March 19, 1915

REPORT.


Sixth annual report of the Board of Civil Service Commissioners.-Hon. Louis Coderre.


SENATE AND HOUSE OF COMMONS ACT AMENDMENT.


Mr. EDMOND PROULX (Prescott) moved for leave to introduce Bill No. 77, to amend the Senate and House of Commons Act. He said: This Bill is intended further to secure the independence of members of the Senate and House of Commons, and at the same time to safeguard the interests of the country. In these days of extensive purchases by the Government without public tender, I believe that the present legislation on this subject needs to be amended. As the law is at present, a member of this House or of the Senate is prevented from having any contract or business dealings with the Government, but he may be a shareholder in a company, and be largely interested in that company, which has the right to contract with the Government, except in the case of a company which undertakes to contract for a public building or other public work. By this Bill, I wish to add to the companies prevented from dealing with the government any company in which a member of this House or of the Senate is a director, or in which he holds, directly or indirectly, a controlling interest. Motion agreed to, and Bill read the first time.


BANK ACT AMENDMENT.

LOANS FOR SEED GRAIN.


On motion of Hon. W. T. White (Minister of Finance), the House went into Committee to consider the following proposed resolution: Resolved, that it is expedient to amend the Bank Act by permitting the chartered banks up to the 1st day of July, 1915, to lend money for the purchase of seed grain upon the security of the grain purchased, the crop to be grown therefrom, and the grain threshed from the crop, and that any Act founded on this resolution be deemed to have come into force on the 15th day of March, 1915.


?

Richard Smeaton White

Mr. WPIITE:

This resolution is almost self-explanatory. We propose to amend section 88 of the Bank Act by allowing a bank to lend money to the owner, tenant or occupier of land for the purchase of seed grain, upon the security of the crop to be grown from such seed grain. At present it is not open to the banks to take such security, and it was thought advisable, having regard to the desirability during this year of greatly increasing production and prevailing financial conditions, that the amendment should be made and this additional power given to the banks. Representations have been made to me for some time past with regard to this matter. I took it up with all the chartered banks in Canada, and while it appears perfectly clear from the replies which I have received from the banks that the general credit and standing of the borrower will still be a controlling factor in their determination of whether or not loans will be made, it would appear also that it may be an advantage to the borrowing community that this legislation should be enacted, as the banks would, I am convinced, be more ready to lend than if they were not permitted to take this security.

Topic:   BANK ACT AMENDMENT.
Subtopic:   LOANS FOR SEED GRAIN.
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LIB

Alexander Kenneth Maclean

Liberal

Mr. A. K. MACLEAN:

The present provisions of the Act covered this-not so far, I admit, as lending on the seed grain itself, which would be no security; but after that seed grain is once sown and harvested, the present provisions of the Bank Act would enable a bank to make advances upon the security of that grain. I do not see how one can differentiate between general grain and grain grown from seed purchased by the Government.

Topic:   BANK ACT AMENDMENT.
Subtopic:   LOANS FOR SEED GRAIN.
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CON

William Thomas White (Minister of Finance and Receiver General)

Conservative (1867-1942)

Mr. WHITE:

I think my hon. friend is correct in stating that once the crop is reaped and the grain harvested, if an agreement had been taken for a lien, it would probably be given effect to by the courts; but the section of the existing legislation to which I have referred does not cover the case of growing crops. As my hon. friend knows, growing crops are in a sense real estate and not personal property. We propose to give a lien analogous to the lien

which is given under legislation of certain of the provinces, in the West solely, so far as I am advised, by which legislation a lien may be given for advances made for the purchase of seed grain, upon the growing crop as well as upon its product when harvested and threshed.

Topic:   BANK ACT AMENDMENT.
Subtopic:   LOANS FOR SEED GRAIN.
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LIB

William Ashbury Buchanan

Liberal

Mr. BUCHANAN:

Does the minister know whether the banks are prepared to avail themselves of this proposal if it is adopted?

Topic:   BANK ACT AMENDMENT.
Subtopic:   LOANS FOR SEED GRAIN.
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CON

Frederick Laurence Schaffner

Conservative (1867-1942)

Mr. SCHAFFNER:

Do not worry about

that.

