February 15, 1935

CON

Edgar Nelson Rhodes (Minister of Finance and Receiver General)

Conservative (1867-1942)

Mr. RHODES:

Perhaps my hon. friend did not hear me. I said that there are cases where loans have been actually made to persons not actually living on the farm but tilling the soil and farming that piece of land, that being their principal occupation.

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

Ambrose Upton Gledstanes Bury

Conservative (1867-1942)

Mr. BURY:

I understand from the minister that no loan is given to a tenant farmer. If no loan is given to a tenant farmer, why may not a loan be given to the registered owner of the farm, who has the fee simple, the rent and the reversion? Surely somebody who has the major interest in the land can get a loan.

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

Joseph-Arthur Bradette

Liberal

Mr. BRADETTE:

I hope the minister will give a wider interpretation to the word "farmer." I have in mind more particularly the settlers in the fine rural sections of northern Ontario. They are under the impression that under the interpretation of this act they are not included as farmers. There are thousands of northen Ontario settlers who do not come under the present definition and I believe this act should apply to at least a certain number of them. It is true the land does not belong to them; it is true the title still is vested in the crown. That being crown property, the central government could get a first mortgage on it. The fact remains that in our section-and I believe the same applies also to northern Quebec and certain districts

of the western provinces-a number of settlers cannot graduate from the settler into the farmer class because they have not sufficient money to buy stock and cattle or own sufficient buildings to get their deeds from the province. During the last two years at least I have received hundreds of letters from good bona fide settlers in northern Ontario stating that they regret the fact that they cannot come under this legislation. This is an injustice because this is one of the finest sections of the rural population in the whole country. On a previous occasion I made a very urgent plea to the government to try to include in the word "farmer" or "farming" the settlers of northern Ontario.

A certain quantity of land has been given to settlers in our sections, but for the last six or seven years such loans have not been given as liberally as in the past. If I interpret aright what the minister said a few days ago, it was that this was intended really to help agriculture; that it was the wish of the government that as much money as possible, within reason and in accordance with the laws of economy, should be loaned to the farmers, and surely this should include the settlers of northern Ontario and Quebec who are doing pioneer work in the newer parts of the country.

There are not hundreds but thousands of families who find it impossible to graduate from the settler into the farmer class for the simple reason that they lack not thousands of dollars but only a few hundred dollars. I think very few will be found who will ask more than a maximum of a thousand dollars. In my constituency we have studied this measure very thoroughly; we have held meetings to consider it, but so far we find in it no provision for the settlers of northern Ontario, and I trust the minister will find it possible to include them.

I listened with a good deal of attention to previous speakers who referred to people not actually occupying their farms. I am not in sympathy with the man who has a farm as a hobby or one who is a gentleman farmer to the extent of suggesting he should receive the same attention as the actual tiller of the soil, but I am in sympathy with the settlers who are trying to make a living off the land. I have no advice to give the government as regards the man running a farm as a hobby, but there may be special cases where through infirmity a real farmer is unable to manage his farm himself, and in such a case this act should apply. Speaking generally, unless a man actually resides on his farm I do not believe he should be entitled to any loan from

Canadian and British Insurance

any government. Having been a settler myself in northern Ontario, however, I feel that something must be done for that fine class of people who graduate from the settler to the farmer class.

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

Edgar Nelson Rhodes (Minister of Finance and Receiver General)

Conservative (1867-1942)

Mr. RHODES:

My hon. friend is making a worthy plea for a very worthy class of citizens, but he must bear in mind that we are not dealing with a colonization scheme or a scheme of assistance to colonization. That is not the purpose of this measure, worthy as that purpose may be. Its purpose is to assist farmers, and the moment any individual of whom my hon. friend has spoken can qualify as a farmer there is nothing to prevent him, other things being in order, from securing a loan from the farm loan board.

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

Joseph-Arthur Bradette

Liberal

Mr. BRADETTE:

I appreciate the point the minister makes, but would he be good enough to indicate to the committee the line otf demarcation between a farmer and a settler? This is a very important question. In our section we call a man in a colonization section settled on a new holding a farmer, although we all know the land belongs to the crown. The acreage at present on each farm is ninety acres, and the settler has to clear at least ten acres and have a dwelling house and stable or barn before he can get a deed. In hundreds in my own district the people are ready to get their deeds; they have cleared the land and wish to put up a better dwelling, but they have not the capital to do so, and I believe that is where the government should come in. I appreciate what the minister says, that this is not a colonization scheme, but I am speaking of farmers. Only five per cent of these people have graduated from the settler class to the class of farmers, for the reasons I have stated, if it means getting their deed. Will the minister enlighten the committee as to the line of demarcation between settlers and farmers, and whether a farmer actually living on the land will 'be able to benefit under this act?

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

Edgar Nelson Rhodes (Minister of Finance and Receiver General)

Conservative (1867-1942)

Mr. RHODES:

No, Mr. Chairman; if I wanted to get a definition of a farmer I fancy I would have to apply to the Department of Justice. Parliament has said what a farmer is as far as the Canadian Farm Loan Act is concerned. If my hon. friend will look at the definition of "farmer he will find that-

"Farmer" means any person whose business is that of farming and who owns and occupies a farm, or who proposes to acquire a farm for immediate occupation and cultivation by him.

