March 23, 1927

LIB

James Alexander Robb (Minister of Finance and Receiver General)

Liberal

Mr. ROBB:

That goes to confirm that the minister was right in refusing to issue a certificate to this concern. A royal commission was issued on the 12th January, 1912, to the Honourable Mr. Justice Sir William R. Meredith. The commissioner states that in the method in which they dealt with the notes given in respect of subscriptions, the provi-

Farmers Bank Failure

sional directors and Mr. Travers were "guilty of a breach of trust," and that for the manner in which the money borrowed was applied there was neither justification nor excuse. He referred to the letter of assurance from Mr. Travers to the minister, stating that these statements were in fact untrue, and the language used in his letter to the minister was deliberately chosen by Mr. Travers in order to make it appear that he was giving the assurance for which the minister had asked, while he was in fact not doing so and could not truthfully do so. In the report which I have under my hand from the commissioner-and I repeat it-the commissioner states as to the issue of the certificate, as follows:

My conclusion on this branch of the inquiry is that the Treasury Board was induced to give its certificate by false and fraudulent representations on the part of Travers, and that if the facts I have mentioned as to the way in which the $250,000 was made up had been disclosed, the certificate of the Treasury Board would not have been given.

The commissioner refers to verbal information given to the minister by Mr. Henderson and Sir Edmund Osier, and a letter from Mr. McCarthy, and he adds:

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 not have been justified in refusing to grant it.

The commissioner refers to the letter from the manager of the bank at Milton to the Deputy Minister of Finance informing him that promissory notes given in payment for shares were being discounted at the bank's branches and the proceeds credited to the head office. The department called for a special return in that regard. The commissioner was unable to find that in this there was any neglect of duty on the part of the department, or that anything more than was done could have been done.

Topic:   FARMERS BANK FAILURE
Subtopic:   MOTION PROPOSING RELIEF FOR THOSE WHO SUFFERED LOSS
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CON

Alexander McKay Edwards

Conservative (1867-1942)

Mr. EDWARDS (Frontenac):

That is in regard to Vankoughnet's letter.

Topic:   FARMERS BANK FAILURE
Subtopic:   MOTION PROPOSING RELIEF FOR THOSE WHO SUFFERED LOSS
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LIB

James Alexander Robb (Minister of Finance and Receiver General)

Liberal

Mr. ROBB:

I am quoting from the commissioner's report.

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CON

Alexander McKay Edwards

Conservative (1867-1942)

Mr. EDWARDS (Frontenac):

In a previous paragraph it is shown that the commissioner has reference there only to Vankoughnet's letter. My hon. friend is rather leaving the impression that that applies before the certificate was issued. If he had continued his quotation of a minute ago, another paragraph would have shown differently.

Topic:   FARMERS BANK FAILURE
Subtopic:   MOTION PROPOSING RELIEF FOR THOSE WHO SUFFERED LOSS
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CON

Peter McGibbon

Conservative (1867-1942)

Mr. McGIBBON:

The minister is evidently reading from a carefully prepared brief. He is reading only one-half of the commissioner's report. Equally opposite opinions can be given from the other half.

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Subtopic:   MOTION PROPOSING RELIEF FOR THOSE WHO SUFFERED LOSS
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LIB

James Alexander Robb (Minister of Finance and Receiver General)

Liberal

Mr. ROBB:

I am presenting my case. The hon. gentleman who was presenting his case this afternoon did so without any interruption. The commissioner adds:

Notwithstanding irregularities on the part of Travers and his misconduct in connection with the application for the certificate which I have mentioned, the evidence satisfies me that if the bank had been prudently and honestly managed there is no reason why it should not have succeeded.

Perhaps this is what the hon. gentleman wishes:

The promissory notes that had been given by subscribers were for the most part good and were subsequently paid, and while it is true that if the certificate of the Treasury Board had not been granted the money of the shareholders and depositors would not have been lost, the efficient cause of that loss was the recklessness and fraud of those entrusted with the management of the bank, and not the granting of the certificate.

That is the statement of the commissioner who was appointed, and I repeat, notwithstanding the arguments of my hon. friend this afternoon, that the report of the commissioner who was appointed to investigate this matter, states that the treasury department could not have done any more than they did do.

Topic:   FARMERS BANK FAILURE
Subtopic:   MOTION PROPOSING RELIEF FOR THOSE WHO SUFFERED LOSS
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CON

Robert King Anderson

Conservative (1867-1942)

Mr. ANDERSON (Halton):

If the same arguments are applied in the case of the Home Bank-that is, if the management had been honest-the Home Bank would not have failed.

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Subtopic:   MOTION PROPOSING RELIEF FOR THOSE WHO SUFFERED LOSS
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LIB

James Alexander Robb (Minister of Finance and Receiver General)

Liberal

Mr. ROBB:

I never argued that the management of the Home Bank was everything that was desirable.

