February 5, 1935

LIB

Pierre Auguste Martial Rhéaume

Liberal

Mr. RHEAUME (Translation):

I don't know. However, a moment ago I heard the Minister of Finance (Mr. Rhodes) say, in answer to the hon. member for Provencher (Mr. Beaubien), that a farmer must be very highly rated to obtain money with which to settle his debts under the Farmers' Creditors Arrangement Act. When you wish to find fault with somebody, nothing is easier. I understand that the Minister of Finance is a good lawyer; he is in that respect about the equal of the Prime Minister (Mr. Bennett): he never commits himself. His answer, to my mind, is very wise; if the farmer's standing is very good, if he is a first class man, the board will probably consider his case. But he did not commit himself.

I read in the newspaper La Presse that, in the province of Quebec, one can get but 60 per cent of the assessed value of his farm while in the other provinces, one can obtain two-thirds. When the bill is before the house for consideration, I hope the Minister of Finance will tell us why the farmers of the province of Quebec can obtain but 60 per cent of the valuation of their farms.

On what will the hon. minister base his valuation? On the municipal valuation or on that of the board's inspector? I know personally that, in a few cases, the inspector for the St. Jean-Iberville district, a man of high standing, had fixed the valuation of a farm, a valuation that met with the approval of the Quebec government, but which was refused by Ottawa. An inspector of the central board was sent to fix the valuation; the loan however was refused.

When you talk of lending 60 per cent, I ask you: On what valuation? If you take the inspector's appraisal, and if, in a number of cases, he values the land at $15 or $20 an acre, 60 per cent on that will not amount to much: from $9 to $12 an acre. It would mean that, on a 100 acre farm, a farmer could borrow under this great piece of legislation from $900 to $1,200. When the bill is introduced, I hope the Minister of Finance will give us some explanation. If you take the inspector's appraisal1, I can predict that the act will be a failure, as in 1934. I do not think there are five members from Quebec in this house who can say that two thirds or 50 per cent of the applications have been granted. In the electoral district of St. Jean-Iberville, eighteen applications have been made but not one has been granted. And we were told the new arrangement would give farmers a chance to borrow money! If there is nothing in the

act by which the lending of a fixed amount of money is authorized, and if you leave that to the inspector's discretion, I think there is no sense in that. Inspectors appointed may not be any better than their predecessors.

The Canadian Farm Loan Act passed in 1927 proved to be very advantageous in 1928, 1929, 1930 and 1931; it was of some use in 1032; but since that time, it has rendered no service at all. A few Joans have been made in the electoral district of St. Jean-Iberville at $40 or $45 an acre, which was a reasonable amount. But, when you come to lending 60 per cent on the basis of a valuation made by an appraiser who values the land at $20 or $25 an acre, I say the thing is perfect nonsense and you waste the time of this house by discussing a piece of legislation under which the decision is left to the discretion of inspectors who are, in a great many cases, political appointees.

Now I would like to touch upon that great Farmers' Creditors Arrangement Act. Much has been said about it. The Minister of Finance has just given notice that the period will be extended from 60 to 90 days. A lawyer practising in St. Johns, who has quite a number of cases before that tribunal, was telling me yesterday: "That is not of much importance; I have a case pending since last November; no tribunal has yet been organized; I asked for a postponement of 60 days and it was granted."

With this precious arrangement act, the government has absolutely killed the farmer's credit. No farmer is able to get $100 from a bank, but, before that act, two farmers could go to a bank and borrow money on a promissory note endorsed by one of them. What I am telling you now, I learned from three managers of our banks in St. Johns, where we have branches of the Banque Canadienne Nationale, the Royal Bank of Canada and the Canadian Bank of Commerce. The managers have received instructions not to lend a single cent to farmers. The farmers' credit has been completely ruined.

I know the proposed amendments may have their good points; but, if you want practical legislation, you necessarily must fix a minimum valuation per acre. Otherwise, your legislation will be worthless, because, if you leave the valuation to the discretion of inspectors, it will certainly be a failure, like all the rest.

Mr. OIROLTARiD (Translation): Mr. Speaker, the fact that the suggestion made by the hon. member for Provencher (Mr. Beaubien) has not appealed to the honourable minister of Finance (Mr. Rhodes), is very unfortunate. If the government is really

Farm Loan Act

anxious to help the farmers, I think that the Canadian Farm Loan Act and the Farmer's Creditors Arrangement Act should necessarily supplement each other.

As it is now, the Farmer's Creditors Arrangement Act operates as follows: a farmer appears before the receiver appointed by the government and files his statement of affairs. A meeting of the creditors is called for a certain date. If the creditors cannot come to an agreement, a compromise is out of question and then the fanner has the right to ask that his terms be submitted to the board of review. That board of review, as far as I know, has not yet operated in the rural districts of the province of Quebec, although the law is in force since the 1st of October, 1934.

