1934-06-18

QUESTIONS

[Stage Direction]
(Questions answered orally are indicated by an asterisk).
Questions

Mr. DESLAURIERS:: 1.	Is it true that a ship containing a cargo of Russian gasoline is moored in Montreal harbour at the present time?
2.	Is it true that the parties in charge of such ship are offering such gasoline at 7 cents per gallon?
3.	Is it true that the authorities are delaying the unloading of such cargo, and what reasons are advanced for the delay in unloading?


Mr. MATTHEWS:: 1.	Not so far as known to Department of National Revenue.
2.	Answered by No. 1.
3.	Answered by No. 1.


PRICE SPREADS
Mr. SEGUIN:: In view of the revelations arising out of the "Stevens" inquiry with respect to the enormous profits which certain companies have made as a result of their dealings with the tobacco growers, shall the government put a stop to such a state of affairs, in the interests of the grower and the consumer?


Mr. BENNETT:: I should think this question should be stricken out. No report has been made, and the matter is still before the committee.


MOTIONS FOR PAPERS
Mr. VENIOT (for Mr. Casgrain):: For a copy of all correspondence, telegrams, letters, and other documents exchanged between the Department of Indian Affairs and all persons in the province of Quebec, with respect to the administration of the Indian reservation at Mingan and the Indian superintendent in that locality, since the year 1930 to date.


UNEMPLOYMENT RELIEF-LAKE ST. JOHN
Mr. DUGHAY:: For a copy of the schedules of works approved by the federal government under the Relief Act. 1933, for the county of Lake St. John, showing the dates on which such schedules were received and approved, the accounts received with respect to each schedule, the dates on which such accounts were received and the dates on which payment of same were made to the province.



DOMINION FRANCHISE ACT

[Stage Direction]
On the orders of the day:
Right Hon. W. L. MACKENZIE KING (Leader of the Opposition):: May I ask the Minister of Justice when the house may expect to have English and French copies of the Franchise bill?
[The Chairman.]


Hon. HUGH GUTHRIE (Minister of Justice) :: I have a copy of it; it is down now.


William Lyon Mackenzie King: It has not been distributed. I understand the copy has come only in English.


Hugh Guthrie: The French copy is here, too.


Mr. NEILL:: I inquired a couple of hours ago, and was told that the English copies would not be ready until to-morrow morning.


Hugh Guthrie: I got my information from the clerk only a few moments ago stating that they were available now.



DOMINION COMPANIES ACT


[Stage Direction]
Hon. C. H. CAHAN (Secretary of State) moved the second reading of and concurrence in amendments made by the Senate to Bill No. 64, respecting dominion companies.
Mr. CAHAN:: I move that these amendments be concurred in, and at the same time I wish to add that if after I have given an explanation hon. gentlemen wish to discuss these amendments in detail I shall ask leave to withdraw my motion and move the house into committee. The bill has been carefully considered by the select standing committee of the Senate on banking and commerce. For three days I attended the meetings of that committee. The changes which have been suggested do not change the purpose or intent of the provisions of the bill, but after careful consideration of the bill and of suggestions which were made to the committee by correspondence and otherwise certain valuable amendments have been proposed and unanimously adopted by the Senate. I would refer hon. members to item No. 21 appearing in the notice printed in the votes and proceedings of Friday, June 15, where the suggestion is made to strike out on page 36 line 32 of the bill, the words "knowingly and wilfully." That is an error either in printing or transcribing. The amendment made by the Senate was to strike out the two words "knowingly and." We had made a similar deletion in another section, and the Senate thought that this section ought to conform to our previous amendment.
The main amendment, however, appears at page 430 of the votes and proceedings. The bill prescribes heavy penalties, heavier than have heretofore been imposed in any companies act in Canada, and, after consideration of the whole bill, the Senate thought the bill should be amended to conform to the provisions of section 372 of the English Companies Act of 1929. For that reason they

Dominion Companies Act
proposed and adopted an amendment to this bill in conformity with and following verbatim this section 372 in the English Companies Act. The new section as amended will read as follows:
"207. (1) The persons to whom this section applies are directors of a company or corporation; managers of a company or corporation; officers of a company or corporation; persons employed by a company or corporation as auditors whether they are or are not officers of the company or corporation.
(2)	If in any proceeding for breach of or non-compliance with any of the provisions of this act or breach of or non-compliance with any of the provisions of the letters patent, supplementary letters patent, special act, or bylaws of a company or corporation, against a person to whom this section applies, it appears to the court hearing the case that that person is or may be liable in respect of such breach or non-compliance, but that he has acted honestly and reasonably, and that, having regard to all the circumstances of the case, including those connected' with his appointment, he ought fairly to be excused for such breach or non-compliance, that court may relieve him, either wholly or partly, from his liability on such terms as the court may think fit.
(3)	Where any person to whom this section applies has reason to apprehend that any claim will or might be made against him in respect of any such breach or non-compliance, he may apply to the court, as defined in paragraph (d) of section three of this act, of the province in which the head office or the principal place of business of the company or corporation is situate, for relief, and the court on such application shall have the same power to relieve him as under this section it would have had if it had been a court before which proceedings against that person for such breach or non-comnlianre had been brought.
(4)	Where any case to which subsection two of this section applies is being tried by a judge with a jury, the judge, after hearing the evidence, may, if he is satisfied that the defendant ought in pursuance of that subsection to be relieved either in whole or in part from the liability sought to be enforced against him, withdraw the case in whole or in part from the jury and forthwith direct judgment to be entered for the defendant on such terms as to costs or otherwise as the judge may think proper."
The commission which had under review the English Companies Act thought that in view of the heavy penalties there imposed a certain discretion should be given to the court trying an offence in respect of which these heavy penalties were imposed, so that if such alleged offender had acted honestly and reasonably and if having regard to all the circumstances of the case he ought fairly to be excused for such breach or non-compliance, the court may relieve him either wholly or partly from his liability on such terms as the court may think fit. The Senate were unanimous in support of that provision. Personally I think that under the circumstances it is just and should be accepted.
That is the only material change which, through Senate amendments, has been made to the bill. I move that the amendments be concurred in.


Mr. RALSTON:: Would the minister indicate again the section from which the words "knowingly and" have been struck out?


Charles Hazlitt Cahan: Yes, I would refer the hon. member to page 36, line 30 of the bill. The hon. member will recall that the committee of the whole in this House of Commons struck out those words in a similar section. Subsection 2 now reads:
If any director, manager, or other officer of the company knowingly and wilfully authorizes .. .
And so on. The words "knowingly and" were struck out because the word "wilfully" implies knowledge. The Senate thought this section should conform to the section with which we dealt previously.


James Layton Ralston: The other section is No. 67, I believe?


Charles Hazlitt Cahan: Yes, I think that is true;
it is to effect conformity with section 67 and with section 72.
Motion agreed to; amendments read the second time and concurred in.



FARMERS'-CREDITORS' ACT

[Stage Direction]
The house resumed from Monday, June 11, consideration in committee of Bill No. 92, to facilitate compromises and arrangements between farmers and their creditors-Mr. Bennett-Mr. Hanson (York-Sunbury) in the chair.
On section 2-Interpretation.
Richard Bedford Bennett: Mr. Chairman, subsection 3 of section 2 stood. There was an amendment to add the words, "if so determined by the court," so that it would not follow as a matter of course that failure on the part of the farmer to carry out any of the terms of the proposal would be deemed to be an act of bankruptcy, but that it should be determined by the court. I think the amendment has been put through.


Mr. COOTE:: Will you please read the
amendment, Mr. Chairman?


The CHAIRMAN (Mr. Hanson, York-Sunbury) :: The amendment was carried, as
I understand it, the other day. The amendment that has just been handed to me is the same. It is that subsection 3 of section 2 be amended by adding at the end thereof the words, "if so determined by the court."
Farmers-Creditors Act


George Gibson Coote: I really feel that the section ought to be amended by striking out subsection 3. I do not know whether the Prime Minister would consider doing that, but I think that is really the way the section should be amended. If subsection 3 is to remain in the section, I doubt whether the amendment moved by the Prime Minister is definite enough. I do not think there is anything in the act to guide the judge as to the basis on which he shall make his decision as to whether the farmer shall come under Part I of the Bankruptcy Act if he fails to meet any of his liabilities. Once any farmer makes a proposal for the composition or arrangement of his debts he will very likely be compelled to go through with it, and if the arrangement that he suggests is not acceptable to any of his creditors any one of them can have the matter referred to the provincial board of review. On this board there is to be a judge, a representative of the debtors, and a representative of the creditors. There is no doubt at all as to the view which the representative of the creditors will take in almost every case. I think we can take it for granted that the representative of the creditors will naturally seek to have the farmer bound to pay under the arrangement the very maximum which he thinks it is possible to get. It is very difficult indeed to get a person to represent the debtor's viewpoint as faithfully as the representative of the creditors will represent their viewpoint. We know that from experience.


Mr. BOWMAN:: Why should that be so?


George Gibson Coote: That has been our experience in the past. The debtor's representative looks at it more in a disinterested way. That has been our experience. I have seen men on the debt adjustment board who it seemed to me in some cases were inclined to favour the creditors' case more than the debtor's; at least they would lean that way. The judge, I think, in most cases is apt to adopt a legal or technical attitude and to be bound by the law. I do not think a judge's experience particularly fits him as a rule, for seeing all the difficulties from the debtor's' point of view. The debtor will not be present personally, I take it, before the board of review. Any such arrangement can be brought before the provincial board of review and once the board of review has given its decision the act says that there is to be no appeal from it, and the farmer is bound to sign any documents or papers which may be drawn up in connection with carrying out the arrangement which has been determined by the provincial board. That
[The Chairman.]
being the case I think we should be very careful to safeguard subsection 3. It reads now:
In any case where the affairs of a farmer have been arranged by a proposal approved by the court or confirmed by the board-[DOT]
That is the board of review:
-Part I of the Bankruptcy Act shall, notwithstanding section 7 thereof thereafter apply to such farmer and failure on the part of such farmer to carry out any of the terms of the proposal shall be deemed to be an act of bankruptcy.
The farmer for the rest of the time that he continues to farm, and it may be all his life, will be in a different position with regard to bankruptcy, from any man who has not had such an arrangement of his affairs. The very first year after the arrangement he might have a crop failure; there might be a drought, or the man might be sick and be unable to work his farm, and then immediately he comes under Part I of the Bankruptcy Act if so determined by the court. That is, his failure to carry out the terms of the agreement will be an act of bankruptcy, if so determined by the court. Even under the best of circumstances it seems to me that if this is to be determined by the court there should be some basis laid down to guide the court so that it would know on what principle to base its decision.
First of all I would like the Prime Minister to consider striking out subsection 3. I cannot see that striking it out would weaken the act in any way. I do not think it would affect the farmer's liability to pay his debts for he would be in the same position as any other farmer who could be compelled to pay his debts. But if there is a good reason for exempting farmers in general from Part I of the Bankruptcy Act, I do not think that failure to meet any of his obligations under this arrangement should immediately make that farmer subject to the terms of Part I of the Bankruptcy Act.
If the Prime Minister will not agree to striking out subsection 3 I suggest that he might enlarge the amendment he has proposed, to read something like this:
Provided that such failure was not caused by crop conditions or depressed prices or, without being restricted by the foregoing, by other causes over which the debtor had no control.
If those words were added to the subsection it would be a guarantee to the house that the farmer would not be forced under part 1 of the Bankruptcy Act through, as I have said, a crop failure, depressed prices or other conditions over which he had absolutely no control. If it is the purpose of this bill to

Farmers-Creditors Act
keep a farmer on his farm, I think we should either strike out this subsection or amend it as I have suggested. I should like to know if the Prime Minister would not consider changing subsection 3 in the manner I have suggested.


Richard Bedford Bennett: The basis of this legislation would be destroyed if that subsection were taken away. Section 7 of the Bankruptcy Act exempts a farmer from its provisions; this bill gives him the benefit of those provisions without assigning or without being adjudicated a bankrupt. Having secured an arrangement and an extension having been agreed upon or settled by the court of review, if there is nothing in the provisions to indicate that failure to observe the arrangement made shall constitute an act of bankruptcy, then the whole basis of the legislation disappears. You cannot have it both ways. You cannot have the benefit of the Bankruptcy Act under our jurisdiction to deal with property and civil rights without having a corresponding obligation that the failure to maintain the agreement arrived at shall constitute an act of bankruptcy. I was impressed with what was said the other day by the hon. gentleman opposite and to my right and realized that it was perfectly sound to provide that crop failures, climatic conditions and depressed prices should be factors to enter into the determination by someone as to whether the default is excusable or inexcusable. If excusable, then it does not constitute an act of bankruptcy; if inexcusable, it can be determined only by a judge in any event. I am sorry to say to the hon. member for Macleod (Mr. Coote) that that is as far as I can go and still maintain the jurisdiction of this parliament to deal with contracts, property and civil rights and questions of arrangements made between creditors and debtors.


George Gibson Coote: I should like to know where there is anything in the bill to indicate to the judge whether he should determine that a man should come under Part I and whether his failure should be deemed an act of bankruptcy. We have the Prime Minister's (Mr. Bennett) statement, but as far as I can see there is nothing in the bill to indicate to the judge that that is the intention of parliament.


Richard Bedford Bennett: I do not desire to prolong the discussion unduly but I endeavoured the other day to point out to the committee that Part I of the Bankruptcy Act deals with bankruptcy and receiving orders. Section 3 gives a long list of what constitutes acts of
bankruptcy. The judge, in determining whether or not he should adjudicate a defaulting party to this agreement as a bankrupt, would consider the whole condition of the applicant or the insolvent. The fact is that in every one of these cases that will have to be dealt with an act of bankruptcy has been committed, otherwise this would not apply. He is now getting away from the results of that act by availing himself of the provisions of this bill. If a judge so determines that he shall be given .a second chance, the inevitable result follows only when that determination has been made by a judge.


Mr. REID:: When a farmer makes a composition under this bill and endeavours to set himself up again to continue his life on the farm, he would probably apply to the farm loan board. I was wondering what would happen in those provinces where there is no farm loan board. Would a man in that case be able to come under the provisions of Bill No. 92?


Richard Bedford Bennett: He certainly would come under the provisions of Bill No. 92 but his ability to secure money would depend upon the provincial body which was functioning instead of the dominion body in that particular province. That would be a matter between the farmer and the provincial body because the farm loan board would not be transacting business in that particular province. Judging by what has been said in some communities, it is not improbable that he would be able to secure more generous terms from the provincial body than he would from the dominion board, although I am not expressing an opinion in that connection.


Mr. MOTHERWELL:: I should like the Prime Minister to make something a little more plain to me. I should like to know what will be the effect of the amendment and how the section will read when the amendment is incorporated.


Richard Bedford Bennett: This bill is based
upon the assumption that without assigning or being adjudicated a bankrupt a farmer unable to pay his debts may avail himself of what I would call the general provisions of bankruptcy, that is, arrive at an arrangement with his creditors by which they would not be able to proceed against him during the life time of the agreement or while its provisions were being met. On the other hand, he will be enabled to keep himself free, shall I say, from suit by having execution issued against him or anything of
Farmers-Creditors Act

that sort. The act as it reads provides that in the event of his failure to discharge his obligations under the compromise agreement, by reason of that fact he would be a bankrupt and the provisions of Part I of the Bankruptcy Act would apply to him, even though he were a farmer. Objection was taken to that the other day and it was pointed out that great hardship might be worked in the event of climatic conditions preventing a farmer from reaping a harvest or depressed prices preventing him from making a profit. I suggested that we add to the subsection such words as would prevent him from being ipso facto a bankrupt. He could be adjudged a bankrupt for failure to discharge his obligations under the compromise agreement only if the court so determined. In other words, default on his part to carry out the compromise agreement should not in itself render him a bankrupt; a judge would have so to determine before he would be a bankrupt in law and in fact. Having endeavoured to enable the farmer to secure the benefits of the Bankruptcy Act by interfering through legislation with contractual obligations, with property and civil rights, the basis of this legislation is that it shall not be a permanent incentive to him to escape the discharge of the obligation which he has thus undertaken, but rather that his ability to do so shall constitute an act of bankruptcy. Have I made myself clear?


William Richard Motherwell: Yes, thank you.


James Layton Ralston: I do not think that the amendment which is suggested accomplishes the purpose which the Prime Minister has in mind. The section states that if a man has entered into an arrangement with his creditors and has undertaken certain obligations as part of that arrangement, he will then be subject to Part I of the Bankruptcy Act. It is not his failure which subjects him to Part I of the Bankruptcy Act but the fact that he has made a proposal. It then goes on to state that the failure of the debtor to carry out the proposal shall be deemed an act of bankruptcy. The Prime Minister suggests adding the words, "when so determined by the court." Now I submit that those words do not add anything at all to the section, because Part I provides for acts of bankruptcy being taken into consideration by the court, and you always have to have the court determine whether an act of bankruptcy has been committed. I think therefore that the section as it reads now, and even with the Prime Minister's amendment, will mean that a man who has entered into a proposal and undertaken certain obligations becomes 
liable under Part I of the Bankruptcy Act, and that provides that certain things are acts of bankruptcy and involve the determination of the quality of those acts by the court itself. So I submit that adding the words "when so determined by the court" does not get us further along the road which the Prime Minister desires to travel.
The other point I want to make is this. I doubt whether after all this is beneficial to the persons for whose benefit the act is being passed, even if the Prime Minister went further and made it clear in his amendment that the failure of the debtor to carry out one of the terms of the proposal should not be deemed an act of bankruptcy unless the court, in the exercise of special discretion, so decided. It seems to me that the insertion of words making it clear that the failure to carry out the proposal is not necessarily an act of bankruptcy will make creditors that much more reluctant to afford credit to the farmer. They will say, "What happens is this. We give credit to the farmer. We know there is an act in force which permits of compromise but we know further that even after he has agreed to the terms, or after the board of review has ordered that it shall be effective, the farmer has no incentive to carry it out, because even if he does not carry it out his failure may not be deemed an act of bankruptcy." I question therefore whether, in the interests of the class whom we are trying to benefit, the insertion of some clause negativing the idea that failure to carry out the obligation is an act of bankruptcy will be useful and beneficial to those for whom its remedial provisions are intended.


Richard Bedford Bennett: 
James Layton Ralston: My thought was that clause 2, subclause 3 was put there for the purpose not of getting jurisdiction over the subject matter but of providing some sort of incentive to the farmer who had once made a compromise indicating to him he could not do this again and that after he had made his compromise he had to live up to it or be subject to the provisions of the bankruptcy act.
Farmers-Creditors Act


Richard Bedford Bennett: That is partly true.


James Layton Ralston: That is why it seems to me, if that was the only purpose of subclause 3, it goes further than the Prime Minister intended. The clause brings the farmer under the Bankruptcy Act for the purpose not only of defining what shall be an act of bankruptcy but of giving a creditor the right to apply for a receiving order in view of the fact the farmer has not paid his bills, one of them being the undertaking he has entered into under the proposal. I thought the jurisdiction was covered by clause 6 which says that a farmer who is unable to meet his liabilities as they become due may do so and so. That, it seems to me, was the well known definition and test whether a man was bankrupt:	If you found a man in that condition,
parliament had jurisdiction by reason of the fact he was not able to meet his liabilities as they became due.


