Hon. J. W. EDWARDS (Frontenac-Addington) moved:
That, in the opinion of this House, it is advisable that the same measure of relief should be granted to those who suffered loss through the failure of the Farmers Bank as has been granted to those who lost through the failure of the Home Bank.
He said: Mr. Speaker, I hold in my hand a tabulated statement of some twenty-four bank failures which have occurred in Canada between 1868 and 1910, giving in each case the date of suspension, the amount owing to the
Farmers Bank Failure
public, and the percentage paid to the depositors, also the amount lost in each case, if any. The aggregate liabilities, the amount owing to the public, in these twenty-five banks-I am including the Home Bank-was about $77,000,000. The amount lost was $6,774,665, not including the loss in the Home Bank case. Out of those twenty-five cases of failures, in fourteen cases the depositors received the full amount they had on deposit: in six cases they received respectively 57| per cent, 59i per cent, 66 J per cent, 75| per cent, 96i per cent, and 99i per cent of the amounts they had on deposit. In one case they received 11 per cent, and in another 17i per cent of the amount they had on deposit. In two cases only of all in this list the depositors received nothing whatever. One of those cases was the Bank of Acadia, which suspended in April, 1873, and where the amount involved was only $106,914. The other case was that of the Farmers Bank, which suspended in December, 1910, and where the amount involved was about $2,000,000.
I wish to point out that during the last fifty years or more there has been no case of a bank failure where the depositors have lost all that they had in the bank, except the case of the Farmers Bank. I want to state also this, that so far as my information goes, and I believe it is correct, the only case in the history of Canada where the certificate was granted to a bank in violation of the provisions of the Bank Act was in connection with the Farmers Bank.
Earlier in the session I placed on the order paper certain questions which in due course were answered by the hon. Minister of Finance (Mr. Robb). One of these questions read as follows:
Did parliament vote money for the relief of Home Bank depositors in recognition of any legal or moral claim of such depositors on the government?
The answer to that question was as follows:
The act stands on the statutes as a relief measure. It will be recalled that the House adopted a report of the banking and commerce committee to the effect that it considered the investigation established "a moral claim in equity for compensation."
The Home Banklopened its doors for business on the 2nd of January, 1906, and suspended on t'he 17th of August, 1923. The Farmers Bank opened its doors on the 2nd of January, 1907, and suspended 'ou the 19th of December, 1910. The Home Bank was therefore in operation for 17 years and 7| months, while the Farmers Bank was in operation for less than four years. When the Home Bank
failed there was on deposit in savings and current account a little over $15,000,000. When the Farmers Bank failed there was on deposit about $2,000,000. In the case of the Home Bank the depositors received 25 per cent from the liquidator, and I am informed, whether correctly or otherwise, that there is a likelihood of their receiving eight or ten per cent more, which I hope may be the case; but in addition to what they received, and may receive, from the liquidator, the depositors were granted under the legislation that was put through parliament by the government an additional 35 per cent, so that these depositors have been recouped to the extent of 60 per cent, whereas, as I stated before, the Farmers Bank depositors have received nothing whatever,
When the Home Bank failed representations were made to the government asking for an investigation, and in February, 1924, Mr. Justice McKeown was appointed to investigate the Home Bank failure. He made his report to parliament in June of that year, and in July of the same year, 1924, the banking and commerce committee made its report, which was approved by parliament. In June, 1925, the Finance minister moved the House into committee on a resolution to pay $5,450000 to the creditors of the Home Bank for moneys on deposit or in current account. He said that this would provide for a partial pajunent of 35 per cent of deposits, and was in pursuance of the approval by the House of the report of the banking and commerce committee, which was influenced by the report of Mr. Justice McKeown that the depositors had a moral claim, or to use the exact phraseology of the Minister of Finance, "a moral claim in equity" against the government.
What is the basis of that moral claim? It can rest, it seems to me on only one foundation. The basis of the moral claim placing moral responsibility upon the government for loss must necessarily rest upon error of judgment or negligence on the part of the Finance minister or of the Treasury Board. That is the basis, and the sole basis, it seems to me of the moral claim and of the government's responsibility. My resolution asks for the same measure of relief to be granted to those who lost through the failure of the Farmers Bank as has been granted to those who lost through the failure of the Home Bank. It is therefore up to me to establish an equally strong basis of moral claim, and to do so I must establish it on the same foundation, in fact, on the only foundation there is, namely upon an error of judgment or negligence on the part of the Minister of Finance or the Treasury Board.