The board of review has the power, under the provisions of the act, to compel the creditor or the debtor to accept the compromise that the board sees fit to determine. The board is composed of three members appointed by the government. The point raised by my hon. friend, the member for Proven-cher, is as follows: supposing that a compromise is arrived at and that it is approved by the board, where will the debtor find the necessary amount of money if it is agreed that a certain amount should be raised in cash? The only people a farmer can apply to in order to raise the money is obviously the Farm Loan Board. Without a Farm Loan Board, the only compromise a debtor could offer would be by way of instalments. The farmer having come to terms, and being compelled to make some payments at a more or less distant date, I am afraid he will not be in a position to do so and, under the act, i'f he does not comply with the terms of the arrangement, that failure is tantamount to bankruptcy and his property is sold by the receiver. Consequently, the necessity of giving the farmer the means of raising money by way of loans and to come to terms on a basis of a cash payment, which is of course a much better arrangement than an instalment plan, is apparent. As I have already said, the Farm Loan Board, and nobody else, can supply him with the necessary amount of money. I respectfully submit that, if the government wishes to see those two acts fairly and efficiently applied, the honourable Minister of Finance should amend the Canadian Farm Loan Act so as to compel the Farm Loan Board to advance to the farmers the amount required under the arrangement approved by the board of review.

Topic:   CANADIAN FARM LOAN ACT
Subtopic:   AMENDMENT TO FACILITATE AND INCREASE THE EXTENSION OF CREDIT TO FARMERS
Permalink
LIB

Charles Benjamin Howard

Liberal

Mr. HOWARD:

Hear, hear.

Topic:   CANADIAN FARM LOAN ACT
Subtopic:   AMENDMENT TO FACILITATE AND INCREASE THE EXTENSION OF CREDIT TO FARMERS
Permalink
LIB

Wilfrid Girouard

Liberal

Mr. GIROUARD:

However, it is my own

opinion. And, judging by the oases that came to my notice, in my district, such is the only practical way to be fair both to the creditor and the debtor.

If you will allow me, Mr. Chairman, I will mention a case to the minister of Finance. I think it was the only case, in Druimmond-Arthabaska, which was settled by the receiver.

I am ready to admit, however, that there might have been arrangements which did not come to my notice. A farmer went to the receiver's office; he had debts to the amount of $1,500. His creditors accepted a 50 per cent arrangement, payable in December 1935. At that time, that man will have to pay $750 to his various creditors. If he does not pay, that will be a case of bankruptcy under the act and his property will be sold by the receiver. If this farmer is to avoid ruin, Mr. Chairman, there must be an organization which will lend him the amount needed to keep him on his farm.

Cases similar to this one are quite numerous, and I was glad to hear the suggestion made by the hon. member for Provenoher. I wish I could be satisfied that these two acts are not on our statute book purely to remain there inoperative. Our farmers are actually in need of money, they must have credit, and if the government is willing to give them that credit, it is absolutely necessary to amend the Canadian Farm Loan Act, as I was saying, so that the Farm Loan Board would be obliged to make necessary advances when an arrangement is made and approved by the board of review.

Topic:   CANADIAN FARM LOAN ACT
Subtopic:   AMENDMENT TO FACILITATE AND INCREASE THE EXTENSION OF CREDIT TO FARMERS
Permalink
UFA

Michael Luchkovich

United Farmers of Alberta

Mr. LUCHKOVICH:

The minister mentioned three factors which would have to be considered before loans could be made, namely the character of the applicant, the productivity of his land and the value of his assets. I believe he mentioned the further factor regarding the applicant's ability to pay. I understand the purposes for which money would be loaned would be to pay off existing liability, to fence, to drain, to improve and to buy new lands and other purposes to which the board may agree.

In trying to explain the act a member of parliament is placed in a difficult position, because while hon. members may think they know all the sections, when they are asked by their constituents to make explanations they find themselves unable to do so. The minister said each case would be dealt with on its own merits. A statement such as that may be comparable to some of the replies we receive from the departments in the form of

530

Farm Loan Act

stereotyped phrases such as, "We will take the matter into our serious consideration." I once wrote a letter to a department and received that reply. I have waited three years, and I suppose they are still taking the matter into their very serious consideration.

I know about a farmer who has two sections of land, and owes only about $300 on it. I believe he owes about $130 arrears in taxes. The man told me that when he went to the farm loan board in Edmonton he was told that unless his debts were $1,000 or over he would not be given a loan, under the act. I notice a section in the act which states that loans may be made to farmers in good standing. The question is: Which farmers are going to get the loans? The act is so enshrouded with mystery that people like myself have found it very difficult to gain any information which might be of benefit to our constituents. I should like to know what loan the man I have mentioned could get under the farm loan act. I find myself in very much the same position as other hon. members have described, namely, that I have not sufficient information to advise my constituents who ask for loans.

