Public Debt of Canada, its Provinces and Municipalities, Funded Debt of Corporations, together with
Interest Payments (Latest Available Figures)
- Amount Interest A\rerage RateNet debt of Canada March 31st, 1933 (preliminary) (1)
Bonds guaranteed by the Dominion of Canada as to principal and $ 2,599,089,000 $ 121,637,365 per cent 4-68interest, and interest only March 31st, 1933 (2) 996,148,354 45,356,904 4-55Gross direct liabilities of provinces, fiscal years ending in 1932 (3) 1,363,382,464 62,715,593 4-6Indirect liabilities of provinces, fiscal years ending in 1932 (4)
Grand total direct liabilities of all Canadian municipalities Dec. 215,977,011 9,071,034 4-231st, 1931 (5)
Corporations- 1,584,000,000 77,616,000 4-9Railways (6) 919,000,000 40,897,000 4-45Other corporations (7) 1,178,000,000 64,672,000 5-498,855,596,829 421,965,896 4-77(1) Funded debt was $2,715,910,607 with interest charges of $127,239,499.
The net debt figure is used in preference to that for gross debt ($2,990,315,000) because certain items in the gross debt are offset by active assets ($391,226,000), which are in large part cash assets and interest bearing assets. Among the active assets are loans to provinces which should appear among provincial debts. If they were included in Dominion government debt also there would be duplication. Net debt figures are used in preference to funded debt because the latter would include money raised and put into active assets, such as loans to provinces.
(2) Bonds guaranteed by the dominion. Of these, interest only is guaranteed on principal amounting to $216,000,000. Principal and interest are guaranteed for the remaining $780,148,354.
(3) The largest item in provincial public debt is the bonded debt which totals $1,148,451,597. In addition there were treasury bills amounting to $103,707,602, bank loans, savings deposits, etc.
(4) Indirect liabilities of the provinces include guarantees of railway, hydro-electric, municipal obligations, etc.
(5) This figure includes the total liabilities of all municipalities in six provinces and the bonded debt of the others (the total liabilities not being available). The amount given is. therefore, the lowest at which the aggregate direct liabilities of Canadian municipalities can be placed.
(6) Only the unguaranteed portion of Canadian National bonded indebtedness is included here, the guaranteed debt being included in the second item of the table.
(7) Other corporations include industrial, financial, merchandising, etc., in fact, all except public and railways.
II. Municipal Debt
The gross debenture debt of municipalities nurrjbering over 4,200, by provinces, as at December 31, 1931, was as follows:
Prince Edward Island (a) ..
Bonded Debt $ 78,679,570
129,913.890 116,864,937 499.002,074 31,386,025 21,477,521 1,863,211 362,132,334 47,488,595
Other liabilities, consisting of temporary loans and overdrafts on banks, accounts payable and miscellaneous floating liabilities, amount to $295,223,318.
Interest payments on municipal bonded debt average 4-9 per cent, or on the total shown in the table above, $63,151,599.
III. Private Debt
While the figures for public debt can be obtained with approximately completeness, those
for private indebtedness can only partially cover the field. Figures for bank loans are a matter of monthly record, and were submitted to the committee.
Concerning mortgages, definite information is obtainable for only a portion of the field. In the census of 1931, a question regarding mortgages was included in the farm schedule. As a result of this investigation it was ascertained that out of a total of 654,297 owned and partly owned farms in the dominion, 244.201 were mortgaged to the extent of $677,564,100. It should be pointed out that these figures refer only to the debt secured by a mortgage or by an equivalent legal instrument on lands and buildings. Details may be found in the evidence. These figures apply also only to "owned" farms. It is estimated that urban mortgages held by corporate lenders amount to about $765,000,000.
No attempt has been made to compile information on debts of private individuals which may have been contracted in various ways, because of lack of available data.
IV. Bank Interest
Rates of bank interest and discount are not available by provinces but average rates for the dominion as a whole are known. Average interest rates on loans, including call loans, show declines from 1930 to 1932.
Banking and Commerce
Maximum and minimum average interest and discount rates charged by all banks on loans or advances in
Canada during the years 1930, 1931 and 1932.