Farmers Bank Failure
What constitutes negligence?? An act may not be a negligent act at one time under certain circumstances which would certainly be an act of negligence under different circumstances. A person may be driving along the road at a moderate rate of speed, unaware of certain danger, or unaware of the fact that a certain part of the road is unsafe. He meets with an accident. That person is not guilty of negligence, but if that same individual driving at the same rate of speed has been made aware, not by one warning or two warnings, but by half a dozen warnings, that this particular spot is dangerous, and then meets with an accident, I think if he sued for damages any court would say that he had contributed, by his negligence, to the accident which had occurred. Looking at it in that light, I want to place before the House certain facts which I think should be considered in regard to this matter. There are, it seems to me, certain reasons why the Minister of Finance, the Hon. Mr. Fielding, should have been particularly careful before issuing the certificate to the Farmers Bank. As I said a moment ago, a certain number of failures had taken place. Some of these were of recent occurrence. Some half a dozen had occurred between 1896 and 1906. Mr. H. C. McLeod, general manager of the Bank of Nova Scotia, said:
Most if not all of these failures were fraudulent, and it is now plainly evident that a few hours' examination by a skilled banker would have disclosed an insolvent condition in any one of those banks years before they collapsed.
There were a number of failures which had occurred in recent years. For instance, there was the failure of the Banque Ville Marie, which occurred in 1899, but it was only wound up in 1905. Then there was the failure of the Bank of Yarmouth in 1905. This was pretty close to the time when the certificate was given to the Farmers Bank. Then the Ontario Bank closed its doors or suspended in October, 1906, the very month when Travers was making overtures for a certificate. It seems to me that these failures, occurring so recently, should have been a warning to the minister to be especially careful. Another matter of importance is this: the Farmers Bank was incorporated in 1904. The promoters started to work to get the money necessary to obtain the certificate. They failed and came back in 1905 asking for a renewal of their charter. Again they worked for a year and failed, and came back again in 1906, and at that time the Hon. Mr. Fielding 32649-94
expressed his opposition to the granting of the charter, and what reason did he give? He said:
My view was that the fact that they had not been able to organize promptly indicated that they were having difficulty, and I confess that from the beginning I did not quite like the name "The Farmers Bank".
The impression which he had at that time certainly was not very favourable; to the granting of a certificate to this bank, and his own impression, it seems to me, should have warned him to be particularly careful, in view of the fact that Travers and those connected with him had been working for two years and had failed to find the necessary money which would have enabled them to obtain a certificate.
On November 30, 1906, the very day that Travers came for the certificate, Mr. Fielding had a talk with him and brought up the matter of the Bank Act being evaded by taking notes of subscribers and getting them cashed. Mr. Travers assured him that nothing of that kind had been done. On the assurance of Mr. Travers that there was nothing in the rumour so far as the Farmers Bank was concerned, Fielding handed over to Travers the certificate, asking him at the same time to write him, putting in the form of a letter the assurance which he had given him verbally. Travers goes out of the office with the certificate in his pocket, goes to an hotel and writes a letter along the line of the conversation he had just had with the Minister of Finance. When the Farmers Rank failed representations were made from various parts of the country asking for an investigation. On January 7, 1911, a large number of shareholders demanded that a royal commission be appointed to investigate the affairs of the Farmers' Bank. On January 23 of that year Sir George Foster, speaking in the House said:
The Treasury Board had an application before it. The fundamental conditions were the subscription of $500,000, and the putting up and paying in of $250,000 of actual cash.
Neither the one nor the other was done, and the only way that the $250,000 came to be paid in at last was that some men, the bank not being in existence, not having running power, borrowed the money. On February 18, 1911, Mr. Travers was taken from prison to give evidence before the court, and on that occasion he swore that the chief Liberal whip, Mr. Calvert, had gone with him to the Finance minister to urge the granting of the certificate, and on his intervention had been successful. On the 23rd November, 1911, the government refused the request for a royal
Farmers Bank Failure
commission to investigate. On the 15th March, 1911, Mr. David Henderson, member of parliament for Halton, which county was hit the hardest of any, moved for a royal commission to investigate. This motion was voted down on a straight party vote of 97 to 62. In that debate Mr. Fielding said:
Undoubtedly that certificate, as has since been ascertained, was obtained fraudulently. The minister was deceived, the Treasury Board was deceived, the whole country was deceived by the whole proceedings of the Farmers Bank.