My hon. friend is just as capable of putting an interpretation on that as I am. Neither of us is any further ahead, because the act is administered by the farm loan board and they must be the judges as to whether an applicant comes within the definition of the act which they have to administer.

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

Joseph-Arthur Bradette

Liberal

Mr. BRADETTE:

The objection the board will find will be under the word "owns." He has not the title, which is still in the crown, but he is the owner in fact as far as actual habitation and work are concerned.

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 would not suggest that the farm loan board would lend money to a man who does not own a farm?

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

Joseph-Arthur Bradette

Liberal

Mr. BRADETTE:

Well, he owns it in a sense; he has the moral right to it. There are farmers in our section that have been on their farms twenty-five years but have not a deed. No one will tell me that anyone could take those farms away from them. They have made improvements. I know the government is sincere in its desire to help agriculture, and there should be some provision to make it possible to help that fine settler population in the newer sections of Canada.

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:

It is obvious that we cannot make further progress before six o'clock. It is not proposed to go on with this bill this evening. I therefore move that the committee rise and report progress.

Progress reported.

At six o'clock the house took recess.

After Recess

The house resumed at eight o'clock.

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

CANADIAN AND BRITISH INSURANCE COMPANIES ACT AMENDMENT


Mr. G. G. COOTE (Macleod) moved the second reading of Bill No. 13, to amend the Canadian and British Insurance Companies Act, 1932. He said: Mr. Speaker, when the insurance act was amended a couple of years ago section 180 of the old act was not included in the revised act. The purpose of this amendment is to place in the present act the provisions of old section 180. I will not take time to read that whole section; I will simply say that its provisions would make it compulsory for a life insurance company when any premium is due and not paid to apply any cash surrender value which existed under a policy to maintain the policy in force until the whole cash surrender value was exhausted.



Canadian and British Insurance As the act now stands it is not necessary for the company to maintain the policy in force if the premium is not paid by the policyholder; the policy may be forfeited, and in that case the insured would lose his insurance; in other words the policy would lapse. It seems to me that every policy should be carried in force so long as the cash surrender value is sufficient to cover the premium. Most policies now in existence contain such a clause, but I feel that it should be compulsory for every company carrying on life insurance business to adopt this method. I am told that some companies have made a good deal of money out of this practice of allowing policies to lapse even where there was sufficient cash surrender value to have continued the policies in force. To-day all companies are in competition with each other in the selling of life insurance, and one of the strong talking points used by their agents is the profits earned by the companies. If one should make profits out of the cancellation or the lapsing of policies where there is sufficient cash surrender value to carry them on, no doubt other companies will feel compelled to adopt a similar method so that they will be able to compete in the matter of profits. Subsection 5 of this bill is new; it is not taken from the old act. This subsection would limit the rate of interest which may be charged by any life insurance company against any advance or policy loan to a maximum of four per cent per annum. I think hon. members will be seized of the importance of this provision when I state the figures showing the money advanced as policy loans. In 1932, which is the last year for which I have the figures, the amount of advances against policies held by life insurance companies reporting to the dominion Department of Insurance was $244,000,000. In 1933 it was $218,000,000; in 1930 it was $188,000,000 and in 1929 it was $159,000,000. I think those figures show the importance of this matter. I might say a word as to the necessity for this section. In 1921 I had the experience personally of being charged ten per cent per annum by an insurance company on a six months' note which I tendered in payment of a premium. I refused to sign the note and secured the money elsewhere with which to pay the premium. But that shows the rates which have been charged policyholders by certain insurance companies. Just last year I found that I was being charged eight per cent on money which was automatically advanced under the provisions of the policy itself; the premium was being advanced automatically from the cash surrender value of the policy. That was carried as a loan against the policy and I was being charged a rate of eight per cent per annum. I found that by taking out a loan against the policy and turning it in as payment of the premium due and the premium previously charged against the cash surrender value, the rate was reduced to six per cent, but I think even that rate is excessive. I am told that some companies regularly charge a rate of seven per cent on loans against their policies. The importance of this matter may be shown in another way. I have here the figures concerning four large companies doing business in Canada. The first company has twenty-four per cent of its interest earning investments in the form of policy loans. The next company has approximately twenty-five per cent, the third about twenty-four per cent and the last company about twenty per cent of its interest earning investments in the form of loans against policies. The investment folio of another company shows city mortgages amounting to $27,000,000, farm mortgages totalling $19,000,000, bonds and debentures amounting to $43,000,000 and policy loans of $28,000,000. So it will be seen that in this case the second largest investment is in policy loans. I think the rate of even six per cent, which is the lowest of which I have heard, is much too high. The security for these loans is the best in the world; the companies are lending money to their own creditors. There cannot possibly be any loss; there is no risk connected with it. Another reason is that the next best investment of the life insurance companies would be dominion government bonds, and the rate they can now earn from those investments is considerably less than four per cent. I find that the average rate earned in 1923 by two of the largest companies was 4-08 per cent in one case and 4-09 per cent in the other, yet to my personal knowledge one of these companies was charging eight per cent on part of their loans against policies. I think it advisable that parliament should incorporate in the insurance act a uniform rate that may be charged by these companies. As I said before they are in competition one with the other. They are all trying to make good profits, and if one company charges high rates of interest in order to increase its earnings the other companies naturally will feel that they must do the same in order to compete. Life insurance surely is carried on for the good of the people, at least it should be carried on in the interests of the people. Canadian and British Insurance All our regulation is ostensibly for that purpose, and looking at the matter from that point of view there can be no doubt that this is something which should be regulated by parliament. I earnestly ask this house and the government to accept the bill, and if it is accepted I should be glad to move that it be sent to the banking and commerce committee for further consideration. I think the bill is a feasible one, and I hope it will receive the support of the house.


