peace River aforesaid, and that such Chief Electoral Officer, returning officer, deputy returning officer or other officer *or officers be directed to (take such action as may be requisite and necessary to secure the return to the House of Commons of the candidate who secured the greatest number of votes cast by the electors of the electoral district of Peace River on the 2Dth of October, 1925, aforesaid, and for such other and further relief as may seem meet in the premises.
And your petitioner as in duty bound will ever pray.
James Arthur Collins.
Mr. Collins, the petitioner, therefore claims the seat by this prayer.


Some hon. MEMBERS:: No, no.


Arthur Meighen: Mr. Speaker, with all
deference, I do think this matter is of such great consequence that it should not be disposed of, especially by ruling, without argument. We propose to show, and I think we can convince you, that the petition is not the same petition at all-that it differs in the very respect in which Your Honour said it should differ in order to be received; and secondly, and more important-vastly more important than all-that if this petition is not received the courts are utterly incompetent-have been declared by this House to be incompetent-to treat the subject matter of the petition. Not only can it not be referred to the courts, but the courts are disarmed and disempowered from trying it. The courts cannot hear the appeal of this man who was elected but whose seat is now being usurped by another party.


Hewitt Bostock: I was proceeding to nde because I inferred from the remarks of the right hon. gentleman a moment ago that he expected a ruling from the Chair.


Arthur Meighen: I only expect a ruling
on the competency of the clerk to make such a report as this to the House. That was the only thing I called in question.


Hewitt Bostock: This is a very technical
question. First, the Examiner of Petitions reports on the petition, then his report is tabled and it should be published in the Votes and Proceedings.


Arthur Meighen: Very well.


Hewitt Bostock: When it appears in the
Votes and Proceedings then my attention should be called to it. If it is not the desire of the House to have my ruling on the petition I shall wait until another opportunity.



CIVIL SERVICE SUPERANNUATION- STATUS OF GRAIN COMMISSION STAFF

[Stage Direction]
On the Orders of the Day:
Hon. R. J. MANION (Fort William):: I
wish to bring to the attention of the Minister of Finance or the Minister of Trade and Commerce, and in this case I presume it is a matter for the consideration of both ministers, a letter which has been received by a number of members of the House, including the hon. member for South Winnipeg (Mr. Rogers), the hon. member for North Winnipeg (Mr. Heaps), the hon. member for East Calgary (Mr. Davis), the hon. member for Vancouver Centre (Mr. Stevens), the hon. member for Port Arthur-Thunder Bay (Mr. Langworthy), and myself, from the Secretary of the Dominion Weighing Department Association, or some of the employees of the Board of Grain Commissioners at Fort William. I will read three paragraphs from it which will present the case to the minister, as I think it is important enough to deserve consideration. The member for Vancouver Centre laid a similar case before the min ister a short time ago. The letter says:
It would appear that all employees under the Boarf of Grain Commissioners who have been accepted, and are now contributing under the Superanaiuation Act, would not receive any benefit an case they were retired from the service, or quit the service for any reason, neither would their dependents receive any benefit in case of the death of the contributor.
Further down he says:
We do not understand wthy the employees under the Board of Grain Commissioners Should be barred from the act, and we think it very unsatisfactory, that the government should continue to deduct contributions from the monthly cheques of those employees who were accepted before the ruling by the Department of Justice came into effect, when, as it would appear, they will receive no benefit.

Division List and Pairs
Then the closing paragraph of the letter reads:
We would ask you to endeavour, either to have all employees under the Board of Grain Commissioners made acceptable under the act, or a rebate made to those employees who have been contributing unless these employees will benefit under the act as understood by them at the time of making application to be elected under the act.
I draw this matter to the attention of the minister with the hope that he will look into it, because on the surface it certainly appears to be a case worthy of investigation, and I think it should be treated with greater care than it is being treated at the moment.


Hon. J. A. ROBB (Minister of Finance):: I will have the matter looked into at once. My recollection is that the matter is already under way. I recall having had something of that nature before me last week, and my hon. friend from Fort William may be interested to know that recently I approved of some increases of wages to certain people, as recommended by the Board of Grain Commissioners.


Robert James Manion: I am very glad to hear
it.



APPOINTMENT OF E. J. SEXSMITH

[Stage Direction]
On the Orders of the Day:
Hon. J. W. EDWARDS (Frontenac-Addington):: Exercising my privilege as a
member of this House, I asked a question of the Minister of the Interior in regard to the appointment of one E. J. Sexsmith. The question reads:
Was E. J. Sexsmith appointed on his merits after
competitive examination?
If not, on whose recommendation was he appointed?
The reply given does not answer those two questions. Will the minister supplement the answer to be placed on Hansard by telling me whether or not E. J. Sexsmith was appointed on his merits after competitive examination, and if the answer to that is no, then on whose recommendation was he appointed?


Charles A. Stewart: Did my
hon. friend say that his questions on the order paper are not answered?


John Wesley Edwards: They are not answered.


Charles A. Stewart: I will look it up and furnish the answer to-morrow.



POSTMISTRESS AT KEY JUNCTION

[Stage Direction]
On the Orders of the Day:
Mr. JAMES ARTHURS (Parry Sound):: I wish to ask the minister representing the
Postmaster General regarding a return ordered some months ago, I think with reference to the office of postmistress at Key Junction, which is now long overdue.


Ernest Lapointe: I am sorry that my hon. friend
has not received the papers yet. I will see that he gets them.



DIVISION LIST AND PAIRS

[Stage Direction]
On the Orders of the Day:
Hon. CHARLES A. DUNNING (Minister of Railways and Canals):	I desire to call
attention to an error in Hansard in the recording of the vote taken last night. I voted in favour of the adjournment of the debate but my vote is not recorded.
Ernest Lapointe: Then we will have one more.


Henry Lumley Drayton: How do you
know

it does not appear in Hansard.


Mr. E. W. TOBIN (Richmond-Wolfe):: I was paired with the hon. member for Park-dale (Mr. Spence), and the pair is not mentioned in Hansard. Had I voted I would have voted for the motion.


Hewitt Bostock: With reference to this
question I will read to the House the following letter which I received from the Editor of Debates:
June 1, 1926.
The Honourable The Speaker,
House of Commons.
Sir-I respectfully direct your attention to page 3916 of Hansard, recording the declaration of pairs following the division on the motion of Mr. Jacobs for the adjournment of the debate on the motion of Mr. Ross (Kingston City). You will observe that a note is inserted stating that the list of declarations is incomplete. The explanation is that no official pair list was available and the declarations came in such rapid succession-in some cases practically simultaneously-and from so many different quarters of the House, that it was not possible for the reporter on the floor to immediately identify all members rising. The adjournment of the House following, there was no opportunity to check up the list and it was therefore deemed proper to omit names as to which there was doubt, on the assumption that the member whose name did not appear would avail himself of a later opportunity to have his declaration properly recorded.
I have the honour to be, Sir,
Your obedient servant,
George Simpson,
Editor of Debates.


Mr. DUFF (Deputy Speaker):: Mr. Speaker, if I am allowed I would take this opportunity of directing your attention and that of hon. members of the House to the circumstances under which the vote was recorded last night. While the division was proceeding conversation was general in the

Alberta Natural Resources
chamber, and there was an absence of the decorum which should be observed on such an occasion, with the result that those responsible for the record of proceedings found difficulty in performing their tasks. We all realize how assiduous the Clerk, the Clerk Assistant and the official reporters are in carrying out their arduous duties, and I am sure we will admit that they are deserving of the consideration of the House. In view of what occurred last night, I would suggest that in future when a vote is being taken hon. members refrain from conversation and from other manifestations which do not contribute to orderly procedure in the House.



NATURAL RESOURCES


[Stage Direction]
On the Orders of the Day:
Ernest Lapointe: The Prime Minister (Mr. Mackenzie King) stated yesterday, in answer to a question by the right hon. leader of the opposition, that I would make a statement to-day concerning legislation with regard to the natural resources of Alberta, and I will now do so:
By the agreement entered into on the 9th day of January, 1926, between the government of the Dominion and the government of Alberta, all crown lands within the province are to be transferred to the province, subject to any trust existing in respect thereof.
In 1872, after the acquisition by the Dominion government of the Northwest Territories, the first statute concerning Dominion public lands was enacted. It is chapter 23 of 35 Victoria. Section 22 of this act created an education endowment, sections 11 and 29 in every surveyed township to be set apart for purposes of education, in the territory.
In 1879, statute 42 Victoria, chapter 31, placed under the Minister of the Interior the administration of the school lands and the school fund derived from the sale of such lands, the interest thereon to be paid annually to the government of the province or territory within which such lands are situated, for school purposes. Those statutes have been consolidated from time to time, namely: in 1908, 1914, 1916, 1919, 1920, 1921, 1923, 1924. The administration of those school lands and the school fund by the Dominion government has always been considered as a trust and, to use the language of Sir John A. Macdonald, in 1883, page 874 of the Debates : " The Dominion government is merely 
the trustee for these lands and cannot divert them in any way whatever from the purpose of school endowment
It thus appeared to the government that it was advisable to make it clear that the transfer of the school lands and the school lands fund should be made subject to that trust, and that they should continue to be administered by the province in accordance with the existing laws under the constitution of Alberta.
I am responsible for the drafting of the clause which is in the resolution on the order paper, the object of which was to continue the existing order of things.
Colonel Biggar, who is counsel for the government of Canada, and who had been entrusted with the legal work concerning the agreement with Alberta, went to Edmonton to submit this new clause, and said clause was accepted by the government of Alberta and by the law officers of the province.
The clause, as drafted, was inserted in the bill introduced by the Alberta government in the legislature of that province on February 24, and the bill received its second reading, on March 5 passed through the committee stage, and stood for third reading.
Simultaneously, the clause was inserted in the legislation introduced by the Dominion government and is part of the resolution on the order paper concerning said legislation.
Two other amendments concerning the parks, forest reserves and the rights and properties of the Hudson's Bay Company were also suggested by us, accepted by Alberta, and inserted in the concurrent legislation at the same time.
On April 7th the Premier of Alberta sent a telegram that owing to an editorial in a certain newspaper he would probably have to recommit the bill and amend it.
The criticism of the newspaper in question was to the effect that the clause as drafted would result in the Imperial parliament giving ratification to the school clause of the Alberta Act of 1905, which according to the writer of the editorial, was unconstitutional.
Our answer was that any attempt to change the clause under such circumstances, would be resented, and could not be accepted.
The telegram of Mr. Brownlee, on April 7, was the first intimation to me that there could be any doubt as to the validity or the constitutionality of section 17 of the Alberta Act. The clause which I suggested never was drafted for the purpose of giving to section 17 the ratification which an imperial act would involve. Indeed it is my opinion-as it was the opinion of those who placed that section in the constitution of Alberta-that

Alberta Natural Resources
the act of 1905 has the effect of an imperial enactment for all purposes and that its validity is beyond question.
Section 17 of the Alberta Act is the result of a compromise and was placed in the constitution to prevent litigation and for the purpose of continuing in Alberta the system existing in 1905. This compromise was accepted to settle and put an end to a difficult problem.
On May 25, a telegram was received by the Prime Minister from Premier Brownlee, informing him that the provincial legislature had passed the Natural Resources Bill with an amendment to clause 2 (a), substituting for the last words of said clause the following:
For the support of schools organized and carried on therein in accordance with the law of the province.
The amendment made by the legislature of Alberta without our consent suggests that the laws of the province might differ from or be in conflict with section 17 of the Constitutional Act of Alberta. Otherwise the amendment would be useless and futile. Furthermore, the record, as well as the statements made, show that the change is made owing to the expression of a doubt in some quarters as to the validity of the Alberta Act. This is unacceptable to us.
The Alberta Act has stood as the constitution of the province for twenty-one years. It has come directly and indirectly before all the courts of the land without its constitutionality being challenged or doubted, except in one instance before the courts of Alberta, where its validity was upheld. We cannot directly or indirectly, even in a tacit manner, acknowledge that its validity might be subject to question.
However the Prime Minister has stated to Mr. Brownlee that if the government of Alberta is willing to question the validity of the act, we will gladly facilitate and expedite proceedings, so that a reference to the courts may take place immediately.
In justice to Mr. Brownlee, I must say that he does not personally question the validity of the Alberta Act. His suggestion seems rather to be that as there are some people who have doubts about it, we should refrain from any reference to it in our legislation.
Our present position in the matter is fairly expressed in a telegram sent to the Premier of Alberta on May 27 by the Prime Minister. This telegram, after reciting the history of the negotiations, continues as follows:
As pointed out in interview at Ottawa, an view of implied doubts as to the validity of Constitution Act any amendment to the Natural Resources Bill as originally agreed upon if introduced at this stage of the proceedings and having reference directly or indirectly to school lands would be certain to raise controversy over school question. In these circumstances we do not feel that we would be justified in submitting to our parliament the amendment made by the Alberta legislature on Saturday Hast, and quoted in your wire. This amendment as adopted by your house if it has any meaning suggests that the laws of the province might differ from or be in conflict with the Alberta Act. Sureily the laws of the province must be within the four corners of the constitution which is the source of her legislative powers. Clearly the whole matter hinges on the validity of Alberta Act which you stated some people were questioning. We agree with you that every available means Should be taken to avoid a possible controversy on the school question. We believe further that question should be cleared away and settled for all time. We have offered to facilitate proceedings for a reference to the courts of the Alberta Act. We reiterate this offer and dn order to prevent delay, as well as to avoid any question being raised as to party who should be expected to initiate proceedings our government will take immediate steps for a reference to the Supreme Court of Canada. We will submit the act and support and uphold its validity, and give an opportunity to those who question it to present their views. When question definitely settled, all difficulties as to the drafting of proposed legislation will disappear and negotiations with respect to transfer of resources may then be resumed in a manner which will remove altogether the possibility of the introduction of any school question.
This was signed by the Prime Minister. I may say that the Department of Justice has in hand the proceedings necessary for the submission of this question to the Supreme Court of Canada. I believe this solution is fair to all parties, and I earnestly hope that this delicate question will in this way be settled definitely and removed forever from the field of controversy.


Arthur Meighen: Would the minister place on the table the correspondence between this government and the government of Alberta?


Ernest Lapointe: I will see that this
correspondence is tabled to-morrow.
Mr. W. T. (LUCAS (Camrose):	Why was
this question not included in the agreement which was signed on the 9th of January?


Ernest Lapointe: Perhaps for the same
reason as the two other clauses with regard to the Hudson's Bay Company and the parks or forest reserves have not been included. Those things always happen in important questions of this kind.' We thought it should be made clear that the trust with regard to school lands would be made part of the arrangement.
C ensus-Nationality


Mr. LUCAS:: I would like to say-


Hewitt Bostock: Unless by unanimous
consent I cannot allow a debate to proceed on this question. This is a statement made by the minister.


Some hon. MEMBERS:: Go ahead.


Hewitt Bostock: Am I to understand that the House is willing to hear the hon. member?


Some hon. MEMBERS:: Yes.


William Thomas Lucas: I would like to point out
that there is no agitation in Alberta for any change in the school laws as we have enjoyed them for the last twenty years. If this question is raised the responsibility will certainly be upon this government.



CENSUS-NATIONALITY

[Stage Direction]
On the Orders of the Day:
Mr. W. W. KENNEDY (Winnipeg South Centre):: Is it the intention of the government to instruct the enumerators having charge of the census being or about to be taken to accept the term "Canadian" as a sufficient and proper description of those Canadian citizens who were bom in this country?	.


James Alexander Robb: As I understand the matter, the questions that are generally asked in the ten-year census are not asked in the present census, that is the census that is taken every five years; but the matter is under consideration for the next decennial census. This census is merely to determine the population of the prairie provinces for the purpose of the subsidy which is paid under the act.



APPOINTMENT OF POST OFFICE INSPECTOR-MARITIME PROVINCES

[Stage Direction]
On the Orders of the Day:
Ernest Lapointe: The hon. member for York-Sunbury (Mr. Hanson) asked a question yesterday with reference to the appointment of a post office inspector in the Maritime provinces. On behalf of the Postmaster General I desire to make this statement:
There are two postal districts in the Maritime provinces-one with headquarters at St. John and one at Halifax, also a post office inspector stationed at Charlottetown, Prince Edward Island.
To provide for inspection work in ithose portions of the province of New Brunswick with French speaking population, it was ifound necessary to have a bilingual inspector. It was considered that the bilingual inspector should be able to do all the bilingual work in the three Maritime provinces. He is, therefore, being stationed at Moncton in order to be more readily available for the three provinces although he is attached to the staff of the St. John postal district.



LONG TERM FARM LOANS

[Stage Direction]
Hon. J. A. ROBB (Minister of Finance) moved the second reading of Bill No. 148, for the purpose of establishing in Canada a system of Long Term Mortgage Credit for Farmers.
Motion agreed to, bill read the second time, and the House went into committee thereon, Mr. Duff in the chair.
Short title agreed to.
On section 2-Definitions.
Mr. GARLAND (Bow River):: Paragraph (d) defines a farmer to be any person whose business is 'solely" that of farming and who owns and occupies a farm, or who proposes to acquire a farm for immediate occupation and cultivation. A similar definition in the Bankruptcy	Act was interpreted by	Mr. Justice Tweedy in such a way as to exclude persons	engaged in	custom threshing.	Mr. Justice	Tweedy held that	the4 p.m. word "solely" restricted the provisions	of the Bankruptcy	Act
to those who were engaged strictly in farming, and he gave it as his opinion that men engaged in threshing along with farming were precluded from that act. If the word "solely" is retained in this 'bill the same difficulty will arise here, and the bill will be interpreted as excluding those farmers who also do custom threshing.


James Alexander Robb: This qualifying word is intended to make it clear that anyone living in the village and occupied industrially is not to be considered a farmer within the meaning of the act merely because he happens to do some farming. It is not the intention to preclude any farmer from exercising his ordinary duties as a citizen. For instance, a member of parliament whose business, apart from his parliamentary duties, is farming is not excluded. The word has been inserted for the protection of the farmers themselves.


Edward Joseph Garland: I would not raise the point were it not for the inter-

Long Term Farm Loans
pretation which Mr. Justice Tweedy placed on a similar definition in the Bankruptcy Act, whereby he excluded from the benefits of that legislation such farmers as I have described. I have no desire to widen the scope of the bill to embrace business men in towns, living away from their farms, and I may point out to the minister that such persons come under another section. I would move-


James Alexander Robb: I will move the amendment later.


Mr. SHORT:: The word "farmer" here means only the farmer of the soil. Why not make provision for the farmer of the sea, the fisherman? Why should he not be entitled to the provisions of this act?


James Alexander Robb: If my hon. friend can explain to me how I can get a mortgage on the fish in the sea I will consider his suggestion.


Harry Bernard Short: You can get a mortgage on the fisherman's equipment as well as on the farmer's.


Mr. HANSON:: I support the suggestion of the hon. member (Mr. Short). The fishermen at least on the Atlantic coast, engage in an occupation which at times is quite precarious, and they are entitled to some encouragement at the hands of this parliament while we are considei'ing the needs of the farmers of the west. I seriously suggest that if the minister has not already done so he should include fishermen in the benefits of the act. There is no difficulty about security. The equipment of the fishermen is as saleable in their districts as is the security of the farmer in Alberta, especially in the drought season. If anything, the advantage in this respect is with the fisherman. If there is to be any easy money for a particular class, then let us have no discrimination in favour of the western farmer. I am willing that he should receive fair treatment, but I do not want to see him get any special privileges. And that is all this legislation amounts to. I am not by any means opposed to rural credits, but if the government, desire to put easy and cheap money in the way of the farmers of the west, I demand at least equal treatment on behalf of the fishermen of the Maritime provinces.


Mr. SPENCER:: This is the first time the suggestion has been made that this legislation is for the benefit of the west alone; I thought it was intended to benefit all Canada.


Richard Burpee Hanson: Everyone knows that for
the past five years hon. members to my left have been demanding legislation of this character for the particular benefit of their own 14011-249
constituents. There has never been a demand from the farmers of the Maritime provinces for legislation of this kind.


Mr. BROWN:: Then they are not properly represented.


Richard Burpee Hanson: They were not properly
represented in the last parliament but the3' are well represented in this House. Speaking for the Maritime provinces, our farmers do not and will not demand this kind of help if you will give us a proper fiscal policy.


Mr. CHURCH:: I would like the minister
to explain the definitions under clause 2, because I am very doubtful whether parliament has power to pass this bill. Why should there be rural credits and not city credits; why single out the farmers for long term loans? Why should this particular class be favoured as against all others? Agriculture to-day is the most highly protected industry in the world, and this is class legislation of the worst kind; one class is favoured because they have an influence in this House which other classes do not have.


George Gibson Coote: I rise to a point of order.
I contend that the hon. gentleman is not speaking to the section of this bill under discussion.


Thomas Langton Church: In the first place, Mr. Chairman-


George Gibson Coote: I ask for a ruling on the
point of order, Mr. Chairman.


Thomas Langton Church: I say this is class legislation of the worst kind.


James Alexander Robb: I rise more particularly to
move the amendment which I have just handed you, Mr. Chairman, that the word "solely" be deleted. The discussion we have had so far only emphasizes the difficulties of legislating for a large country of varied interests such as Canada. This is the first time it has been brought to my attention that the fishermen require legislation of this kind. This government has not been unmindful of the fishermen; in the budget of 1924 we made considerable concessions to those engaged in this industry, making it easier for them to get their equipment and so earn a living.


Harry Bernard Short: May I ask a question?


James Alexander Robb: When I get through I will
answer my hon. friend. This measure is designed to help not only the farmers of the prairie provinces but those of the entire Dominion. The necessity for such a measure to provide cheaper money for the man on the farm has been demonstrated to us time after

Long Term Farm Loans

time. The man on the land produces traffic for the railways and his success determines the general prosperity of the country. This government has even been accused of being a bit tardy in introducing this legislation. The hon. member for Vancouver Centre (Mr. Stevens) had a similar resolution on the order paper the day parliament opened, and I give him credit for being in favour of this move. Most of the provinces have systems of rural credits of one kind or another; they have already recognized the necessity for such a measure as we are bringing in now, The hon. members for Ontario may object to this, because in Ontario they have a very excellent system of rural credits which, I am told, is on a good paying basis.


Arthur Meighen: Why duplicate it?


James Alexander Robb: We are not duplicating it;
it is not necessary for Ontario to come under this scheme if they do not want to, but because Ontario is well provided for is no reason why the other provinces should not be helped. It is not obligatory upon any province to come under this scheme if they do not wish to. Now coming back to the fishermen, I will be very pleased to listen to my hon. friends who represent these people if they can establish the necessity for a system of credits other than those now provided by the rural credit systems of the provinces. We will consider that question at another session, but this act has to do with long term mortgage credits for farmers. I move the amendment.


William Duff: Mr. Robb moves that
subsection (d) of section 2 be amended by deleting the word "solely" in the first line.


Harry Bernard Short: I have no objection whatever to this bill, but why confine it to soil farmers? The fisherman farms the sea just as much as the soil farmer farms the land, and he has just as hard a time to make a living as the farmer on the land. Consequently he is entitled to just as much consideration. Before the fisherman can start out to make a living he has to spend from $500 to $1,000 on equipment; many men are not in a position to make such an expenditure, and they must be assisted. If the land farmer is to be helped with easy money I claim that the fishermen of the Martime provinces and the Pacific coast should be helped as well. I think the Minister of Finance (Mr. Robb) would be well advised to take this into consideration before the measure passes.