Richard Bedford Bennett: But the Bankruptcy Act does not apply to him-my hon. friend has put his finger on the point-until the compromise arrangement is completed and approved either by the court or the board. That is the whole point.


James Layton Ralston: L understood clause 6 was the operative clause which provided that a farmer who was not able to meet his liabilities as they become due might make a proposal for a composition-


Richard Bedford Bennett: Yes.


James Layton Ralston: -that the Bankruptcy Act does apply-


Richard Bedford Bennett: No.


James Layton Ralston: only to such a man and that the act was made applicable by reason of clause 6. Subclause 3 of clause 2 was inserted, as I thought, for a totally different purpose. That is why I pointed out that that subclause had gone much further than the Prime Minister intended and that was the reason he was putting the rider on so that it would read:
Failure on the part of such farmer to carry out any of the terms of the proposal shall he deemed to be an act of bankruptcy-
And then the addition:
-if so determined by the court.
I still think the addition of those words does not affect the purpose which the Prime Minister has in mind because it seems to me Part I of the act cannot apply unless there is a determination by the court; that is to say, the act of bankruptcy is proved to the court

and the court decides whether it is an act of bankruptcy. The subclause says that failure on the part of the farmer to carry out any of the terms of the proposal shall be deemed to be an act of bankruptcy, with the addition by the Prime Minister of the words "if so determined by the court," but I think he would have to go further and say that notwithstanding there was failure on the part of tihe farmer it should not be deemed an act of bankruptcy unless the court, taking into consideration all the facts and circumstances and working on an entirely different principle from that on which a judge in bankruptcy generally works, decided it was an act of bankruptcy.


William Richard Motherwell: In the event of the secured creditors being willing to give an extension of time to the debtor can any non-secured creditors press the farmer into a position he does not want to attain, for instance, into bankruptcy? In other words, can a non-secured creditor press a farmer into bankruptcy even though the secured creditors are willing to negotiate with him?


Richard Bedford Bennett: I am afraid I have failed to make myself clear to this committee.


William Richard Motherwell: Well, the matter is pretty complicated to a layman.


Richard Bedford Bennett: I agree with that. If the hon. member for Shelburne-Yarmouth is unable to follow me I would not expect a layman to do so, and I attribute the failure to myself and not to others.


William Richard Motherwell: Quite so.


Richard Bedford Bennett: First may I point out that the foundation of this whole matter lies in the	fact that by common law	there	canbe no	compromise by a	debtor	with	his
creditors unless all his creditors are agreed.
Mr.	MOTHERWELL:	Secured	and	unsecured?Mr.	BENNETT: Yes,	secured	and	unsecured. I should like to make that proposition so clear to the committee there can be no doubt about it; in other words, if ninety-nine per cent of a debtor's creditors agree to a compromise, that does not effect a compromise and the remaining one per cent may bring an action, secure judgment and issue execution. That is point number one. Number two is that under the law as it now stands farmers are not under section 7 subject to Part I of the Bankruptcy Act. Number three is that this bill endeavours to meet the situation without putting the farmer into bankruptcy in the first instance and uses the machinery
Farmers-Creditors Act
and power of parliament under its exclusive jurisdiction over bankruptcy to assist in making effective a compromise in which all the creditors do not join and need not join because of the character of the proceeding. The hon. member for Shelburne-Yarmouth. is quite right in saying that clause 6 says what might be done; that is, when the farmer is not in a position to pay his debts and desires to make a compromise, his creditors are convened and they put forward a scheme of settlement or compromise.


James Layton Ralston: Without bankruptcy.


Richard Bedford Bennett: Yes, that is the point I am trying to make. That compromise would under the common law have no value in the world as being effective among the creditors and clause 2 is the one where we have to provide the jurisdiction required. Even at the risk of wearying the committee I should like to read this. Clause 2, subclause 2 reads:
Unless it is otherwise provided or the context otherwise requires, expressions contained in this act shall have the same meaning as in the Bankruptcy Act, and this act shall be read and construed as one with the Bankruptcy Act, but shall have full force and effect notwithstanding anything contained in the Bankruptcy Act, and the provisions of the Bankruptcy Act and bankruptcy rules shall, except as in this act otherwise provided, apply mutatis mutandis in the case of proceedings hereunder including meetings of creditors.
I can quite understand the hon. member for Shelburne-Yarmouth assuming that subclause 3 was being used for the purpose he suggests, but I want him to study it for a moment. It reads:
In any case where the affairs of a farmer have been arranged-
That is the operative word there.
*-by a proposal approved by the court or confirmed by the board as hereinafter provided-
It is quite clear that unless we bring that within the Bankruptcy Act, the common law prevails and the compromise has no value.


James Layton Ralston: I go back to clause 6.


Richard Bedford Bennett: But clause 6 has no
reference to the Bankruptcy Act; it only enables the conference to take place.


James Layton Ralston: It has reference to the
state of bankruptcy.


Richard Bedford Bennett: Yes, what by law is one of the states of bankruptcy. After the proposal has been made and approved by the court or board, we have to have something to give authority and power to that settlement to make it legal as against the common law that there can be no compromise. There-74726-256
fore we say that the provisions of Part I apply and section 7 is no longer operative. The farmer's failure to discharge his obligations under that compromise agreement might continue for a very long time; it might continue without any action being taken, but the suggestion was made the other day of safeguarding this in some way and so we say that that shall not constitute an act of bankruptcy unless so determined by the court.


Mr. BEAUBIEN:: Supposing a farmer has obligations to meet and he can meet them only in part; can the mortgagee or the people to whom he owes money apply under this measure to the board of review in order to bring about a compromise or composition, and if they can apply, after that application is made and the composition is brought about, does that man, although not desirous of being a bankrupt, automatically become one unless the court takes all the circumstances into review?


Richard Bedford Bennett: That is not the case;
if the hon. gentleman will look at clause 6 the situation is just the reverse: the farmer makes the proposal. Clause 6 reads:
A farmer who is unable to meet his liabilities as they become due.
There are other provisions to which reference was made the other day, but the basis of the foundation of jurisdiction is that the farmer makes an application for a composition.


Charles-Philippe Beaubien: But under this act he is the only one who can make application?


Richard Bedford Bennett: Circumstances may arise, as we will see in the bill, in connection with difficulties and differences arising in which a creditor can make a further application, but not the original application.


Charles-Philippe Beaubien: Then may I ask the Prime Minister this question. Under certain circumstances, as I understand the bill, the people to whom the farmer owes money can make an application, and the composition is arrived at?


Richard Bedford Bennett: No.


Charles-Philippe Beaubien: His creditors cannot
apply under the act?


Richard Bedford Bennett: The jurisdiction rests
with the farmer and not with the creditors.


Charles-Philippe Beaubien: The farmer has to make the first move under this bill?


Richard Bedford Bennett: Yes.


George Gibson Coote: I think it is quite clear that the farmer makes the first move under this bill, but after the farmer makes his proposal

Farmers-Creditors Act

eventually the provincial board has power to make an arrangement and the farmer has no option but to accept it. He must sign any papers he is ordered to sign.


Charles-Philippe Beaubien: Then he becomes bankrupt.


George Gibson Coote: No, he does not, but he places himself in the position that if he fails to meet any of the payments which he is obliged to make, that shall be deemed an act of bankruptcy under Part I of the act. That brings me to the statement made by the Prime Minister. I think he made it very clear that the reason for putting in the words he suggested was that if the failure to meet the payments as arranged was due to crop failure or climatic conditions, then the farmer should not be considered a bankrupt, because those were conditions over which he had no control.


Richard Bedford Bennett: He might not be considered a bankrupt; the court would have jurisdiction.


George Gibson Coote: Those are the reasons the court would take into consideration for refusing to have him deemed a bankrupt. But if that is the reason for inserting these words I really think some suggestion to the judge should be included as well, as to why he should not determine the man to be a bankrupt. There is nothing in the act to guide the judge in refusing to give an order directing that the man is a bankrupt, and I think the amendment I have suggested should be inserted for that purpose. My amendment is that after section 3 we add the words, "provided that such failure was not caused by crop conditions or depressed prices or, without being restricted by the foregoing, by other causes over which the debtor had no control." As I understand it that would leave it to the judge in rendering a decision to say, "Parliament wishes me to be guided by the conditions laid down in the statute. Has the failure of the farmer to meet his obligations arisen through crop conditions or from other causes over which he could have absolutely no control?" In that way I think we would lay down a basis on which the judge could render a decision. It seems to me there is nothing in the act at present to suggest to the judge that if crop conditions were bad he should refuse to adjudge the man a bankrupt.
As I understand the act, and I should be glad if the Prime Minister would correct me if I am wrong, once a proposal is made the provincial board may make the final arrangement. It may be quite different from the

proposal of the farmer in the first instance, but on the application of any creditor the provincial board can review the case and decide on the terms of the compromise, and the farmer must accept those terms. Of course the creditors must accept them too, but in making these adjustments no leeway seems to be left to the farmer; it is not anticipated that he will have any equity other than what he is going to pay for under the compromise. It seems to me that unless the farmer has more protection than he is given here he may say, "I might far better remain as I am and still enjoy the privilege of living in my own home, because my only reason for making this compromise would be to try to assure to myself the privilege of living here."


Richard Bedford Bennett: His exemption is not taken from him by bankruptcy.


George Gibson Coote: No, and his exemption cannot be taken from him by a court of law, but I should like to ask the Prime Minister whether this legislation in any way invalidates the debt adjustment legislation in the provinces.


Richard Bedford Bennett: No, it would not be competent for us to validate or invalidate it. May I repeat, even at the risk of being tiresome, that legislation enacted by a legislature somehow must fall within the provisions of section 92 of the British North America Act, and be exclusively within the jurisdiction of that legislature. Legislation passed by this parliament somehow must fall within the provisions of section 91, either under the specific heads enumerated or the broad general terms of peace, order and good government in Canada. If we passed an act to attempt to validate what has been done by a province it would be a contradiction in terms, for if the exclusive jurisdiction rests with the province and exclusive jurisdiction rests with parliament-there are two or three matters in which there is concurrent jurisdiction, with which I need not deal-it would follow that an attempt under our exclusive power to validate something that exclusively belonged to a province would be a contradiction in terms.


George Gibson Coote: Has the board of review power to lower the interest rate on a mortgage or other debt that now exists, which the farmer must pay for the years covered by the new agreement?


Richard Bedford Bennett: I should say the answer would be no; that is dealt with by section 17. My hon. friend is talking about future interest?

Farmers-Creditors Act


George Gibson Coote: Yes. The farmer now has a mortgage bearing interest at eight per cent, we will say. Under this compromise the principal of that mortgage may be reduced, but would the board have power to say that the rate of interest should be five iper cent or six per cent or any rate other than that set out in the existing mortgage?


Richard Bedford Bennett: After the decision of the supreme court the other day it is not contemplated, except to the extent mentioned here, that they may deal with secured and unsecured creditors as well. It does not contemplate the board having power to break a contract, with the exception of the provision under section 17 dealing with the question of interest.


Mr. HANBURY:: That would only apply
to secured creditors or those having security; it would not necessarily apply to unsecured creditors, who might get any rate of interest or no interest whatever, as the board might decide.


Richard Bedford Bennett: Offhand one would say,
considering the kind of cases that will have to be dealt with, that here the whole arrangement is predicated on the ability of the man to pay. There need be no plan at all. If the board concludes that the man will never pay they should not make an arrangement. This is predicated on the assumption that the man has indicated, by his past history or by his present surroundings and conditions, his ability to pay something. He makes a compromise accordingly, and from what was said the other day by the representatives of the secured creditors, I feel quite certain that in their anxiety to keep the man upon the security, upon the land, they will be most generous in their attitude towards interest rates. Many of them, as I explained to the committee the other day, have already reduced their interest rates, indicating their earnest desire to keep the farmers on the land. I suppose no one wants to keep the man on the land any more than the people who loaned the money to him; surely that would be the case. They are the people who want him to stay there. He wants to stay there, for one reason, to have a home, to make his living and to pay his debts. And they want him to stay there in order that their security may not become useless.
I say to the hon. member for Macleod that we have not undertaken, and I hope parliament will never undertake, to do what is regarded to be of the utmost danger. I will put it this way, that there are those who would say that it would be invalid for us to 74720-256 i
do it. I tried to explain that, ordinarily, parliament has jurisdiction over interest, but once a contract is made between a farmer and a loan company, or an insurance company, or his neighbour to pay a given rate of interest, that contract is then solely under the exclusive jurisdiction of the province, being a matter of property and civil rights. There are those who say notwithstanding that fact we have a right to say that although one of the terms of the contract is that he shall pay seven per cent we may say that hereafter he will pay only three per cent. But I think legal opinion is that it is not competent for us, that it is no longer a matter of interest, but that it is a matter of a contract between one citizen and another citizen or-if you wish to accept my illustration-between a citizen and a company. And there is no jurisdiction on the part of this parliament then, to interfere with such contract. We think that we have gone as far as we can in section 17. In fact, I do not know whether or not some of my legal friends think that section 17 is wholly within our powers; I think it probably is. We have gone as far as we think we can, to be certain. To suggest that this parliament can pass a statute and say that a contract between Smith and Jones by which Smith agrees to pay Jones five per cent can be changed to an agreement to pay one per cent, in the view of legal men with whom I have discussed the matter is to suggest something that is not within our power: I do not know the view held by the hon. member for Shelburne-Yarmouth but I may say that is the general view among legal friends with whom I have discussed the matter. It would be within the power of the province to do it, and, of course, it would amount to confiscation. The privy council has decided in the Florence Mining case that that is a matter within the competence of a provincial legislature. In that case the mine was taken from one person and given to another, and they were denied the privilege of going to court and issuing a statement of claim. It was held by the privy council that that was a constitutional and valid exercise of the powers of a provincial legislature. My view is that it is not competent for this parliament to interfere with property and civil rights, after a contract has been arrived at.


Alan Webster Neill: Do you consider section 17 is within our power?


Richard Bedford Bennett: I say section 17 is, we think, within our power. We believe it is. I think section 17 is valid, because it refers only to interest and to matters arising solely out of it.
Farmers-Creditors Act


William Richard Motherwell: My right hon. friend must think it is valid or he would not have it in the measure.


Richard Bedford Bennett: There are doubts. We think it is.


William Richard Motherwell: It may be what may be termed a line question.


Richard Bedford Bennett: Yes.


George Gibson Coote: I may have misunderstood
the Prime Minister, but I thought he said that this parliament had no power to change a contract. From his remarks I drew the inference that we had no power to reduce mortgage interest from eight per cent to live per cent. But I understood it was intended that under this legislation, the provincial board would have power to render a decision in regard to the composition of a farmer's debt, and one of the things it was expected they should do was to write down the capital debt, even in the case of secured creditors. I wish to have that point cleared up.


Richard Bedford Bennett: The hon. member did
not misunderstand me. We have provided in section 3, the one with which we are now dealing, that under certain circumstances the provisions of the Bankruptcy Act shall apply. Last session we enacted some legislation by which we did provide for adjustments with respect to secured creditors. It was contended by very able members of the legal profession that that was beyond our competence. The supreme court unanimously decided that that was within our jurisdiction. I do not know whether the case is to be taken farther or not, but as the law now stands these provisions are predicated upon that decision. As the law now stands we have framed these provisions, and they were framed so as not to be considered in this house until after judgment was given. If the judgment had been adverse I am afraid I should have had to modify them. They do, in terms apply to secured and unsecured creditors, and if the hon. gentleman has before him the statute passed at last session he will see how far we really did go.


George Gibson Coote: If I am correctly informed,
in almost all cases where reorganization might be effected under the legislation passed last year the interest on bonds and other securities would be reduced, and it seems to me they are being reduced under the authority of the legislation passed last year.


Richard Bedford Bennett: But they are not compulsorily being reduced. That is what I have been trying to say to the hon. gentleman.


George Gibson Coote: The bankruptcy court has
power to reduce. Not being a lawyer I may be labouring under considerable difficulties. But I should like to be clear in the matter. If we have power to legislate giving the bankruptcy court or any bankruptcy machinery the right to reduce the principal of a debt, surely we have the power to give them the right to reduce the rate of interest which is to be paid by a debtor under a new arrangement. I just wish to find out whether the provincial boards, when they made those final settlements between debtors and creditors which are binding upon all parties, have any authority or power in law to fix a lower rate of interest, which the farmer is assuming under the compromise, than was said to be payable by him under the original contract.


Mr. SPEAKMAN:: There is only one
point with which I should like to deal. I am sure the Prime Minister will understand our position. As he said, this matter is somewhat involved. Many of us are in the unfortunate position of being laymen, and yet we will be called upon to explain all the minute details of this legislation to those people in our constituencies who may be interested. It is for that reason, among others, that we are endeavouring to ascertain an exact understanding of the legislation.
As I understand it, with respect to the provincial legislation a farmer will have the choice between remaining under the present provision for provincial debt adjustments and coming under the provision of this new federal legislation. He cannot have both. In other words, if he elects to enter into composition under the provisions of the federal legislation he thereby loses any opportunity he may have had to continue under the provincial legislation. I believe that point may have been in the mind of one of my colleagues when he suggested that this legislation would invalidate the provincial legislation. I cannot see that it would do that, but I believe it would give an alternative to the farmer. He could come in under either the provincial or the federal, but he could not come under both. Once he has come under the federal legislation he has placed himself under the terms of federal bankruptcy law, which would override any provincial legislation.
The one point, however, in which I am keenly interested, and which has been discussed at great length, is the question of protection afforded to a debtor after a composition has been entered into and after, for reasons under or beyond his control, he has failed to comply in full with those conditions.

Farmers-Creditors Act
The Prime Minister, realizing the situation, introduced an amendment to-day so far as possible to cover the point. But the difficulty
1	have in my mind is this: As I understand it the amendment-and I agree with the hon. member for Shelburne-Yanmouth, although it may be presumption on the part of a layman to state whether or not he agrees or disagrees -but so far as I understand the Bankruptcy Act such protection is provided under that act, itself. This goes a little farther than does the act. What I have in mind is this. It is possible, if not probable, that any court before which such a case might be brought might conceive itself bound by the statutory definitions of what constitutes insolvency, and might therefore merely determine whether or not in view of those statutory definitions the debtor was insolvent and therefore subject to Part I of the Bankruptcy Act. I was wondering whether it would be possible to enlarge the section somewhat along this line, that in its determination the court should not be bound by the statutory definitions of insolvency but should have full discretion in dealing with the matter. Otherwise it does seem to me-I speak subject to correction- that the average court would feel itself bound in such a case by the statutory definitions laid down in the Bankruptcy Act itself. That act defines what bankruptcy and insolvency is, and I think that the average judge will feel that he has no choice in the matter except to decide whether the farmer was actually insolvent according to the act itself.


