February 28, 1901

MONEY-LENDERS.

LIB

Joseph Alexandre Camille Madore

Liberal

Mr. J. A. C. MADORE (Hochelaga).

(Translation) moves the second reading of Bill (No. 3) respecting money-lenders. ' He said : Mr. Speaker, the evil of usury, which this Bill-the second reading of which I now Mr. CARGILL.

move-purports to remedy, is by no means of recent date. In fact, it traces its origin back to the remotest antiquity, and so to say, to the very cradle of mankind, and writers who deal with the philosophy of history hold that Jacob himself, on the day when he bought his brother's birthright for a. mess of pottage, became guilty of extortion and usury. From the very rise of Christianity and throughout the succeeding ages, it is on record that legislators, in the different countries of the world, have grappled with the evil of usury and have framed anti-usury laws. But such legislative reforms did always occur periodically so that, between the abolition of a former law and the promulgation of a new statute, intervals of more or less duration invariably elapsed. Whenever usury was received in a country, and whenever the shylocks of those times, having multiplied with impunity, were seen unblushlngly parading in the broad daylight their nefarious monopoly and hovering, like so many vultures, over the victims of their rapacity, then it was that public opinion being stirred up and roused from its lethargy, statesmen and law-makers in all civilized countries framed numberless laws against usury. And when the usurer thus put under the ban of society and branded as an enemy of mankind and a vulgar criminal, no longer dared to show his face, and when hydra of usury, chained as it were, and kept within reasonable bounds by drastic laws and inexorable tribunals, was afraid to hold up its head, then it was that the advocates of commercial freedom stood up and demanded in their turn the repeal of those laws under the pretense that they interfered with the expansion of trade and the progress of the country. When the English parliament in its wisdom, deemed it its duty to enforce an anti-usury law, such legislation had, beyond doubt, became a necessity and was a long-felt want. Under the bene-ficient influence of such legislation, the ruins heaped up by usury and the disasters which ever follow in its wake, gradually decreased, and finally, in 1853, the British parliament, having come to the conclusion that it was more expedient to foster freedom of trade than to protect the few victims of usury, the statute regulating the rate of interest was repealed. So it was with our own country and it became free to money-lenders and all other persons to stipulate any rate of interest whatsoever.

Later on, the many-headed monster of usury began again to show signs of life and in our young country, forty years had scarcely elapsed when lo ! usury was rampant again and had become the great curse of our community.

In Great Britain usury has become at the present day as great an evil as it was formerly, and so disastrous did the results prove that in England, the very home of commercial freedom, they have not hesitated to brush away as irrelevant the objection taken

to tlie adoption of an anti-usury law as likely to interfere with freedom of trade. They did, in fact, pass and turn into law a Bill, which, in its main features at least, is similar to the measure which I now ask this House to put on our statute-hook.

in order to show, Sir, that the need of an anti-usury law is seriously felt in this country, I do not deem it necessary to enter into any lengthy details ; but, were I not afraid to trespass upon the indulgence of the House, I could give quite a long list of young lawyers, young notaries, young clerks, young professional men, young bank clerks, who after having occupied positions of trust which enabled them to handle the money of others, and who, having had the misfortune of falling into the hands of usurers, were induced to use other people's money to satisfy the exigencies of those money-lenders, and are now Within the walls of penitentiaries or fugitives from justice in the United States.

The usurers nowadays, I dare say, have emboldened to the point of stipulating rates of interest as high as from 5 to 10 per cent per month, which represents an interest of from 60 to 120 per cent a year. Nay, more, they are bold enough to go before the courts and in the sacred name of justice, ask the tribunals to sanction such exorbitant rates of interest.

1 now call to mind the case of a moneylender having lent a small sum at the rate of 12 per cent a day, sued his debtor, and obtained judgment at the rate of the stipulated interest, and why ? Because, Sir, as I he judge indignantly declared, the law left him no option, because he had no discretion in the matter, and liis hands were tied ; but lie did not hesitate to say that it was the duty of the legislature to grapple with the evil and remedy such a serious state of things.

It was after such judgments rendered by the courts and also in consequence of the remarks fallen from the Bench, that public opinion being stirred up, the press advocated drastic legislation against such abuses Then it was that the Bill, which I now bring forward, was introduced in the other House by Senator Dandurand. Last year, the Bill passed in the Senate, but came up for discussion in this House at too late a stage of the session to allow of its being passed into law. This year, I deemed it my duty to take charge of the Bill in this House, and it was in order to discharge such duty that X introduced this Bill.

From the reports published by various commissions organized in Great Britain, with a view to the passing of the Bill I have referred to, and also from the expression of opinion given by competent men in the matter. I gather that there are two means which may be adopted, if not for suppressing usury altogether, at least for remedying in some measure the evils attendant upon it. The first consists in giving 20

the courts power to go back to the origin of the transaction, to inquire into all the circumstances surrounding the loan, and to determine, as it appears to the judge, what amount should be legitimately charged in each case. The second means consists in determining, by statute, a maximum rate of interest, debarring the money-lender from recovering in justice any amount in excess of that maximum rate, and enabling the debtor to recover the amount so paid in excess.

