Mr. STEWART (Argenteuil):

Dr. Tory was employed by the government to make a study of rural credits: he made a report, and in addition gave evidence before the committee on Agriculture. The suggestion that the federal government should go into the rural credits scheme on their own responsibility would meet with some opposition from provinces that are carrying on schemes of their own. ^In fact, that became evident to the government when this matter was being discussed, and the government thought it well to come to the assistance of those provinces who are desirous of getting help financially and who have rural credit schemes in operation.

Mr. IRVINE:

Just in what way does the federal government through this bill help the provinces? As I understand it the provincial bonds are accepted by the Dominion government, and then the Dominion government issue other bonds to carry the debt. Why this double transaction? Why could not the provincial government issue their own bonds direct? If that is all the Dominion government is going to do, what is the advantage?

JMr. Vien.]

Mr. STEWART (Argenteuil):

There is no advantage except that the credit of the Dominion government is behind the issue of the bonds, and that will reduce the interest charge for the borrowers. The whole hope of the scheme, if it is of any value at all, is that it will reduce the interest charge to the farmer borrower.

Mr. IRVINE:

What is the difference at the present time between the interest rate paid on Dominion government bonds and on provincial government bonds? When we know that, we shall be able to estimate the amount by which the interest charges will be reduced by borrowing under this scheme.

Mr. STEWART (Argenteuil):

If the provinces were to issue farm loan bonds of which they were the sole guarantors, my hon. friend might find the interest rate considerably higher than if those bonds were backed by the credit of the federal government. I think it goes without saying that the credit of the federal government will reduce the interest rates. If not, then I will say at once that there is no need of the federal government going into this field at all.

Mr. IRVINE:

Is not that a matter that might be easily estimated?

Mr. STEWART (Argenteuil):

I know what is in my hon. friend's mind, I think. His point is that the provincial bonds are selling almost on a par with federal bonds, and that therefore in the issue of farm loan bonds there is no advantage in having the federal government as guarantor. That, of course, is very largely a matter of opinion. My own opinion is that there will be advantage in having the backing of the federal government in the issue of these bonds covering farm loans.

But what I wanted particularly to say is this. I am more attracted to the scheme suggested and discussed and written about at some length 'by Mr. Petersen of Calgary. His scheme would provide for a system of rural credits that would be financed largely by the people themselves. Still, I know the difficulty in the inception of a scheme of that kind.

I do believe, however, that if the rural sections of Canada are to be successful in securing cheap money, it will have to be done in some manner other than continually leaning upon the credit of the provinces or of the federal government. We have a serious situation in Canada, particularly in western Canada, where the interest rates are much higher than in any other part of this country, where money is dearer, and transportation and living costs are higher, and relief in this direction I think should be extended to these provinces. I do

Rural Credits

not think it should be extended to them to an extent beyond what their credit will warrant. Under this bill the government are not taking any chance of having losses, but this step is being taken for the time being in order to inaugurate a system of this kind. We are loaning our credit to the extent of $10,000,000. It is true that $10,000,000 will not go very far in a scheme of this kind, but I think it will go far enough to meet the requirements at least of this year. It will take some considerable time to get the negotiations worked out between the provinces who are desirous of obtaining loans and the federal government. No one would argue that $10000,000 would be of any advantage at all if it were to be confined to that. I think Doctor Tory is well within the mark when he states that the farm loan indebtedness of the three prairie provinces is well over $200,000,000. Some years ago when I was premier of the province of Alberta-at the time, by the way, when our farm loan bill was passed-the indebtedness of the province of Alberta alone was then $60,000,000, so that to suggest that $10,000,000 would meet the situation is an utter absurdity. But I would like in the intervening period between this session and next to make some further study of the scheme. I see no difficulty in encouraging under provincial auspices, backed by the credit of the federal government farm loan societies much along the same lines as our rural credit societies are being carried on to-day. That is what I would like to see done, but I do think it is important that the credit of the federal government be behind the scheme in order to get the money at the cheapest rate.

Mr. GARLAND (Bow River):

Is not the minister aware that the legislation now on the statute books of Alberta proposes to do just that very thing-the organization of local credit societies with provincial backing, providing they can get money in co-operation with the Dominion government?

Mr. STEWART (Leeds):

I should like to ask again what provinces have requested this assistance.

Mr. ROBB:

I have already stated twice that representatives from different counties in different provinces have from their place on the floor of this parliament made representations to us in this matter.

Mr. STEWART (Leeds):

Am I to assume, then, that there has been no formal request from the government of any province for this assistance? I would like to have the minister answer the question, yes or no.

Mr. ROBB:

I am not going to make a reply to that question without reading carefully through my files again.

Mr. MEIGHEN:

The minister thinks possibly he could dig up some letter from a government. He knows just as well as he knows he is sitting in his seat that no government in the world has asked for this. He knows it is nothing more or less than grotesque for the government to introduce this as a rural credit scheme. A rural credit scheme is one thing, and a farm loan scheme is another. It would be almost a joke to describe this as anything at all, but the last thing in the world you could describe it as is a rural credit scheme. Manitoba has a rural credit scheme, and a farm loan scheme too.

Mr. ROBB:

This act is to provide long term farm loans.

Mr. MEIGHEN:

Why all the use of this term "rural credits"? This has nothing to do with rural credits as commonly understood.

Mr. VIEN:

My right hon. friend is wrong.

The title of the act is "An Act to authorize advances to assist agriculture by providing for long term farm loans."

Mr. MEIGHEN:

I am quite aware that when it came to the title of the act the government got away from rural credits, but this was announced in the House as a rural credit scheme. The Prime Minister announced the government was going to introduce one. The government has not done so at all. This has no more to do with rural credits, as rural credits are understood, than has the bill about the Petersen contract.

Mr. ROBB:

What is my hon. friend's idea of the difference between rural credits and long term farm loans?

Mr. MEIGHEN:

If the minister has not that in his own head he has not given much study to this subject. Rural credits in Manitoba are based on the idea of government cooperative units. They have been assisted by the provincial government and a special act is passed to provide for the administration of the funds entrusted to each on a co-operative basis. I know it has been a failure. I know that fifty-odd out of seventy-four are now in the hands of the provincial government as liquidator. But that is the rural credit scheme, good or bad. They have a farm loan scheme too, and I am not sure which has been the greater failure, the farm loan scheme or the rural credit scheme.

Mr. FORKE:

I think the farm loan scheme is all right.

Rural Credits