May 2, 1911

CON

William Sora Middlebro

Conservative (1867-1942)

Mr. MIDDLEBRO.

I can only say that the more information the minister gives me about the rumours concerning the Farmers' Bank, it seems to me all the more reasonable why he should have been more careful in granting the certificate. The Act says in effect that the only two parties to be satisfied are the Finance Minister and the Treasury Board. That is not a ques-

lion of law. It is only a question of the satisfaction of the Finance Minister and the Treasury Board that all the details of the Act have, been complied with that would justify him in granting a certificate. He applied to the Minister of Justice for his opinion. As to what did he want his opinion? As to whether or not the evidence was sufficient to justify him in granting the certificate? If he wanted to get his own opinion corroborated by the Minister of Justice, the only way in which he could get an honest corroboration was to submit to the Minister of Justice all the facts that he himself was possessed of. Now, I ask the Minister of Finance if he said to the Minister of Justice: I have a complaint from Mr. McCarthy to the effect that these subscriptions were obtained by fraud, that some men subscribed for $1,000 stock, and when they came to investigate they found that they were down for $10,000; I have information from Mr. McCarthy that a great many of those who are down for subscriptions did not sign the stock book at all, and that a certain member of parliament whose name wras put down as a director had' never consented; we have the judgment of the court at Toronto, which practically confirms all these allegations, because these men got judgment against the Farmers' Bank, and got back their money and their notes; I have the evidence of Mr. William Laidlaw, K.O., in an affidavit in which he swears that all these things are true. If the Minister of Finance had submitted all these facts to the Minister of Justice, together with the single affidavit of Mr. Travers, does he think that the Minister of Justice would have written back saying: You are quite justified on the evidence you have submitted in granting the certificate. I venture to say that he would not. All that the Minister of Justice did say was: If you are

satisfied with the evidence, you are justified in granting the certificate. So that the matter came hack to the judgment of the Minister of Finance himself whether or not he would he justified in granting the certificate. And all this evidence is not what has been discovered since, but is from information which the Finance Minister indisputably had in his possession at the time he granted the certificate, which is not only a certificate that the bank has been properly organized, but is practically a certificate of character to Mr. Travers, because it is a refutation of all the charges made against him, and an intimation to the innocent people of this country that he is all right, that he has complied with the laws of the Dominion of Canada, and that they are perfectly justified in placing their money in the Farmers' Bank of Canada. That is what it amounts to. The Minister of Finance says that because the govern-Mr. MIDDLEBEO.

ment of Ontario happened to have a small deposit of $25,000 in the Farmers' Bank, they were satisfied with Mr. Travers. But the answer to that is this. The Ontario government knew that before a bank could get a charter it had to comply with the Dominion Act, and, therefore, they assumed that the Minister of Finance had carried out the Act.

Topic:   WAYS AND MEANS-THE FARMERS' BANK.
Subtopic:   E. S. CLOUSTON,
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LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING.

I did not think they had so much faith in me.

Topic:   WAYS AND MEANS-THE FARMERS' BANK.
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CON

William Sora Middlebro

Conservative (1867-1942)

Mr. MIDDLEBRO.

They had until this question of the Farmers' Bank came up. It was because of the action of the Minister of Finance in allowing the bank to be organized, and in giving them a certificate, and in starting them out to work that the Ontario government made that deposit. I venture to say that had the minister placed in possession of the Ontario government all the facts he had before him when he issued that certificate the Ontario government would never have put a dollar in the Farmers' Bank of Canada.

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LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING.

The hon. member (Mr. Lennox) said it was published in the Toronto newspapers.

Topic:   WAYS AND MEANS-THE FARMERS' BANK.
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CON

William Sora Middlebro

Conservative (1867-1942)

Mr. MIDDLEBRO.

If the Minister of Finance had told them that Mr. McCarthy had sent this warning that all the allegations contained in the special endorsement had been sworn to by Mr. Laidlaw; if he had told them that the Canadian Bankers' Association had said the certificate was obtained by fraud, does he suppose for a minute that the Ontario government, or anybody else would have entrusted any money to that bank? It was because these irregularities were silenced by the Minister of Finance that the public had confidence in that bank. Apart altogether from the question of intention, the Minister of Finance was not justified in issuing this certificate, and in issuing it under the circumstances he did not exercise ordinary care and prudence which as the holder of a public trust he -was called on to exercise, and I think, therefore, the minister is open to the censure of this House.