The Bill now before the House follows the lines of the latter proposition. To leave to the judge the power to determine, in his discretion what rate of interest should be charged in each case would tend to destroy uniformity in the enforcement of the law. In fact, I know judges who would look upon a rate of 20 per cent in certain cases as reasonable and fair, while others under similar circumstances, would look upon the same as outrageous.

So far as the province of Quebec in particular is concerned, I must confess that such a system, in my opinion, is apparently impracticable. I am not familiar with the procedure followed in the other provinces, but in the province of Quebec when a debtor is sued by the lender for the amount claimed to be due, even if he acknowledged his indebtedness as to a portion only of the amount claimed, he must, in order to throw the costs of the contestation on the shoulders of the opposite party, tender and deposit the amount which he owes.

Were it left to the court to determine the rate of interest to be charged, the debtor would never be able to make a tender to the plaintiff, because he could not know what rate of interest the judge looks upon as reasonable and fair that is the reason why it is necessary to determine the rate of interest which the lender may collect; because it would be ridiculous to give such protection to the debtor, were he forced to pay additional costs instead of the interest. Under such circumstances, believing that the system of giving such powers to the courts would prove unworkable at least in our province, we deemed it preferable in framing the Bill, to fix a reasonable rate of interest as a maximum rate beyond which any amount exacted by the lender should be looked upon as usurious.

In the Bill now before this House the maximum rate is fixed at 20 per cent for loans below $500 ; and in the case of business transactions above that amount, the Bill does not apply. Those who are opposed to this Bill take objection to the fixing of a maximum rate of interest at 20 per cent on grounds which are diametrically opposed to each other. The first objection, and it is one which has been invariably taken to anti-usury laws in the past-goes to say that such legislation interferes with freedom of trade. The second objection is that, if you fix a rate of interest at 20 per

cent, you thereby encourage a rise in the rate of interest in general in all business transactions to that maximum, which would be too high a rate.

I quite agree that, nowadays more than ever before, money has become a commodity, the value of which fluctuates on the market just as much as any other commodity ; but I may remark here that I have incorporated in the Bill two provisions which obviate this difficulty. Thus, to meet the objection of those who think that the Bill is encroaching upon freedom of trade, it is enacted that in the case of larger loans, above that amount, in which greater risks are incurred and from which greater benefits are expected, the Bill does not apply.

As to great financial transactions and enterprises, such as railway construction, deepening of canals, mining operations and other similar operations for which considerable loans are made, and where the money-lender incurs great risks, the law governing the rate of interest remains as it stands today. This Bill aims at protecting those who borrow small sums without incurring any great risks or expecting to reap any large benefits; in short, men who go to the money-lender, just to meet certain expenditures in the ordinary course of their business, or in the practice of their profession, and who would be exposed to fall into the clutches of a Shylock, without any hope of ever succeeding to recover their freedom. In short, by limiting to 20 per cent the maximum rate of interest that can be legally charged on small loans below $500, there is a sufficient margin left for all reasonable business transactions.

Besides, in this matter of freedom of trade, it should be borne in mind that, the objection taken to the Bill in that regard has already been solved. Parliament did not believe that it was an infringement upon the liberty of commerce to i>ass laws against the organization of compacts or combines, by which certain parties control the sale of some products or commodities or raise the price of those articles at their sweet will. It never occurred to parliament that, when called upon to pass such legislation against combines, that they were interfering with or laying a sacrilegious hand upon the sacred principle of commercial freedom. So again, should parliament pass an Act prohibiting usurers' rates; of interest, I am of the opinion that far from being an encroachment upon that great principle, the limitation of the rate of interest would result In preventing money-lenders from giving money a fictitious and exhorbitant value.

Objection is taken to the fixing of a maximum rate of interest, say 20 per cent, as likely to bring about a rise in the rate of interest up to that figure in all business transactions ; but such objection, to my mind, is groundless. As a matter of fact, the money-lenders who now charge 60 per Mr. MADORE.

cent, 100 per cent and even 200 per cent, would undoubtedly exact the maximum of 20 per cent. But as to loans on which moneylenders, under the statute as it now stands, charge only 10, 12 or 15 per cent, it would not be fair to say that they would be induced to raise their rate of interest owing to a limitation having been fixed by the Bill, beyond which, the rate would be extortionate and usurious. They would very likely, under such circumstances, keep within reasonable bounds, and charge only a moderate interest.

Besides, we know from experience that the fixing of a rate of interest does not necessarily bring about such results. The Banking Act fixes a maximum rate, for the banks, of 7 per cent, for all current business transactions. But, as is well known, the banks, for loans of five thousand dollars and more, charge 5 per cent and even less, notwithstanding the fact that they are allowed under the statute to charge 7 per cent.

This Bill also provides that if a moneylender sues his creditor and obtains judgment against him, the rate of interest shall be reduced to the rate of 6 per cent per annum from the date of said judgment. In this connection, I may say that it was at the special request of the judicature of the province of Quebec and particularly of the district of Montreal that such provision was incorporated in this Bill. On two different occasions, I heard from the bench remarks to the effect that it was greatly to be deplored that the courts were not given the power, when rendering judgment, to reduce the rate of interest. Mr. Justice Gill, when rendering judgment in the case I referred to a little while ago, which condemned the defendant to pay 12 per cent interest per diem, complained bitterly and indignantly that the legislature had not yet grappled with this question and remedied the existing evil.