Richard Bedford Bennett: Mr. Chairman, the hon.
gentleman from Red Deer has put the case very clearly from his angle. I can only say to him that if he will look again at subsection 3 of this bill, and then at section 7 of the Bankruptcy Act, and then at section 2 of the Bankruptcy Act, he will have these matters before him. Section 7 says that a farmer shall not be subject to the Bankruptcy Act. Section 2 defines what are acts of bankruptcy. Now this statute says that in the event of a farmer failing to discharge the obligations which he has undertaken, section 7 of the Bankruptcy Act shall no longer apply to him, and failure on the part of the farmer to carry out any of the terms of the proposal shall be deemed to be an act of bankruptcy. There has to be failure to carry out any of the terms of the proposal. It has nothing to do with section 1 or section 2 or anything else. It makes it referable only to this one single thing. He cannot be made a bankrupt under section
2	because that is precluded by section 7, but section 7 does not apply when there is
failure on the part of the farmer to carry out any of the terms of the proposal. That is what we say in this bill, that failure to carry out any of the terms of this proposal shall be deemed to be an act of bankruptcy if so determined by the court.
My hon. friend from Macleod suggests that we add words to the effect that it shall not be deemed an act of bankruptcy if the farmer's failure to carry out the terms of the proposal should be caused by climatic or economic conditions. Now we have a rule of law, whether it is sound or not, and I suppose laymen will doubt its soundness, that when you mention specific things you thereby exclude the others, and it was because of that I thought it desirable to leave the matter so wide and so clear that when a judge looks at, say, the six terms in the proposal -one relating to production, for example, one with relation to cultivation, one relating to residence, one to the taking of moneys that come from the sale of the crop for tax purposes, and so on-that a breach of any one of these terms shall be deemed to be an act of bankruptcy; if so determined by the court. That is an entirely different thing from the Bankruptcy Act. It is an application of it. Under this statute we say, as was pointed out by the hon. member for Shel-burne-Yarmouth, that when the proposal has been approved by the court the operative provisions of the Bankruptcy Act apply when there has been default, shall I say, in any one of the terms of the agreement. Instead of trying to anticipate what the terms would be and what default would be we simply say "if so determined by the court." If there are other words that make the farmer's position safer I am most anxious to adopt them, but I must keep in mind that if I undertake to specify certain things I have excluded those I do not mention, and we may run up against that difficulty in the very first case, whereas, as it stands now, it applies to every possible contingency that can arise in connection with default in relation to any of the terms of the agreement. If there are wider words to be used to indicate a greater discretion, I am content to use them, but frankly I do not know what they are.


Alfred Speakman: That was the only
point in my mind, that the farmer would be subject to Part I of the Bankruptcy Act as soon as the proposal was made, and if he failed to comply with the terms of the agreement the Bankruptcy Act would apply and he would be subject to its terms. Apparently I have not been able to make myself clear, but the one point I had in mind was this:
Farmers-Creditors Act

If the farmer breaks one of the terms of the agreement would the board have any discretion in applying to that case, say, the ordinary rules of insolvency and bankruptcy? Would they be able to say:	This man is
insolvent because of something beyond his control, and therefore the act does not apply to him, and therefore he should not be deemed insolvent? My impression is that as it stands they would not be able to say that, but would simply ask themselves:	Is
the farmer insolvent under any of the definitions in the Bankruptcy Act itself? If so, he must be declared a bankrupt and a receivership may be applied for.
My hope was that it might be made quite clear-frankly as a layman I would hardly care to suggest the words to be used-that the judge would be unhampered in his discretion and beyond applying the statutory definition of insolvency he would be able to take into account all these mitigating features and be able to say: There has been a crop failure and therefoi'e we shall not declare you an insolvent, and you will not be open to a receivership. My only desire is to make certain that absolute discretion is given to the court in such cases so that no judge would feel himself bound by the strict letter of the Bankruptcy Act.


Richard Bedford Bennett: The Bankruptcy Act does not apply to this section.


Alfred Speakman: I understood the Prime Minister to say that just as soon as the farmer made the proposal he lost his immunity under Part I of the Bankruptcy Act.


James Layton Ralston: As soon as the proposal is confirmed.


Alfred Speakman: Yes, as soon as it is confirmed by the court and accepted by all parties the farmer loses his present immunity under Part I of the Bankruptcy Act and is then like any other citizen, but he could not be declared a bankrupt until he failed in the performance of one of the terms of the agreement; but having so failed, then under the amendment which has been moved by the Prime Minister it remains for the court to determine whether the man shall be declared a bankrupt in the ordinary sense of the word and be subject to a receivership.
My point was, and it is so essentially important that I repeat it, that it should be made quite clear in the act that after all the preliminaries have been gone through and the man has failed in one of the terms of the agreement, the court in making its determination shall be able to take into account
IMr. Speakman.]
the mitigating circumstances-hail, for instance, depressed prices, climatic conditions- but without indicating these conditions in the bill, and indicating only that the discretion of the court is absolute in such matters.


James Layton Ralston: 
Richard Bedford Bennett: I suppose lawyers have differed, hence they have lived.


James Layton Ralston: That is why we go to the privy council.


Richard Bedford Bennett: "VVe will see that this does not get that far. Subsection 2 provides that the Bankruptcy Act applies mutatis mutandis but that where there is any conflict between the Bankruptcy Act and this statute, this statute shall prevail. That is, this statute shall supersede the Bankruptcy Act. Section 3 of the Bankruptcy Act has no reference at all to this legislation. If I were asked to name the points upon which I would regard a farmer bankrupt, and if it were desired to do it without any regard to this statute, I would do it under (f), which states that a debtor commits an act of bankruptcy when he ceases to meet his liabilities generally when they become due. In this case his liabilities are specifically indicated in the agreement which he has undertaken and, therefore, he comes within this. However, the point which I have apparently not succeeded in making clear to the committee is this: To found jurisdiction is one thing, to exercise it is another. To found it we must do it on some basis of fact, not of law, and that basis of fact must be that the farmer himself has applied to his creditors to adjust and compromise his obligations. That is a condition precedent to everything; that starts the thing. I think we are all agreed about that. When, having done that, he is able to make an arrangement and ultimately it is settled by the board of review, the provisions of the Bankruptcy Acit apply as provided by section 2, that is, the extent to which they are not at variance with this statute. Where they are at variance, this statute prevails. Subsection 3 reads:
In any case where the affairs of a farmer have been arranged by a proposal approved by the court or confirmed by the board as
hereinafter provided, part I of the Bankruptcy Act shall notwithstanding section 7 thereof thereafter apply to such farmer and failure on the part of such farmer to carry out any of the terms of the proposal shall be deemed to be an act of bankruptcy.
The hon. member's remarks have brought about some doubt as to whether or not that is abundantly clear, although in my mind it is clear enough that the only act of bankruptcy would be the failure to carry out the compromise provided by this bill. That is the whole genius of this legislation. Subsection (f) of section 3 states that the failure to pay liabilities generally as they become due constitutes an act of bankruptcy while this legislation deals with the agreement or proposal. The whole purpose was to make it clear that that was the only provision which would apply, namely, the provision regarding failure on the part of the farmer to observe the terms of his agreement and which, under the general provisions of section 3, would constitute an act of bankruptcy. If subsection 2 is applied to the whole statute I think it will be found that the court would construe those words to mean that an act of bankruptcy must be an act which arises out of the failure to comply with the terms of the agreement. If there is any doubt as to that. I should like to have it made abundantly clear.


George Gibson Coote: Do not the first five words of subsection 3 really mean that the farmer would immediately come under the Bankruptcy Act?


Richard Bedford Bennett: Yes, but the Bankruptcy Act is amended by this bill and this bill has supremacy over the main act. Subsection 2 deals with that and I ask my hon. friend to look at it. It states that the provisions of the Bankruptcy Act shall, except as in this act otherwise provided, apiply mutatis mutandis in the case of proceedings hereunder including meetings of creditors. Instead of reenacting the whole thing, we take advantage of the Bankruptcy Act but with respect to this particular thing, we deal with it specifically. If there are words which could be introduced to make it abundantly clear, I am perfectly willing to add them as I am anxious that there should be no doubt about it. I think we can meet the last point raised by the hon. member for Red Deer (Mr. Speakman) and the hon. member for Macleod (Mr. Coote). I would not care to undertake to mention all the circumstances which would release a farmer but I think we could use these words: "Unless in the opinion of the court such act was due to causes over which the farmer had no control."
Farmers-Creditors Act


Wilfred Hanbury: I think that would
limit it.


Richard Bedford Bennett: I desire to meet the views of the hon. members if they think it is in the interests of the farmer to say, "over which he has no control." However, I do not think it would be quite as good as leaving it entirely in the discretion of the judge. The hon. member for Red Deer seems to think that the judge might not be aware of all the circumstances.


Alfred Speakman: He might feel himself bound by the statute.


Richard Bedford Bennett: Section 3 does not apply and I should like to have it clear that it does not if there is any doubt about it. The only act of bankruptcy which a farmer can commit after he has made an agreement is to make default in his agreement. My hon. friend has stated that that is in contravention of the provisions of section 7. Subsection (f) deals with a man who ceases to meet his liabilities generally as they become due but in this case new liabilities have been created under a compromise agreement and the failure to discharge those would constitute an act of bankruptcy. That is the only thing, but if there is any doubt or if it is felt that it should be made more clear, let us put in the words to make it clear beyond per-ad venture.


George Gibson Coote: The point I was trying to make was that there is nothing to indicate to the judge why he should not give an order.


Wilfred Hanbury: The very fact that it is referred to a judge is sufficient justification.


George Gibson Coote: I do not know why; there may be several reasons. I think the judge himself must always decide even though the act says that certain things constitute an act of bankruptcy. I should like to suggest certain words which were given to me by a lawyer with whom I discussed the matter. The reason I mentioned crop failures and climatic conditions was that they were specifically mentioned on the floor of the house.


Richard Bedford Bennett: I mentioned them.


George Gibson Coote: I would suggest that after
subsection 3, which states that the failure of a farmer to carry out the terms of a proposal shall be deemed to be an act of bankruptcy, these words should be added, "provided that such failure was not caused by crop conditions or depressed prices and, without being restricted by the foregoing, by other causes over which the debtor has no control." Per-

haps this would circumscribe the authority of the judge but so far as I am concerned, I would prefer to have these words in. This is the reason which we would give to the judge for refusing to issue an order. These are causes over which the farmer has no control. We do not intend to protect the farmer indefinitely if he will not make some effort, where the conditions are favourable to his doing so, to meet his liabilities. But if there should arise conditions over which he has no control, and if it is impossible for him to meet all the conditions under the agreement, then I think we should make it clear to the judge why we should not issue the order. I should be very glad indeed if the Prime Minister would adopt some suggestion of that sort.


Richard Bedford Bennett: I do not wish to adopt
any provision that nullifies the whole purpose of the act. I do not wish to destroy the foundation on which it is predicated, and it is predicated on the assumption that only by bankruptcy can we do what is proposed. Most lawyers will agree to that without difficulty.	*


James Layton Ralston: I think section 6 is
sufficient.


Richard Bedford Bennett: If I were arguing in a
court I could make it clear that you have to have something further than that. As my learned friend very properly says, section 6 is put there for the purpose indicated; but we have something else in mind as well. We wish to declare that we have jurisdiction, by providing for bankruptcy; because bankruptcy as a legal fact and as a fact known to all persons are two different things. For instance, I may be a bankrupt; you may say, "Bennett is bankrupt." But I am not bankrupt in the technical sense of that term until the proper proceedings have been taken.


James Layton Ralston: You have only committed an act of bankruptcy.


Richard Bedford Bennett: Something that may
make me subject to the Bankruptcy Act. The farmer is exempt from it. Now we will let him compromise, which is a violation of the conditions of the common law; and to maintain our jurisdiction and keep him from being sued I make the declaration in section 3, so that the condition of his being sued cannot arise at all. Then, I say, having obtained all the benefits being provided for here, and being protected in this way, if he makes default there must be some limit somewhere; and we overcome that by saying that a judge shall determine it. The hon. member

Farmers-Creditors Act
for East Edmonton (Mr. Bury) suggests that we might meet the situation by providing that it should not be so determined unless it were for causes beyond the control of the farmer. That would mean climate and the general conditions of the world. But, it seems to me, there is a danger in specifying such conditions. I have not practised my profession actively for some years but I think the rule is that if you specify you run the chance of excluding those conditions which you do not specify.


James Layton Ralston: You would have to begin with acts of God.


Richard Bedford Bennett: Yes, and the king's
enemies, and various forces of that kind. I remember being interested long years ago in a matter of this sort, and because we undertook to specify we found ourselves in difficulties. And that is so here.


Wilfred Hanbury: There is one point I have not clearly in my mind in connection with bankruptcy. When a firm goes into bankruptcy a trustee is appointed and he may carry on the business and incur new liabilities which take precedence over his trust. Assuming that there is a similar condition here and that new liabilities are incurred, will they take precedence over the composition, and, if they do take precedence over the composition, could not the new creditor then take action and force the debtor into bankruptcy?


Richard Bedford Bennett: I think it is only fair to say that this act does not contemplate that condition arising.


Wilfred Hanbury: But is it not possible?


Richard Bedford Bennett: No; there is no trustee in this case. This contemplates the man continuing himself; that is the purpose of the act. The Farm Loan Act contemplates some possibility of his being able to get new capital, but it does not contemplate such a contingency of receivers' certificates taking priority over the original creditors. Will the hon. member for Shelburne-Yarmouth (Mr. Ralston) be good enough to look at the section for a moment, to see whether or not, to remove any doubt, the use of the word "only" after the word "and" and before the word "failure" in line 17 of subsection 3 is desirable, so that it would read:
And only failure on the part of such farmer to carry out any of the terms of the proposal shall be deemed to be an act of bankruptcy.
Does the hon. member think that this would meet one of the difficulties mentioned here?


James Layton Ralston: The first point I made-


Richard Bedford Bennett: I am leaving that out.


James Layton Ralston: My first point is that you may be making it harder for the man you are trying to benefit. Perhaps the words "but only failure" might be preferable.


George Gibson Coote: I wonder whether the Prime Minister would accept an amendment somewhat like this. He said that something of this kind was suggested by the hon. member for East Edmonton: "Provided that such failure is not due to causes over which the farmer has no control." I suggest that there should be something of this kind to guide the judge, to give him some idea as to why the matter has been referred to him for decision. Personally I should prefer the wording I suggested before, but if the Prime Minister does not see fit to adopt it he might consider the suggestion I have just offered and which he said was what was proposed by the hon. member for East Edmonton (Mr. Bury).


Richard Bedford Bennett: The hon. member for East Edmonton suggests: "Unless in the opinion of the court such act was due to causes over which such farmer had no control."


George Gibson Coote: That is the idea.


Richard Bedford Bennett: That is as as far as we can go without bringing ourselves within the rule that to mention specific causes is to exclude others in the same class. The suggestion is that, in order to meet the situation, the word "and" in line 17 be struck out and the words "but only" substituted therefor: "but only failure on the part of such farmer to carry out any of the terms of the proposal shall be deemed to be an act of bankruptcy." We shall have to add the words: "provided that such failure shall not be deemed to be an act of bankruptcy unless in the opinion of the court such act was due to causes over which the farmer had no control."


Wilfred Hanbury: Not sufficient control; he may have some degree of control.


Richard Bedford Bennett: No effective control.


Alfred Speakman: Would that not be for the judge to determine?


Mr. STITT (Selkirk):: Am I to understand that the words mentioned by the Prime Minister are being added? I should like to see them added, because I think they make it abundantly clear and give the judge absolute discretion. I approve the suggestion.


Alfred Speakman: That should pretty
well cover the point. Under the former amendment all that the court could determine was whether the farmer had fulfilled the
Farmers-Creditors Act

obligations of his agreement; that being determined, no mitigating cause could be taken into account. Under the present wording some discretion is given.


Richard Bedford Bennett: Would the committee
bear with me, listen to this and see if it meets the situation? After the word "bankruptcy" add:
Provided that such failure shall not be deemed an act of bankruptcy unless in the opinion of the court such act was not due to causes over which such farmer had no control.
My hon. friend suggests " effective control." "No control " are words used in law and they have been construed by the courts. Will that meet the views of the committee?


Hugh Guthrie: Or "causes beyond the
control of such farmer."


Richard Bedford Bennett: The Minister of Justice
suggests:
Or "causes beyond the control of such farmer."
That may be better.


Wilfred Hanbury: The question of control would still be within the opinion of the judge, would it not?


Hugh Guthrie: Yes.


Richard Bedford Bennett: Yes. Then it might
read:
Provided that such failure shall not be deemed an act of bankruptcy unless in the opinion of the court such act was not due to causes beyond the control of such farmer.


The CHAIRMAN (Mr. Smith, Cumberland) :: Mr. Guthrie moves that subclause 3
of Clause 2 be amended by striking out the word "and" in the seventeenth line and substituting therefor the words "but only" and by adding the following after the word "bankruptcy." the last word of the subclause:
Provided that such failure shall not be deemed' an act of bankruptcy unless in the opinion of the court such act was not due to causes beyond the control of such farmer.


Richard Bedford Bennett: I think that covers it.


James Layton Ralston: Just to make it a little clearer might I suggest that the word "if" be substituted for "unless" and that the word "not" be struck out. Then you would strike out two negatives and have the positive declaration, "if in the opinion of the court such act was due to causes beyond the control of such farmer."


Richard Bedford Bennett: I thank the hon. gentleman; that makes it better.


[Stage Direction]
Amendment agreed to.
Mr. LUCAS:: There is another point on which I should like a little information. I understand that a farmer who is insolvent will not come under the provisions of this bill. This morning I handed the Prime Minister a letter I received from a farmer who declared that he was hopelessly insolvent, and who wanted to know if this bill would give him any assistance. To-day a farmer who is insolvent requires from $100 to $150 to go into bankruptcy. Many farmers simply cannot raise that money, and I was wondering whether under the provisions of this bill, by which we are providing without cost official receivers and boards of review for the benefit of those farmers who may come under the act, these insolvent farmers might not have their cases reviewed so that, if they are found to be hopelessly insolvent, they might be put through bankruptcy without the cost that is now entailed. These men cannot raise the money necessary to go through bankruptcy and they find themselves chained, as it were, almost as slaves. They are unable to get rid of this debt and start up afresh. I am sure that if some means could be provided whereby they could be relieved of this burden many of them would make a fresh start with at least some hope of making a livelihood.
I want to congratulate the Prime Minister on bringing in this legislation. I think it is very badly needed and will afford a great deal of relief to those who are able to come under the provisions of the bill. But I think hon. members, especially those from western Canada, will agree that many farmers in the west are hopelessly insolvent, and they will not geit relief so long as they remain in that condition.


Richard Bedford Bennett: The reason I answered the hon. gentleman as I did with respect to the case which he suggested might come within the provisions of the statute was that I had regard to subsection (9) of section 12, which reads:
The board may decline to formulate a proposal in any case where it does not consider that it can do so in fairness and justice to the debtor or the creditors.
In the case suggested by the hon. gentleman the debtor indicated that he owed $6,000 or $7,COO and had no assets at all. In that case obviously no plan would be formulated; I think that is reasonably clear, but there is no doubt that every farmer in occupation on the land may make application. The farmer starts it; it is for him to determine whether or not he shall do so and thereafter, as mentioned in section 6, the matter follows the

Farmers-Creditors Act
course I have already indicated. I do not see that anything further can be done for bona fide farmers than is being done under this act.


