1961-01-19

Mr. Speaker:: I have the honour to inform the house that consequent upon the notification of a vacancy in the representation given in this house on Wednesday, January 18, 1961 by the hon. member for Trinity-Conception (Mr. Tucker), and pursuant to section 10 of the House of Commons Act, I have addressed my warrant to the chief electoral officer for the issue of a new writ of election for a member in the electoral district of Kings.



COLUMBIA RIVER


Hon. E. D. Fulton (Minister of Justice):: Mr. Speaker, I should like to table copies of the report of the negotiators appointed to negotiate a treaty with the United States for the co-operative development of the Columbia river. It is a very short report, and if hon. members wish it might be printed as an appendix to Hansard or reproduced in Votes and Proceedings.
I should mention that a copy of the treaty which the negotiators recommended was attached to the original report. I am not attaching a copy because the treaty itself has already been tabled in the house.


Mr. Speaker:: Is it the wish of the house that the report tabled by the Minister of Justice be printed as an appendix to Hansard of today?


Some hon. Members:: Agreed.
[Editor's note: For text of document above referred to, see appendix.]



EXTERNAL AFFAIRS


Hon. Howard C. Green (Secretary of State for External Affairs):: Mr. Speaker, I have a brief announcement to make concerning assistance to India under the Colombo plan. Out of the $50 million appropriated for Canada's participation in the Colombo plan
for the fiscal year 1960-61, an amount of $25 million has been allocated for capital assistance to India.
Discussions have been proceeding with the Indian government on the projects which might be financed out of this grant. I am now in a position to inform the house that Canada has agreed to provide the following economic assistance to India under our Colombo plan program for 1960-61: Wheat to the value of $7 million; aluminum, copper and nickel to the value of $11.7 million; a final allocation for completion of the Canada-India atomic reactor in the amount of $600,000; an initial allocation of $3J million for stage 3 of the Kundah hydroelectric project.
Our agreement to these allocations brings Canadian Colombo plan assistance to India already approved under 1960-61 appropriations to a total of $22.8 million.
The wheat has already been shipped in order to have it cleared from Canadian ports before freeze-up on the St. Lawrence seaway. Arrangements are being made to have the non-ferrous metals shipped without delay.
As is the usual practice in the case of commodities, the Indian government has agreed to set aside counterpart funds in local currency equivalent to the value of the Canadian grant. These counterpart funds will be spent on economic development projects in India to be agreed upon between the two governments. The Canadian wheat will of course be most helpful to India in meeting the food requirements of her growing population which cannot be met from local sources. The metals will assist Indian industry to maintain production and enable development plans to go forward in the face of an acute shortage of foreign exchange.
The Canada-India atomic reactor near Bombay has now been completed, and the Minister of Veterans Affairs represented Canada at the inaugural ceremonies which were held on January 16. The allocation of $600,000 to this project in the current fiscal year is required to cover final expenditures on the Canadian share of the cost of the reactor.
Canada's participation in stage 3 of the Kundah hydroelectric project in Madras state represents a continuation of Canadian interest in this major Indian development scheme, since we have already made a substantial

Colombo Plan Assistance to India contribution to stages 1 and 2. The first two stages were formally inaugurated yesterday, January 13, and the Minister of Veterans Affairs also represented Canada at these ceremonies. Additional power from the Kun-dah project is urgently required for agricultural and industrial development in south India. Canada has, therefore, agreed to provide Canadian equipment, material and engineering services representing the foreign exchange costs of the third stage of Kundah.
This year's allocation of $3.5 million will cover the first instalment of the Canadian contribution and, subject to the appropriation of funds by parliament, further allocations will be made in future years up to an estimated total of $22 million. In addition, Canada has agreed that India should use counterpart funds to the equivalent of $25 million, accruing from the sales of Canadian commodities previously provided to India, to defray the local costs of the Kundah scheme.


Hon. Paul Martin (Essex East):: Mr. Speaker, the announcement made by the minister has to do, of course, only with assistance given by Canada to India under the Colombo plan. I presume from what the minister has said that India continues to be the largest beneficial recipient of Canadian assistance under the Colombo plan.


Howard Charles Green: Yes. India gets one half.


Paul Joseph James Martin: That has always been the situation and that continues to be the situation-


Howard Charles Green: No.


Paul Joseph James Martin: -largely because India was among the first of the recipients, along with Ceylon and Pakistan.
The minister has referred to a number of forms of assistance some of which, like the atomic reactor at Bombay and the hydroelectric project in Madras state, are continuing projects. Significance will be attached to the continuing assistance in respect of the atomic reactor, which was participated in by Canada on an equal basis with India, at a time when assistance was being given by the United States in the establishment of atomic installations in the Philippines. This is further evidence, of course, of Canada's interest in helping certain countries which require this assistance. In this way we are making a constructive contribution to the friendly relations that we hope will prevail among all nations.


Mr. Hazen Argue (Assiniboia):: Mr. Speaker, the statement made by the minister was interesting and, of course, welcome to the house, although there was nothing particularly new in it by way of new policy or

different policy. It was merely an outline of the way policy announcements, made on previous occasions, are being carried out. I am sure that every member of this house, and every Canadian, will support this kind of policy to help our sister nation in the commonwealth, and by this means assist the growth of democracy in that area and lift the living standards in India.
I just want to say, speaking for this group, that I think the government should raise its sights and consider a very great expansion of Colombo plan funds for this kind of program. The minister has said some $7 million worth of wheat is to be shipped to India. He did not tell us how many bushels that would represent, but I assume it would be somewhere in the neighbourhood of four million bushels. He said this was to take care of needs that could not be provided locally.
I remind the minister that the United States is doing much more for India in this way. There is an agreement whereby the United States will provide some 146 million bushels of wheat a year under a loan-gift plan. I would suggest that Canada should raise its sights. To do this would help India strengthen democracy and would help take up the slack in our own economy.



PRIVILEGE


Mr. M. A. Hardie (Mackenzie River):: I rise on a question of privilege, Mr. Speaker. Last night on a nation-wide T.V. program "The Nation's Business" the Prime Minister made the following statement:
In the Yukon and Northwest Territories, projects have become realities which were glibly dubbed as merely visionary a few years ago. Four thousand miles of access roads and two thousand miles of development roads are being built to tap new and known resources which otherwise would be delayed for years.


Some hon. Members:: Hear, hear.


Mervyn Arthur Hardie: My question of privilege, Mr. Speaker, is this. The Prime Minister in this statement is misleading the Canadian people.


Mr. Speaker:: Order. If the hon. member claims as a question of privilege the fact that he does not agree with a statement made by the Prime Minister, I think he is extending the question of parliamentary privilege far beyond what was ever intended. The statement, so far as the words which the hon. member has read are concerned, does not seem to me to involve any of the privileges of any of the members of the house or of the house itself. Any member is at liberty to make a statement outside the house. If an hon. member disagrees with what is

said, and it does not involve him personally, then that is a matter for debate, not a question of privilege.


Mervyn Arthur Hardie: Mr. Speaker, I do not disagree with the statement except that the facts represented to the people are not true.


Mr. Speaker:: That, as I have already told the hon. member, in my opinion, does not involve a question of privilege.


Right Hon. J. G. Diefenbaker (Prime Minister):: I do not propose to raise a question of privilege, Mr. Speaker, on the statement by the hon. member. I simply say the hon. gentleman took advantage of this house and its privileges to make the statement that the ideas I advanced were misleading. They were factual.


Mr. Speaker:: The hon. member has raised his question of privilege, the member concerned has commented on it, and if there is anything further to be said I suggest that it be said in the way of debate at the appropriate time.


Mervyn Arthur Hardie: Closure.


Mr. Speaker:: Order. The hon. member will have to withdraw that word because it is a reflection on the Chair, and that is something that cannot be permitted.


Mervyn Arthur Hardie: Mr. Speaker, I am sorry that I made this reflection on the Chair. However, after my question of privilege was ruled out of order by Your Honour I think the Prime Minister had no right to make the statement he made.


Some hon. Members:: Withdraw.


Mr. Speaker:: I take it that the hon. member has expressed his regret at having used the word and that we can consider the matter closed.



PERSONNEL OF SELECT COMMITTEE TO CONSIDER GREATER DISPATCH OF BUSINESS

[Stage Direction]
Mr. John Pallet! (Parliamentary Secretary to the Prime Minister) moved:
That the select committee on procedure appointed January 18, 1961 be composed of Miss Aitken and Messrs. Argue, Churchill, Crestohl, Fulton, Flynn, Macquarrie, McCleave, McGee, Mcllraith, Meunier] Pallett, Pickersgill, Rea and Ricard.
Motion agreed to.


[Stage Direction]
On the orders of the day:
Hon. L. B. Pearson (Leader of the Opposition):: Mr. Speaker, I should like to
90205-6-'77J
Inquiries of the Ministry ask the Prime Minister whether he can confirm to the house a statement he made over the air last night, namely that unemployment has been less in comparative terms in Canada than in the United States of America. If so, would he give us his basis of calculation in making that statement?


John George Diefenbaker: Mr. Speaker, any time the hon. gentleman wishes to debate this question he may do so, but a question such as this one on the orders of the day is improper.


Mr. Hellyer:: Just give us the facts.


Paul Joseph James Martin: In view of the reply just given by the Prime Minister and the reply he gave yesterday to a question of mine, may I ask him this question. Is he not aware that the system of measurement employed in the United States is that employed in Canada, both systems conforming to the recommended standard of the international labour office?


John George Diefenbaker: If the hon. gentleman had studied the matter a little bit more carefully than his question would now indicate, he would realize the fact that in the United States there are differences and they are of great importance. In addition to that fact there is in the United States a call-up which takes from the labour pool men for service in the armed forces.


Paul Joseph James Martin: Is the Prime Minister not aware of the fact that the system employed in Canada and in the United States is that recommended by the international labour office, which means that both systems are identical?


Some hon. Members:: Order.


Mr. Grafftey:: Wrong again.


Paul Joseph James Martin: That is the truth; and you added yesterday-


Some hon. Members:: Order.


Mr. Speaker:: This seems to me to be a subject of debate, and I suggest that it might be pursued at the appropriate time.


Lester Bowles Pearson: Mr. Speaker, in view of the position taken by the Minister of Finance and his parliamentary secretary that there is no recession, would the Prime Minister explain what he meant last night when he talked about the recession which we are in, which could have been foreseen in 1957?


John George Diefenbaker: Mr. Speaker, I must say that I have never had a greater tribute paid

Inquiries of the Ministry to me by the opposition than today. It indicates that what I said last evening, for the purpose of giving the Canadian people the facts, has hurt the hon. gentlemen.



ELLIOT LAKE, ONT.    INQUIRY AS TO REPORTED EVICTION NOTICES

[Stage Direction]
On the orders of the day:
Lester Bowles Pearson: Mr. Speaker, in the absence of the Minister of Public Works may I direct a question to the Minister of Labour. Has the minister or his department received reports that unemployed people are being sent notices of eviction from their homes in Elliot Lake because of their inability to keep up their mortgage payments?


Hon. Michael Starr (Minister of Labour):: I have received no such reports, Mr. Speaker.
(Translation):



LOW RATIO OF SUMMER JOBS GIVEN TO QUEBEC STUDENTS BY THE FEDERAL GOVERNMENT

[Stage Direction]
On the orders of the day:
Mr. J. P. Deschatelets (Maisonneuve-Rose-moni):: Mr. Speaker, I should like to put a question to the Secretary of State.
Is the minister aware of an article published in today's issue of Le Devoir concerning the small number of summer jobs made available to the students of the province of Quebec? Could the minister also inform us whether the government intends to take action in order to correct this situation?


Hon. Noel Dorion (Secretary of State):: Mr. Speaker, the article referred to by my hon. friend has come to my attention. I must say that in general the various departments try to deal in all fairness with French-Canadian students and meet, as far as possible, the requirements of the various universities.
(Text):



UNEMPLOYMENT


[Stage Direction]
On the orders of the day:
Hon. J. W. Pickersgill (Bonavisia-Twil-lingate):: I wonder whether I could ask the Minister of Finance if he succeeded in convincing his audience in New York yesterday that the Americans were to blame for unemployment in Canada?


Mr. Speaker:: Order. I am sure the minister would not hesitate to reply, but it seems to me the question is hardly appropriate.


John Whitney Pickersgill: Nor was the speech.



NOVA SCOTIA-REQUEST FOR MEETING WITH UNION REPRESENTATIVES

[Stage Direction]
On the orders of the day:
Hazen Robert Argue: Mr. Speaker, I wish to ask a question of the Minister of Mines and Technical Surveys arising out of the reported continuing lay-offs in the coal mines of Nova Scotia. Is the minister in a position to inform the house whether he has received a request from the representatives of the united mine workers union, district 26, to meet with him on this important subject, and will the minister say whether he will meet with this delegation some time today?


An hon. Member:: Keep up to date; they are in the gallery.


Hon. Paul Comiois (Minister of Mines and Technical Surveys):: Mr. Speaker, if the member for Assiniboia (Mr. Argue) would look in the gallery, he would see them all there.


An hon. Member:: He would not recognize them.


Paul Comtois: I will be very pleased to see them in my office right after the question period.


Hazen Robert Argue: Since the welcome delegates are in the gallery, I wonder if the minister can give them some assurance that he will have a policy to present to them to maintain employment in the coal mines, as the government has promised.


Paul Comtois: Mr. Speaker, the hon. member has too much experience not to know that his question is out of order.


Hazen Robert Argue: It is very much in order.



THE CENSUS


[Stage Direction]
On the orders of the day:
Hon. Lionel Chevrier (Laurier):: Mr. Speaker, may I direct a question to the Prime Minister and ask him whether he is aware of a unanimous resolution passed by the legislative assembly of the province of Quebec asking that the printed words "Canadian" and "American" as racial origins be removed as a possible answer to question 10 of the forthcoming census; and what action does the government intend to take with reference to it, if any?


John George Diefenbaker: Mr. Speaker, as to the first part of the question the answer is in the affirmative. As to the second part, government

policy, as the hon. gentleman knows, is announced when it is considered appropriate to do so.


Lionel Chevrier: Mr. Speaker, may I ask a
supplementary question of the Prime Minister and inquire whether, when the Associate Minister of National Defence was speaking recently at Chicoutimi he was giving the views of the government when he said-


Some hon. Members:: Order.


Lionel Chevrier: -that the absence of the names of countries of French origin as a possible answer to question 8 of the forthcoming census was an unpardonable anomaly?


John George Diefenbaker: Mr. Speaker, I have not seen the quotation referred to and I do not intend to make any observations on a statement that is uncorroborated.


John Whitney Pickersgill: It was just in the press. [Later:]


Mr. Maurice Bourget (Levis):: Mr. Speaker, I wish to direct a question to the Prime Minister, and ask if he can inform the house whether the government has decided to appoint a committee of experts to study the possibility of removing the printed word "Canadian" as a racial origin as an answer to question No. 10 in the forthcoming census, as reported in last night's issue of Le Droit.


Mr. Speaker:: Order. The hon. member perhaps did not hear an earlier question on the same subject matter which, if I am not mistaken, covered the same ground.


Maurice Bourget: I think this is a very different question from the one asked by the hon. member for Laurier. My question has to do with the formation of a committee of experts who will study the question of removing that word as an answer to question No. 10.


John George Diefenbaker: The same answer applies as to the earlier question, Mr. Speaker. Government policy in this regard will be announced when it is considered proper to do so.


EXTERNAL AFFAIRS
[Stage Direction]
On the orders of the day:
Mr. H. W. Herridge (Kootenay West):: Mr. Speaker, I made a promise to an indignant young lady who came to my office this morning-
Son>" hon. Members: Order.
Inquiries of the Ministry


Herbert Wilfred Herridge: -and in view of my promise I ask this question. It is a somewhat borderline case, and I throw myself on your mercy, Mr. Speaker. My question is based on a newspaper report in today's Globe and Mail on page 4 under the headline:
Ontario Youth Involved. Claims Insult by U.S. Biologist Stages Fast.
In this report Professor Haldane is reported to have planned to introduce two young students, two young Canadians, to Indian scientists at a dinner, but when he went to get them at their hotel they told him United States information agency officials had forbidden them to attend and had insisted that they dine with an American.


Mr. Speaker:: Order. I know that the
responsibilities of the Secretary of State for External Affairs are very broad, and if he wants to encompass Mr. Haldane's dinner party in his administrative responsibilities I will not prevent him from answering, but it seems to me it is scarcely a matter under the responsibility of the minister.


Howard Charles Green: Mr. Speaker, if the hon. member for Kootenay West will read this article again-if he has in fact already read it, which I doubt-he will find that the heading is not to be interpreted the way he is interpreting it. It reads:
Ontario Youth Involved
Then there is a larger heading:
Claims Insult by U.S., Biologist Stages Fast
According to my reading of this it was not the Ontario youth who was insulted but an Indian citizen who claimed to have been insulted by United States officials. This so-called insult, if it was an insult, was to a Professor J. D. S. Haldane who is the former chairman of the editorial board of the Daily Worker, the organ of the British communist party in the United Kingdom, which fact is mentioned in this same article. Professor Haldane went to India and took out Indian citizenship. It is the professor who claims to have been insulted and not the Ontario youth at all, so where we fit into the picture I do not understand.


Herbert Wilfred Herridge: I want to say-


William Heward Grafftey: The hon. member is getting senile.


Some hon. Members:: Question.


Herbert Wilfred Herridge: -I quoted the heading of a Conservative newspaper.

Inquiries of the Ministry



REASSEMBLING OF SUPERVISORY


[Stage Direction]
On the orders of the day:
Paul Joseph James Martin: May I ask
the Secretary of State for External Affairs a question arising out of a statement in a Reuter's dispatch attributed to the Prime Minister of India, which appeared in last night's Ottawa Journal, to the effect that Great Britain was the only country which had agreed to the reactivation of the international supervisory commission. I ask this question in the light of the statement made by the minister on Monday last.


Howard Charles Green: Mr. Speaker, it would be improper for me to comment on the report of a statement made by the Prime Minister of India. I do say this, however; that each of the countries concerned with this crisis has its own view as to the conditions under which the commission should be reconvened. I set out the Canadian point of view in my statement on January 16, which the hon. member will find at page 1062 of Hansard. What we are hoping will be arranged is that the two co-chairmen of the Geneva conference, namely the United Kingdom and the Soviet union, will ask that an exploratory mission be sent to Laos in an endeavour to obtain the consent of the Laotian king to the commission undertaking certain efforts in Laos designed to help bring about peace in that unfortunate country. Negotiations are still under way, and I am very hopeful that something of this kind can be worked out.
(Translation):



TRANSPORT


[Stage Direction]
On the orders of the day:
Mr. L. J. Pigeon (Jolieiie-L'Assompiion-Monlcalm):: Mr. Speaker, I should like to put a question to the Minister of Transport. Could the minister inform the house whether representations have been made to airlines and lessees operating at the Montreal international airport, in order that their signs or billboards be bilingual?