Then on the 7th May, 1911, Mr. Haughton Lennox, a member of parliament, moved the following resolution:
This House regrets that in permitting the Farmers Bank to commence and to continue in business the Minister of Finance and the Treasury Board failed to exercise such proper care and to take such reasonable precautions as were necessary to prevent evasion of the law and to protect the public interest.
That motion was defeated by a vote of 97 to 63. Then in the election of 1911 the Liberal party issued a pamphlet in regard to this Farmers Bank matter, and in that' pamphlet they gave this as one of the reasons why the certificate was granted: that at the time of the application some $40,000 had been spent in promotion and if the certificate had been refused the shareholders would have lost a part of that money. They also said-and I put this on record, because it is exactly in line with the expression of opinion given by Mr. Fielding before the House-that if the government had refused to grant the certificate to the Farmers Bank their political opponents would have charged them with treating farmers more unfairly than other people. So that it appears there was a political reason for the granting of the certificate.
I pass now to what took place after 1911, when the Borden government came into power. Sir Robert Borden introduced a government bill for the relief of the Farmers Bank depositors. That bill passed the House of Commons. At that time the majority in the Senate was Liberal. The Senate saw fit to defeat the bill. May I say in connection with the bill iput through very recently in regard to the Home Bank depositors that the Conservatives were in a majority in the Senate, and if they had taken the same course as the Liberal majority did in connection with the Farmers Bank bill that bill would never have become law.
In 1912 the Borden government appointed the late Sir William Meredith, then Chief Justice of Ontario, to investigate the failure of the Farmers Bank. In his report Sir William said:
That the Treasury Board was induced to give its certificate by false and fraudulent representations on the part of Travers;
That as to the representations made to the Finance minister by E. B. Osier and others, it was in my opinion, incumbent on the Treasury Board to have investigated the charges that had been made before coming to a conclusion as to whether or not the certificate should be given.
His findings show conclusively that the conditions prescribed by the Bank Act as precedent to the issuance of the certificate by the Treasury Board had not been complied with, that the certificate had been obtained by fraud and dishonesty, and that the Treasury Board was negligent in issuing it. It will be observed that he said in his report:
It was incumbent upon the Treasury Board.
That means it was the duty of the Treasury Board, which duty was not fulfilled. I submit, Sir, that a duty unfulfilled constitutes negligence, especially if that failure of duty is in the face of repeated warnings.
Let me quote a remark made by Sir Wilfrid Laurier to which I would direct the particular attention of all hon. members. It will be found in Hansard of 1911 at page 5400:
This country is broad enough and rich enough to correct an error of the government, if an error has been committed.
That, Mr. Speaker, is a good principle to follow, for no party and no individual gains anything by refusing to correct a manifest fault. But while Sir Wilfrid Laurier admitted the principle that the country should make good where error was shown, he refused to permit an investigation to find out whether or not an error had been committed. Sir William Meredith followed explicitly, almost literally, what Sir Wilfrid Laurier had said. Sir Wilfrid then said that he would admit moral responsibility if negligence could be shown. Let me quote his own words, that they may impress themselves upon hon. members. They will be found in Hansard of 1911 at page 3659:
If there was negligence on the part of Mr. Fielding, the question of how far the government would be responsible would be u very different question. The government would be morally responsible, if not otherwise. If a minister of the crown has made an error of judgment, it is simply a question of his having made a mistake, which has no legal or moral consequences. It is always a serious charge that there has been an error of judgment, but we are all liable to mistakes; and after all-
I entirely concur with this, as I am sure the House will.
-and after all if the only charge that can be
made against a minister of the crown who has been fifteen years in office is that upon a certain occasion he committed an error of judgment, the charge is but a minor one.
Farmers Bank Failure
I would ask hon. members to note particularly the first sentence, because Sir Wilfrid Laurier there admits the responsibility- if negligence on the part of the Finance minister or the Treasury Board can be shown. I direct attention to that sentence because it was the basis of the action taken by the Borden government. And necessarily it is the basis of this resolution that negligence should be shown.