Mr. PRICE:: I think it would be well for the minister to consider our fishermen. As has been pointed out, they are put to a
IMr. Robb.]
considerable expense in connection with their equipment, nets, motor boats and so on, and at this particular time the fishermen along the Northumberland straits are having a very difficult time to raise sufficient money to equip themselves properly. Within the last two or three years, because of poor facilities, they have had some considerable difficulty in protecting their boats from storms along the cap Bald coast. This is particularly true in connection with the French Acadian people. They have had a hard time; their expenses have been high; they have sustained considerable losses, and if something is to be done to assist them it should be done at this time. The western farmers have been given every, assistance; they have had opportunities not afforded to other classes. The farmers and fishermen in the Maritime provinces are paying rates to-day 100 per cent higher than those paid by the farmers in the west for the same haul.


James Alexander Robb: I rise to a point of order.
Mr. Chairman. I submit that if we are to have a new budget debate, if we are going to debate freight rates at this time, we will be here all summer. If my hon. friend will confine himself to the question at issue we will get along more quickly, and he can discuss freight rates at another time.


Otto Baird Price: I am merely pointing out
that the fishermen are entitled to just as much consideration as are the farmers in western Canadia, and it is on their behalf that I am speaking, in order that they may be given opportunities to share in the same benefits which this government is bestowing on the farmers of the west. I think the fishermen deserve every consideration. They go through more hardships than the farmer; they work harder and take more chances, and their occupation is more hazardous. I think if some of the members of this House who have not seen the fishing industry being carried on would take a trip down to the Maritime provinces and see what these men have to go through, the chances they have to take and the storms they have to fight in their boats, they would agree with me that these men are deserving of more consideration than they have received in the past. Personally I am opposed to anything being done under this bill unless the fishermen along the Atlantic coast are also taken into consideration.


Mr. DUNNING:: I feel reasonably sure
that there is not a single member of this committee who would not agree that the fisherman is equally entitled to consideration from this House with the farmer or anyone

Long Term Farm Loans
else, but may I point out with.regard to the measure now before us, that it deals with a particular type of credit as relating even to the farming industry, that particular type of credit being long term mortgage credit based upon the security of land. It does not deal with short term credit based on the security of chattels either on the farm or anywhere else. I listened to my hon. friends from the Maritime provinces, and if I understand the requirements of the fishing industry correctly from what they tell me, it is rather short term credit on chattel security that is required for that industry. Manifestly it is not possible for the fisherman to give a mortgage on the sea, and it would not be any good if he did so. He has certain equipment that he uses in his business-


Richard Burpee Hanson: What about his fishing
stand? That is real property.


Charles Avery Dunning: Does he have real property? I would like to get to know.


Otto Baird Price: He has his home as well.


Charles Avery Dunning: I listened to what my hon. friends had to say, and they spoke of fishing gear and the expense the fisherman was put to in order to equip himself to carry on his business. Everything that was mentioned by my hon. friends was in the nature of a chattel, and I therefore came to the conclusion, perhaps erroneously, but at least based upon the info-mation supplied by my hon. friends, that the type of security available in connection with that industry is analogous to What the farmer has to give with respect to his short term credit requirements, and therefore does not and cannot very well come within the scope of this bill. Personally I would like to learn more about the fishing industry, and if there is 'any way to assist any one of our primary industries by way of facilitating credit, not at the expense of the country, but with the backing of the country, I can assure my hon. friends from the Maritime provinces that it will have my support.


Mr. FORKE:: I was on my feeit when the
minister rose, to express exactly the same opinions he has expressed. I want to say on behalf of the farmers in the west that we have every sympathy with the fishermen and their troubles. In my young days I lived close by the sea, and know something of the hardships of the fishermen. I remember one storm in which 138 fishermen found a watery grave in one afternoon. So no one needs to tell me about the hardships of the fishermen on the sea. But I want to point out that this bill is 14011-249J
not applicable to the circumstances in which the fishermen find themselves. We in this part of the House have been working for four years to get such a bill as we have now before us, and this is the first time we have heard anything in connection with helping the fishermen in this way. If our friends from the Maritime provinces will come back next session with some workable bill to provide not easy money, but cheap money-there is a difference-to help the fishermen in their calling, or any other primary industry in this Dominion, I am sure they will find us heartily with them.


Harry Bernard Short: We are very glad to get the information from the deputy Prime M nister that the fishermen of the Maritime provin.es rill receive consideration at the next session.


Mr. MARCIL:: There are a large numbe
of farmers in Gaspe and Bonaventure who ar at the same time fishermen; they carry on both callings. When fishing is not over plentiful, they resort more extensively t' farming, and I would like to have that class included, if possible, under this bill. A mm who can give security on land, whether he i.-a fisherman or not, should not be debarred from the benefits of this legislation.


Richard Burpee Hanson: I endorse the suggestion
of the hon. member for Bonaventure. It i-true that a large number of the fishermen in the Maritime provinces also carry on farming and they nearly all own real property of some sort.


Charles Avery Dunning: Then they are already
under this bill.


Richard Burpee Hanson: I am not so sure that they are. I would point out for the benefit of the hon. member for Brandon, if he has not heard a specific demand made on behalf of the fishermen, that this is the first concrete proposal of this kind that has been made in five years. This is the first occasion on which a concrete demand of this kind could be made on behalf of the fishermen, and that is why it is being made. So far as his invitation to wait for another year is concerned. I think we ought to decline that invitation with thanks. Now is the accepted time. If we are going to do anything for the fishermen in the Maritime provinces, we want to do it now. Therefore I invite the minister to amend the bill in that regard, so that it will take in any fisherman who is able to give security other than chattel security, and he might also take into consideration, if he will, the question of chattel security. I quite appreciate the difficulty of including short term

Long Term Farm Loans
credits in a bill of this character, as it is not designed for that, and therefore I shall not press that point; but I do press upon the minister the desirability of assisting these fishermen and bringing them within the terms of this act.


James Alexander Robb: I gather from the observations of my friend from York-Sunbury and my hon. friend from Bonaventure that the amendment I have just introduced brings in most of the fishermen of the Maritime provinces. The word " solely " is stricken out, so that the farmer who has land would come in under this act anyway. I think my hon. friend should leave it to a pretty generous interpretation by the board.


Arthur Meighen: Would a fisherman's occupation be farming? That is what the definition says.


James Alexander Robb: If, as the hon. member for Bonaventure and the hon. member for York-Sunbury have said, these men are farmers as well as fishermen, they certainly would not be deprived of their privileges as farmers simply because they were incidentally engaged in fishing.


Arthur Meighen: The minister knows
quite well that the men referred to by the hon. members are fishermen. The farm they have is incidental to their calling of fishing, and while it might perhaps be security for something, farming is not their main occupation, and they would never come in under this act.


James Alexander Robb: If my right hon. friend, who is a pretty good economist, has any amendment to suggest-


Arthur Meighen: I have not suggested
anything of the sort, but I do not want the minister to cast aside an amendment on a mere sophism which has nothing in it.


Richard Burpee Hanson: If the minister will refer to paragraph (b) of section 4, he will see that it gives the board power:
To make 'long term loans to farmers on the security of first mortgages on farm lands.
Suppose the fisherman has his little homestead of a few acres. It has a commercial value in the community, and it may be good security for a loan, but I doubt whether under this section the board would have power to make him a loan. More than that, as pointed out by the leader of the opposition, his main business must be farming. That man will not benefit by this act.


James Alexander Robb: I read carefully the resolution put on the order paper by the hon. member
J
for Vancouver, and I listened to the speech delivered by my right hon. friend the leader of the opposition, and I concluded that when this bill was introduced it would meet at least with their approval, as it contained what they had outlined as necessary for farming. I ask the hon. member for York-Sunbury if he has read this bill all through. He is a good lawyer, a good financier; does he think we can go out and sell bonds on security such as he has just mentioned?


Richard Burpee Hanson: I think probably you will
sell bonds on much poorer security than you will in the case of some of the farm loans that will be mad& under this legislation, especially in the province of New Brunswick to-day. Does the minister know how difficult it is under the conditions existing down there for farmers to obtain loans now in the open market-


James Alexander Robb: This will make it easier for
them.


Richard Burpee Hanson: -due to the fiscal policy of this government driving industry out of our towns and cities?


James Alexander Robb: That is another question.


Richard Burpee Hanson: It may be, but that condition is due to the policy of this government. I am not in a position to submit an amendment. However, I should be glad to consult with the minister on the point. I am really serious albout the matter. I think something can be done, and if ever anything is to be done now is the accepted time.


Mr. MacLAREN:: I notice a very general
impression in the House-at any rate the view seems to be held by many of the members-that no reference has been made previously to the desirability of extending to the fisherman treatment similar to that granted to the farmer. That is not quite correct. At least once before, and I think probably on two occasions, I have heard the suggestion made that fishermen should be included in this bill.


Richard Burpee Hanson: So have I.


Murray MacLaren: Therefore it is not the
first time the point has been raised. On the contrary, I think the records will show that on several occasions in the past the claims of the fishermen have been put forward. Now, most fishermen possess more than mere chattels. Most of them own their houses, and many of them a few acres of land. I think the minister will need to consider very carefully the definition of what constitutes a farmer. I fear many difficulties will arise

Long Term Farm Loans
and there will be douibt in some cases as to whether the applicant can be considered a farmer or not. Take the case of a fisherman who earns his living substantially by fishing, who also has an acre or two on which he and his family carry on kitchen gardening, would he be regarded as a farmer under the proposed legislation? The minister says "no". Then there will need to be a little better definition in order to determine what will constitute a farmer in the case of a man who is also engaged in fishing.


Mr. FOSTER:: Do I understand there will be no doubt in the minister's mind that farmers who are also fruit growers will come within the purview of this definition?


James Alexander Robb: Surely.


George Eulas Foster: That being so, I desire to
concur in what has been said by the speakers who have just preceded me with regard to the farmer. In this connection may I thank the minister for his promise to take the matter into consideration next year, also the hon. member for Brandon (Mr. Forke) for his promise to give consideration to the case of the fishermen of 'the Maritime provinces. What I object to, and what our people also object to, is that when it comes to doing something for the Maritime provinces we are told "We will ibe glad to do it to-morrow or next year." But when it is a case of doing something for other parts of the country we are told "We insist on its being done now." I think that attitude will meet with very considerable criticism, particularly on the part of the people of the Maritime provinces.
I noticed another statement which struck me as rather peculiar. It was that no mention of the rights of the fishermen had been made in this House in the last four years. I thought that was an amazing statement in view of the fact that we had a solid delegation in this House representing the province of Nova Scotia at least. We sometimes hear the statement that the fishermen are prosperous and that the industry has been greatly extended as a result of wider markets. Let me point out that in 1919 the province of Nova Scotia produced $15,171,929 worth of fish. In 1922, the first year that this government had an opportunity to develop wider markets, the production dropped to $10,209,2.58, In 1923 there was a further drop of $1,800,000 down to $8,448,385. In 1924 the drop still continued to $8,277,000, and in 1925 the production was still going down. And yet we heard statements in this House during the budget debate that the fishing industry of Nova Scotia had been flourishing under the
policy of the government for the last four years. But we have the concrete fact before us that in five years the fishing industry has declined to the extent of $7,000,000. Nevertheless when there is an opportunity to do something to increase the fish production of Nova Scotia, as well as that of the other Maritime provinces, we are told by the leader of the Progressive party:	"Oh, come back
next year and we will give you something." The minister also says, "Make your suggestions and demands during the next year and we will consider them. This legislation is for the farmer alone, and only those farmers in the provinces where they desire to avail themselves of it." I submit that when we are considering this legislation, even if it takes another twenty-four hours to frame an effective amendment, we should take such action as will ensure that the various other industries in the country shall also benefit by the impetus we desire to give the farming industry.


Mr. MacLEAN (Prince):: I quite realize that under the proposed legislation it is impracticable to grant relief to all the fishermen, as has been stated by some hon. gentlemen opposite. However, I take the position very strongly that if there is any industry that should receive consideration from the government it is the fishing industry, not only of the Maritime provinces but of Canada as a whole. I think that hon. gentlemen on both sides of the House have endeavoured to present the views of the fishermen as strongly as they possibly could. Not only have propositions been brought before the select standing committee on Marine and Fisheries, but wre have been asking for concrete action by this House so as to give some assistance to the fishing industry in the Maritime provinces. The question has been raised as to -who will receive benefit under this system of loans and what really constitutes a farmer-whether a fisherman farmer or a farmer fisherman can be properly included in that category'-. I judge that the individual who has sufficient land free from encumbrance to give the requisite security can receive benefits under this act?


Richard Burpee Hanson: Why does the hon. member say that? I fear he has not read the bill.


Alfred Edgar MacLean: I do not see anything in the bill that will deprive any man who has sufficient land free from encumbrance to give the needed security from receiving the benefits contemplated. It cannot be argued that because a man engages in fishing as well as farming he shall be excluded
Long Term Farm Loans

from the proposed benefits. It will be just as reasonable to argue that a farmer in the Northwest Territories should not be granted assistance under this legislation because he worked at lumbering, or some other calling, for a few months in the year. I think any man in any part of the Dominion with sufficient real estate in his own name will receive the benefits under the act. If not, I am not correctly informed on this matter. However I wish to place myself on record as making a demand on behalf of the fishing industry of the Maritime provinces. We were asking for concessions in the putting up of a certain preparation made from the lobster, which is being wasted at present, but which would have meant an immense revenue to the lobster packers and fishermen of the Maritime provinces. We could not get that small concession, because other larger interests and the larger packer's wished to control the situation, and, as in all such cases, the small man had to go without his concession. I wish to support anything that will tend to benefit the fishing industry, and I am sure that the Marine and Fisheries estimates will afford opporunity for further discussion of this matter. I think we should concentrate our efforts on those estimates and endeavour to obtain some assistance.


Arthur Meighen: I am not rising to say anything against loans to fishermen, but I would not like any hon. member to go home with the false hope in his mind that there is going to be any loan to fishermen under this act. It is especially forbidden by the act. It does not matter how much land he owns; he might own the whole of Prince Edward Island, but if his occupation is that of fisherman he cannot get anything."


Charles Marcil: A man may have two occupations-farmer and fisherman.


Arthur Meighen: A man has an occupation which is his chief occupation always, and you could not select anyone in the whole of the island whose occupation you could not tell. A man is one or the other. It may be he has a few onions or patches of corn, but he is a fisherman. He cannot get anything under this measure. Whether he should or not is not the question we are discussing. He could not get anything, and we might as well cease trying to delude the fishermen, or those who do not read, into thinking that they could get anything. For my part I am in favour of the rural credits measure. I stated so when the matter was discussed on a previous occasion, and I hope this measure will be along lines to meet my desire in respect to such a measure. I do not know that you could, in

the first instance, include other industries in it, but you could accompany this measure by another along similar lines, or different lines, to achieve the same end for that other class of people. But the rural credit measure is simply a measure to provide for rural credits, and I think it is time we set. our minds to work to frame a measure satisfactory to the rural sections of the country. We are not at the stage where the vital provisions should be discussed, but we are at the definitions;. I listened to the point raised by my hon. friend from Bow River, which I think the minister conceded, but I really do not think it is of so much consequence as another point, although I fancy it is right. Under this definition, in order to get a loan, a man must be residing on and occupying the land. If the minister will read his definition carefully he will see the point I am trying to make. Paragraph (d) of clause 2 reads:
"Farmer" means any person whose business is that of farming.
The word "solely" is now struck out. The paragragh continues:
And who owns and occupies a farm, or who proposes to acquire a farm for immediate occupation and cultivation by him.
The question I put to the minister is this: does he have to occupy that farm the year round, save of course a trip to California, or to parliament, or anything of that sort, where he does not take up another residence? What I have in mind is a large class of farmers who occupy their farms only for the summer, and reside in a village or town almost half the year. Under this clause as it now reads that man could not obtain a loan.


Mr. JACOBS:: He really would need the
loan more than the man who remained on his farm all the time.


Arthur Meighen: Yes, especially if he
went to California. This would not be the farm he occupies the year round, as his only place of abode. There are very many farmers who do not, in the sense of this definition, occupy a farm at all. They do not live on it. I know some of the best farmers in Manitoba who live in the town or village the year round, but who thoroughly cultivate their farms. They are excluded by this definition from getting a loan. If the minister intends that that should be the position, that is another question, but I do not think that he does. The next point is that it should not be enough that a man owns and occupies a farm. I might occupy a farm near a little town and do nothing

Long Term Farm Loans
with it. The man should own and cultivate the farm. The word "cultivate" should be substituted for the w'ord "occupy." If a man owns and cultivates a farm, I would not care where he lived. It should be sufficient that he is cultivating the farm.


James Alexander Robb: If my right hon. friend will
proceed he would notice that in the very clause he is quoting cultivation is provided for.


Arthur Meighen: No, that is only in the
case of the man who has no farm at all, but is going to get one. Where the draughtsman made the slip was this: he provided in the case of a man who did not have a farm, and was going to get one, that he should get the loan because he was going to get the farm and cultivate it. If he already owned it he would not need to cultivate it. All he needed to do was to occupy it.


Charles Avery Dunning: I think the act would
cover that point.


George Gibson Coote: Does not the word "occupy" as it is used here really mean " cultivate "? A man may have a business located on a business street, and may occupy a house in a different part of the town. It could be said that he occupied the store he owned. It seems to me that is the interpretation that should be given to the clause.


Arthur Meighen: The point I referred to
a moment ago about the word "occupy" is perhaps covered, but the other point is not. If we insist on a man owning and cultivating land I do not see any sense of insisting on his living on it the whole or part of the year. He may live on the next farm. He may own a farm across the road and want a loan on it, and might cultivate it, but could not get the loan.


George Gibson Coote: Under the interpretation the rigihit hon. gentleman places on the word " occupy " it is impossible for a man, although he was actually farming his land, but living in town, to get a loan.


Arthur Meighen: No. I insist on his
cultivating it. The point I am making is that a man should not be compelled to occupy a farm on which he wants to get a loan.


John Livingstone Brown: Is not the clause capable
of a wider definition?


Arthur Meighen: ; I do not know of any other. Certainly if I live in town, have a farm six miles out, and cultivate the farm I should be entitled to the loan.


Charles Avery Dunning: The point is of very
great importance, but for a reason the opposite to that under discussion, that reason
being that it is not the intention of the act to provide loans for men who are incidentally farmers, that is men who are engaged in some other line of business. For instance, my right hon. friend is a farmer and I am a farmer, but not in the sense under which we wish to have credit extended under this law.


Arthur Meighen: Speak for yourself.


Charles Avery Dunning: I am speaking for
myself. I was very nearly putting my right hon. friend in the same category because I think he said on one occasion he did own a farm.


Arthur Meighen: What I mean is: Do not exclude me from the benefits of this measure too soon.


Charles Avery Dunning: I am excluding both my self and my right hon. friend. I still own my original farm; but from the point of view of public policy I do not think it is desirable that this law should be so wide that its facilities might be extended to a man such as myself who, although still farming a farm in the sense of being in control of its operations, meeting the bills and so forth, is not in the class of an actual resident, occupier farmer. There is another class of cases, the class who are engaged in some business in the near-by village. There is hardly a business man in a western village who is not also a farmer. I think all will agree that it is not desirable that we should extend the privileges of this legislation to that class of farmer who is farming as a side issue to some other business which is of much more importance in his scheme of things.


Arthur Meighen: The minister has missed my point.	[DOT]


Charles Avery Dunning: I know that is not my right hon. friend's point; but if the legislation is widened sufficiently to include the class of farmer to whom my right hon. friend refers, I am very much afraid that it will let in this other class. My right hon. friend has referred to the man who lives in a village, who, unless quite incidentally, has no other occupation than farming, and who farms a farm three or four miles out of that village. As he has stated, there is a large and growing class of that type of farmer; but just how to cover the point and admit that class of farmer without also admitting the very much wider class of business men who farm incidentally is a difficulty which I have not been able to overcome.


Arthur Meighen: That is all covered by
the definition of the farmer. Farming must
Long Term Farm Loans

be his business. Farming is certainly not the business of the minister and it is not mine. Once you have said that you have excluded all in the class to which the minister refers.


Charles Avery Dunning: No. My right hon.
friend will permit me, he will know as I know of men who farm in a very large way and who also have some other business. It would be very difficult to determine which of those two was the main business. I have in mind men who farm as much as two or three thousand acres and who also live and are engaged in business in a town. In all probability the turn-over of the farm might very well be larger than the turn-over of the business in the town. The difficulty of determining which was the main business of the man concerned would be very great and I speak from some experience in that regard. If we widen the definition this will be a matter of great difficulty. As regards practical administration, regulations of the board can, I believe, deal with the type of case to which my right hon. friend refers if we give them just that much latitude. I say what I am saying merely as an argument against widening that latitude too much and the tendency is rather to widen it too much.


Arthur Meighen: If the commission finds that the main business of any man is farming that man should come in just the same as anybody else. The object of this legislation is or should be to constitute a low interest, underlying financial security on loans. It will do just as much good to the community to grant a loan on land farmed by a man living in Portage la Prairie although the land is three miles out as to grant it to a man actually living on his farm. The object of it indeed is to encourage the cultivation of land and the production of goods therefrom by constituting a cheap underlying security and it should extend to all whose main business is farming. It does so extend under the definition, but you have a most unreasonable exclusion when you say that a man must be all the time living on his land. As the years go on you are going to exclude more and more until you have half the population of western Canada excluded from the legislation. There is no line of demarcation; there is no reason, no sense in it. The minister should either have it in that way or give the benefit to nobody.


Edward Joseph Garland: I would
find myself largely in accord with the leader of the opposition if we could safeguard the loans made under this bill with regard to cases of this kind. You have in town a real estate agent or an implement agent who is

also a farmer. He applies for a loan under this bill; he secures the loan on the basis of the security of his farm; but without the consent or knowledge of the board he invests part of that loan in his real estate business or implement agency. Before the board discovers what has happened to the loan and is in a position to collect on the good security the man has failed. The board comes along and all it can do it to pick up the fragments. It has the man's security which may still be good; but wo do not want the scheme burdened with a great deal of real estate dealer's or implement agent's land which is being farmed by proxy. If that could be covered I would agree with the leader of the opposition.


Arthur Meighen: The government must
follow the loan past the hands of the borrower; they must see that the money is properly applied. Surely they will not hand it over to the borrower and just let him do what he likes with it.


Edward Joseph Garland: I hope not.


James Alexander Robb: Having read carefully the reports made by Doctor Tory who was appointed to investigate this question, and having listened to the arguments of those who advance such a measure as this, my understanding is that we should provide not so much for a cheap method of financing loans as for a cheap method of helping the man who is really farming, the man who is on the land, to farm. That is where I differ somewhat from my right hon. friend. I would not want to widen this too much; I would like the measure to go through so that it would be regarded as a sound financial means of enabling the real farmer who is farming to get money at a reasonable price. The closer we can keep to that, the better value we put on those bonds when we come to sell them on the market.
After all, the man who invests money looks carefully into the matter to see whether it is a real farmer who is working the land or some chap who is carying the land along in the hope that some day it will increase in value and he will sell it. Having made this statement, I may say that my friend and colleague the Minister of Railways, who has had a very wide experience in regard to rural credits and whose rural credit system has been in point of success second to none in Canada, will take charge of this measure, and I hope it will go through in such a way as to keep in mind bonds that will be gilt-edged when they come to sell them. That is the way to get cheap money. I am glad

Long Term Farm Loans
to know my right hon. friend is coming back to the speech he made earlier in the session.
I gather now he is thoroughly in sympathy with the proposition.