My hon. friend complains that the measure of relief which Sir Thomas White introduced into the House in 1914 for the depositors of the Farmers Bank was rejected by the Senate. That is not a new thing for the Senate to do. It amended very considerably the measure of relief we sent over to it in connection with the Home Bank, and I suppose the Senate was simply exercising its right in the case of the Farmers Bank after it had fully examined all the records.

I have just one other word to add. My hon. friend, it seemed to me, this afternoon was going just a little far in attempting to give to his constituents the idea-perhaps it was good politics-that it was the Liberal party, the Liberal government and its Liberal predecessors, who were responsible for not

Farmers Bank Failure

having granted relief to the depositors of the Farmers Bank. As I say, in 1914 Sir Thomas White brought in a measure of relief for the depositors of the Farmers Bank, and that measure was defeated in the Senate. My hon. friend, if not directly, by implication indicated that it was defeated because the majority of the Senate at that time were not favourable to the government of the day. Rut thirteen years have passed since then, during seven years of which the government of which my hon. friend was a supporter, and later on a member, had a majority in both Houses, but during all those years they did not bring in a measure of relief for the depositors of the Farmers Bank. Why? Because that measure had been disposed of in 1914. To-day my hon. friend argues that we should come to the relief of the depositors of the Farmers Bank because we gave certain relief to the depositors of the Home Bank. It is true that we did give a measure of relief to the depositors of the Home Bank, but it was very strongly represented to us, and all the records of the department indicated, that there was some foundation for a claim in that case, because Sir Thomas White appeared before Mr. Justice McKeown, who was investigating the failure of the Home Bank, and gave evidence that under no circumstances would he have allowed any bank to close its doors during the period of the war, because the closing of one bank might have toppled over some of the others. That was the statement of the then Minister of Finance, and it was upon that statement that the representatives of the depositors of the Home Bank came to the government and said: "You have a moral responsibility. Had the Finance minister of the day closed the Home Bank in 1916, we who put in our deposits later would not have suffered." It was pretty hard to answer that argument, and it was upon that ground that relief was given.

I submit to my hon. friend who has presented this resolution, and to the House, that if we are going to reopen this question which has already been decided by parliament in 1914, and again decided in 1924 when an amendment to aid the Farmers Bank depositors was defeated in the banking and commerce committee-twice we have considered this matter, and twice parliament has decided that the depositors of the Farmers Bank are not entitled to any measure of relief-we should not only be reopening the case of the Farmers Bank, but we would have to go all the way back to the first days of confederation and examine the records of all the banks that have been mismanaged during that period.

I submit to the hon. gentleman and to the House that there is involved not a decrease of taxation, as was asked for recently in an amendment proposed from the other side and in an amendment proposed from the other corner, but rather an increase of taxation if we are going to introduce this principle.

Topic:   FARMERS BANK FAILURE
Subtopic:   MOTION PROPOSING RELIEF FOR THOSE WHO SUFFERED LOSS
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CON

Peter McGibbon

Conservative (1867-1942)

Mr. PETER McGIBBON (Muskoka-On-tario):

Mr. Speaker, I purpose taking up the time of the House for only a moment. The Finance minister (Mr. Robb) as usual has skated very skilfully around the subject matter of this resolution, and eventually he threw out the threat that the House must vote against this resolution because it would mean an increase of taxation. I think it would have been much fairer if the minister had chosen to meet the arguments of the hon. member for Fron-tenac-Addington and discussed this question on its merits.

Let me say at once that I am not discussing the principle of recouping the depositors of any bank. The fact of the matter is that this parliament has established a precedent in connection with the Home Bank, and I think any one who followed closely the argument of the hon. member for Frontenac-Addington must have come to the conclusion that the depositors of the Farmers Bank have a much stronger case than the depositors of the Home Bank ever had.

The Minister of Finance has confined his argument largely to the fact, as he says, that the Finance minister at that time had no warning of the condition of the Farmers Bank. He has quoted at considerable length from the report of Sir William Meredith, but he did not read it all, and for that reason I shall quote a few extracts. At page 8 of Sessional Papers, Volume 27, 1913, Sir William Meredith says:

My conclusion on this branch of the inquiry is that the Treasury Board was induced to give its certificate by false and fraudulent representations on the part of Travers.

Further on he says:

It is plain from the letter of the Finance minister to Travers, of 30th November, 1906, that the minister understood that section 13 of the Bank Act would not have been complied with if the $250,000 was made up wholly or in part of money raised on promissory notes given by subscribers for shares to the provisional directors and that he would have felt it his duty to recommend that the certificate should not be granted if he had known that part of the money had been raised in that way.