Now let us examine the facts a little more in detail. I have already quoted Mr. Fielding's admission that he was deceived. I will add some words from Sir Wilfrid Laurier to the same effect. He stated from his place in the House:
That the Minister of Finance and the Treasury Board have been deceived was admitted long ago. When Mr. Travers declared that the shareholders had put into the treasury of the bank $250,000, that was deceit to the extent of about $80,000. That is admitted.
These words of Sir Wilfrid Laurier are the basis for the general admission by himself and his followers of what they are pleased to call an " error of judgment" on the part of Mr. Fielding. But the right hon. gentleman argued that that bad nothing whatever to do with the subsequent loss. In that regard I wish to quote what was stated by Sir Robert Borden, as recorded in Hansard of 1911 at page 5397:
The Prime Minister having put a very relevant question as to whether or not this fraud had anything to do with the subsequent loss, I would ask him: Does he consider the
Department of Finance or the government was doing its duty when it permitted the man, who according to statements of the president of the Canadian Bankers Association had perpetrated a fraud, by means of perjury, upon the department, to remain at large and to continue his operations among the various communities of this country and no investigation instituted. Had that nothing to do with the loss?
That question, by the way, was not answered by Sir Wilfrid Laurier.
I have said, Sir, that it is incumbent upon me to establish negligence on the part of the Treasury Board or of the Minister of Finance, all the more so because of the statement of Sir Wilfrid Laurier that if negligence could be shown he would admit the government's responsibility. The Farmers Bank was incorporated in 1904. By acts passed in 1906 and 1996 the time for issuing the certificate was fixed at not later than January 18, 1907. Therefore there was no good reason for unusual haste in issuing the certificate on November 30, two or three days after the application for it had been made. I refer to section 13. of the Bank Act, which requires 32649-94J
$500,000 to be subscribed. I would ask hon members to mark these words:
To be bona fide subscribed before the meeting of the subscribers is called.
Before the meeting of the subscribers is called, the act requires that $500,000 shall be bona fide subscribed. Notice of the meeting which took place on November 27 appeared first in the Toronto Globe of October 22. Therefore, according to the Bank Act, previous to or by October 22, $500,000 should have been bona fide subscribed. I put these questions to all reasonably minded members: Was section 13 of the Bank Act complied with? There is only one answer: section 13 was not complied with. Whose duty was it to see that section 13 was being complied with? There is only one answer: It was manifestly the duty of the Finance minister and the Treasury Board. If, then, that duty was not performed, was there negligence? Do not the circumstances indicate that there was negligence? Sir William Meredith says that if October 22 was the determining date, then the $500,000 was not bona fide subscribed. Whose business was it to determine the date? Can any person deny negligence in that regard? The application of Travers on November 27 for the certificate was accompanied by what purported to be a list of shareholders together with a statutory declaration of Travers in which, referring to the list of shareholders, he states that it is a list of the subscribers to the capital stock of the bank, correctly setting forth as to each subscription the name of the subscriber, his address, the number of shares subscribed for by him, the amount of such shares, and the amount paid in thereon. He also declares that each of the subscriptions is a bona fide subscription to the capital stock of the bank. Was that list true or was it false? That is a fair question. There is no doubt about it, the list was false; and if it was false the certificate could not issue. Whose duty was it to determine whether the list was true or false? Again, I say, that duty devolved undoubtedly on the Minister of Finance and the Treasury Board. Was there negligence? I maintain there was.
Consider for a moment the $250,000 deposit. On October 6, the provisional directors gave Travers a power of attorney, and on October 9, Travers borrowed from the Trust and Guarantee Company $80,000, repayable in a month, on the security of promissory notes of subscribers amounting in the aggregate to $100,955, agreeing to pay interest on the loan at the rate of 10 per cent per annum and a bonus of $1,000, and on October 23, the day
Farmers Bank Failure
after the issue of the notice calling the meeting, he borrowed from the same company $20,000 repayable on demand on the security of promissory notes of subscribers amounting to $26,500 and certain shares of loan companies, valued at $20,500, which had been transferred to the bank in payment of subscriptions, agreeing to pay the same rate of interest and a bonus of $500. Again, I ask, was this in accordance with the Bank Act? The answer most positively is no. Whose duty was it to look into this matter? I say it was the duty of the Treasury Board and of the Minister of Finance. Was that duty performed or was it not? The answer is, it was not performed. If that duty devolved upon them and it was not discharged, I ask, was there negligence? I again establish that there was.