The Bill contains also a provision respecting existing contracts. From the time of the coming into force of this Bill, no rate of interest, stipulated in contracts or agreements entered into before such date and exceeding 20 per cent, shall bear a rate of interest greater than that maximum rate. Moreover, from the date of the coming into force of this Bill, no rate of interest greater than 6 per cent per annum shall be recovered upon any judgment rendered under the operation of the old Act, just as in the case of judgments rendered subsequent to the passage of this Bill. Of course, the Bill contains a provision for the protection of the rights of third parties, in the case of a money-lender having conveyed a note of hand drawn prior to the passage of this Act. Such third person may recover the amount thereof, but the party discharging such instrument may reclaim from the moneylender any amount paid thereon for interest or discount in excess of the amount allowed by this Act.

Then, we have incorporated in the Bill a penal clause which makes the moneylender who infringes this Act guilty of an indictable offence, and liable to imprisonment not exceeding one year, or to a penalty not exceeding one thousand dollars.

The intention, in providing imprisonment was not only to frame a drastic law, but to attach opprobium to the business of the usurer.

We do not claim absolute perfection for the Bill, and the draft which is now before the House may, no doubt, be recast and improved. For my part, I shall be (happy to receive from members of experience in this House, any suggestion they may think proper. I am confident that, with the assistance of the hon. gentlemen, we can, if necessary, amend the Bill so as to render it more acceptable. There are portions of this Bill which can be discussed more practically in committee, when each clause is up for consideration, and when amendments may be suggested and considered. I believe that if it is remodelled in committee in that spirit, it may prove a very useful measure.

But irrespective of any amendment that may be made to this Bill, I appeal in a particular manner to the members of this House to spare no efforts in waging war against usury and removing the evils attendant upon it.

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The MINISTER OF MARINE AND FISHERIES (Hon. Sir Louis Davies).

The hon. gentleman (Mr. Madore) proposes some very radical changes in this Bill, and it contains provisions which have never yet been investigated by a committee. I would ask him if he would state to the House briefly in English, the reasons he thinks would justify the House in adopting the measure.

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LIB

Joseph Alexandre Camille Madore

Liberal

Mr. MADORE.

Mr. Speaker, as I have stated in French, it has become necessary periodically to introduce a measure against Shylocks in different civilized countries during the past centuries. We have had in Canada, as there was in England, a law against usury. This law worked fairly well in England, until about 1853, when it was thought it was not necessary to keep it in force, and for the sake of what was called commercial liberty, the law was repealed. So it was in Canada. Since then, however, it has been found that moneylenders have multiplied everywhere, and that usury has become as great an evil at the present day, as it was when the usury law of England was first passed. Last year, a law was passed in the British House of Commons, containing about the same provisions as the Bill which I now have the honour to submit to this House. In Canada, usury has been the ruin of many young men in the province of Quebec, and, I presume, in other provinces as well. I could mention many and many names of young lawyers, young notaries, young professional 20i

men, young bank clerks who handle the money of others, and who having put themselves into the hands of a money-lender without a soul, have been obliged to use other people's money to satisfy the demands of the usurer, and are now either in our penitentiaries or fugitives from justice in foreign countries. It is well, therefore, that we should pass a law to restrict the rate of interest that can legally be charged on a loan. In this Bill, 1 have limited to 20 per cent per annum, the amount of interest that can legally be charged on loans under the sum of $500. In the case of large loans in which greater risks are incurred, and from which greater benefits are expected, this Bill does not apply. It only applies to loans made to young men for short periods in the general course of their own business. I think that 20 per cent under these circumstances is quite a reasonable rate, and should not be considered as an infringement of the liberty of commerce. These are the principal reasons which I have urged in French in favour of the Bill. The Bill also provides that if a moneylender sues and obtains judgment, a higher rate of interest than 6 per cent should not be allowed from the date of judgment. There is another class which says that for all previous loans which are still undue, from the time of the coming into force of this law, the rate of interest would be reduced to 12 per cent, and on all judgments rendered previously to the effect that the defendant should pay a higher rate of interest than 6 per cent, the rate would be reduced to 6 per cent from the very moment that this law comes into force. Then there is a penal clause which makes the money-lender guilty of an indictable offence, and liable to imprisonment not exceeding one year, or to a penalty not exceeding $1,000, who lends money at a higher rate of interest than that authorized by the Act. It has been thought well to provide for imprisonment, with a view of casting a stigma on the business of the usurer.

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LIB

Thomas Fortin

Liberal

Mr. THOMAS FORTIN (Laval).

The question of regulating the rate of interest has in most civilized countries excited very much discussion and, at various times, provoked some legislation. From the very earliest period in the Roman state there were laws regulating the rate of interest. In the Middle Ages, as is well known, no interest whatever for the use of money was deemed to be legitimate ; and the word ' usury ' derives its etymology from that period. Coming down later, we find various statutes passed in England regulating the rate of interest. I believe the first English statute on the subject was 37 Henry VIII., chapter 9, which fixed the rate at 10 per cent per annum. This statute was subsequently repealed and again re-enacted ; and finally, the last statute regulating the rate of interest, and declaring an excess of the

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CON

James Clancy

Conservative (1867-1942)

Mr. JAMES CLANCY (Bothwell).