Arthur Meighen: He never was away from that speech; but if the Minister of Railways has made such a great success of the rural credit system in Saskatchewan and there is a very fine system in Ontario the thought occurs to me that perhaps we ought to let well enough alone.


James Alexander Robb: There are other provinces.


Arthur Meighen: I would not like to say that Quebec was not just as capable of working out as good a system as Ontario, or Manitoba not as capable of working out as good a system as Saskatchewan. If this system in Saskatchewan is flowering and fruiting in such magnificence it is too bad to interfere with it. Why enter into competition and have two systems starving instead of one flourishing? I know that will appeal to the fine sense of logic of the hon. member for Cartier.


Samuel William Jacobs: Why to me particularly?


Arthur Meighen: Because of his particularly fine sense of logic.


Samuel William Jacobs: I thank the right hon. gentleman very much.


Arthur Meighen: The minister says:	We
just want to help the real farmer. I do not know about other districts, but I know that about the best real farmers in the district in which I have lived most of my life live right in the town. I have land sold to men who are living on it and I would lose a good deal of money to get them off the land and have one or two of those men who live in town and farm outside take the land instead because they are the real farmers. Take Regina. How many real farmers live there? Hundreds of them, I have no doubt-farmers who are just as good as any man who stands up against the winds of winter and endures the dust of summer. The distinction cannot be drawn. If a man owns the land and farming is his business he should be included with the others. A definition embracing such farmers is defensible; it is a rock on which you can stand. But this is not defensible, and what is more the government will not be able to stand by it. They will yield all right, and it will not be very long before they do.


Mr. JELLIFF:: I am in accord with what the leader of the opposition (Mr. Meighen) has said. The word " occupy " should be
changed to " cultivate." In parts of the country from which I come there reside in the towns people who own land and do their own farming. These people in many cases live anywhere from one to five miles from their farms and they have been looking forward to the benefits of this legislation. Indeed, they are among those who need the legislation. I hope the minister will amend the definition.


Charles Avery Dunning: The Minister of Finance (Mr. Robb) is obliged to leave; it is hot a matter of choice; and in view of the importance of getting the legislation through he has requested me to take hold of it for the time being, as well as possible. Perhaps it was unfortunate that he should have lauded me as an expert in this matter, for I do not claim to be one. I do however know something of the difficulties of administering such a scheme, and while I recognize the great difficulty presented by the point raised by the leader of the opposition, I submit that there is a far greater difficulty inherent in the point I have brought forward myself with regard to the business man securing a loan on the farm. There are not many small business men in villages who cannot demonstrate, if called upon to do so, that their farming business during the past year has been more important to them than any other activity, whether it be machinery or any other business. With regard to the point mentioned by the hon. member (Mr. Jelliff) he will find fully met in paragraph (f), the difficulty which he fears.
There are in relation to legislation of this kind many things which must be worked out in the course of administration.
5 p.m. It is impossible to set forth in a section of the bill a definition so comprehensive as to cover all the various conditions to be encountered from the Atlantic to the Pacific in all the different types of agriculture which obtain in this country. But one important consideration, as the leader of the opposition himself has pointed out, is to get a sound underlying security. That being the case, should we not start too tight in our provisions rather than too loose? Experience indicates that we shall in any event run into other difficulties. After all, the definition of " farmer " has reference to the borrower, over whom you have virtually no control when once he has obtained the money. You have of course certain drastic powers under the mortgage, but as a matter of practice you could not take advantage of them. I do not think it will be argued that there is any desire to establish an agricultural credit system which
Long Term Farm Loans

would lend itself easily to the securing of loans by any man, who, immediately or soon after the receipt of the money, ceases to be a resident farmer and becomes a renter. Manifestly, renting does tend to depreciate the value of the security originally given. There are of course exceptions, but that has been the experience of lending generally.
My view of this legislation as regards these particular features is, on the whole, that we should have it sufficiently restrictive to make our underlying security attractive to those who may desire to purchase bonds. That is why I urge that the provisions should be tight rather than loose to begin with. It is much easier to loosen them later on if that is found necessary. Let us however begin on a sound basis, leaving any expansion to future consideration as necessity arises.


Mr. SMITH:: I want to bring back the discussion, which has gone far afield, to the question raised by Maritime members in relation to some provisions for fishermen. Members from the Maritime provinces during this session have stressed the necessity for relief for our coal miners, and have failed to get any response. They have asked for some consideration for the steel workers in that part of the country, and have got nothing. They have requested some general relief for the people of the Maritime provinces and they have been given a royal commission. We can with justice appeal to the minister for some relief for our fishing industry, the importance of which may be gauged at once at a glance at the map, which will show the length of our coast line. The figures quoted by the hon. member (Mr. Foster) will give some idea of the magnitude of this industry. I have not studied this bill carefully, but there appears to be some difference of opinion as to whether it does or does not include fishermen who own real property.	I do think the minister
should amend the 'bill to include these people, and enable them to obtain what the hon. member for Brandon describes as cheaper money. The hon. member for Hants-Kings also pointed out the necessity for immediate relief to the fishermen; it is no use postponing it for another year.	Surely after hearing what
Maritime members have had to say about conditions down there it should be unnecessary for any one to labour that point. We need relief at once, and I would appeal to the minister on purely non-partisan grounds to give to the fishing industry of the Maritime provinces the consideration to which it is entitled. For that reason the scope of the bill should be widened to include fishermen. fMr. Dunning.]


Mr. BURY:: The term "occupation" does
not suggest any difficulties to me; I do not' think it necessarily includes residence. Apparently, however, the bill is intended to benefit stock raisers, and if that is so the word "cultivation" hardly covers the case. I understand also that it is intended1 'that the benefits of these provisions shall apply to fruit growers, in which case I douibt very much whether the word "tillage" will serve the purpose. The minister will have to use much wider terms than "cultivation" and "tillage" if he is to bring in stock raisers and fruit growers. I would suggest some other phrase such as "farming operations thereon" or words to that effect.


Charles Avery Dunning: I do not think we can
devise a long term farm scheme which will fit the ranching industry. It is not practicable in nine cases out of ten for the rancher to give security on the land, very much of which is leased. It is not contemplated that the bill shall apply to ranchers as such. It is meant to apply to those engaged in mixed farming and who can give some basic security on the strength of their land for the loans they receive. I do not think there is any doubt as to the provisions being sufficiently wide to deal with all classes of cultivation including fruit farming and other things of that kind, but I must admit that I do not think the bill would include a rancher, who was not cultivating the land but ranching in the old sense of the term.


Charles Marcil: Speaking of the class I
referred to at the beginning of this debate, the farmer who is occupied part of (the time in fishing or lumbering but who can give security under this act would not be debarred from this measure, as I understand it. In our district men farm, do lumbering in the winter time and fishing and other things, but if they can give security on farm land they would come within the scope of the act. I would like to understand that thoroughly. I know there is some reference made in section 7, subsection 3, to the effect that:
Loans under this act shall be made only to farmers actually engaged in or shortly to become engaged in the cultivation of the farm mortgaged-
All our people in the Gaspesian peninsula are farmers, fishermen and lumbermen combined.


Charles Avery Dunning: How much land do such men cultivate?


Charles Marcil: They own farms of thirty, forty and fifty acres.


Charles Avery Dunning: In my opinion they are not debarred from this act.

Long Term Farm Loans


Mr. McQUARRIE:: Would it not be
advisable to include fishermen as well? Farmer means any person whose business is solely that of farming, and the definition goes on to say:
-and who owns and occupies a farm,-
It would only be necessary to include the word "fishing" as well, and this matter would be cleared up beyond any doubt. I am afraid that if this is not done the fishermen will be out, and it will not be possible to loan money to a man whose business is fishing. If the government wish to be fair they should include fishermen as well as farmers.


Mr. BOYS:: What does the minister say is the meaning of the word "occupies"? Does that mean personal, actual occupation?


Charles Avery Dunning: That is the point we have been discussing for some time.


William Alves Boys: I would like to find out, because if that is what it means I think it is in conflict with the provisions of section 7, subsection 3, which is as follows:
Loans under this act shall be made only to fanners actually engaged in or shortly to become engaged in the cultivation of the farm mortgaged...
That would clearly embrace a man Who might be living in a city with a manager running his farm; he would be engaged in farming and would come within the provisions of this act, as I think he should. I am in favour of this act so far as it is going to give relief to bona fide farmers, but I am absolutely opposed to it if the intention is to go further, unless you are going to broaden it to include fishermen. It seems to me that should be done in a separate bill, if it is to be done at all, and if you are going to assist the fishermen of the Maritimes I would put in a word in favour of the fishermen on the Great Lakes. They are as much entitled to relief as anyone else, and there are a great many of them. Buit it is my opinion that we should not deal with both classes in the one bill. If the word "occupies" is intended to have the wider meaning contemplated by subsection 3 of section 7 I would suggest to the minister that more appropriate language would be:
-who owns and is in possession of-
Legally, as everyone knows, you may be in possession of a farm without living on it, and if this language is used there can be no doubt. If on the other hand it is intended to confine it to those who are in actual physical occupation, you are certainly in conflict with the provisions of section 7.


Charles Avery Dunning: The intention of the
government is undoubtedly to have it apply to resident farmers and that, I am informed by the Department of Justice, is a correct statement of the meaning of the language used in both the defining clause and that under discussion.


Mr. SUTHERLAND (South Oxford):: If
that is the desire of the minister would it not be better to let the word "solely" remain?


Charles Avery Dunning: We have the difficulty
raised by the hon. member for Bow River (Mr. Garland), that some judge in the west has held that a man engaged in threshing is not solely a farmer. Those of us who are farmers know that threshing is an essential part of the business of farming, and that it is done on the farm as a part of the farm operations. Custom threshing would rule a farmer out. The object of striking out the word "solely" was to meet such a case, because it would be manifestly absurd to rule out all those men who do a little threshing for their neighbours as well as their own.


Mr. MURPHY:: The minister has stated
that it is the intention of the government that loans shall only be made to bona fide farmers actually resident on the land. Many men reside on a certain quarter section who own other lands as well. Would such a man be eligible for loans on such other lands, as well as on the land where he actually resides?


Charles Avery Dunning: I am advised that the
act provides for such contingencies. There is no particular piece of fence specified; if the farmer owns other land across the road there is no reason why that should not be included with the land on which he resides.


William Alves Boys: That might be so if it were
not for section 7. But with that section I do not see how the minister can make that contention at all. If a man owns four farms the minister has informed the committee that under the definition of occupation he must be in actual personal occupation, and that is only possible on the land on which he resides. Suppose he has land in a different township altogether; if he is actually a farmer and is farming that land, why should he not be able to get a loan on both farms? It seems to me the distinction should be between those actually and honestly engaged in farming, and those carrying on something else as a side line. If they are .able to run two or three businesses they should be able to finance
Long Term Farm Loans

their farms. But I cannot see why a man should not be able to get loans on two or three farms, no matter whether they are in different townships; he can only live on one of them. I think the minister must either alter the definition of the word "occupies" or he must make an amendment to the act.


Sir EUGENE FISET:: Why not take out the word "occupies" altogether, and leave the definition as in subsection 3 of section 7?


Donald Sutherland: The minister claimed that the word "solely" was taken out to enable the man engaged in threshing part of the time to come under the act. Surely threshing would be considered part of the work of farming, and the man doing this work would not be barred in that case. I think if the word "solely" is retained and the words "and occupies" are removed, it would meet all the requirements.


Mr. BEAUBIEN:: My idea of this legislation, and of the reason why it has been advocated for some years, is that it will keep the people on the land, and encourage others to begin farming. This will facilitate the financing of these ventures at a cheaper rate.


Mr. CAHAN:: How does this bill do that?


Charles-Philippe Beaubien: That is my view of the purpose of the legislation.


Charles Hazlitt Cahan: According to the way I read the bill a man may be resident on the land at the time he applies for and receives the loan, but there is no provision that, having received the loan, he should not take up his residence elsewhere.


Charles-Philippe Beaubien: Suppose I give the hon. member a mortgage for five or ten thousand dollars on my farm. You lend me the money on the security of the land, and you have no right to tell me what I shall do with my money. That is my point. It has been argued that men living in towns or villages who are engaged in farming as a side line should come under this bill. I claim that a real rural credits measure that has anything else in view but to help keep farmers on the land, and to encourage others to go on the land, is wrong. I make this statement from practical experience and of my own knowledge, that no man is going to make a success of farming unless he resides on the farm.
I am living in possibly as old established a district as there is in western Canada, along the Red river, where there is the finest fertile soil. Farmers come in there from the United States who have bought farms and whole townships, and they would never have 
made a success of farming if they had not had unlimited means. What we want to do by this measure is to encourage our people to stay on the land, and provide them with facilities for getting cheap money in order that they will remain on the land. But if you are going to take in all these other people you are going beyond the scope of what should be accomplished by this measure. You are going to allow a lot of land miners to come under the legislation, and I do not think that class are in need of help.


George Gibson Coote: I think it is the desire of
this committee to make this subsection quite clear. As it now reads, it may mean any person whose business is that of farming, and who owns or occupies a farm. The discussion, so far as I can gather, is largely centering around the meaning of the word "occupies," and it does seem to me there is some force in the contention of some hon. members who have argued that the word means resides. The section as it reads now should certainly be changed somewhat. There are in some parts of western Canada very good settlers who reside in small communities and work the land for several miles around from that one centre. In fact there are some people who are advocating this very type of settlement. I personally know of these settlements. The men are splendid farmers. I do not think there is a probability of our getting a better type of farmer, or of finding any finer land on which to make a loan, but it might be questioned whether these men are actually residing on their farms.


Charles-Philippe Beaubien: Could not that be
covered by regulations?


George Gibson Coote: If "occupies" is not read as meaning "resides." I do not think "occupies" should be so interpreted. The point should be cleared up so that there will be no doubt about it.
Mr, DUNNING:	The word "occupies"
was put there rather than "resides" in order not to be too cramping in the definition. We have had the case mentioned of a man who might be residing on one side of the road and running a farm on the other. With respect to these people, and also those who are living in the centre of their farming land and farming the land around, bona fide farmers, authority is given in the bill to make such regulations as will cover the vast variety of exceptions which exist but which nevertheless must come within the definition of "owns and occupies." There will be a vast variety of exceptions even in a province

Long Term Farm Loans
like Saskatchewan where conditions are almost similar from one end of the province to the other. Broadly the intention is to make this act applicable to the resident farmer, and that end can be better achieved perhaps by not using too great strictness in legal definition. Manifestly some latitude must be allowed to the board to deal by regulation with bona fide cases such as have been mentioned, provided the original intent is carried out, which is that the benefits of this legislation are intended for the bona fide farmer living on the land, and not those we were discussing a little while ago, whose main business is not farming but who are living in some village or town and engaged in some other business-and nearly all of our western business men have farms in addition to their regular business. We intend to shut them out. All I can say to the committee is that that is the intention of the government, and it will be necessary, unless you cramp it very tightly, for the board set up under the authority of this legislation to make regulations in order to effectuate that intention.


William Alves Boys: If the regulations made are in conflict with the statute, the minister agrees that the statute will govern. Now we have this point right before us. Suppose a man owns three farms, is fanning one himself, and rents out the other two. He wants a loan in connection with one of the rented farms, just as much as he might want it in connection with the farm he is living on and working. But if the minister's interpretation of the word "occupies" is correct, he could not get a dollar by way of loan on the other two farms he is renting out. Now why shouldn't he?


Charles Avery Dunning: We are really not going
into the business of financing farm land which is rented out. We think it would be a very bad thing in principle for the state to give aid in connection with that kind of operation. This legislation is intended for the benefit of the agriculturist who is farming his land, not the man who is renting the land, whether he happens to live on another farm or in town.


Mr. WOODSWORTH:: Would this be too
loose

"whose main occupation is that of farming"?


Charles Avery Dunning: I do not want to cut out the fisherman-farmer.


Ambrose Upton Gledstanes Bury: I cannot see any difficulty
* about the use of the word "occupation". I do not see how you could argue that it implies residence. So far as the case mentioned
by my hon. friend from North Simcoe is concerned, if a man rents a farm to another, the landlord is not in occupation of the tenant's holding. The moment he rents out the land for even a year he has ceased to be in occupation himself, and the occupation is the occupation of his tenant. It would be a mistake so to frame the bill as to insist that a farmer must reside on his land in order to get a loan, because if you do that you will necessarily confine the loan to the land on which he is residing. Some farmers may have moved into a village or town for the sake of the educational facilities, or perhaps for the sake of health. They may not be able to reside on their farm at the particular time when they want a loan upon it, but nevertheless they may be working it.


Charles Hazlitt Cahan: As I read this bill, a man may reside on a farm and obtain a mortgage loan on another farm. It need not be the farm he occupies or resides upon.


William Alves Boys: The minister says no.


Charles Hazlitt Cahan: I am dealing with the bill as I read it, and I would like any section to the contrary pointed out.


Ambrose Upton Gledstanes Bury: The act should not be so
framed as to confine the loan to the land on which the farmer is residing, nor do I think it should be so framed as to deprive the farmer, who for some reason has to live in a village and not on the farm itself, but who is perhaps doing nothing but farming, of the benefits of this legislation. Anlother thing to which I should like to call the attention of the minister is this:	He has told us that
it is not intended to extend the benefits of this bill to ranching. If so he will have to alter his definition because the definition expressly says that farming includes stock raising.


Charles Avery Dunning: The later definition
provides for that.


Ambrose Upton Gledstanes Bury: There is the trouble. As it
stands your bill will be inconsistent. You have a section there which is intended to define the meaning of your terms. That should be the regulating section as to what the meaning of a term is. Then by some other section, which is inconsistent, you make it possible by implication or inference to alter the plain, clear meaning of the defining section. If you are going to extend the benefit of the bill to fruit farmers I doubt if the term " tillage " technically includes fruit farming.


Mr. TOBIN (Wetaskiwin):: Is there anything in the bill to prevent a man from securing a loan and afterwards renting his farm?
Long Term Farm Loans


Charles Avery Dunning: No. I may say that
there is a provision as to the sale of the security in section 7.


Lucien Cannon: I have here a copy of
Webster's dictionary in which "occupant" is defined as follows:
One who occupies, or takes possession; one who has the actual use or possession, or is in possession, of a thing; one in occupation.
I think there can be no doubt that
" occupant of land " means wh*o ever has the actual use of it.


Charles Avery Dunning: Possession.


Lucien Cannon: And possession, naturally. He can be a resident and he may also not be a resident. The tenant of a farm is the occupant of it.


Mr. GEARY:: Does my hon. friend occupy his seat when he is not sitting in it?


Lucien Cannon: That depends. We have
legal fictions that bring about the most extraordinary results.


George Gibson Coote: May I ask whether the act
will be administered according to the lawyers who may wish to question it?


Mr. McMILLAN:: You could not get them to agree anyway.


William Alves Boys: Let me address a final word
to the minister. We understand now from him that "occupied" means physical and personal occupation. If that is so does the minister think that in section 7, subsection 3, that thought is carried out? The subsection in question reads as follows:
Loans under this act shall 'be made only to farmers a-etually engaged in or shortly ,to become engaged in the cultivation of the farm mortgaged-


Charles Avery Dunning: That is the intention.


William Alves Boys: It seems to me the sections
are clearly in conflict.


Charles Avery Dunning: If you read that subsection in the light of the definition of "farmer" I think it is perfectly clear.


Mr. ROGERS:: I was going to say something about the experience we have had in Manitoba. If you widen this bill so as to provide that in order to effect a loan a man need not be a resident you open a very wide gate. The province of Manitoba has a rural credit system and has lost about $750,000 in connection with it. I venture to say that 90 per cent of that loss resulted from making the provisions unduly wide. Certain individuals living in towns commenced to speculate in farming with the result that there was a heavy loss in the operation of the [Mr. Tobin.1
system. I think that the loss of three-quarters of a million dollars in Manitoba was almost entirely due to that condition of affairs. Therefore it would be well to safeguard the present bill and confine the right granted here to farmers who live upon the land. If the provision does not work out satisfactorily it can be amended next year.


Charles Hazlitt Cahan: Paragraph (d), which we
are discussing, defines a farmer as any person whose business is that of farming and who owns or occupies a farm. I submit that paragraph (d) does not cover a case in which the commission will advance a loan and take a mortgage.


Charles Avery Dunning: Paragraph (f) covers
that.


Charles Hazlitt Cahan: No it does not. What I
suggest is that it is covered by subsection 3 of section 7, which reads:
Loans under this act shall be made only to fanners actually engaged in or shortly to 'become engaged in the cultivation of the farm mortgaged-
Now, loans under this bill are to be made only to farmers, and under paragraph (d) of section 2 "farmer" means one who owns and occupies a farm. Then under subsection 3 of section 7 it is provided that farmers must be "actually engaged in or shortly to become engaged in the cultivation of the farm mortgaged." The farm mortgaged need not be the same farm the occupation of which makes the person seeking the loan a farmer. As long as he is a farmer and owns and occupies one farm he may, I suggest, under this bill secure a mortgage upon an entirely different farm which he does not occupy.


Ambrose Upton Gledstanes Bury: So long as he performs the
conditions with respect to it.


William Alves Boys: So long as he is engaged in
farming.


Charles Hazlitt Cahan: Yes, but he owns one farm and occupies another and is engaged in cultivating it. A loan can be made on the farm which he owns and occupies, but a loan may also be made upon any other farm in the cultivation of which he is about to become engaged.


Lucien Cannon: He would not have any
right to mortgage his farm unless he owned it.


Charles Hazlitt Cahan: Certainly, but he need not occupy it. That is my point.


Lucien Cannon: He cannot reside on two
farms.


[Stage Direction]
Section agreed to.
Section 3 agreed to.﻿JUNE 1, 1926
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On section 4-Power of board.
Mr. GARDINER:: I would suggest that
this section be amended. It gives power to the board to hold for five years property it has taken by reason of foreclosure. Personally I think that five years is too long a term.


Charles Avery Dunning: That suggestion has been considered. I move to strike out the word "five" in the fifth line and substitute therefor the word "three."


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
On section 5-Capital requirements, initial capital.
Robert Rogers: What is the necessity for taking in the western provinces? We have had the rural credit scheme in the three western provinces and have not succeeded very well with it. I think we should keep clear of those provinces. If we are going into a rural credit proposition, why not let the Dominion take it up? The provinces have their own rural credit system; why duplicate it?