Hon. Leon Balcer (Minisler of Transporl):: Mr. Speaker, all lessees have officially been requested to follow the example of the Department of Transport which has fully respected bilingualism at the Montreal airport and, in addition, verbal representations were made
[Mr. Herridge.l
to those concerned. I am pleased to report that up to now results have been most satisfactory.
(Text) '



PRODUCTIVITY COUNCIL


[Stage Direction]
On the orders of the day:
Lester Bowles Pearson: Mr. Speaker, in view of the great importance attached to the matter by the government, may I ask the Prime Minister if he can give to the house any information about the probable date for the setting up of the council on productivity?
Righl Hon. J. G. Diefenbaker (Prime Minister): Mr. Speaker, that is under way at the present time. Naturally we are endeavouring to secure the best possible men and women for that council. We are considering the names not with regard to area or region, but are seeking to appoint those who in our opinion could best contribute to the discharge of the very important and heavy responsibilities attendant on the membership of that council.



INDIAN AFFAIRS


[Stage Direction]
On the orders of the day:
Mr. J. N. Ormislon (Melville):: Mr. Speaker, I should like to direct a question to the Minister of National Health and Welfare. Would his department be prepared to review its scale of fees paid to private practitioners for medical services supplied to Indians on its behalf, and consider an increase in these rates?


Hon. J. W. Monfeilh (Minisler of National Health and Welfare):: Mr. Speaker, this scale of fees is being studied at the present time.



CANADIAN BROADCASTING CORPORATION


[Stage Direction]
On the orders of the day:
Mr. J. R. Tucker (Trinity-Conception):: Mr. Speaker, I should like to direct a question to the Minister of National Revenue and ask him if he would convey to the management of the Canadian broadcasting company the desire of many Canadians to have all the periods of the hockey games broadcast and televised on Saturday nights.


Hon. George C. Nowlan (Minister of National Revenue):: Mr. Speaker, the minister spends half his time in conveying to the corporation the wishes and prejudices of the

Canadian public with respect to the programs of the C.B.C. I shall be very happy to convey to the corporation this request, which is not original; and I should also appreciate some constructive suggestions from the hon. member as to where the C.B.C. will obtain funds to replace those lost through the cancellation of those programs which would have to be cancelled during this period.



UNITED NATIONS


[Stage Direction]
On the orders of the day:
Herbert Wilfred Herridge: Mr. Speaker, I should like to ask a question of the Secretary of State for External Affairs, which question originated in the mind of the hon. member for Kootenay West. I apologize for not sending him notice. My question is based on a headline in today's Globe and Mail, which headline I trust is correct:
U.N. Troops Look On As Lumumba Beaten By Katangan Police
In view of the fact that the Canadian government quite properly protested most vigorously the beating of Canadian troops by South Congo troops-I think at the time termed "Lumumba troops"-has the Canadian government protested against the beating of Mr. Lumumba while United Nations troops looked on, which is an injustice according to our approach to life?


Howard Charles Green: No, Mr. Speaker, there has been no protest launched. It would keep us very busy if we were to protest all the beatings which take place in the Congo. I agree with the hon. member that it was an unfortunate incident.



TRANSPORT


[Stage Direction]
On the orders of the day:
Lionel Chevrier: Mr. Speaker, may I direct a question to the Minister of Transport, and ask him when he expects to table the annual reports of the Canadian National Railways and Trans-Canada Air Lines.


Léon Balcer: Mr. Speaker, I am sorry I cannot give the exact date, but I will let the hon. member know tomorrow.


Lionel Chevrier: A supplementary question, Mr. Speaker. Does the minister propose proceeding with the setting up of the special committee that deals with the accounts of those two crown corporations although the annual reports will not have been tabled?
Inquiries of the Ministry


Léon Balcer: Of course not, Mr. Speaker. We will form the committee and they will start sitting when the two reports are tabled.



FEED MILL AGREEMENTS WITH WHEAT BOARD

[Stage Direction]
On the orders of the day:
Mr. E. Nasserden (Rosthern):: Mr. Speaker, I should like to address a question to the Minister of Agriculture, or in his absence to the parliamentary secretary. Could he tell us how many feed mills in the wheat board area have now completed agreements with the Canadian wheat board, enabling them to purchase grains outside the normal quota established for deliveries of grain? Could he also tell us whether this trade is confined to provincial boundaries? Will those mills entering into agreements be required to submit statements showing the extent of their purchases and sales of grain and grain products?


Mr. Speaker:: Order. If the hon. member had given notice he might have received an immediate answer. Otherwise, that type of question is much more appropriately put on the order paper, because it obviously requires some preparation and research in order to be answered.



REQUEST THAT FEED MILLS BE RETURNED TO WHEAT BOARD JURISDICTION

[Stage Direction]
On the orders of the day:
Hazen Robert Argue: Mr. Speaker, yesterday I asked the Prime Minister a question regarding a statement made earlier that action would be taken by the government if evidence was submitted showing that grain prices had reached a distress level in relation to purchases by feed mills. The Prime Minister replied that he had not at that time received a report from the national farmers' union. My question now is, has this report been brought to the attention of the Prime Minister? Has a further report which I received a few hours ago, pointing out a further distress price, also been brought to the Prime Minister's attention?


John George Diefenbaker: Mr. Speaker, upon my return to my office yesterday I found that the first report in question was on my desk. I think it was dated January 16.


Hazen Robert Argue: January 13.


John George Diefenbaker: However, the hon. gentleman is ahead of me on the other one which he has just received. Apparently the report is sent to him before it is forwarded to me, or his mail service is better than mine.

Inquiries of the Ministry


Hazen Robert Argue: Since the Prime Minister has now received the report, may I ask him what action the government is contemplating on the evidence put forward?


Mr. Speaker:: Order. The hon. member is asking for an expression of the government's policy. As the Prime Minister has already pointed out today, it is not normally declared on the orders of the day.


Hazen Robert Argue: If I may put it this way, what action is the government considering in the light of the statement made by the Prime Minister in this regard on December 22?


Mr. Speaker:: The effect is the same. Of course if the Prime Minister wishes to answer he may do so, but I regard the question as one which asks for a declaration of policy.



HOUSING


[Stage Direction]
On the orders of the day:
Mr. J. R. Garland (Nipissing):: Mr. Speaker, I should like to direct a question to the Minister of Finance arising from a speech made by Mr. John R. Campbell at a meeting of Canadian house builders being held in Montreal at the present time, in which he is reported to have said:
More than $31 million in new money for housing has already been produced through a secondary market for securities backed by N.H.A. mortgages-*
We know that this matter has been the result of about six years of negotiation. The article goes on to state, and this is the basis for my question:
One snag to the plan is finance minister Fleming's "baby budget" restriction on the flow of United States funds into Canada-
In view of the importance of this matter would the minister care to comment on it?


Hon. Donald M. Fleming (Minister of Finance):: Mr. Speaker, I do not think any comment on this statement is called for. It happens to be a statement made by an individual concerning a matter in which he is evidently interested. He is not speaking for the government or declaring government policy in any sense.



POST OFFICE DEPARTMENT


[Stage Direction]
On the orders of the day:
Mr. Azellus Denis (St. Denis):: Mr. Speaker, may I direct a question to the Postmaster General. According to sections 209(e) and 553 of the postal rules and regulations, letters which contain uncancelled stamps must be
[Mr. Diefenbaker.l
treated as first class mail and stamped accordingly. Can the minister explain how thousands of letters sent out by Reader's Digest-and I have received one myself- containing uncancelled stamps, as is indicated by the window on the envelopes, have been accepted as second class mail and charged accordingly?


Hon. W. M. Hamilton (Postmaster General):: As I remember them, the rules prohibit the giving of a legal opinion in this house and the asking for it. However, I shall be glad to look into the matter which has been raised.



INTEREST ACT


Hazen Robert Argue: the second reading of Bill No. C-3, to amend the Interest Act.
He said: This bill, Mr. Speaker, is not a new one in this house. As a matter of fact I have moved this kind of bill now every year since about 1954. After having presented this proposition to parliament in the years immediately prior to 1956 I was able to get a great deal of support across the nation and a good deal of support from members of parliament, and as a result of growing public opinion at that time the government of the day took some steps toward controlling the interest rates charged by small loans companies on particular loan arrangements.
This is a very important question. It is something that affects hundreds of thousands of Canadians, and it would be of benefit to the thousands of families and the tens of thousands of people in this country who are on very low incomes.
The purpose of the bill, Mr. Speaker, is very simple. It would set by law-


Mr. Speaker:: I wonder whether I might interrupt the hon. member and ask for better attention. There is a great deal of conversation and shuffling going on while the house settles down to debate. I hope hon. members will give their attention to the hon. member who has the floor.


Hazen Robert Argue: Mr. Speaker, I was saying the purpose of the bill is very simple. It would provide a statutory limit of 12 per cent on all interest rates charged in this country. As I was saying, in 1956 parliament took action to control within a certain range the interest rates set by small loans companies. The area of control affected by the measure of that day was all loans made by small loans companies up to a maximum of $1,500, and the

limits on the interest rates were set as follows, as found in the act:
The cost of a loan shall not exceed the aggregate of
(a)	2 per cent per month on any part of the unpaid principal balance not exceeding $300,
(b)	1 per cent per month on any part of the unpaid principal balance exceeding $300 but not exceeding $1,000, and
(c)	One half of one per cent per month on any remainder of the unpaid principal balance exceeding $1,000.
By this means there was a reduction in the interest rates that might be charged by small loans companies. Even with these changes in the interest rates, however, the business of the small loans companies has flourished. Business done by small loans companies in 1956 amounted to $343 million, and loans outstanding by small loans companies in September of last year amounted to $490 million. So, although there was a slight reduction in interest rates, these companies have flourished, have increased their business and have in no way been harmed by the measure that was passed at that time.
As the years have gone by the effect of this particular measure has been lessened because more and more small loans companies are going into the field of loans in excess of $1,500, and a small loans company making a loan in excess of $1,500 is able to charge any interest rate set forth by agreement, because loans larger than $1,500 do not come under the provisions of the act of parliament.
One of the purposes, therefore, of this particular measure is to bring under control all interest rates charged by small loans companies, and not leave control merely within the area up to $1,500. The whole purpose of the bill, of course, is much broader than this. It would apply to lending rates and interest charges by any loan company, by any firm providing instalment credit or by any individual making a loan.
The field of personal credit is exceedingly important in this country, is exceedingly large and is steadily growing. According to the Bank of Canada statistical summary for September, 1960 the total amount of money now on loan to consumers by finance companies and retail dealers comes to $2,253 million. For quite a period during 1956 and 1957 the amount of instalment or consumer credit in this country was relatively stable, but since 1957 there has been a steady, increasing growth in consumer credit. In 1957 credit in this field amounted to $1,968 million. In 1958 the figure was $2,030 million, in 1959 $2,205 million and in September, 1960, the latest figure available, $2,253 million.
Therefore the area of credit to which the bill would apply is steadily growing and is likely to continue to grow in the future, I 90205-6-78
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suggest, even though we are in a very serious recession at the present time. I think the fact of the matter is that many people who have very little money and very little income are forced in such circumstances to go to small loans companies; therefore business in this particular field may increase at a time when there is very widespread unemployment.
The bill would apply to all the major fields of consumer credit. It would apply to credit obtained when financing automobiles. The general rate of interest charged on automobile financing is in the neighbourhood of 16 per cent to 19 per cent. These are the rates charged by the ordinary acceptance corporations doing business in this field. However, there are other fringe companies, smaller companies, fly by night companies, that are charging much higher rates, some of them fabulous and extortionate, and I will refer to this later.
The bill would apply to all instalment credit provided by retail firms doing business on an instalment basis. This is a very important part of credit in Canada, and it is running now in the neighbourhood of $258 million. Companies that sell goods on instalment credit are allowed by law to charge any interest rate they wish to apply to the particular purchase that is made. These interest rates range anywhere from 20 per cent to 50 per cent or more. Some of the large mail order houses in this country, Eaton's, Simpsons-Sears and others, very frequently charge rates of 15 per cent to 20 per cent, and the highest rate charged by Eaton's and Simpsons-Sears works out to 54 per cent per year, a fabulous rate for such reputable firms to be charging on this kind of credit.


Mr. Chown:: Would the hon. member permit a question? Would he give the house the authority for the figures he has just cited with respect to interest?


Hazen Robert Argue: With respect to Eaton's and Simpsons-Sears, I do that on my own responsibility. I happen to have made the calculation myself. I made it years ago and I have repeated the statement in the house on many occasions. The arithmetic has never been successfully challenged. I suggest to the hon. member that he get hold of Eaton's catalogue or Simpson's catalogue and do the arithmetic, and inform himself and the house whether my figures are correct. I used these figures on a television broadcast one night and counsel for Simpsons-Sears was on the telephone a few minutes later telling me all the things that were going to happen. I have never heard from them since, so I presume they checked these statistics too. These are facts.

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I want to be fair. The very high rate to which I have referred applies on the smallest purchase that can be made on credit. It is not the rate on every purchase, but it is the beginning rate. I think it is a shame that consumers should have to pay such a high rate, and through this bill I am suggesting that consumers should not have to pay any rate in excess of a maximum of 12 per cent per year.
I hope the government will take action in this field, and I do not know why they have not done so before. Even when we were putting forward a similar bill from the opposition side of the house in earlier years when a Liberal government was in power, we got no assistance or support from the Conservative members of the day. The Liberal party has been a party of high interest rates. The Liberal party has resisted the efforts that we have made to bring down interest rates.


Paul Joseph James Martin: That is not so.


Hazen Robert Argue: My friend refers to Duncan MacTavish-


Paul Joseph James Martin: No, I did not.


Hazen Robert Argue: My friend behind me, not the hon. member for Essex East. I know he would not want to refer to Mr. MacTavish with respect to this matter at this time, because I am sure he would not want to be responsible for doing that. However, as I was saying, the Liberal party has resisted the efforts that we have made-


Mr. Marlin (Essex Easl):: That, of course, is not a fact.


Hazen Robert Argue: -to bring down the maximum rate of interest to 12 per cent. I challenge the hon. member for Essex East to rise at the appropriate time and say how he stands on this question and how he would vote on this bill if it were brought to a vote.


Murdo William Martin: I have to catch a train this afternoon. I am going to my constituency, but I will deal with it right now.


Hazen Robert Argue: All right.


Murdo William Martin: I want to say to my hon. friend that there is no one in this house who is a spokesman for the Liberal party who has castigated the government of the day for the high rate of interest-


Hazen Robert Argue: How would you vote on this bill?


Murdo William Martin: I will make my own speech now that I have the floor.


Hazen Robert Argue: No, you will not. Are you in favour of the bill or against it?
[Mr. Argue.f


Murdo William Martin: I want you to know that the Liberal party and the member for Essex East take second place to no party and to no man in this house in trying to arrange the financial burdens imposed on the Canadian people-


Mr. Speaker:: Order.


Mr. Bell (Carlelon):: Answer the question instead of evading the issue.


Murdo William Martin: I have the floor.


Mr. Speaker:: I am beginning to think the hon. member for Essex East has the floor and that the hon. member for Assiniboia has finished. I take it that was not the intention of either party and when the hon. member for Essex East was allowed to answer a question-


Murdo William Martin: On a point of order, Mr. Speaker, the hon. gentleman yielded the floor to the member for Essex East. Unless the member for Essex East is out of order, I do not believe anyone should interfere with his right to accept the opportunity which the hon. member for Assiniboia has given him. It is not open to anyone in this house, no matter what officer, to intervene on such an occasion. The only one who can withdraw my right is the member for Assiniboia, who can do so by complaining I am abusing the privilege he has extended. If he takes that position, then I will be prevented from making-


Mr. Speaker:: I cannot see what the point of order is. If the hon. member for Essex East is claiming the floor, then I think I will have to give it to him although I did not recognize him. No member has the right to give the floor to another member. A member speaks on recognition by the Chair. Although the proceedings were somewhat irregular, they seemed to have been taken in good part and I do not propose to interfere with them unless a serious point is made of it.


Hazen Robert Argue: I thank the hon. member for Essex East for carrying forward-


Murdo William Martin: I have not finished.


Hazen Robert Argue: -our gentlemen's agreement. Since he is taking an undue length of time to reply to a simple question and has failed to give me an answer, under the rules I am obliged to resume my speech.
The hon. member for Essex East has said he takes second place to no one in his sympathy for the people who are paying high rates of interest. What he should have said was that the Liberal party takes second place, a very close second, to the Conservative party in being the party of high interest rates, a party that has successfully maintained high, extortionate interest rates in this country-


Mr. Henderson:: That is not true.


Hazen Robert Argue: -for many years. I have been saying that the Liberal party was a high interest party. But even that party, bad as it was and bad as it is, did give consideration to the bill we presented in this house in 1955 and 1956. They gave consideration to the proposition and sent it to the banking and commerce committee. While the members of the C.C.F. did not agree that the Liberals had gone far enough, they did go a considerable distance in the face of opposition from Conservative members in introducing a measure of control in the small loans field. But this government has not-


Mr. Pallell:: Would the member indicate where this opposition to which he adverts took place?


Hazen Robert Argue: The speaker will understand when I say the Minister of Finance was one member of the committee who ran interference for the small loans companies, but he was not alone.


John Cameron Pallett: On a question of privilege, Mr. Speaker-


Mr. Speaker:: The hon. member for Assi-niboia has the floor.
Mr. Pallet!: He has made a very serious charge. He has suggested the Minister of Finance ran interference in the committee, and that should be withdrawn immediately.


Mr. Speaker:: If the hon. member is raising a point of order I will hear him. I understood he was simply disputing what the hon. member was saying.


Hazen Robert Argue: I was there.
Mr. Pallet!: So was I. The member is suggesting that the Minister of Finance, in a committee dealing with a certain reference some years ago, was running interference for the finance companies. Those are the words he used. I suggest they be withdrawn because they impute a motive or a course of conduct that is not in keeping with a member of this house.


Mr. Speaker:: I doubt if there is any question of a breach of privilege there. Any member is entitled to espouse any cause he wishes in committee. I do not think there is any suggestion necessarily arising of improper conduct. If the hon. member is not satisfied I will reserve the point until the Minister of Finance is consulted. After all, he is the party concerned.


Hazen Robert Argue: I was not imputing any improper motive to the Minister of Finance. I do not understand the thin skin of hon. members opposite-
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Mr. Speaker:: The matter might be considered disposed of; it is not a subject for debate under the bill.


Hazen Robert Argue: I cannot understand the thin skin of members opposite-


Mr. Speaker:: Order.