Topic:   CANADIAN FARM LOAN ACT
Subtopic:   AMENDMENT TO FACILITATE AND INCREASE THE EXTENSION OF CREDIT TO FARMERS
Permalink
CON

Edgar Nelson Rhodes (Minister of Finance and Receiver General)

Conservative (1867-1942)

Mr. RHODES:

May I say in all kindliness and without any desire to offend that we have discussed this resolution two days and we have not had an opportunity to introduce the bill so that hon. members might consider it. I submit in all fairness that questions might be asked to greater advantage when the bill is before the house and hon. members have had an opportunity to peruse it. It will be better to have the bill introduced than for hon. members to be putting hypothetical cases to me before its introduction. I am not finding fault with the hon. member, but I cannot answer the hypothetical question he has answered. He has said he was told a certain man went to get a mortgage and received the reply that he would have to borrow $1,000. I cannot be responsible for what a man is told, by whom, I do not know. All I can say to the hon. member and to the committee is that there are loans of $500. In the past the farm loan board has not desired to make loans smaller than that amount, although I do not know there is any prohibition or any actual fixation of amounts. The hon. member will understand that in the very nature of things the costs of inspection, costs in matters of title, costs for bookkeeping entries and so on, are as high in connection with a small loan as they are on larger loans. A loan of $500 is not so attractive, from the standpoint of administration; nevertheless there are those smaller

loans. The hon. member will realize we are now amending the farm loan act and he must not draw conclusions with respect to the manner in which the act should be administered, when the dominion board is solely responsible, from circumstances which arose at a time when there was divided authority through the operation of provincial boards.

Topic:   CANADIAN FARM LOAN ACT
Subtopic:   AMENDMENT TO FACILITATE AND INCREASE THE EXTENSION OF CREDIT TO FARMERS
Permalink
LIB

Thomas Reid

Liberal

Mr. REID:

The other day when the

matter was under discussion I made some general remarks regarding the application of the act in British Columbia and at that time made some suggestion as to changes which I believed should be made to the act as it affected the farmers in the lower Fraser valley. I rise at this time for two reasons. This afternoon when the minister made reply he omitted replying to one or two of the suggestions I had made, and which I feel are vital to the people in that part of the country. Of course, I am not finding fault.

First of all I should like to deal with some of the statements made by the minister this evening. I do not wish to misquote him, but I gathered from his remarks that he was endeavouring to tell the committee it was the man himself who was viewed as to his ability to pay and as to whether or not he would be a good risk. I cited two cases in my previous speech and I am going to mention another now in an endeavour to show the minister that the man in this case did not enter into it at all.

A man with a $9,000 mortgage on his farm from a loan company was told that if he could put up $4,500 cash they would call it square. He applied to the official in charge at New Westminster, but owing to the regulations of the board he could not come under the farm loan act. I am going to repeat what I said on a previous occasion, because it is very important. In British Columbia it takes between $250 and $400 to clear one acre of stump land. It is probably not worth that much after it is cleared. But is the government going to take the position through the board that after a man by his own labour and capital has cleared it, the total valuation of that acre shall be only $100, and on that total valuation a loan of fifty per cent shall be made? That occurred in the case of the $9,000 loan. The man did not enter into the picture. I am endeavouring to bring to the attention of the minister this fact, that unless some change is made whereby the valuation is raised, the present amendments to the act will be of no material benefit so far as the lower Fraser valley is concerned.

The minister also spoke of the numerous applications that had been made for loans.

Farm Loan Act

I took it upon myself to visit the official a few times to find out how the act was working. I might say I was very much in accord with the Farmers' Creditors Arrangement Act at the time, and told many farmers who had asked me for my opinion of it that I believed it would bring them relief. Well, Mr. Chairman, the official in charge informed me that ninety-eight per cent of the applications made to him before I left for Ottawa should have gone direct to the farm loan board. That is his statement, and when the minister says that he has thousands of cases that have been settled-

Topic:   CANADIAN FARM LOAN ACT
Subtopic:   AMENDMENT TO FACILITATE AND INCREASE THE EXTENSION OF CREDIT TO FARMERS
Permalink
CON

Edgar Nelson Rhodes (Minister of Finance and Receiver General)

Conservative (1867-1942)

Mr. RHODES:

No, I said hundreds.

Topic:   CANADIAN FARM LOAN ACT
Subtopic:   AMENDMENT TO FACILITATE AND INCREASE THE EXTENSION OF CREDIT TO FARMERS
Permalink
LIB

Thomas Reid

Liberal

Mr. REID:

Well, let us take it at that, hundreds of cases; it will be interesting when we consider the bill to hear how many cases in the lower Fraser valley have been settled. I know the act has been in operation only a short while, and I am not over-critical on that account, but I would urge upon the minister that the peculiar circumstances in the lower Fraser valley should receive some consideration, and amendments should be made to the act to care for the farmers there.