Topic:   BANK ACT AMENDMENT.
Subtopic:   LOANS FOR SEED GRAIN.
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CON

William Thomas White (Minister of Finance and Receiver General)

Conservative (1867-1942)

Mr. WHITE:

The banks must exercise

their discretion in regard to all applications for loans. It is not open to a government to enact compulsory legislation unless the further step is taken of supplying the financial institutions with money. The banks have to loan out money which is placed on deposits with them by the public throughout the country. It is for them to exercise their discretion as to whether or not in particular cases they will or will not extend credit. Our object in introducing this legislation is to enable a bank to take a lien, the idea being that, being able to take this additional security, it would be more willing to lend in a case in which there might be some doubt as to whether the loan was a good one or not. I believe that this legislation will facilitate the extension of credit to the farmers for the purpose of purchasing seed grain.

Topic:   BANK ACT AMENDMENT.
Subtopic:   LOANS FOR SEED GRAIN.
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LIB

Wilfrid Laurier (Leader of the Official Opposition)

Liberal

Sir WILFRID LAURIER:

I presume

that this legislation is introduced in response to many requests which have come to my ihon. friend chiefly from western farming communities. I am under the impression that this is not the first time that similar legislation has been requested. There have been many efforts on the part of farming communities to (have the Bank Act amended in the way in which it is proposed to amend it temporarily. The question is not free from doubt as to whether or not such a departure from well-known banking principles will work satisfactorily. At all events, this legislation will serve as an experiment. I never could see why it could not be done. There are, of course, some conflicting principles. For instance, a moment ago my hon. friend said very properly that a standing crop is part of the realty. Under the present law of the province of Quebec, the crop would go to the purchaser of the soil. It is easy, however, by legislation to give a bank the necessary power to collect its lien. From

time to time the banking law has been amended to advance credit further so as to enable men to get accommodation from the banks. This is another step in that direction. It is an experiment, and I hope and believe it will woik out satisfactorily.

Topic:   BANK ACT AMENDMENT.
Subtopic:   LOANS FOR SEED GRAIN.
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LIB

James McCrie Douglas

Liberal

Mr. DOUGLAS:

With one exception, I am quite in favour of the resolution as presented by the Minister of Finance. He brings it into effect only until the 1st of August, 1915. A provision of this character is of such value to the farming communities of western Canada in particular, that it should become a part of the Bank Act of Canada and should remain in force along with the other provisions of that Act.

Topic:   BANK ACT AMENDMENT.
Subtopic:   LOANS FOR SEED GRAIN.
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CON

William Thomas White (Minister of Finance and Receiver General)

Conservative (1867-1942)

Mr. WHITE:

I think my right hon. friend has put the matter very fairly in saying that such legislation has not in the past at least, been regarded as being free from doubt, and that this amendment is in the nature of an experiment. From the experiment which we shall make with this, we shall be in a better position to judge as to the advisability of adopting the suggestion put forward by my hon. friend. In the past, either this question specifically-or questions analogous to it-as to the security which may be taken by banks from their customers, has been very much discussed in the House and in the Banking and Commerce Committee. In the past one consideration as against legislation of this kind has had great weight with the House; that is, that the banker's lien is a secret lien, and one reason why Parliament has not been willing to permit banks to lend upon chattel security or to extend the list of securities upon which banks may lend money, has been that other creditors, who would not be aware of the existence of the lien, might be prejudiced, and that parties who had themselves taken a lien might find themselves cut out by a secret lien taken previously to their encumbrance, without notice on their part. Therefore the question is not entirely free from difficulty; but for the present year, and having regard to the exceptional situation which prevails, we think we may well enact this legislation, which, by the way, we intend shall date back to March 15, 1915. I notified the banks on the introduction of this resolution in order that any steps that they might take, immediately between March 15 and the date of the passage of this Bill, would be authorized and legalized by this legislation.

Mr. BUCHANAN1: I agree somewhat with the remarks of the hon. member for Strath-

cona (Mr. Douglas) in this respect. This is not compulsory upon the banks, but it gives them the right to do this, if they want to do so. If it were extended and made a feature of the Bank Act, it would rest with the banks as to whether they would make the ^advances or not. I think there is something to be said in favour of making it a permanent feature of the Act.