Hazen Robert Argue: I am on another point altogether. I cannot understand the thin skin of members opposite when it comes to dealing with the question of the loan sharks, the racketeers, these people who have fleeced innocent Canadians by charging extortionate interest rates, thereby ruining the lives of many Canadians. I have ample evidence on my desk to support this statement, and I intend to refer to it. I do not understand, for the life of me, why the government does not take some action in this field. Why does the government allow interest rates which are legal-I am not questioning their legality- in this country but which are a disgrace to the nation? These interest rates have been and are being charged.
I have in my hand a copy of Liberty magazine for August, 1959. It contains a long story entitled "How Loan Sharks Put The Bite On". On page 58 an example is given of a Mr. and Mrs. Bert Thompson of Toronto, who paid $878.50 for a car they never owned. They made a down payment of $400 on the car and signed a contract to pay the rest at $36 a month. They paid $618 and had the car just six months. They then turned the car back because they were unable to meet their payments. The car was subsequently sold, and in spite of the large sum of money that had been paid, the Thompsons were left owing a balance of $262.50. I have not the time to give all the references in this article to this particular case, but it shows just what fabulous charges are made by some companies in this field.
I have in my hand an article that appeared in the Globe and Mail of April 28, 1960, entitled "Oakville Man Forced into Paying 87 Per Cent Interest on Second Mortgage". I ask hon. members opposite if they like this. I ask them if they are in favour of it. I ask them if they are opposed to this kind of legalized gangsterism. If they are, why do they not do something about it? The article goes on to say this:
Reports of bonus payments for second mortgages in the Oakville-Trafalgar area brought to light yesterday the case of an Oakville man who was forced to pay effective costs of 87 per cent on a second mortgage for a three-year period.
Three years ago, Edward Waddington went to his lawyer to make arrangements for the down payment on his new home. He had $2,000 in cash, and needed to raise $1,680 more on a second mortgage to make up the total required of $3,680.
"When the mortgage came through, it was for $2,700," Mr. Waddington said, "bearing an interest rate of 6 per cent per annum."

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"I thought when I got the papers that it was a typographical error," he continued, "that they had put down $2,700 instead of $1,700, but it wasn't."
Next month, when Mr. Waddington pays his final payment on his second mortgage, he will have repaid $3,186, or 187 per cent of the amount of money he actually got-$1,680.
Experts in the field of real estate report this fantastic cost for a second mortgage was probably not uncommon.
Are the members of the Conservative party in this house in favour of allowing a legal extortionate rate of 87 per cent, as in this example, to be continued in this country? Liberty magazine, the Globe and Mail and the Toronto Daily Star have all given a good deal of thought and publicity to this important problem. Pierre Berton had a series of articles in the Toronto Star in May of 1960. I have an example that I should like to put on the record, and I think it shows just how far some of these gangsters are prepared to go in extorting heavy charges from unsuspecting people. On May 2, 1960 Pierre Berton had this to say in part in one of his articles:
When he-
That is a certain person wishing a loan, namely a Mr. Huider.
-entered Quay Funding's offices he had two mortgages on his home. One had a year to run. The other was not due for almost three years. The total amount he owed on both mortgages was $6,130.19.
When the Lundy-Solnik company was through with him, Mr. Huider had two brand new mortgages on his house. And now he owed $8,795.
In order to get $200 in cash, Mr. Huider allowed Quay Funding to negotiate two new mortgages to replace two old ones. The "finance charges" for this transaction totalled $2,300. In addition, "recording charges" totalled $190. In addition, Mr. Huider must pay interest at per cent and 12 per cent, respectively, on the total value of the mortgages plus all the added charges.
This works out to a real interest rate of 18.3 per cent on his new first mortgage and a real interest rate of 34 per cent on his new second mortgage.
And all Mr. Huider has to show for this is $200 in cash from the people he asked to be his friend.
I'll repeat this for the benefit of those in the back who may not have thought they heard me distinctly:
Mr. Huider got exactly $200, plus the nebulous advantage of a slightly extended period in which to pay his debt. In January, he owed $2,665 more on his house than he owed in December. His monthly payments and his interest rates are now higher than they were before he applied for his loan.
I find this almost unbelievable, but I have the loan agreements and the reporting letter from Quay Funding before me, and I have had the mortgages checked. Mr. Huider is only dimly aware of what has happened. He still does not know what his real interest rates are.
There is something else, alas, that Mr. Huider is not aware of. His loan agreements call for him to make monthly payments of $90. This means that, in four years, when these new, expensive mortgages come due, Mr. Huider will have paid some $4,300 to the Lundy-Solnik firm.

Yet he will still owe more on his house then than he did when he first applied for a loan.
Last December he owed $6,130. Four Decembers from now, if he pays at this rate, he will owe about $7,300. He is paying more than 1,000 per cent interest per annum on his $200.
I ask my hon. friends opposite if they think they are justified in allowing this kind of extortionate practice to continue in our country. I think the government should take action in this field, Mr. Speaker. If the government took action in this field I think there would be other means by which credit could be obtained. If a few of these loan sharks decided that they did not wish to continue in business I would say good riddance, because it would be better to have firms charging 1,000 per cent interest out of business than in business continuing to charge such fabulous rates of interest.
We have credit unions which are doing a good job and which can do an even better job. We have in this country banks which, according to law, can make loans with an interest rate up to 6 per cent. I give the banks credit for having tried in recent years to develop their small loans field at a more rapid rate. I feel that some of the pressure and some of the publicity that has come from discussion in parliament have been instrumental in bringing the banks to exert a greater effort in this field. But it is also a fact, in my judgment, that the banks have cut some corners today by methods that are certainly not established as being legal, in order to bring about for themselves a much higher interest rate than the 6 per cent set forth in the Bank Act. There is on the record and there has been for sometime evidence that the rates are 9 per cent, 10 per cent or 11 per cent. I refer to the effective rates.
I have had sent to me an unsigned letter, but I should be happy to show it to anybody in the house. It sets forth in a detailed way the charges now being made by the Bank of Nova Scotia in the small loans field. The writer of this letter, whoever he may be, has come to the conclusion that the rates are some 12.6 per cent. I suggest that the government should have this practice checked and should inform the house whether in fact these rates are being charged. Certainly they are cutting corners. Certainly they are charging rates in excess of 6 per cent.


Mr. Broome:: Will the hon. member permit a question?


Hazen Robert Argue: Yes.


Ernest James Broome: I will make it short. Is the hon. member not in favour of the banks entering this field under these conditions that he has stated?


Hazen Robert Argue: I am very much in favour of the banks entering this field.


Ernest James Broome: Then why take up all this time?


Hazen Robert Argue: I think they should enter this field in a legal way and not try to cut corners; that is all I am saying. I think they should not be charging 12.6 per cent interest, if this is a fact, and I am suggesting that the government check on the matter. I think they should not be charging 12.6 per cent interest when the law says the rate should be 6 per cent. If the banks require a higher interest rate in order to do business in the small and personal loans field, then this matter should be dealt with by parliament in a proper manner and particular rates should be set out for particular business. There should not be any of this practice of cutting corners and doing things that are not well established as being legal.
This discussion also took place in the banking and commerce committee some years ago, but at that time there was not evidence that some rates even in excess of 12 per cent were being charged.


Mr. Hodgson:: May I ask the hon. member a question?


Hazen Robert Argue: Yes.


Clayton Wesley Hodgson: Does the hon. member pay much attention to unsigned letters? All his argument has been based on a letter he received on which there is no signature.


Hazen Robert Argue: I asked the government if they would check on the matter and see whether the Bank of Nova Scotia is in fact charging these rates of interest.


Clayton Wesley Hodgson: The hon. member does so because he received this letter with no signature on it.


Hazen Robert Argue: Sometimes I would rather pay more attention to unsigned letters than to some statements made by some hon. members I could think of.


Clayton Wesley Hodgson: Yes, and yours included.


Hazen Robert Argue: I am asking the government whether or not the Bank of Nova Scotia is charging this interest rate. This is something that the parliamentary assistant, I am certain, will make inquiries about, because I am sure the government would not condone this practice. It is a fact, of course, that the Canadian Bank of Commerce for many years has charged rates of 9 per cent and 10 per cent- there is no dispute about that-even though the rate in the Bank Act is 6 per cent.
We want action; we want the government to do something. I do not know why the government will not move in this field. They
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claim they are not afraid to bring forth legislation that will mean a new Canadianism. They are provoking Canadianism all the time. If they are doing this in a real and effective sense they should not be afraid to bring in legislation that will limit the charges that are made by finance companies in our country, since approximately 70 per cent of the business done by finance companies is done by companies that are wholly owned in the United States.
Why should we allow Canadian companies or any other companies the right to levy these extortionate rates of interest? This field is dominated by United States corporations. A government that has the attitude which this government has to outside capital from the United States surely should not be backward in doing the right thing, affecting all companies in this field, more particularly since 70 per cent of the business is in the hands of companies wholly owned in the United States.
I have given examples of some of the fabulous rates of interest that are being charged in this country. The thing that amazes me is that they are being charged in a legal manner, that this government has taken no steps to control these charges. I know it is going to be said that property and civil rights belong to the provinces, but long ago it was established that interest rates are under the control of this parliament, and every other charge that is associated with a given transaction has been interpreted as being an interest charge. Therefore this government has the right to legislate in this field.
I suggest that this government, badly in need of political support as it is at this time, badly in need of some moves that will carry some popular support, could do nothing better than extend the area of interest control and limit the interest rates along the lines I have suggested.
The banks can do a better job, the credit unions can do a better job, a bigger job. They are capable of doing it. I suggest that to allow a maximum rate of 12 per cent is allowing a rate, if anything, too high, but a rate surely that is adequate for normal, legitimate, efficient businesses to carry on their operations and make a return on those operations.
I have made forecasts in the past, Mr. Speaker. Sometimes I have been wrong. I am going to make one now. I hope I am wrong. My forecast is that when the time for adjournment comes tonight a Conservative member will be telling us, perhaps, some of the things that are wrong with this bill-maybe things
very much unconnected with the bill_______and
carrying on the practice of talking out this measure. That is my forecast. I hope I am wrong.

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I think the government should allow the members of parliament to vote on this bill. It would be very interesting to me to see how the Liberal members would vote on it. The hon. member for Essex East has announced his departure, with his own position unstated, after I had been courteous enough to give him adequate time to make his reply.
I would hope we would get some support from the Liberal party. I think this measure deserves the support of members of this house. I would like to see it come to a vote. The attitude of the Liberal party in the past was very often, "We do not agree with opposition bills", though we have seen some of their members vote for opposition bills. But in most instances-not every instance-Liberal governments of former days allowed private members' bills to come to a vote.
I challenge the government to take off the whip. I challenge the members of the Conservative party to give the house a chance to make a decision on a bill that I think is of extreme importance to the Canadian nation at this time. It is of importance in normal times; it is of greater importance when hundreds of thousands of Canadians have lost their jobs, when people are on very low incomes and may be forced, through family difficulties, into the hands of these loan sharks who can ruin them financially for the rest of their lives.


Mr.  M. D. Morion@Davenport: Mr. Speaker, once again we come to discuss what the sponsor of the bill has stated is a simple proposition. I agree that the purpose as set out is simple, but I must also contend that the implications are not as simple as they appear on the surface.
I have had the privilege of speaking on this bill on two or three previous occasions. Like hon. members from the other side of the house who have introduced this bill, I have been able to bring to the attention of this house and the country very serious instances where people have misused the second mortgage market. Perhaps as a result of having spoken in this house I have been the recipient of a great deal of literature pro and con this question. I must confess that the more I study this subject the more complicated it seems and the more confused I become. It is not quite as simple as the hon. member has stated.
I would like, in all fairness, before I deal with this matter to answer in part some of the things that the hon. member for Assiniboia (Mr. Argue) has stated. He has pointed out, and I think quite properly, some of the abuses that have been prevalent in the second mortgage field. He knows that I have brought similar instances before this house. But I think in all fairness he must admit that in
IMr. Argue.]
1960 legislation was passed in the province of Ontario, in an act known as the Ontario mortgage brokers act, where it is set out and required that people who are registering mortgages must set out in detail what are the interest rate, the bonuses, and so on. It is hoped that this will overcome the difficulties of people not knowing what they are signing. If they are over 21 years of age, can read and go to their lawyer, they can be advised. But if they refuse to do those things it is going to be difficult for us to help them.
That was one step in this direction, and it was a step within the jurisdiction of the provincial government. That is what the provincial government is doing. What is more, they are still investigating other instances of these irregularities that have been brought to their attention perhaps by members of this house and by writers such as Pierre Berton. I must advise this house that they are not sitting idle and letting these things go by. Incidentally, it is a Conservative government that is doing it.


Hazen Robert Argue: They are allowing it to be done.


Mr. Morton:: The hon. member says "They are allowing it to be done". They are doing whatever they can in their power to stop these practices. One of the difficulties confronting us today is the lack of recognition on the part of many people of the problems and complications involved in economic questions. The hon. member for Assiniboia brings forward many proposals, but until he realizes the complications involved and stops tarring everybody with the same brush his suggestions will be of no value in solving the problem.
The subject of interest and interest rates has been discussed many times in this house. As the result of discussions in years gone by we have on our statute books the Small Loans Act which came into effect in 1938-39 and was amended in 1956. There is also the Pawnbrokers Act and the Interest Act. What we are now dealing with are the weaknesses in this legislation which permit certain companies without ethics to prey on those who need money.
In dealing with this problem we have to consider what is the thing we call money. Some people consider it a commodity, others a means of facilitating trade, and still others consider it to be both. Interest rates are usually set by competition, the natural level at which money can be obtained in normal competition. When money is in short supply interest rates go up. Interest rates also vary in accordance with the risks involved. Hence, rates of interest on loans with collateral security are less than those without security,

and interest rates on first mortgages are less than on second and third mortgages. These are basic assumptions.
The problem of interest rates is further complicated by monetary policy. In times of threatening inflation those who control the monetary policy encourage high interest rates in order to discourage the demand for money. Also, if money is in short supply interest rates may be increased by the demand. If there is too much money in circulation which is causing inflation there is a tendency for monetary authorities to encourage high interest rates. The more we study the problem the more confused we become and the more complicated we realize it is. A simple declaration by act of parliament that the rate of interest should not be higher than 12 per cent seems destined to failure when we consider the sense of balance of our complex economy.
The hon. member for Assiniboia in drafting this bill did not direct his attention to the economic theories behind the various forces which influence the rate of interest. The hon. gentleman, like many of us, is more impressed by and concerned with the abuses of greedy moneylenders. The buying public, being unaware and trusting, fall prey to encouragement to increase their debt, and thus overanxious consumers become committed to various loans.
This bill is an expression of a desire to protect people. It is prompted by the same motive which prompted the introduction of the other acts to which I referred which are on our statute books for the protection of the public. It is perhaps for the same reasons that the province of Ontario recently passed an act to protect people who have been involved in second mortgages and is continuing its investigation of the activities of certain unscrupulous moneylenders.
The sponsor of this bill appears to share the hope that people who wish to borrow on future earnings to pay for present needs should be able to do so at a lesser cost. Hence we are faced with two different approaches which are seemingly contradictory and conflicting. If we were to adopt the principle that people should be able to borrow all they want to buy whatever they wish and pay only a low rate of interest, one way to do this would be to create more money so that the money supply would be sufficient to meet the demand and interest rates would remain naturally low in a competitive market. On the other hand the government could go directly into the lending business and create the money it wished to loan at a low rate of interest.
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I am not an economist. I can, however, foresee some of the consequences of a course of action of this nature on the value of our dollar. We would probably wind up with greater confusion, and perhaps we would create a greater hardship on the people we are seeking to assist.
However much we may speculate and dream about these things, we have to face the realities of the situation. We cannot create money at will, nor can we in our every day needs and requirements simply go out and buy everything we see just because we want it. We have to buy things in accordance with our needs and means. We should be astute enough as individuals not to sign contracts which are averse to us. If we do not know what these contracts mean or involve, we should be intelligent enough to have a friend or lawyer check them over. This is an important subject because of the implications it has relating to our whole economy.
The hon. member for Assiniboia set out some figures illustrating the scope of consumer credit in our Canadian communities. The dominion bureau of statistics daily bulletin of November 16, 1960 shows that the balances outstanding on the books of sales finance companies at the end of September amounted to $1,245,500,000. Outstanding balances on consumer goods at the end of September were $849,200,000. Bank loans at the end of October last were $6,257,000,000.
In July of 1960 United States consumer credit stood at $53.5 billion. John Kenneth Galbraith in his recent book "The Affluent Society", page 201, sets out some interesting figures relating to the United States economy which may have some general application here. Between 1952 and 1956 total consumer loans increased from $27.4 billion to $41.7 billion, or by 53 per cent. In that time the disposable income increased by only 21 per cent. In other words the people of the United States seemed to be spending more money than they had available.
In the period to which I referred instalment credit increased by 63 per cent and that for automobiles by nearly 100 per cent. In 1955 one family in four with an income of between $3,000 and $4,000 bought automobiles, 69 per cent of them on credit. One family in three with an income between $4,000 and $5,000 bought automobiles, 66 per cent on credit. Those with income in excess of $10,000, in the majority, paid cash for their automobile purchases. There is no indication, however, as to whether some of these seeming cash transactions were in fact purchases made with cash borrowed elsewhere unknown to the seller of the automobile.
Both in our economy and that of the United States the question of consumer credit

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is of great importance. Because of that fact the finance and mortgage companies have moved in to fill a need. We cannot deny that there is a need, nor can we deny that there have been abuses. It is the duty of the government to study these things and try to eliminate the abuses. I differ from the hon. member for Assiniboia, who takes the examples of the abuses and then proceeds to paint everybody in the business with the same brush. I think he is doing a disfavour to those who are giving a service in the provision of consumer credit.
The hon. gentleman pointed out two or three groups that he feels can handle this better than others. But even at that perhaps he has been too broad in his accusations. I am not saying that the instances he gave are wrong, but I feel that they do not reflect the practices of the majority of those who are in the consumer credit business.
Before we come to the conclusion that 12 per cent is the easy way out of the difficulty and is the be-all and end-all, we have to realize that in coming to that conclusion there are costs involved. There are certain charges, and this bill, regardless of what the hon. member for Assiniboia says, cannot cover them. The hon. member made the statement, and I question it, that every charge can be interpreted as an interest rate. Unfortunately I have not the law before me, but it is my understanding that when the Small Loans Act was enacted and the control of charges was included in the act it was done with the permission of the provinces concerned. The hon. member shakes his head. I have no way of repudiating it; we will have to leave that for future examination.


Hazen Robert Argue: I wonder whether I may just say something to the hon. member. My statement, at least in part, was based on the evidence given by the deputy minister of justice before the banking and commerce committee back in 1956, when, at one place in the evidence in answer to a series of questions, he made it perfectly clear that in his view the federal government had the power to control all charges because that power flows from the undisputed power of the federal government to control interest charges, and it would not be controlling the rates if the government controlled the interest rate and a company could charge what was in fact a higher rate by calling it something else.


Murray Douglas Morton: I think that points up the difficulty we are in, when we say that 12 per cent would be the most that could be charged. If other charges and costs amounted to 10 per cent of the 12 per cent, the interest

would be only 2 per cent. If we were to add up the sum total of the cost to the person obtaining the loan under those conditions, it would not be any more than 12 per cent. We might be able to do that indirectly, but this brings up the point as to how practical it would be, because for some loans and in some places the charges for services are greater. It may be doing indirectly what you cannot do directly. This points out the constitutional difficulty.
As I say, in some provinces they are going as far as they can, and what they need is assistance. This sort of thing should not be done by the provinces and the dominion separately. I think the time has come when this whole matter, like many other matters in our economy and in relation to our constitution, must be dealt with by the provinces and the dominion together if we are to have effective legislation to meet the problem.
The hon. member mentioned a department store charging 40 per cent or 50 per cent on a purchase. That could be worked out in this way. Someone purchases something in a store for $30 and has to make his payments over a three months period at $10 a month. He is charged $2 interest. This amounts to 40 per cent per annum. Without explanation this seems to be an enormous charge, but to the person buying the article the $2 does not amount to very much, and he feels it is worth it. The same thing can be said of service given to a loan which costs $2 or something of that order. The loan is small. We cannot be too dogmatic in saying that the charges should be 12 per cent.
If the hon. member would read the act in conjunction with his bill, Bill No. C-20, he would realize that there is an anomaly there, because in one section of the act it is said that on a loan of $1,000 to $1,500 the total cost of the loan is less than 1 per cent per month, whereas in Bill No. C-3 the interest rate is 1 per cent per month. There is an anomaly there.