Charles Avery Dunning: It is to avoid the very duplication my hon. friend refers to that this scheme is proposed. No province will come into it if it prefers to continue the provincial scheme it now has. But if it desires, because of the greater pooling of security involved in the Dominion scheme, to come in, there is no reason why it should not cease the operation of lending under the provincial scheme, and turn that organization into co-operation with the Dominion, under this scheme. The great objective is the pooling of security over a wide area, such as has been done in the United States and other countries, in order to provide efficient security for an issue of bonds which will be well understood by the public and popular with them as a sound investment. Co-operation with the provinces is also necessary in order to attain the necessary flexibility. We in the west have been complaining for many years that the financial relationship between those lending money and the farmers of the west has been greatly hampered by the fact that the lending bodies are in the east and do not understand thoroughly the conditions under which the borrower himself is working. By having the provincial co-operation provided for in this bill, it is hoped to bring about that local knowledge, sympathy and understanding which have been lacking in the operation of highly centralized institutions engaged in business of this character in the past. Most of our financial institutions would

themselves admit, I think, that they are constantly striving to overcome the problem created by their very centralized nature. They require to be centralized in order to gain strength, but in the operation of their business they must constantly find fresh means of coming into closer contact with the individuals with whom they are doing business from one end of Canada to the other. By co-operation with the provinces it is possible to get the detailed information and the knowledge that brings; and to get at the same time the strength which comes from centralization and the pooling of the mortgage credit of the farmers from one end of Canada to the other.


Charles Hazlitt Cahan: Will the hon. minister tell us frankly what has been the experience of the provincial boards in Alberta and Saskatchewan? We in the east are led to believe, from the reports circulated by the governments of Saskatchewan and Alberta, that there have been very great losses in the administration of similar schemes by those governments. We who live in the east know that one of the largest banking institutions in this whole country went to the wall not because of one large account in the east but because of millions of dollars which it had loaned out in the west which could not be recovered. Before we can be in a position to understand whether this is really a reliable scheme which will pay its way, and whether trusts funds may be safely invested in the bonds to be issued, we should be informed as to the schemes which have been in operation in the two western provinces, as to their success or otherwise, and as to what particular provisions are inserted in the bill now before the House to provide those safeguards for investments that were not provided in the schemes adopted by Alberta and Saskatchewan.


Charles Avery Dunning: My hon. friend's premise is not correct in the first place. He refers to a scheme in Alberta. There is no such scheme in Alberta. That is number one.


Ambrose Upton Gledstanes Bury: But there were measures for rural relief which lost money.


Charles Avery Dunning: We do not want to mix up two entirely separate things, two things which are separated by every financial institution having to do with such matters, that is, the long term mortgage credit system on the one hand and the short term or banking business on the other. Rural credit is an inclusive term which might be said to include both, but the term rural credit has later come to mean the short term credit system
Long Term Farm Loans

rather than the long term farm loan mortgage system. In Saskatchewan and Manitoba there have been in operation long term governmental farm mortgage systems. Perhaps I am not quite correct in describing the Manitoba scheme as governmental in its operation. It is an association in which the government has considerable interest. Many people have the idea expressed by the hon. member for St. Lawrenee4St. George in that they confuse the operations of the rural short term credit system in Manitoba with the operations of the long term farm mortgage credit system in Manitoba and Saskatchewan. That confusion has arisen in Saskatchewan itself. Saskatchewan never had a governmental short term rural scheme; they have not regarded it as a field in which it would be wise to operate.


Charles Hazlitt Cahan: Then as to Alberta?


Charles Avery Dunning: I believe Alberta has a short term credit scheme, but the hon. members from that province can speak as to that.


Henry Elvins Spencer: There has been no disaster in Saskatchewan.


Charles Avery Dunning: No. The disaster took place mainly

and I am subject to correction by hon. members from Manitoba-with respect to the short term rural credit scheme in Manitoba. While I say that by way of clearing away the underbrush and getting down to what we are discussing, namely a long term credit system, I do not want the committee to believe that the experience in Manitoba and Saskatchewan has been entirely a bed of roses in connection with the long term mortgage credits. There have been difficulties. With regard to the scheme I am most familiar with, the farm loan board of the province of Saskatchewan, we must remember that it commenced operation in 1917 or 1918. It has passed through the most difficult years from the point of view' of mortgage security that western Canada has ever passed through. While there have been difficulties I may say to my hon. friend that on the first of January of this year the Saskatchewan Farm Loan Board had paid to the Saskatchewan government every cent of interest due on advances by the government to the board. That does not mean that all of the farmers paid all of the interest due by them to the board; but in the aggregate they paid sufficient of it to enable the board to repay all the interest which the board owed the government, and in addition the board was enabled at the same time to reduce the amount lent by the government for administration purposes by about $75,000

There have been further collections since then.
For the information of my hon. friend I might state that the Saskatchewan system was based on a rate of interest to the farmer of 6J per cent and the loans were for thirty years. That meant in effect that the farmer paid 7.65 per cent including amortization, or to put it more simply, $76.50 per $1,000 per annum repaid the loan, principal and interest, in thirty years and that $76.50 per annum which included principal and interest was, of course, as the hon. member knows, a smaller amount than the farmer would ordinarily pay for interest alone to the ordinary mortgage institution. That is the measure of benefit to the individual farmer in that case.
As to the amount invested, in Saskatchewan about $10,000,000 has been lent by the board and in Manitoba I believe almost a similar amount ha3 been lent by the Manitoba Farm Loans Association. I believe the Manitoba experience has not been unlike that of Saskatchewan. I admit that such a scheme requires the most careful administration. The man in charge should if possible be Scotch and he should have a very strong back-bone.


Charles Hazlitt Cahan: He might be a French-
Canadian and have the same characteristic.


Charles Avery Dunning: There are a good many French-Canadians with Scotch names who might qualify, but he should have those characteristics I speak of just as the manager of any lending institution must have a pretty stiff back in order to make a success of his business. There is a tendency in some quarters to regard schemes of this kind as philanthropic. We must not regard this as a philanthropic institution; this is a scheme to enable farmers to pool their mortgage credits in order to get the advantage which comes from combining their credits and resources. It has succeeded elsewhere; I believe I am correct in saying that the experience of the United States scheme, which is similar in many of its aspects to the scheme which we are now considering, may be said to be of great advantage to United States agriculture during a very difficult period. They have had their difficulties in operation and we shall certainly have ours. The administration of this will not be easy; but I believe and the government believes it will accomplish valuable results in reducing the cost of long-term mortgage credits to agriculture generally from one end of the country to the other.

Long Term Farm Loans


Charles Hazlitt Cahan: I am not asking for information for the purpose of opposing this bill. The words of the hon. gentleman will go to the east and be read by many who are interested in the financial scheme incorporated in this bill. I understand from my hon. friend that prior to the present time the interest has been paid upon loans made by the Saskatchewan government to the board.


Charles Avery Dunning: Yes.


Charles Hazlitt Cahan: But I understand that all that has been paid by the farmers for the amortization of their loans has been utilized by the board for the purpose of paying interest up to date.


Charles Avery Dunning: I am sorry if I gave
that impression. Every dollar that is paid by a farmer on principal is a payment on principal from the board to the government and can then be relent by the government to the board for the purpose of making other loans. All interest payments made by the borrower to the board are the only sums available to the board wherewith to pay interest due by the board to the government.


Charles Hazlitt Cahan: How long has the Saskatchewan scheme been in operation?


Charles Avery Dunning: Since 1917 or 1918; I
forget the year.


Charles Hazlitt Cahan: Eight or nine years. During that time, to what extent has the government been compelled to make foreclosure and to take over land under mortgages


Charles Avery Dunning: That is in the report;
I	could not answer my hon. friend offhand. Of course the government does not take over land; the board does. The board acts in the matter in the same manner as a mortgage company.


Charles Hazlitt Cahan: The board is the government for all practical purposes.


Charles Avery Dunning: Not for business purposes, because the government's relationship to the board is that of lending to the board money which must be met in exactly the same way as if the board was a mortgage company. Of course in a large business amounting to $10,000,000 the board have some foreclosures and they have as a result a property account. They set up a reserve in respect of losses on property account exactly as a mortgage company would do. I have not the report of the board before me. They have taken possession of quite a number of parcels of land but usually only in cases of abandonment. Those eight or nine years of experience of the Mani-14011-250
toba and Saskatchewan schemes are by common consent the worst eight or nine years of mortgage experience in western Canada. We have tasted what we may hope is the worst that we shall have to experience along that line.


Charles Hazlitt Cahan: This information must be
available in some department and I would like the minister to give the committee information which will be very valuable not only to this committee but to the country. The country is taking a deep interest in this bill. Of course in my experience I cannot distinguish as the hon. member does between a board appointed by and responsible to a government and the government itself. I regard it simply as an agent of the government for carrying out a particular undertaking. Further, while I am not presaging any evil I do not think there is any doubt that with respect to the grain districts in the next ten years we are likely to meet with difficulties quite as great as those created by the deflation of the last ten years. We must keep that in view in order to put this scheme on a sound basis, because we must have it on a sound basis as the government is placing it in the power of every trustee throughout the length and breadth of Canada to invest trust funds in securities which the government is hereby creating.


Charles Avery Dunning: Of course this is only
a matter of opinion, but I can say this based upon my hard experience of the last eight, nine or ten years, that this scheme if properly administered would stand the test of a similar ten years. That is, the foundation of this scheme renders it capable of meeting such conditions as those referred to by my hon. friend. I shall be glad to have with me after eight o'clock material indicating the experience of the Manitoba and Saskatchewan schemes with regard to foreclosures.


Charles Hazlitt Cahan: The information should be
placed on the record so that the House and the country may be fully informed in regard to it, because while I know the minister is a practical man I would rather draw my conclusions from my experience.


George Gibson Coote: While the minister is getting that information as to losses sustained by these two provincial schemes, he might ascertain what losses have been sustained by private mortgage and loan companies in western Canada. It would be interesting to compare ithe respective losses of the provincial and private systems of lending mqney on long term mortgages.

Long Term Farm Loans


Charles Avery Dunning: I shall be glad to get
that information.


Robert Rogers: Has this bill been submitted to the financial firms?


Charles Avery Dunning: Since it has been brought down they have all seen it.


Robert Rogers: Have they approved of it?


Charles Avery Dunning: I did not ask them.
At six o'clock the committee took recess.
After Recess
The committee resumed at eight o'clock.


William Duff: When the committee
rose at six o'clock we were considering clause 5 of Bill 148.


Mr. NEILL:: I would like to ask why it is deemed necessary to start this board off with exemption from interest for three years. In three years the interest on $5,000,000 at 5 per cent will amount to something like $750,000, and if this board is to stand on its own feet surely it does not need that exemption.


Charles Avery Dunning: The minister, I know,
gave quite a little consideration to the necessity for providing marginal security for bonds in the capitalization of the institution. For the information of the House I have here noted that under the United States scheme the federal government supplied each bank with $750,000 of initial capital; the borrowers subscribed to the extent of 5 per cent on their loans and became liable, if necessary, for assessment for another 5 per cent. But it must be remembered that in the United 'States the bonds are exempt from taxation of all kinds, a principle which we are not following in this bill. It is not intended that the whole of the $5,000,000 will be subscribed by the Minister of Finance immediately, but only as required.


Edward Joseph Garland: And possibly not at all.


Charles Avery Dunning: Possibly not at all, but that is not probable. As the provinces come into the scheme it is anticipated that the capital authorized to be subscribed by the Dominion will be paid over by the minister as required.


Edward Joseph Garland: But is it
not true that the scheme may be carried out without requiring the whole $5,000,000?


Charles Avery Dunning: Of course we may never pay the full $5,000,000. The issuance of bonds may be sufficiently successful to meet the requirements of the Farm Loan board without drawing upon any substantial portion of that amount.


Robert Rogers: I would regard the exemption from interest for three years as a very unsound principle to start with. As I understand it this rural credit scheme is being adopted for the purpose of providing cheap money to those who require loans on farms. If you start on an unsound basis, different from that of any other business concern of the country, then you lend your position to creating trouble all the way through. If you are going to exempt this amount from interest for three years you can do anything else you like that will be regarded and will be in fact unsound. I think it is a great mistake.


Alan Webster Neill: The wording of this section
hardly justifies the hopeful anticipations of the hon. member for Bow River (Mr. Garland) because it does not suggest that only any sum less than the $5,000,000 needed to float this venture, will be exempt from interest. It says:
The amounts provided from time to time under this subsection shall be free from interest charges for a period of three years.
Supposing they start with $2,000,000, and when another province comes in they want another $1,000,000; the whole $5,000,000 will ultimately be taken out. I appreciate the minister's point that it is desirable to start on a sound financial basis, but it is too much to give them $750,000. The board will start with this present and after a while they will say, "We are doing nicely; we are paying our interest to the government." Yes; for the first three years it will not be difficult to do that, because there will be no interest to pay. That may even cover the next three or four years, because they will have a start in that way. They may be even tempted to reduce the rate of interest on the mortgages, because they will do so well, but they must remember that they will not have $750,000 handed to them every three years, and they may be led to take an optimistic view of the situation and get in what the minister seeks to avoid, an unsound position.


Charles Avery Dunning: The Minister of Finance did give consideration to approaching this matter from the standpoint of a definite grant for organization purposes rather than the method provided in this bill, and it was felt that the organization expense could be better

Long Term Farm Loans
dealt with in this manner, because under this scheme no more would be taken than is necessary. The freedom from interest would be the full extent to which the board would be assisted directly by the government, and by approaching it on this basis the assistance is altogether and at all times proportionate to the development of the business. That was the view of the minister in deciding to adopt this method rather than the United States method by which $750',000 was given to each bank.


Charles Hazlitt Cahan: With respect to this first
provision of what is called the initial capital not exceeding $5,000,000, the amounts provided from time to time shall be free from interest charges for a period of three years. No money will he required unless a loan is made; if loans to the extent of $1,000,000 are made in the first year there is no other source from which moneys may be obtained than from this initial advance, the 5 per cent additional amount advanced by the government plus the 5 per cent of each individual loan which is taken off the amount loaned to the individual. So it is impossible that there ever may be $5,000,000 of loans outstanding, except that money to the extent of 90 per cent shall be advanced from the federal treasury. I think that is quite clear. Then, as the loans are made, interest will accrue on these mortgages sufficient to cover the interest paid to the federal treasury plus the expenses of the administration of the board. Therefore there is no satisfactory reason that I can see why interest should not accrue to the federal treasury practically from the time that advances are made by the federal treasury. In respect of the 5 per cent of advances from the federal treasury, no interest is payable on that; in respect of the 5 per cent advance by the province, no interest is payable on that; in respect of the 5 per cent taken from the individual loan of the person borrowing, no interest is payable on that. Those contributions of 5 per cent each only receive interest by way of dividends arising out of the profitable administration of the fund by the board. So that with respect to the 85 per cent of other money advanced from the Dominion treasury, I can see no reason why the interest should not accrue from the time the advances are made, because the advances will not necessarily be made until corresponding loans are made to the individual borrowers.
Furthermore, why should you give freedom of interest for three years in order to cover the organization expenses? Give your money as cheaply as you will, if that is the desire, 14011-foftf
but certainly it should not be so cheap as not to cover interest plus administration expenses, and, although you might stretch the initial organization expenses over a period of years, over five or ten years if you like, nevertheless those organization expenses should be repaid to the federal treasury through the board. Therefore I suggest that this is an improper way of covering organization expenses, by giving freedom of interest for three years on amounts up to but not exceeding $5,000,000. It is a direct bonus which will never be repaid, and you are placing this board in competition with all the-loan companies of the country. Why should you, in competition with the loan companies of the country, advance up to $750,000 of the-organization expenses, which will never be repaid to the treasury, while every other competing company has to pay its own organization expenses and amortize its expenses over a term of years?


Ambrose Upton Gledstanes Bury: If the minister is not going to answer the hon. member for St. Lawrence-St. George, I would like to call his attention to certain elements in this section 5, and ask for an explanation. At the top of page 3 we are told that repayment of the amounts provided by the government shall be made from time to time out of the earnings of the board. Are we to understand that that means the interest paid on the loans, or are we to understand that it means as well the repayments made on account of capital? If the latter, then you cannot call those earnings. The only possible moneys coming into the board to which the term earnings could by any conceivable stretch of language apply would not be repayments of their own moneys, but the interest paid in addition to the capital moneys they have advanced, over and above all expenses. I call attention to that because if you will look at paragraph (a) of subsection 2 you will see that the Dominion government is to subscribe 5 per cent of the capital amount of the loan. Then it goes on to say: -so that the total amount subscribed under this paragraph shall equal at any time as nearly as may be, 5 per cent of the total loans theretofore made and not fully repaid.
I take it that that is intended, to paean 5 per cent of the unpaid balance of the loans that have not yet been fully paid off. It does not say that, but I assume that is what it means. That being so, the amount represented by the 5 per cent which belongs to the government is continually decreasing as the capital is being paid off, and I take it, therefore, that the term "earnings" must for that reason refer to more than interest, that
Long Term Farm Loans

it must also include payments on account of capital. That is the thing that struck me as inconsistent and very difficult to explain, but if the minister means by earnings repayments on account of capital, it is capable of explanation.


Charles Avery Dunning: It is a provision for the redemption of initial capital. Manifestly, repayments of principal cannot be taken for the redemption of initial capital because they will be required to redeem the other capital provided for loans.
Perhaps I might here say with reference to the other point raised by the hon. member for St. Lawrence-St. George, that we have always to keep in mind the fact that we are endeavouring here to create a security winch will warrant public confidence as an invest-1 ment. This security consists, first, of the farm mortgages pooled; second, of an investment by the provinces, the Dominion, and the borrowers, of 15 per cent of the total of the bonds-a marginal security to that extent, and in addition the interest-free provision for three years on the first $5,000,000 of initial capital. This is a further reason for following this method rather than putting in a sum by way of direct grant to enable this institution to organize. It must have money wherewith to organize, and we must create a kind of security which will be readily marketable at the best rate of interest in order that this scheme may function.


Henry Lumley Drayton: I would like the minister to explain which has the preference under this scheme-the government for the repayment of its $5,000,000, or the bondholders? If the government has preference then I can appreciate the point as to interest. If the bondholders, on the other hand, have the preference, the point is not well taken.


Charles Avery Dunning: If my hon. friend will carefully read clause 5, I think that point will clear itself. At the top of page 3 it is provided that:
Repayment of the amounts so provided-
That is, the initial capital provided by the government.
-shall toe made from time to time out of the earnings of the board; provided, however, that before any such proposed repayment is made the reserve fund of the board provided for by section 9 of this act, shall be at least equal to the total repayments including the repayment then proposed to be made.


Henry Lumley Drayton: What does my hon. friend say that means? Suppose he puts it in his own colloquial western language, what does it mean?


Charles Avery Dunning: I cannot improve on the language as it is written.


Henry Lumley Drayton: Then my hon. friend does not understand it. I have asked a plain, straight question, and I want to know what the answer is. Which is the premier security? This is something which is vital to the foundation of the whole thing. Which is the premier security, the claim of the government, or the claim of the bondholders?


Charles Avery Dunning: The bondholders, undoubtedly. My hon. friend knows that as well as I do.


Henry Lumley Drayton: Now we have the answer. If the bondholder has the prior claim, it is then a matter of total indifference to the bondholder whether interest is charged for these three years or not, because he is prior not only to the government in connection with interest but also in connection with capital. That being so the answer given by the minister is no answer at all. Surely the minister sees that if the bond owners come to the government not only for interest but also for capital, their security is not a bit improved because they are given three years' interest. Their security is absolute as against interest for all time, and against the capital as well.


Charles Hazlitt Cahan: I suggest that that point, Sir Henry, is well taken.


Charles Avery Dunning: What are you going to do about it?


Charles Hazlitt Cahan: That is what I am asking you. As the representative of the government I ask: What are you going to do about it? I am trying to discuss the matter in a serious way, because it is not quite satisfactory to force this through by a majority.


Charles Avery Dunning: I am sorry if my hon. friend misunderstood me. I did not mean to imply what he suggests. What I meant was this: What suggestion would he offer to take the place of this provision and to deal with the problem of starting the institution off?


Charles Hazlitt Cahan: So far as the " starting " is concerned I suggest that the government is able now to estimate, within a few thousand dollars at least, the cost of starting this board. That expense should be treated as an initial expense to be repaid by the board ultimately out of earnings. This initial expenditure may be repaid over a term of years if you like, but it is part of the actual cost of these loans made to the individual farmers and should be

Long Term Farm Loans
taken care of by a specific appropriation, not by non-payment of interest for the term of three years. Further-and I may as well discuss the point now, because it comes up under this provision-the bonds outstanding are the primary security. They are secured, as I understand, in the first place by the capital provided, to the extent of $5,000,000, by the government, plus five per cent of the loans outstanding provided by the province, plus five per cent of the loans outstanding provided by the individual borrowers.


Edward Joseph Garland: Plus something else.	[DOT]


Charles Hazlitt Cahan: What else?


Edward Joseph Garland: The
security of the land itself.


Charles Hazlitt Cahan: The security of the land itself is very little.


Some hon. MEMBERS:: Oh, oh.


Charles Hazlitt Cahan: I will deal with that in a moment. I am considering the matter in the light of the experience of loan companies and others in the northwest, particularly in view of certain provisions which prevail there with respect to prior liens for mortgages. Now the government should have security with respect to the advances which it makes -first, the $5,000,000; secondly, the five per cent of all loans actually made. With respect to that the government has only the security of the amount of the mortgages outstanding. Under the provisions of this bill the government has no prior charge in respect of its mortgage. We all know by report-I do not profess to be an expert upon the municipal or provincial legislation of either Saskatchewan or Alberta-that in those provinces respectively there are prior liens which come before any mortgage, whether it is a mortgage to this board, to a loan company, or to an individual. I have seen it stated that cases have arisen-and I have prepared a number which I believe to be actual cases -in respect of loans in Alberta. Take the first case. It was originally a loan of $700 to a farmer. The farmer was unable to pay the interest, and principal of the loan plus interest amounted to $808. When it came to foreclosing it was found that on that farm there were $1,330 of prior charges in the way of municipal taxes, provincial taxes, mechanics' liens, and so on, and when the property came to be sold the company that had made the loan had to pay those prior charges before being able to recover one cent of its original principal of $700, or one cent of its accrued interest of $108.


Charles Avery Dunning: If my hon. friend will permit me, I think it would facilitate discussion if he would hold that material until we are discussing the clause relevant to it, which is No. 7. That clause bears directly on what my hon. friend is now discussing.


Charles Hazlitt Cahan: Then I will reserve my remarks. But it illustrates the point I wish to make that under this legislation bonds come first. The bonds have behind them the original advance up to $5,000,000 from the Dominion treasury, plus five per cent of all loans outstanding subscribed by the government by way of stock, plus five per cent of the loans outstanding provided by the province, plus five per cent withheld from the original mortgagee. So to that extent they are better secured than the government in respect of advances. Hon. gentlemen opposite laugh when I suggest that the government has practically no security but that which the original mortgage gives.


Charles Avery Dunning: I did not laugh.


Charles Hazlitt Cahan: I thought the hon. gentleman was rather amused at my suggestion.


Charles Avery Dunning: I was rather amused at something else at the time my hon. friend was making the suggestion, but I certainly was not amused at that.


Charles Hazlitt Cahan: Then we understand each other.


Charles Avery Dunning: No, I do not think so.


Charles Hazlitt Cahan: I was going on to show that the farmer's security in a case where foreclosure came under the laws of Alberta was of very little value, in view of the presence of these prior liens and charges which exist under the law of that province. I will not go further at the present time than merely to state that some provision should be made to give real security to this government with respect to these prior liens and charges which are a first charge and which eat up, in many cases, the entire principal of the first loan. I will discuss the other point when we come to the proper section.