Topic:   WAYS AND MEANS-THE FARMERS' BANK.
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CON

David Henderson

Conservative (1867-1942)

Mr. DAVID HENDERSON (Halton).

I would not have spoken on this occasion were it not for the manner in which my name has become associated with opposition to the granting of this certificate, and I shall crave the indulgence of the House while I endeavour to make my^ connection with this matter plain. I desire to read wo letters, one from the Minister of Finance to Mr. Travers, dated 30th November, and the other the reply from Mr. Travers to that letter, of the same date, and I shall explain why I wish to put these letters on 'Hansard'. The first letter reads:

Minister of Finance, Canada,

Ottawa, November 30, 1906. W. E. Travers, Esq.,

General Manager of the Farmers' Bank, of Canada,

Eussell House, Ottawa.

Dear Sir,-I regret that owing to pressing engagements yesterday, arising out of the budget, I was unable to meet you to consider your application for the issue of a certificate to authorize the Farmers' Bank of Canada to commence business. I shall be glad to see you to-day, at my office, at any time before one o'clock if you can call. Or 1 might be able to see you later, between four and five, at the House of Commons, if that will be more convenient.

There is a phase of the matter which I should like to bring to your notice so that you may consider it at once. It has been represented to us that in some previous instances where an application was in all respects apparently regular, there was actually an evasion of the intention of the Bank Act in relation to the paid-up capital. We have been told that in some cases the subscribers did not actually pay in cash but gave notes to the provisional directors which were used to raise the money. On account of information of this kind, which has reached us in relation to a previous case, we deem it proper to scan very closely every application for a certificate which comes to us. I shall be glad to have an assurance that nothing of the kind has taken place'in relation to the subscriptions for the Farmers' Bank, but that the amounts set forth in the application as having been paid up have in every case been bona fide cash payments.

Topic:   WAYS AND MEANS-THE FARMERS' BANK.
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W. S. FIELDING,


Minister of Finance. The Teply to that is as follows: Ottawa, November 30, 1906. The Hon. W. S. Fielding, Minister of Finance, Ottawa, Ont. Dear Sir,-In reply to your letter of the 30th of November, I have to say that in the case of the Farmers' Bank of Canada, the provisional directors did not raise the money in the way mentioned by you. You will find the statement put in by me absolutely correct as to the amount of stock subscribed and the amount paid up.


W. E. TEAVEBS,


General Manager, Farmers' Bank of Canada. I now desire to say that I never saw that letter or a copy of it until the return asked for by the hon. member for North Toronto was brought down, but I knew what it contained, and it was known in the county of Halton that such a letter was in existence, and what its purport was. Since our former debate on the Farmers' Bank I have had communications orally and in writing with some of my constituents, and my attention has been called to the fact by different parties, that I had communicated the particulars of my interview to these persons. It is a notorious fact that in the county of Halton to-day 260 there are people who knew the nature of that letter a considerable time ago; one man has known it for a portion of a year, and another man has known it for several years. Now, where did they get that information? They did not get it from the Finance Department, I did not get it from the Finance Department. I got it from the Minister of Finance himself, and I communicated the nature of that letter to people of my county who were interested in the Farmers' Bank, and I got it in the way I have already described in this House. When the Minister of Finance and myself met, the minister communicated to me the fact that he had asked Mr. Travers to write him a letter along the line that is indicated here I assumed, when he told me that, that it was to see whether my previous statement was verified or not with reference to the notes I had seen in the hands of the solicitor. I mention this circumstance, not that it is absolute evidence, but the peculiarity of it is that it was known to men who read what the Minister of Finance said, and that I said that this letter existed, and the very nature of its contents was known. I do not know how much stronger evidence I could get to verify the statement I made at that time. I want to say here with reference to the three interviews I had with the Minister of Finance that in no case did one of these interviews last more than two or three minutes. I do not believe the second interview extended over a minute or a minute and a half, and only the few words that I have mentioned were spoken. The first interview, when I told the minister of these notes, did not extend beyond three minutes, and the later interview very possibly was about the same length of time. But I want to say this now because I had not the opportunity of putting it before the House in the former debate. I want to say now-and I say it with the utmost certainty of its being correct-that not a thing was mentioned at any of those interviews relating to the incorporation of the bank, so that the Minister of Finance must have referred to one set of interviews, and I to another. I am positive that nothing was said regarding the incorporating of the bank at any one of^ these three interviews. I went to the minister for one purpose only. The bank had been incorporated months before. I think the charter had been passed through this House six or seven months before. Consequently it was not a matter of interest to me at that time how the charter was granted, or who supported it, or who opposed it. That was a question which did not require to be raised at all and which certainly was not in my mind. The only question in nay mind was whether proper proceedings had been taken with regard to