Hazen Robert Argue: The rate is lower for the portion of the loan between $1,000 and $1,500 than is provided in this bill.


Mr.  M. D. Morion@Davenport: If you look at the statistics of the loans made you will see there are fewer loans in that field between $1,000 and $1,500. This is not so much because people do not want them in that amount but because finance companies do not find it profitable to make loans in that field. The field of loans over $1,500 is more profitable.
These are some of the difficulties connected with interest rates. There are various ways in which to set interest rates. You may have a 6 per cent interest rate on a monthly

instalment contract. It could be 6 per cent per annum or it could be a 6 per cent flat add-on rate, or a flat 6 per cent discount rate. You may borrow $100 and pay 6 per cent, but you receive only $94. Therefore, in effect you are paying on that $94 almost 12 per cent. It becomes very complicated when you try to calculate actually what is the interest rate. That is what I am trying to point out to the hon. member. It is not as simple as he appears to make it to be. That is why it is most difficult to control these things.
Perhaps hon. members would be interested in knowing who are the people who make these purchases, or who purchase by this method. Let me give their occupations. According to a pamphlet put out by the federated council of sales finance companies, with headquarters in Ottawa, 13 per cent of the loans are made by proprietary and managerial groups; 5.9 per cent by professional people; 4.1 per cent by armed forces personnel; 6.2 per cent by farmers, fishermen and lumbermen; 5.8 per cent by salesmen and agents; 50.3 per cent by skilled and semiskilled labour; and 14.7 per cent by clerical people and others. That gives a sort of crosssection of the people who need this assistance, and indicates its importance.
The question has sometimes been brought up whether we need regulations. Of course we do, and I should like to refer to an example in the United States. In a pamphlet called "Consumer Credit Facts For You", published by the bureau of business research, Western Reserve University, there is the following on page 16:
Legislation has an important influence on maximum rates. Only five states set maximum rates for retail instalment financing transactions. In these states maximum rates vary from 24 per cent on new cars to 43 per cent on used cars. Evidence collected by legislative bodies indicates that corresponding maximums in uncontrolled states are at least 120 to 275 per cent.
So there is merit in legislation. We do not deny that, and there is all sorts of proof of it. The question is how best to regulate this field. The fact is that this problem raises many questions. Recently I received a pamphlet, which perhaps many hon. members also received, from Saunders Cameron Limited, 55 Yonge street, Toronto, containing suggestions concerning a royal commis-mission on Canadian monetary matters. Under the heading "Trust and Loan Companies" certain questions are raised which I think indicate that this is not a simple matter. Many people more learned than ourselves with respect to economic conditions are raising questions. The author of the pamphlet has this to say:
Are the trust and loan companies satisfactorily fulfilling the place of the English or United States
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building and loan societies in Canada? Should there be close ties between such companies and chartered banks? Should there be any provision for Bank of Canada control over trust and loan companies and, if so, how can it be applied to companies under both federal and provincial charter? Many more questions can be imagined which should shed light on the place of these institutions in our structure.
With respect to finance companies this statement is made:
Here we enter an area of conflict between the federal powers over interest rates and provincial powers over property and civil rights which might cover conditional sale agreements. Should the Bank of Canada be given powers over these companies and how they may be operated? How can companies with access to foreign funds be satisfactorily controlled on the same basis as domestic concerns? Would some form of taxation, exempting companies which are under or place themselves under federal jurisdiction, induce companies dealing in conditional sale agreements to operate in the same manner as loan companies where there are rules respecting interest rates, etc.?
What about consumer credit interest rates? Do they affect the individual's willingness to borrow? Should they be spelled out as an annual rate of interest, or should it be recognized that some charges are legitimately made for investigation, etc., and morally not a form of interest? Are there abuses and how may they be prevented?
I think this points out the difficulty of the situation and the need of a genuine investigation into the matter. I think that in all legislation dealing with this matter we have to recognize the philosophy that we cannot legislate for, shall I say, the lack of morals and poor ethics of some people in our society. There is a limit to which we can go in protecting people. We can set up ground rules, but we cannot legislate that a person be good when he does not want to be good. If he wants to be a crook he will do all he can to get around the rules that we make.
The greatest protection that we might have in this field would be a better ethical code on the part of those involved in these activities. A similar question was raised in the winter edition of "The Canadian Banker", in which it is said in effect that if businessmen want to keep the government out of business through legislation, if they want to prevent the government from interfering with the details of their day to day business, they will have to improve the ethical code under which they operate because as they become less ethical in their business operations they invite the government to come into the field to try to control them.
I think that is perhaps pretty much the situation in the matter of consumer credit today. Many of these people have been unethical. We can only go so far in establishing rules, but there must be an ethical code established by responsible companies in the field and they should help the government to ferret out and put out of business those

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people who do not adhere to an ethical code. On page 29 of the article, which is written by Mr. A. Beedle, the author comes to these conclusions. I quote in part:
Business should therefore:
(1)	Be willing to let government share in the guardianship of business conscience. Some desirable results can only be obtained through government action. State action acts as a stimulant of conscience. Business, however, should try to see that government does not entirely usurp its role. Business should not abdicate its role. Achieving this balance may be delicate ...
(2)	It should recognize and accept the beneficial aspects of countervailing powers and be willing to adopt readily measures for the common good, instead of regarding countervailing powers as always representing detrimental interests.
(4)	It should not ignore religion. It does not have to back all Moral Re-Armament groups; it does not have to hand its conscience over to the religious authorities; but it should be willing to adopt as practical politics those measures of which it approves. It is too prone at the moment to pay mere lip service to or completely ignore religious principles.
(5)	Above all it should educate and train in economic statesmanship. It should support studies in the universities and other academic institutions. It should set up its own study groups. It should make pronouncements on moral issues.
Finally, Mr. Speaker, I should like to emphasize that the bringing forward of this bill by the hon. member for Assiniboia has provided an opportunity to disclose to the public those abuses that are prevalent and need to be rooted out. In bringing this matter before the house he has brought forward something that needs a great deal of discussion, and I think the debate should impress upon the government the need of further study as to the role of interest in our economy.
Although the purpose is laudable and the principle is simple, I feel that the application of the bill is not as simple as it may appear on the surface, but that should not deter us from studying the matter and bringing people here who know all the implications of interest with respect to the economy. We should be able to devise some method of control that is not too rigid and yet will be effective in dealing with those people who like to live by sponging off others who cannot afford it, people who do not know how to protect themselves, people who are in unfortunate circumstances not always through their own fault. They should, in some way, be protected. I agree in this respect with the sponsor of the bill, and to that end I have, on occasion, brought before this house examples of the things I felt were wrong, especially in the second mortgage market. I believe this has borne some fruit because I know some investigations have taken place in Ontario. The Ontario department has moved to remedy that situation and they are still investigating those who have been unconscionable in their activities.

I should like to urge upon our government and our cabinet the making of a study of the implications of the interest rate as it relates to the consumer credit field, that vast field in which people are dependent upon loans to assist them in buying the things they need. I think we should say the things they need and not what they want because they cannot afford everything they want. I believe the government should ascertain that these institutions which need to fulfil a vital role are filling that role at not too great an expense to those who need their services.


Gordon Campbell Chown: Mr. Speaker, I would preface my remarks by stating my sympathy with the point of view of the hon. member for Davenport (Mr. Morton) who has pointed out the hardships people have to sustain as a result of the unethical and unscrupulous practices of these loan sharks and moneylenders in a field which has done so much to contribute to human unhappiness. I wonder if the loan companies who are under discussion here today because of the interest rates they charge had not filled this area in the money lending market, it would not have fallen to more unscrupulous and unethical operators?
This bill, presented by the hon. member for Assiniboia (Mr. Argue) is becoming an annual old friend. I do not doubt the honesty or sincerity of purpose of my hon. friend, and I commend the suggestion of the hon. member for Davenport that the situation would bear detailed study by a committee of this house from time to time. The great value of such a study would be that arguments could be refuted by the reputable people in this industry, by facts and figures, by specific cases and especially in terms of their own public relations.
All of us are aware of the very seductive advertising that has become a prelude to every Christmas and which is to some extent inflated and misleading to those who are on the receiving end. These people, not knowing better, soon find themselves lured to attend at one of these offices where they are offered a consolidation of their Christmas debts. I trust they are told not only what the net loan will be but what the gross cost of the loan may ultimately be. I am assured by reputable members of the industry that this is indeed their approach and that the interest rate is clearly disclosed. In many cases, it is disclosed in the area of the signature. I only hope the supplementary information is given, namely that you are borrowing $300 but you will be expected to pay $350 or $375 or whatever it may be. I have not precisely calculated that amount, I have only guessed at it.

The hon. member for Assiniboia pointed out that these companies have been flourishing since 1956. I think that was the date he used. I have before me a report from the department of insurance for the year ending December 31, 1959 which contains a chart listing the 77 finance companies. Of these 77 companies, 14 showed a loss and 63 showed a profit. There were 24 companies that had a profit of less than $10,000; nine had a profit of less than $20,000. Only 30 out of the 77 loan companies made a profit in excess of $20,000. This does not reflect the rosy picture of pyramiding profits the hon. member was pointing out in his general remarks, but there are some companies-


Hazen Robert Argue: These 30 companies did very little of the business. Most of the business is done by half of the companies.


Gordon Campbell Chown: I have no doubt that at the moment the gross loans of many of these new companies would be small but will grow in volume over the years. However, I picked out two companies that did a substantial business. I found that company A had a gross profit before taxes of $1,317,125.


Hazen Robert Argue: What company was that?


Gordon Campbell Chown: I am not giving the name of the company, I am just calling it "A".


Hazen Robert Argue: It is public information. The country knows it. You do not have to call it "A".


Gordon Campbell Chown: The figures are in that report. I do not think it really matters whether I call it by a letter. It is public information and perhaps the hon. member has the report in front of him.


Hazen Robert Argue: No, I have not. Mine is a year older than yours.


Gordon Campbell Chown: In any event, I took these figures right off the sheet here and the gross profit in the case of company A is $1,317,125. The net profit was $791,431. Therefore, they paid income taxes to the tune of $525,694. Company B had a gross profit before taxes of $1,933,282. The net profit after taxes was $990,780, so they paid taxes of $942,502. I picked out these two large business enterprises to indicate that they did contribute substantially to our federal treasury by way of income taxes which, in turn, find their way back to the people of Canada through the social security measures that exist as a result of the work of our government. I was going to add that co-operatives and credit unions also make loans, as we all know and that they are non-taxable.


Hazen Robert Argue: That is not correct.
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Gordon Campbell Chown: Will the hon. gentleman give me his authority for saying that?


Hazen Robert Argue: Yes. I should be pleased to do so. The laws of this country apply to all companies in exactly the same way. The law says this. Every company must pay at least 3 per cent on its capital invested and further that every company is allowed if it wishes to take all or part of its profits and pay the profits in patronage dividends and any profit paid in patronage dividends is not taxable. So the law applies precisely the same way to every company in Canada including co-operatives. They pay every tax that any other company pays.


Gordon Campbell Chown: With the exception that they have the right to pay out patronage dividends which in many respects would disburse the profit that would normally accrue.


Hazen Robert Argue: The Beneficial Finance Company could do the same thing if they wanted to do so.


The Acting Speaker (Mr. Rea):: Order.


Gordon Campbell Chown: I was glad to note that my friend the hon. member for Davenport alluded to the situation where the interest rate was said to be 54 per cent. I am sure that my friend the hon. member for Assiniboia was being quite honest and true when he said that that interest rate was computed on an extremely small amount of money with a monthly charge over a period of perhaps three or four months. But that certainly is misleading as far as the major retail companies are concerned to suggest that they are charging interest rates at that level because by and large, on charge accounts and so on, it is not their custom to charge any interest rate whatsoever.


Hazen Robert Argue: Mail order houses?


Gordon Campbell Chown: I would say as far as retail companies are concerned. The other point I want to come to has to do with the fact that this industry has grown to a point where there are 150 financial houses across the country and over 550 branches. If we take into consideration the fact that each branch might conceivably employ ten people, we arrive at a substantial number of employees, namely a minimum of 5,500 employees in this industry across the nation. Hence, if we were to pass this bill in its present form I would think the tendency in the industry, because of their high risk factor and the cost of the multiplicity of loans on a small quantum basis which results in heavy services and other charges, would be that these companies would not be able to continue in business, with the consequent loss of employment across the nation.

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I have always been of the opinion that given honest service with good public relations they have a gap to fill in the economy and that they fill it very usefully.
My friend the hon. member for Assiniboia referred to the many legislative studies that have taken place over the years both in the Senate and the House of Commons banking and commerce committees. I want to quote in part some of the conclusions that came out of these committee hearings up to the time the present act was passed. As an authority for this quotation I am using the pamphlet entitled "Consumer loans in Canada". At page 3 these five conclusions are stated:
1.	-our modern economy creates a need for small-sum, short term loans to wage-earners and salaried people.
2.	-the demand will be met, either by legal and supervised agencies or by unlicensed lenders at unregulated rates.
3.	-the actual cost of making and servicing such loans far exceeded the 12 per cent per annum provision of the then existing Money-Lender's Act.
4.	[DOT]-if legal, supervised service was to be provided, the permitted maximum charge-to cover every element of cost, including interest-must be adequate to enable efficient management to earn sufficient profit to attract enough capital.
5.	-prohibitory legislation would be ineffective and would result only in forcing needy borrowers into the hands of unlicensed lenders.
In the Interest Act in part I there is a clause which reads as follows:
5. No person shall transact the business of a moneylender unless such person has first obtained from the minister a licence: but this section does not apply to a moneylender the cost of whose loans does not in any case exceed an amount equivalent to 1 per cent per month on the unpaid principal balance thereof.
It is obvious that consumer lenders would not take out licences and accept the many restrictive provisions of the Small Loans Act unless the Interest Act were further amended to specifically exclude them from its rate requirement. If there are no licensees there are no annual reports, no examination of lenders' books and records and no restriction of such matters as length of contract, reduction in charges for prepaid accounts, minimum charges, and many other features which now offer excellent protection to the borrowing public. The result would be a long step backward in the history of borrowing and lending in Canada, and I think this would be a mistake of the first magnitude.
Consumer lenders actively advocated a small loans law and accepted the terms and conditions of the Small Loans Act in 1939. They have not seriously objected to it since then, mainly because the act provides a rate of charge higher than for other kinds of lending in recognition of the higher costs involved in making personal instalment loans. These lenders may feel differently about a

definition of interest as broad as that suggested in Bill No. C-3 if the statutory rate is reduced to the point that it becomes impossible to earn a profit.
Since the Interest Act covers a much wider field than the Small Loans Act there will no doubt be many other kinds of lenders who will find such a definition of interest unpalatable. For example, loans on real estate often incur heavy expenses for inquiries, appraisals, recording fees, commissions, et cetera. If these must be lumped into one total charge along with the rate of interest on the loan as a 1 per cent per month maximum it would certainly seriously slow down the rate of mortgage lending, especially on secondary security.
This mortgage problem in the lending field -I refer to second and third mortgages- was brought to the attention of the house by my friend the hon. member for Davenport and it points to a real and difficult situation and the need for supervision of loans of this nature by way of some sort of provincial act such as that which is now on the books in the province of Ontario which should point a good example to the other provinces in Canada. As a lawyer I have dealt with many people who were confronted with this situation of being overly mortgaged, with 20 per cent to 30 per cent discount on second and third mortgages, and to have suddenly found themselves out of work and unable to meet the payments they found that their equity in their home had been swallowed up, with the net result that they lost their home and their place of living at an extremely difficult time when they are in financial straits.
This kind of legislation is of great credit to the province of Ontario, and of course that province has a Conservative government. This is the kind of legislation that I believe should be followed by all the other provinces of our nation. I have here the Bank of Montreal Business Review issue of September 26, 1960, which I think contains a rather good definition of consumer credit:
Consumer credit is generally regarded as consisting of contractual obligations entered into by individuals, as consumers but not as house buyers, for personal rather than business reasons. As such it includes indebtedness incurred in the form of charge accounts, or commitments to pay for goods and services by instalments, or personal cash borrowings without attendant collateral in the form of stocks and bonds.
Prior to world war II there were only $400 million outstanding in Canada in consumer credit. By 1943, due to the exigencies of the second world war, the production especially of household goods, and so on, this dropped to $200 million. By 1946 it advanced to $400 million again and it had passed the $1 billion

mark by 1950. It was again restricted during the Korean war, for obvious reasons, and ever since has been on the rise until now it stands at $3J billion.
This is a tremendous increase in the field of consumer borrowing, but in my opinion it is rather the sociological trend of our times. People want to have possession of some desirable and useful chattel now and pay for it later. In most cases I am sure they understand the consequences of the charges that ensue by way of interest. But there is that small segment of the public which is drawn into these financial offices, and if these people are not treated with the respect, understanding and sympathy which they deserve they are apt to be committed to a loan to pay for such goods and chattels which they really cannot afford.
In the same Bank of Montreal Business Review there is a table showing consumer credit as a percentage of personal disposable income. I thought it would be of interest to the house to put this table on the record. In 1950 it was 8.3 per cent of personal disposable income; in 1951 it was 6.8 per cent; in 1952 it was 8.9 per cent; in 1953, 10.5 per cent; in 1954, 11.3 per cent; in 1955, 12.6 per cent; in 1956, 13.1 per cent; in 1957, 13 per cent; in 1958, 13.3 per cent. Then in 1959 it rose to 14.1 per cent and in 1960, as at the end of the first quarter-which is the last figure available-it was 13.5 per cent.
At the present time, when there is a slight recession in the economy, consumer credit shows a definite falling off. When times are good it shows a sturdy gain. To suggest, as the hon. member for Assiniboia did, that in times when there is high unemployment- as there is at the moment-the credit companies are in a more advantageous position is quite wrong. These statistics clearly indicate that they are as buoyant as any other business in good times, and their business falls off very substantially when times are not so good.
There are different types of consumer credit. First of all you have the charge account type of credit, which is the short term, almost month by month account and the account is paid at the end of each month. Even though it is not paid until it becomes pretty badly in default, there are no interest charges on it. This type of charge account increased by 50 per cent in 1959 over what it was in 1951 and now represents 13 per cent of total consumer debt, as opposed to 29 per cent in 1951, which is an interesting development.
Then there is instalment credit. This type of credit, instalment buying, by way of contrast to the charge account type of consumer credit, increased 4i times between 1951 and
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1959. This aspect of credit is dealt with on page 2 of the Bank of Montreal Business Review, as follows:
The unevenness of annual increases already noted in consumer debt generally has been particularly apparent in instalment credit. Most of the rise since 1951 occurred in the years prior to 1957 when, despite the arrested growth in 1954, instalment debt grew at an annual compound rate of about 25 per cent. In the past two years the rate of increase has been notably lower, averaging less than 4 per cent. Thus, while nearly half of consumer debt was in the form of instalment credit at the end of 1957, the proportion now approximates two fifths.
The third type of consumer credit is personal cash loan. This has become a major component of consumer credit. It started out very slowly in the 1950's and increased in volume until at the present time it represents nearly one half of all the consumer credit in our country. Hence, when you use the chart issued by the superintendent of insurance, probably if one went back to 1951 he would find just a small handful of these finance companies. Today, as I pointed out, there are 77, each of them growing year by year.
It is interesting to know that more than half of the non-farm family units have no consumer debt whatsoever, and one third of these do have liquid cash assets in excess of the amount of their own indebtedness. So that when you look at the whole picture it is not quite so bad as it seems. Assuming that this is really becoming a social change of our day I should like to quote the Radcliffe committee of the United Kingdom which aptly summed up the role of consumer credit in the following terms:
While he (the purchaser) escapes the necessity of saving in advance of his purchases, and draws on the savings of others to finance his investment, the act of repayment restores those savings for other uses, and there remains in the hands of consumers, after the discharge of their obligations, a stock of goods that may be presumed to make as real a contribution to the amenities of life as any other form of investment.
That would appear to indicate that the money being loaned out across the country by these finance companies is in its own way doing good in that it is keeping a substantially growing amount of money in circulation which keeps up the level of consumer purchases and, in its own fashion, contributes to the general buoyancy of our economy.
I wish to quote from a pamphlet called "Facts about consumer loans" prepared by the Househould Finance Corporation which company has been in business in Canada since 1927. The pamphlet points out:
The need for satisfactory sources of small sum loans to wage earners and consumers has only developed in Canada during comparatively recent years, with the change from an agrarian to an industrial economy and the consequent shift of