I well remember when such a measure as this was being discussed in the various farmers' institutes in 1927. It was thought desirable at that time to advocate such a measure, and pressure was brought to bear upon the then government to have such a measure introduced in the hope that it would take care of many of the small men, the five or ten acre men. Now it is hopeless for men in that class to obtain a loan from the board. They are told that they are not farmers. I think that situation should be looked into. I discussed this very question at the last session when the Farmers' Creditors Arrangement Act was being put through and the word "farmer" was being defined. But there is not the same definition in the farm loan act, and speaking on behalf of those farmers in the lower Fraser valley I think the minister shoidd consider an amendment so that small holders may be brought under the farm loan act and be able to take advantage of its provisions. I do not think that is an unfair thing to ask, because, as I have pointed out, the conditions there are peculiar to that province. Again I would urge that the valuation be raised, especially in British Columbia. A valuation of $100 is far too low and excludes many farmers.

I dispute the minister's statement that the man himself is considered, and not his assets. In conclusion, I would again ask the minister 92582-341

to consider seriously these aspects of the question which I have raised as affecting the part of the country from which I come.

I was pleased to hear the minister speak about the five per cent stock, and to hear him say they were going to consider giving that back. In a meeting in which this question was discussed prior to my leaving home, when some twenty-five farmers who had loans met together, it seemed to be a very sore point with them that they should have to pay interest on capital which they had never received, and I do hope that some credit will be given to the farmers on that account. I would point out in passing that these men felt it was unjust that they should be asked to pay interest on money on which the board itself had not paid interest; because it will be remembered that for the first few years after the act was introduced, the board received loans of money from the dominion government on which it was not called upon to pay interest. I do hope that before the bill comes down the minister will give his careful consideration to these questions I have raised.

Topic:   CANADIAN FARM LOAN ACT
Subtopic:   AMENDMENT TO FACILITATE AND INCREASE THE EXTENSION OF CREDIT TO FARMERS
Permalink
CON

Edgar Nelson Rhodes (Minister of Finance and Receiver General)

Conservative (1867-1942)

Mr. RHODES:

My hon. friend from New

Wetstminster was good enough to say that he disputed my statement. Of course, he is at liberty to do so, but he is not at liberty, I submit, to attempt to prove he is right by a set of facts that have no bearing whatsoever on the minister's statement. He is dealing with past conditions; I was dealing with the administration of the new farm loan act under the new set-up, and therefore I say that my hon. friend is on ground that is untenable. It will be time enough to dispute my statement after the act has been in operation and it is seen whether it works out in conformity with the statement of the minister.

My hon. friend's first complaint was with respect to valuation. That does not require an amendment to the act at all. It is purely a question of administration,

I told him of the attitude that one should assume with respect to the character of a risk, and I repeat that the moral character of the applicant is of far greater importance than the physical value of his assets in land, buildings and machinery. What I said was that if I were lending money, that was the attribute to which I would attach most importance, and I believe any well regulated farm loan board and any official operating under it would have that in mind. My hon. friend has also complained that the definition of farmer is not wide enough. It is an old maxim that hard cases make bad law, and you cannot make-amendments to this act sufficient to allow

Farm Loan Act

every man who poses as a farmer of sorts to crawl within its four corners. That would do far more harm than good. There will always be borderline cases even if you embroider the description of farmer. Having said so much, I am not averse to considering a different definition of farmer, if that should be thought desirable. As a matter of fact I am inclined to think that the definition of farmer in the Farmers' Creditors Arrangement Act is a better definition, and as at present advised I would not be averse to considering an amendment to the definition when we introduce the bill, if we are permitted to do so during the present session. When we get into committee on the bill I shall be very happy to consider a revision of the definition. The term "farmer" is defined in the Farmers' Creditors Arrangement Act as follows:

"Farmer" means a person whose principal occupation consists in farming or the tillage of the soil.

I think that is a very fair definition and one which on the whole is calculated to do far greater justice to the farmer than if an attempt were made to refine language to the point of including this, that and the other person, and by so doing exclude, under the well known rules of construction this, that and the other person, who might not be specifically designated but who under a general description would be more apt to be designated as a farmer than not.

Topic:   CANADIAN FARM LOAN ACT
Subtopic:   AMENDMENT TO FACILITATE AND INCREASE THE EXTENSION OF CREDIT TO FARMERS
Permalink
LIB

Jean-François Pouliot

Liberal

Mr. POULIOT:

Reading the paper to-night, I saw an article signed by Mr. Albert Rioux. I understand he is one of the commissioners appointed under the Farmers' Creditors Arrangement Act, and the Minister of Finance should remember his appointment. Now, if I am not mistaken the commissioners are acting rather in a judicial capacity.

