June 4, 1917

LIB

Daniel Duncan McKenzie

Liberal

Mr. D. D McKENZIE (North Cape Breton):

I am not opposed to the farmer having every opportunity of borrowing money, but I think it is objectionable to create machinery that will enable people to borrow money from a bank and that at the. same time will be different from any other methods of borrowing. If the Minister of Finance will give the banks power to lend money on such security as is mentioned in this resolution, letting them take such security as may be in compliance with the laws of the different provinces in which the banks are doing business, I think he is going as far as he can be expected to go, and I do not see any necessity for going any further. I understand the deficiency in the Bank Act was that banks were not permitted to lend money on security of this character. That being the case, of course, there is a handicap, but this legislation removes that disability and says to the bank: If your directors and managers are willing to lend money on security of this character, you have authority to do so, taking such security as you may deem advisable, subject to the laws of the province in which you are doing business. That is as far as we ought to be asked to go, and we should not be creating any machinery that will put the bank in a superior position to a private individual who may have money to lend. My hon. friend from North Simcoe (Mr. Currie) speaks of loan sharks. There may be such people, but there are other people who^are honest, who have money to lend and who sometimes are willing to lend it out at a lower rate of interest than the banks. If a man who has a few thousand dollars in his possession is willing to lend it on security of this kind to a farmer, why should a bank have a private lien so that it is put in a superior position to the private individual? I think we are creating unnecessary difficulties. Banks are well equipped to do business. Their directors and managers are the very best men they can secure; they have the best legal advice obtainable, and if they have power to lend money on this class of security, that is all they should ask from this Parliament. They should bear the burden of looking after the security and complying with forms and proceedings just as other businesses in the various provinces must do. I am strenuously opposed to going any further than that. If you place an execu-

tion. in the hands of a sheriff in any province of Canada, that sheriff, if he is a careful man, may go to the registrar and see if there is anything on record against the personal property of the man against whom the execution is issued. If there is nothing against the property, he has no excuse for not levying, but under this legislation, if it goes into force, there may he a private lien, and a man may go through the whole process of the sheriff's .sale and the whole thing may be abortive because the sheriff could not give title, because there was no title in the naan against whom he had the excution. This private lien renders the whole thing abortive. After the wool has gone through the factory and has been cut and tailored into a coat, it may turn out that the bank has a lien on the wool and a man may have his coat taken off his back because he had no title in it. This is most extraordinary legislation. I am not at all claiming that the minister has no power to compel or to ask the officers in the different provinces to file this lien, I will point him to a similar case in a different way; the registrar of deeds is under no greater obligation to the Department of Railways and Canals than he is to the Department of Finance, but if the Department of Railways and Canals wishes to take over land in the province of Nova Scotia, the engineer makes a plan of that land under Dominion legislation; he goes into the office of the registrar of deeds; that officer takes it; and puts it on record, and he in a way vests the title to that land in the Crown as represented by the Department of Railways. That is because the taking over of this land and the filing of the plan are incidental to the building of the railway. If the minister makes taking security on personal property an incident of banking,-and we have absolute power to deal with banking-I see no reason why the same argument would not apply, and when a man presents that authority from the Department of Finance, under legislation passed by this Parliament, I see no reason why an officer of any province would not be obliged to put it on record just as he is obliged to put on record the plan that comes to him from the Department of Railways.

Topic:   QUESTIONS.
Subtopic:   BANK ACT AMENDMENT.
Sub-subtopic:   LOANS ON SECURITY OF LIVE STOCK.
Permalink
CON

John Allister Currie

Conservative (1867-1942)

Mr. CURRIE:

The ho'n. gentleman knows it is a rule of banking that there is a difference between taking security on productive property and non-productive property. Non-productive property is personal property such as jewels, furniture, and that sort of thing, and a chattel mortgage is required

in order to borrow money on it; but for productive property, such as cattle, that increase in value by being fed, I cannot see any difference between that and say logs, or pig iron, or raw lumber, and I think this legislation is along the right lines. A distinction is made by foreign banks which, will not lend on jewels, furniture, or anything of that kind.