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population from rural to urban area. The resulting dependence of a growing number of people on cash income rather than on the physical products of their own hands, has produced this need. Early laws did not protect borrowers, and many people needing small loans were victimized by unscrupulous lenders charging exorbitant rates.
This condition did not develop as soon in Canada as in the United States, where intensive studies of the problem commenced in 1908. Most active in this field was the Russell Sage foundation, a philanthropic body dedicated to the improvement of social and living conditions.
Studies by the foundation showed that laws limiting interest on all loans regardless of size, were inadequate as far as small loans were concerned, since they only prevented small loans being made legally, and drove people into the hands of the loan sharks. It was also apparent from experiments with the operation of philanthropic lending agencies that the need for small loans could not be met in this manner. The foundation concluded that the only answer was to pass laws which would provide small loan rates low enough to protect borrowers, but high enough to attract sufficient capital to the business to meet the public need. Only by doing this could the borrower be protected.
The foundation received the support of legal lenders, among them Household Finance, and by 1917 the first uniform small loan law had been passed in several states. Since then improved versions of this law have been passed in the majority of states.
In Canada by 1936, it was apparent that a small loan law was necessary, for here, as had happened in the United States the high rate lenders were plying their trade. Realization of this condition led to the passage of the Small Loans Act in 1939-
There was a reason and purpose for these companies coming into existence. The experience here in Canada clearly points to the fact that people were being stung by unethical and unscrupulous operators. The change in our whole economic set-up, the movement of the population from rural to urban centres, higher wage rates, higher employment and the consequent greater amount of cash available to working people led these companies into a field which investigation establishes was clearly needed. Accordingly I cannot agree with the hon. member for Assiniboia when he says that we would be doing the public of Canada a service by accepting the hon. member's proposed bill at face value realizing the constitutional anomalies that were already pointed out in this debate and realizing the conflict between this bill and the existing Small Loans Act even at this level leaving out the provinces entirely.
Before accepting such a measure I feel we should conduct a full and thorough investigation. With that in mind I feel that a more intelligent decision could be reached if all the evidence were placed before the banking and commerce committee. We should take into consideration the fact that the present act has remained relatively unchanged since
[Mr. Chown.f
1936. From the evidence obtained and the witnesses heard we could come to a sober conclusion as a result of having another and very close look at this whole general problem.
In the meantime, it would be difficult for me to support this bill. I do not know how my hon. friend arrived at 12 per cent as a figure for the maximum interest rate. It appears as though he has simply taken the present allowable maximum of 2 per cent per month, chopped it in half and reduced it to 1 per cent and said, "That will do because that is what my friends in the cooperatives and credit unions are charging, and that seems to be a fairly reasonable interest rate".
It is important to remember that those in co-operatives and credit union societies are not coping with such a broad area of risk where you have thousands of small loans in the amount of $200 and $300 apiece thinly spread among hundreds of thousands of people all of which loans have to be serviced, checked and rechecked and pursued when they are in default.
When a loan is in default the lending institution must decide whether it is advisable in terms of the possibility of collection to pursue the account through legal processes. Even if the money is collectible the institution must determine whether or not to pursue it through legal processes and face the consequences of bad public relations.
My hope is that they will find that recourse through the courts, or by way of chattel mortgage through a bailiff and a seizure is an unprofitable move from the standpoint of their general public relations because they should know better than to become involved in that type of situation in the first place. In other words, they have to take a very responsible attitude toward each risk they accept and when a poor risk is discovered they should reflect on the fact that there was bad judgment on their own part before they incur the poor public relations that will follow if they pursue the account through legal processes.
The philosophy that the customer is always right is more applicable to finance companies than to retail stores. No human being can sit back and be happy over the dire results of playing along with a poor risk, and least of all a finance company. I think finance companies are charged with a very grave responsibility in this regard, a responsibility to tell the public the true story of the interest that is being charged, to state with courage the fact that 2 per cent per month means 24 per cent per year, and to look with caution and with care, into the

background of people whom they are servicing and to weigh up the consequences of a default by a person through loss of employment or disaster in the family or any other cause.
If finance companies do not accede to the charge made against them, and accept this very grave and heavy responsibility, then the time will come when they will face the possibility that public clamour will rise to the point where some action will have to be taken, both at the federal and provincial levels, to police those corporations with even greater care than they are policed at the present time.


Jean-Paul Deschatelets: Will the hon. member permit a question? Does he have any figures showing losses resulting from recent loans by finance companies?


Gordon Campbell Chown: I have not that information before me. I have already pointed out to the house that 14 of those listed in the annual report of the superintendent of insurance actually showed a year end loss, no profit whatsoever; 24 had a profit of less than $10,000; and nine had a profit of less than $20,000, which amounts to a total of-


The Acting Speaker (Mr. Rea):: Order. I am sorry to interrupt the hon. member but I am advised that his time has expired.
(Translation):


Mr. Alfred Belzile (Maiapedia-Maiane):: Mr. Speaker, my remarks on this matter will be very brief, as I merely wish to support the principle of Bill C-3, even if I do not fully agree with its terms.
Bill C-3 will, if passed, decree that the maximum interest rate that may be charged by companies or loan institutions be set at 12 per cent.
Of course, Mr. Speaker, as the mover of the bill is none other than the hon. member for Assiniboia (Mr. Argue), who is also leader of a party with socialist tendencies, and who, at least in theory, claims to be able to provide our country with more favourable legislation in the economic field, it is obvious that, in this case, we might have expected something more spectacular.
My purpose in speaking at this time is to submit to the house and to defend the position of the working classes, of the small wage earners.
However, I am not of those who advocate the principle of lending money without interest.
On the contrary, I recognize that if borrowed money is useful to the borrower, it should provide a return to the lender.
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I think that if I rent an apartment, a car, or some other article I have to pay something for the wear and tear of the merchandise or premises.
I must admit that credit unions and chartered banks are charging reasonable interest rates in this field and are rendering a great service to their customers.
Unfortunately we cannot say as much with regard to other loan companies regularly established on the market, some of which advertise on television, or on the radio, claiming that they are ready to give tremendous service to people by advancing them the money they need.
First of all, let it be clearly understood that I have nothing to reproach, either directly or indirectly to the management or employees of those companies. Most of them are very honest people, working for modest salaries. Yet, I would state categorically that those companies are doing a disservice to people, in the majority of cases where our fellow-citizens deal with them.
The interest rates charged on the full amount of the loan, or on any outstanding balance for the purchase of an article, on the basis sometimes of a rate of 9 per cent, and even more in some instances, on the total amount, and for the whole period of repayment on purchases paid by monthly instalments, amount to twice the interest rate provided in the contract.
Mr. Speaker, as a member of parliament, I am often visited by some constituents of mine who come and tell me about their financial difficulties. Most of them, after we have discussed their financial troubles, fish out of their pockets what is known in our province as a finance contract. They have borrowed money from lending institutions whose interest rates are exorbitant. Those companies, I can well appreciate, are probably taking greater risks than do our credit unions and our charter banks, but a man would be better off in being refused a loan at a reasonable rate of interest, if it would be too much of a burden to him, than to be granted one at a rate of interest he cannot affort to pay.
Toward the end of 1959, the Bank of Canada had instructed all chartered banks to restrict their credit facilities. And, of course, as a consequence, chartered banks had to curtail loans which they normally grant to their usual borrowers. However, for reasons unknown to me, no restrictions at all were imposed by the Bank of Canada on the companies T have now in mind, with the result



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many patrons no longer applied to banks and credit unions and turned to these lending companies which charge higher rates of interest. Consequently low wage earners have had to pay more in interest for money they had borrowed and which, in certain cases, they could have done without.
Mr. Speaker, I appreciate the services rendered by such companies to people buying cars, furniture and so on. However 1 feel that in proportion to the service rendered, the interest rates charged are far too high.
As I have said, I admit that in some instances lending companies have operated at a loss. In fact the previous speaker mentioned that 14 companies had run into deficits.
Mr. Speaker, it goes without saying that I do not want to suggest that the financial reports of those companies might be doctored. But I wonder whether figures are not somewhat like music and whether it is not possible to make them give off various sounds.
In any case, I wonder how our caisses populates, making loans at 6 and 5 per cent interest in some instances, can manage to accumulate reserves and lend money at rates much lower than those charged by these lending institutions? How is it that in every town and city of every province in this country chartered banks can lend money at reasonable rates and get along, as far as I know, while other lending companies charging twice the same rates are showing a deficit?
Mr. Speaker, it is without any trace of bitterness that I sought to express my humble opinion in this debate about financing and money in Canada.
I happen to come from an area which is rather average, if not downright poor and, as I was saying earlier, I have in many instances witnessed the dire predicament of some of my fellow citizens who had been lured by credit or loan facilities at very heavy rates of interest.
Mr. Speaker, 1 am happy to find that this government is taking action in the sense I have just suggested, as evidenced by the Small Loans Act passed before the Christmas recess. I am sure that this measure will greatly benefit small businesses and provide a reasonable interest rate. I sincerely hope it will be followed by other legislation enabling Canadians in need of credit to secure loans at reasonable rates of interest.
(Text):
Mr. R. J. McCleave (Halifax):: Mr. Speaker, my first thought on this subject is one of 
some surprise that the official opposition has in effect bowed to the claims of those who claim they are the effective opposition in presenting measures of this sort. My second thought is to express some pleasure that it is again possible to debate a measure which is so important and which should be very carefully considered before parliament takes action on the proposal of the hon. member for Assiniboia (Mr. Argue).
In my contribution to the debate, Mr. Speaker-and I hope I will be reasonably short-I should like to present some figures which would suggest that if we adopted this measure the small loans companies of Canada would immediately disappear from the landscape because they would all be forced out of business by bankruptcy. To this I have no particular objection. Fortunately I have never had to use their services but it still is a fact that we should consider that if we were to give effect to this measure it would mean the disappearance of the loan companies.
The reason I say that is that according to figures compiled by one of these companies the costs of operating their services amount to about 13.3 per cent of the average outstanding on loans. The hon. member for Assiniboia proposes that the effective rate of interest should be 12 per cent and it is apparent on the face of it that 12 per cent is less than 13 per cent. I am not going to vouch for the accuracy of these figures. They are but projections and would have to be carefully examined in a committee. Notwithstanding whether or not they are correct, it is still an assertion by one company which has compiled these figures that if the effective rate of interest was set at 12 per cent the loan companies would immediately suffer losses.


Murdo William Martin: Will the hon. member permit a question?


Robert Jardine McCleave: Yes.


Murdo William Martin: If, as he states, the figure is 13 per cent for the operation of such businesses, can I assume that the hon. member is in favour of operating inefficient businesses?


Robert Jardine McCleave: Mr. Speaker, the question is simple but I am afraid the answer will have to be somewhat complex. The trouble is that the people who have to use the services of small loans companies are the unfortunates of the world and the unfortunates of the world do not always find it easy to obtain the money they need on simple terms. They are the people who go to the

small loans companies or loan sharks, and may I say I have no objection to the use of that term. If the money is to be repaid they are the people who have to be hounded by the collectors who work for the loan companies and by their letter writers, and all this adds up to cost. Unfortunately, it must be paid for out of the business. I certainly am not in favour of this business. Most of the people are honest and do repay the money in time, but still the collection of money from these other people is a very expensive item and it adds to the cost of operation of these companies.
I think that is a point that has to be faced squarely. Assuming that the cost of operation is that high-I would think that would have to be very carefully examined because, as I have said, I am only passing on the information I have received from one of these companies-and assuming these companies did disappear, the inevitable result would be that the people who needed the money and who had gone to these loan companies before would have to find their money from other sources. I would suggest they would find that money, Mr. Speaker, by going to bootleg sources. If a man is desperate, he will pay almost anything to obtain what he wants.
Those are the facts, and they cannot be ignored. This is not the best of all possible worlds. Some of these people are the victims of their own circumstances. They do not enjoy a first class bank rating, for example, so many of them would find difficulty in borrowing money from credit unions. In fact, Mr. Speaker, I am looking at the number of accounts in Canada under the small loans operations for a year and I find there are approximately one million. There are only 213,000 Canadians who have loans of more than $1,100. I am looking at the figures which were compiled for, and set forth in the annual report of the department of insurance for 1958. These are precisely small loans, Mr. Speaker, when people have to borrow up to $1,100.


Jean-Paul Deschatelets: Would my hon. friend permit a question?


Robert Jardine McCleave: Yes, indeed.


Jean-Paul Deschatelets: Do those figures to which the hon. member referred include the financing of automobiles?


Robert Jardine McCleave: I am not sure, Mr. Speaker, I know these figures cover the operations of all licensed lenders in Canada and I presume they would include the financing of automobiles. However, I cannot give a categorical answer.
May I suggest, sir, that there are two types of people who go to the small loans companies
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for loans at interest rates which go up to 24 per cent. The first group would be those who are misled by the advertising or who are ignorant of the actual rates they are paying and so go to the premises of the loan companies. The second group would be those who are beyond what I call the twilight zone of basic credit. I mean they have not the standing which would enable them to borrow money at from 6 per cent to 12 per cent from the chartered banks or any credit unions or any of the other reputable sources. The remedy, apart from the bill we are considering, could include education for the former, that is to clearly show the effective rates of interest one pays by going to finance companies. The remedy for the latter group who are forced to go to high interest sources for their money is a very difficult problem. I suggest that this bill cannot be the answer. Before I conclude my remarks, perhaps I may be allowed to present my own solution to this social problem which is an extremely important problem.
First, may I make it clear that the remarks made by the hon. member for Davenport (Mr. Morton), who referred to money under certain circumstances as being a commodity, are very true. People have to get bread and butter for their living and a roof for themselves and their families. Under special circumstances they may have to also obtain money for the things they need. Money, therefore, is a commodity that has to be sought on a market in which the factors of supply and demand exist. A person's credit rating will determine how much money can be given. The lending of money, under certain circumstances, can be a life raft to a man. Under other circumstances, it can shackle him and drag him down into a river of debt in which he forages for himself forever among the loan sharks. One pretty method they have for dragging in their clientele is the offer of consolidation. We hear that so frequently. Do not be nagged by a dozen creditors, come in and consolidate your debt. Then, of course, you have one big nag instead of a dozen small nags a month. When the consolidation does not quite work out, the interest that is owing and overdue mysteriously becomes part of the principal. The debt is rewritten, and so the story goes and a small debt becomes a very large debt which can hang like a millstone about a person's neck for all his working days.
Recently I had occasion to examine an example of refinancing in my own city. A man had decided to consolidate two debts on which he was paying interest at 6 per cent, amounting to about $2,500. He secured a second mortgage of $5,200 at 8 per cent, but unfortunately there was a bonus provision

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so he actually received two thirds of that $5,200 or about $3,500. He was paying a nominal rate of interest of 8 per cent, but the effective rate of interest when all this was done was 16 per cent, and possibly much greater. Obviously instead of two short term worries which were causing great hardship but which would have been solved in a reasonable length of time, this man adopted a long drawn out process in which he is paying less per month but still exchanging a short term debt for a long term debt under very unattractive circumstances indeed. Perhaps this man could never have solved the problem by the traditional methods. Perhaps no bank would have advanced him the money or he could never have remortgaged with the traditional mortgage companies. Perhaps some method of educating him to the use of this money would have served its purpose and saved this man from decades-I am sure it will be decades-of misery.
In conclusion, Mr. Speaker, perhaps I could mention my own solution to this problem if I am not straying too far from the subject matter under discussion. It seems to me that circumstances differ when people borrow money. What is usury for one man may very well under the circumstances be life saving and the proper thing to do for another. The person who is a victim under one set of circumstances comes out very well indeed under another set of circumstances, even though the amounts borrowed are the same and the terms of the payment are the same. In short, a person who goes into a contract to buy money and to pay a large rate of interest on it may do so knowing full well the risk he is taking, and accepting that risk knowing that it is for his benefit. On the other hand, he may enter into that contract knowing that he is the victim of his own circumstances, that he is helpless, that he must accept almost any terms that are thrown at him.
It seems to me then that the best approach the law could make to help such people would be this. I am convinced that they should be helped; and if all else failed, I would certainly support this bill and hope that it could be given proper study. Then it seems to me that there should be a discretion in the law-an act to deal with usury, to make it an offence-so to contrive it that all circumstances could be brought forward and a judge or a judge and jury could determine in any one particular case whether there was in fact usury and unfair practice against the borrower. This could be done at the instance of the borrower himself so that if he felt aggrieved he would have his remedy. With policing done by the person himself

instead of the more impersonal policing of society which may not work out in this particular bill, I think we would have an answer.