William Thomas Lucas: I wondered whether, through the officials set up under this bill, such farmers could not go through bankruptcy without a charge of 8150, which it is impossible for them to raise.


Richard Bedford Bennett: The farmer cannot be
put into bankruptcy, nor can he receive the benefits of the Bankruptcy Act unless he comes within this act. Section 7 of the Bankruptcy Act, as it stands to-day and has stood for many years, prevents the farmer from taking advantage of that act.


William Thomas Lucas: Unless he applies for it?


Richard Bedford Bennett: No, he cannot become
a bankrupt.


James Herbert Stitt: I think the last
speaker is referring to this as the Bankruptcy Act; I think the point he is trying to make is that a great many farmers will not have money with which to pay counsel.


Richard Bedford Bennett: They do not need counsel in this case. .


Alfred Speakman: I think the point is
quite clear, but I do not see how it would come under this act which is to keep farmers on the land rather than to help them off it. Did I understand the Prime Minister to say that under the terms of the Bankruptcy Act at the present time a farmer could not make a voluntary assignment?


Richard Bedford Bennett: A voluntary assignment
is another thing altogether.


Alfred Speakman: I think that was the
point the hon. member for Camrose had in mind, that those who wished to go into voluntary assignment were unable to do so because they could not meet the cost of $100 or $150 which is involved under the present act. The suggestion, in which I certainly concur, was that some machinery might be provided, possibly using the officials established under this act, by which the official trustee would be able to carry out the voluntary assignment so that the man could be placed in bankruptcy without the necessity of meeting the charge that has been mentioned.


Richard Bedford Bennett: As a matter of fact the
statute of limitations is the best cure for most cases of that kind. As it now stands this act could not deal with those cases.
Section as amended agreed to.
On section 8-Valuation of securities of secured creditor.


Hugh Guthrie: With regard to clause 8, a new clause has been drafted. I beg to move:
That clause 8 as printed in the bill be struck out and the following be substituted therefor:
8. Whenever a proposal relates to the rights of a secured creditor or of a person who has acquired movable or immovable property subject to the right of redemption, such creditor or person may value his security and shall be entitled to vote only in respect of the balance of his claims after deducting the amount of his valuation provided, however, that no proposal shall be approved by the court which provides for the payment to such secured creditor or such person on account of such security of any amount in excess of his valuation, or for granting to him any new security for an amount in excess of his valuation.
The only change in the clause is the addition after the word "creditor" in the second line of the words:	.
Or of a person who has acquired movable or immovable property subject to the right of redemption.
And in the next line the addition of the words "or person" after the word "creditor."


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
On the preamble.
James Herbert Stitt: Am I to understand that legal machinery is provided by which the farmer may take advantage of this act? Are there any provisions in the act giving the farmer legal aid without expense to him, in order that he may secure the benefits afforded under this act? For instance, we have provided counsel for returned soldiers applying for pension; is something like that being done under this act? I think that was the point brought up by the hon. member for Camrose (Mr. Lucas); I think he had in mind that there would be a great many farmers without ready money available with which to employ counsel. I wondered if there was any provision for legal aid for the farmers and, if there was not, if the government would consider that point.


Richard Bedford Bennett: I made it very clear-the hon. member could not have been in the chamber-that this act was framed in very simple terms. All a farmer has to do is indicate that he is unable to meet his obligations; then the official receiver who is appointed for each constituency takes up the matter and the costs incidental to it are charged against the consolidated revenue fund. The farmer escapes any costs.
Farmers-Creditors Act


Thomas Reid: Did the Prime Minister look into the question as to whether or not those people under the farm loan board or soldier settlement board could take advantage of this legislation.?


Richard Bedford Bennett: I am not clear as to whether they could or not, without divesting the crown of some of its present authority under the act. I did endeavour to present the matter to one of the officials of the Department of Justice, but I did not succeed in doing so because he was otherwise engaged at the time. I think, however, that it would be extremely dohbtful as it now stands.


Alan Webster Neill: Would it not be desirable?


Richard Bedford Bennett: Well, that brings the crown into the position of dealing with a question of compromises, having already remitted S85,000.000 in connection with these matters. But I do not think that at the moment it is desirable. I am not sure, but that is my present view.


George Gibson Coote: May I refer to a matter which was mentioned by the hon. member for Selkirk? I believe there really is some necessity in certain cases to have counsel for the farmers, if we expect any great number of them to take advantage of the legislation. It is true that the farmer may make his own proposals for the composition of his debt, but it is also true that any one of his creditors may appeal to the provincial board. The board then has power to review the whole case and to fix the terms of the composition or arrangement. As I said before, the farmer must accept that arrangement. On the board of review there will be a representative of the creditors. We can take it for granted that the creditors will see that they have high priced and very capable men to look after their interests. But I do not see how we can ensure that there will be representatives for the debtors who will take the same intelligent interest in their cases. Such a person could not be as well posted in the cases of individual farmers. The representative of the creditor would be well advised because in every case the creditor concerned would take the trouble to see that counsel was well advised and that his case was well presented. But I am afraid that the representatives of the debtors will not be in that fortunate position, even if they wanted to do the very best they could for the debtors.
A remedy for this condition may appear to the Prime Minister to be somewhat difficult, and he may think we are asking too much. I believe however that in many cases

the debtor will be in the hands of counsel, just as applicants for pension are in the hands of counsel when they come before the pensions board. I should be very glad indeed if the Prime Minister would give some consideration to the proposal to make it possible for the farmer to have the advantage of counsel.


Richard Bedford Bennett: My own view is that the farmer would be infinitely better if he presented his own case before a tribunal than he would be with the aid of counsel. He will make the statement of what he has got, what he can do, and demonstrate his capabilities and capacity to meet the situation which has arisen. If he cannot get more sympathy from a court than he can get from a lawyer, I greatly mistake his position.


George Gibson Coote: It would be all right if the farmer could appear before the board of review, in the event of that board travelling around as does the pensions board. In that way the farmer could appear before the board and state his own case.


Richard Bedford Bennett: We contemplate that.


George Gibson Coote: I did not understand that that would be done. I do not suppose that the board of review will see the farmer or hear his own side of the case. It would have nothing but the farmer's statement, and the case presented by the representative of the debtor who, perhaps, might act in a hundred cases. He would represent the cases of hundreds of debtors, and I do not think he would be able to look after the debtors' interests as well as the representative of the creditors would look after the creditors' interests. Unless the judge happened to be a man inclined to take the human view of a case I am afraid that the decisions, in the great majority of cases, would be inclined to favour the creditor rather than the debtor.


[Stage Direction]
Preamble agreed to.
Richard Bedford Bennett: In view of what was said the other day as to the superior court of the province of Quebec being neither a district nor a county court, I move:
That section 5 be struck out and the following substituted therefor:
5.	(1) In the case of any assignment,
petition or proposal in the province of Quebec, the superior court of the judicial district where the farmer resides and in other provinces the county or district court shall have exclusive jurisdiction in bankruptcy subject to appeal as provided in section one hundred and seventy-four of the Bankruptcy Act.

Farm Loan Act
(2)	The superior, county or district court judge shall exercise the powers vested in the registrar by section one hundred and fifty-nine of the Bankruptcy Act.
(3)	The prothonotary of the superior court and the clerk of the county or district court shall perform all the duties of the registrar, except his judicial duties.
It is contemplated that if necessary the court may move from place to place for the purpose of dealing with these matters.


[Stage Direction]
Amendment agreed to.
Section 5 as amended agreed to.
Richard Bedford Bennett: It will be remembered that the right hon. leader of the opposition asked that we add a clause at the end of the bill to provide that a report be made by the minister to parliament of the expenditures under the act, so that we might be able to have the matter in mind. It will be observed that under section 16 the Minister of Finance is charged with the responsibility of administration. With that in mind I move:
That section 16 be amended by adding thereto the following subsection:
2. The minister shall at the end of the fiscal year prepare a report of expenditure incurred and of proceedings taken under this act shall lay the same before parliament forthwith, or if parliament be not then sitting, within fifteen days after the commencement of the next ensuing session.


Alan Webster Neill: The amendment requires a report only as to expenditures made. Would it not be desirable to have a general report as to the working of the legislation?


Richard Bedford Bennett: I would call the hon. member's attention to the words "proceedings taken."


Alan Webster Neill: I was mistaken. I thought it was a report as to expenditures only.


[Stage Direction]
Amendment agreed to.
Section 16 as amended agreed to.
Bill reported.
Mr. SPEAKER:: When shall the bill be read a third time?


Richard Bedford Bennett: Next sitting.


Some hon. MEMBERS:: Now.


George Gibson Coote: I do not wish to object to it being read, but I should like to have an opportunity to read one of the amendments presented to-day.


Richard Bedford Bennett: Very well, next sitting.



CANADIAN FARM LOAN ACT


[Stage Direction]
The house resumed from Monday, June 11, consideration in committee of Bill No. 93, to amend the Canadian Farm Loan Act- Mr. Bennett-Mr. Fraser (Cariboo) in the chair.
On section 5-Conditions for loans.
Thomas Reid: I have a suggestion to make
to the Prime Minister. Those who are under this act will not be able to take advantage of Bill No. 92 which we have just passed, according to the interpretation that was given by the Prime Minister, and I think some consideration should be given to those who are carrying the load under the farm loan act, and if at all possible the interest rate should be reduced. We have a federal post office savings bank in this country paying 24 and 3 per cent interest, and I do not see why that money could not be loaned to the farm loan board, the two interest charges amounting to 4| or 5 per cent. No farmer can afford to pay 6 per cent. I make that suggestion on behalf of those who are carrying the load and who do not come under the bill we have just passed. This bill gives to the farm loan board further security but very little help to those who are burdened with loans they have obtained under this act.


Richard Bedford Bennett: All I can say is that you
cannot get money to lend on farm loans in this country at 24 or 3 per cent. The farm loan act provides that the moneys loaned should be loaned at 14 per cent more than is paid for the money. If the money is borrowed at 3 per cent the farm loan board lends it at 44 per cent. The farm loan board is not the government by any means, nor is the government the farm loan board. The farm loan board exercises an independent jurisdiction and makes its loans without reference to the government or anybody else, but the government has so far bought about ten million dollars of securities issued by the farm loan board to put it in funds to make the loans. The provision here is to enable an increase in the sum to be loaned in order that we may take care of those who have no capital, and we are dealing with that in section 9, making it a little more specific than it now is about supplementary advances.
I can only say that it would be quite impossible to take the money out of the post office savings banks and lend it on farm loans. If we did we would have a situation in this country that other countries have
405S
Farm Loan Act

had, namely, frozen, assets with which to meet the demands of depositors for their money. As it now stands, we have to maintain ten per cent in gold, metallic coverage, for post office savings, and that has been the law in this country for a very long time in order that post office savings may always be available to depositors who desire to get them. Depositors have to give so many days' notice of their intention to withdraw.


Mr. MacLEAN:: In connection with this bill and the bill we have just been considering I am afraid there is not very much relief being afforded to the farmers of Prince Edward Island because the farm loan act has never been made operative in our province. Many of our farmers would like to obtain some new money at a lower rate of interest, but I think in this bill or in the other bill it is provided that a farmer can obtain immediate assistance in the way of an additional loan through this act only if he is paying an interest rate of over seven per cent. Is not that correct?


Richard Bedford Bennett: That is not it. Section 17 of the act we have just passed is what the hon. gentleman had in mind.


Alfred Edgar MacLean: Down in Prince Edward Island seven per cent is the highest rate of interest that is charged on any mortgages out at the present time, and possibly a lot of mortgages are out at six per cent, so the provision in this act whereby only those who are paying an interest rate of over seven per cent can avail themselves immediately of its provisions would not be of very much help to our farmers even if the act were brought into effect in our province.
There is another point. It is really too bad that this legislation cannot be made effective in all the provinces. I do not suppose parliament can force any province to adopt the legislation, but an effort should be made to ;reat every province alike, and every inducement should be held out to the local governments to embrace this legislation. If anything could be done to induce the province of Prince Edward Island and others who are not under the scheme to come in, it would possibly help out if, as I have said, the rate of interest mentioned in the bill were changed to suit maritime conditions.


William Thomas Lucas: I think the time is coming when drastic action will have to be taken to bring about a lower rate of interest, because agriculture cannot continue to carry on at the present rate of interest or even at six per cent. I had a letter this morning pro-[Mr. Bennett.1
testing against this legislation if the interest rate is going to be on a six per cent basis. They are now paying six per cent to the farm loan board, and there is an amortization clause whereby they pay an extra two per cent, so that if a farmer is to keep up his contract he has to pay eight per cent. I think everyone is agreed that eight per cent cannot be paid, especially under the conditions that have existed for the last few years. If the farmer gets behind in one of his payments, he is charged eight per cent on the overdue account. Bill No. 92 which we have just passed will no doubt bring a great deal of relief by the composition of debts, but in my opinion, if it is to be a success, the farmer must be in a position to meet the new arrangement, and his ability to do that will depend largely on the rate of interest he has to pay.
I might add that a more sympathetic attitude on the part of the farm loan board, especially provincial boards, is very much needed. I confine my remarks in that respect entirely to the provincial boards because I have always received very courteous treatment from the commissioner and the officials in Ottawa, but I cannot say the same of the provincial boards. There is a great deal of dissatisfaction with their administration.
Twenty years ago the United States sent a commission to Europe to study rural credits. Mr. Harvie Jordan, who was one of the commissioners, after a study of the situation, said:
Every European country for the past half century had given every possible assistance to the development of agriculture.
He found that in Europe farmers secured loans at four per cent while commercial loans ran from five to six per cent. That is just the reverse of the practice in this country and the United States, where commercial loans are made at cheaper rates than agricultural loans. In 1894 France passed the first fundamental law creating machinery for agricultural credits. Two years later, when the charter of the Bank of France expired, it was renewed only on condition that the bank advance to the government forty million francs free of interest to be used in subsidizing rural credit banks. It also stipulated that the bank should pay annually a sum calculated at one-eighth of its circulation, said sum to be not less than two million francs, for the same purpose. We are extending the charters of our banks for another ten years and I was wondering whether a clause of that kind should not be inserted. It was stated also by Mr. Harvie Jordan that loans to agricultural cooperative societies in Europe were made at rates as low as two per cent. As I stated before, the

Farm Loan Act
farmer in Canada cannot continue to pay the high rates of interest which are being charged.
While I am on my feet I Bhould like to refer to the complaints being made with regard to the administration of the Canadian Farm Loan Act. We are amending this act and I think we have some right to say under what regulations or under what conditions the provincial boards shall carry on. Farmers complain that they do not even get copies of their mortgages. As the Prime Minister knows, very often payments in western Canada are made by the delivery of grain. In the last few years when a farmer got behind the board demanded that he should sign a contract to deliver one-third or some other fraction of his crop. There is a great deal of dissatisfaction in connection with this delivery of grain as to wl at authority the board has to hold or sell the grain. I know of one case in Septemiber, 1931, where the board seized three hundred acres of crop for the payment of $294. When the crop was threshed the farmer had 4,300 bushels of wheat and 3,300 bushels of oats besides his green feed, and yet the whole crop was tied up from September to November. Through his solicitor the farmer delivered 1,000 bushels to the sheriff on November 14. At the price of grain prevailing on the day the tickets were delivered, this represented sufficient to cover his payments. Instead of selling this grain, the board held it and acknowledged receipt on December 4, two weeks later, when there had been a further drop in the price of grain. In January they wrote to the farmer to find out what he wished done wtih the grain and he wrote back stating that he expected to get the price prevailing on the day the grain was delivered. The grain was held for eight and one-half months during which time the price continued to drop. It was finally sold by the board at a considerable loss to the farmers. I took up this case and after a great deal of negotiation an adjustment was recently made of approximately $100. I am doubtful whether this man is going to be satisfied as there was a period of two weeks during which a considerable drop occurred in the price of grain.
I have another case where a farmer delivered grain in April of this year on the understanding that if, when it was sold, it did not bring in enough, he would pay the difference. The board wrote back saying that they would not accept any responsibility for the sale of this grain. He wrote back and said that that was quite satisfactory, that he wished to sell it himself. However, when
the rise in prices occurred about two weeks ago the board sold the grain, but it still did not bring sufficient to pay the farmers' debt.
I believe the price to-day is higher than when it was sold, even allowing for the recent drop in prices.
When the board accepts grain I think there should be some definite understanding with the farmer as to how and when it is to be sold. This would eliminate a great deal of controversy and misunderstanding. I understood the Prime Minister to say a while ago that he had no responsibility for the provincial boards, but this act has been created by this parliament. I understand that we are going to guarantee these bonds and surely we should have some right to say how the act shall be administered by the provincial boards.


Richard Bedford Bennett: There is nothing that
can be added to what has been said so frequently during the last few weeks regarding interest rates. An earnest effort has been made to reduce interest rates in this country by inducing the banks to pay a lesser rate on deposits, but there has been considerable difficulty because of the fact that trust and loan companies under provincial charters are receiving deposits and paying an interest rate in excess of that paid by the chartered banks. This difficulty has been overcome to some extent, but it still prevails.
The hon. member has pointed out that in the conception of the Canadian Farm Loan Act it was assumed that much of the administrative powers would be left with the provincial bodies. Each province has its own registration laws and particular regulations touching the registration of documents, how mortgages are to be created and concerning the signatures of a man and his wife, and matters of that sort. Some have the old fashioned idea of a mortgage under which the fee or title to the property is transferred to the mortgagee with the right of redemption. Others go under the Torrens system whereby a mortgage constitutes a charge against the property. All these matters were in the mind of this parliament when it enacted the farm loan act, so that cooperation between the provincial and federal authorities is essential to its success. In a broad and general way I think it may be said that they have worked fairly well, although there are exceptions. I know of many cases myself to which objection could be taken, but when the explanations were received they do not appear to be nearly as bad. Acting in my own personal capacity and not in any official capacity, I have complained several times
Farm Loan Act

with respect to what I conceived to be the attitude taken by some of the provincial boards. After the depression some of them apparently became very fearful in connection with their record of the amount of loans and were unduly apprehensive as to collections and perhaps pressed their debtors very hard, in my judgment too hard. I gave the figures the other day which were supplied by the commissioners as to the amount of principal and interest in arrears, and judging from the observations made, most hon. members of the committee thought it was a rather large sum.
In connection with the taking of grain for the purpose of meeting obligations, I need hardly point out that two great cases in this country deal with the obligations of those who take securities. One noted case that went from the Yukon to the privy council against one of our banks dealt with the question of sale of securities at a low market, and there is a much more recent case. The board is no more immune than any other lender from the rule that it must exercise reasonable care and diligence in the marketing of wheat which it receives, and if it failed to do so it would be liable. But that would be in the absence of agreement. There is always difficulty. Of course, whenever it happens that a man's grain is sold on a rising market and it goes higher a few days later, he is perfectly satisfied that his creditor should have held the grain until it had reached the highest price. But if it falls then he is equally censorious of the creditor for not having sold it when it reached the high point from which it departed on the day he complains. These are but manifestations of human nature to which we are all subject, and most of us have been through the unpleasant experience of seeing our securities sometimes sold for less than we thought they were worth to pay our debts. Sometimes we have had to do it ourselves and sometimes others have done it for us. I can Dnly say that the rule is quite as applicable to the board as to any other lender who takes a security to protect himself against loss and under proper circumstances there is no doubt that the appropriate remedy against the board would be in the hands of the debtor.