Topic:   QUESTIONS.
Subtopic:   BANK ACT AMENDMENT.
Sub-subtopic:   LOANS ON SECURITY OF LIVE STOCK.
Permalink
LIB

Daniel Duncan McKenzie

Liberal

Mr. McKENZIE:

The hoi., gentleman had no occasion to interrupt me because I knew before what he told me. All that I ask is that the banks should look after themselves as to the kind of security they 'will take, and all that we are called upon to do is to authorize them to take such security, and, upon such security, lend money if they are willing. In the particular part of the province of Nova Scotia from which I come no substantial farmer has any difficulty in getting the money he requires. Of course we have no large cattle ranches such as exist in the West where such legislation would be serviceable.

As far as publicity of the form of security taken is concerned, there should be no discrimination in favour of the bank. If the minister' comes to the conclusion that he cannot force the officers to put this form of security on record, this legislation should not go through at all, and the banks should be left to take security in any such form as they deem advisable, after consultation with their legal advisers.

Topic:   QUESTIONS.
Subtopic:   BANK ACT AMENDMENT.
Sub-subtopic:   LOANS ON SECURITY OF LIVE STOCK.
Permalink
LIB

John Gillanders Turriff

Liberal

Mr. TURRIFF:

What is the opinion of the farmers' organizations with regard to this legislation?

Topic:   QUESTIONS.
Subtopic:   BANK ACT AMENDMENT.
Sub-subtopic:   LOANS ON SECURITY OF LIVE STOCK.
Permalink
CON

William Thomas White (Minister of Finance and Receiver General)

Conservative (1867-1942)

Sir THOMAS WHITE:

I believe they are in favour of it. Speaking from memory, the matter was first brought to my attention by the United Farmers of Alberta. My hon. friend will pardon me, I hope, if I first reply briefly to the hon. member for North Cape Breton. I think he is probably correct in stating that the Dominion Government could designate a provincial official as the party to file the form of assignment provided for in banking legislation. The matter, however, does not rest there. In the legislation of the several provinces there are usually additional safeguards thrown around chattel mortgage transactions. In some of the provinces, for instance, it is provided that there must be an affidavit of bona fides, and filing must take place within a certain number of days. In some of the provinces it may be the clerk of the county court who receives and files the chattel mortgages, and in others a different officer. I hope my hon. friend

will take it from me that we have considered that phase of the matter very fully, and that there are very great difficulties indeed in the way of drafting Dominion legislation providing for the registration of an assignment such as is provided for in this legislation, if it is to be in accord with the legislation of the several provinces. This matter has been given the best consideration by the farmers, I believe, and especially, by the representatives of the banks at Winnipeg, who have had frequent conferences with the farmers, and who desire to promote as far as possible the livestock industry. I shall be very glad to have all these matters most carefully considered when the Bill is before the Banking and Commerce Committee. I do not want to be responsible for legislation that will do any harm to creditors, but I do think that our legislation must be more and more advanced as the country itself advances. I think that what were regarded as necessary safeguards if) the public, say a few years ago, may be unnecessary to-day, having regard to the changed conditions in agriculture and in business. The farmer will more and more get into the habit of doing his business with the bankers, and paying his grocery and other bills by cheque, just as business men do; in other words, farming will become more and more a business. We must not conclude that what has been true of the past must necessarily be true of the future. I think our legislation must take a step forward from time to time to meet the changed conditions, if the country is going to do its utmost along the line of agricultural development.

Let me point out what happened two pr three years ago. At that time banks, while they could loan on warehouse receipts, could not make a loan to the farmer upon a pledge of the grain ,on his farm. We introduced legislation, first of all for one year,-I think it was introduced in 1915- under which a farmer having grain upon his premises could pledge it to the bank, just as a manufacturer can pledge his product to the bank. The question was raised at that time. What about the farmer's creditors, what about purchasers of value without consideration? Precisely the same questions that are raised to-day were raised then. However, we enacted the legislation, first for one year, and afterwards permanently, and so far as I know np untoward results have followed; I have had no complaints from any creditors that they have been defrauded by the