I regret that I was unable to follow the hon. gentleman who introduced the Bill (Mr. Madore), but I have no doubt that the hon. gentleman's object is to remedy what he considers a very great evil. I wish to point out that the hon. gentleman is endeavouring to protect those who come under the exception rather than under the rule that prevails throughout the country. The hon. Minister of Marine and Fisheries (Hon. Sir Louis Davies) very aptly asked the promoter to state in English what the main objects of his Bill were. And the objects as the hon. gentleman gave them resolved themselves into this, to protect young men who live rather extravagantly-though he did not say that, nor am I going to say it, but young men who live beyond their means, properly or improperly-and become indebted to money-lenders, and become discredited and disgraced, and many of whom he says are now fugitives from justice. There may be such cases, but I am sure the House is not prepared to disturb a business useful to the country for the purpose of meeting cases of that kind. I should be glad to see young men protected from the evils the hon. gentleman has referred to; but, we must not injure the great mass of the people for the benefit of the few. If the hon. gentleman has given the slightest attention to usury laws, he knows that, as a rule they have not done what was expected of them. I do not mean to say that we should not restrain moneylenders at all, but it should be done with great care. You cannot lay down an arbitrary rule on this subject without interfering with a perfectly legitimate business in this country. Under the present law. where there is no contract, the borrower is always protected against extortionate rates. But, we must take care not to injure the large class of legitimate borrowers in this country. Take, for instance, the farmers who borrow money at short dates. I will suppose that the hon. gentleman is in the position of a money-lender, carrying on a private bank. No one will pretend to say that private bankers do not perform an important function in the business of the country. Chartered banks do not care for small loans at short dates. The class of borrowers dealt with give a security also that the chartered banks do not care for. Suppose that the hon. gentleman were in the habit of making loans at 20 per cent,

which is the maximum allowed under this Bill. A farmer comes in, and desiring to borrow $50 for fifteen days. For that loan the hon. gentleman would be allowed to charge only about forty cents. He has to look after the money, and see to its collection; and when it comes back, it may remain for fifteen or twenty days before being loaned again. What appears, when stated as a percentage, to be a very high rate, is really not a high rate when the circumstances are all considered. My own experience and observation is that in attempting such regulations as is here proposed, you are very apt to strike a severe blow at the class of people who, though they borrow money in small sums pay it back, and are not disgraced or brought into court. Who is the dependent person in these transactions 1 The man with the money is not dependent, he can make his own terms-if he cannot make them one way he can in another. These small short date loans would not be made upon negotiable security, but the lender would insist upon a chattel mortgage. So, if a man wished to borrow twenty-five or thirty dollars, it would cost him two or three dollars for drawing and registration. Such a transaction would he a mere evasion of this law ; but the man who most needs money will be driven to seek the loan even upon these onerous terms. Suppose a farmer wishes to hold his grain for twenty days, and goes to a private banker to borrow fifty or a hundred dollars. He does not object to paying twenty-five per cent. If, without it, he might be compelled to dispose of his grain at a time when the market was unfavourable, the loss would be far greater than the interest on the money.

I would ask the hon. gentleman if there is any general demand for this Bill. Is there any general outery against the sharks and Shylocks whom we have heard of here. There are some, no doubt, but there are men of great respectability carrying on private banks, men who do not charge such exorbitant rates as has been spoken of. The cases against which the hon. gentleman desires to direct legislation, I fancy occur mainly in great centres, where young men are in need of more money than others require. But these cases are comparatively few, and to injure the many in order to protect that few would be a great mistake. I do not think this Bill should go to a committee ; the House should have no difficulty in rejecting it at this stage, for it has not a single good feature in it.

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CON

Frederick Debartzch Monk

Conservative (1867-1942)

Mr. F. D. MONK (Jacques Cartier).

I have not had the advantage of hearing the whole of the discussion on this Bill, but I am bound to say I am in favour of giving the measure a fair tidal. I do agree with my hon. friend from Bothwell (Mr. Clancy) as to there not being a general demand for such a law as this. I did not gather from the remarks of the promoter of the Bill, Mr. CLANCY.

that the evil which is attempted to be cured is confined to a few young men who have led lives involving too much expense. It is well known in the city of Montreal that the evils of usury are not confined to this class of young men, but are general. The expense ot living in Montreal is considerable, and the revenues of a great many people-not young men only, but of many others of a diversified class-are far below what they ought to be to meet these expenses. Many are obliged to have a resort to the money-lenders, and the evil pointed out by my hon. friend from Hochelaga (Mr. Madore) arises. Nor is this state of affairs, I believe, confined to the city of Montreal. I believe we shall hear from members of this House that in many other large centres the same thing exists. It exists in England, as is evidenced by the fact that last year a Bill such as this, in fact a Bill after which this seems to have been drafted was passed by the British parliament, and is now on the statute-book, and known as 63-04 Vic., cap. 51, * The Money-lenders Act.' I have not given this British Act very careful study, but it seems to be exactly the same as the Bill now before us, allowing for some changes made necessary by the difference of circumstances. It is stated that this interferes with liberty. In the first place, let me point out that this Bill is aimed at the Shylocks only. Section 2, defines what a money-lender is. If a man chooses, under the circumstances pointed out by the hon. member for Bothwell, to come to the relief of a farmer, he does not come under the provisions of this Bill.