Mr. William Skoreyko (Edmonion East):: Mr. Speaker, once again I rise in my place to take part in a debate in which I participated some time ago. I cannot help once again congratulating the hon. member who proposed this bill because I feel that his intentions in this regard were good. I am sure that he means no ill by introducing it. At the same time I am not too sure in my own mind that this bill is going to achieve what the hon. member has in mind.
Much as I am concerned with the possible hardship on the people of Canada by having to pay high interest rates I am more concerned with the thought that they must be able to continue to borrow money. No matter how or where he wishes to borrow the money he needs, and no matter in what circumstances he may have to pay it back, the decision in this regard should be that of the borrower. Today we have an alternative.
It is hardly fair to suggest that if a person has been refused a loan by a bank, he should not be able to borrow money at all. The alternative is the small loans companies. It is true that their interest rates are higher than are bank interest rates but I suggest that this is where the risk factor comes into the picture. If interest is the reward for allowing someone else to use your money, some part at least must be the lender's reward for taking the risk that he may lose his money.
On an individual transaction the amount of reward by way of interest will set the limit on the amount of risk a lender will take. The one thing that bothers me in this bill is that the rate of interest will be set at 12 percent. I am afraid that this figure may fall short of the incentive that may be needed in order to induce lenders to lend money to people in certain categories. I refer specifically to an individual case of which I know in the city of Edmonton, that of a man who was refused a normal bank loan. This individual resorted to the higher interest institution. He was able to get his money there at a time when the interest rate was less important than was the fact of being able to borrow the money. Today that man is a successful businessman. I do not think that man would be in the desirable position in which he is today had he not been able to borrow this money, even at an interest rate which was higher, so as to be able to establish himself.
Risk, however, has an over-all effect on the interest rate covering any particular class of borrowing. There are always some losses. These losses in the money lending business

are part of the cost of running that business. They are just as much an expense as are office help, office rent, the cost of light and water or the maintenance of the office itself. As part of the expenses of the business they, must be included in the selling price of the product. Every borrower therefore must pay part of the cost of losses in his class since it is reflected in the price of the commodity he wishes to borrow. This means that interest will go up or down depending on the degree of losses on that particular class of loan.
Like governments and businesses all over the world, the Canadian consumer also depends on cash loans in order to tide him over emergencies or rough spots. This is a form of service which he has come to expect in much the same way as he expects schools for his children, electricity for his home or life insurance for the protection of his family. The Canadian consumer is willing to pay for these advantages in the form of interest and he expects them to be made available to him.
One important point which many people fail to recognize is that the costs of conducting a credit business are dictated by the size of each transaction. As an example, an institution which could profitably make loans of say $12,000 at 6 per cent interest per annum would find it extremely difficult, I am sure, to make sufficient $200 loans in order to take up that $12,000 at 6 per cent. This conclusion follows because it would require 60 times the amount of work. Obviously then the smaller loans must require a higher rate of interest.
The hon. member for Assiniboia (Mr. Argue) made reference to a banking and commerce committee which sat some time in the past. I was able to obtain some information on the banking and commerce committee which sat in the House of Commons in 1938, and whose report formed the basis for the Small Loans Act. They recognized this cost factor in making smaller loans and expressed this recognition in the following words:
Quite obviously the purchase of a block of 12-year Canadian government bonds requires little expenditure for investigation and none for supervision; investments in 50 farm mortgages for varied periods entail considerable cost both for investigation and supervision; while the investigation of 1,000 applications to effect loans to 500 people for a few months with meticulous supervision becomes expensive business when expressed as a percentage rate of $100 on a monthly basis.
This quotation emphasizes another important cost factor in connection with consumer loans and interest, the cost of investigating the considerable number of applications which do not result in loans being made. This cost is considerable, as the investigation
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of applications which do not result in loans is in many cases as expensive as for those applications which do result in loans. The parliamentary committee referred to in the statement I have just made expressed its main objective as follows:
Throughout its inquiry your committee's objective has been to secure the best procurable rate for the borrower.
It is evident from the exhaustive nature of of the 1956 committee's examination that they had the same objective in view. While keeping in mind that the rate should be set as low as possible in the interests of borrowers, the original committee recognized that, for the same reason, it must also be high enough so that lenders would be able to continue to provide this service. This point is emphasized by the experience in certain of the United States. When changes in the laws reduced rates below the level necessary to produce a fair return to the lenders the supply of licensed capital rapidly decreased. The result was a return of high rate, illegal loans in considerable volume.
In the United States, where small loans legislation was first passed in 1917, a great deal of study has been given to the subject of consumer borrowing by legislative committees. In Great Britain, however, the small loans laws and interest laws are considerably different. The law is not as clear-cut as it is in Canada and the United States. If there is a complaint that the rate in a particular loan transaction is too high, and it is not over 4 per cent per month, the onus is on the borrower to show that the rate is unconscionable. If the rate is more than 4 per cent per month the lender must satisfy the court that it is justified.
During the legislative hearings in 1956 in Great Britain an executive of a British loan company told the banking and commerce committee at that time that in practice most consumer loans are made at a rate of approximately 60 to 70 per cent per annum and that, furthermore, there is no restriction as to the kind of security that may be taken by lenders.
I want to say again that I firmly believe the intention of the hon. member for Assiniboia (Mr. Argue) is nothing but sincere. However, I do hope that he will give some consideration to allowing some body to study the merits of this bill so that there will be some means of determining a right and just form of interest to be set for small loans in the future. On the grounds that I have put forth this evening, Mr. Speaker, I am afraid that if the bill should come to a vote I would have to vote against it.

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Mr. Terry Nugent (Edmonton-Strathcona):: Mr. Speaker, it is a great pleasure to follow my confrere the hon. member Edmonton East (Mr. Skoreyko). It is the first time in this house that I have had a chance to take up right where he left off.
I would like to carry on, if I may, from the last part of his speech; that is, the effectiveness of this bill and whether we should pass it. I suggest that one facet that has perhaps not received enough consideration today is this: How willing are we to interfere with the rights and privileges of the citizens of this country?
Each law that we pass, no matter what it is, may be called in some instances another interference with the freedom of the citizens of this country. Approached in that manner, I suggest that the particular objectives to be gained by this interference must be very carefully studied and weighed alongside the possible harmful effects it may have.
The objective aimed at here by the hon. member who introduced this bill is the protection of the citizens of this country from excessive interest rates. On the other side of the scale I think we have seen clearly that the danger to be reckoned with is the possibility that those we seek to protect may not be able to borrow money at all if we set up a too high and artificial value.
Mr. Speaker, may I call it six o'clock.
At six o'clock the house took recess.


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AFTER RECESS

The house resumed at 8 p.m.
Terence James (Terry) Nugent: Mr. Speaker, just before the supper break I had mentioned that in considering whether this bill should be voted for or against we had to consider whether it would do more harm than good and consideration of that question, I suggest, requires that we look at the present situation.
The purpose of the bill we are considering this evening is to place on interest rates a ceiling of 1 per cent a month or 12 per cent per annum. I suggest that to look at it properly we should have some real idea whether in this country today anyone is forced to pay more than that a month and, in so far as we can, we should determine what are the factors or circumstances that have caused people to pay more than that rate.
Before proceeding I should say it is not my own personal protection I would necessarily be seeking if I were to speak in favour of this bill. I believe it is fairly well known that while hon. members of this house are

not overpaid they happen to have a credit rating unsurpassed in the country so that we can all go into debt at a much lower rate of interest. Not all people in this country are so blessed. Actually some of my friends and relatives and especially many of those who come to me for help in my legal office find themselves stuck with bills that cost them a great deal in excess of normal bank rates, even more than the bank charges me on my overdrafts, I must add.
A proper consideration of what people are paying by way of interest must in my opinion take into account some of the factors which influence interest rates. Since interest rates are determined, on one side at least, by the willingness of people who have money to lend it to others who want it, it is perhaps a good idea to start with some of those considerations which lead people with money to lend into the lending business. What are some of the factors which induce a man to invest his money in a bank, business or loan company rather than into a service station, garage, saw mill or grocery store? Obviously people enter the business of lending money for the same reason they enter any other business. It is an investment. People invest their money to make a profit.
I suggest that a good starting point in considering some of the possible effects of the bill before us is to examine some of the problems confronting those who go into the finance business. Every business has its own financial problems, even the money lending business. Every business must contend with a few fundamental expenses and must undertake some risks and uncertainties. These are some of the basic factors of the matter of going into a business with the idea of making a profit.
I suggest that financial houses of every nature and kind whatsoever face the same business problems that are faced by our local garage men and corner grocers. To do business you must get business. You must attract customers. You must have something to sell. You must convince the public that you are the person with whom to do business. And so, even in the lending business, it is automatic that you will have one overhead expense, the cost of financing your advertising. It may be that your advertising will cost you in direct proportion to the competition in the field, to the type of audience you must reach and to the type of advertising medium that is necessary to reach that audience which is most likely to need to borrow money.
Next, you must figure on the cost of your own money. Most finance people lend other people's money. Because they are so safe, banks are able to obtain money from people

who are interested in saving, the safest possible way in which they can keep their money and earn interest. Banks lend that money. Most people I know are not accustomed to thinking of bank deposits as a source of loans but banks do business with the money which they borrow from investors. Because of their very secure position they are in the happy circumstance of having to pay a very small premium for the use of it. However, there are others who borrow from banks, including finance companies. I suggest we would be most unrealistic if we failed to take into account the legitimate cost to the finance companies of the money they must borrow from the banks.
I suggest also that whether or not they borrow from the banks, if they are financing, entirely depending on their own capital, they must as a cost of their business include the amount of money that that capital could earn in any other business, even at a modest rate of 5 per cent or 6 per cent at which most people can borrow. So that that is an item of cost of at least 5 per cent or 6 per cent as it is for most businesses.
Naturally they require a staff of personnel. They are making loans and therefore they must have bookkeepers and auditors to check their accounts. They must, as all other businesses do in this complex society of ours, have perhaps a little extra staff to keep track of those records, the keeping of which we have of necessity imposed on them over the years, the returns to this and that government department, income tax deductions, unemployment insurance records, and so forth. The cost of overhead in financial institutions, as in all other businesses, is a considerable item which must be paid for by someone.
Since there is not sufficient lending money, and since lending money is a good business only to the extent that you follow sound business practices, it requires good judgment on the part of management in selecting those with whom they will do business. There is, therefore, a good deal of staff work on every application for a loan. It is necessary to know what type of person you are dealing with, to know what security he has, what are the chances of having your money repaid, and perhaps in some instances a case history of the person with whom you are dealing and his record. It may be necessary to check the value of securities and most of those factors which go into determining that perhaps the most important factor of all is the risk you are running in doing your business.
It is in this business of lending money that we really find the risk factor to be all important. It is a straight case of cash being handed to some person. I suggest to you, Mr. Speaker, that just a cursory glance at
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the criminal convictions in this country for any short period of time would indicate that it is not really insulting the Canadian people to suggest that there are some dishonest people among us. In fact, the easier it is to steal money the easier it will be to find the hardest working people among our criminal element. Since the easiest thing in the world to steal and to make use of is money, the financial institutions of all kinds are likely to find that attracted to the market are criminals who calculate that the easiest part of the job is where there is no risk of getting rid of the money when you get it.
Therefore, of necessity investigation must amount to a pretty healthy, shall I say, insurance item in this regard. The financial institutions have to be sure first of all in so far as they can that they are dealing with honest men. But this is really only a start. Even if the borrower is honest, such a factor as his general security rating must be taken into account. Does he have a house and furniture? Does he have a steady job? Has he been long in the community? Does he own a car? How much are his debts? What is the worth of all this?
Next is the extent of the loan, the period for which he wishes to borrow the money. If he looks too good in one way, then why has he not gone to an institution which will charge him less for the money? This in itself could appear suspicious enough to warrant further investigation. All of these questions are most pertinent, because, of course, every mistake that the financial institution makes in this regard means a loss, not just of the interest that is charged for advancing the money but on the capital advance itself.
Now, as I said, I am considering some of the cost factors that people in the business of lending money have to take account of and since those who borrow must of necessity pay all the costs that are incidental to running that business and provide a profit to the man himself before he goes into it, we have in those considerations that I have enumerated some very specific items that are brought to bear. Certainly it cannot be expected that a man who has to build his own house and who has paid for practically all of it and who owes on a $10,000 house only $2,000, who has a car that he has paid cash for and a house full of furniture on which he owes nothing, a steady job that he has held for 10 years or 15 years, and a couple of promotions in between, is going to borrow money, taking into consideration the risk factors, at the same price as a recent high school graduate who perhaps may have married too young, taken a job with a new company in a new location, who does not

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own his house and has not had time even to acquire furniture free of debt; who does not own a car but merely has loads of responsibilities and nothing to tie them to that location, and in fact nothing that can probably make them move faster than an overbearing load of debt.
I suggest, therefore, that bearing all this in mind we must find this risk factor of such considerable importance that taking into account all the other costs of running this finance business and allowing first your bank interest as a capital cost of running the business we have an awful lot to squeeze in to make the 5 per cent or 6 per cent that stands between that cost of the capital and that return which this bill suggests should be the maximum in any event for any loan.
But I suggest to my colleagues in this house that we have only begun to scratch the surface when we have considered risk only or the cost of running the business. I suggest that the cost is only one item. Risk is another item. There must also be the attractiveness of the business itself if we are going to induce anyone to lend money or come into the money lending business at all. Therefore, I suggest we must consider what competition there is for the money. Certainly we are old enough and have been around long enough to know that the price you pay for anything may be considerably influenced by the supply of that item at hand. If there are too many automobiles on the local car sales lot in a small town where in fact there are only 40 potential customers and 200 cars, we are going to have what would be called a buyers' market, and it is the same story with money.
In certain circumstances at certain times and in certain localities it may very well be that every basic industry is earning very good profit. It may be that the local retailers, the local service businesses, are earning a return on their capital much in excess of the 12 per cent suggested by the bill and that in these localities at these times and under these circumstances there would not be a single person in the money lending business. I suggest that business conditions may never be quite so good that there is no one in the money lending business but certainly we have seen periods when business generally has been so good that for a period of two or three or perhaps more years people have been able to invest in any number of businesses without the degree of risk that we find in the finance business and with a much better assurance of a higher return on their investment.

I suggest that the basic problem today is that we have not given enough consideration to the fact that over the years we have seen built up in this country so many finance companies, so many lending institutions, so many places where one can get money at interest rates so much in excess of 12 per cent per annum. There must be a reason for the growth of these businesses and there must be a reason for interest rates in excess of 12 per cent.
Obviously the demand is there. We happen to have in this country such a high percentage of people who for various reasons must have money that they are willing to pay more than 12 per cent, and I am suggesting that this is where we run into our major difficulty. I say there are various reasons. I have mentioned the example of the young couple just starting out. The young husband must have a few necessities to furnish a home for his young bride and perhaps he is young and foolish as well as desperate enough to pay much more by way of interest. But between that type of case and our solid businessmen we have any number of independent-minded Canadian citizens who have great faith in their own ability, some of whom, like the one mentioned by the hon. member for Edmonton East (Mr. Skoreyko) earlier today, happen to have a greater knowledge of the business in which they wish to become engaged and its opportunities than those in the loan business. All the way down the scale, whether it is a matter of pressing needs of the moment or the vision of a man who is going places in business, each one of these people has for his own reasons, for his own needs and desires and to attain his own ends, decided to pay more than 12 per cent.
When I started my few words on this subject I suggested that every law we introduce here must by its very nature be a curtailment to some extent of the freedoms that we all enjoy. Here is my principal fear with regard to this bill, that up to this time and especially in these days of world tension and a feeling of insecurity generally we have seen and are seeing more and more an attitude of looking to the government to do things for us, to take care of us, to make sure that we do not by our own foolishness get into too hot water and of looking to the government to pull us out of the hot water when we do get into it.
I am suggesting that this is not the spirit that we must foster. This is not the spirit that has made our country a rapidly progressing one. This is not the spirit that is needed for democracy itself. I suggest that those who feel most strongly a necessity for us to mollycoddle people to this extent would really,

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whether or not they recognize it in their hearts, be much happier in some country behind the iron curtain where most of their worries would be taken care of for them.
As a lawyer I have had much experience of the hardship suffered by those who have been adversely affected by high interest rates, but my principal objection to the bill is that we seem to forget completely that it is not a hardship to have to stand on your own feet, that it is very important for each and all of us and for this country to foster the spirit of the man who says: I will take my own risks, I will make my own way, I reserve the right to be a damn fool in this way if I want to but I want my freedom.


Murdo William Martin: Mr. Speaker, when the hon. member for Halifax (Mr. Mc-Cleave) spoke on the bill this afternoon he made note of the lack of interest in it on the part of the official opposition.


Jean-Paul Deschatelets: The debate is not finished yet.


Murdo William Martin: I do not know about hon. Liberal gentlemen to my left. Just over a week ago they met together to develop a new policy and certainly with regard to high interest rates their policy apparently is silence. But I must say that I believe the hon. member for Halifax must have had his tongue in his cheek if he implied that the members of this party are not interested in this bill.
I believe he first came to the house at the same time as I did and that this is the fifth session we have both attended. This is the fifth time that members of this party have introduced this bill in the house during that period. In that time we have heard many speeches, some good, some bad. We have heard many pious platitudes but we have yet to see the house get around to voting on the bill. I would suggest to the hon. member that opposition members are becoming, so far as this bill is concerned, a little bit like people across the country. They are getting sick and tired of all talk and no action.
I have spoken on this bill in previous sessions. I have put the case for the bill before the house as have other hon. members in this group. It is my intention tonight to devote the time at my disposal to rebuttal, which I believe is in the interests of proper debate, of some of the points made by hon. members on the government side. I am not one of those who maintain that all Tories are bad. Unfortunately only the majority of them are.
For example, Mr. Speaker, we heard a very good and forthright speech by the hon. member for Matapedia-Matane (Mr. Belzile). I must say I was delighted to see a member
on the government side have the courage to come out and say that only two years ago when this same government was in power it appeared that instructions had gone out from the Bank of Canada to the chartered banks to cut down on small loans so that people who were in need of such loans would have to go to these finance companies. That is the kind of thing we should hear more of from government members. It should not always be left to the opposition to bring out points of this kind. I was delighted to see that the hon. member had the courage to stand up and disagree with the Minister of Finance (Mr. Fleming) who claimed the very opposite at the time this point was brought up by members of the opposition.
It is my opinion, Mr. Speaker, and I think it is the opinion of many others in this country, that the duty of the Bank of Canada should be to serve the interests of the people of Canada and not be used in this way for the purposes of the moneylenders. This amounts almost to a monstrous conspiracy, Mr. Speaker, a conspiracy to gouge the public, to gouge the unwise, those people who are ill equipped to defend themselves.
I regret, Mr. Speaker, that toward the end of his speech the hon. member tended to weaken what I thought was an otherwise excellent speech by trying to make the point that action taken by the government at this session is going to go some way toward correcting this situation. Regardless of the merits of any action taken by this government at this session, it is not going to deal with the problem with which we are dealing in this debate. It may help in other fields, but it certainly will not help in this one.
Then, we had the hon. member for Davenport (Mr. Morton), for whom I have great personal respect, and his speech in this debate was mostly good. However, I thought he tended to treat the situation rather lightly. He tended to feel that the hon. member for Assiniboia (Mr. Argue), who introduced this bill, was slightly unfair. He felt the remarks of the hon. member for Assiniboia could be construed as making a charge that was applicable to all the people in the money lending field, whereas it was only the greedy moneylenders who should be charged with gouging the public. I believe the hon. member completely missed the point, Mr. Speaker. These greedy moneylenders, as he calls them, are operating within the law. This bill is designed to change that law so they will no longer be able to operate in that fashion.
I would suggest, that the innocent people in the money lending field to whom the hon. member referred should welcome legislation of this kind because they are, in fact, tarred

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with the same brush. The hon. member for Davenport also tried to make a case for the charges made by these companies over and above the interest charges. I should like to know what the interest charge is for if it is not to pay the administrative costs of these companies. I am not familiar with the operations of finance companies because I have never worked for one and I have never dealt with one. However, I am quite familiar with the operations of credit unions. I know that the maximum of 12 per cent which is charged by credit unions-in fact, in many cases it is much less than that-looks after all the costs of operation of the credit unions. This 12 per cent is to look after the costs and to pay interest to the people who invest in credit unions, as well as to set aside a sum every year to take care of uncollectible debts.