I would like to point out to the minister something which has relation to the condition in my own district, and which applied not only to seed grain, hut to feed for live stock. I think that in the recent amendments to the Bank Act provision was made whereby banks may lend money on the security of live stock. In my district great difficulty is experienced in securing feed for live ^tock. The Government is providing feed for work horses and some other farm animals, but I have received a great many complaints to the effect that the farmers are not in a position to borrow money from the banks to secure feed which will carry them through till harvest time. The owner of a large number of cattle or hogs or sheep who cannot get assistance from the Government is in the position that he cannot get assistance from the banks. He cannot get feed on credit, and he is forced to dispose of his live stock at a great sacrifice. I think that the banks should go out of their way to assist any farmers who have difficulties in that respect and of whose credit they are satisfied. I am led to believe, however, that the banks, without considering the credit of the farmer or the stock raiser, simply take the view that they will not lend money-and they are not lending it. Consequently, mixed farming in my section of the country is suffering severely by reason of the action of the banks in this respect. My criticism does not apply to all banks, because I know that some of the banks are treating the farmers fairly liberally in this respect. A great many of them, however, are not, and the result is that the farmers are losing their live stock. Although the banks may not avail themselves of any provision which may be made to obviate this difficulty, I would be glad if the Minister of Finance would urge upon them the desirability of their being more liberal in their treatment of the farmers, thus enabling the farmers to retain their live stock which they have purchased in recent years and which during the last season many of them have been forced to sacrifice on account of lack of feed. I received a communica-

tion this morning stating that the policy of the department was largely confined to providing feed for work horses in order that the crop should be put in this spring. I am told that the supplying of feed does not apply to milch cows; it is needless to say that it would be a serious matter for the farmers to have to sacrifice their milch cows at this time. Conditions are so critical that the farmer may lose many of their animals by being obliged to dispose of them at very small prices.

Topic:   BANK ACT AMENDMENT.
Subtopic:   LOANS FOR SEED GRAIN.
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LIB

William Pugsley

Liberal

Mr. PUGSLEY:

Any provision which

would enable the farmers to obtain credit certainly ought to commend itself to this committee. But I think in considering this measure one ought to bear in mind that the farmer would benefit by being enabled to get credit from storekeepers and from the people with whom he is accustomed to deal and from whom he is in the habit of getting his supplies. That brings up the consideration as to whether they or these bankers' liens should be secret. I do not believe that a banker's lien upon lumber or upon any other article ought to be a secret lien. If the banker takes a lien upon grain and upon the products of grain, I do not see why that lien should not be filed in the local registry office, so that everybody who chooses to make inquiry would be able to find out just what liens exist against a man who may be getting credit from the storekeeper or from any other person. By extending the banker's lien and still providing that it shall be secret, you hamper the farmers in getting credit from the persons with whom they have business transactions and the dealers from whom they may desire to purchase. Can my hon. friend suggest any reason why a banker's lien should be secret? If a man borrows from a private individual and gives a bill of sale, that bill of sale must be filed in the registry office. If he buys machinery on a vendor's lien or a lien note, that lien note must be filed in the registry office. That is the law; why should the banks be singled out for exceptional legislation and be allowed to make secret agreements? When the debtor finds himself unable to meet all his obligations, the banks may get in first and sweep away everything which the man has, leaving the other creditors absolutely without remedy or relief.

Mr. WHITE; My hon. friend has put forth very cogently the reasons which have usually been given in the House, in connection with the decennial revision of the

Bank Act, why the bankers' lien under section 88 of the existing legislation, should not be extended. The matter to which he refers was given very careful consideration by the Banking and Commerce Committee at the last revision, and was also discussed to some extent in the House. It was shown to the satisfaction of the committee that on account of the vast number of transactions, running up to a great number every day, which take place in this connection, it is inexpedient that the liens taken upon merchandise generally and lumber, to which my hon. friend particularly referred, should be registered. It was also shown to the satisfaction, I think, of the committee, that no disadvantage resulted to the community as a whole by reason of the existing legislation. Both the committee and the House were unwilling, however, to extend the principle of secret lien so as to enable the banks to take, let us say, chattel mortgages-mortgages upon all kind's of chattel property.