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CON
CON

Frederick Debartzch Monk

Conservative (1867-1942)

Mr. MONK.

No, not as I understand it, because he is not a money-lender, a man who habitually lends money at a higher rate than 10 per cent; so I say the Bill is restricted to that class of people who make a habit of profiting by the misfortunes of others. As to the other clauses, I think that the limit fixed of 20 per cent is a very reasonable one. Even as in the case spoken of by the member for Bothwell (Mr. Clancy),

I think the man who lends a sum only for a few days ought to be satisfied with 20 per cent interest. The great difficulty, I think, is that laws of this kind have been passed time and again and have failed to meet the evil. I question very much whether this law, carefully framed though it has been, and in view of the experience of a great number of years with the operations of these money-lenders, will attain the object aimed at. I would ask the hon. member for Hochelaga how he would solve, for instance, a case such as was submitted a moment ago by the hon. member for Lanark. Supposing the hon. member for Hochelaga gives me his note of hand for $100 for one month, and I go to you, Mr. Speaker, and sell it to you for $70 ; how will this Bill operate to relieve the

member for Hochelaga ? I do not think it is possible to meet a case such as that, although I And in section 4 that extraordinary power is given to the court to examine all the circumstances of the transaction, and the court can give relief if the circumstances appear to justify it. I think the fact that this remedy has been tried in England, where they have adopted an Act to give relief to a large class of people who suffer from the exactions of these money-lenders, would dispose me to give this law a fair trial. It was discussed thoroughly in the Senate last year, and adopted by that body, and I think we should give it a trial.

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Mr. L. P.@

DEMERS St. John and Iberville.) (Translation). Mr. Speaker, the measure brought forward by the hon. member for Hochelaga (Mr. Madore) deals with one of the most important and the most intricate problems which can engross the attention of a deliberative body. The trouble

is, how to observe the golden means in dealing with a problem with regard to which there has always been such a broad divergence of opinion among men. The old axiom that money is barren and unproductive, no longer holds good nowadays. I believe that my hon. friend, in introducing this Bill, had in his mind the axiom Which says that [DOT] virtue is removed from extremes ' and that 1 you will go with the greatest safety in a middle path ' ; for, he has chosen a middle path between the extremes of absolute commercial freedom, as it exists now, and absolute restriction as it existed of old.

It is next to impossible to draft a Bill which is not open to some objection or other. It is very seldom that you find a legislation, which does not admit of some exception unforeseen by those who framed

it. I think this Bill is entitled to our most serious consideration.

Now, coming to the principle of this Bill, I say that in order to determine whether il should be accepted, we have only to inquire whether there exists such an evil an usury in this country. The Bill now before us is an anti-usury legislation. Usury is the taking of more for the use of money than tile law allows, or the extortion of a sum beyond what Is legal. Under tills Bill the maximum rate of interest is fixed at 20 per cent, and it is an indictable offence to charge a higher rate than that.

That, in the great centres particularly usurers are found who charge extortionate rates of interest is beyond question. The leading newspapers in this country have been denouncing that crying evil for years and years.

Under the circumstances, parliament, I believe, should not hesitate to grapple with this problem, and to give its best consideration to the Bill, which was framed with a view to remedying this evil. The principle of this Bill Is excellent, and the committee

to which it is to be referred, will, no doubt, give it their best consideration.

They say that such legislation interferes With freedom of trade; but far from encroaching upon the liberty of commerce, it simply -aims at checking the rapacity of usurers and protecting our brothers and our children, and all those who are exposed, to be victimized by those Sliylocks. It must be borne in mind that liberty is not freedom to do wrong.

Although I agree in principle With this Bill. I reserve to myself the same rights as other lion, gentlemen have to discuss some of the details in committee, and assist the hon. gentleman (Mr. Madore) in making a workable measure out of the Bill he has brought forward. I believe that all usurious contracts and obligations should be declared null and void under' common law, for, a contract which contains unlawful or immoral stipulations is ipso facto null and void. Such is the principle of contracts such as laid down in our Civil Code, and such is the legislation in force In all countries which have adopted the principles of roman law.

That usurious contracts should be set aside is beyond question. But, I may be told : Are you not afraid of giving the sanction of the law to another immorality, I mean, the risk which the lender would incur of not being paid back ? No, Sir, I entertain no such fear, because the lender may have his recourse by means of another action, that Is to say, the lender may recover only to the extent of the amount by which the borrower has benefited.

We could well adopt section 11 of chap. 127 of the Revised Statutes of Canada, which deals with such cases.

I do not intend going at any greater length into the details of the Bill now before the House. I approve of the principle of the measure, and to my mind, the whole question may thus be summed up : Does there exist an evil which calls for such a remedy ?