Mr. Speakman:: Do they pay any income taxes?


Murdo William Martin: If the hon. member is not familiar with the operations of credit unions in this day and age I would advise him to join one so he could ascertain how they operate. The income tax is paid by the individual who draws whatever interest he draws from that credit union. This goes in as income, and the tax is paid in that manner.
The hon. member for Davenport suggested this was not something for which we could have a simple answer and it should be given a lot of study. I would suggest that after five sessions, and after a full day of debate in each one of those sessions, it is about time we had a vote on the bill rather than further study of the subject matter.
Then, of course, Mr. Speaker, we had the hon. member for Winnipeg South (Mr. Chown), who started off his remarks by expressing sympathy for the people who were caught in the toils of these finance sharks or moneylenders. I think it is quite true to say that sympathy expressed by any hon. member in this house is not going to make the payments on the washing machine for the people who are caught in these traps. After expressing his sympathy, the hon. member went on as usual to defend the finance companies. I should like to compliment the hon. member because he had the honesty to come out and defend what he believes. It is obvious to me that he represents the majority of the members on the government side because if he did not they would have done something about this in the last five years.
Then the hon. member went on to talk about the noble role that finance companies play in our society. They make money available to people who cannot get it elsewhere. I would suggest, as was pointed out by the hon.
[Mr. Martin (Timmins).1
member for Matapedia-Matane, that one of the reasons they cannot get money elsewhere is that this service is denied through the proper channels. The hon. member went on to say that it was not really too bad for these companies to gouge the public as long as they paid income tax. In my opinion, this was the worst defence for action of this kind. One needs to go only a step further to condone Chicago gangsterism as long as the gangsters pay taxes.
The hon. member went on to point out that 14 companies had lost money or were losing money. As the hon. member for Matapedia-Matane suggested, it is very easy to juggle the books in this game and to make a statement that so many companies make so much money. We should consider their costs of promotion, and I do not say advertising, I say promotion. I think there is a distinct difference between the two. I am sure hon. members who have had to fight an election campaign by using the T.V. medium realize that television costs money in this day and age. If you are on television as often as most of these finance companies are, then your costs are going to be very high.
In my opinion the most fantastic defence of all was the statement by the hon. member for Winnipeg South that the finance companies were not really so bad because they provided employment across the country. If ever there were an example of Tory employment, this would be a good one. It is evidently a good thing to employ people across this country to gouge the public the way the finance companies have, as has been put on the record on more than one occasion.
I wonder if the hon. member realizes that one of the major problems facing this government today, the problem of unemployment, is caused to some extent by the fact that the people who are caught in the toils of these finance companies pay 33 cents of every dollar for interest and other charges. Once this money is lost to the purchasing field, a chain reaction is set up. This one third of the purchasing dollar which is siphoned off at this level means there is that much less consumer goods purchased by the consumer. It means the people producing these goods have to be laid off. Furthermore, it means that this government will have to find money to pay unemployment insurance benefits to these people. This sets up a chain reaction. I think if the money these people pay in taxes were tallied up and the employment they provide counted, that would certainly be more than balanced by the disadvantages that accrue from their operations.
The hon. member for Halifax again referred to the cost of operation of some of

these companies, and I do not know where he obtained a figure as high as 13 per cent. He then went on to suggest that maybe the reason for this situation was the high proportion of uncollected debts owing to these companies. As I said, I do not know what the average is of uncollectable debts of the finance companies. I have been told by former managers who worked for them, until they finally became so sick of the whole business that they were compelled to get out of it and get into another field, that the proportion of uncollectable debts is nowhere nearly as high as the public is led to believe. However, I know that in the credit union movement the figure amounts to less than one half of one per cent.
In order to accept the suggestion made by the hon. member that it is because of this high amount of uncollectable debts that the interest and carrying charges are so high in these finance companies, I should like to know the reason for the difference between the uncollected bills of the banks and credit unions and the supposedly uncollected bills of the finance companies. If there is that much difference I would suggest that one of the major reasons is that the public has a respect for the credit unions in this country and for the banks but that the public has no respect for these loan sharks, and certainly they have no reason to have any respect for them.
The hon. member for Edmonton East (Mr. Skoreyko) made one point and unless I misunderstood him I must confess that I was rather shocked. As I understood what he said, in making a similar point he said that the reason for the high cost of these finance companies was the class of people with whom they were dealing. I do not think the people across this country are going to appreciate too greatly that type of remark.
I think of the honest people who have fallen into these traps that we see set every day on television and advertised in the newspapers: "Come in and consolidate". They should say "Come on in and compound your financial problems", not "Come in and consolidate". I am thinking of the many thousands of immigrants who have come to this country and who, before they become accustomed to the financial system here, find themselves almost hopelessly embroiled in the clutches of these finance companies. I am thinking of the people who have turned to these companies in desperate circumstances, the people whom the banks are unable to help. I have had more than one bank manager tell me that many times they would like to grant loans but they are unable to do so because they have instructions otherwise. I do not 90205-6-79
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think it is right or proper for any hon. member to pigeon-hole all these people as a class who deserve what they get because they do not pay their bills.
Most hon. members who have spoken in this debate, both on this occasion and on previous ones, have expressed concern about the problem. However, I would suggest that this problem will never be solved as long as it is legal for financial buzzards to prey on the unwise and unfortunate in this country. The banks must be freed from whatever control it is that prevents them from making small loans to our citizens, when they refuse to grant loans to citizens but will grant loans to the finance companies which, in turn, will lend to the citizens. The banks must be freed from whatever control it is that prevents them from going into this field. The credit unions and the caisses populaires must be nourished and encouraged to take an even greater share than they have taken in this field, and the finance and loan companies that come under condemnation in this bill must be checked. As long as they know that all we are going to do is talk about the matter in this house, they have nothing to fear. As long as they see five sessions in a row when this matter has been discussed and no decision has been arrived at, they have little to fear. I would say that the only way in which to take the first step in solving this problem is to have a vote on this bill.


Mr. W. H. McMillan (Welland):: Mr. Speaker, the hon. member who has just spoken and, I believe, an hon. member on the Conservative side this afternoon referred to the fact that we in the Liberal party have not spoken on this bill. I am in favour of lower interest rates to all sectors of our community, particularly to those in the lower income group who must avail themselves of money from the small loan companies. These rates are extremely high indeed. Our party is in favour of lower interest rates generally. We will vote for the second reading of this bill if it is allowed to come to a vote. However, evidently the government members are ready to talk it out, we shall not have a chance to vote on it and this bill will die this session. This filibuster will kill the bill.
I listened to the remarks of the sponsor of the bill this afternoon; I refer to the hon. member for Assiniboia (Mr. Argue). He described the conditions of people in the small money market. If the conditions are half as bad as he said they are-and I have no reason to doubt his word-I think this matter should be referred to the banking and commerce committee so that they might hear some evidence and send for persons and papers. In that way I think we could come

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to a better understanding of conditions in the small money market. We should like to vote for this bill but I fear that we are not going to get any chance to do so. I should therefore like to move, seconded by the hon. member for Trinity-Conception (Mr. Tucker):
That the bill be not now read the second time, but that the subject matter thereof be referred to the banking and commerce committee for consideration and report.
In my opinion, Mr. Speaker, the government would not be tied by any decision or by any report. The motion does not tie the government to anything. It just empowers the committee to hear evidence in connection with conditions in the money market.


Mr. R. S. MacLellan (Inverness-Richmond):: In rising to speak on the motion for second reading of this bill and the amendment I first of all, along with so many other members who have spoken, offer my congratulations to the hon. member for Assini-boia (Mr. Argue) for introducing this bill today. Most members of the house, whether or not they have spoken on the bill and whatever side they have taken in the debate, have expressed the opinion that this is a matter that should be examined and, above all, is a matter worthy of the concern of the house at this time. I certainly agree that it deserves this attention, in particular since the problems of consumer financing and the questions that revolve around the matter of interest on consumer loans are growing in complexity every day.
Actually the instalment buying system, or the method we now have of distributing goods by virtue of the instalment contract, is a relatively new thing. Only a few years ago credit in the consumer line was much simpler than it is today. If a man wished to buy goods he bought them, charged them to his account, if he had credit at the retailer's, or if not he arranged at a bank or with a friend for the credit to carry him over until he could repay his loan.
This was relatively simple and the credit limits of the borrower, or the purchaser, were well defined. But today we have a situation where oftentimes the term "purchaser" and the term "borrower" are synonymous. A large percentage of our people today who go to a store to buy goods-cars, appliances, all manner of household goods-plan while they are there to arrange for the financing of these goods. The retailer has become not only a purveyor of goods but also a financier for many people.
From my experience as a lawyer doing business with finance companies and people who had done business with finance companies, acceptance corporations and instalment buying generally, it seems to me that

more and more people are relying upon the retailer to provide their financing for them and to decide whether or not the financing system is satisfactory.
It seems to me that too few people bother any more to read the finance contract that they sign. Too few understand the agreement they are entering into, and very few seem to appreciate the rate of interest that is involved in the transaction. As a matter of fact the situation as regards the finance companies which dispense funds by way of loans, such as Household Finance, is not as bad as some aspects of the general instalment financing that is done by department and retail stores and, I think, by the acceptance corporations.
The consumer loan companies, as they are called, are now regulated by the Small Loans Act and except in the case of loans under $300 there is a limit now of 12 per cent on loans up to $1,500. Over $1,500 there is no limit in law to the interest which can be charged. I sincerely believe the latter is a field which should be studied very carefully. I understand that while loans in this bracket are not as numerous as smaller loans- generally speaking the consumer finance companies are set up to handle and prefer the smaller type of loan-at the same time loans over $1,500 are becoming more common and the interest rates on them are certainly considerable.
It seems to me, however, that a bill of this type is not the whole answer to the problem. I support the amendment that the matter should be referred to the banking and commerce committee, because it certainly is not a simple problem. The first thought of the ordinary man in the street, or in this house, for that matter, in considering a bill like this is that 12 per cent is enough interest for anybody. Indeed, that is my first reaction. I am sure that in most cases interest of 12 per cent is enough for anybody. Indeed, in some cases it is far too much. But on the other hand I think we have to acknowledge that there is a danger that the passage of this bill would act to prevent people who need and want credit in certain high risk fields from getting it when they should have it. Indeed a case can be made out that there is a certain area of lending where an interest rate of 12 per cent is not at all excessive.
Interest rates are generally set, of course, by supply and demand on the market. I remember when I first began to practice law in my home province of Nova Scotia the prime mortgage rate was 4 per cent. Some 12 years later it was almost double that. The difference was not in the value of the security, because if anything I think the

security of properties in my part of the province was greater in recent years than formerly. But the difference was that the supply of money for mortgages was not nearly as great in the latter part of the 1950's as it was in the latter part of the 1940's.
Since money was not in such great supply the mortgage companies had to pay to the investor a higher bond yield so he would make his money available to them. When they added to that the cost of administering loans they were able to say with justice that they needed a much higher interest rate in the late 1950's than they required in the 1940's, when the supply of money outran the demand in most cases. Supply and demand affects interest rates; there is no question about that.
Another thing that affects interest rates, of course, is the risk involved in the loan. Where interest is considered as the reward paid to a lender for the use of his money it is obvious that a man is not going to lend money for the same reward, or price, on a dangerous risk as he would on a good risk. It is also obvious that that is the reason why on most mortgage risks the interest rate is much lower than it is on unsecured loans. All these factors enter into what the interest rate should be and what it is at any particular time.
For that reason, in considering any proposed legislation such as this bill now before us respecting maximum interest rates, we must consider the various types of loans that are made available and how the bill will affect each type of loan. Anyone who would suggest, for example, that the bank rate should be increased from 6 per cent to 12 per cent, or that the banks should be allowed a maximum of 12 per cent would be scoffed out of court. We feel that for business loans 6 per cent is high enough. At the same time many of us will forgive the banks for not entering into the personal loan business in a big way over the years, with a return limited to 6 per cent.
I have mentioned the risk situation and the supply situation. Another very important factor in determining interest rates-as has been said so many times here today-is the cost of administering the type of loan that is made available. Obviously if I borrow $10,000 from a mortgage company or a bank it costs much less for the lender to earn his interest on that money than if I obtained 100 loans of $100 apiece. The same checking has to be done on small loans as on large ones, because no matter what the amount of the loan the lender wants his money returned.
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The cost of lending money is much greater in the case of non-business personal loans. The cost of collecting the money is much greater, and of course we do have to give a margin to the man or the company who is in that field for the extra work, trouble and expense to which he goes. However, I feel that there is one particular area of consumer financing where a 12 per cent interest rate would certainly be sufficient, and I refer to the field of the acceptance corporations.
If I go to a car dealer to buy a car on credit the usual situation is that the dealer, after requiring a certain down payment, will ask me to sign a contract to repay the balance owing on the vehicle along with finance charges. I then sign the contract and also a note in which I undertake to pay separate from the contract the amount of money owing on the car plus the finance charges and usually also insurance charges.
If this were a contract between the dealer and me, and the dealer were wondering whether or not he could collect his money there might be some excuse for the high interest rate in view of the risk factor and the cost of administering the loan. But what actually happens is that the car dealer or the retailer of appliances, as the case may be, has in fact nothing to do with the loan. Rather he assigns that contract and the note to the acceptance corporation. Then I must turn up weekly or monthly to make my payments to the acceptance corporation. The rate of interest on these purchase contracts is usually very high. Certainly the rate is high compared with 6 per cent charged by the banks. I cannot help but wonder what justification there is for such high rates in cases of that kind. The acceptance corporation has much more security than the banker ordinarily does on personal loans. And certainly he has twice the security of the consumer finance company which makes an unsecured loan directly to the customer in its office.
The acceptance corporation first of all has a chattel mortgage or rather a conditional sales contract mortgage on the vehicle. Secondly, the acceptance corporation has my signature on the note so that if it must repossess the car and sell it, I can be sued by it for any deficiency on the resale price. In addition to that, since I have signed a note to the dealer as payee which he has endorsed over to the company, the dealer's signature is on the note as an additional endorser. The security of the acceptance corporation is the vehicle itself, my endorsement and the endorsement of the dealer. Certainly the amount of risk in a transaction of this type is small indeed. Indeed, in actual practice if the car is repossessed the acceptance corporation need not even find a market for it. The company

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merely returns it to the dealer, who under his contract with them is bound to pay the acceptance corporation the balance owing on the vehicle. The dealer in turn must sell the car to get what money he can and if he is interested in so doing he may sue the initial purchaser of the vehicle for any deficiency.
My argument is that, in the case of the acceptance corporation merely accepting contracts from retailers, they ask very high interest rates in relation to the risk they take and the work they do. Indeed I might go further and say they take so little risk the interest rate paid to them is chiefly payment for their work of administering the loan in place of the retailer. It seems to me this would be a proper case for an inquiry and perhaps for an agreement with the provinces which would allow a national regulatory act to come into being with respect to acceptance corporations and instalment companies.
I also believe that the instalment purchase system used by department stores and retailers generally, since it is becoming so important in our modern merchandising, is a field that would be well worth our searching inquiry. I feel that conditions could be improved by introducing some regulation to the system. It is vital that our free economy should be kept free; and that we should interfere as little as possible in the producing and merchandising sectors of the nation. But on the other hand it seems to me that this is a sphere where we could well exert some control as we have done in the case of bank loans. I think the public and the nation would be better off as a result of some machinery to regulate interest charges on instalment contracts particularly in the field of lending of acceptance corporations.
Certainly, however, the answer to the whole problem of the modern citizen in relation to the retailer-financier is not to be found solely in regulation. Some hon. members have spoken of the work done by the credit unions in providing a source of credit to people who otherwise would be unable to obtain it except at high interest rates. While this work has been important, even more important has been the educational work the credit unions have done in this field. Many people who knew little or nothing about financing or modern merchandising methods before joining a credit union, or coming into contact with credit union philosophy, have achieved a better understanding of modern business and of the type of contracts they were entering into with the retailer on the street and merchandise dealers generally, as a result of credit union educational programs.
[Mr. MacLellan.l
The best answer is education. Before children leave school they should have some knowledge of interest and instalment purchasing. It seems to me there are too few people who really understand how much interest can increase the cost in the purchase of a car, a home or other goods. Few realize how much the cost of goods can be increased by high interest rates. Certainly it is as important to children as any other part of their education that before they leave school they should be taught what instalment contracts involve and the fundamentals of modern buying and selling.
I agree in principle with the mover of this bill and of the amendment. I hope this subject can be studied more exhaustively either by the banking and commerce committee or a special committee because it is a field which will bear more inquiry as years go on and the merchandising methods of today are extended to additional products.
Instalment contracts have gone hand in hand with mass production and probably mass production and the cheap goods resulting therefrom would not have been possible without the combination of modern merchandising and financing. We reach into many fields to see that the public is protected and to ensure that there is little room for fraud, exploitation and the operation of the clip artists. We could well do it in this sphere as well.
(Translation):


Jean-Paul Deschatelets: Mr. Speaker, I only want to talk a few minutes so that this important legislation may come to a vote. A few moments ago, the hon. member for Welland (Mr. McMillan) submitted to the house an amendment to the bill proposed by the hon. member for Assiniboia (Mr. Argue), and, if I am in favour of the principle of Bill C-3, which would mean a protection against the flagrant abuse of our working classes, it becomes quite obvious when reading the bill-and I know very well that the hon. member for Assiniboia has no illusion on the matter- that it will not solve the problem of high interest rates.
Many times, in the course of our law practice-and I think that all hon. members who belong to the legal profession will agree with me-do we see legal action taken against people who, after having paid the total amount of their debt and part of the interests are sued for a considerable balance of interest? In those instances, we always say: you are dealing with finance sharks, your are entirely without protection, there

is nothing we can do except ask for an extension of time to enable you to pay the balance.
Today, instalment buying has entered our way of life to stay, and we hear often of teams of salesmen who, having been trained for selling from house to house, do some high pressure selling, and often under false pretences, of goods at exorbitant prices. And the buyers, often after having signed a contract they do not quite understand, wake up to find that they are owing considerable sums of money at an extremely high interest rate.
Mr. Speaker, I think that from the social point of view, we cannot leave people unprotected and that it is time the government put a stop to the practice of charging unduly high interest rates, so as to protect the unwary.
I feel that the amendment put forward by the hon. member for Welland is a good answer to this problem. If Bill C-3 is not an answer to the problem, we should therefore give it careful study. Indeed, was it not the Prime Minister (Mr. Diefenbaker) himself who said that he had to keep his many members occupied and that the best way to do so was to keep them busy in the committees? Well, here is a perfect opportunity; let the matter of high interest rates be referred to an appropriate committee. That committee could at one and the same time go into the matter of interest rates charged by the banks, the caisses populaires and the lending institutions. I feel that if a comprehensive study of the problem were made, that committee could come up with interesting suggestions. The government could then introduce a bill to meet the problem of high interest rates.
Today people sometimes wonder why chartered banks do not engage directly in car sales financing, for instance. I am fully aware that a few years ago when the going was good-I refer to the years prior to 1956 and 1957-some banks had undertaken to finance that type of contract, but since the rate a bank is allowed to charge is restricted to 6 per cent, they were unable to meet the demand.
In my opinion, if the committee on banking and commerce considered the matter, it might result in banks being able to engage in this type of financing. I am convinced that chartered banks would not charge 12 per cent but that they would be satisfied with an interest rate not exceeding 8 per cent.
Mr. Speaker, there are two undeniable facts. On the one hand, as I was saying earlier,
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sales on the deferred payment plan exist and will perhaps be even more readily available in a few years, while, on the other hand, loan companies can also render services to people in cases where chartered banks and credit unions might not be in a position to do so. It is therefore a question of finding out what legislation could answer the needs of those who wish to borrow money.
I think that the amendment introduced by the hon. member for Welland should be put to the vote by the government and that we should look carefully into this matter this very session.
Mr. Speaker, the hon. members who have spoken before me have pointed out the fact that members from this side of the house have not yet taken the floor. Now, the proposed amendment which constitutes a proper solu-lution to the matter now under discussion was introduced by a member of the official opposition. We are therefore providing the government with an opportunity of finding an answer to this problem.
I hope that the hon. members opposite will stop talking before ten o'clock so that the amendment of the hon. member for Welland may come to a vote.
(Text):