That is one point to which I wish to direct the attention of the Minister of Finance. Further on the commissioner says:

That that information had been given to the minister before the certificate was issued appears from the testimony of Sir Edmund Osier and Mr. David Henderson and is shown by the

Farmers Bank Failure

letter of the 19th October, 1906, of Mr. Leighton McCarthy to the minister, which appears in Exhibit 5, pp. 2, 3. In that letter Mr. McCarthy states as follows:

"I have received information that the alleged subscribers for shares paid a large sum of money in cash and have signed notes for other large sums of money and that the persons professing to act in the name of the bank have transferred notes and received the proceeds and that a deposit either has been or will be made of the cash received and the proceeds of these notes or sufficient amount to make up $250,000."

He says further:

That the verbal information I have mentioned was conveyed to Mr. Fielding was not denied.

He continues:

The officials of the Department of Finance appear to have treated Mr. McCarthy's letter as if it had never existed, and, in my opinion, in that they erred.

I submit, Mr. Chairman, that that proves that the Minister of Finance had been warned. He knew perfectly well that the Bank Act was not being complied with, and sufficient evidence had been brought to his attention to justify his investigating the affairs of the bank.

I do not wish to take up the time of the House further because the ground has been thoroughly covered by the hon. member for Frontenac (Mr. Edwards) and I am hoping that a vote will be reached before six o'clock.

I just wished to point out that the minister, in quoting from the report of Sir William Meredith, quoted only that part that suited his case.

Topic:   FARMERS BANK FAILURE
Subtopic:   MOTION PROPOSING RELIEF FOR THOSE WHO SUFFERED LOSS
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CON

Martin James Maloney

Conservative (1867-1942)

Mr. MALONEY:

I was paired with the

hon. member for St. Ann (Mr. Guerin). Had I voted, I would have voted for the resolution.

Topic:   FARMERS BANK FAILURE
Subtopic:   MOTION PROPOSING RELIEF FOR THOSE WHO SUFFERED LOSS
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LIB

Joseph-Fernand Fafard

Liberal

Mr. FAFARD:

I was paired with the hon. member for New Westminster (Mr. Mc-Quarrie). Had 1 voted, I would have voted against the resolution.

Topic:   FARMERS BANK FAILURE
Subtopic:   MOTION PROPOSING RELIEF FOR THOSE WHO SUFFERED LOSS
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LIB

Ernest Lapointe (Minister of Justice and Attorney General of Canada)

Liberal

Mr. LAPOINTE:

I was paired with the

hon. member for West Calgary (Mr. Bennett). I would have voted against the resolution.

Topic:   FARMERS BANK FAILURE
Subtopic:   MOTION PROPOSING RELIEF FOR THOSE WHO SUFFERED LOSS
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IND

Julien-Édouard-Alfred Dubuc

Independent Liberal

Mr. DUBUC:

I was paired with the hon.

member for Toronto Northwest (Mr. Church). Had I voted, I would have voted against the resolution.

Topic:   FARMERS BANK FAILURE
Subtopic:   MOTION PROPOSING RELIEF FOR THOSE WHO SUFFERED LOSS
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CON

George Taylor MacNutt

Conservative (1867-1942)

Mr. MacNUTT:

I was paired with the hon. member for Hants-Kings (Mr. Ilsley). I would have voted for the resolution.

Topic:   FARMERS BANK FAILURE
Subtopic:   MOTION PROPOSING RELIEF FOR THOSE WHO SUFFERED LOSS
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LIB

Frederick William Gershaw

Liberal

Mr. GBRSHAW:

I was paired with the

hon. member -for London (Mr. White). I would have voted against the resolution.

Topic:   FARMERS BANK FAILURE
Subtopic:   MOTION PROPOSING RELIEF FOR THOSE WHO SUFFERED LOSS
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LIB

Paul Mercier

Liberal

Mr. MERCIER (St. Henri):

I was paired with the hon. member for West Hamilton (Mr. Bell). Had I voted, I would have voted against the resolution.

Topic:   FARMERS BANK FAILURE
Subtopic:   MOTION PROPOSING RELIEF FOR THOSE WHO SUFFERED LOSS
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LIB

Charles Marcil

Liberal

Mr. MARCIL:

I was informed by the whip, Mr. Speaker, that all pairs had been declared off. I was paired with the hon. member for Argenteuil (Sir George Perley), but in view of that declaration I voted.

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Subtopic:   MOTION PROPOSING RELIEF FOR THOSE WHO SUFFERED LOSS
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LIB

Peter John Veniot (Postmaster General)

Liberal

Mr. VENIOT:

I am in the same position.

At six o'clock the House adjourned, without question being put, pursuant to rule.

Thursday, March 24, 1927.

Topic:   FARMERS BANK FAILURE
Subtopic:   MOTION PROPOSING RELIEF FOR THOSE WHO SUFFERED LOSS
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March 23, 1927