William Thomas Lucas: My point was that the board should have some clear understanding with the farmer, when they accept the grain, whether the wheat should be held, whether they should use their judgment, or just exactly what would be done. In one case they held it and in another case they sold it.


Richard Bedford Bennett: It is the same principle of law as with respect to the broker who has no stop order and does not sell except on his own judgment. Sometimes, if the market is rising rapidly, there is great complaint because he did not hold long enough. If the market suddenly goes down there is complaint because he should have sold when it was at the top point. I agree that there should be a hard and fast arrangement between the mortgagor and the board, when grain is taken; there should be a direction to sell at a fixed price which is the subject matter of agreement. I shall speak to the commissioner, directing his attention to what has been said to-day in that regard.


George Gibson Coote: Is the differential of 1J per cent in the rate of interest fixed by law or is it a. rule of the board?


Richard Bedford Bennett: I am not sure whether it is a regulation. I think it is in the act.


Alan Webster Neill: It is in the act.


Richard Bedford Bennett: The hon. member for Comox-Alberni says it is in the act, and he is an authority on the act.


George Gibson Coote: I have the act from the library but I have not had time to go through it. I have not found it in the marginal notes. If it is in the act I should like the Prime Minister, before passing the bill out of committee, to consider the advisability of changing that section, because I think that 1J per cent under certain circumstances is too high. The differential which the board must receive depends very largely on the amount of business it is carrying on. If the board were lending a larger amount of money, one per cent ought to be ample. I should like to see this change made in the act, either reducing the rate to one per cent or leaving it in the hands of the governor in council to fix from time to time.
The importance of reducing interest rates on farm mortgages is difficult to exaggerate. The loan value of any land under this act is going to be determined by its productive capacity; in other words, on the prospective net earnings of the farmer. It is going to depend on the value of the commodities which can be produced on the farm, less actual and necessary costs. That is to say, it is the farmer's margin over his costs, and the rate of interest in reality fixes the loan value of the property. Let me make that clear.
Let us say that the margin which the farmer has is estimated at $120, and suppose he has a loan of $2,000 drawing interest at the rate of eight per cent. The interest is $160, so that

Farm Loan Act
no additional loan is possible, under this act, to that fanner. At seven per cent the interest would be $140 and no new loan is possible. If it were six per cent the interest would be $120 and still no new loan would be possible. At a rate of five per cent the annual charge would be $100 and there would be a surplus available to pay interest on a larger loan. In other words, it would increase the loan value of the farmer's property to the extent of $400. So that with a net income of $120, at five per cent, the loan value of the property is $2,400; at six per cent the loan value is reduced to $2,000; at seven per cent the loan value is $1,700, and at eight per cent, $1,500. The rate of interest payable on the farm mortgage might in reality be said to fix the loan value of the property, and I think I am right in saying that a reduction in the rate of interest is the most important factor in working out this whole scheme. For that purpose I am now discussing the two acts together, the farm loan board act and the measure now before us.
I urged in the house before, when this legislation was being considered, that action should be taken by law to reduce the rate of interest on farm mortgages to a certain specified rate. Personally, I should be in favour of five per cent. I believe the Prime Minister said that there was represented in' farm mortgages the sum of $726,000,000. I think we are safe in estimating that of that amount $300,000,000 is at eight per cent and perhaps $300,000,000 at seven per cent. If you reduced the rate of interest to six per cent, that would effect a reduction in interest charges of $9,000,000 annually, and at five per cent the total interest burden would be reduced $15,000,000. If the rate were fixed at five per cent the reduction which would be effected in the annual interest charge on farm mortgages would amount to a total of $15,000,000. I mention this to show that I am not overemphasizing the importance of this matter, and it is involved in section 5 of the bill, which deals with the amount that may be loaned on mortgage.
The value for loaning purposes is going to be fixed very largely by the rate of interest which is payable on farm mortgages. I am not unmindful of what the Prime Minister said before. He intimated that he had given consideration to this suggestion, but one reason why he could not see his way clear to take the action proposed to reduce the rate of interest was that some companies had issued debentures some of which were payable in the old country at a rate of five per cent, and that obviously these companies could not continue 74726-257
to pay five per cent on such debentures if they themselves were allowed to collect only five per cent. I suggest that he could deal with that situation by amending the farm loan board act in such a way that these companies could come to the board with debentures bearing four per cent and get the money neeessary to pay off the debentures which they owe in the old country.


Richard Bedford Bennett: Where would they get the
money?


George Gibson Coote: The Prime Minister is able to get plenty of money when he needs it; he is always able to get any money that is necessary.
I would not urge this if the matter were not so important. I believe a reduction of the rate of interest on farm mortgages effecting $726,000,000 of investments would be one of the best steps we could take to reduce the rate of interest on all obligations. It would be one factor in bringing down the rate of interest payable by the Dominion of Canada and by every province when they go into the market to borrow money, and it would be one factor in bringing down interest rates generally.
As I have said in the house before, it is not the size of the debt that matters so much as the rate of interest which the debt carries. As a farmer I can pay five per cent on a mortgage of $8,000 more easily than I can pay eight per cent on a loan of $5,000. There are in Canada thousands of farmers paying eight per cent on mortgages, and so far as I can see, this legislation is not going to bring them any relief to many of them. For various reasons these farmers aTe unable to go anywhere else to get the money to tender to the persons now holding the eight per cent mortgages; they are not yet in the position where they are absolutely insolvent and can ask for a compromise on their debts, and even if they did we were told in the discussion on the other bill that the board has no power to Teduce interest rates even on obligations where a compromise is arranged.


Richard Bedford Bennett: I said that that might be a part of the compromise without being a specific reduction.


Wilfred Hanbury: A question of agreement.


George Gibson Coote: I understood the Prime Minister to say that the board of review under the other bill had no power to reduce the rate of interest. I hope the creditors will agree to a reduction. I think in passing this legislation we are making a mistake in that we do not say that the board has power to reduce



BKVISBD EDITIOK

[Stage Direction]
Farm Loan Act
[Stage Direction]
interest rates. I did intend to argue under clause 17 of the other bill that perhaps a clause might be inserted in that bill to reduce by law the rate of interest on mortgages. Some people may say that that is unfair, but we are dealing with actual conditions; the farmer, out of his year's income, is not in a position to pay that rate of interest. It has been said repeatedly in the house; it has been said by members of the cabinet that farmers cannot continue to pay rates of seven, eight or eight to ten per cent. I know insurance companies that have reduced the wages of every one of their employees but that are still insisting on collecting their eight per cent; they are not willing to say to the mortgagor: Conditions have changed so that we realize you are not in a position to pay the eight per cent; we will make dt even seven. Let us admit that the problem is difficult, but the situation is so desperate, and, I may say, in many cases conditions at present are so impossible, parliament would be well advised to deal with the matter, and I think it would be quite within our rights to do so.
With regard to the legal aspect of the question, I think I read the opinion given by all the attorneys general in Canada who replied to a questionnaire sent out last year by the banking committee, and if I remember correctly every one who expressed an opinion said that the dominion government had power to legislate in regard to interest rates even on existing obligations. There is only one way, I suppose, to determine a case like that, and that is to pass the legislation and see what is done about it. I thought that this afternoon when we were discussing matters which were brought up on the other bill. We could pass the legislation and if anybody cared to test its validity in the courts we could soon get a decision as to whether the legislation was ultra vires. I should like again to urge the Prime Minister to take some action to reduce, by legislation, interest rates generally.
To deal with the other question I raised, that is the differential, I really do not think there is any differential fixed in the act, but I speak subject to correction. I am now quoting from the farm loan act of 1627. Section 7, paragraph (e) deals with the rate of interest.
Richard Bedford Bennett: Paragraphs (e) and (f)
are the ones that deal with the problem.


George Gibson Coote: The section 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.
I take it for granted then that the differential of one and a half per cent is simply a role of the board.


Alan Webster Neill: Paragraph (f).


George Gibson Coote: Paragraph (f) reads:
Every farm loan shall be repayable in equal annual or semi-annual instalments of principal and interest at the option of the borrower; and the amount of such instalment or instalments payable in any year shall be a fixed percentage of the amount of the loan, such percentage to be the rate of interest mentioned in the mortgage increased by either one per cent or two per cent of the amount of the loan as the borrower may elect.
I think that provision is simply for the amortization of the principal, so that it would seem that the differential of one and a half per cent is only a rale of the board and not fixed by the act itself. To effect a reduction needs action only by the board, and I think in the present case it might be a matter of government policy to consult the board with a view to having that differential reduced.
I would urge the Prime Minister to take whatever action is necessary to have the interest on loans made by the farm loan board brought down to five per cent. I do not think agriculture can pay a higher rate. We hope in passing these two bills we are taking a really worth while step to deal with this farm debt, and perhaps I should say, farm credit problem. Even at five per cent our farmers will be paying much higher rates than are paid by farmers in many countries. In Denmark the credit societies are borrowing the great bulk of their money at four per cent or less. They did have a large amount outstanding at four and a half per cent, but if I remember correctly, legislation was introduced about two years ago to assist them in converting those four and a half per cent bonds to bonds bearing interest at four per cent, and government action in Denmark has certainly been used to reduce the rate of interest payable on all farm mortgages.
At six o'clock the committee took recess.
After Recess
The committee resumed at eight o'clock.
On section 5-Conditions for loans.


George Gibson Coote: I wonder if we could have an explanation as to why the loan is limited

Farm Loan Act
to $7,500, when under another section it is proposed that the board may take a second real estate mortgage and also a chattel mortgage?


Richard Bedford Bennett: The hon. gentleman will remember that under the provisions of the farm loan act the maximum amount that might 'be loaned was $10,000. In view of the present situation as to values it is believed by officials of the board that the provision limiting the maximum loan to $7,500 would be in the interests of both the borrower and the lender,, in this case the farm loan board.
Just before recess the hon. member for Macleod (Mr. Coote) was making a strong appeal for a reduction in the rates of interest.
I need not go over the ground that has been covered so many times this session, but when I say to him that the government has used every means within its power, short of legislative action to which I shall refer presently, to bring about a reduction in interest rates, I think I am stating what is within the know-edge of all. Just what has been accomplished in that regard is also fairly well known, and the price at which money has been loaned to . this dominion recently is some indication of what I have stated. I just put this position to the committee and to my hon. friend. He suggests that this parliament should enact a statute declaring that the interest rates on all outstanding mortgages should be reduced to five per cent; that is, that the rates that now are in excess of five per cent should be reduced to that figure. I say to him that to do so would be hurtful beyond words to the credit of this dominion, and I do not think there is a single member of this committee who does not realize what would be the effect of the arbitrary action of this parliament in reducing the contractual rate to five per cent.
What are we trying to do? On the one hand we are trying to maintain the credit of this country at the highest possible level; on the other hand we are endeavouring to secure all the money we can to meet maturing obligations and also to secure fresh money for needed development. In this very bill there is a provision permitting us to increase the amount of money to be raised by the farm loan board by the sale of bonds. I put this to any hon. member, including the hon. gentleman who has just spoken:	Does he think we
could borrow any money at all outside of Canada-and it would be very difficult in Canada-if by an arbitrary action we declared that all mortgages bearing interest of more than five per cent should have the interest rate reduced to five per cent, depriving those who in good faith have contracted with borrowers of an income, as he suggests, amounting 74726-257J
to several million dollars? Just tell me what the effect would be upon the farmers themselves. The farm loan board would not be able to borrow more money; that is clear. I doubt if the people of Canada would want to loan money to the board. When I suggested to the committee the other day that two enterprises in Canada had borrowed on debentures in Scotland and elsewhere sums of money in one case amounting to $30,000,000 and in the other case to $29,000,000, at the surprisingly high rate of five per cent, as I learned for the first time a few weeks ago, I merely indicated that this was a factor thait had to be considered, because they loaned the money at a higher rate than that at which they borrowed it.
During the discussions that have taken place during the last few months between the government and the representatives of the loan companies I have been greatly taken with the attitude of mind of those representing the lending companies. I recall the words used by one such representative, as follows:
In their own interest, the companies^ do not want the good farmer to abandon his farm or to be sold out; in fact it is the worst thing that can happen to a company at the present time. Therein lies the strongest assurance that can be given that mortgage companies will do. their part in compromise arrangements.
Then he used these words:
As a concrete instance of what is even now being done, I am informed by one loan company that at their weekly board meeting yesterday they dealt with 46 renewals of mortgages in the three prairie provinces. They were all cases where the mortgagor was in arrears for interest, sometimes for a considerable amount. Every renewal was granted, with a reduction in the rate of interest to seven per cent; the arrears of interest were partly waived and the balance capitalized so that the farmer is now given a fresh start with his account in good shape. In addition, further advances were made where necessary for seed or similar necessities.
Then he gives a few extracts from the reports of their inspectors. I mention that to this committee because, in our anxiety to assist, by taking extreme positions sometimes we may harm those whom we desire to assist. We have a condition in this country that has not been brought about in a single day or year, but which has come about after a long series of years. We have made loans to the farmers, amounting to over $700,000,000, as I pointed out when this bill was first brought to the attention of the house. Parliament did not intervene in those days to fix a rate of interest at a rate lower than might be contracted for. To-day the legal rate is five per cent, but parliament has not imposed upon
Farm Loan Act

those who borrow a restriction or prohibition in the exercise of their contractual powers or rights. The result is that a considerable number of mortgages outstanding bear rates of interest in excess of seven per cent, and this was well known to Canada and the Canadian people when it was being done. In the days of buoyant prosperity no one complained about contracting to pay eight per cent; in fact it is well known that sometimes offers of more than eight per cent were made. As a result we are now inheriting a condition. Having inherited that condition we now say that it is beyond our power to emerge from our difficulties unless parliament intervenes and lessens the amount that we must pay to discharge our obligations.
I do not know how many of you read the speech of Mr. John Buchan at the assembly of the Church of Scotland, of which he is high commissioner. He said that at the bottom of all our trouble is fear, which he described as the father of despotism. I made some reference to that on Saturday last. Therein, it seems to me, lies the genesis of much of our trouble. We have made promises. We have executed contracts. We have assumed obligations. With every word that the hon. member for Macleod has said as to the low prices of commodities influencing our ability to pay, we must not forget that the student of history will point out that in days long since past the obligation was to pay ten per cent, twelve per cent, fourteen per cent and fifteen per cent. Without parliamentary intervention or the destruction of contracts it is amazing how the difficulties were met and overcome in the past. The lowering of interest rates; the adjustment of difficulties; the compromise of obligations we have endeavoured to assist in every way within our power, but when you suggest that any government of Canada should arbitrarily say that all mortgages outstanding in this country bearing interest rates of more than five per cent should have those rates reduced to five per cent, and in the same breath suggest to me that we should get more for the farm loan board, I say these are mutually destructive, because if carried out the one will make the other impossible.
Only a few days ago, the day I was absent, I was struck more than I would care to say to this committee with the high reputation that this country enjoys because thus far it has declined to become a party to the destruction of its contractual obligations, and has maintained the position it has taken and met its obligations in the terms of its con-

tracts. I say to my fellow Canadians here to-night that nothing could be more inimical to our credit, nothing could be more destructive to our high reputation and nothing more calculated to menace the very, shall I say, permanent improvement of this country, than that we should listen to what is urged by some in that regard. It is so easy and so popular to raise the cry, " Why don't they cut the interest? Why don't they destroy our contracts?" Mr. Chairman, there is an old saying, a very old one to which I shall refer; I am sure the classic mind of the hon. member for Vancouver Centre (Mr. Mackenzie) will recall the words, " Swift is the descent to hell," and once started upon this course what must be the result? I just leave that with the committee, because I do not purpose again to reargue the matter. It would be so much easier for one to court popular approval in certain quarters by simply saying, "Certainly, we are going to cut these things; we are going to destroy these contracts; we are going to pay no attention to obligations created in the past, but we will just think of the present and of the future." One could get more votes that way, and would please more people. If any hon. member suggests that I am not fully advised of the economic conditions of those who have to pay, and that I have not a clear appreciation of the difficulties they have to overcome and, in many instances, their inability to do so, I can say only this, that he is entirely in error. If any hon. members assume that I have not as much knowledge as they have about the matter, they are wrong. I know about the hardships and the difficulties. But what we did through the bill considered this afternoon was to go to the absolute limit of our constitutional jurisdiction, without destroying our credit. And to-night what we are endeavouring to do is to ensure that there shall be a little fresh capital available to make a start, and that some safeguard shall be provided to prevent the very thing we are trying to do from having the effect of destroying our power to do that which we seek to do.


Mr. SMITH (Victoria-Carleton):: I have been very much interested in this bill to amend the Canadian Farm Loan Act, which is a companion to the bill we passed this afternoon. As such it must afford relief to a number of farmers throughout our country in order that they may get that for which they have been looking so long. There was a great deal of discussion this afternoon on the bill which now stands for third reading, and I must confess that I am fairly well seized

Farm Loan Act
as to the meaning of that piece of legislation. If I understand it correctly it means, first, that if a farmer finds himself in distressed circumstances he may go to the receiver, and the receiver may say to him, "Let me have the number of your creditors, and their names." Then with that information before him he states, "We will take your case into consideration and, if the situation warrants, we will call the creditors into conference so that we may have a clear understanding of the whole situation." Then, having done that, and there comes a time when all the creditors do not agree, they will say, "We will submit this case to the court of review," upon which occasion the court of review makes the final decision as to whether or not there is a clear case. It seems to me that is absolutely clear, and ought to be a fair arrangement for the farmers. After having gone that far the farmer may find himself unable to meet his obligations, aind he states that he has been unable to meet them; the court of review has then no jurisdiction over him, in which event he goes to the bankruptcy court. I believe that is a correct understanding of the situation. After all this has been done, this bill, which I have described as the companion bill to the one discussed this afternoon, takes effect, and through its operation it is intended if possible to relieve the farmer.
We will suppose that a farmer owes $4,000 and finds that he is unable to pay it. Where will he get that money? My deduction is that it is intended he shall get the money through the farm loan board mentioned in the bill before us. During the last few years I have had some experience with the Canadian Farm Loan Board. 1 do not know what the experience of other hon. member's has been, but in the province of New Brunswick, and in my own constituency particularly, I want to state frankly that we have submitted a large number of cases to the Canadian Farm Loan Board at Ottawa, cases approved by the provincial board and in that respect different from those to which reference was made this afternoon. These cases have gone before the board at Ottawa and time after time have been turned down. I submit that to-day the Canadian Farm Loan Board is simply a collecting agency; it is no longer a lending power. If through the bill before us, which gives additional powers to the Canadian Farm Loan Board to lend on stock and on other securities offered, we get no farther than we have got in the past few years, we will not go very far towards providing money to assist the farmers in their agricultural pursuits. I believe hon. members know that in the past few years the Canadian Farm Loan Board
have not done more than could have been done by a collecting agency.


The CHAIRMAN (Mr. Fraser, Cariboo):: I suggest that the hon. member is quite out of order; in fact, all this discussion in my view has been out of order. We are now discussing section 5, which has nothing to do with the general principle of the bill. With all due deference to the hon. member I suggest he should confine himself to the subject under discussion.