What had transpired that- should have caused the Hon. Mr. Fielding to exercise special care? He said himself, as recorded in Hansard of 1911, at page 2679:
There was gossip abroad concerning the Farmers Bank. I was well aware of it.
But, Sir, I submit there was a good deal more than gossip. The Monetary Times says that the Finance department had received six different warnings. Certain it is-this is not and never has been disputed-that on October 8, 1906, Mr. Leighton McCarthy wrote to Mr. Fielding that a number of subscribers for shares in the Farmers Bank would dispute the bona fides of the subscriptions. He said:
Grave conditions have arisen which require careful consideration before the Treasury Board grants the certificate to the organizing of the bank.
On October 11 he sent a telegram again warning the Minister of Finance, and on October 19 Mr. McCarthy wrote the minister formally, asking that the Treasury Board stay action on the application of the Farmers Bank for a certificate. There are three distinct warnings, not one of which has ever for a moment been disputed by any person at any time, and all of these before the certificate was issued. We have evidence too that Mr. Henderson of Halton went to the Minister of Finance and warned him that the provisional directors were not carrying out the spirit and intent of the Bank Act. He had himself seen notes which were endorsed by provisional directors for the purpose of raising money, presumably to provide the $250,000. Later the Minister of Finance said1 to Mr. Henderson: "Henderson, I don't see why you should worry over this. You are not responsible. Besides, you did warn the government." I also call the attention of the House to an-
other warning, and I quote from Hansard of 1911 at page 10,472.
Mr. Osier said:
After the deposit had been made with the Receiver General and before the certificate had been issued, I met the Minister of Finance and had a talk with him about the Farmers Bank. I told him that it was a fraud, that the people connected with it were not worthy, and that the method taken for obtaining the necessary deposit was absolutely illegal. I knew that of my own personal knowledge, because I knew where application had been made to borrow the money on these endorsed notes; I did not know at the time from whom. I saw that the Finance minister was under a good deal of anxiety about the condition of affairs. The matter ended there so far as I was concerned until some time afterwards, when I learned that a certificate had been issued, and I again spoke to the minister, and said I was exceedingly sorry that the government had issued the certificate.
Further on he observes:
It was notorious that the men at the head of the bank were not worthy .... Further than that, I may say that I had a conversation with my hon. friend from Halton (Mr Henderson), and he told me he had made the same represenation to the Finance minister.
Surely words like these coming from a man of the standing of Mr. Osier cannot be set aside. They constitute a warning which the minister should have heeded, and in failing to take cognizance of such a warning he was guilty of negligence. Mr. Fielding wrote Travers who assured him that everything was all right. Of course Travers would say so; he was a crook and he would not hesitate to give that assurance. Let me now quote from a statement of Sir William Meredith:
That in thus dealing with these notes the provisional directors and Travers were guilty of a breach of trust does not, I think, admit of doubt, and for the manner in which the money borrowed was applied there was neither justification nor excuse.
Mark these words;
I very much doubt whether in the circumstances it would have been right to have depended on the word of Travers, even if he had given the assurance for which the minister had asked. The information which had been conveyed to the minister had come from gentlemen of standing, and if it was accurate the declaration of Travers had made was untrue and it would seem to have been almost an idle thing to ask for an assurance that there was no foundation for the statements that had been made to the minister from the very man whose honesty was in question. . . . It is true that, as Mr. Fielding stated in evidence, Travers, so far as he knew, was a reputable banker; but that was not in my opinion, a sufficient reason for not haying instituted an inqury as to the matters which had been called to his attention. Such an inquiry could easily have been made, and the delay .occasioned by it would have been inconsiderable, and such an inquiry would, un-
Farmers Bank Failure
doubtedly, have resulted in the discovery of the manner in which the $100,000 had been raised and in the refusal of the Treasury Board to give the certificate.
I quote further from Sir William:
I do not suggest that the minister would have been justified because of the information conveyed to him in recommending that the certificate should not be granted or that the Treasury Board because of it would have been justified in refusing to grant it. But having received the information it was in my opinion incumbent on the Treasury Board to have investigated the charges that had been made before coming to a conclusion as to whether or not the certificate should have been given.