My hon. friend has said that he thinks it advisable that these liens should be registered, and there is much to be said for that view. But he will recognize that if a provision were made for registration, machinery would have to be created whereby the liens could be registered. The one great difficulty in the way at present is that in the province of Quebec such a thing as a chattel mortgage is not known; it is prohibited by law. There is in that province no provincial organization such as exists in the province of Ontario, let us say-and, I believe, in almost all the other provinces- whereby a mortgage, as we call it in Ontario, of that character, can be conveniently registered upon the payment of a small fee. It would be necessary, therefore, in connection with this measure which I am now introducing, if we decided that these liens should be registered, to create machinery in the province of Quebec for that purpose. A proposal of this kind would have to receive very careful and somewhat prolonged consideration. My hon. friend is not in disagreement with myself as to this. He evidently has in his mind that the farming community may be prejudiced in obtaining credit from storekeepers and others by reason of the possible existence of a lien in favour of the banks. There is also this view: that storekeepers and other creditors might be prejudiced by the existence of a secret lien of which they had no knowledge. That is the reason why Parliament in the past has not been willing to agree to the extension of the secret lien.

The seed grain situation this year is exceptional, because there appears without doubt to be a serious shortage of seed grain, especially in the West. The Government is doing what it can. I think we appropriated some $7,000,000 or $8,000,000 for the purpose of making advances to the farmers of the West in order to enable them to procure seed grain, which action is necessarily limited to those areas of the country which have been drouth-stricken because, speaking generally, when you deal with those who have patented their lands, as opposed to those who have not yet secured patents, who are the wards of the Government in a sense, any action of this character should be provincial rather than Dominion. If the Dominion assumed the task of financing any class of the community its action would have to be Dominion wide, from the Atlantic to the Pacific, and I think it is common ground to both this Government and the Government which preceded it, as is shown clearly by the correspondence of 1908 with relation to seed grain advances, that once land is patented, prima facie, the duty of assisting those who had the patented lands devolves upon the provincial government. However, this has been an exceptional year, as was 1908; and the Government, as I have stated, decided to make very large advances to assist those in the drouth-stricken district to purchase seed grain. In order to carry out the suggestion of the hon. member for St. John (Mr. Pugsley) to provide for the registration of these liens, much more consideration would be required than we are able to give to it this year or than the House would be able to give to it; and as the measure is temporary and as my right hon. friend has said in the nature of an experiment, and as it may be demonstrated by experience that this legislation may safely be made permanent, I think the Government are quite justified in introducing this measure to meet the exceptional situation which prevails.

Topic:   BANK ACT AMENDMENT.
Subtopic:   LOANS FOR SEED GRAIN.
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LIB

William Manley German

Liberal

Mr. GERMAN:

The minister stated that this suggestion as to the registration of the liens had passed Parliament and the committee of Parliament when the Banking Act was up for discussion, to the satisfaction of Parliament and the committee. It probably did pass to the satisfaction of the majority of the House and the majority of the committee, but not with the unanimous sanction of Parliament or the committee, because it was pretty seriously discussed then and is a serious problem as was stated by the hon. member for St. John. The min-

ister says that no machinery exists or could be made to exist at the present time. It appears to me it would be the easiest thing in the world to devise machinery for the registration of these liens, that they could be registered with the clerk of the county court in each county and have a fee of 10 cents paid to the registrar or clerk of the court. Then every one would have notice that the bank did not have a lien. I for one think that the bank has altogether too much advantage over ordinary creditors throughout the country. They have the best of it all the way through.

Topic:   BANK ACT AMENDMENT.
Subtopic:   LOANS FOR SEED GRAIN.
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CON

William Thomas White (Minister of Finance and Receiver General)

Conservative (1867-1942)

Mr. WHITE:

The banks have not asked for this legislation.

Topic:   BANK ACT AMENDMENT.
Subtopic:   LOANS FOR SEED GRAIN.
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LIB

March 19, 1915