Benjamin Franklin Smith: I presumed that section 5 of the bill was wide enough to permit my going into the whole matter.


William Alexander Fraser: Section 5 of the bill limits the amount of money the board may lend. I shall read it.


Ernest D'Israeli Smith: I beg your pardon; I can read it. That is exactly the point with which I was dealing. I was referring to the amount of money to be lent, and I am very sorry that I did not impress 3rou, Mr. Chairman, with that fact. So far as this bill is concerned it is entirely of the same pattern as the one we passed this afternoon, and the question of lending money is absolutely relevant, I submit. If the farmers cannot get loans from the farm loan board to relieve them in their present distress, they cannot get very far.
If I understood the Prime Minister aright, he said this afternoon he was not sure that borrowers under the Canadian Farm Loan Act and under the Soldier Settlement Act could obtain money under this act. Is that correct?


Richard Bedford Bennett: No.


Ernest D'Israeli Smith: That
was my understanding at least of the Prime Minister's remarks. If we are going to relieve the farmers we must see that they get a lower rate of interest. I agree with the Prime Minister that that lower rate of interest cannot be brought about by this parliament, but at the same time I submit that if the Canadian Farm Loan Board could get its money at three and one-half per cent it could lend to the farmers of this country on a basis of five per cent. If there is one thing that is burdening the farmers more than another it is the high rate of interest.


William Alexander Fraser: Again let me draw the attention of the committee to the fact that this section has nothing to do with interest. The hon. gentleman is absolutely out of order.


Ernest D'Israeli Smith: WThat
has the section to do with, Mr. Chairman?
Farm Loan Act


William Alexander Fraser: I offered to read it to the hon. gentleman a minute ago, and he said he could read it himself.


Benjamin Franklin Smith: I do not think I am so dense that I cannot read it. It says:
5. Paragraph (a) of section seven of the said act is repealed and the following is substituted therefor:-
"(a) Loans shall be made only on the security of first mortgages on farm lands up to fifty per cent of the board's appraised value of such lands and twenty per cent of the permanent insured improvements thereon:
The farm loan board has had authority under the old act to lend up to fifty per cent of the value of a man's farm lands. There is a further provision that no one person and no two or more persons having joint or several ownership shall have by way of loan more than a certain amount. I am sorry, Mr. Chairman, if I have digressed from the section before us but I had a few observations to make in connection with the lending of money to farmers, and if this is not the right time I shall reserve my remarks until a subsequent section.


Mr. SPENCER:: I was interested in the
very able case which the Prime Minister made with regard to keeping up the credit of Canada. But there are two distinct sides to that subject, one of which I do not think he stressed enough. If Canada is suffering at all with regard to credit it is because fifty per cent of her people who are on the land are facing a serious financial crisis, and I think it is just as necessary to pay attention to the huge losses that have been incurred by those who have lost fifty to sixty per cent of their commodity wealth as to the possible losses of the financial wealth of other people,
I should like to say a word or two in support of the remarks of the hon. member who has just taken his seat with regard to the administration of the loans of the Canadian Farm Loan Board. I have had an enormous correspondence in regard to this matter in the last two years, and I regret to say that I have never had a letter which has been complimentary to the administration of these loans.
I want to congratulate the government on Bill 92, which may prove to be one of the best pieces of legislation which has been passed by this house to help the farmer to get back on his feet. But if the bill now before us is intended to be complementary to Bill 92, very serious changes will have to be made in the administration of the farm
(Mr. B. F. Smith.]
loan act. Not only are the officials of the board collectors at the present time, but they are collectors in the roughest sense of the term. I hold in my hand a letter I received this morning-


William Alexander Fraser: I would call the attention of the hon. gentleman to a ruling I made a few moments ago.
I must rule the hon. gentleman out of order.


Henry Elvins Spencer: I do not want to go
against your ruling, Mr. Chairman, but the type of collection in the last few years has been one of the worst, and it has been done at a time when the farmer is in a very serious financial condition through no fault of his own. It has been nothing less than brutal, to say the least.


George Gibson Coote: On the point of order, Mr. Chairman, this bill received its second reading with practically no discussion, and in such cases it is usual to allow a certain amount of discussion on the principle of the bill when we are in committee. That is the common practice in this house, and it is very unusual for the chairman to insist upon every member of the Committee keeping strictly to. the clause under discussion when there has been no debate on the principle on second reading. I think it will facilitate the work of the committee and of the house to allow that much discussion. Certainly the question of interest is involved in the question of the amount of money the board may lend, and that is one of the questions dealt with in this section.


William Alexander Fraser: I think the hon. gentleman is well enough acquainted with the rules of the house. All I have to do is to quote subsection 2 of rule 58 which reads:
Speeches in committee of the whole house must be strictly relevant to the item or clause under consideration.
The hon. gentleman is sufficiently acquainted with the rules to know that a general discussion is not in order when the committee is discussing a section of a bill, and I submit that hon. gentlemen would assist the business of the house by complying with the rules.


Alfred Speakman: Speaking to the point of order, Mr. Chairman, a thing I very rarely do, I submit that when the committee is dealing with a clause which applies specifically to the conditions under which loans may be made and to the limitations upon those loans, is the very time to discuss all the conditions surrounding the loan-the way the loans are made and how they are collected. To my mind there could be no clause on which a discus-

Farm Loan Act
sion of interest rates and of the general policy in respect to the issue of loans would be more relevant than on the one now before us, which deals with the power of the board to make loans, the limitations placed by the board upon such loans, and generally the conditions under which loans are made. It seems to me, therefore, 'Mr. Chairman, that we are very much in order in discussing this particular phase at this time.


William Alexander Fraser: I do not want to limit the discussion on a question of this kind, and if the committee desires to permit hon. members to ramble on as they have, it is all right with me.


Mr. WILLIS:: I take it I wouild be in order if I spoke in connection with section 5. This reads:
Loans shall be made only on the security of first mortgages on farm lands ...
And so on. My point is that while this section says that they shall be made, the Canadian Farm Loan Board has refused to make any loans within the district which I represent. No matter what the security is, no matter what the buildings are, no matter what the character of the individual may be, no matter what his record may be with regard to that which he has produced, the Canadian Farm Loan Board has thought it unwise to lend within that district. Generally speaking, these loans run over a number of years. In the years 1925, 1926, 1927 and 1928 this district produced perhaps the best crops in Manitoba. For a period of three or four years since that time there have been no crops in the western section of that area. The regular mortgage companies which hold mortgages within this area have refused to continue to lend. At a time when we expected we should get some assistance from the Canadian Farm Loan Board, they have adopted precisely the same attitude and have refused to lend. It seems to me that this board from the point of view of policy, from the point of view of the Canadian people and from the point of view of good business has not adopted the right attitude by saying that because there have been no crops for two or three years they will not advance any money. Particularly is that so when no consideration is given to the past record of the farmer and particularly so because these mortgages, generally speaking, run for a period of twenty years. I take it that this was not the purpose of the setting up of the Canadian Farm Loan Board. I readily realize that the government has no control over the policies of the farm loan board, as it is an independent body set up for that purpose. My criticism is with
regard to the judgment of the farm loan board and its adoption of that attitude. Why is it that a farmer who produced twenty-five or thirty bushels to the acre in 1928, who has good buildings, who has a good record as a farmer, whose lands, machinery, cattle and horses are unencumbered, should not be permitted to get a loan? He may be a good man; he may have good possibilities, but this farm loan board has completely blocked out that area and said that no loans shall be made irrespective of the individual, his security or his possibilities. In my opinion that was not the purpose for which the Canadian Farm Loan Board was set up. If an area produced good crops from 1925 to 1928, it is quite reasonable to suppose that it will produce good crops from 1935 to 1938. The farm loan board was willing to make loans in this area up to 1928 at a time when there were poor crops in other areas, but when those other areas are having fair crops and this area is having none, they refuse to make loans. It seems to me that the policy of the board is open to very severe criticism in connection with the way they have handled this situation. I say it is not good business and it is not the purpose for which the board was set up. In my opinion the purposes for which this board was set up are not being carried out by the present management.


William Thomas Lucas: Paragraph (a) of section 7 of the present act states that:

mortgages taken as security for farm loans and remedies thereunder shall be in all respects subject to the law of the province in which the farm land mortgaged is situated.
Under section 5 of the bill paragraph (a) of section 7 of the act is being repealed, and as I understand the substituted paragraph, it will mean that any loans now taken out will not be subject to the law of the particular province in which the land is situated. I understand that private companies making loans come under the laws of the province in which the loans are made, and I should like to know why the farm loan board should not be placed in the same category.


Richard Bedford Bennett: The hon. member for Camrose (Mr. Lucas) must be ill advised as there is no change in the law. Section 7 is being amended and in lieu of the existing paragraph (a) a mew paragraph is being substituted. This paragraph does not deal with the matter to which the hon. member has referred, it merely limits the amount to $7,500. It is not necessary to provide that mortgages taken as security on a farm shall be in all respects subject to the law of the province in which the farm land mortgaged is
Farm Loan Act

situated, because that is a matter implied; it is a matter of law. It was put in the original act, but it was really unnecessary.


William Thomas Lucas: Does the Prime Minister say that there is no change?


Richard Bedford Bennett: Except as to the amount.


William Thomas Lucas: I notice the last sentence in the explanatory note reads:
This provision, in view of the extension of loaning operations provided in Part II of this bill, is not included in the amended subsection.


Richard Bedford Bennett: Surely, but it does not change that.


Mr. BROWN:: I have no criticism to make of the general purpose of this bill and the other bill providing for the possibility of a farmer making a composition to his creditors. If the intentions can be carried out, no doubt the results will be good. However, I am just a little doubtful as to whether it will be possible for farmers to make any great use of either of these bills. This section provides that loans shall be made only on the security of first mortgages on farm lands up to fifty per cent of the boards appraised value of such land and twenty per cent of the permanent insured improvements thereon. If a farmer takes action under the other bill and has his mortgage reduced to a given amount, I think it will be found in many cases that that amount will be more than the amount at which any appraiser would value the lands under present day conditions. Land is not productive to-day because it will not pay the cost of working it. Many farmers have mortgages of from $5,000 to $6,000. Suppose a farmer makes a composition and his mortgage is reduced from $6,000 to $4,000; I believe that those in charge of the operations of the farm loan board will find that $4,000 is too large an amount and will only lend the farmer about $2,000. That will leave the farmer in a position where it will be impossible to take advantage of either of these bills. As I say, I have no criticism to make of the government for their endeavour to solve this problem; I am fully aware of the difficulties which confront them, but I cannot help thinking that the situation which I have depicted is one that is very likely to happen: Some of the machine companies a year ago made a very good offer to their debtors; they offered to take $100 in payment of $112 of debt. That was very good for those who could take advantage of it; but if a man did not have $100-and it was not much easier to get $100 than $112-the offer was not of much use to him. I am just afraid that in many instances PVtr. Bennett.]
some such situation will develop in the actual working out of these two measures we have been considering, good though they may be in intention.


Benjamin Franklin Smith: Would
it not be possible to have some appeal from the final decision of the Canadian Farm Loan Board? I realize that there will be a great responsibility on the government of the country, but on the other hand I do submit that under the circumstances, in view of the fact that provision is made for appeal from the marketing board as well as in all other acts that we have passed, there ought to be an appeal from the decision of the Canadian Farm Loan Board.


Alfred Speakman: I was somewhat relieved when the Prime Minister said that there was no change in that feature of the act which brought loans made by the farm loan board under provincial protective legislation such as the debt adjustment and moratorium acts. Is the Prime Minister quite certain? If he is, then the explanatory paragraph is entirely misleading. Section 5 states that paragraph (a) of section 7 is repealed "and the following is substituted therefor," and that substitution deals with the amount of loan which may be made upon first class mortgages. The explanatory paragraph reads:
The present paragraph (a) of section 7 fixes the maximum loan on first mortgage security at ten thousand dollars. This amendment reduces the amount of the maximum loan to seventy-five hundred dollars to conform with the maximum of the advances on first and second mortgage security fixed by section 9 of this bill.
The present paragraph (a) further provides that "mortgages taken as security for farm loans and remedies thereunder shall be in all respects subject to the law of the province in which the farm land mortgaged is situate." In virtue thereof, the board has been subject, in the handling of its loans, to the provisions of all provincial debt adjustment and moratorium legislation. This provision, in view of the extension of loaning operations provided in Part II of this bill, is not included in the amended subsection.
So that it would appear to be deleted from this part of the act. But the Prime Minister states that in spite of that deletion, as a matter of common law it will fall under the protective legislation in the provinces.


Richard Bedford Bennett: I think I should make
it somewhat clearer than that. The law of the province as to the form of mortgage and all rights and remedies of the mortgagee governs, of course. The debt adjustment act, as a matter of legal opinion, has no reference to it; but in view of the language used in

Farm Loan Act
the section, an argument has been built up that the parliament of Canada conferred jurisdiction upon them. That was never intended to be so, because, to be perfectly frank with the hon. gentleman, it is believed by many of those even responsible for debt adjustment acts that they are ultra vires of provincial legislatures in matters of this kind; hence it is they have been very anxious that some such act as that which was passed this afternoon should have been on our statute books. For it is quite obvious that it is a form of bankruptcy that is being carried on under the guise of provincial legislation, and this section as amended leaves it not open to controversy on the ground set up, namely, that the federal power made the mortgages subject in all respects to the law of the province; and they said that one of the respects was the debt adjustment act, which in our opinion is not an argument based on sound law. I should have made that more lengthy explanation but I thought, from the way the hon. member for Camrose spoke, that that was what he had in mind. I am glad to have had occasion to make this more extended explanation.


Alfred Speakman: I assume then that the only part of this explanatory paragraph which is misleading is that which states that by virtue of the second part of the original subsection (a) the loans made by the farm loan board did come within the purview and under the authority of provincial protective legislation such as the debt adjustment and moratorium acts.


Richard Bedford Bennett: Rather than have long, complicated lawsuits the matter is dealt with in this rather than in the other way.


[Stage Direction]
Section agreed to.
Sections 6 and 7 agreed to.
On section 8-Purchase of bonds by minister.
Richard Bedford Bennett: Section 8 contains two blanks; one is as to the amount of the bond held at any one time by the minister on behalf of the dominion, being not more than
$	, and the other provides the extent of
the guarantee. At the present moment there is authority conferred on the board to borrow from the dominion Minister of Finance up to $15,000,000. Substantially 810,000,000 has thus been dealt with, leaving practically
85.000.	000, and it would occur to me that if the word "forty" were inserted it would leave
530.000.	000 that might be utilized in that way; and the guarantee, if conditions improved and the credit of the country warranted, should be substantially the same
sum. But I am willing to consider any suggestions made by the committee as to what in the opinion of the members would be the best figure to use. My motion would be that the word "forty" should be inserted after the word "exceed" and before the word "million" in the first subsection, and in the second there should be inserted the words "thirty million."


Mr. YOUNG:: Has any estimate been made of the probable demand?


Richard Bedford Bennett: I intimated to the house the other day, in a long series of figures I placed on Hansard, what the condition was. If conditions improve, as they have in some sections of the country, it is probable that it will obviate the necessity of any sums being provided except for the purpose of implementing undertakings under the adjustment act, and this would be more than ample for that purpose, at least for the next year.


Mr. CARMICHAEL:: The great agricultural province of Saskatchewan has its fair share of farmers in debt and unable to carry on, and who do not come within the purview of this federal farm loan act. We have provincial legislation whereby farmers have been able to get loans up to, I believe, a maximum of $9,000,000 or $10,000,000, but in recent years the provincial government has been unable to get money to make further loans. Here we are extending the scope of this legislation from $15,000,000 up to $40,000,000. Is there not some way whereby, if money cannot be advanced directly from the federal farm loan board to finance individual farmers in Saskatchewan, the provincial farm loan scheme of Saskatchewan can be financed from this, so that farmers in that province may at least be on an equal footing with the farmers in other provinces.


Richard Bedford Bennett: The hon. gentleman knows perhaps that there are those who used to assert that they were much better off under their act than they would be under this. I do not know just what steps might be taken to meet that situation. When the bill has been finished in committee and stands for third reading I will go over it again and if we can think out any plan by which what has been suggested can be done we shall see that in another place a clause is added to the bill. This question has been giving us a considerable amount of thought but it is not as easy as it appears to arrive at a solution. The farm loan board does not operate in Saskatchewan and we cannot select some other instrumentality that will make advances and over which we ourselves would have control.
Farm Loan Act


Henry Elvins Spencer: Is Saskatchewan the only province that has not made use of the Canadian Farm Loan Act?


Mr. VALLANCE:: It cannot.


Richard Bedford Bennett: Ontario does not.


Benjamin Franklin Smith: My
understanding of this clause is this, and I would like to ask the Prime Minister to verify it: If the board is able to borrow money at three and a half per cent, it will lend it to the farmers of Canada at five per cent. Am I correct?


Richard Bedford Bennett: Substantially that is right as the law now stands. The amortization fund of two per cent to which an hon. member referred this afternoon is two per cent on account of the principal; it has nothing to do with the interest. I think this afternoon I directed the attention of the committee to the matter. It will be recalled that the appraised value is the value for productive purposes and the interest rate was to be, as the hon. member for Macleod (Mr. Coote) read this afternoon under paragraph (e) of section 7, a rate that would return the interest on the money borrowed and provide for the expenses of operation and the necessary reserves for losses, or, if no bonds were issued, such a rate as in the judgment of the board would be yielded by the farm loan bonds when issued, increased by provision for expenses and reserves. At the present time the board has fixed one and a half per cent in addition to the going rate. If therefore, three and a half per cent money was secured, that money would be lent at a maximum of five per cent.


William Alexander Fraser: It has been moved by the Prime Minister that the word "forty" be inserted before the word "million" in line eleven, section 8 of the bill and that in the fifteenth line the words "thirty million" be inserted before the word "dollars."


Mr. MACKENZIE (Vancouver):: Why is it forty in the first case and thirty in the second?


Richard Bedford Bennett: The forty million dollars includes the thirty million outstanding obligation plus the additional contemplated.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
On section 9-Further loan may be made.
Richard Bedford Bennett: I have an amendment to move to this clause. If the committee will be good enough to look at it they will observe that the first mortgage loan is limited in practice to a maximum of less than fifty per cent

of the appraised value of the land plus twenty per cent of the value of the buildings, and with the further advance it will be seen that the total advance would be approximately sixty per cent. I am therefore changing the figures so that subclause 2 of clause 9 will read:
The aggregate of loans made to any one borrower under the provisions of this act and of the Canadian Farm Loan Act shall not exceed two-thirds of the appraised value of the land and buildings in respect of "which security is taken and' shall not exceed at any one time the sum of $7,500. The amount advanced under this section shall not exceed one-half the amount advanced on the security of the first mortgage.
It will be observed that the clause read "one-third." That would have brought about a condition that we are trying to avoid rather than create. The amendment may be made in one of two ways, either substitute the new subclause or change the wording. The amendment will be to strike out the word "one-third" in the thirty-fourth line of clause 9 and substitute therefor the word "one-half".