Alan Webster Neill: There seem to be two lines
of argument with respect to this matter. As to the one I entirely agree with the minister that it is highly desirable there should be the very strongest conviction in the minds of purchasers that these bonds are good. Otherwise, of course, the whole principle of the bill will be nullified because in that ease people will only pay such prices as will make the money too dear. I claim that it would be much better that these bonds should be guaranteed out-
Long Term Farm Loans

right by 'the government of Canada. That is a tiling which would be understood by the humblest or least intelligent of our citizens. They would know then what they were doing. But when you tell them they are going to be guaranteed by the board, which gets its money without interest charges for a period of three years, it does not add to the security except in a very temporary way, because at the end of the three years the full liability will have to be taken up again, and it wall not afford a permanent security such as a government guarantee would give. The other point of view that the minister advances it that it is necessary to provide for organization expenses, to give the board a start. The minister himself suggested a better way, namely by paying a fixed sum to begin with. I believe 'that .the method in the bill will be almost an evil, because for the first (three years of their existence the board will be wallowing in money. They will have the interest coming in and nothing going out, and it will be calculated to mislead them and to give them what is known in more common circles as a swelled head. They will begin to think they have more money than they really have, and may indulge in a course of dealing not altogether warranted.
I do not generally carry five million dollars about my person, but if anyone would give me a present of three-quarters of a million, I would undertake to finance this scheme at an agreed on rate of interest. Certainly any loan company would do so, and of course we recognize all the responsibility and inevitable trouble that arise when a government embarks on any scheme to lend money. The suggestion is made, what is the remedy? I would suggest an obvious remedy, either to give a direct vote for organization expenses and have no interest exemption, or cut down the interest exemption from three years to two years. Just look at the proportion of the thing. Here iwe have an expenditure of $5,000,000. and it is suggested that it will take three-quarters of a million for organization expenses. That does not seem a reasonable proportion for such a scheme. That would be equivalent .to spending $750 in organizing an investment of a similar character of $5,000. I would suggest that it would suffice if we cut it down to an exemption of half a million. That would take care of the organization expenses on a most ample scale and would do away with some of the other objections which have been raised.


Henry Lumley Drayton: I agree in
principle with a great deal of what my hon.

friend from Comox-Alberni has said. There are really no organization expenses in the ordinary sense of the term at all. Organization generally has to do with the expense of selling stock and' the like, and the expense of carrying your monetary overhead before you get under way. In this case you have no trouble about selling the stock or lending your money, and no loss in connection with the monetary overhead, because the money will be used when it is necessary. But that is not the real reason. The minister gave the *real reason when he said. "We want the value of these bonds to be certain. We want people to know they are buying a good thing". I am paraphrasing what he said. And he said further, "We are giving three years' exemption from interest". But that whole object and argument goes when the minister tells me frankly something which he never could have considered when he inserted that provision, namely, that as he understands it now the bondholders are to come before the whole of *the five million.


Charles Avery Dunning: Of course they are.


Henry Lumley Drayton: So that they are ahead of the interest for all time. Therefore there is no possible object, according to his explanation, in giving an exemption. There is nothing like putting the matter plainly. Why not insert a clause in this bill saying that the status of the bondholders is ahead of the government and! takes priority of the government not only for three years, but in respect to the whole of the capital and interest as well? In that case we would have a security unquestionably good so far as the bondholder is concerned. The cost is met, I think, without any very, very great expense to the treasury.


Charles Hazlitt Cahan: Why should we not go further than that and make a plain guarantee of the bond? You might as well agree first as last that no government now existing, and no government which may exist in the future, dare allow those bonds to go by default, no matter what the loss may be. The parliament of this country constitutes the board. The government undertake to make advances, and further than that, they provide, as part of this legislation, that these bonds shall be proper investments for trust funds in every part of the Dominion. A government which undertakes to form that board under legislation passed by this House authorizing the investment of trust funds in that board, dare not afterwards allow the bonds to be repudiated. Under present conditions the bonds

Long Term Farm Loans
bear interest at 5 per cent. Under guarantee of this government those bonds bearing interest at 41 per cent should sell at par. If your object is to give cheap money to western farmers-and I think there is a little too much said about cheap money to benefit the farmers-why not guarantee the bonds at 41 per cent, or whatever may be the rate, so as to ensure that the bonds will be sold under the rate of interest guaranteed with respect to them in order that you may give a cheaper service to the western farmers? No government now in existence and no future government in Canada, so long as this board exists, no matter what failures they may have in the west, would dare allow these bonds to go by default in the hands of trustees, representing as they do investment of trust funds from one end of the country to the other. I think it is a camouflage throughout.


Arthur Meighen: What does the minister expect the farmer to pay in the way of interest?
I	have read over the clauses of the bill and I would like to get the minister's idea. I may be a borrower.


Charles Avery Dunning: You are going to another section of the bill.


Arthur Meighen: No, this appertains to the whole bill.


Charles Avery Dunning: Subsection 5 of section 7 of this bill reads:
The interest rate on loans under this act shall be such a rate in excess of the interest rate yielded at the time of issue by the last series of farm loan bonds issued by the board as shall 'be sufficient, in the judgment of the board to provide for the expenses of operation and for the necessary reserves for losses, or if no such bonds have been issued, such a rate as in the judgment of the board will be yielded by the farm loan bonds when issued, increased by provision for expenses and reserves as aforesaid.
There will be discussion on that subsection which touches the point my right hon. friend refers to. I understand he wants my opinion as to the rate?


Arthur Meighen: Yes.


Charles Avery Dunning: That is very difficult to answer, and I say so frankly. It will depend upon how secure investors feel with regard to this bond which we are now discussing. Referring to the experience of the governmental schemes at present in operation, I stated this afternoon that under the Saskatchewan scheme 6J per cent was charged to the borrower in the form of interest. Under the Manitoba scheme I believe the rate was 61 per cent m the form of interest, and one per cent or a little more for amortization. I think under this scheme they should be able to lend
money at that rate. That is an opinion based upon existing conditions.


Henry Lumley Drayton: It should be better than that.


Arthur Meighen: The minister was more or less frank in giving an estimate, but to say that it was difficult to do so is an evidence of cautiousness rather than of frankness.


Charles Avery Dunning: I prefer to be cautious.


Arthur Meighen: I notice that the contemplated rate of the bond will be five per cent. The minister may as well give up any hope of a lower rate if the bond is issued under the terms of this bill, because from what I know of the money market that would be a pretty low rate. The farmer has to pay enough over and above that to cover the expenses of the board. I do not think that will be very much, although I have not yet been informed as to who are to be the members of the board. I might make a pretty fair guess.


Charles Avery Dunning: My hon. friend is under one misconception. There is nothing in the bill fixing the rate of interest on the bonds at 5 per cent.


Arthur Meighen: I know there is not, but the minister knows that a bond issue of this character would not sell to-day at par at a rate under five per cent. He will do very well if he gets the bonds sold on a five per cent basis. I do not think he will get that, but I do not pretend to be sufficiently expert in financial matters to give an opinion worth very much. The farmer has to pay enough above that to keep the board going. What that will cost will depend somewhat on the personnel and the character of the business management. In the second place the farmer has to pay enough above that again to take care of losses of his fellow farmers, and if they are proportionate to losses occurring in Manitoba at present, what that will add to the rate over the five per cent the minister would be very cautious if he said he did not know. If they run as the losses in Manitoba are running to-day the additional rate would not be covered by three per cent.


Charles Avery Dunning: Three per cent in what
form?


Arthur Meighen: Over and above the five per cent. The rate of loss in Manitoba is very heavy, although of course there is a great question as to when you are going to count your loss. If you have the farm you
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may put it on your books at what it costs to cover the amount of the loan plus interest and costs.


Robert Forke: Does the right hon. member refer to the farm loan plan?


Arthur Meighen: Yes. I am not referring to rural credits at all; I am referring to the farm loan plan, because I made careful inquiries in connection with it. There are losses enough to-day, although they may not appear on the books, that if the farmers were to be called upon to add to their rate of interest to make up those losses they would want to get out of that loan into another. Assuming, however, that this will be as good as that paragon of excellence, the minister's own plan in Saskatchewan-


Charles Avery Dunning: I did not say so.


Arthur Meighen: -a considerable amount will have to be added to the five per cent to take care of losses. In addition to that a reserve fund must be created equal to 25 per cent of the outstanding loans, and after that 25 per cent is reached, 10 per cent of all earnings are to go into that fund. The farmer has to pay enough over and above the 5 per cent to cover the cost of running the scheme and his share of the losses, and to take care of the reserve fund. I do not know what rate we have reached now, but I will guarantee to any contemplating borrower that we are certainly at 6i per cent. But that is not going to be enough. This stock issue is going to carry a dividend. The borrower gets a share of stock, five per cent of what he borrows; the government gets a share, five per cent also. The government subscribes to five per cent of the whole outstanding amount lent; the provinces also subscribe to five per cent of the whole outstanding amount lent, and all this is going to bear a dividend. Indeed it is going to bear so much dividend that the government contemplate under the last subclause of section 9 that the accumulated dividends on the fanner's stock will in time discharge the whole loan.


Charles Avery Dunning: No.


Arthur Meighen: Yes. Read the last subclause. I like to indulge in these visions myself. The minister puts this in the bill to provide that after the accumulated dividends on the shares of stock that the farmer has, pay off the whole loan, the farmer has to give up the stock. The farmer will be quite ready to do that.


Charles Avery Dunning: My hon. friend knows
that is not a fair interpretation of subclause * of clause 9.
^Mr Meighen.]


Arthur Meighen: That is what it says.
Perhaps the minister will give another interpretation when he gets to it.


Charles Avery Dunning: It would facilitate
matters if we could discuss each clause by itself.


Arthur Meighen: The whole bill is tied
up together; you cannot completely separate the clauses for the purpose of discussing a bill of this sort. The minister says that the fanner's rate has to cover, first, the 5 per cent estimated interest which the bond will bear; second, the cost of management; third, the losses; fourth, the reserve fund and, fifth, some profit on the Stock. Is that not right?


Charles Avery Dunning: I would prefer to state
it in my own words.


Arthur Meighen: Why would the minister prefer any other words than those?


Charles Avery Dunning: Because they are not
fair.


Arthur Meighen: I do not know what is
wrong with them. I have not reached the end yet, because the minister contemplates that he is going to get that $5,000,000 back. That has to come after the five charges that I have already recited. What is going to be the rate of interest that will take care of all those responsibilities?


Charles Avery Dunning: My hon. friend asked
for my opinion. I wonder if he would be equally frank and, having recited all that tremendous load, tell us what rate of interest should in his opinion be charged.


Arthur Meighen: It would be so high that I would not like to be the author of the charge.


William Thomas Lucas: What are the minister's
objections, if any, to the government's guaranteeing these contingent liabilities?


Charles Avery Dunning: This business of adopting another minister's bill and endeavouring to give all the explanations which he would give who has been studying it so long is not easy. But everybody has been treating me so fairly in the matter that I will endeavour to answer the question asked by the hon. member for Camrose as to why it would not be better to have the government guarantee the bonds. In the first place this is a scheme whereby the provinces desiring to cooperate are asked to assume a measure of responsibility, and if there were a Dominion government guarantee there would not and could not be any provincial responsibility. Another point is that even we in Canada can

Long Term Farm Loans
learn something from the experiences of other countries which have been experimenting in this regard, and from them we learn that it is possible by government assistance in the initial stages to set up a form of security and a system of long term farm loans which will function without being a contingent liability so far as the government is concerned in connection with bonds with no written government guarantee. The United States farm loan scheme has often been referred to; it was referred to by my right hon. friend in a very capable speech on this subject not so long ago, and it was also referred to by the hon. member for Vancouver Centre (Mr. Stevens). What are the conditions in that country with regard to security? The federal government put up $750,000 of stock in each federal land bank and the federal government gets no interest on that $750,000. It remains for all time a stock held without interest in that federal farm loan bank under the United States system.


William Thomas Lucas: By that method they have
given a very low rate of interest to the farmers.


Charles Avery Dunning: No; the reason the low
rate of interest is given to the farmers is that they have made their bonds exempt from taxation, and when a low interest return on bonds is effected it can be passed along to the farmer. Speaking as a farmer, however, I do not believe that the agricultural community generally desire to have cheap credit based on tax-exempt securities; nor do I think that this would be sound. The reason for the cheapness of money under the American farm loan system is the fact that the bonds are exempt from taxation.
With respect to the edifice which the leader of the opposition (Mr. Meighen) has erected, of charges that have to be met out of interest, it is of course apparent to everyone that all the charges incident to the conduct of a loan mortgage business must be met by that business.


Charles Hazlitt Cahan: Except one-taxation of
income.


Charles Avery Dunning: Yes, there is that one;
and there would be some advantage in that regard. The experience of existing organizations gives us some guide in this matter, and while I do not want to harp on the Saskatchewan scheme it is only natural that I should refer to it rather frequently- inasmuch as I am the father of it. Now, no one can have any final information regarding losses on foreclosures in a mortgage institution which is continuously operating, for the
reason that there is always a land account which is being gradually liquidated. The proportion of losses in connection with liquidations is being ascertained from time to time and it is possible to assess the final loss in that direction only by taking cogniz-aance of the sales against the land account. Let me briefly state the experience of Saskatchewan in the matter of interest. The province has charged the board the cost of the money including everything, and, to arrive at something steady over a period of years, the rate of 5j per cent as between the treasury and the board was set as the initial charge. As to the adequacy of this scheme over a period of eight years, I may say that there has been a variation of only a few thousand dollars as between the cost to the treasury of the money, including all costs, and the aggregate of 5i per cent charged the board. So that the original estimate is approximately correct.
The board charges 6i per cent, and the records show that at that rate it is possible to make an earning. Of course it is only a book earning because in the agri-
9	p.m. cultural loan business you have always got your money out in the form of assets. That brings me naturally to the point raised by my right hon. friend, which is of the greatest importance in connection with this class of business-losses due to foreclosures which are afterwards disposed of at less than the amount the institution has invested. That, of course, is the problem. I submit that it is not fair to imply, as my right hon. friend did,, that all lands taken over under foreclosure represent losses. They do not in practice. In the experience of loan companies there is only an inconsiderable loss, while in the case of the farm loan boards losses are rarely sustained. And these losses do not represent the total amount advanced in the first place. Moreover, loan companies have been known to sell farms, after carrying them for a few years, at more than there was against them at the time of foreclosure. Western Canada is improving very materially just now in this regard, an agricultural mortgage man having told me within the last few weeks that they were able satisfactorily to reduce their outstanding land accounts. The fact is that they are now able to make sales at better prices than formerly, and are thus reducing their land outstandings.
These things are of course all matters of effective administration. Any scheme depends for its success on the character of its management. You may have on paper what appears
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to be a beautiful scheme, and one that will work like a charm, but which in the hands of an incapable man will go to pieces. On the other hand, you may have a scheme which, while it does not look particularly strong on paper, can in the hands of the right man and under a sound administration be made to work satisfactorily. We have before us now the experience of the United States in connection with their federal farm loan scheme; we have the experience of the European countries which, of course, is not quite so applicable to our conditions; we have the experience of the Manitoba farm loan association, which is the closest approach in Canada to this particular proposal; and we have the experience of the Saskatchewan board. I believe that Ontario also has had some experience in this matter. The Superintendent of Insurance, who has given a good deal of study to the subject, has the available experience of the loan companies in Canada in relation to this particular class of work, and with all this experience to guide us I personally believe that the scheme here proposed will function successfully, under proper management and under reasonably normal conditions, at the 6i per cent rate. I know that this rate will not suit my hon. friends to my right. They want, no doubt, a lower interest. Well, they may get it, but judging from the experience I have had I am rather doubtful of their being able to get a rate below 0j per cent. If a lower rate can be obtained, and if the scheme can work satisfactorily on that basis, I shall welcome it. But it seems to me that it would be worse for the farming industry to obtain money too cheap if this will mean that the scheme will run behind. It would be better to pay a fair rate of interest to enable the scheme to function as the law intends it to, continuing to spread -its advantages throughout the agricultural areas of Canada for a period of years, rather than, for the sake of a lower interest, to have its success impaired.


Mr. NICHOLSON:: Paragraph (b) of subsection 2 of section 5 provides that each province in which loans are made shall be required to subscribe for the capital stock from time to time, as loans are made under the act. I take it that the minister realizes that this parliament has no power to compel any province to become a party to this scheme. This being the case, the section to which I refer will render the whole scheme inoperative, for I do not believe that it will be possible to get any provincial government in Canada to participate in an undertaking of this kind [ Mr. Dunning. ]
administered wholly by th-e federal govern-mient. If the minister will read1 certain provisions in the bill he will find that the administration rests exclusively in the hands of the federal government.


Charles Avery Dunning: Perhaps my hon. friend
will wait till we come to those clauses before he discusses them.


George Brecken Nicholson: There are certain
provisions whereby the provinces will apparently have some say in the administration, but it will be found in the final analysis that the thing will- be managed by the federal -government. In Ontario, Manitoba, Saskatchewan, British Columbia and, to some extent, in Alberta-I do not know about the eastern provinces-provincial loan schemes are already in existence. We know that this is the case in Ontario, and according to what we have heard to-day Saskatchewan has a perfect scheme.


Charles Avery Dunning: No one claims that.


George Brecken Nicholson: In Manitoba there is
a dual scheme providing for both long and short terms and- in Alberta there is a short term scheme. We are now providing that this scheme shall become operative only when the provincial governments come in, but I do not think that the provinces will join under such conditions. I agree with my hon. friend (Mr. Cahan). If the government intend to make this scheme operative they should set out in the act, what they are going to do in reality; that is, guarantee the bonds. They will get cheaper money without a doubt, and as my hon. friend pointed out they are virtually guaranteeing these bonds; they dare not do otherwise. Why not start out right and eliminate these provisions, which can do nothing else than weaken the effect of the act?


Richard Burpee Hanson: Has the minister any assurance that any of the provincial governments will come under this scheme? in the province of New Brunswick, for instance, we have a farm settlement board which lends money to accredited farmers on approved security, holding title to the land until the loan is fully paid. I doubt very much whether New Brunswick will have anything to do with this scheme. Have the provinces been aproached in any way?


Charles Avery Dunning: If the minister were here he could probably fell of his conversations with various provincial treasurers regarding this matter; I could not say with certainty that any provinces will come under it. I

Long Term Farm Loans
can say, however, that there is an advantage in the scheme even to those provinces which now have similar schemes of their own. The great difficulty with provincial farm loan schemes is generally that the credit of the province, engaged as it is with a great many other undertakings, particularly when these undertakings have to do with public utilities under government ownership and things of that sort, cannot be extended very far in this direction. When a province puts 810,000,000 or $15,000,000 into this form of activity along with all its other activities, naturally there is a disposition to go very slowly, and properly so. But by the pooling of mortgage credit under this scheme it is possible to widen the area. I would say to my hon. friend from East Algoma (Mr. Nicholson) that a highly centralized scheme such as he suggests, without the benefits of provincial associations such as this bill provides, would not, I fear, work in Canada; it would not be sufficiently flexible to provide adequately for the widely varying conditions in this country. Now I am wandering off myself into another matter. I will deal with that when the proper section comes along, and if my hon. friend will watch for section 8, which has to do with the provincial relationship, it will be more in order to discuss the matter then.


William Alves Boys: Does the minister think there is any chance of the province of Ontario coming into this scheme? I say without hesitation that there is no such chance, because at present Ontario, through the Agricultural Development Board, is lending money to the farmers upon first mortgages to 50 per cent of the value, at the rate of 6 per cent. If they have to pay 6i per cent under this scheme there is not the slightest chance of Ontario compelling farmers to pay that rate when the province is now lending money at 5 per cent.


Charles Avery Dunning: My hon. friend is giving some information now. He has made a statement which in his own mind, I am sure, offsets the pyramid his leader set up a moment ago. How is it possible for this provincial board in Ontario to meet that terrific array of charges set up by the leader of the opposition, and at the same time lend money at 5 per cent? How is it done?


William Alves Boys: In the first place the government get their money at about 4 per cent or less, and operate at a cost of 1 per cent.


Richard Burpee Hanson: They have a government savings bank.


Charles Avery Dunning: Then they lend money received by the provincial savings bank on long term first mortgages?


William Alves Boys: I am not saying where they get their money; they may get it from the sale of bonds-


Charles Avery Dunning: They do not get 4 per cent money from the sale of bonds.


William Alves Boys: I do not think Ontario pays more than 4 or 4J per cent. That may not be the exact figure, but it is not very much more. I know I am correct in the rate of interest; it was reduced a year ago from 6 per cent.


Charles Avery Dunning: The provincial government must be contributing something towards the cost of administration and the losses, to be able to lend money at that rate. The hon. member for West York (Sir Henry Drayton) could, I feel sure, give us some information about it, but the scheme certainly cannot be self-sustaining at that rate of interest; it is quite impossible.


William Alves Boys: I do not want the minister to think I am criticizing the plan; I have already expressed myself as favourable to it, but I am pointing out that there is not the slightest chance of Ontario taking advantage of this scheme in view of what they are doing at present.


Richard Burpee Hanson: And the same would be true in the Maritime provinces. In New Brunswick the government assumes the entire cost of management, but I am glad to say they do not do a large business. They keep it down as much as they can, but the funds are available upon proper application, and money can be obtained for 5 per cent. So I am sure there is no demand in New Brunswick for this class of legislation.


Edward Joseph Garland: Are the provisions of the New Brunswick act wide enough to include fishermen?


Richard Burpee Hanson: No, I do not think they are.


George Brecken Nicholson: I do not want to prolong the discussion, but surely it cannot be suggested that the only means by which you can get local administration or an administrative body in touch with the local situation in order to administer this act is to have the provinces come under this scheme. The central board or the federal government can provide a provincial organization just as effective as can be obtained under this measure. Under this bill I submit that there
Long Term Farm Loans

is not the slightest chance of getting the various provincial governments, with their different political complexions to come in under the scheme. We might as well face the issue squarely; these governments will not pool their interests and make themselves responsible for the lending of money which, m the final analysis, comes directly under a federal administrative body. That is the point, and if the scheme is to be made effective we might as well strip it altogether of these encumbrances and establish a federal loan scheme for which parliament and the federal government are responsible, free altogether from provincial entanglements. If this proposal is to be made effective that is the only way it can be done. I am absolutely certain, and I believe the minister will agree with me, that if we wait until we get a plan by which the provinces will co-operate with the federal government in a scheme of this character, we will wait until doomsday.


Charles Hazlitt Cahan: I think the hon. member
for East Algoma quite misunderstands the minister. If I followed his argument and made a proper deduction from it, he said that in Saskatchewan they have a really well administered board and loan fund of a similar character to that proposed in this bill. But unfortunately Saskatchewan, the minister suggests, has undertaken such large provincial obligations-


Charles Avery Dunning: No, I did not say that, and I did not imply it.


Charles Hazlitt Cahan: I think it is a fair inference that the obligations were so great that you could not expect the government to extend that scheme.


Charles Avery Dunning: I did not say anything of the kind.


Charles Hazlitt Cahan: I am very sorry if I took the wrong inference. I take the hon. gentleman's word implicitly, but that impression was left in my mind.


Charles Avery Dunning: I said all the provinces of Canada; I was drawing no invidious comparisons. I may say; however, that in financial stature the province of Saskatchewan compares favourably with any other province.