We owe protection to the weak, and the argument put forward by those who say that the evil is not general enough to call for such drastic legislation, is unfounded. The evil exists, and it is the duty of parliament to grapple with it. In conclusion, l may say that the measure now under discussion is one Which deserves our best consideration, and one which commends itself to the approbation of the House.

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Mr. A. A. C.@

LaRIVIERE (Provencher). While most of those who are supporting the Bill speak from an urban standpoint, I may say that in the western part of Canada and in the new provinces, we need such legislation as that more, perhaps, than it is needed in older provinces. In the new provinces we have men who have failed, to some extent, to succeed in their former places of residence, and have moved out west with the view of bettering their con-

dition. They are not always provided with the means to start an establishment, and are therefore compelled, in many instances, to borrow money, and unfortunately they have to borrow it of those Shylocks, as they have been well described by the hon. member for Laval (Mr. Fortin). We have too many of those money-lenders who take advantage of poor men who are trying to improve their condition, and are compelled to resort to men who make a business of lending money at a high rate of interest. Speaking from my own experience, I know many cases where farmers were improving their position, but were compelled to have recourse to these Shylocks, have been in consequence completely ruined ; their properties for which they had paid have been in a short time taken from them, and they have been thrown upon the road and ruined through having been compelled to pay as high as, not 20 per cent, not 50 per cent, but 300 or 400 per cent. I say it is time this House should take this monstrous evil into consideration, and adopt some such measure as that presented by my hon. friend from Hochelaga (Mr. Madore). It is high time that we should put a stop to the doings of these money sharks, because there is absolute need of legislation such as this in the newer provinces of Canada at least, if not in the older provinces.

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LIB

Thomas Barnard Flint

Liberal

Mr. T. B. FLINT (Yarmouth).

The old battle over free trade in money and attempts to restrict rates of interest, is now being fought over again to a certain extent in the discussion on this Bill. No doubt a great deal can be said from a practical standpoint as to the advantages of free trade in money, that is, leaving men at perfect liberty to hire or lend money. Under many aspects legislative efforts to restrict the rate of interest in matters of business are necessarily very difficult to enforce; but that there have been such efforts made in the past is evident from a study of history. Principles against taking excessive interest have always prevailed in the mother legislature, as well as in the various legislatures of Canada. The only question that can arise upon that point is whether these restrictions can be made available for the purpose of preventing extortion, and as to the effect of these efforts to protect certain persons that the legislature desires to protect. Those who have perused the reports upon the subject of litigation where excessive interest has been exacted, and where judges have been compelled by law to render judgments for large amounts of interest, have been shocked and wounded in their sense of justice. We must admit that the parties who have fallen into these traps are to be pitied, but in the main it is very difficult to protect them, even with the passage of such a measure as this. There are, unfortunately, persons who have Mr. LaRIVIERE.

no appreciation whatever of the significance of the contract which they have signed. They are, of course, severely pressed for the use of money, like many others, but they are unfortunately unqualified by education or knowledge of financial transactions to know the real nature of the contract which they signed and the obligations under which they are placed, and that the legislature should step in and protect this class of people from extortion I think no one can dispute. As to whether the provisions of this Bill will remedy these evils may be open to question. There are, no doubt, portions of the Bill which can be discussed more practically in committee when each clause is up for consideration and when amendments may be suggested and considered. I notice that this Bill is divided into two parts, to one of which only shall I allude in the few remarks that I propose to make. Clause 0 proposes to add an offence to the Criminal Code and to make persons liable to indictment who charge excessive interest over the rates provided for in this Bill. I question whether the general sense of the committee and the feeling of indignation which people have against those charging excessive interest have gone sufficiently far to declare that a contract which is voluntarily entered into by the supposed victim, and as to which there is necessarily no fraud, should involve a criminal offence. I question whether it is not stretching the powers of this parliament in its jurisdiction over indictable offences too far to make a criminal offence of that which heretofore has not been deemed a criminal offence and which has been deemed a venial offence even from the criminal standpoint. I think there may be discussion as to the advisability of adopting such a course. As to the other questions arising out of the Bill, I think, when we observe that it applies only to contracts where the sum involved is under $500, it is easily perceived that large financial transactions are not affected and that it is only parties who are requiring the use of smail sums of money that this Bill is designed to reach. Another question which may arise in committee is as to the definition of the term ' money-lender,' and as to whether the law, professedly operating for the benefit of practically the whole public, should not provide that one class of money-lenders should be placed entirely on the same basis as all other money-lenders. I think it would be found very difficult in practice, as a matter of litigation, to ascertain the real practical meaning of this term ' money-lender.' If the present practices operate so grievously against the poorer classes of the citizens as to require this drastic legislation,

I think it would be only proper that it should apply to all persons who lend money, whether they are regular money-lenders or not. With these exceptions, I think the principle of the Bill, as it has commended itself to the British parliament and as it

lias commended itself to a number of legislatures on tins continent, might well be accepted by the parliament of Canada and the details worked out in committee in order to carry out the design of the hon. gentleman who has brought this measure forward. As far as I am personally acquainted with business transactions in the maritime provinces I am not aware that extortion or that the evils which have been so graphically and picturesquely described by the hon. gentleman have resulted. The evils seem to be rather particular to the city of Montreal and to some of the larger centres of population in the country, and as my hon. friend (Mr. LaRivi&re), who preceded me, remarked, perhaps in some of the districts of the great west where farmers might find themselves unfortunately involved owing to their ignorance of the contracts they were entering into and owing to their necessities at certain seasons of the year. In the maritime provinces the matter has not been pressed to any great extent on the attention of public men, but with the evidence we have had from the hon. gentlemen who represent these two extremes, I think parliament is honestly bound to endeavour to provide a remedy for that state of affairs which appears to have pressed so grievously upon large classes of the people. I, therefore, while approving of the principle of the Bill, reserve the same right as other hon. gentlemen have to discuss some of the details in committee and endeavour, if possible, to assist my hon. friend in making a workable measure out of the Bill he has brought forward.

