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to foster freedom of trade than to protect the few victims of usury, the statute regulating the rate of interest was repealed.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.