®ie <xrganiz.ati)on of tihe )bank and tile j granting of the certificate. I went to the Finance Minister with that matter alone in my mind and gave him the information I had. I did not say to him: I warn you. The hon. minister is too intelligent a man for me to say anything of the kind to him. All I did was state the facts which should have been sufficient. The minister knew his duty and it was not for me to point out that duty to him or to say I had come to warn him. In none of these three interviews did we discuss anything in connection with the granting of this charter, so that the only conclusion I can come to-and I have thought over the matter very carefully- is that the minister has in his mind one set of interviews and I have in my mind another set. As I have said already, I am more than justified by the letter written by Mr. Travers to the Minister of Finance, and which the Minister of Finance knew about four and a half years ago. I had never seen the files of the minister nor did I know that saich a letter was on them. The only source of information I had was the minister himself who told me the letter had been written. I have nothing more to say on this question. The facts have been laid before the House by the hon. member for South Simcoe (Mr. Lennox), and the hon. member for North Grey (Mr. Middlebro), and it would be unwise for me to undertake to discuss what may be called a legal question. I am glad to have had the ooportun-ity of making the statement I have made, and I make it with every confidence that it may lead to a solution of what apparently is a difference of recollection in the mind of the Finance Minister and myself.


LIB

Henry Horton Miller

Liberal

Mr. H. H. MILLER (South Grey).

In referring to the action of the hon. the Minister of Finance (Mr. Fielding), my hon. friend from North Grey (Mr. Middlebro), used these words: ' He would not grant more than six months extension,' implying that the Minister of Finance went to the meeting of the Banking and Commerce Committee, when the extension -of the life of the charter for a year was granted and granted a renewal, not for the year which had been asked for, but for not more than six months. That does not place the Minister of Finance in the true light. The hon. minister was very emphatically opposed to granting any extension whatever. The committee, however, contrary to his wish and advice, insisted upon giving a renewal or extension. When the Minister of Finance could not prevail on the committee to grant no extension at all, he succeeded in getting the extension limited to six months.

Mr. HENDERSON

Topic:   WAYS AND MEANS-THE FARMERS' BANK.
Subtopic:   W. E. TEAVEBS,
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CON

Richard Blain

Conservative (1867-1942)

Mr. BLAIN.

Was there a vote in the committee?

Mr. MILLER; No, buSfc it was very apparent that the majority, were favourable to granting an extension. Let me isay that this is not by any means the only instance in which members of the committee have voted against the advice of the Finance Minister.

Mr.' BLAIN. I asked if there was a vote taken in the committee, because the hon. gentleman said that the committee voted the extension.

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LIB

Henry Horton Miller

Liberal

Mr. MILLER.

I do not think I used the word ' voted.' What I said was that the committee insisted on giving an extension. My hon. friend from Halton (Mr. Henderson), will admit that this was not an exceptional case, but that in many other instances the committee has gone against the advice of the Minister of Finance. The responsibility, therefore, for that extension is wholly upon the committee which acted against the advice of the Minister of Finance.

My hon. friend from Halton (Mr. Henderson), says that he has had conversations with the Finance Minister, and there is a dispute between them regarding what took place. No one will doubt the good faith or the word of either the Minister of Finance or the hon. member for Halton, but the hon. member for Halton says to-day: ' I admit that I did not warn the Minister of Finance, nothing that I said could be construed as a warning.'

Topic:   WAYS AND MEANS-THE FARMERS' BANK.
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CON

David Henderson

Conservative (1867-1942)

Mr. HENDERSON.

The hon. gentleman (Mr. Miller), should not put words into my mouth which I did not utter. I did not say in so many words to the minister:

' I warn you.' I did not do this because I consider the Minister of Finance too intelligent a man to be talked to in that fashion.

Topic:   WAYS AND MEANS-THE FARMERS' BANK.
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LIB

Henry Horton Miller

Liberal

Mr. MILLER.