Charles Hazlitt Cahan: We may as well get rid of the camouflage; nowhere east of lake Superior is there any demand for this scheme, and no eastern province has the slightest desire or intention of entering into it. We are dealing with a scheme for the benefit of Manitoba, Saskatchewan and Alberta; there is no use camouflaging it under any other words or de-

scriptions. Now, will Alberta, Saskatchewan and Manitoba, each with what is claimed to be a well administered scheme, each having reached the extent of their credit in regard to making farm loans of this nature

will they be enabled to unload their schemes upon the federal government by associating with the federal government in the operation of this fund now contemplated?


Charles Avery Dunning: Definitely, no.


Charles Hazlitt Cahan: Will Mr. A, a farmer in a district of Saskatchewan who has a loan from the Saskatchewan board, be authorized to pay off that loan and take another similar loan under this scheme as provided in this bill?


Charles Avery Dunning: If he could get away with it there is nothing in the bill to prevent him, so far as I know.


Charles Hazlitt Cahan: The banks, I believe, are
quite favourable to this rural credits bill, and I am always suspicious when I find financial bodies so favourable. To what extent will they be able to unload1 the liabilities due to them by the farmers of the west by having those who are liable to them for advances come in under this scheme, and out of the proceeds of loans made to them by this board proceed to liquidate their liabilities to the banks? Is there some limit? If not, then just so soon as Manitoba or Alberta or Saskatchewan finds that its credit is limited, finds that it wishes additional credit in the markets of the world, just so soon, by putting moral or legal pressure upon its clientele, will it force them to liquidate their loans to the provincial government by accepting new loans under the federal government scheme. That is the position. In view of the fact that these long term loan boards in the three provinces of the central west are doing so well, would it not be far better for the Dominion as a whole that this government should make appropriations where necessary to assist the provincial boards in carrying out the work they now have in hand? If the hon. gentleman suggests that the credit of these bonds is to be greater because they are stretched over farm lands in all the provinces, the idea is bound to be an abortive one. There will be no loans east of lake Superior under this scheme, and if the Dominion government by its guarantee of these bonds, and by the provisions in the bill which admit of this board taking over the liabilities of the provincial boards-


Charles Avery Dunning: It does not provide that.

Long Term Farm Loans


Charles Hazlitt Cahan: But there is no obstacle.
It entirely rests with the nominees of the government appointed to this board to say to what extent they shall take over the liabilities of these provincial boards.


Edward Joseph Garland: I am sure
the hon. gentleman does not wish to mislead the committee. I would like to know where in this bill he finds anything which will permit this federal loan board or any advisory board in the province to lend any sum under this scheme for any other purpose than a farm loan.


Charles Hazlitt Cahan: Certainly, for a farm loan.
I am dealing with farm loans and nothing else.


Edward Joseph Garland: The hon.
gentleman is dealing with farm credit associations in the provinces.


Charles Hazlitt Cahan: I am dealing with farm
loans and with existing loans on farm property in the provinces I have mentioned, in the central west. I say there is nothing in this bill which prevents the boards formed under it from taking over those liabilities, and nothing which prevents the provincial authorities, by moral suasion or otherwise, from forcing those who have loans from the provincial boards to liquidate their loans to them by taking out new loans under the Dominion board. Therefore I think that so far as the Dominion is concerned it would be better either to guarantee the loans outright or make them direct from the treasury of the country at the lowest rate of interest consistent with the standard rate which the government pays upon the loans which the government places upon the markets of the world. If you are going to make these loans, make them direct; let the government use their own officers to do it, and let them restrict the advances to loans in those provinces in such a jyay as to prevent the banks which have liens on farm lands and liabilities owing by farmers of the west from having these liabilities unloaded upon the Dominion government board-


Robert Gardiner: Will the hon. gentleman tell this House where banks can take a lien on farm lands?


Charles Hazlitt Cahan: The farmers of the three
provinces of the central west at the present day owe millions of dollars to the banks, and there is nothing in this bill to prevent a farmer securing a loan from the Dominion board and using the proceeds to pay off his liabilities to the bank.


Robert Gardiner: The hon. gentleman
stated that the banks had liens on farm lands. Will he say how a bank can take a lien on farm lands?


Charles Hazlitt Cahan: It does that the moment it obtains a judgment against the property and registers that judgment, and there are judgments rendered in the west to my knowledge running into hundreds of thousands of dollars. I have no doubt they run into a very much larger sum than that.


Mr. STEVENS:: I regret I did not have
the privilege of being in the House all the afternoon and listening to the discussion. I understand, Mr. Chairman, that we are on clause 5, and I shall try to confine my remarks to that clause, although I notice that a good deal of the discussion has been on clause 7. I shall have a few words to say on that when we come to it. In clause 5 we are dealing with the question of capital stock and the manner of financing. I wish to say most emphatically, and I do it with considerable deference to my hon. friend who has just taken his seat, because I know his knowledge of these matters is very great, that from my study of this question, which has extended over a number of years recently and has been of a more or less intimate character, having been on different committees during the last five years, my firm conviction is that it would be far better for Canada, if it is to have a rural credit scheme, that it should be based on the principle set forth in this bill, than that it should be of the character of direct Dominion government administration, with loans direct from the Dominion treasury itself.


Charles Hazlitt Cahan: Is not this Dominion government administration?


Henry Herbert Stevens: In a sense, yes.


Charles Hazlitt Cahan: Is it not in every sense?


Henry Herbert Stevens: I am afraid my hon.
friend mistakes the spirit of my observations. I am not offering these remarks in a controversial spirit at all. I think there is a great distinction between the raising of capital by non-guaranteed bonds, bonds not guaranteed by the government at all-raising capital for instance, upon an issue of bonds by what might be termed land banks-and the lending of money direct by the Dominion government, or the lending of money based upon bonds guaranteed by the Dominion government and administered by officers of the crown.
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Charles Hazlitt Cahan: The hon. gentleman evidently did not hear the prior discussion. Does he think that any Dominion government, this or any succeeding government, could afford to allow one single bond to be defaulted in view of the fact that by this legislation we have created a fund assisted by advances from the government and made the bonds themselves investments for trust funds from one end of this country to the other?


Henry Herbert Stevens: I appreciate the question fully; it has been most intimately discussed by different committees in several preceding years. Should such a contingency arise in the future I do not think the Dominion government would allow bonds of these banks to go into default. I think parliament would be compelled to do something as a matter of national honour. But I want to point out to my hon. friend that the experience of the countries that have taken up this form of financing, the issuing of land bank bonds, has been that the bonds themselves have become the soundest class of security, a class of security equal to that of the national bonds. I believe this but I make one qualification, namely, proper administration.


Charles Avery Dunning: Absolutely.


Henry Herbert Stevens: I believe that these bonds, if properly administered, will prove to be equal to Canadian or provincial bonds in the market; I have not any doubt of it.
Now then we come to this question, "properly administered." There may be some ground for criticism of the plan-I am not criticizing it; perhaps it is as good as we can get-but I will say that I believe the plan suggested in this bill, so far as proper and economical administration is concerned, is better than any scheme I know of that could be erected within a government department, as government departments from our knowledge have been administered in the past. In making that statement I am not reflecting on the governmental system, but this is what we find in experience-we must admit it, I think-that when a department of government undertakes the administration of a business? matter, a matter that is commercial -shall I say?-in its character, there is a tendency to allow the political element to obtrude itself unduly and to influence it.


Charles Hazlitt Cahan: Shall we escape it in this case?


Henry Herbert Stevens: Perhaps not altogether,
but I say it will be less in this case. I will put it that way and I think I am moderate in doing so. There is less likelihood of 
political interference under this method than under departmental administration. Or let me put it in another way: Under departmental administration you are almost certain to have political interference, but under this method I believe you will largely escape it. We are passing through an experience just now. That experience is the administration of a national railway. It is a tremendously big thing but I will say this of the National railways and I only inject this, Mr. Chairman, by way of illustration.


Charles Hazlitt Cahan: I suppose my hon. friend does not want to provoke discussion?


Henry Herbert Stevens: I do not want to provoke discussion, but I say this: because of their magnitude, it will take a number of years to demonstrate fully what will happen in respect to the National railways, but I do think there has been a great deal accomplished in the way of eliminating political interference in the administration of a public utility under the method which was formulated by this parliament for the operation of the National railways. I do not say we have escaped it altogether, but I think we have made a big stride-shall I say?-towards the elimination of the political element in railway administration. That is the reason I am very strongly of the opinion that this method suggested by the government is perhaps the best method we can get.
Now let me say one word, perhaps not so directly on the clause and yet in support of this argument, and it is this: I believe we have need of this legislation. I think we must get that thought into our mind. I am not so sceptical as some who have spoken as to Ontario and Quebec, and the larger provinces of the east, not participating. I will venture this prediction-it may be rather a reckless thing to do but I will venture it in any case-that when this scheme is inaugurated, is operating, and is proving itself successful, we will say in the western provinces, the people in other provinces will be anxious to take advantage of it.
I am not going to transgress to the extent of discussing clause 7, but I should like to say a word on that clause when we come to it.


Charles Avery Dunning: All right.


Henry Herbert Stevens: I want to emphasize my
conviction that there is a great need for a land bank scheme, using that term to express perhaps what would take a lot of words to express. There is a need of it.

Long Term Farm Loans


Charles Hazlitt Cahan: There is a great difference
between this scheme and the land bank system.


Henry Herbert Stevens: I would not think so. I think there is a very striking similarity.


Charles Avery Dunning: Very striking.


Henry Herbert Stevens: I do not say for a
moment that this is identical with every land bank scheme I have seen, but I, do see a striking similarity, and I think it justifies using that description of it. I again state that I would be inclined to support this scheme much more readily than a scheme of direct governmental loans. Had the minister introduced such a scheme he would have found rather a harsh critic in myself.


George Gibson Coote: I would like to say one
or two words about this scheme, particularly in answer to some of the statements made by the hon. member for St. Lawrence-S't. George. He seems to think-


Charles Avery Dunning: Stick to clause 5 from
now on.


George Gibson Coote: I have no remarks to make upon clause 5. If we are restricted to clause 5 I will certainly sit down.


Charles Avery Dunning: I think we ought to
pass clause 5.


Henry Lumley Drayton: Let us see if
we understand clause 5. After all it is a good thing to get an understanding of just exactly what we mean. We are now approaching the question of floating a concern, getting its capital and getting it running. We put up $5,000,090. I have been glancing over the bill since I had a chat with my hon. friend the minister. What is intended under the bill is that that $5,000,000 shall, in the first instance, form a fund from which loans can be made.


Charles Avery Dunning: An initial reservoir.


Henry Lumley Drayton: So that you
have not only 100 per cent of your bonds as security but a reserve of $5,000,000. Now let us go a step further. Not only have you got your mortgages and your reserves but you also have your stock subscriptions. Supposing we start out that way, how are we going to get this money? I should think there must be two and a half million dollars' worth of loans drawn from the government $5,000,000 before one would think of starting a bond issue.


Charles Avery Dunning: No.


Henry Lumley Drayton: The minister
says "no" but I would have thought so.
Mr-. DUNNING:	In Saskatchewan continuous sale has been very successful indeed.


Henry Lumley Drayton: But you would not want to start your continuous sale before you knew you could sell your bonds, or before you had sold a fair amount.


Charles Avery Dunning: About a million.


Henry Lumley Drayton: Let us put it
at two and a half millions.


Charles Avery Dunning: By way of illustration.


Henry Lumley Drayton: In that case
the borrowers would have two and a half million dollars' worth of loans and security to the amount of $5,000,000 from the Dominion government, in addition to the amount of stock subscribed. Am I right in that


Charles Avery Dunning: Not quite.


Henry Lumley Drayton: Wherein am I wrong?


Charles Avery Dunning: They would not have
$5,000,000 of security advanced by the Dominion government.


Henry Lumley Drayton: That is perfectly true. But the $5,000,000 is the maximum amount which could be drawn upon and which could be the ultimate security. They would know it was.


Charles Avery Dunning: We are understanding
each other much better now.


[Stage Direction]
Section agreed to.
Section 6 agreed to.
On section 7-Conditions for loans.
Henry Herbert Stevens: Referring to some observations made a moment ago, I noticed in paragraph (d) of subsection 2 a clause which I think is quite properly there, but I should like to suggest to the minister that he might safeguard it a little. The paragraph reads:
To discharge liabilities already accumulated.
That means that the proceeds of the loan may 'be used for the discharge of liabilities which the borrower has already accumulated. It was suggested a moment ago that this might be abused by concerns or provincial governments inducing persons who are indebted to them to secure a loan under this scheme, and thus reimburse them. I think the paragraph is sound, in so far as it is directed to this purpose-for instance, take a farmer in
Long Term Farm Loans

the west who has incurred a debt for machinery or stock, or to the bank, upon which indebtedness he is paying 8, 9 and in some cases as high as 10 per cent. One of the things that prompted me to support strongly a rural credit scheme was the fact that a large number of farmers are paying such rates of interest, and that of all classes of business, agriculture is one class which cannot subsist and pay such rates. In a speculative form of business, where a man is trading and has a rapid turnover, he can pay a high rate of interest. Certain classes of commercial business, even fairly stabilized, can pay perhaps 8 or 9 per cent at times-


Mr. SPENCE (Parkdale):: Not very often.


Henry Herbert Stevens: -for certain advantages in buying, but an agriculturist who pays a higher rate of interest than 6 per cent- I am speaking of interest, not amortizing-is fighting against an economic law iwhich sooner or later will ruin him. As I understand this scheme, it is directed to supply interest, with an amortizing fund, over a period of about thirty years, I think at a rate of interest of 6i per cent.


Charles Avery Dunning: Thirty-two years is the
maximum.


Henry Herbert Stevens: At 6i per cent?


Charles Avery Dunning: We do not know exactly.


Henry Herbert Stevens: I would say that that is
fair; that is a rate that will not only be possible but will be attractive.


Charles Avery Dunning: I do not wish to be understood as saying that 61 per cent includes amortization.


Henry Herbert Stevens: I say interest and amortization fund.


Charles Avery Dunning: Six and a half for the
two?


Henry Herbert Stevens: Yes.


Charles Avery Dunning: I am not speaking of
what is in the law. The rate is not in the law, and cannot be. But I do not believe we can get along with very much less than 61 per cent for interest alone at first. Under present financial conditions it cannot be done.


Henry Herbert Stevens: The objective should be a maximum of 6 per cent for interest alone.


Charles Avery Dunning: I should be glad to see it.


Henry Herbert Stevens: Perhaps after the first year, when the scheme commences to operate, my hon. friend will find that money can be secured at a rate that will provide 6 per cent and provide for an amortizing fund above that. I was going to say 7 per cent as a maximum.


Charles Avery Dunning: Including amortization?


Henry Herbert Stevens: Yes. I would suggest to the minister that if paragraph (d) could be limited to such classes of liability as I have referred to, thus excluding, shall I say, a government or a municipality that may have a moribound scheme at some time-and I have no doubt there are some in existence-* and prevent them unloading their patrons on to this scheme, I think it ought to be done. For instance, if a provincial scheme were charging a man 8 per cent or some high rate, I should say he is entitled to come under this scheme whether he has a provincial loan or not. But if under a bona fide provincial scheme he has a loan at a rate approximately the same as would apply here, I do not think we should open the door to the provinces unloading such a loan upon us. The object of the scheme is to relieve the pressure of undue debt at high rates of interest on the farmer, not to translate him from one sphere to another, but to relieve the pressure. If a formula can be found that would accomplish that object, I submit to the minister that it should be done.


Charles Avery Dunning: I will endeavour to deal with what my hon. friend from St. Lawrence-St. George has said relating to the same matter. Let us assume for a moment something which I have no right to assume particularly-that is that Manitoba and Saskatchewan, which already have such schemes, desire to come in under this proposition-I think it is quite manifest that they will not continue making loans under their existing provincial schemes. The provincial scheme will naturally continue to function with respect to the collection and administration of the sums already loaned-


Henry Lumley Drayton: Unless you take them over.	[DOT]


Charles Avery Dunning: -yes, unless we take them over, and we are not contemplating taking over holus bolus under this scheme all the ten millions involved in each of the schemes of the provinces of Manitoba and Saskatchewan. That is definitely not contemplated. Let us

bear in mind that it is very probable that the existing local administration of the present provincial schemes would become the provincial administration under this scheme, if the provinces decided to come in under it, because they have there all the machinery and the type of men necessary to carry on the work. That is very probable, but it is a matter of arrangement and in no way tied up. As to whether individual farmers could unload from the provincial scheme to this one, why would an individual farmer want to do so? For one of two reasons, I apprehend:	The first would be that the rate of
interest under this scheme was lower than the rate he is now paying under the provincial scheme, But there is no great likelihood of this scheme producing a sufficiently lower rate of interest than 6i per cent to constitute a very great temptation to him to switch over. Neither is there any incentive to the provincial government to attempt to get rid of a borrower who is what we would call a good borrower under the provincial scheme. Bad borrowers could not qualify under this scheme because the amount they would require to clear off their existing loans would be in many cases too great for them to come under the provisions of this legislation. The hon. member for Vancouver Centre (Mr. Stevens) hit the nail on the head. This scheme like every other great business will depend upon sound, honest administration for its success. It cannot be a success if the men who administer it approach it from the point of view of facilitating the taking over of every bad loan in the country whether from a provincial scheme or from a loan company. Loan companies of course look after their own business; if they have a borower in deep water whom they are not very sure of as regards the future, they naturally try to encourage him to get a loan from the provincial farm loan scheme in order to pay them off. I do not blame them for that because they are looking at the matter from the point of view of the interest of their shareholders. That has to be guarded against in connection with any such scheme, but to put any limitation around it is a matter of great difficulty, as the horn, member for Vancouver indicated.
Unless this scheme is to provide for the liquidation of liabilities which the farmer now has it will not be worth very much to agriculture in this country. That liability may be to an existing mortgage company; it may be to one of those banks of which the hon. member for St. Lawrence-St. George is so suspicious; it may be to another loan company or another provincial mortgage scheme. It 14011-251
Long Term Farm Loans
may be and probably will be to implement dealers, storekeepers and all sorts of people. The great benefit of this scheme to the farmer will be to remove from his shoulders a nine per cent or ten per cent loan and replace it with a six and one-half per cent loan, or some such figure amortized over a considerable period. That has been the advantage of similar schemes in Canada and elsewhere. The limitation suggested by my hon. friend will have to be worked out in practice as a matter of administration. If we attempt in this House to set bounds to the scheme I am afraid we are going to cramp it and probably deprive many deserving people of its benefits.


George Gibson Coote: The Dominion of Canada
has a direct responsibility in connection with this matter of long-term, farm loans. I look upon it as a Dominion responsibility and not a provincial responsibility in any sense. It is because the Dominion government has neglected its responsibility for so many years that the provinces were forced to take action. As regards the contention of the hon. member for St. Lawrence-St. George or his fear that the Dominion government scheme is to be loaded up with all the bad loans of Alberta, let me set his mind at rest as regards that province because Alberta has no provincial farm loan scheme and has no farmers' bad loans to unload on this system.


Charles Avery Dunning: The loan companies
have.


Charles Hazlitt Cahan: There are loans on farms.


George Gibson Coote: The government of the province of Alberta has no loans on farms. I challenge the hon. member to show where they have a loan on farm land. The hon. member said that the land which would be covered by these mortgages would not be worth much as security. If that statement is correct it is time that this government took notice of the fact. If the farming industry is in such a poor state that those lands are no security for the mortgages on them I do not know why we are encouraging immigration to that country. The Dominion government can put farming in western Canada on an unprofitable basis at any time because they control the three vital matters of transportation, tariff and immigration, and the Dominion government should take this responsibility if any government is going to do so.
As regards the fear which the hon. gentleman has that the banks will want to unload a large number of bad loans on this system, I do not think that is possible. Practically all the farms in western Canada of men who are

Long Term Farm* Loans

in debt are mortgaged to mortgage companies. If a bank has a mortgage it is a second one and they cannot sell a second mortgage to the board that we are going to set up under this bill.
We have heard a great deal about losses made by the banks and loan companies in western Canada. In my opinion most of these losses were made because these concerns were managed from an office two thousand miles away. That is why it is advisable that the provincial governments should assume some responsibility in helping the Dominion government to carry out this long-term, loan scheme.
Just a word in connection with the Ontario government scheme which lendis money to farmers at 5i per cent. The success of any rural credit scheme depends upon the rate of interest which must be charged to the borrower. The volume of business which will be secured by this board is going to be largely determined by the rate of interest which they charge, and the larger the volume of business which they handle the lower proportionately will be the charge for management. That is a very important point which must not be overlooked. But to return to Ontario, the reason that in that province they are able to lend this money at 51 per cent is, so I have been told, because they are securing the money through savings banks where they get the money at four per cent.
I have a suggestion to make to the minister who is in charge of the bill. He agrees with the hon. member for Vancouver Centre that it is desirable that the rate charged including one per cent for amortization should not exceed 7 per cent. The Dominion government has post office savings banks in which at the present time something over $30,000,000 is on deposit at 3 per cent. The government might very well loan a part of this money to the farm loan board at 4 per. cent. I do not think there would be any difficulty in getting 6 per cent money in that way. By lending money to the farmers at 6 per cent plus one per cent for amortization you have a 7 per cent rate to the farmers. I do not see why this could not be done by this government. They are securing this amount of about $30,000,000 at 3 per cent. It would not be costing this country anything if they would use at least a portion of that money in financing the farm loan board.


Thomas Langton Church: Under the rules the proper place to discuss the principle of a bill is on the second reading, but about three-quarters of this bill has been passed in commit-

tee and the members have been discussing the principle all afternoon and evening because you cannot discuss various clauses without discussing the principle as the principle of the bill is wrapped up in every clause. The second reading of this bill was carried without debate and I was surprised that not one gentleman on the second reading said one word either for or against the principle of the bill.
If there ever was a sample of high finance in Canada you have it in clauses 5, 6 and 7 of the bill. It is all very well for the Minister of Railways to support this measure. What does he or hon. gentlemen from Saskatchewan and Alberta care about who pays for this legislation? Saskatchewan contributes only one-eighth of one per cent to the net revenues of the country. Who is asking for clauses 5, 6 and 7? The farmers of Ontario do not want them. Who is asking for this bill? The other day I asked an hon. gentleman from the west who used to be in. this House:	Who is asking for this
legislation? He said he did not know; he was not asking for it. Not by the wildest stretch of the imagination can this act be considered a work or undertaking for the general advantage of Canada, and if the minister will consult the Justice department I venture to say that he will be informed that this House has no power to pass the bill in its present form. There are 2,900,000 people in Ontario who will have to contribute to this scheme although they will not share in its benefits. They are not asking for it; they do not want it. Nor are people in other parts of the country making any demand for this legislation. This is class legislation of the worst kind which gives to the farmers of one province a benefit at the expense of the rest of the people. Those who will have to foot the bill are the artisans and the toilers in the various centres of population. The farmers do not want any reduction in the income tax which these people have to pay, because they pay no income tax; but they want the rest, of the country to provide taxes for legislation to meet their demands for agricultural credits. The people of central Canada pay over 80 per cent of the taxation which is collected in Canada, and although they are not asking for this legislation they are going to have to make the payments which will be involved in it. The fact of the matter is that this bill is in line with some of the class of legislation which was passed by Ontario in the days of the Drury government. It is framed on the same principle-the principle, as someone has put it, of robbing Peter to pay Paul.