[Stage Direction]
Amendment agreed to.
Alfred Speakman: Just in this connection, in comparing the clause we aire just passing with clause 3 of the first part of the bill, I am afraid there might be some contradiction, not in law but in practice. Under clajuse 3 of the first part of the bill we provide that the board may accept and hold additional collateral security for loans as the board may deem proper. In answer to a question that was asked whether the farmer might be forced to offer this additional security, the Prime Minister said: no, as a matter of his own choice. But from such experience as we have had I am not certain that it will be because, although strictly speaking it may be a matter of his own choice, if a farmer fails into arrears of payment the board might well suggest this would be carried forward and no action would be taken if the additional collateral were given. That having been done-and I am afraid it may be done in a good many cases unless there is a little more leniency shown in administration-farmers who have loans from the board at present would be debarred from securing those additional loans on live stock and personal property which are contemplated in the latter part of the measure. Of course that would not apply to new loans made because they would be made definitely under present conditions, but it might readily apply to a large part of the eight or nine millions now outstanding if the board exercises its power in that way.

Farm Loan Act


Richard Bedford Bennett: I can give no assurance
how the board will exercise its powers, but the words in clause 3 must be read with the words that follow: "May deem proper."
And "deem proper" means proper under the terms of this legislation, that is as to the advances the board makes. The limitations imposed in clause 9 of course prevail and it will be observed that the interest rate on this loan will be only one per cent more and not one and one-half, than is paid for the money; that is because of the character of the loan the clause so provides.


Alfred Speakman: I was reading paragraph (g) which is the second paragraph in clause 3 and that covered the very point I had in mind. It is to enable the board to-
Make such composition, extension of time or scheme of arrangement with any borrower on his loan as the board deems advisable.
It would simply put it into the power of the board in case of any farmer who was unable to meet his obligations promptly _ to insist on receiving this additional security. The additional security being covered by an existing loan, the farmer would be precluded from receiving the additional loan contemplated in the second part of the bill. That was the point I had in mind.


Richard Bedford Bennett: I know of no way whereby you can substitute an act of parliament for a man's own judgment in connection with a matter of this kind. Either he signs or he does not; there is nothing in this measure to compel him to sign.


Alfred Speakman: There might be a refusal on the part of the board to carry him if he did not sign.


Richard Bedford Bennett: That is one of the contingencies that must always be contemplated.
Section as amended agreed to.
On section 10-Loans to mortgagee.


Richard Bedford Bennett: I intend to move an
amendment to this clause. The other day I promised that we would look it over a little more carefully. It will be observed that subsection 1 provides for loans to the mortgagee on the security of the assignment of the first mortgage in any province in which the board is empowered to make loans. Then instead of subsection 2 we propose the following :
Whenever a proposal for a composition, extension or scheme of arrangement made under The Farmers' Creditors Arrangement Act has been duly approved, the mortgagee shall be eligible for a loan which shall be disbursed to the farmer for such purpose in connection
with the proper operation of the farm lands covered by the first mortgage and in such instalments as may be agreed to by the board.
That is to ensure that the money thus advanced goes for' the purposes for which the new loan is made. It is not intended to designate them here; they are such as may be agreed upon by the farmer and the board. Then there is an amendment to be inserted as subsection 8 immediately after subsection 7, as follows:
The provisions of section five of the Canadian Farm Loan Act for the issue of capital stock and subscriptions therefor shall not apply with respect to loans made under this section.
This amendment is proposed for reasons that were given the other day by one of the hon. members of this committee. Then we further propose the insertion of the following as subsection 9:
The governor in council may make advances to the board out of any unappropriated moneys in the consolidated revenue fund for the purposes of this section and the board shall, for such purposes, be deemed to be the agent of the crown and any securities taken by the board shall be so taken on behalf of the crown.
I know my hon. friends opposite have strong views with regard to this procedure, but for reasons which I mentioned the other day it seems to me that in the first instance we cannot do better than this. After this has been in operation during the next fiscal year we will be able to predict what is to be done with some degree of certainty. It will be recalled that we have a control over all the moneys because they are raised under a preceding section and are dealt with in a report made by the farm loan board. It is also the intention to renumber the present subsection 8 as subsection 10.


[Stage Direction]
Amendments agreed to.
George Gibson Coote: Might I ask if all the loans made by the farm loan board bear the same interest rate?


Richard Bedford Bennett: My memory is that there was a slight reduction in the rate after they secured the last block of money, before the depression, but I would not care to give a definite answer to that question. I have not the means at hand of securing the information, but I will get it and send it to my hon. friend.


Alan Webster Neill: I wonder if the Prime Minister would allow me to refer to the other act. Did he specify that the previous act would apply to men holding land on agreement for sale?
Farm Loan Act


Richard Bedford Bennett: Looking at the context of it I was advised that it did so apply, and in this act, in order that there might be no question about it, the agreement for sale is added. I am advised by the law officers that there is no doubt about it, but if the hon. gentleman has any doubt we can add the words.


George Gibson Coote: Under subsection 4 might I ask if the Prime Minister can say whether he anticipates that the rate of interest charged by the farm loan board might be reduced to five per cent on all loans made after this?


Richard Bedford Bennett: 
James Layton Ralston: Might I ask the Prime Minister, with reference to the amendments to section 9, whether the original farm loan act provided that the money should be paid out of moneys appropriated by parliament or out of the unappropriated portion of the consolidated revenue fund?


Richard Bedford Bennett: That does not arise under that section. There is provision for a report each year, which report as the hon. member knows is laid on the table of the house. That does not come under section 9, because this is a new fund created for this specific purpose.


James Layton Ralston: How are the moneys provided in the original act?


Richard Bedford Bennett: The hon. gentleman will remember that the board had power to issue and sell bonds known as Canadian farm loan bonds; to make long term loans; to hold real estate, and so on. We were to subscribe a *certain amount of the capital, not to exceed [Mr. Neill.)
$5,000,000, which was the first capital the company had. After that they sold their bonds' entirely to the Minister of Finance; there have been no public issues so far. The moneys have been borrowed by the country and advanced to the board. Five per cent was to be subscribed by the province and five per cent by the borrower; the rate of interest was to be approximately five per cent, and the bonds were to be for thirty-five years. There is nothing further than that.


James Layton Ralston: I thought the amendment provided for funds under Part II of this act, regarding supplementary advances, being paid out of the unappropriated portion of the consolidated revenue fund, and I was wondering why these funds were not provided as in the original act, namely through the sale of bonds.


Richard Bedford Bennett: That is how it is hoped
the money will be secured later. You see, it is limited to one-quarter the amount of the mortgage, and the officials thought that the only method by which they would be certain of being able to have the money, in the event of difficulties such as I have indicated, would be to make it a charge against the consolidated revenue fund. It would be a little difficult to issue bonds for the purpose of securing money to be advanced on the equivalent of chattel mortgages. And so, in order not to leave that impression too strongly, that we have engaged in that business, we make it a charge against the consolidated revenue fund, in the first instance, but it is for only a year, and limited to one-quarter the amount of the mortgage. I believe it is one-quarter, at any rate.


James Layton Ralston: The right hon. gentleman knows what I am referring to. He knows that the right hon. leader of the opposition has always felt that these funds should be provided by vote, and that moneys needed for purposes of this kind should come from moneys appropriated by parliament for the purpose, not out of the unappropriated portion of the consolidated revenue fund. I was wondering if the Prime Minister had considered that point, and if it would be possible to have that provision in here, because we can estimate somewhere near the amount of money which would be required.


Richard Bedford Bennett: As a matter of fact I
directed the attention of the committee to this point, I am familiar with the views entertained with respect to it, but as I said the other evening, we could have ascertained the fact with respect to old age pensions with much more certainty than we can in the present instance. I did feel that in the first

Supply-Railways-C.N.R.
fiscal year of operation we would have to have some little leeway in order to make it effective. I have no desire to depart from what I consider to be sound practice. The section as amended would read:
Tlie governor in council may make advances to the board out of any unappropriated moneys in the consolidated revenue fund for the purposes of this section and the board shall, for such purposes, be deemed to be the agent of the crown and any securities taken by the board shall be so taken on behalf of the crown.
That is so far as possible to protect advances, as I think the hon. gentleman realizes, for the purpose of putting the farmer on his feet. We thought there should be that much security given to the crown for the advances thus made. I do not feel in a position to make an estimate.


[Stage Direction]
Section agreed to.
Section 12 agreed to.
Bill reported.
Pierre Édouard Blondin: When shall the bill be
read a third time?


Richard Bedford Bennett: Next sitting of the
house. We shall now proceed with the shipping bill.


Alan Webster Neill: May I call the attention of
the government to the fact that this is not one of the items mentioned on Friday night?


Richard Bedford Bennett: I was so informed.


Alan Webster Neill: No.


Richard Bedford Bennett: If there is any objection, we will take supply. There are some items which could be disposed of.

DEPARTMENT OF RAIL Wr AYS AND CANALS
The house in committee of supply, Mr. Smith ('Cumberland) in the chair.
Loan to Canadian National (West Indies) Steamships, Limited, repayable on demand with interest at a rate to be fixed by the governor in council, upon such terms and conditions as the governor in council may determine and to be applied in payment of:
(a)	Deficits in operation of the company and of the vessels under the company's control, during the year ending December 31, 1934, $1,020,000.
(b)	Capital expenditure in connection with vessels under the company's control during the year ending December 31, 1934, $222,000.


James Layton Ralston: Could the minister give
a brief statement with regard to the West Indies steamship service?


Hon. R. J. MANION (Minister of Railway and Canals):: I have not that information
before me, because I did not expect we would be going on with the estimates tonight. However, these items have been before the committee on railways and shipping, and have been very carefully considered. If there is anything the hon. gentleman would like particularly to ask, I shall try to give him the information. I should not like, however, to make a general statement without knowing what he wishes.


James Layton Ralston: Could the minister tell
us about the amount of the deficit?


Robert James Manion: This is the exact figure.


Ian Alistair Mackenzie: Were
those all approved by the committee?


Robert James Manion: Yes, they have all been
before the special committee, and this is the deficit required.


[Stage Direction]
Item agreed to.
Richard Bedford Bennett: There is an item standing with respect to penitentiaries, and the Minister of Justice gave an undertaking to the hon. member for Southeast Grey (Miss Mac-phail) and the member for Kingston City (Mr. Ross) not to proceed with it in their absence. I think I had better give notice that we will proceed with that item on Friday next so as to leave no doubt as to that.
The Minister of Pensions and National Health is confined to his room so we cannot take u,p any items of that department. There are two miscellaneous items that we might take up. One deals with radio. We might go on with that because there is another radio item in the supplementaries when there will be an opportunity to discuss radio matters.



MISCELLANEOUS

[Stage Direction]
Canadian radio broadcasting service,
James Layton Ralston: Was this estimate before the radio committee?


Hon. ALFRED DURANLEAU (Minister of Marine):: I know that the radio commission explained to the committee all the expenses they are incurring. Their expenses for the past year also appear in, the report which was tabled in the house a considerable time ago. I believe they were short some $25,000, and an item in the supplementary estimates for the last fiscal year for $25,000 was already approved by the house, I think it was for expenses incurred in connection with the broadcasting of American programs.
As to the item before us, it is covered by the licence fees collected after expenses have
4074	COMMONS
Supply-Miscellaneous-Radio
been deducted. My hon. friend will also see in the supplementaries an item of $250,000 also covered by licence fees collected.


James Layton Ralston: So the total licence fees collected are $1,250,000?


Alfred Duranleau: Yes. The net revenue for the last fiscal year will be around $1,150,000, or $1,200,000, but that amount would include the balance that remained over from last year. The law provides that all the licence fees collected should be appropriated to the commission.


James Layton Ralston: There is a very small matter which I should like to mention to the minister. I know that in Montreal a number of men are constantly going around to houses asking to see radio licences. They do not call once only, but two or three times. I would ask the minister just what the arrangement is with these men and why it is that householders are troubled in this way.


Alfred Duranleau: Since the first of April we have been allowing the house to house collectors for radio licence fees twenty-five cents per licence. A great number of citizens prefer to have the collector call to going to the post office or to some dealer or bank to get their radio licence.


James Layton Ralston: Is each collector allotted a certain district?


Alfred Duranleau: Yes, I think the supervisor in Montreal allocates the districts to the different collectors.


James Layton Ralston: Is there no way of arranging for the house where the licence fee has been paid to be crossed off the list so that these collectors will not be calling more than once at a house1 where the licence fee has already been paid and where the licence is on hand?


Alfred Duranleau: It is very difficult to check the lists up accurately from day to day to show who has paid and who has not paid the licence fee. We have a fairly good system, although ocasionally a collector may call at a house where the licence fee has already been paid. In such a case the collector looks at the receipt and reports.


James Layton Ralston: I am going to ask the
minister to look into the matter because I know one house where the licence fee was paid and men called three times after that, asking to see the licence. The licence fee was not paid to a collector but was obtained through the post office. There is some duplication there that makes it troublesome for the householders who have paid their licence fee. I

think the department should arrange some system whereby those who had procured a licence from the post office or other central place would be marked off the list so that they would not be called on.


Alfred Duranleau: If my hon. friend will give me the particulars I shall be very glad to look into the case and see that it does not occur again.


James Layton Ralston: I shall do that.


Ian Alistair Mackenzie: Were all the details of this item investigated by the radio committee?


Alfred Duranleau: I think so.


Ian Alistair Mackenzie: Has the
committee reported yet?


Alfred Duranleau: No.


Ian Alistair Mackenzie: I would
suggest that we hold over the item in the supplementary estimates for radio if this is to go through to-night.


Richard Bedford Bennett: We will. There is an
item of $250,000 in the supplementaries for radio, and it is not intended to curtail the discussion on that by passing this item.


Thomas Reid: Last year I drew the minister's attention to the fact that people who live in cities such as Vancouver or New Westminster are able to obtain the services of radio interference inspectors, and I urged that the same service should be given to people living in the rural parts. Complaints have come to me from rural parts that they cannot obtain the services of interference inspectors. I understood from the minister last year that there was just a certain number of them. I draw his attention to the matter again this year, and would urge upon him that those who live in the country, even if it is only a few miles out, have just as much right to this service as people who live in the city.


Alfred Duranleau: I have given instructions to every station that the interference inspectors shall give the best possible service in the rural districts as well as in the cities, but of course the rural districts, being further away from the station, cannot get as quick a service as those cities. I am sure that our employees are carrying out my instructions but I will see if some further improvement cannot be made.


Peter John Veniot: Might I call the minister's attention to a complaint so that he can transmit it to the radio commission? Something seems to be radically wrong with the radio service in northern New Brunswick. We can

Supply-M iscellaneous
get New Carlisle quite easily but we cannot get Saint John or Fredericton unless they are hooked up on a dominion wide service, and then we can get them only through New Carlisle.


Alfred Duranleau: I shall draw the attention of the commission to the point raised by my hon. friend.


[Stage Direction]
Item agreed to.

[Stage Direction]
The Canada Grain Act, including management, operation, maintenance and equipment of elevators, administration of, $1,810,571.10.
Richard Bedford Bennett: The Minister of Trade and Commerce (Mr. Stevens) is not here this evening but there is an item in the supplementary estimates which will permit of any discussion which may be desired. This item has been discussed at some length, and it is in the hands of the committee as to what action shall be taken.


William Lyon Mackenzie King: If it is understood that this matter may be discussed in the supplementaries, we might pass it.


[Stage Direction]
Item agreed to.

[Stage Direction]
Unemployment relief, $2,100,000.
Richard Bedford Bennett: This item is also covered by another item in the supplementaries so there will be ample opportunity for discussion.


William Lyon Mackenzie King: This item relates to unemployment relief. As the public works construction program is still to be brought down, I think this item should stand.


Richard Bedford Bennett: This item relates only to special soldier unemployment. I suggest that this matter could be discussed under items 297 and 298 of the supplementaries.


William Lyon Mackenzie King: I know some hon. members desire to discuss the absence of a clear line of demarcation between the relief granted to returned men and general relief. I thought as regards relief there was supposed to be a line of demarcation between the two. If the Prime Minister will undertake to say that on the supplementary items we may discuss the whole question of relief, whether it relates to returned men or to unemployment generally, I see no reason why this item might not be allowed to pass.


Richard Bedford Bennett: I think item 297 is broad enough to cover all discussion which may be desired. If it is not, so far as the government is concerned, they will make it so.


[Stage Direction]
Item agreed to.

[Stage Direction]
Amount required for cost of administration, construction, purchase of land, supplies and equipment, maintenance and discharge of inmates at Kingston, St. Vincent de Paul, Dorchester, Manitoba, British Columbia, Piers Island, Saskatchewan and Collin's Bay penitentiaries, $2,833,850.
Richard Bedford Bennett: The Minister of Justice undertook that penitentiaries would not be discussed until the hon. member for Kingston City and the hon. member for Southeast Grey were in their places. However, item 289 deals with penitentiaries and can be made the basis of any discussion which may be desired with respect to this matter. We could undertake to debate this on Friday in order to give the two hon. members an opportunity to be present.


Thomas Reid: I should like to know if the
department has given any attention to the question of hours in the penitentiaries. The minister will remember that I brought up this matter last year.


Hugh Guthrie: I have a report on that
matter but I do not have it before me this evening. When the other item is called I will give my hon. friend the information he desires.


[Stage Direction]
Item agreed to.
Ian Alistair Mackenzie: Would
it be possible to set a definite day for the discussion of pensions?


Richard Bedford Bennett: We are ready to accommodate ourselves to any day the hon. gentleman suggests. It was my purpose to take up the insurance bills on Wednesday.


Ian Alistair Mackenzie: Would Thursday be all right?


Richard Bedford Bennett: I see no reason why it
should not.


James Layton Ralston: It will not be before
Thursday?


Richard Bedford Bennett: Not before Thursday.


James Layton Ralston: It is understood that we are to have the opportunity to discuss pensions without limitation to the two items which appear in the supplementary estimates?


Richard Bedford Bennett: It is understood that
on those items all matters relating to pensions may be discussed in all their phases.
Resolutions reported, read the second time, and concurred in.

Ways and Means-Supply Bill



WAYS AND MEANS


[Stage Direction]
Right Hon. R. B. BENNETT (Prime Minister) moved that the house go into committee of ways and means.
Motion agreed to and the house went into committee, Mr. Smith (Cumberland) in the chair.
Richard Bedford Bennett: Resolved, that towards _ making good the supply granted to His Majesty on account of certain expenses of the public service for the fiscal year ending 31st March, 1935, the sum of $135,756,833.73 be granted out of the consolidated revenue fund of Canada.
Resolution reported, read the second time and concurred in. Mr. Bennett thereupon moved for leave to introduce Bill No. 109, for granting to His Majesty certain sums of money for the public service for the financial year ending March 31, 1935.
Motion agreed to and bill read the first time.


RAILWAYS AND CANALS
[Stage Direction]
Right Hon. R. B. BENNETT (Prime Minister) moved that the house go into committee of supply.
Motion agreed to and the house went into committee of supply, Mr. Smith (Cumberland) in the chair.
Lachine canal-to provide for a contribution by the Department of Railways and Canals, in accordance with the agreement of 1930, of one-third of the cost of the construction of a tunnel for vehicular and tramway traffic under the Lachine canal at Wellington street, Montreal, such cost not to exceed $2,356,170, $785,390.
William Lyon Mackenzie King: Some Montreal members might wish to speak on this.