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Mr. I@

(Translation.) Mr. Speaker, I deem it my duty to offer my congratulations to my hon. friend from Hochelaga (Mr. Madore) for having introduced his measure in such eloquent terms. I also congratulate the hon. Senator Dandu-rand who, upon two different occasions, has brought this Bill before the Senate and has succeeded in having it endorsed by his colleagues. This is a measure of public policy, and although an hon. member has expressed the opinion that the victims of usury were not very numerous after all in this country, I may tell him this : that it is not the consideration of the amount at stake or of the number of victims which should induce us to support the Bill introduced by the hon. gentleman (Mr. Madore), but the serious character and the extent of the evil which we are called upon to grapple with.

Alongside with the freedom of doing good, there is also found the liberty of doing wrong, and it is the latter liberty which calls for a restrictive law. We are told that to pass this measure would constitute an infringement upon the freedom of trade. For my part, I confess that I harbour in my breast the highest respect for commercial freedom ; but is it not a matter of fact that every day this principle is being infringed

upon, and that commercial liberty is being curtailed ? Are not the customs and excise duties as many limitations of commercial liberty ? And still, handicapped as trade and commerce are by these necessary restrictions, nobody dreams of complaining about it. Therefore I say that parliament is empowered and is in duty bound to restrict the freedom which money-lenders enjoy of charging extortionate rates of interest. To my mind, the rate of interest stipulated by the present Bill is quite reasonable.

We have drifted very far from the doctrine of Christ. We claim to be a Christian people. Both the Imperial parliament and tlie Dominion parliament are said to be actuated by the most sincere Christian feelings. Now, Sir, without going back very far in the past, I perfectly remember the words of the Divine Master to his disciples : Mutuum date nihil inde sperantes, ' Lend, hoping for nothing again.' But, I ask, can it be said that we are living up to this divine precept when we, in a civilized country, are tolerating the exaction of such exorbitant rates of interest by money-lenders '? It is a well-known fact that money-lenders, particularly iu the city of Montreal, despoil their victims of everything and even of their honour. I speak with a full knowledge of the facts, and the hon. member for Hochelaga could give the names of money-lenders who charge as high as 200 per cent interest. During my professional career, I have been called upon to occupy in cases before the court of assize where it was shown that young men had been led to the penitentiary by those Shylocks whom my hon. friend has just denounced with so much vigour. Take for instance the case at the 'Banque Ville Marie,' when two young accountants were arrested, after having completely wrecked an institution which had so far been looked upon as perfectly solvent. One of them was sentenced to the penitentiary and the other discharged by reason of his youth. Those two young men had been brought before the court, in consequence of their relations with usurers.

All this goes to show that the existing evil calls for parliamentary interference, and the limitation of the rate of interest when, for instance, you prevent people from taking their money to the lotteries, do you not restrict their freedom ? And yet, parliament did not hesitate to pass legislation for doing away with these lotteries. Again, was it not, on the part of parliament an encroachment upon the liberty of commerce to incorporate in our criminal code clauses making it an indictable offence to form trade combines or trusts, having for their object the undue enhancement of prices. Now, if it is lawful to restrict freedom of trade, with a view to preventing the creation of trusts and combines, and the running of lotteries ; if it is lawful to impose customs and excise duties, I think it is still more lawful to adopt a legislation framed with

a view to protect weak or necessitous men from being overreached or oppressed by usurers.

On these several grounds, I intend to give my support to the Bill introduced by my hon. friend (Mr. Madore), and I hope it will be carried into law.

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LIB

Fletcher Bath Wade

Liberal

Mr. F. B. WADE (Annapolis).

The question of interest is regulated by chap. 127 R.S.C. and amending Acts. The law is not uniform for all the provinces, certain provisions applying to certain provinces only, and do not have general application. Some of its provisions relate to the province of Nova Scotia only. I refer particularly to section 13, chap. 127 as amended, which provides that at the present time interest upon real estate securities cannot exceed 7 per cent per annum, and on all other contracts, if there is not a stipulation, the rate is 5 per cent and there cannot be an agreement for over 10 per cent. Now, the Bi 1 which we are considering deals with transactions under $500, and legalizes the exacting of interest up to 20 per cent, and so would alter the law as it is in Nova Scotia by increasing the maximum rate of interest upon sums under $500 to 20 per cent. For that reason I object to the Bill. It does seem that the difficulty which is contemplated by the preamble of the Bill exists only in the province of Quebec and therefore it would be well to exempt the province of Nova -Scotia from its provisions, or let the same apply only to the province of Ontario and Quebec. If it is desirable that the law should apply to the province of Quebec I am sure I have no objection. We are not troubled with very many moneylenders in the province of Nova Scotia. The great worry with us is to find somebody to lend money to us.