Topic:   CANADIAN FARM LOAN ACT
Subtopic:   AMENDMENT TO FACILITATE AND INCREASE THE EXTENSION OF CREDIT TO FARMERS
Permalink
CON

Edgar Nelson Rhodes (Minister of Finance and Receiver General)

Conservative (1867-1942)

Mr. RHODES:

We are not discussing the Farmers' Creditors Arrangement Act.

Topic:   CANADIAN FARM LOAN ACT
Subtopic:   AMENDMENT TO FACILITATE AND INCREASE THE EXTENSION OF CREDIT TO FARMERS
Permalink
LIB

Jean-François Pouliot

Liberal

Mr. POULIOT:

No, but my hon. friend was speaking about it, and these matters are all connected, so much so that this commissioner under the Farmers' Creditors Arrangement Act writes articles in regard to farm loans. He is a very fine fellow and I wrote him a letter congratulating him on his competence, though it was as to his theoretical competence; I did not go further than that. It seems to me that there is a want of dignity in a man who holds an appointment from this government to act in a judicial capacity to be writing articles in several papers for propaganda in regard to the farm loan business, and I do not know whether he does so under the instructions

of the Minister of Finance. Did the hon. gentleman give him authority, after his appointment, to take advantage of his high function to write some propaganda favourable to the government? This I should like to know. I have no objection to his appointment, but I have the greatest objection to his writing articles with political tendencies when he receives a salary from the crown to act in a judicial capacity. The Minister of Finance, who is a lawyer of very high standing, having appeared very often before the bench, will surely admit the soundness of that proposition-I mean mine, not his. As Minister of Finance, as guardian of the exchequer of the country, he will not tolerate for a moment, I am sure, that a man whom he has appointed to act in a judicial capacity should canvass anyone through the press or otherwise on behalf of this government. It is exactly the same as if a judge appeared on the hustings making political speeches. Everyone would object to that, and I object to the practice of this gentleman. I repeat, I do not object to the appointment of Mr. Rioux, though he has very strange views upon certain matters; but I do object strongly to the kind of articles he writes in the press, and there is no reason why that should continue. If he wishes to write articles in the press, let him resign, as my hon. friend from Charlevoix-Saguenay rightly says. He is free to do so, but so long as he holds an appointment with a salary from this government he has no right to use his high function to canvass the people of his province on behalf of this or that party.

May I say to the minister also that even if this gentleman, Mr. Rioux, were writing on behalf of the Liberal party, notwithstanding the fact that he holds his appointment from this government, I would strongly object because it would derogate from the dignity which we expect in a magistrate who has to settle the difficulties that exist between farmers and their creditors.

There is something else. The amount which was supposed to be loaned to the farmers was previously $15,000,000 and now it is $90,000,000, six times as great. Is it because the farmers' position is now six times worse than it was a few years ago? Is it because the farmers have six times less money that we have to lend them six times more than we lent them before? I said a word or two just before adjournment in this connection.

Let me quote again some figures for the information of the Minister of Finance. He is not making a gift to the farmers and he knows it very well, because he said that they would have to refund the money advanced to

Farm Loan Act

them. It will not be a gift; it is just a lifebuoy that he is throwing out to them until better times come. Last year some figures were submitted to the house-official figures- with regard to the decrease in exports of farm products. Those figures are astounding. The external market has been lost to the farmers of the country. The Prime Minister has said very often, "We have retained our local market; the farmers can trade within the high walls of the tariff which I have erected around this country". Very well; what was the decrease? In home consumption of farm products in one year as compared with another, in the year 1932 compared to the year 1930, we find that it amounts to a loss of over $440,000,000 to the farmers. They have lost money on all their sales, and more than that, they have no market. No one can buy their products, and in my constituency I know some farmers who have hundreds of bushels of good potatoes which they have to sell at fourteen cents a bushel because there is no market. Why have they no market? Because the people have no money. They have not money to pay even fourteen cents a bushel, and if the farmers sell potatoes at that price they get no benefit from it. One farmer told me that if he raised calves in accordance with the instructions given by the departments of agriculture both federal and provincial it would cost him $15 a calf, and he would receive only $5 from the butcher, or a net loss of $10. Is it surprising that the farmers asked for protection? They were promised protection in 1930, when the then leader of the opposition said, "We will protect you, working men and everyone else". What sort of protection did he give them? He gave them an umbrella with bare wires, but that is no protection against rain. And now that the farmers' trade has been destroyed by the insane policy of the government, my hon. friends are giving them a raft on which it is impossible for all the farmers to find a place. That is all there is to it, but in the election I am sure the Tory candidates will say to the people, "Look how generous this government have been: they are lending you money to help you through this awful crisis which is international, and which came upon us in spite of the efforts of the Prime Minister and his wonderful government to save you from despair. Cheers." They know and they judge more fairly than the government can do. They know their own business and they know very well the government cannot do enough for the farmer. What the government should do is to put the farmers on their feet not only by lending them money now but-and this is an obligation on the government-by giving