Richard Bedford Bennett: We will let it stand.
Item stands.
Contribution to the railway grade crossing fund' on account of the obligations of the fund in connection with the Hamilton viaduct, $500,000.


Richard Bedford Bennett: Is there any desire that this item should stand?


William Lyon Mackenzie King: The hon. member for East Hamilton might like to say something about it.
Item stands.
fMr. Bennett.]
Grant in aid of the four hundredth anniversary celebration of the landing of Jacques Cartier and to assist celebrations at Gaspe, Three Rivers, Ottawa and Niagara, to be disbursed under the direction of the treasury board, $100,000.


Peter John Veniot: This item is for the celebration of the four hundredth anniversary of the landing of Jacques Cartier, and I notice that $100,000 is to be distributed in Gaspe, Three Rivers, Ottawa and Niagara. I do not wish to oppose the granting of this amount but I would call attention to the fact that the place of Jacques Cartier's first landing, in what is now known as the Dominion of Canada, was not on the Gaspe coast but at the entrance to Bathurst harbour. According to the description given in history of his peregrinations in the straits of Northumberland and the bay of Chaleur, he landed first on what is now Canadian soil at the entrance to Bathurst harbour, now known as Caron Point. I do not think the government should have left Bathurst out entirely in the distribution of this amount. I want it to become a matter of general history that the fact is as I have stated.


[Stage Direction]
Item agreed to.
Amount required to meet loss on exchange, subject to approval of the treasury board, $320,000.
Richard Bedford Bennett: This item I submit with some regret, but there is no method I know of by which it can be obviated. Our contributions to the League of Nations and payments abroad have cost us a very considerable sum of money during the last year. It aggregates the enormous sum of $320,000 to take care of arrears in connection with exchange and to provide for the next fiscal year: Some of the nations of the world have experienced great difficulty in connection with the depreciated currency of their countries and the payment of their servants abroad, and this is the smallest sum that will take care of the situation. I may as well tell the committee frankly that this is a large sum, but there is no other way of getting out of it and discharging our obligations in terms of the gold franc.


James Layton Ralston: There is nothing else than loss of exchange,


Richard Bedford Bennett: Those are the exact figures computed in the Department of External Affairs and given me by the Under Secretary.


[Stage Direction]
Item agreed to.

Supply-Miscellaneous
To provide hereby for payment to the province of New Brunswick of the amount at credit of its debt allowance account, $529,299.39.
Richard Bedford Bennett: Is there any reason why we should not proceed with this item?


Peter John Veniot: It is only the withdrawal by New Brunswick of the amount of its deposits since confederation, although I jthink the province should have left that nest egg there.


[Stage Direction]
Item agreed to.
To provide for the arbitration expenses, "I'm Alone" case (revote), $4,709.
Richard Bedford Bennett: There is some likelihood of there being a termination of this matter during the year 1934.


[Stage Direction]
Item agreed to.
Salaries and contingent expenses of the several ports of the dominion, etc.-further amount required, $25,000.
To provide for payment to William Caven, formerly dominion inspector of excise, compensation and expenses for services performed after his retirement, in connection with the revision of the Excise Act, $1,500.
To pay a compassionate allowance to John M. Leblanc, a former member of the preventive service who suffered injury while on duty on patrol boat No. 3, $2,000.
To provide for the administration of the Income War Tax Act, 1917, and amendments thereof, and authority for this purpose to create positions and make appointments, notwithstanding anything contained in the Civil Service Act and the said positions and staff so appointed are hereby wholly excluded from the operation of the said act-further amount required, $50,000.
Richard Bedford Bennett: This item of S25,000 represents the requisition made by the Department of National Revenue for the extra sum required to enable them to collect revenues. The next item deals with assistance given by Mr. Caven, formerly dominion inspector of excise, in the preparation of the Excise Act which was before the house the other day. The next item refers to a former employee who was injured on board a patrol boat. He would have received this sum under the Workmen's Compensation Act had the provisions of that act applied. That is the advice given the department with respect to the matter. The next item, as will be seen, is the sum required by the income tax branch for the administration of the Income War Tax Act for the purpose of enabling them to give effect to the provisions of the law as they now stand. We had a larger sum the previous year but it was not expended and this 74726-258
amount is required. If the committee thinks it does not require further information than that, we might pass the items; otherwise I should be glad to let them stand.


William Lyon Mackenzie King: The only point about the item is the withdrawal from the provisions of the Civil Service Act of the staff administering the Income War Tax Act. I understand they have never come under the Civil Service Act.


Richard Bedford Bennett: I assure the leader of the opposition that there is no change in that regard, for reasons of which he is fully aware. You have to get for part of the time chartered accountants and men of that character. They do not work continuously during the year; they work for a given length of time and then are reemployed later. In the stress of time of payment they are employed in large numbers and at other times in fewer.


[Stage Direction]
Item agreed to.
Adjustment of war claims-
Secretary of State-amount required'to pay the expenses of litigation relating to the recovery of payments made on reparation account, $6,000.
Charles Hazlitt Cahan: This is required to pay an
estimated amount of expenses of the litigation now pending in order to recover certain amounts which it is alleged were obtained by false representations in connection with payments of reparations. I need not stress the matter; I think all hon. members understand the application of this item.


[Stage Direction]
Item agreed to.
Miscellaneous-
Public Archives-further amount required, $51,620.
Charles Hazlitt Cahan: Of this, $7,000 is required
to compensate employees who are engaged in the Archives office in Paris in respect of the depreciation of our currency when their salaries are paid in francs. Those employees receive very small salaries, hardly a living wage, and when the franc was reduced by forty per cent exchange they were nearly on the street, so I wish to pay that $7,000 loss on exchange. There are one or two small items, but the other large item is in connection with the balance of the payment in respect of the acquisition of the two portraits concerning which I laid orders in council on the table a short time ago.


William Lyon Mackenzie King: I do not wish to take exception to the purchase of these portraits, but I should like to draw attention to the special pleading of the Secretary of

Supply-Miscellaneous

State in his order in council. He has sought to have it appear that the government had made this purchase largely because the previous administration had had some negotiations in connection with a possible purchase of the paintings. I may say the fact is that the previous administration did not purchase the paintings, so that the responsibility for their purchase as well as the full credit for it must fall to my hon. friend.


Charles Hazlitt Cahan: I accept it.


William Lyon Mackenzie King: They are both historical paintings which ought in my opinion to belong to the nation, but I do not see that the fact that Lord Durham in his report on the rebellion of 1837 made mention of Papi-neau and Mackenzie had anything to do with the purchase of the Durham portrait. That is set forth in the order in council or in the statement given to the press.


Charles Hazlitt Cahan: Nevertheless, when the
dominion archivist recommended the purchase of those paintings I was informed that during the preceding regime an effort had been made to make the purchase but that the figure at which they were held was so high that the purchase was not completed. The judgment of the right hon. gentleman in a matter of that kind weighed very heavily with me and I so represented to council.


William Lyon Mackenzie King: I want to remind the Secretary of State that from a reading of the order in council or the published statement one would think that because the hon. member for Labelle (Mr. Rourassa) happened to be the grandson of Louis Joseph Papineau and I the grandson of Mackenzie, he had purchased the pictures.


Richard Bedford Bennett: It is just possible he did.


Charles Hazlitt Cahan: I was influenced very much in another matter because the right hon. gentleman is the grandson of his grandfather. I may state now that the extreme language of the oath of allegiance which is preserved to this day was first adopted by the legislature of IJjpper Canada at a time when the grandfather of the right hon. gentleman, having been a member, had been expelled. That oath was prescribed apparently for the express purpose of keeping him out of the legislature. The fact of his expulsion and the fact that this extreme form of oath, which was not found anywhere else in the British Empire, was prescribed and exacted under those circumstances constituted a strong argument in my mind in favour of effecting its repeal at this late date, after a lapse of nearly a century.
{Mr. Mackenzie King.]


William Lyon Mackenzie King: After having had the satisfaction of witnessing hon. gentlemen apposite move to repeal that particular oath and also of having had the satisfaction myself of joining with them in the vote to have it repealed, I am more strongly convinced than ever that there is such a thing as eternal justice.


[Stage Direction]
Item agreed to.
Labour-
International Labour Conference-further amount required, $5,000.
Richard Bedford Bennett: This provides for additional representation at the conference at Geneva and merely covers the expenses at a given rate at which such representation is made. It was claimed that this being the year in which the labour delegates and their advisers and employers and employees were also represented, this represents the sum of money to enaible them to go.


[Stage Direction]
Item agreed to.
Labour-
To reimburse Mr. Joseph MacDonald. Winnipeg, Man., for a claim against the Dominion government, equivalent to one-third of his expenditure in connection with a relief scheme which the city of Winnipeg authorized lnm to undertake in 1921, $5,345.47.
Richard Bedford Bennett: This is an item that the minister merely reported had been going on year after year in connection with a case in which a man named Joseph MacDonald claimed that he should get one-third of an expenditure which was actually made under the direction of the city. The province paid its third; the city paid its third and we have not paid ours. He claimed that he was entitled to it. He sued the city and lost. Claim has been pressed for this for many years. The minister brought it up and recommended that it should be paid.


Ian Alistair Mackenzie: Was there any arbitration?


Richard Bedford Bennett: The amount is not in question; the question was as to whether he really should get it.


William Lyon Mackenzie King: I suppose this is not an item on which the leader of the Cooperative Commonwealth Federation would wish to speak. If the Prime Minister will take the responsibility of going ahead with it I shall be glad to share it with him.


[Stage Direction]
Item agreed to.

Supply-Miscellaneous
Public printing and stationery:	plant,
repairs and renewals, further amount required, $6,800.
Charles Hazlitt Cahan: We had no vote for repairs last year-


Some hon. MEMBERS:: Carried.


[Stage Direction]
Item agreed to.
Mines and geological survey:	geological
survey: for exploration, surveys and investigations, wages of explorers, topographers and others-further amount required, $24,300.
For publications of English and French editions of reports, maps, illustrations, etc.- further amount required, $10,000.
Richard Bedford Bennett: I do not suppose I can usefully add anything in connection with these technical items. The permanent officials say these amounts are necessary in order that they may discharge their duties. One item is for printing reports, maps and so on of the geological survey, while the other item arises from extra expenditures made in the northwest territories in the vicinity of the pitchblende deposits from which radium is extracted.


James Layton Ralston: Is there anything in this item for aviation?


Richard Bedford Bennett: S'o far as my memory serves me the answer is no.


[Stage Direction]
Item agreed to.
Department of Marine: meteorological service, including magnetic observatory, etc.- further amount required, $14,000.
Richard Bedford Bennett: This stands in exactly the same position.


[Stage Direction]
Item agreed to.
Department of the Interior:	Dominion
Observatory:	expenses connected with the
dominion observatory at Ottawa - further amount required, $2,000.
Richard Bedford Bennett: Hon. gentlemen will be familiar with this item. This $2,000 is to take care of the extra expenditures that were necessary in order to make this observatory efficient after the reduction of staff became effective under last year's order in council.


[Stage Direction]
Item agreed to.
International Boundary Commission: expenses connected with the maintenance in a state of effective demarcation of the international boundary-further amount required, $12,000.
Richard Bedford Bennett: This deals with matters for which we have voted funds from year to year. This amount provides for the expenses of the demarcation .of boundary lines between the United States and our own country.
74726-258|


Thomas Reid: Would the Prime Minister allow this to stand until the minister is here?


Richard Bedford Bennett: Certainly.
Item stands.
Public works-Saskatchewan-
Areola-purchase of building, $4,500.
Broadview-purchase of property for public building, $4,000.
Gull Lake-to purchase building for post office, $10,000.
Kerrobert-to purchase building for postal purposes, $7,000.
Kinistino-to purchase building for post office, $7,000.


Richard Bedford Bennett: Possibly this requires a little explanation. The chartered banks have been reducing their branches in western Canada to some extent; where there were two banks now there is only one. These buildings were offered at extremely low prices, and after having them inspected the minister recommended that we avail ourselves of this opportunity to secure public buildings at a very reasonable price. I might just tell the committee frankly how that happened.


Mr. TOTZKE:: Does that apply to all the items?


Richard Bedford Bennett: No, just where you see the purchase of property.


William Lyon Mackenzie King: Have they been before the price spreads committee?


Richard Bedford Bennett: No, but they have been before the committee for making bargains without conscience with those well able to stand any loss.


[Stage Direction]
Item agreed to.
Ontario-harbours and rivers-
Blind	River-dredging-further	amount
required, $2,500.
Little Castor river and Annable creek- contribution to the municipality of the township of Winchester towards dredging Little Castor river and Annable creek, the provincial government to contribute a like amount, $8,000.
Spring creek-contribution to the municipality of the township of Lochiel, Glengarry county, towards the cost of dredging Spring creek, the provincial government having contributed a like amount, $5,000.
James Layton Ralston: Previously I directed the Prime Minister's attention to a very small work in Nova Scotia, and my right hon. friend said he would examine my representations and endeavour to meet them either in the supplementary estimates or in the public works program. I note that no provision is made here, so I am hoping-
Supply-Miscellaneous


Richard Bedford Bennett: I think with all confidence the hon. gentleman may rely upon the fact that it is there if it is not here.


Peter John Veniot: I am sorry the Minister of Public Works is not in his place.


Richard Bedford Bennett: The item can stand if the hon. gentleman so desires.


Peter John Veniot: 
[Stage Direction]
Item agreed to.
Indians: to provide for payment to the Long 1 lam Indian Band for lands taken by the Department of Indian Affairs to establish a reserve for the Sioux Indians who formerly resided in the municipality of Portage la Prairie, $14,000.
Richard Bedford Bennett: This is to pay a band of Indians for land taken from them.


[Stage Direction]
Item agreed to.
. Royal Canadian Mounted Police: compassionate allowance to Mrs. Madeline Mary Shoebotham. formerly the widow of the late Superintendent, P. M. Shoebotham of the Royal Canadian Mounted Police, $810.
Richard Bedford Bennett: This is merely a small item for compensation.


[Stage Direction]
Item agreed to.
Department of the Interior: to provide for necessary improvements on landing fields and air harbours at Fort Smith and Rae, N.W T. $3,000.
Grant in aid of Shackleton expedition to Ellesmere island, $1,000.
Richard Bedford Bennett: The first item refers to improvements to be made at those two far northern ports in order that the airplanes

carrying the mails may land with as little danger as possible. The second item has to do with the Shackleton expedition, of which members of the committee doubtless have read. That expedition is going into the far north, and the request was made to the Department of the Interior, if the information obtained was to be made available to the dominion, that they should contribute $1,000. The thousand dollars is thus contributed to the expedition.


[Stage Direction]
Item agreed to.
Dominion Lands, Parks, etc.-
To provide for the building and equipment of a mining recorder's office at Cameron Bay, Great Bear Lake, N.W.T., $5,000.
To provide for the expenses incurred under the Lake of the Woods Control Board Act, 1921, and under the agreement between the dominion, Ontario and Manitoba, confirmed by the Lac Seul Conservation Act, 1928, for the construction of a dam at the outlet of Lac Seul and its operation by the Lake of the Woods Control Board, moneys expended to be reimbursed to the dominion by the province of Manitoba under the terms of paragraph 8 of the Manitoba transfer agreement, $20,000.
To provide for the expenses incurred under the Lake of the Woods Convention, 1925, for Canadian participation in legal proceedings in the United States incidental to acquiring a flowage easement over lands bordering on Lake of the Woods in the United States, two-thirds of the moneys expended to be reimbursed to the dominion by the provinces of Manitoba and Ontario under the terms of the agreement of November 15, 1922, $10,000.
Richard Bedford Bennett: It depends entirely on
the committee as to whether we should proceed with these items. I can give the explanations with respect to them. There has been a considerable amount of activity up near Cameron bay, on Great Bear lake, in the Northwest Territories, and it has been thought desirable to erect a building for the mining recorder. Only a small building is required, but as it will be removed some distance from the railhead it will cost about $5,000. Then, as hon. members will observe, the next part of the item is connected with our statutory obligation, in reality our treaty obligation, in connection with Lac Seul and for the expenses incurred under the Lake of the Woods Control Board Act, 1921. The next part of the item has to do with the recent legal proceedings which terminated successfully for the contention of the dominion as to the basis upon which compensation should be assessed for those whose lands were affected by the rising of the water in the lake of the Woods district. The contention made by the Department of the Interior and by certain interests in the United States was sustained in the courts of that country. The

Banking and Commerce Report
principle upon which the assessment is to proceed is the ordinary principle of compensation, and not of some special value attached to these particular lands because of their alleged usefulness for particular purposes.


[Stage Direction]
Item agreed to.
Federal district commission-to provide for maintenance and improvement of properties under the control of the federal district commission-further amount required, $10,000.
Richard Bedford Bennett: I think the right hon.
gentleman is aware that arrangements have been made to ask the federal district commission to take over certain work done by the Department of Public Works in this city, as the federal district commission has, shall I say, done the work much more satisfactorily than it could possibly be done by various persons attached to the Department of Public Works. They have the office, the equipment and the machinery.


[Stage Direction]
Item agreed to.
Richard Bedford Bennett: I assume that we should wait for a better attendance in the committee before proceeding to the items concerning the marketing act and the franchise act, because there might be some further discussion.


William Lyon Mackenzie King: Yes, those
items might be allowed to stand.


Richard Bedford Bennett: Then there is to be an
opportunity on item 361, under the Department of Trade and Commerce, to allow a discussion to take place with respect to the Grain Act. I do not know whether there is any special interest in the other two items under that department.


William Lyon Mackenzie King: They had
better stand.
Progress reported.


FOOD AND DRUGS ACT AMENDMENT
[Stage Direction]
Right Hon. R. B. BENNETT (Prime Minister) (for the Minister of Pensions and National Health (Mr. MacLaren) moved the third reading of Bill No. 70, to amend the Food and Drugs Act.
Motion agreed to, and bill read the third time and passed.

[Stage Direction]
Mr. BENNETT moved the adjournment of the house.
He said: I gathered yesterday that the discussion on the shipping bill was to go on
to-day, but this evening the hon. member for Comox-Alberni indicated that he did not wish to go on to-night, and for that reason we shall not. To-morrow we will continue with the shipping bill. I promised we would introduce order No. 31 to-morrow, and that we would move the house into committee of the whole on the resolution on which to found a bill. Then we will take shipping, and there are some introductions of bills and some third readings. We will endeavour to get rid of as much as possible appearing on the order paper.
James Layton Ralston: When will the Prime Minister be considering item No. 30 on the order paper, respecting Bill No. 72, to amend the Canadian and British Insurance Companies Act, 1932?


Richard Bedford Bennett: I propose to take it on Wednesday. I had set it down for to-morrow, but there was a conference between some of those interested in it, and as a result we will take it on Wednesday.


Henry Elvins Spencer: When will the Prime Minister go on with the Bank of Canada Act?


Richard Bedford Bennett: I want to get that to the Senate as soon as I reasonably can. I believe we can take that also on Wednesday.
Motion agreed to and the house adjourned at 10.20 p.m.
Tuesday, June 19, 1934