Average Interest Average Discount
Maximum* Minimum* Maximum* Minimum*per cent per cent per cent per cent1930 6-43 6-29 6-99 6-866-39 6-05 6-80 6-666-18 603 6-81 6-67N.B.-These average rates include call loan transactions on which for some years past the prevalent interest rate had been 6 per cent. ,
Each bank reports quarterly its maximum and minimum rates. The averages shown above are the averages of four quarterly periods and of all banks.
V. Mortgage Rates of Interest Considerable data were secured by the Dominion bureau of statistics from the Dominion Mortgage and Investment Association, and from some individual mortgage companies relating to interest charged on mortgages. Average, rates were obtained from 57 companies, which show current rates ranging from G per cent to 8 per cent in all provinces except Quebec, where slightly lower rates were reported. One large company furnished records showing that the average rate on new rural and urban mortgages for. the Dominion declined from 8-35 per cent in 1921 to 6-84 per cent in 1931. On renewals the rate fell from 8-17 per cent in 1921 to 6-90 per cent in 1931.
In general, it may be concluded in the cases of the figures supplied that mortgage rates have declined throughout the dominion in recent years on both new mortgages and renewals.
Nevertheless, these conclusions should only be taken as tentative, because they are based on returns from corporate lenders only. No data are available yet from private lenders or from mortgagors themselves. Statistical enquiries should be instituted to secure information from these sources to round out the case presented by the mortgage companies.
VI. Supplementary Information Required On several other subjects which came to the attention of the committee, partial information was furnished by the Dominion bureau of statistics, but it is felt that the data thus far brought together are insufficient upon which to base definite conclusions, and that an allround enlargement in the bureau's organization of financial statistics should be instituted. In particular, in addition to the supplementary information required on mortgage rates (which has already been mentioned) the committee recommends that the Dominion bureau of statistics be authorized to obtain the following: Data on fees and charges to which mortgagors are subjected when taking out new mortgages or renewing old ones. Very meagre information is available on this subject, but enquiries are already under way in the bureau of statistics.
Data on the cost of money to loaning bodies are required so as to get some idea of the spread between actual costs and loaning rates. Only partial information is now available.
Data on arrears of interest payments and on the amount of principal and interest written off by mortgage companies.
VII. Jurisdiction of Parliament
The following questions respecting the jurisdiction of parliament to legislate on the subject of interest and loans were submitted to the Deputy Minister of Justice, the Deputy Minister of Finance, and the attorneys-general of the various provinces (pp. ix and x):
"1. Has the Dominion parliament the power to fix a maximum rate of interest which may be charged on loans, et cetera, granted by corporations created by Dominion statute or letters patent where such corporations were
(a) previously incorporated;
(b) to be incorporated?
2. Has the Dominion parliament any pow'er !to prescribe the maximum rate of interest chargeable on loans generally made by
(b) corporates created by statute or letters patent other than Dominion?
3. Has the Dominion parliament the power
(a) to fix;
(b) to alter
rates of interest in respect of bills of exchange and promissory notes?
4. (a) Has the Dominion parliament power to enforce reduction of principal of debt in respect of loans made
i. by corporations incorporated under jurisdiction of the Dominion parliament;
ii. by corporations incorporated under other jurisdictions;
iii. by individuals?
(b) If necessary for the determination of the above questions, is any differentiation to be made between loans
i. secured upon real property;
ii. secured upon personal property;
iii. without security?"
Answers to these questions were made by the Department of Justice and the attorneys-general of Nova Scotia, British Columbia, New Brunswick, Manitoba and Quebec. These answers appear in the minutes of proceedings and evidence as follows:
Department of Justice, pp. 43 to 48;
A.-G. of Nova Scotia, p. 49;
A.-G. of British Columbia, pp. 65-66;
A.-G. of Newr Brunswick, p. 187;
A.-G. of Manitoba, pp. 188 to 190;
A.-G. of Quebec, pp. 198-2CG.
The answers may be summarized as follows:
Questions l (a) and (b)-all answers were in the affirmative.
Banking and Commerce