Ernest James Broome: Mr. Speaker, I find that while I can agree with the spirit of the amendment. I cannot accept the wording of the bill although I can agree with its spirit also. I believe the members of the C.C.F. group could do a service to this parliament if they would put a little more research and hard work in preparing the bills which they bring before this house. All that we have heard from the two spokesmen of the C.C.F. party are intemperate, wild and unfounded statements. For instance, Mr. Speaker, if you refer to the speech made by the hon. member for Assiniboia (Mr. Argue) when he introduced this bill on February 12, 1959, you will find that in three places on pages 951 and 952 he suggests that the chartered banks should be charged with providing money in small amounts, and that they were not doing this job. And yet, when he introduced his bill today he took a fair amount of time telling us how he believed the chartered banks were cutting corners because they are lending money in small amounts to small borrowers. He intimated that they are acting in a strictly illegal manner when they do this.
The hon. member for Timmins (Mr. Martin), who certainly should know better, referred to the fact that this is the fifth time and he thinks it is the fifth full day of debate on this bill. If he will only cast his mind back to last session he will recall that he was

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closest to the flood of oratory from the hon. member for Skeena (Mr. Howard) and the hon. member for Timiskaming (Mr. Peters) who filibustered for the entire session and not only this bill but all bills put forward by a private member were held up. No bills got other than first reading which, as the hon. member knows, is strictly a formality in introducing a bill into the house and takes only a few seconds. Yet he stands up and in spite of this recent event, the memory of which should be in his mind, makes this statement. He goes after hon. members on this side of the house who have spoken, who have honestly and conscientiously tried to place the bill before the house in its proper light by giving the points in favour and the points against. Oh, he says, they are not doing their job. This is not what they are supposed to do. He says that they are filibustering. As an expert in filibustering himself perhaps we should take his word, but this is not so.
Members on this side of the house are trying to do the job that the sponsor of the bill should have done and did not do. The sponsor of the bill should have prepared a case. He should have been able to give us facts and figures as to the profits made by these loan companies. He should have been able to present a case to the house which could have been debated and a decision then arrived at, but all we got was sound and fury, wild accusations as to the horrible part played in our economy by the loan sharks. That phrase was repeated time and again. He damned everybody who lends money as being a loan shark.
In his rebuttal, as the hon. member for Timmins called it, he carried on in the same way. He referred to the hon. member for Davenport (Mr. Morton) saying that certain loan companies had lost money and, according to the hon. member for Timmins, the answer is that they juggled the books. He talks about people being victimized by very high rates and says it is because service is denied them through the proper channels. What proper channels? What facts are we given? What work has been done by members of the C.C.F. party in preparing the case to put before the house so that we can come to a reasoned decision? I suggest that they did not do their homework. They did not prepare the case properly and that has been the reason for this day-long debate during which members on this side of the house have earnestly tried to search out the truth with respect to this problem.
This is a seemingly simple bill, Mr. Speaker. It simply says that no one shall charge any interest rate in excess of 1 per cent per month and that is the end of it. The job we have had to do is to show that the problems is not that

simple. Since the beginning of time legislatures have tried to cope with the problem of usury and as recently as 1956 representatives of all parties in the house sat on a committee that considered representations from all interested parties and the result was the Small Loans Act. That is not such a long time ago and conditions have not changed so drastically since.
This does not mean that a case could not be made out for amendments to the act but not in the form in which the hon. member for Assiniboia has presented them because all he has done in his omniscient, omnipotent and all-knowing manner is to say: This is the answer, accept it and there you are. That is why I say that the amendment proposed by the official opposition brings a breath of reason and sanity into this debate which has been lacking in the presentations made by hon. members of the C.C.F. party.


Murdo William Martin: Will the hon. member permit a question?


Ernest James Broome: Certainly.


Murdo William Martin: Does the hon. member think it could bring about a vote?


Ernest James Broome: I do not know. I have not the faintest idea how many members wish to participate in this debate. We on this side believe in the free discussion of every problem that comes before the House of Commons. I am not one who is going to try to deny the right of any hon. member to speak in any debate to which he feels he has a contribution to make. I have noticed that members of the C.C.F. party have never hesitated to pose as experts on every subject that comes before the house. All you have got to do is look at the index of Hansard to see what restraint they have exercised.


Mr. Cardiff:: Whether or not they knew anything about the subject.


Ernest James Broome: That is exactly the point I have been trying to make. Society today is built almost entirely on credit. I would venture to say that the cessation of credit would bring about a depression of a depth and magnitude which would satisfy even the fondest hopes of hon. members on the other side. They would get everything they want. If we dry up credit, if we try to stop this way of life we have developed we will be in trouble. I am not saying that the system is good, bad or indifferent but I am saying that we live in an age in which our economic life is based on credit and credit is perhaps the most important factor in our western economy.
Such a bill could be of advantage by eliminating abuses but it could also do irreparable harm. It is like tinkering with

the control mechanism of a mighty engine. It cannot be done in a brash manner. It must be done after full investigation and having obtained full knowledge of what the results will be. Therefore the amendment to refer the bill to a special committee which will be able to study all the problems and to assess what are the true costs of doing business and what are proper interest rates is a welcome one. I honestly do not believe that the hon. member for Assiniboia knows what are the proper rates that should be charged for different types of business and under varying circumstances.
These are answers that would have to come out and the answers would not be easy to arrive at. Such answers would have a profound effect upon our economy if the matter was not fully considered. I remember that the Social Credit people had a phrase to the effect that what is socially desirable is economically feasible, and this bill is the sort of grab-all type of thing which has just about as much substance to it as the phrase I have just cited.
I am not going into the points of view which have been covered by other members on this side with regard to the degree of risk which is taken in respect of different accounts and what should be the compensation to the lender if he does assume these risks. The greater the risk, the greater the return the lender will ask, and that is only natural. The same is true of insurance. Have two or three accidents and you will find out what you have to pay for insurance. That is normal business practice. It is not normal business practice and it is not even common sense to think that you can legislate common sense into people, that you can legislate goodness into people, that you can legislate righteousness into people.
But that is not to say that the state does not have a responsibility to see that the people of the nation are protected against outrageous rates of interest, against deceptive advertising, against the almost crooked dealing in the way contracts are drawn. I abhor just as much as any member of the C.C.F. party second mortgages with very high discounts, the trickery that goes with them and the fact that a person can pay and pay and after paying for five or ten years can owe more at the end of that time than when he started to pay. These conditions are not right, and they should be looked into and corrected. I do not agree that the hon. member for Assiniboia is the person who knows what is the right answer. It was for this reason I started my remarks by saying it would have been a service to this house if this case had been better prepared, if a
Interest Act
little bit of work had been done to really substantiate what the hon. member said was the right thing to do.
Now, Mr. Speaker, I feel I have injected other factors into this debate. This was my intention. I must say, in conclusion, that if this bill comes to a vote I certainly believe the amendment will receive the support of many people who feel as I do.


Herbert Wilfred Herridge: It
was not my intention to say anything in this debate. However, I cannot allow to go unchallenged the statements made by the handsome member for Vancouver South (Mr. Broome), who used a very old, worn out vocal broom to try to sweep away the arguments of the hon. member for Assiniboia (Mr. Argue) and the hon. member for Timmins (Mr. Martin).


Ernest James Broome: What arguments?


Herbert Wilfred Herridge: First of all, he referred to the intemperate arguments of the hon. member for Assiniboia. He is mistaking emphasis and repetition throughout for intemperance. Then, the hon. gentleman mentioned that the hon. member for Assiniboia had not presented any facts. Surely, Mr. Speaker, the hon. gentleman knows that the hon. member for Assiniboia has been presenting this bill to this house year after year. You cannot continue to repeat and make the same speech year after year. He has to present the argument in another form, and that is what he did today.


Ernest James Broome: May I ask the hon. member a question?


Herbert Wilfred Herridge: Yes.


Ernest James Broome: Can the hon. member tell me how this speech differed from any other speech the hon. member for Assiniboia has ever made on this subject?


Herbert Wilfred Herridge: It did not differ in principle and purpose, but it differed in so far as the arguments and evidence were concerned. I think if the hon. gentleman reads the previous speeches of the hon. member for Assiniboia he will see that.


Ernest James Broome: I have and they don't.


Herbert Wilfred Herridge: I am glad to know that the hon. gentleman reads.


Ernest James Broome: A person who was caught out
this morning on orders of the day for only reading the headlines should not be mentioning such a touchy problem.


Herbert Wilfred Herridge: I am quite tolerant toward the hon. gentleman. He is wandering around, but I do not mind listening. He is doing it, of course, to take up the time until ten o'clock.

Interest Act
Then, the hon. gentleman accused the hon. member for Timmins, or at least some of the members of our group, of filibustering in connection with other debates. Does he not realize that the end of that filibuster resulted in a member from his own party moving a bill which partly achieved the aim of those who were filibustering. They were successful in that respect. They moved a member on the government side to action partly in the direction they intended the government to go.


Ernest James Broome: I think in all fairness the hon. member will agree I was not criticizing the filibuster, as such, but simply using it to point out that the hon. member for Timmins must have sat there time after time and made statements in rebuttal which could not have been true because of the filibuster.


Herbert Wilfred Herridge: This is a most interesting debate between the hon. member for Vancouver South and myself. I am very pleased to see I have caused him to rise from his seat for a few minutes during this session.
He accused our members of filibustering in several respects. What has happened in the last five years when the hon. member for Assiniboia has introduced this bill? Members on the government side of the house have talked out the bill on each occasion. There has been no suggestion for improving the bill by way of amendments. I am sure the hon. member for Assiniboia recognizes fully that it is possible to improve the bill. He would welcome assistance from members on the government side of the house to improve this bill and in securing the legislation that he desires to protect the interests of the people who suffer under present circumstances.
Now, Mr. Speaker, I rose to support the principle and purpose of the bill. There is no need for me to repeat the arguments put forward by the hon. member for Assiniboia or the hon. member for Timmins which, in my opinion, cannot be successfully challenged. No one has challenged the principle of the arguments or the purpose of the bill today. I think all members of this house, if they approach this question fairly, recognize that the bill aims to deal with a financial cancer and evil that exists in our society because of the needs of certain people who find themselves in difficult circumstances.
I want to say that while I think it is essential that we have some legislation along the lines suggested by this Bill No. C-3 as moved by the hon. member for Assiniboia, I do have great faith in the value of the credit unions mentioned by the hon. member for Timmins in assisting, shall I say, or co-operat. ing with legislation in overcoming the grip these financial companies have on those who

are in need of short term credit to alleviate certain difficult and temporary circumstances. I have had some experience in that respect. I like this idea of legislation and rank and file action in the work of the credit unions in finally removing, shall I say, the evils we are seeking to remove. I think both are necessary.
We have been very successful with the credit union movement in Kootenay West. I can never speak on this subject without mentioning my constituency. We have a number of these credit unions in such places as Ross-land, Trail, New Denver and Nakusp. I remember 10 of us got together many years ago to form a credit union with $200. A lot of the hon. gentleman's friends laughed at us on that occasion and said the workingman is not capable of running his own affairs. Fancy running a bank; they will go broke in four years. Now, I cannot remember the figures, but I think the Trail credit union has assets of $4 million, and I know some people have been advised to go to the Trail credit union to get loans that the bank would not provide. This actually happened during the last year. It is training in the practice of the principles of economic and social democracy. I say we want legislation to supplement the activities of these, shall I say, rank and file organizations.
Now, Mr. Speaker, I must say we support the amendment moved by the hon. member for Welland (Mr. McMillan) which proposes that this bill be referred to the banking and commerce committee for consideration and report. Conditions have changed in the last few years. I think this was a sensible amendment. I want to say right here that I consider the hon. member for Welland a very practical and common sense member. He does not speak at great length. I never saw a doctor who could needle a lawyer to better advantage when it comes to financial questions than the hon. member for Welland. I think his suggestion is a good one, and we support it. It is obvious the members on the government side of the house are not going to allow this bill to pass. They are going to talk it out. I have seen the whip running in and out trying to get some of the boys to come along and carry on the debate. I understand how this is done.
We support this amendment because it is obvious the bill is going to be talked out. I believe the hon. member for Vancouver South supported the amendment timidly but, as he suggested, it will provide an opportunity for a committee to study this question, which is a serious question. An opportunity will be provided to hear representations from credit unions, from trade unions, farmers' organizations and other types of organizations, as

well as from the finance companies themselves. We will have an opportunity to get the facts as they are at the present time and make a report to this house.
Surely no one can object to that. No one who has any concern about the welfare of these people and who recognizes the need for legislation of this type can oppose the amendment moved by the hon. member for Welland. This procedure will provide the facts, the opinions and the opportunity for a report to this house. I am certain that report will further strengthen the opinion of the members of this group as to the need for legislation to correct the present situation.
In conclusion I make this request of members on the government side of the house. If I am correct, I presume that the hon. member for Carleton (Mr. Bell), parliamentary secretary to the Minister of Finance, could use his tremendous influence within the party to which he belongs with a view to having them support this amendment this evening so that this matter could be referred to the banking and commerce committee as recommended by the hon. member for Welland. I may be wrong. It may be the Minister of Mines and Technical Surveys (Mr. Comtois)-I note that he is taking a great interest in the question-or it may be the Minister of Fisheries (Mr. MacLean) or it may be the Minister of Northern Affairs and National Resources (Mr. Dinsdale). I know that he is a man of heart. He is a man of principle whom I respect as I respect the others. I urge the responsible cabinet minister or the person on the government side this evening responsible for leading the house that he pass the word around to their members that this is a golden opportunity presented to them by the introduction of this bill and by the hon. member for Welland to have this question studied, to have the public concerned present evidence and make representations and to have the banking and commerce committee make a report so that at least next session we shall have legislation to which the government can point with pride as something to the advantage of the Canadian people.
(Translation):


Mr. Rene  Leioumeau@Slansiead: Mr. Speaker, just a few words to express my views on Bill C-3 now before us and which deals with the limitation of interest rates.
The buying power of a country is the criterion of its economic strength. Whether you live in town or in the country, when the goods put up for sale by large or small 90205-6-80
Interest Act
dealers do not sell because there is no money about, it clearly indicates bad times.
It is obviously among the small people that you find an often unfulfilled wish to buy. One man wants clothing or toys for his family; another wants to buy furniture. Others again dream about owning a car.
Anyway, people want to buy, but have they always got the necessary money? It is at this point that the loan companies come in. They advertise everywhere, in the papers, on the air, on television, in short they use all media of publicity.
Now here is the man who has obtained some money thanks to a loan. He is pleased, and buys what he wants. But the finance company which has given him this loan will expect each month a call from that small wage earner. And he will have to pay to the last cent, not only the amount lent to him, but also unduly high interests.
Everybody has a right to live, of course. A finance company cannot operate and survive without guarantees. The man who asks a bank or a credit union for money to pay his mortgage, must give some guarantee for his solvency; this is but normal.
But, if it is used to strangle the borrower, it must be avoided.
The bill now submitted to us is a step in the right direction. It aims at lowering to a maximum of 12 per cent the interest rate on loans.
I feel that it is the duty of any government to administer the affairs of the nation and to protect its citizens. This field offers a good opportunity to give such protection. Any abuse is to be condemned. There should be no usurers in this world of ours.
I am not an expert in the legal field but I know, as a businessman, that this bill has some merit. Many years ago people who could not pay their debts were sent to jail. Society has become more civilized and the law has been wisely modified.
I am one of those who believe that everyone has a right to live. There should be no hardship in this world. Luxury is out of reach for the poor while the destitute lack the necessities of life.
It is understandable that at one time or another one should have to borrow money. One is short of money and goes to a lending institution which grants the loan but this does not give the institution the right to strangle the borrower by charging him prohibitive interest rates.
That is why, Mr. Speaker, I feel that the principle of this bill is good and deserves my support.

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In my constituency, there are many people who live in small towns, others in rural areas on farms. They all have the right to live and be happy. And I am happy to see, when I visit rural areas, that many enjoy television and that many have a car to drive around.
It is a good sign. It means that business is not so bad after all.
However, much remains to be done. Perfection is not of this world. However, I think our government has shown its willingness to help the people of Canada by providing means for better technical training. Let us at the same time protect people from profiteers, it will be a further good answer to our many problems.
(Text):


Mr. J. E. Pascoe (Moose Jaw-Lake Centre):: 
Lionel Chevrier: Mr. Speaker, may I inquire of the house leader what the business will be tomorrow, and perhaps at the same time we could get some indication of what it will be next week.


George Clyde Nowlan: Mr. Speaker, as I think I have already said, the budget debate will be carried on tomorrow. As I understand the new rules which are in effect, there will be a division late tomorrow afternoon.
On Monday, according to the rules it is private members' day, which rule will be followed. On Tuesday we will again proceed with the budget debate. Further than that I would not like to go at this moment, but we will make an announcement either tomorrow or Monday with respect to Wednesday and Thursday.


[Stage Direction]
At ten o'clock the house adjourned, without question put, pursuant to standing order.
90205-6-80J


[Stage Direction]
On October 19, 1960 the governments of the United States of America and Canada accepted as a basis for drafting a treaty the joint progress report which had been submitted by the negotiators on September 28,
1960.
The two delegations accordingly submit the attached draft of the treaty which they recommend for signature and ratification in accordance with the constitutional procedures of the respective Governments.
Signed at Ottawa this 8th day of January,
1961.
ELMER F. BENNETT Chairman, United States Delegation
IVAN B. WHITE Member, United States Delegation
E. C. ITSCHNER Member, United States Delegation
E. D. FULTON, M.P., P.C., Q.C. Chairman, Canadian Delegation
R. G. ROBERTSON Member, Canadian Delegation
E. W. BASSETT Member, Canadian Delegation
A. E. RITCHIE Member, Canadian Delegation
[Stage Direction]
Friday, January 20, 1961