farmers. The legislation seems to have worked out satisfactorily, and as a result the farmers have been securing loans on grain which had not left their farm, and on which they could not obtain loans previously. The banker naturally has to protect himself. When he can get a lien upon grain he will make a loan that otherwise he would not make for fear the farmer might sell the grain or some other creditor seize it. Under the legislation that was passed at that time it would be fraudulent, and consequently criminal, for the farmer to dispose of his grain in violation of his pledge. What is the difference between that and live stock? The grain farmer can pledge his grain to the bank, but at present the live stock farmer cannot pledge live stock, and the question is, shall he be allowed to do so? This Bill will enable him to do so. But we are so solicitous of the rights and so regardful of the policy of the several legislatures of Canada, knowing as we do that most of them have placed chattel mortgage legislation upon their statute books, that we provide that if the legislatures of the several provinces, or any of them, enact that this lien shall be registered by the officers in that province whose duty it is to register chattel mortgages and bills of sale, then this security must be registered, and if it is not so registered it becomes null and void. That is the intention and effect of this measure.

Topic:   QUESTIONS.
Subtopic:   BANK ACT AMENDMENT.
Sub-subtopic:   LOANS ON SECURITY OF LIVE STOCK.
Permalink
LIB

John Gillanders Turriff

Liberal

Mr. TURRIFF:

I have no doubt that the legislation may accomplish some good, although to my mind there are some very serious objections to it. I think it is undesirable to give the banks a preferred position over other creditors. . This legislation will accomplish some good, no doubt, but I do not think the Government is going about it in the right way. We have heard a great deal of late years about credit for the farmers of the West, and the local governments have undertaken to find cheaper money for the farmer in the way of farm loans. In the three prairie provinces the legislatures have made arrangements to provide farmers with money at actual cost plus the cost of administration, thereby cutting out all profit. That is going to be a boon to the farmers. What they need more particularly at this time is a bank credit for short term loans, and it seems to me that that is purely a matter of banking, though it will never be accomplished by the present chartered banks. Our banks have branches all over the country. A young fellow will go from Ottawa,

say, to take charge of a branch bank in the West. He understands banking all right but he knows nothing about farming and the raising of stock, and besides he is hampered by hard-and-fast rules from the head office. I think the time has come [DOT]when the Dominion Government ought to do something in the way of assisting to establish farmers' banks throughout the country from which farmers could get short term loans. But I would point out to the minister that if that were done it would be absolutely necessary to protect these farmers' banks from the chartered banks. For there is no doubt that if a bank were started for the purpose of doing only this business with the farmer, it would be only a small bank, something along the line of the state banks in the United States; and if it were not protected in some way, so that its securities could be re-discounted, it would be an easy matter for the chartered banks to do with it exactly as they do now with any new bank which starts in .a small way-they make it almost impossible for that bank to succeed. So, while this legislation may be all right, while it may be a step in advance, I do not know that it is at all a solution of the problem of short term banking credit for the farmer. While it is too late, I suppose, to attempt anything in this way this session, I would suggest to the minister that the matter should be looked into between now and next session with a view to evolving some system by which small hanks may be established to supply the necessary credit for the farmers ip. their ordinary business, particularly for the very important object for which this Bill is introduced-to enable the farmer to buy stock, feed it, and sell it again. In many oases in the West a farmer will have a good deal of poor wheat which cannot be sold to advantage, but if he is in a position to buy cattle, hogs, or sheep, and feed this grain, he may be able to make more money out of it than if he sold a crop of first-class wheat. So, while this legislation is all right, I think it is not a solution of the question, and I would urge the minister to consider the whole subject between now and next session.

Topic:   QUESTIONS.
Subtopic:   BANK ACT AMENDMENT.
Sub-subtopic:   LOANS ON SECURITY OF LIVE STOCK.
Permalink
CON

Hugh Boulton Morphy

Conservative (1867-1942)

Mr. MORPHY:

I congratulate the Finance Minister (Sir Thomas White) on having taken a step in advance in this matter. As I understand it, this law will enable farmers to be assisted to meet conditions that probably no bank, particularly in the province of Ontario, *would help him to meet. The chartered banks will have the power to advance money by way of warehouse receipt or assignment, to take a first lien, without registration of any kind. Here is a Bill that gives to the farmer an advantage that he has not had before in any province of Canada under the Bank Act, viz., the power to borrow money from the bank upon chattels upon which the hank heretofore could not loan.

Topic:   QUESTIONS.
Subtopic:   BANK ACT AMENDMENT.
Sub-subtopic:   LOANS ON SECURITY OF LIVE STOCK.
Permalink
LIB

William Pugsley

Liberal

Mr. PUGSLEY:

-The bank could loan on this security under the legislation of last year.