utmost freedom of trade in the matter of lending and borrowing money. Many years ago the Usury laws so called, which prohibited the charging of more than a fixed rate of interest, were abolished, and the general opinion will be that since then money has become cheaper and cheaper year after year. I can remember very well when 10 per cent, or even 1 per cent per month was not considered a very inconsiderable charge to make for money on note of hand. That has all passed by now. In the maritime provinces on good security money can be freely borrowed at 5 per cent, and 6 per cent, 7 per cent, and 8 per cent is considered a good interest to pay on note of hand. My hon. friend from Laval (Mr. Fortin) stated the case in a nutshell when he said that while the principle of free trade in regard to the rate of interest is a good one, that possibly there might be exceptional circumstances which would justify a deviation from that good rule. The hon. gentleman from Hochelaga (Mr. Madore) told us that this Bill is based largely upon the Act which passed the Imperial House of Commons last year. I have given some attention to that English legislation and I read the report of the committee upon it and the debate in the House. It must be remembered that the law as it ultimately passed the British House of Commons is not at all of the same nature as the Bill now before us. There are special circumstances existing in England, particularly in London, which do not exist in Canada. Every one knows of the great scandals which resulted from the publication of the transactions of tlie celebrated usurer Isaac Gordon who died last year.

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An hon. MEMBER.

Lewis.

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Some hon. MEMBERS

Hear, hear.

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LIB

Fletcher Bath Wade

Liberal

Mr. WADE.

I was filled with envy when I learned that the young men of Quebec were able to borrow money even at 20 per cent. We in Nova Scotia never found anyone who would favour us thus. I would therefore suggest that the province of Nova Scotia should be omitted from the provisions of this Bill, or if it goes to a committee, I trust that these matters may be considered so that the law may not be affected as it is in our province at the present time.

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The MINISTER OF MARINE AND FISHERIES (Hon. Sir Louis Davies).

There is evidently a broad divergence of opinion amongst hon. members with regard to this Bill, and I am glad to say that the cleavage of opinion is not upon political lines. I was not aware until it had been stated here that a similar Bill had been passed by the Senate last year. I knew it was introduced, but I was surprised to hear that it had received the sanction of the Senate. The policy of the government of -Canada (not of the existing administration, but of the government of Canada) has always been to permit the Mr. LEMIEUX.

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The MINISTER OF MARINE AND FISHERIES.

No ; I refer to Isaac Gordon: Lewis was another. There is a class of money-lenders in England who carry on their business by means of circulars containing more or less misrepresentations, which class does not exist in this community at all. It was against that class alone that the English legislation was directed. But they did not pass that legislation hurriedly. The matter was brought before the British parliament some years ago, and a special committee, the members of which were selected for their peculiar qualification, was appointed to investigate. They heard a great many witnesses, including some of the most distinguished jurists of the High Court in England : Mr. Justice Mathew, Mr. Justice Hawkins, and that celebrated soli-tor, Mr. George Lewis. And, after hearing the evidence of these witnesses as to the existence of the peculiar evil which required remedy, the government introduced the Bill. There was a report made by the committee to which I have referred and upon which the legislation was subsequently based, and that report contains the following :

After carefully considering the evidence which has been given in regard to particular transactions and the general expressions of opinion of persons so well qualified to form a judgment as Sir Henry Hawkins, Sir James Charles Mathew, Sir George Lewis, the inspector general in bankruptcy and the county court judges, your committee have unhesitatingly come to the conclusion that the system of money-lending by professional moneylenders at high rates of interest is productive of crime, bankruptcy, unfair advantage over the creditors of the borrower, extortion from the borrower's family and friends, and other serious injuries to the community.

And although your committee are satisfied that the system is sometimes honestly conducted, they are of the opinion that only in rare cases is a person benefited by loan obtained from a professional money-lender, and that the evil attendant upon the system far outweighs the good.

They therefore consider that there is urgent need for the interposition of the legislature with a view to removing the evil.

I take it that if any facts were given to this House to show a condition of affairs in Canada similar to those that exists in England there would he little hesitation in passing the necessary legislation. But, who has contended in this House that the present system of lending at higher than 6 per cent, or 10 per cent, or perhaps higher than 20 per cent in exceptional cases ; who in this House has pretended to cite facts showing that that system has heen productive of ' crime, bankruptcy, unfair advantage over other creditors of the borrower and extortion from the borrower's family and others.' These things may exist in Canada, but we have not heard of them. Speaking for the part of the Dominion I have the honour to come from, I do not know that any such things exist. X have spoken with some of my maritime province friends and we are pretty well agreed that the evil does not exist to. any great extent in these provinces. The hon. member for Laval (Mr. Fortin), who is a distinguished member of the legal profession living in Montreal, is not able to state that in his judgment a very serious state of affairs exists there, and I understand it is largely upon the conditions said to exist in Montreal that this Bill is introduced.

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LIB

February 28, 1901