I submit in all reason that failure to investigate under these circumstances constitutes negligence on the part of the Minister of Finance and of the Treasury Board. That brings us to November 30. On that date, the very day Travers obtained the certificate, Sir Edward Clouston, the president of the Canadian Bankers' Association, wrote the deputy minister as follows:
In connection with the application of the Farmers Bank of Canada for the usual certificate from the Treasury Board, I have reason to believe that the money lodged or to be lodged at Ottawa as stock subscriptions cannot be regarded as paid up capital, and that a large proportion of the amount necessary to the obtaining of a certificate is a loan made upon the promise of its payment when returned by your department.
Permit me to request, if only for the protection of the public, the Treasury Board will exercise its rights to refuse to issue the certificate if it thinks best so to do until a thorough investigation has been made into the circumstances stated herein.
Some person may say "Oh, but that was on November 30. and it is only reasonable to suppose that as this letter was dated November 30 the minister did not receive it until the next day, and the certificate was issued on November 30." Very well, let us accept that if you like. This, however, is true-that the bank did not open its doors or commence business until the second day of January, 1907, one month after this letter had been obtained from the president of the Bankers Association, and just at the time that the certificate had been handed out to Mr. Travers. Taking that in connection with the other warnings I submit that the Finance minister should have gone to the telephone, got into communication with Travers and said: "Hold on, I do not want you to go ahead until I have some further interview with you, I want to investigate this a little further. I have received certain representations from the head of the Bankers Association, and I ask you to return that certificate, or to suspend any action upon it until I have
had further time to investigate." If Mr. Travers then undertook to say: "I have the certificate and I am going ahead," then I submit the Minister of Finance had it within his power to tell Mr. Travers that he would take such steps to protect the public as were in his power, and he would have prevented the subsequent deplorable occurrences.
That brings us up to the time the bank had started business. Now I should like to refer to another matter a little later which shows that the government had further warning which should have caused action on the part of the Treasury Board and the government even after the bank started to do business. The bank opened on January 2nd, 1907 and on April 17, three months and a half after they had started to do business, the manager of its branch in the town of Milton, Mr. Vankoughnet, wrote as follows to the Deputy Minister of Finance:
Will you kindly give me your opinion as to the following: Our general manager (Mr. Travers) sends to the different branches lists of notes given in payment of our capital stock. These notes he makes the managers put through as discounts, crediting the amount to head office. This is figured in the government return as paid up capital and circulation issued to that amount. If I read the Bank Act correctly, section 76, he is asking us to do what is not right. As I do not wish to do anything contrary to the law, I should be much obliged if you give me the ruling on it.
In reply to this letter, Mr. T. C. Boville, Deputy Minister of Finance, writes as follows on May 1, 1907:
While it is not deemed expedient to enter into correspondence at this stage, the matter referred to by you is of sufficient importance to warrant further inquiry. This will shortly be made. I should like to have a copy of any of the notes.
On May 3rd Mr. Vankoughnet sent him one of the notes, and in the accompanying letter he declared that "the amount under discount at this office April 30th was about Sill,885".
Well, Mr. Travers was asked to make a return covering this point, and he not only wrote but gave his oath. He swore that this was the state of affairs:
The portion of the $375,473 paid up capital of the bank as per return of March 30th, 1907, represented by promisory notes of the shareholders held by the bank amounts to $59,110.
So that Travers swore that the total amount of these notes held anywhere in Ontario or in Canada was only $59,000, while the minister had under his hand a statement from the manager of one of the branch banks-and a small one at that-showing that in that particular branch alone there was $111,885. Had
Farmers Bank Failure
who had subscribed nothing at all, was put down as subscribing $10,000. All Mr. Fielding had to do was to look at the list of subscribers and he would have seen that these men figured on the list as bona fide subscribers of the bank.