Topic:   QUESTIONS.
Subtopic:   BANK ACT AMENDMENT.
Sub-subtopic:   LOANS ON SECURITY OF LIVE STOCK.
Permalink
CON

Hugh Boulton Morphy

Conservative (1867-1942)

Mr. MORPHY:

Not in the way now proposed by this Bill. The whole question, to my mind, comes to this: If the .provinces wish to aid the farmers they will bring their legislation into line with what this Bill provides, especially under section 17. That is to say, the province may enact a law that will compel the hank to register the assignment under this Act in case of a loan to a farmer upon his live stock. I think this is a clear advantage and benefit to the farmer.

Topic:   QUESTIONS.
Subtopic:   BANK ACT AMENDMENT.
Sub-subtopic:   LOANS ON SECURITY OF LIVE STOCK.
Permalink
LIB

William Manley German

Liberal

Mr. GERMAN:

Wherein would the farmer be better off if an assignment had to be registered than he would be if a chattel mortgage had to be registered?

Topic:   QUESTIONS.
Subtopic:   BANK ACT AMENDMENT.
Sub-subtopic:   LOANS ON SECURITY OF LIVE STOCK.
Permalink
CON

Hugh Boulton Morphy

Conservative (1867-1942)

Mr. MORPHY:

It is less expensive, for one thing.

Topic:   QUESTIONS.
Subtopic:   BANK ACT AMENDMENT.
Sub-subtopic:   LOANS ON SECURITY OF LIVE STOCK.
Permalink
LIB

William Manley German

Liberal

Mr. GERMAN:

No.

Topic:   QUESTIONS.
Subtopic:   BANK ACT AMENDMENT.
Sub-subtopic:   LOANS ON SECURITY OF LIVE STOCK.
Permalink
CON

Hugh Boulton Morphy

Conservative (1867-1942)

Mr. MORPHY:

Absolutely so, I think-

Topic:   QUESTIONS.
Subtopic:   BANK ACT AMENDMENT.
Sub-subtopic:   LOANS ON SECURITY OF LIVE STOCK.
Permalink
LIB

William Pugsley

Liberal

Mr. PUGSLEY:

What does it cost to register a chattel mortgage in Ontario?

Topic:   QUESTIONS.
Subtopic:   BANK ACT AMENDMENT.
Sub-subtopic:   LOANS ON SECURITY OF LIVE STOCK.
Permalink
CON

Hugh Boulton Morphy

Conservative (1867-1942)

Mr. MORPHY:

Fifty cents.

Topic:   QUESTIONS.
Subtopic:   BANK ACT AMENDMENT.
Sub-subtopic:   LOANS ON SECURITY OF LIVE STOCK.
Permalink
LIB

William Pugsley

Liberal

Mr. PUGSLEY:

It costs only ten cents in New Brunswick.

Topic:   QUESTIONS.
Subtopic:   BANK ACT AMENDMENT.
Sub-subtopic:   LOANS ON SECURITY OF LIVE STOCK.
Permalink
CON

Hugh Boulton Morphy

Conservative (1867-1942)

Mr. MORPHY:

Then, the assignment is drawn for nothing-

Topic:   QUESTIONS.
Subtopic:   BANK ACT AMENDMENT.
Sub-subtopic:   LOANS ON SECURITY OF LIVE STOCK.
Permalink
LIB

William Pugsley

Liberal

Mr. PUGSLEY:

There is no expense in it now.

Topic:   QUESTIONS.
Subtopic:   BANK ACT AMENDMENT.
Sub-subtopic:   LOANS ON SECURITY OF LIVE STOCK.
Permalink
CON

Hugh Boulton Morphy

Conservative (1867-1942)

Mr. MORPHY:

Are the lawyers drawing these documents for nothing?

Topic:   QUESTIONS.
Subtopic:   BANK ACT AMENDMENT.
Sub-subtopic:   LOANS ON SECURITY OF LIVE STOCK.
Permalink
LIB

William Pugsley

Liberal

Mr. PUGSLEY:

They have a form-

Topic:   QUESTIONS.
Subtopic:   BANK ACT AMENDMENT.
Sub-subtopic:   LOANS ON SECURITY OF LIVE STOCK.
Permalink

June 4, 1917