them a chance to trade, by giving them an opportunity to sell their products at a. reasonable price. The Minister of Finance knows this very well. Everyone on the other side as well as everyone on this side knows it; everyone in the country knows it. This should have been done, yet it is not done. Why? On account of a lack of courage because Canada has been following a policy which is silly, which has destroyed the free flow of trade, and the government will not change its policy. I know very well if the Minister of Finance were left to himself he would decide differently. He comes from a broad-minded province, a beautiful province on the Atlantic, dear old Nova Scotia, and he knows very well in that dear old province free trade is very popular-free trade with Boston. He knows very well there are lines of steamships between Yarmouth and Boston, Halifax and Boston, Nova Scotia and the United States. Those people want to trade; they are ready to buy from others provided those others buy from them. I am sorry that the Minister of Finance, for whom I have great regard and respect, as he knows, has not the courage to do what he should. Why does he not throw this policy overboard and give an opportunity to the Canadian people, to the farmers, to sell their products, to trade not only within Canada but with the outside world?

Topic:   CANADIAN FARM LOAN ACT
Subtopic:   AMENDMENT TO FACILITATE AND INCREASE THE EXTENSION OF CREDIT TO FARMERS
Permalink
CON

Henry Alfred Mullins

Conservative (1867-1942)

Mr. MULLINS:

It is not my intention to speak at length on this matter because the farm loan act is quite satisfactory to those of us in western Canada who are not sitting in the opposition. I have had a farm in the west for more than fifty years, and I know something about farming conditions. From where I am standing here I saw, until a few minutes ago, a farmer who sold his crop last year for over $20,000. He was a farmer. I am glad the minister has defined as a farmer a man who lives on the land and works on the land-not an agriculturist. I do not know whether the previous speaker is an agriculturist or a farmer. An agriculturist is one who lives in the city and spends his money out on the farm. I served on three boards in the city of Winnipeg and when we passed on a loan we passed on the ability of the man to pay and on the ability of the farmer to farm. A man who left his threshing machine out all winter with the result that it was in such shape that in the spring he had to pay $72 for repairs would not get a loan. I would like the ex-Minister of Agriculture to listen to this. He made the statement that before he could thresh he had to pay $72 for repairs to his threshing machine. If he left that threshing machine out all winter and it was in such a dilapidated condition as he describes,

Farm Loan Act

that is like the situation on some of the farms that I have seen in western Canada; people who will do that sort of thing are not farmers at all.

Topic:   CANADIAN FARM LOAN ACT
Subtopic:   AMENDMENT TO FACILITATE AND INCREASE THE EXTENSION OF CREDIT TO FARMERS
Permalink
LIB

William Richard Motherwell

Liberal

Mr. MOTHERWELL:

The machine was in a sod shed.

Topic:   CANADIAN FARM LOAN ACT
Subtopic:   AMENDMENT TO FACILITATE AND INCREASE THE EXTENSION OF CREDIT TO FARMERS
Permalink
CON

Henry Alfred Mullins

Conservative (1867-1942)

Mr. MULLINS:

Half of such people are not farmers at all. If I were to serve in an advisory capacity to the minister, unless a man had an implement shed I certainly would not make a loan to him.

Topic:   CANADIAN FARM LOAN ACT
Subtopic:   AMENDMENT TO FACILITATE AND INCREASE THE EXTENSION OF CREDIT TO FARMERS
Permalink
LIB

William Richard Motherwell

Liberal

Mr. MOTHERWELL:

This machine was in an implement shed.

Topic:   CANADIAN FARM LOAN ACT
Subtopic:   AMENDMENT TO FACILITATE AND INCREASE THE EXTENSION OF CREDIT TO FARMERS
Permalink
CON

Henry Alfred Mullins

Conservative (1867-1942)

Mr. MULLINS:

I shall not say what I was going to say in regard to Melville and the hon. member's farm. I shall keep that back; at my age, I do not think it is policy for me to say anything personal, because we are both getting along in years and I would not like to say anything derogatory. But there are poorly kept farms in western Canada. If you drive up to the doors of some of the farms you will find the hog pen in the front of the house; they believe in sociability. If you look around you will see the machinery scattered all over the farm. I would say to the minister: No, I would not make a loan to that man under any consideration. One has to be an expert to study and judge a man and to look over his farm as to the weeds and his ability to farm before granting a loan, and I was glad to hear the minister make the statement he did.