Mr. Travers told Mr. Fielding that he was authorized to ask for the certificate. Why did the minister not ask Mr. Travers to produce his authorization? I think he neglected an opportunity when he did not ask for it. Had he asked for it Mr. Travers could not have shown it., because he never had any authorization to ask for the certificate. If Mr. Fielding had asked to see the minute book of the provisional directors, he would have found there enough evidence to stop the whole thing. If he had asked Mr. Travers to show him the stock list as signed by the subscribers-and surely that was an easy thing to do-and had compared it with the list which was presumed to be a copy of the original list, he would have found at once that Travers had placed in his hand a fake list. There is no doubt about that, and I contend that that is an indication of negligence on his part. The minute book would have shown the Minister of Finance that the directors had collected from subscribers $210,000 in cash, and had paid out $41,000 improperly for commissions and expenses. It would have shown that Travers had borrowed $80,000 on subscribers' notes, all in contravention of the Bank Act. The Treasury Board had most direct and positive notice of the frauds. They had Henderson's warning; they had E. B. Osier's warning; they had McCarthy's letters; they had McCarthy's suit before the high court; they had the warning of the Canadian Bankers' Association; they had Vankoughnet's letter of April, 1907, and they had the letters from Hotchkiss, the superintendent of insurance for New York state. Was there or was there not negligence in paying no attention to all these warnings and allowing the certificate to be handed out?
This parliament, Mr. Speaker, has at different times voted large sums of money for the relief of persons in distress. I remember that on one occasion this House voted a sum, the amount of which I now forget, for the relief of those who had suffered in Paris from the floods. We have also voted money to relieve those who suffered from disasters in Italy, in Newfoundland, and in San Francisco. Why did we do this? Those who had suffered in these different cases had no claim upon the parliament of Canada except the claim of common humanity and common citizenship in a broad sense, but we voted the money of this country to these people who had suffered
through no fault of their own. I am asking this House now to grant relief, not to people who live in other countries and have suffered loss through no fault of their own, but to farmers in various parts of the province of Ontario who through no fault of their own suffered loss through the failure of the Farmers Bank, and who feel embittered because they feel that in a measure at least the loss that they sustained was dtue to neglect upon the part of the government before the certificate was granted to the bank. I might add that only a short time ago parliament voted an annuity of $10,000 to the Hon. W. S. Fielding. There was no opposition to that. I was not a member of the House at the time, but I took occasion, as a former member of parliament, to write to the press in my part of the country at that time commending the government for this recognition of a man who had given such long and distinguished service to his country as Mr. Fielding had, but it is only natural that those who lost their all in the failure of the Farmers Bank, and in most oases the losses fell upon men in very moderate circumstances who could ill afford to lose, should have some little feeling of resentment or bitterness against the man who was at the head of the Treasury Board at that time. That feeling of bitterness I venture to say, would not be lessened by the fact that parliament saw fit to grant to him an annuity of $10,000 for the rest of his life.
I appeal to the government to do this act of justice, not only because it is an act of justice to those who suffered, but because it is due also, I think, to the Hon. W. S. Fielding, for fifteen years Finance minister and identified with the public service of this countiy for so long, in order to remove from the hearts of those who suffered the bitterness which it is only natural they should feel against those who were in charge of affairs at that time. I appeal also on the ground of compassion, because I take it that relief was granted to the Home Bank depositors on two grounds; first the moral claim in equity-I am not sufficiently versed in the law to know exactly what that means, but I know what you are driving at anyway, that there was a moral responsibility resting on the government 'because of negligence or error of judgment upon the part of Sir Thomas White and the Treasury Board in connection with the Home Bank, and that I believe was the main ground for the relief that was granted-and secondly, the compassionate ground. That would apply also to the loss through the failure of any bank. It applies with particular force in this case because, I repeat, of all the banks that have
Farmers Bank Failure
failed in Canada since more than fifty years, the Farmers Bank is the only one where the depositors have received nothing whatever from the liquidator winding up its affairs.
I therefore move this resolution, Mr. Speaker, and beg most earnestly that the government will give it their very serious and favourable consideration. The amount involved is very small. Following the line adopted in the case of the Home Bank and the restrictions placed on the relief granted in that case, I venture to say, without being in a position to speak positively that the amount involved would perhaps be not more than $300,000. I have placed this matter before the government and before parliament because I felt it my duty to do so. There were a number of losers in my county, where the loss amounted to about $125,000. That is sufficient warrant for me, as the representative of that constituency, in appealing for the favourable consideration of this resolution by parliament.
Subtopic: MOTION PROPOSING RELIEF FOR THOSE WHO SUFFERED LOSS