Long Term Farm Loans
I protest strongly against the passing of the bill, in its present form at any rate, and I make that protest as a representative of a province which contributes 45 per cent of the taxes of the country. We cannot lend a cent of money to our returned soldiers, some 140,000 of whom have had to leave the country for the United States to find a living, but we can provide money for rural credits. The Minister of Railways is a new member, and it is all very well for him to
10	p.m. get up and support the bill for Saskatchewan only; but I venture to say that the people generally will not be in favour of it. It is very fortunate that we have a second chamber and I have no doubt the bill will be taken good care of when it gets there.


William Alves Boys: I feel it my duty to make a
slight correction. In referring to the board in Ontario I said that the rate of interest was 5 per cent. I heard an hon. member say that it was 5J per cent, and on reflection I recall that this figure is correct.


Charles Avery Dunning: I want to congratulate the hon. member (Mr. Church) on being on the same platform as the hon. member for St. Lawrence-St. George (Mr. Cahan), but in getting there he has been guilty of a strange inconsistency. The hon. member being such an out and out advocate of government ownership of everything, I am very much surprised that he should stop short at government ownership of credit. One would expect the hon. gentleman to be consistent in this instance. Let me refer very briefly to his implication that, in assuming temporary responsibility for the direction of this measure in the unavoidable absence of the Minister of Finance (Mr. Robb), I am acting in some strangely selfish way on behalf of the province of Saskatchewan and without a due sense of obligation to the rest of the country. I assure my hon. friend that neither the government nor the legislature of Saskatchewan has asked for this scheme at any time. The people of that province have a scheme with which they are fairly well satisfied except for the fact that it has not lent enough money in the aggregate to take care of all demands. This scheme is intended as a bona fide attempt to carry out the wish of parliament, as expressed on former occasions after investigation by duly constituted committees, that such a system should be undertaken in the interests of agriculture in Canada generally, and not in any special section of it. The legislation was conceived in that spirit and in that spirit it has the support of a number of hon. gentlemen on the other 14011-2511
side who have been giving to the subject, in its relation to the nation at large, their best attention during the past few years. As to whether the provinces will take it up or not, it is a matter of co-operation and we find ourselves in the same position as we have done in connection with many other schemes which have depended for their success upon the provinces and the Dominion working together. When we have something concrete to submit to the provinces they can decide whether or not it will suit their conditions, and whether or not they should take advantage of it. It was so in the matter of technical education; it was so in the matter of agricultural education; it was so in relation to certain public health measures that called for co-operation; it was so with respect to highways. Many hon. gentlemen from various provinces, my hon. friend from Vancouver Centre among them, gentlemen who, have served on committees which in the past have investigated the subject, and who seethe problem as it is, have all given to the: matter very careful study; and many provincial legislatures have also discussed it. The situation as it exists from coast to coast is therefore fully realized. We shall have provided in this bill, if it passes, machinery for co-operation should the provinces require to avail themselves of it, as I believe they will. The measure is not intended solely for the west; it may be taken advantage of by the other provinces as well. I do not know how Ontario will regard it until the scheme is in operation, but I can assure the committee that it is not a method devised for taxing the whole of the country for the benefit of a particular section. It is a comprehensive scheme based on sound principles and one which has been found to work successfully in other countries.


Charles Hazlitt Cahan: I would point out to the minister that in dealing with a measure of this kind the fewer personal observations he makes the better it will be for the harmony of the discussion. I am quite as capable as the minister of making unpleasant remarks.


Charles Avery Dunning: I really was not conscious of having said anything unpleasant about my hon. friend.


Charles Hazlitt Cahan: If the minister wishes to invite unpleasant and tart comments, my Scotch-Irish temper is equal to meeting the demand. I have not so far said anything that could be regarded as opposition to the measure, for I have not approached it in that spirit. Certainly I have not intended that any remarks of mine should be con-
Long Term Farm Loans

sidered as having been offered for any other purpose than to elicit the actual facts, so that we might know on what the bill was founded and what grounds there were for its passage. On reading my remarks to-morrow in Hansard the minister will find that I -have been within the scope of reasonable criticism.


Charles Avery Dunning: I do not dispute that for a moment, and I am sorry if my hon. friend should have taken any other impression. I Iiad no intention of being disrespectful, and if I have unwittingly offended him I am only too glad to apologize here and now.


Charles Hazlitt Cahan: The minister and I quite understand each other. I do not accept what .he says as an apology, because no apology is necessary.


Charles Avery Dunning: Thank you.
Mr. GA'HAN:	This section contains the
following words:
Mortgages taken as security for farm loans and remedies thereunder shall be in all respects subject to the law of the province an which the farm land mortgaged is situated.
I am informed, although I have no personal knowledge, that in Alberta particularly there are a large number of prior liens constituted under the legislation of that province, by virtue of which very considerable charges hav1 priority in case of the foreclosure of a mortgage loan, and this clause in my opinion places it entirely within the discretion of a provincial legislation as to the extent to which they may thus oust the lien or mortgage created under this act.
A few moments before the House adjourned at six o'clock I was intending to cite a number of cases which, I believe, all refer to the province of Alberta, dealing with the prior liens or charges created by provincial legislation, and to which I suggest the lien or charge of this first mortgage should not be entirely subjected if this board is to have a really first class security which will be of value in case of realization of the mortgage. The first case was where the loan was $700; the interest in arrears amounted to $108. Upon foreclosure it was found that under the legislation then existing there were prior charges of $1,330. In the next case the loan was $1,100; the arrears of interest had run up, because time had been given, to $494, and yet it was found that there were other liens and charges created by the legislation of the province to the extent of $2,106 which were a prior charge upon this land. The third case was a loan of $800; the interest in arrears amounted to $130, yet when it came to fore-

closure it was found that there had been created under the legislation of the province other liens and charges to the extent of $1,203. The fourth case was a loan of $1,000; the interest was long overdue and at the time of foreclosure amounted to $894. In that case the prior liens and charges amounted to $1,462. In the fifth case the loan amounted to $1,000 and the arrears of interest to $235; there were prior charges under the legislation of the province of $1,483. So I could go on and take the twelve typical cases, a number of which I have already mentioned. To avoid the repetition of each case and to save time, in these twelve typical cases-


Charles Avery Dunning: Typical of what, may I
ask?


Charles Hazlitt Cahan: Typical of loans made in
Alberta and of the operation of the prior lien laws of that province in case of the foreclosure of the mortgages securing the loans. In these twelve cases the aggregate principal amounted to $11,600 while the interest came to $5,000, in round figures, yet the prior liens created under the legislation of that province amounted to $17,416. The mortgagee in order to save his security, had to pay in these cases the charges for taxes and other prior liens to the extent of $17,416, in order to save his original principal of $11,600. I will take these prior liens and charges in the aggregate. The Dominion seed and rdief lien amounted to $9,507; miscellaneous taxes of various priorities amounted to $3,165; co-operative society liens, $2,285; hail insurance taxes, which were a prior lien on the property, $627. Even hospital fees under some legislation of that province have a priority. If a farmer or any member of his family is taken ill and goes to the hospital, under certain conditions the fees payable to the hospital are a prior lien upon the land of the householder, even though a first mortgage is outstanding. In these cases I find hospital fees were prior liens to the extent of $231. Then there were mechanics' liens outstanding which attached1 after the first mortgage charge had been properly registered; these amounted to $1,600. So in these twelve cases the $11,600 of prinicipal originally loaned became, when the mortgages were realized, subject to prior liens of $17,416. It seems to me that this matter requires some attention.
I find that the Alberta Co-operative Act of April 1921 gave rise to the following case. The original mortgage was $1,200; then a caveat was placed by the International Harvester Company, and on that caveat being placed a prior lien was given the International Har-

Long Term Faun Loans
vester Company, taking priority over the mortgage then outstanding, to the amount of $5,795. Then came a Dominon seed and relief lien which, with interest to March 1920, amounted to $1,149. Then there was a mechanics' lien, in this particular case of the Beaver Lumber Company, amounting to $284. There was a prior lien or charge owing the municipality for grain ami unting to $600, and there was another lien created under the Cooperative Credit Act amounting to $2,044. All these liens had to be paid off by the mortgagee before he could secure the original mortgage charge of $1,200. That, of course, is undoubtedly an extreme case, and I have cited it because it is extreme and shows the possibilities of the situation. Now, what is the result? A mortgage of $1,000 ' is made under the bill which we have now before the House. In Alberta, under the laws which obtain there-and I mention Alberta simply because I am dealing with an Alberta case- other priorities may subsequently attach, with the result that the real value of the land may be offset entirely by the subsequently created prior charges, leaving a very slight security indeed to the hoard which, under this legislation has made the original loan. Now that is a matter that must be considered. In these three western provinces, because despite the remarks of my hon. friend as to the possibilities of this legislation being applied east of lake Superior, I still have my doubts as to that-in these three provinces of the middle west at whose demand, I understand, this legislation Was been brought down by the government, why should their municpal taxes even have a lien over what is really a government advance, an advance made on the credit of the Dominion? In case a householder or members of his family have to go to hospital, why should those hospital charges have a prior lien upon the farm which must be paid before the mortgagee can realize upon his mortgage security? I can understand that subsequent advances made by the municipality for seed grain have a prior charge on the crop realized from the growing of the grain, but I cannot see any reasonable ground why an advance for seed grain should be a prior charge upon the land and be paid out of the proceeds of the sale of the property on the realization of the mortgage, in priority to the claim of the mortgagee, in this case the board. I think that requires consideration.


Charles Avery Dunning: My hon, friend has read clause 12, I presume.


Charles Hazlitt Cahan: Clause 12, if the chairman will allow me to deal with it, says:
In the event of legislation being passed 'by the legislature of any province operating under this act after loans have been made available in that province which, in the opinion of the board, would prejudicially affect the security of existing or future loans, the board. . . may cease to make further loans an that province.
I am not dealing so much with the future; I am dealing with existing prior charges which are not affected at all by section 12, as I understand it.
As I am dealing with section 7, I would like to call attention to paragraph (d). My hon. friend from Vancouver Centre mentioned the difficulties which farmers have in carrying on farming operations on borrowed money. As a matter of fact, farmers in no civilized country have yet, except in individual cases, been able to carry on farming under normal conditions on borrowed money and make it succeed. In this case the sole plea which is put forward that appeals to me is that the rate of interest is to be made so low as to enable the farmer under these exceptional circumstances to use borrowed money to his own individual profit. But for what purpose should he be allowed to borrow that money? We know as a miatter of fact that the three provinces of the middle west, like many of our eastern provinces, are loaded up with liabilities created by the purchase of furniture, by the purchase of organs and even of pianos, by the purchase of automobiles and *a hundred and one other things on the instalment plan, where the payments are extended not simply over twelve months, but as much as eighteen months. We know that that prevails in all of the provinces, perhaps not to a greater extent in the middle west, but to a very great extent there. Now I for one suggest that it is not proper to aippeaL to the Dominion government and to parliament to make loans of money to enable the farmers of any province to pay off debts which have been created by the purchase of luxuries of that kind on the instalment plan. I suggest that the liabilities which may be paid off under these farm loans should be liabilities which have been created in good faith in the cultivation and management and extension of the farm.


James Shaver Woodsworth: I would like to
ask the hon. gentleman where he secured his information with regard to the character of the farm homes of the three prairie provinces.
Long Term Farm Loans


Charles Hazlitt Cahan: I have not made any reference to the farm homes of the three prairie provinces. I am not discussing the farm homes.


Henry Elvins Spencer: What about the instalment buying?


Charles Hazlitt Cahan: What I mean by instalment buying, if the hon. gentleman wishes to know, is this:	I have received that information not only from the banking community but from some of the loan companies doing business in the west, and from some of the most representative men that those three provinces have produced. They have told me that to the same extent that exists in the eastern provinces the purchasing on the instalment plan has created a very considerable volume of unliquidated indebtedness in these three western provinces. You find the same thing in the eastern provinces as well. I am not making an exceptional statement.


Edward Joseph Garland: The information of the hon. gentleman with respect to conditions among the farmers of western Canada is inaccurate.


Charles Hazlitt Cahan: I am willing to accept that
from one who knows the conditions as well as my hon. friend, but I am using the information to illustrate this fact: Whether you call this an advance from the Dominion treasury, or whether you call it a guarantee by the Dominion government, it is one and the same thing. I regard these bonds as guaranteed by the Dominion government under conditions where a higher rate of interest has to be paid on the bonds than would have been paid if the bonds had been directly guaranteed by the government, although the liability of the government, I think, remains the same. Now for what purpose should we use the credit of this Dominion, which we are using, as the hon. minister himself admits? Should we use the credit of this Dominion for any other purpose than to aid the farmer in acquiring and cultivating and managing his farm?


Samuel William Jacobs: When the farmer is loaded
down with debt, does the hon. member think it really makes very much difference how it was contracted so long as the debt is pressing and has to be paid, failing which the farmer will be turned out.


Charles Hazlitt Cahan: It would be far better to
let the debt be cleaned up and for the farmer to start afresh. The farmer should have some way of taking advantage of some sort

of insolvency legislation to the same extent that eastern merchants have. Subsection 2 of section 7 provides:
The proceeds of such loan shall be used for the following purposes and no other,-
(a)	To purchase farm land;
That is a very proper use of the proceeds.
(b)	To purchase fertilizers, seed, live stock, tools, machinery, and any implements and equipment necessary to the proper operation of the farm mortgaged;
A proper use of the proceeds.
(c)	To erect .farm buildings or to cilear, drain, fence or make any other permanent improvement (tending to increase the productive value of the land;
A very proper use of the proceeds. But when we come to (d) we find the whole horizon opened up to us. In (a), (b) and (c) we have set forth in detail most commendable objects for which these proceeds may be used. As the whole country is interested in agricultural production, you might- reasonably ask that its credit should be used to assist in providing these additional facilities for the acquisition and the cultivation of the land. But when you come to:
(d)	To discharge liabilities already accumulated:
I say it is asking just a little too much to ask that the Dominion treasury, or if you will the Dominion government, should guarantee and provide loans to liquidate already accumulated liabilities in the northwest.


John Livingstone Brown: Will the hon. gentleman
apply that to all liabilities that may be accumulated, or will he differentiate to any degree?


Charles Hazlitt Cahan: I would differentiate,
possibly, in the case of liabilities which have been incurred clearly fo-r the purposes of (a), (b), and (c), I would make a clear distinction there. But to discharge liabilities already accumulated of every sort, description and kind, seems to me to be going beyond any reasonable limit for the proper application of these funds. That is all I am pointing out.


Mr. MACDONALD (Glengarry):: Loans
would be limited to 50 per cent of the value of the lands and 20 per cent of the improvements.


Charles Hazlitt Cahan: I grant that, but even so
the provision I have indicated is open to criticism.


Robert Gardiner: I have listened with
a good deal of interest to the remarks of the hon. gentleman who has just taken his

Long Term Fir>n Loans
seat. He complained very severely that the credit of this Dominion is going to be used to assist the farmer. It is just as well to define what credit is or how credit is created. The only basis of real credit is the ability of the Canadian people to create and deliver goods and service.
Mr. CAHAiN:	You are opening up a large
question.


Robert Gardiner: The farmers of Canada produce a tremendous amount of credit because they produce and deliver goods and service. One of the real reasons why the farmers have come to this parliament and asked for some redress from the high interest rate they have to pay is because parliament in the past took th'e credit of the people of Canada and gave it to private interests to exploit. That is the real reason why we are asking for this legislation. I notice that the hon. member (Mr. Cahan) is leaving the chamber, because now we are dealing with the real question at issue from the bottom upward; we are not dealing with it in a superficial manner. The farmers expect and hope that the present bill will pass this House in order that they may experience some measure of relief from the high interest rates they have been paying in years gone by. It is because of the existence of such high rates and the fact that they are controlled by a financial group in this country that we farmers find ourselves in the position in which we are to-day. We had to submit to the deflation the financial interests of Canada placed upon our shoulders. We could not resist it because of the fact that parliament in the past gave over to financial interests in this country the total credit that the people of the Dominion produced.
The hon. member who has just left the chamber made the statement that no loans under this legislation will be made east of Fort William. II should like to say that I have received deputations from the newer districts of Quebec consisting of farmers who want to come under this particular scheme because they have no facilities for long term loans at lower rates in the particular districts from which they come. I am also quite satisfied the farmers in the Maritime provinces will take advantage of this legislation.
The hon. member for St. Lawrence-St. George has directed considerable criticism against the prior claims that exist in the province of Alberta. He cited one case where the loans on the property given by the mortgage company amounted to SI 1,600, but when they foreclosed and came to take possession
of the property they found the prior liens amounted to something like $17,000. The hon. gentleman blames provincial legislation for all these priorities. Now I want for a moment to occupy the time of the committee in analyzing these so-called priorities. The provincial government has been blamed for placing these priorities against these lands. But the first so-called priority of $9,507 was not placed against the lands by provincial legislation. They were Dominion seed grain liens and therefore the federal authorities were responsible for placing them. Consequently it is not fair to saddle the provincial government with the responsibility.
Mr. 'CAHAN:	Could any legislation that
we passed in respect of seed apply without the concurrence of the provincial legislature?


Edward Joseph Garland: They are
Dominion liens, not liens of the provinces.


Robert Gardiner: Seed was given out by
the Dominion government after the crop failures in 1914. Most of these liens were placed against crown lands. I have not known of a case where a Dominion seed grain lien was placed againSt any other land. The next item of $3,165 represents municipal and provincial taxes. I do not care where you go in this country-whether to city, town or village- but you will always find that taxes have priority before mortgages. It is only reasonable that should be so. Otherwise we could not continue municipal government in Canada for any great length of time. The hon. gentleman also referred to a sum of money of over $2,000 as being a co-operative rural credit society lien against the land. May I say that the rural credit society in the province of Alberta can only place its liens against the stock or against the growing crop. Those are 'the only directions in which the society has power to place these liens, and it is usual to place the lien against the growing crops. It is the only society in the province of Alberta at the present time, that I know of, that has the power, with the exception of the municipalities, of placing a lien against the growing crop. Even banks cannot do it under the existing legislation.
Now we come to the hail insurance amounting to $627 out of $17,000 that the hon. member complains about. I admit that this is a prior claim created by the municipality under the municipal hail insurance scheme. But let me say this to the hon. member: Mortgage companies in western Canada, at least in Alberta, do like to have people who are borrowers take out hail insurance against their
Long Term Fa', m Loans

crop. If that is not done through the municipal scheme, the mortgage companies will do it through private companies whether you agree to it or not and it is applicable to the growing crop. That in my judgment is very high handed, but they had to protect themselves, anl consequently when we find the small sum of $627 as hail insurance against those parcels of land it was in a large measure just as much a protection to the mortgage company as to the borrower.


Charles Hazlitt Cahan: I find that on April 14 last in Alberta, six million dollars of liens were outstanding upon farm lands for seed supplied by the provincial government under provincial legislation, and I may have made a mistake in my reference to a seed1 lien. That six million dollars is a lien by virtue of provincial legislation.


Robert Gardiner: The hon. member made the statement very emphatically that these were Dominion government seed grain liens.


Charles Hazlitt Cahan: I probably did.


Robert Gardiner: I have seen exactly the same return and it was exactly as he stated it. We come to the question of hospital fees in the item he read, $231. I suppose the hon. member would place the people living in the western provinces, sometimes twenty, thirty, forty or fifty miles from a railway, in such a position that if they had not the cash to pay hospital bills they had batter stay at home and die. That seems to be his method1 of dealing with the question. Because of the conditions that have been in existence up to the present time, and ever since that western country has been opened up it has been necessary to provide for the health of the people. In some instances it is quite true the municipalities pay the hospital bill and they have to charge it up against the land owned by the person who incurred the bill; but the amount is strictly limited.
The next item my hon. friend deals with is mechanic's liens, $1,600. Now a mechanic's lien is placed against a piece of property. First you have to get your building material and hire labour to erect a building. These mechanic's liens may include the cost of labour and material. My hon. friend should realize that if there is a mechanic's lien against any piece of property there are improvements on that property that are well worth the money the lien represents; consequently the security of the mortgage company has been increased by the erection of the building on that particular property.

I would suggest a possible amendment to subsection 5 of section 7, which deals with the amount payable over and above the interest rate to provide for the expenses of the board and the reserve fund. I suggest to the minister that, so far as the expense account is concerned1 this amount of interest should be strictly limited. One of the things, and probably the only thing, il am afraid of in regard to this legislation is that we may get an overhead too great for the structure at the present time. I suggest, therefore, that we amend subsection 5 to provide that the amount of the interest charge, over and above what they pay on, the money borrowed for administrative purposes, shall not exceed one per cent. I think we should tie it dowm so that the overhead will be as low as possible, and instead of coupling together the provision for the overhead expenses and the reserve fund, I would separate the two and give the board1 the opportunity of including in the interest rates sufficient to provide a reserve fund against loss. By doing that we will put it on a sounder basis, and control the expenses at the head.


Ambrose Upton Gledstanes Bury: I rise to confirm to a certain
extent what the hon. member for St-Lawrence-St. George has said. There is no doubt that the state of the law in Alberta has bad a very prejudicial effect upon loaning, the effect being that the ordinary loaning companies at one time practically withdrew all their operations from the province, refusing to lend any more money. The result was that as those who were prepared to lend money were reduced in numbers, the rate tended to go up. In other words, the better your security the cheaper your money will1 be. One farmer came into my office to negotiate a loan and asked me the rate of interest. I said 10 per -cent. He said that was impossible. I said, "I quite agree that any farmer who borrows money at 10 per cent is a foolish man." He left the office without taking the loan. You cannot expect cheap money in Alberta or any other province unless you are prepared to -make your security -good, and the legislature of Alberta has undoubtedly interfered with the security which the lenders of money ought to have as on-e of the first inducements to lending money at a low rate.
So far as the different incidents or charges which have been mentioned by the hon. member -for St. Lawrence-St. George and the [DOT]hon. member for Acadia are concerned, I submit that it is absolutely essential that any loan made under this scheme should be subject to the laws of the province. You cannot

Long Term, Farm Loans
get away from that, because the provincial legislature has complete control of property rights. I do think, however, that the government should approach Alberta and other provinces, for the purpose of coming to an agreement with them, that the law of the province should be modified in respect of loans advanced under this scheme so that they shall not be subject to the same priorities, as are ordinary mortgages in the province at present. I do not see, for instance, how you could displace the priority of municipal taxes or school taxes. These must, from their very nature, be a first charge on the land of the farmer, or of anybody else, whether he be farmer or not, who gets the advantages of municipal services and school services. But I do think there is an essential difference between such a charge as, say, municipal or school taxes, and the charge for seed grain liens, or even for hail insurance, or almost any of the other charges which can be put upon a farmer's lands.
The hon. member for Acadia referred to hail insurance. While it is absolutely essential, of course, for the farmer to have hail insurance,-and if he does not so insure the mortgagee, whether an individual or a company, will certainly do it for the protection of his money-the fact remains that by virtue of the law of the province of Alberta having removed from the mortgage instrument the proper virtue of the personal covenant, the hail insurance is not what it ought to be. In other words, the mortgagee who has his security on the land is not able under the laws of Alberta to proceed on the personal covenant and to get any moneys from other resources which the farmer may have until he has exhausted his remedies against the lands themselves. Therefore it stands to reason that even if the farmer gets money from his hail insurance that will not answer the actual mortgage on the lands; it cannot be attached. The only reason why the mortgage companies, banks or others who may have mortgages on lands insist on hail insurance is that they want he farmer not to be down and out so that he will be in a position with the hail insurance moneys, if he chooses so to use them, to relieve his indebtedness to the mortgage company or the bank or to start farming again the following year. But hail security is no additional security.
I might go on with the other different charges-


An hon. MEMBER:: Dispense.