Then when my hon. friend (Mr. Henderson), says that he did not warn the Minister of Finance, he means that he did not use the word ' warn ' but did warn him all the same. Well, I would refer my hon. friend to what he said on the 15th of March last. He was then asked why he had not put his remarks in writing so that there could not be any dispute. He said: ' I did not, because once before I got Into trouble. I put my remarks in writing and they were made public by a member of the government and were made public with the intention to do me injury.' The Minister of Finance asked him, how could I injure you in this connection? Even if I did wish to injure you, how could I have done it? And the hon. member for Halton said:

Y

It might have been insinuated that I had made an attempt to wreck the bank.

If the hon. member for Halton (Mr. Henderson) who was, as the hon. member for North Grey (Mr. Middlebro) has said, personally interested, as he had constituents concerning whose interests he was 'troubled,' had evidence that indicated to him that there was danger to those gentlemen of his acquaintance, and had been willing as a member of parliament and a man to take some risk, even the risk of ' being accused by some one of a willingness to wreck the bank,' had gone further, had made known all the information he had possessed, had argued the case, he would perhaps have accomplished more than could be accomplished in the half-hearted manner in which he spoke. He desired evidently that the Minister of Finance should take a great deal more responsibility in this case than he was willing to take.

Topic:   WAYS AND MEANS-THE FARMERS' BANK.
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CON

Edward Arthur Lancaster

Conservative (1867-1942)

Mr. LANCASTER.

Why should he not?

Topic:   WAYS AND MEANS-THE FARMERS' BANK.
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LIB

Henry Horton Miller

Liberal

Mr. MILLER.

There is no reason why he should. Of course the Minister of Finance has a certain amount of responsibility resting on him because he is Minister of Finance.

Topic:   WAYS AND MEANS-THE FARMERS' BANK.
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CON

Edward Arthur Lancaster

Conservative (1867-1942)

Mr. LANCASTER.

The whole responsibility.

Topic:   WAYS AND MEANS-THE FARMERS' BANK.
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LIB

Henry Horton Miller

Liberal

Mr. MILLER.

Not the whole responsibility. The hon. member for Halton (Mr. Henderson) had a responsibility as the member for that constituency, having constituents interested, equal to the responsibility of the Minister of Finance. It has been said that Mr. McCarthy wrote a letter to the minister in which he said that notes had been given for certain stock subscriptions and further that certain subscriptions had been raised from the amounts for which they were really given to larger amounts. What, after all, did that amount to, and how would any other hon. gentleman have been influenced by that statement? Notes had been given for certain stock subscriptions, undoubtedly. There was nothing morally wrong in that, although there may have been, and there was something technically wrong; but if the farmers who had subscribed for stock had taken the same notes to any other bank and discounted them and taken the money to pay for stock, there would have been nothing either morally or technically wrong. The pavment by notes is something that might have been done through perfect ignorance and I have no doubt it was done through ignorance on the part of the men who gave the notes and of the men who took them. Nots have been given in payment of insurance premiums, given in good faith, and accepted in good faith by the agents, but payment of 260J

the policies has been refused in such cases because the premiums were improperly paid. It has been said that subscriptions were raised. That, of course, was a fraud. If a man subscribed $2,000 worth of stock, and his subscription was increased to $10,000, that would be a fraud, but a fraud on the part of what person? Of Travers necessarily? These subscriptions were taken by agents soliciting subscriptions and getting a certain commission for obtaining them. If they obtained subscriptions for $1,000 and raised them to $10,000 the fraud was theirs, not Travers', and it was not an indication to the Minister of Finance that there was anything wrong in connection with those responsible for the control of the bank or for the obtaining of a license to do business. It was well known that Mr. McCarthy was acting as solicitor for dissatisfied stockholders. He had, I suppose, advised these stockholders that, having given their notes, which was technically illegal, they could get out of their subscriptions, and they used that means of getting out of 'subscriptions which they were then beginning to fear would not be a profitable investment. The member for Halton pointed out to them that they were incurring not only a liability for their present subscriptions, but also a double liability; with this knowledge they used that technical means of evading their subscriptions or getting back their money. It was well known that Mr. McCarthy was acting 'for dissatisfied subscribers. I suppose all of those who were dissatisfied at that time became Mr. McCarthy's clients and were made parties to the action.

Topic:   WAYS AND MEANS-THE FARMERS' BANK.
Subtopic:   W. E. TEAVEBS,
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May 2, 1911