We want some relief from the high rate of interest that we have been suffering under in the west. I say this emphatically; I left three boards in the city of Winnipeg for the simple reason that they were extracting eight and nine per cent from the farmers. I told them that their loan was of very little use; that some day they would pay the price, and today they have quite a number of those frozen assets on their hands. A moderate rate of interest, five and a half or six per cent, will help the farmers of western Canada, and any true westerner who is not sitting over there merely for the sake of opposing will agree with what I say in that regard. I am sure that there is an honest endeavour on this side of the house to do what is right by the farmer. I will stay with a man when he is right and I will quit him in a minute when he is wrong; so I am in agreement with the purpose of the legislation now before us in regard to the farm loan board.

Topic:   CANADIAN FARM LOAN ACT
Subtopic:   AMENDMENT TO FACILITATE AND INCREASE THE EXTENSION OF CREDIT TO FARMERS
Permalink
LIB

Louis-Étienne Parent

Liberal

Mr. PARENT (Translation):

Mr. Chairman, at this stage of the discussion on the amendments to the Farm Loan Act, I think it is my duty to add a few remarks. The government, by this resolution, wishes to ini'Mr. Mullins.j _ j

crease the amount loaned to farmers and to reduce the interest rate. In principle, I certainly do not oppose those amendments, but I think it is a premature step. Has the government taken into consideration the opportunity to answer incessant requests, not only from members of the opposition, but from our financiers, economists, bank managers and, shall I say, from the Minister of Finance (Mr. Rhodes) himself, who to-day moved this resolution to amend the Farm Loan Act? It is proposed to decrease the rate of interest to 5 per cent, if I am not mistaken. The former rate of interest was 6 or 01 per cent, but has the reduction in the rate of interest 'been proportioned to the decrease in the price of agricultural products? To-day, when the farmer is lucky enough to sell his products, he gets 50 per cent of what he was receiving 5 or 6 years ago. The rate of interest should be proportioned to the prices he obtains for the sale of his products. If the government wanted to be really obliging to the farmers, he should offer them money at 3 or 3| per cent, and that would be more in proportion to the profit which the farmer gets from the sale of his products.

On the other hand, the amount made available to the farmers is raised from 70 to 90 millions of dollars. But have you considered that the sum thus made available will have to be paid back? How is the farmer going to pay this money back? He will have to raise this money on his property and pay back capital and interest sooner or later. If, in the meantime, the government follows the policies to which it adhered these last few years, in what condition will the farming community be in five years,-assuming that the present government is still in power, though I hope they will not be. The farmer will neither be in a position to refund the capital, nor to pay the interest. And, on this point, Mr. Chairman, I will direct my remarks.

I read with a great deal of attention the speech of the hon. Minister of Finance before the Young Men's Canadian Club, on December 29 last. According to the French report, here is what the minister said:

. .. although international trade was still stagnant, Canada's foreign trade for the year just ended had amounted to $1,150,090,000.

I infer from the minister's statement that he considers there is enough trade to sell our products in Canada. The hon. minister did not see fit, on that occasion, to draw the attention of his hearers upon the fact that a loan to the farmers would help them greatly and would enable them to face the depression and to overcome the difficult'**-

Farm Loan Act

in which they are now. The hon. minister says that international trade is stagnant. Yes, trade is stagnant. And why? Because foreign markets are not open and do not allow us to sell our products.

The hon. Minister of Finance is not the only one to hold that opinion. I am going to quote the statement made by the general manager of the Bank of Montreal, at the 117th annual meeting of that financial institution, the most important in Canada:

The bank deposits could easily finance a much larger amount of business. Until the tendency toward restrictive legislation on business is more clearly defined, and until the uncertainties in connection with international relations have disappeared, business will improve somewhat slowly.

It would seem as if the hon. Minister of Finance and the general manager of the Bank of Montreal had consulted each other to fix a very short delay and that they both have the same idea about the present condition of the country, namely, that "international trade is stagnant and that business will improve somewhat slowly," so long as there will be no markets.

That leads me to say, Mr. Speaker, that before proposing to lend money to the farmers at a low rate of interest and making them believe that they are waiting for them with open arms and that they are ready to help them, the government ought to increase the purchasing power of the people. In the second place, the government, through the medium always expressed in this hoi*se and elsewhere, ought to give some work to the people, that is to the industrial workers, in order that they may earn, and thereby have a purchasing power that would facilitate the sale of farm products at more remunerative prices than at present.

Furthermore, we must increase the purchasing power of the farmers themselves, by providing them with the means of selling their products at higher prices.

How, I repeat, will the farmer be able to meet his obligations and pay his interest charges so long as he remains in the situation where he finds himself to-day? Before offering loans to the farmers, we should seek to restore his income.