Ambrose Upton Gledstanes Bury: -but I do not purpose to do so in view of the courtesy of hon. gentlemen opposite. If, however, this scheme is to go through the government will have to make special arrangements with the provincial legislatures to see to it that moneys advanced under it shall not be made subject to seed grain liens, or to hail insurance, or to any other form of advance, even to mechanics' liens. A mechanic's lien in Alberta takes prority over a mortgage only to the extent to which it betters the mortgagee's security. The mortgage comes prior to the mechanic's lien except to the extent to which the property has been increased in value, and therefore I do not know that there is any very great objection to the mechanic's lien. As regards the other charges I certainly urge the minister to take some action with the provincial governments to see that those charges do not go on in front of the loans under this scheme.
I would ask the minister to consider very carefully whether it would not be advisable to provide quick and cheap legal remedies in connection with the realization of securities. In other words, as your bill stands now you have to go through the whole full-dress performance of an action in court for the purpose of getting an order either for sale or of foreclosing the lands and taking them over. Where the Dominion government and the provincial governments are co-operating for the purpose of putting through a scheme of this nature, some provision ought to be made in the bill for cheap and speedy legal machinery for realizing on the security of the loan. I wish before taking my seat to thank hon. gentlemen who apparently thought it was necessary to applaud during the few remarks which I had to make.


Edward Joseph Garland: I do not think there is a more important clause in this bill than the present one, and I am surprised at the evident haste there is on the part of hon. gentlemen in some parts of this House to rush this through without due consideration. I want to call the attention of the minister again to the protest made a few moments ago by the hon. member for Acadia (Mr. Gardiner) in respect to clause 5.
Let me say at the very outset that unless the money can be lent to the farmer at a rate of interest not exceeding 7 per cent, including amortization, the scheme itself is going to be slowed up and few are going to take advantage of it. Indeed its whole future may depend upon the rate of interest. It is true, as has already been stated, that the
Long Term Farm Loans

question of efficient administration also enters into the matter, but efficient administration coupled with a rate of interest too high will defeat the whole purpose of the bill, nullify it and make it of absolutely no advantage to the farmer. Subclause 5 of clause 7 reads:
The interest rate on loans under this act shall be such a rate in excess of the interest rate yielded at the time of issue by the last series of farm loan bonds issued by the board as shall be sufficient, 'in the judgment of the board, to provide for the expenses of operation and for the necessary reserves for losses-
And so on. I am opposed to leaving those wide powers in the hands of the board. The board should not have the power to assess its own administration costs. Every hon. member knows from personal experience the temptations, the inclinations of all government appointed bodies to aggrandize themselves and their particular departments or functions, whether they be commissions or departments of the government itself. There is a serious danger that too great an establishment may be set up, too many officials employed, and in a dozen other ways the expenses of the board advanced and the rate of interest increased.
I would like to see inserted in that subclause a maximum of one per cent as a limit for administration costs. I agree of course with all! hon. members who have considered this or similar bills for four or five years that we must protect the whole scheme by making provision for proper reserve. We have no objection to, nior are we opposing, proper provision for reserve. But in addition to the wide power that is gven in this clause, if hon. gentlemen will turn to the first subclause of clause 9 they will find provision made for a vast reserve fund amounting to 25 per cent of the total paid up capital of the board, which may be a contingent reserve and called upon for administration purposes. In other words you have already in subclause 1 of clause 9 full provision of any additional outlay that may in the initial stages fall upon the administration in carrying out its business over and above the one per cent.


Henry Lumley Drayton: This is merely to see what they can do with earnings when they get them. It does not make an earning.


Edward Joseph Garland: Certainly it does not necessarily make 'an earning, but there is a provision for a contingent reserve which may, if secured, be drawn upon by the adminstration. The two coupled together make altogether too wide powers for any board. I strongly support the suggestion of the hon. member for Acadia that we ought to

have some limit to the administration costs. Full and proper provision should be made for reserves, but the administration, costs must be kept down to a limit.


Charles Avery Dunning: I hope my hon. friend did not have me in mind when he spoke of rushing things on this bill. I think I have sat here very patiently this evening.


Edward Joseph Garland: I wish to exonerate the minister. He has been very patient and has done very well, but I do not wish to exonerate hon. gentlemen who bang their desks when other hon. gentlemen are sincerely criticizing the bill.


Charles Avery Dunning: With regard to the question of a limited spread for administration I am somewhat embarrassed in discussing this, as I understand that a number of members on both sides have already discussed it with the Minister of Finance and that he is willing to accept the suggestion. I suppose I cannot separate myself from ministerial responsibility long enough to discuss just the difficulties I see in its operation, so that I had better move on behalf of the Minister of Finance to insert after the word "operation" in the fifth line the words "not exceeding one per cent of the amount of the loan." The subclaiuse would then read-and I would ask the hon. member for West York and the hon. member for Vancouver Centre particularly to follow this, because of their interest in this matter from past investigations:
The interest rate on loans under this act sha.ll be such a rate in excess of the interest rate yielded at the time of issue by the last series of farm loan bonds issued by the board as shall be sufficient, in the judgment of the board, to provide for the expenses of operation not exceeding one per cent of the amount of the loan and for the necessary reserve for losses.


Henry Herbert Stevens: The idea is quite sound.


Charles Avery Dunning: The motive.


Henry Herbert Stevens: Yes, but the wording
of the addition is in the wrong place.


Charles Avery Dunning: I think not.


George Brecken Nicholson: What	will happen if
it is found that the act cannot be administered on that amount? Some means surely will have to be found to carry on.


Charles Avery Dunning: I wish my hon. friend
would not ask me to enter the realm of prophecy to-night. We can at least make an effort to administer the act under the conditions provided. In the United States one per cent is allowed, although included in that amount is provision for losses.


An hon. MEMBER:: Hear, hear.

Long Term Farm Loans


Charles Avery Dunning: Those gentlemen who
say "hear, hear" must bear in mind of course that it is one thing to provide one per cent as a basis of operations in which a billion dollars is involved, and another thing to start a new scheme lending one million dollars in one year and having as a result only $10,000 to operate with.


Edward Joseph Garland: The minister does not wish to prejudice the bill by suggesting a billion dollars as the limit under which the one per cent will not apply?


Charles Avery Dunning: Not at all.


Edward Joseph Garland: Because I have in my hand the last report of the federal farm loan board of the United States in which the statement is frankly made that experience has fully demonstrated that when a bank attains a volume of $100,000,000 in mortgages it can, owing to that volume, pay all expenses of operation, all losses and all other charges on a spread of less than one per cent.


Charles Avery Dunning: I do not want to
prejudice the bill but there is a long piece of difference between even $100,000,000 and the amount that will be involved in a new scheme of this kind.


Henry Lumley Drayton: The amendment is in the right direction. But there is no excuse for spending $50,000 as we shall spend if we do a business of $5,000,000. There should be no heavy overhead expenses in this business, as it is not necessary to have wonderful offices with plate glass windows and all that sort of thing. This scheme can and ought to be run cheaply. The only criticism I have to offer is that, if anything, the one per cent is an invitation to spend more money than we should.


Charles Avery Dunning: Under the Saskatchewan scheme it was necessary to come to the legislature every year for an
11	p.m. amount sufficient to pay the cost of administration, which as I remember stood at $60,000 for several years. And I believe the system there handles something in the neighbourhood of $10,000,000 in the way of loans.


Henry Lumley Drayton: That is sixtenths of one per cent.


Charles Avery Dunning: Yes, but as to whether
that $60,000 would include all items which in this scheme come under the head of administration I am not sure. There are certain charges to the borrower which vary under different schemes.


Henry Lumley Drayton: Subsection 6 provides that every farm loan shall be repayable in equal annual or semi-annual instalments of principal and interest, while subsection 4 of section 9 contemplates repayment by cancellation of stock. AVhich is right? There cannot be two repayments.


Charles Avery Dunning: If my hon. friend can
visualize the scheme succeeding to the extent of paying dividends at all; if he can visualize further these dividends being held by the board under the section to which he is referring; and if also he can visualize the man keeping up his annual payments, principal and interest, he will see that there will come a time when the board will owe the borrower in the form of accumulated dividends as much as he owes the board. When that is the case the provisions of the last subsection of section 9 will apply.


Henry Lumley Drayton: It is not so
drawn, if that is the intention.


Charles Avery Dunning: I think my hon. friend
will see through it if he will read the section carefully.


Mr. CARMICHAEL:: I understood from
the discussion that the interest rate to be paid for the bonds would be in the neighbourhood of 5 per cent, to which one per cent would be added for operation, while provision would be made for the necessary reserves for losses. I have not heard the minister prophesy tonight what in his opinion will be necessary in the way of reserves. It would probably be a fraction of one per cent, possibly one-half, I do not know. Perhaps the minister would not care to prophesy, but he said in his previous remarks that he was of the opinion that the money could not be given the borrower at a lower rate than 61 per cent. We had it brought out in this committee by the hon. member for North Simcoe (Mr. Boys) that the province of Ontario is placing money in the hands of farmers at the rate of 51 per cent, and yet it is stated that the Dominion of Canada, a confederation of nine provinces, cannot do the same thing at less than 61 per cent.


Charles Avery Dunning: If my hon. friend will
read the statutes of Ontario he will find the explanation. I had them here, but they are gone now. The province bears the cost of administration separately.


Archibald M. Carmichael: I am rather of the
opinion that that is not the real secret for the cheap money in Ontario. The real secret is that Ontario is taking the savings of the people and paying 4 per cent, I believe.
Long Term Farm Loans


An hon. MEMBER:: Three and one-half
per cent.


Archibald M. Carmichael: That is better still. Then they let that money out on a spread of 2 per cent, charging the farmer 51 per cent. The hon. member for Vancouver Centre (Mr. Stevens) remarked that money should reach the farmer at a maximum interest rate of 6 per cent, and I am heartily in accord with that statement. If the farmer cannot get the money at a rate not exceeding 6 per cent I am afraid our rural credit scheme will prove abortive, 'but I am of the opinion that the money can be given the farmer at a maximum rate of not more than 6 per cent.
The hon. member for Macleod (Mr. Coote) made a suggestion of which no one has taken cognizance. He said that we have in the Post Office savings accounts $30,000,000, taken from the people on which we are paying 3 per cent interest. I wonder if there is not some way of putting this money into the hands of the farmers at a lower rate than we will get in the New York market. We have post offices all over Canada; it would not be stretching our imagination too much to suppose that we might pay 31 per cent interest to the people, or even 4 per cent, for their savings. If the government would agree to pay 4 per cent through the Post Office savings department they would get ample funds to carry on this scheme, and they could let the money out at a maximum rate of not more than 6 per cent and possibly 51 per cent. I know some of our financial wizards will say that this is invading the precincts of the banks, that we are intruding on bank property and taking some working capital away from these institutions. That is just what I would like to do. The banks of this country have been working on the savings of the people, paying them not even 3 per cent interest, as was pointed out a week or so ago, but paying only 11 per cent or 2 per cent. If the Dominion would take over some of the savings of the people from the banks we would not be doing any great injustice.
I am very much of the opinion, Mr. Chairman, that if we cannot keep this rate of interest down to a maximum of 6 per cent we are going to make the scheme useless at the outset, because even 61 per cent will not represent the total rate of interest the borrower must pay. He has to subscribe 5 per cent of the amount of his loan, and if you take the interest on that 5 per cent along with the 61 per cent it will amount to almost 7 per cent. So I believe that it would not

be very hard for the mortgage companies to reduce their interest rate from 8 per cent to 7 per cent, and so put this rural credit scheme out of business before it starts.


Edward Joseph Garland: There are one or two other explanations I would like from the minister. If he will look at subsection 1 of section 7 he will find that provision is made for a maximum sum of $10,006 to be paid to any one person or two or more persons, in the case of joint ownership of a farm. I am not complaining of the amount at all, but I wish to draw his attention to the fact that there is a discrimination against a partnership farm, and as the minister well knows there are a very large number of such farms in western Canada. They represent the very best kind of risks, and they will be deprived of a fair loan under this bill.
While the minister is considering that point my second suggestion is that in subsection 7 of section 7 he will find provision made for interest on defaulted payments at a rate not to exceed 8 per cent per annum. In my opinion that is an altogether excessive rate; it should be not more than 7 per cent at the very most, and should really be in the discretion of the board in cases where extreme hardship has brought about the unfortunate condition of being unable to meet the interest.


Charles Avery Dunning: The words "not exceeding" are there.


Edward Joseph Garland: Eight per
cent is too high. If the minister would make it "not exceeding 7 per cent" it would be much better.


Charles Avery Dunning: With respect to the remarks of the hon. member for Kindersley I might say that I would much prefer to tell the farmers of Canada, as an expression of my opinion, that the rate would likely be higher than it afterwards turned out to be, than to suggest a rate lower than later proved to be the case. My hon. friend will perhaps remember that I was pressed for a personal opinion, which after all is the opinion of only one man. Inasmuch as it was my opinion, however, for which I must take responsibility,
I would much prefer to state as my opinion a rate higher than turns out to be the fact than give a figure lower than that which really results. I hope it may be possible to get the interest rate down to 6 per cent, but I must be honest in stating my opinion that it will be very difficult to get it that low,

Long Term Farm Loans
although there is a tendency towards a lower cost for money which is very encouraging. Hon. members will remember that Saskatchewan farm loan bonds were formerly selling at 5 per cent par and are now selling at per cent. When enough of them are out at that rate there is no doubt that it will affect the basic rate, but it will be some time before that condition is brought about.
Now we have subsection 5 cleaned up, and with regard to the rate of interest in subsection 7 I am quite willing to accept the suggestion of the hon. member for Bow River and reduce the interest from 8 per cent to 7 per cent. I think the rate on arrears should be higher than the original rate. Farmers are like other human beings; they pay first those debts carrying the higher rate of interest and leave the others until the last. But probably 7 per cent would foe a sufficient incentive, and I move that the word "eight" in the third line of subsection 7 be struck out, and the word "seven" substituted therefor. .


[Stage Direction]
Amendment agreed to.
Ambrose Upton Gledstanes Bury: Will the minister say whether he intends to do anything by way of arranging with the provinces to have a simple and cheap method of realizing on securities, and also to prevent prior claims going in front?


Charles Avery Dunning: My hon. friend asks two questions, first with reference to cheap methods of foreclosure and so forth. As a lawyer my hon. friend is of course familiar with the differences existing between the various provinces in that regard. We are presuming that the men who are going to administer this act will be men who will be interested in pressing in all directions for measures which will promote the more economic administration of it. It would be useless in our opinion to attempt to say anything in this law having anything to do with that matter, but as a matter of administration undoubtedly the board, and the government back of the board, will be interested in securing as simple processes as possible for dealing with the legal business connected with it.
As to the second question, the question of priorities, my hon. friend will notice from section 12 that that has engaged the attention of the government in giving consideration to the measure, more especially as regards future priorities.


Ambrose Upton Gledstanes Bury: Exclusively as regards future priorities.


Charles Avery Dunning: * But outside the mere written letter of the statute there must be common sense applied in working out its provisions, especially when the act is of a co-operative nature. Negotiations must take place between the provincial governments and the federal government with respect to the provinces coming under this scheme, and all these matters and their relationship to the whole scheme must be discussed. But I would point this out to my hon. friend, that the government is not requesting for this scheme a priority which other creditors of a similar class do not enjoy. The government is not requesting that; it is nowhere written in the law.


Henry Lumley Drayton: I think that is right too.


Charles Avery Dunning: My hon. friend from East Edmonton was advocating that in relation to loans of this character, priority should be enjoyed which other creditors of a similar _ class, first-mortgage creditors, are not presently enjoying under provincial legislation, and I was saying that in my opinion that should not be contemplated.
Section as amended agreed to.
Sections 9, 10 and 11 agreed to.
On section 12-Legislation prejudicially affecting security.


Henry Lumley Drayton: Has the minister considered whether it would be advisable to have that read so as not only to cover future but present legislation? It would be strengthening his hands if he wanted to deal with the matter.


Charles Avery Dunning: In giving consideration to the matter up to now, the government has considered that the control by the central board of the percentage to be loaned enables it to deal in a measure with the existing condition. That is, we can as a matter of fact say to a provincial board or to a provincial government: Because of certain priorities which exist in your province we do not think the percentage of the total value to be loaned there should be as great as in other places where the priorities are less. We think that negotiations would result in improvement along that line.


Henry Lumley Drayton: If my hon. friend i3 content with that, why leave the section in at all?


Charles Avery Dunning: For the future.
Long Term Fanil Loans


Henry Lumley Drayton: If my hon.
friend -can deal with the existing evil by simply saying, we will not lend you beyond a certain amount, he can deal just as well with a similar condition in the future by saying, we will not lend you beyond a certain amount. We should have a little bit of consistency one way or the other, if we are serious about it. If the minister is not serious, why then leave it as it is, and let it go. But I can assure him that he is only making it more difficult for himself. It is very easy to say, "present or future legislation". But he may be quite satisfied with all these loans. If he is, he should not put this section in at all. He should be consistent.


Charles Avery Dunning: I am not so much concerned about being personally consistent as I am about having this in practical operating shape. If we agree, and I think the members of this committee would generally agree, that the Canadian Farm Loan Board should not enjoy special privileges with regard to these particular mortgage loans as compared with other mortgage loans-


Henry Lumley Drayton: We are agreed on that.


Charles Avery Dunning: If we are agreed on that, we have to face conditions as they are, and I am arguing that we can best deal with these varying conditions by controlling to an extent the percentage to be loaned in provinces where the conditions are less favourable from the point of view of priorities than they are elsewhere. I think, in addition, the inclusion of section 12 might have a very salutary effect in future in provinces which were considering further priorities. We could call their attention to. section 12, and I think its value would be very apparent under the circumstances.


[Stage Direction]
Section agreed to.
Sections 13, 14 and 15 agreed to.
On section 16-Regulations.
Henry Lumley Drayton: I wonder if we can-get any advice as to what is really the important matter in connection with this act, namely, administration. How is this board to be appointed? How many years of political service are going to be required? This is the sort of thing we should know something about. If we cannot get this

thing out of politics and get it down to a business basis in some way or another, we are simply wasting our time on it and spoiling our hopes. What is going to be done?


Charles Avery Dunning: Really, Mr. Chairman, we did consider this matter when we were on clause 3. We also dealt with it when we were discussing the provision which has to do with provincial appointees. There is no guarantee, of course, that the provinces of Canada are going to be of one political complexion or another all through. The provinces which enter, regardless of the political complexion of their government at the moment, will make their recommendations as called for by this act. I revert to section 3, which provides:
There shall be a board, known as the Canadian Farm Loan Board, which shall be a body politic and corporate, and shall consist of four members, one of whom shall be the minister-
That is the Minister of Finance.
-who shall be chairman thereof, and the other three of whom shall be appointed by the Governor in Council. One of the members so appointed shall be designated the "Canadian Farm Loan Commissioner," and shall be the chief executive officer of the board. The commissioner shall be appointed for such a period of years as the Governor in Council may designate. The other members of the board shall be appointed in the first instance, one for a period of three years and the other for a period of six years; thereafter appointment of members other than the commissioner shall be for a period of six years. Any member of the board shall "be eligible for reappointment.
The provinces come in under another section.


Henry Lumley Drayton: I am not referring to them. If we can get proper appointments from this government, we shall be doing pretty well. Further, I am not referring to the letter of the law, but as to the qualifications the government are going to look for. How many years, for example, in sueess-ful work in the western provinces dealing with farm loans, farm lands and the like, is to be looked upon as a requisite before appointment? What does the government look upon as the underlying qualification of absolute necessity in connection with these three commissioners? I am not now referring to the Minister of Finance. He is ex officio a member of the board, and he will have very little to do with the work. I am referring to the commissioners to be appointed, and particularly to the chief commissioner. What qualifications are the government going to insist upon, or have they none in mind at all?

Forest Reserves and Parks Act


Charles Avery Dunning: I do not think my hon. friend is serious in asking that question.


Henry Lumley Drayton: I am very serious.	.


Henry Herbert Stevens: I am sorry I was not here when clause 3 was being discussed. I may have overlooked it, but I do not see in the bill any reference to the appointment of a representative of the bondholders on the board. I do not wish to delay the passing of the bill tonight, but would the minister consider having an amendment made to that effect? It might be made in the Senate.


Charles Avery Dunning: I may say that consideration has been given to the point. Consideration has also 'been given to the same point in the United States, but there is difficulty in getting such a representative in view of the fact that the bonds are floating around all the time, and are changing hands and so forth. However, the matter is worth consideration; the object my hon. friend has in mind is a good one.


Henry Lumley Drayton: The minister has not yet told us what he conceives to be the qualifications for a man discharging this great trust. Has not the government got down to the initial point yet, the point which is purely a primary point, of making up its mind as to the type of man needed, and the class of experience which he should have? I would have thought my hon. friend would have that information at his finger tips.


Charles Avery Dunning: Well, in some respects the kind of experience my hon. friend has had would fit him for the position. In other respects probably my hon. friend would not be qualified. But certainly a man is needed who has had experience in administering this kind of business, a man of good character and good judgment. Good judgment is more needed than any other quality for a position of this kind. Then he should have a fairly stiff back. I mentioned wThen we were on the clause before that a good stiff back is essential.


Henry Lumley Drayton: I know, but the country has no idea of finding out how the government chooses "stiff backs". I predict that will never get there. It is just one of those things that does not mean anything and is not intended to mean anything. I am asking
again if the government has in its mind any man it thinks is qualified to undertake this job. I do not know whether it has or not, but I would have thought it would have looked, before making these appointments, for men who have been engaged in this kind of work for at least a certain number of years and have a real and intimate knowledge of the conditions in western Canada.


Charles Avery Dunning: Not in western Canada -in Canada.


Henry Lumley Drayton: Just at the present time I am dealing with the west, and if we are going to have this scheme carried out properly it must apply to the west. I am not objecting to that, the only thing I am saying is that we should have something like a decent board to administer this bill, and I am suggesting that the people qualified should know the country where the chief operations of this board are to be-that they should have had a certain number of years' experience of this kind of business and have proved themselves successful in it.


Charles Avery Dunning: I can assure my hon.
friend that the government will take full responsibility for these appointments when they are made. The government is just as anxious as my hon. friend can be to have this system properly administered. I agree absolutely that the men to be appointed to these positions should have had experience in connection with the kind of work they will have to tackle. All these considerations will, of course, be taken into account by the government in dealing with the matter. We will have to take the responsibility involved and we shall be glad to do so.


[Stage Direction]
Section agreed to.
Section 17 agreed to.
Bill reported, read the third time and passed.

[Stage Direction]
On motion of Hon. Ernest Lapointe (for the Minister of the Interior), Bill No. 97, to amend the Dominion Forest Reserves and Parks Act, was read the third time and passed.
On motion of Mr. Mackenzie King the House adjourned at 11.30 p.m.
Peace River Election
[Stage Direction]
Wednesday, June 2, 1926.