Figures are not always pleasant to listen to, but it is absolutely necessary to place figures before the people of this country in order to show that we are to-day in an abnormal situation by reason of the policies heretofore followed by this government in bringing down measures unsuited to the present state of affairs and neglecting more suitable ones which should be introduced immediately. As I have just said, in order to bring back a

normal situation, it will be necessary to increase the purchasing power of the people employed in our factories. In 1929, the working class of Canada drew $813,000,000 in salaries and wages; to-day they draw only $500,000,000. If this difference of $313,000,000 returned to circulation, retail trade would benefit, the farmer would sell more of his products and there would be less privation in the homes.

How is this working class to find revenue and how is the purchasing power of the people to be increased?

We must find markets abroad. It has often been said, and it is still often said, that the Ottawa agreements have been a great improvement. I am not prepared to say they have not improved the situation, but have they brought it back to normal? If we look at the situation with respect to our trade with foreign countries, that is to say with countries outside the British Empire, we readily see that, in spite of the improvement due to the Ottawa agreements, our world trade is not fifty per cent of what it was in 1929, when conditions were normal and world markets were open to us. At that time, the sale of farm products was more profitable; farmers were in a poistion to meet their obligations and the government of that day would not have thought for one moment of offering them loans.

Now, I want to say, Mr. Chairman, that, even supposing that these loans will be very useful to a number of our farmers, only those farmers who own land of a certain value will be in a position to benefit thereby. Half of our population are farmers. Has the minister made a survey of those who might be able to take advantage of that act? I think not half of our farmers will. Then the act will be of any assistance to only fifty per cent of the people who are supposed to be benefited under the act. Farmers having lands of exceptional value will benefit, but the government will say to the less fortunate that their application will not be considered and those farmers will derive no benefit from this act. But we ought to be able to assist the great majority of them.

We must accept the principle of this bill, but I think the Minister of Finance might have suggested to the Prime Minister and members of the cabinet the necessity of bringing down a bill which would have changed the present situation by opening markets abroad, so that our farmers could sell their products at better prices, and be in a position to meet their obligations, and repay principal as well as interest on the loans they are now offered by the government.

Farm Loan Act

Topic:   CANADIAN FARM LOAN ACT
Subtopic:   AMENDMENT TO FACILITATE AND INCREASE THE EXTENSION OF CREDIT TO FARMERS
Permalink
LIB

John Campbell Elliott

Liberal

Mr. ELLIOTT:

There is just a word that I should like to leave with the minister for his consideration. First let me refer to the point that was touched upon by the hon. member for New Westminster, namely the question of small farms. The part of the country which I represent contains a number of these. I think there should be provision, either in the regulations or by a change in the bill, by which an applicant making application for a small loan on a small farm should have to pay less for appraisal and expenses than would be charged on a larger loan.

As to the question of anticipated payment, I take it that that is practically covered by the act is it stands. If it is not, I ask the minister to leave no doubt with regard to the right of the mortgagor to pay off the principal without notice and without bonus at any time.

Then as a final word at this stage-because f expect to have an opportunity of saying something on the second reading-I suggest that the act be amended where it now provides for long term loans. I believe that better rates can be obtained for short term loans. If I read the act correctly the only power given as it now stands is to lend for long terms. I suggest that serious consideration be given to revising that clause so that short term loans may be provided for. I might say that in the mortgages I have drawn, and I have drawn a good many in my time, five years was the usual term, and they all contained the proviso that any amount of principal could be paid off on interest dates. That is a wise provision and I hope the minister will see that such a provision is contained in this bill.

There is no doubt about the fact that you cannot lend money to everyone who wants it, or in the amounts that may be requested. I quite agree that the character of the applicant is many times more important than the security on which the mortgage is placed. But I again urge the minister to have some provision in the mortgage that whatever interest is charged above four per cent, if any, shall be forgiven provided payment is made promptly. I do not think you can insert a provision for penalty for not paying promptly, but if payments are made as they fall due there will be little if any loss to the country by lending to reliable parties at four per cent.

Topic:   CANADIAN FARM LOAN ACT
Subtopic:   AMENDMENT TO FACILITATE AND INCREASE THE EXTENSION OF CREDIT TO FARMERS
Permalink
CON

Edgar Nelson Rhodes (Minister of Finance and Receiver General)

Conservative (1867-1942)

Mr. RHODES:

My hon. friend will appreciate that I would not wish to assume the responsibility of stopping the passage of this resolution now; therefore I shall reply to what he has said in committee of the whole.

Resolution reported, read the first and second times and concurred in. Mr. Rhodes thereupon moved for leave to introduce Bill No. 15, to amend the Canadian Farm Loan Act.

Motion agreed to and bill read the first time.

On motion of Mr. Rhodes the house adjourned at 10.55 p.m.

Wednesday, February 6, 1935

Topic:   CANADIAN FARM LOAN ACT
Subtopic:   AMENDMENT TO FACILITATE AND INCREASE THE EXTENSION OF CREDIT TO FARMERS
Permalink

February 5, 1935