CON

Edgar Nelson Rhodes (Minister of Finance and Receiver General)

Conservative (1867-1942)

Hon. E. N. RHODES (Minister of Finance):

With respect to the provisions contained in subsections 1, 2, 3 and 4 of section 1 of the bill, it is a debatable question whether the proposals made by my hon. friend, notwithstanding the fact that at one time they were contained in the insuraance act, would be as favourable to the insured as the present provisions of the policies of the majority of the companies. If these provisions were inserted in the law it would mean that if a man had a high priced policy, we will say a ten payment life, the loan value applied to the premiums paid would be absorbed with such rapidity that the policy would soon be extinguished, whereas if the insured had the option of accepting a twenty payment life policy or some other class of insurance which would enable him to spread the same amount of money over premiums calling for smaller payments, he would be able to keep his policy alive over a much longer period. However I do not purpose discussing the matter at this stage; I merely make these observations on the point as to whether or not the proposals made would be of benefit to the insured.

It seems to me the question of the interest rate is a technical matter upon which the superintendent of insurance and the parties interested should be heard. So far as I am concerned I am content to accept the suggestion made by the hon. member for Macleod (Mr. Coote) namely that the bill receive second reading on the understanding that it go to the banking and commerce committee where discussion may be had to better advantage than in committee of the whole house. I shall be content to accept that arrangement, but of course without prejudice to the right of hon. members to take exception either to the principle or to the details of the bill.

Topic:   CANADIAN AND BRITISH INSURANCE COMPANIES ACT AMENDMENT
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CON

Hugh Guthrie (Minister of Justice and Attorney General of Canada)

Conservative (1867-1942)

Hon. HUGH GUTHRIE (Minister of Justice):

Mr. Speaker, before the motion is put I believe I should point out to the hon. member who moved second reading of this bill (Mr. Coote) that my understanding is 92582-56J

that section 180 of the Insurance Act, 1927, which is to be found in the revised statutes, was dropped in the enactment of 1932 because it was considered that the federal parliament had no right or had no legislative authority in such matters.

Topic:   CANADIAN AND BRITISH INSURANCE COMPANIES ACT AMENDMENT
Permalink
LIB
CON

Hugh Guthrie (Minister of Justice and Attorney General of Canada)

Conservative (1867-1942)

Mr. GUTHRIE:

There were some very important decisions after the passage of the original section 180. One of the law officers of the Department of Justice, who has had large experience with insurance legislation and has been closely associated in the insurance cases which have gone before the privy council, has sent me a memorandum which I believe I should place at the disposal of hon. members. The memorandum deals with the question of federal jurisdiction with regard to subsections 1, 2, 3 and 4 of section 1 of the proposed bill. He points out that these subsections may constitute regulations affecting the conduct of the business of insurance, and in those circumstances it is doubtful whether we have any right to deal with them. However, he believes subsection 5, regarding the rate of interest, is w-ithin the jurisdiction of parliament, and his object in sending me the memorandum has been to acquaint the house and the hon. member with the situation.

Topic:   CANADIAN AND BRITISH INSURANCE COMPANIES ACT AMENDMENT
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UFA

Henry Elvins Spencer

United Farmers of Alberta

Mr. H. E. SPENCER (Battle River):

Mr. Speaker, without detaining the house too long I should like to support the bill presented by the hon. member for Macleod (Mr. Coote), second reading of which he has moved this evening.

During the last five or six years the matter of insurance has become not only one of great importance but one involving considerable risk to people who are prejudiced because of inability to keep up their premiums. In a debate which took place in this house about a year ago it was shown that due to the heavy cost of writing insurance, involving commissions, bonuses and one thing and another, premiums are essentially-and I believe unnecessarily-high. That being so we find that in years of crisis many people have much difficulty in carrying their insurance premiums.

Last year I obtained figures showing the aggregate amount of policies surrendered and dropped in three years. In the province of Alberta alone these policies aggregated a value of 866,000,000, and the figure for the vhole of Canada was well over two billion dollars. I mention this fact because I believe this extraordinary situation has been brought about, verv largelv not only because of the

Foreign Insurance Companies

high cost of premiums but because of the high interest rates charged. I would point out that the higher the rate of interest the insurance companies charge on loans the greater the difficulty in carrying the policy. For these reasons I have much pleasure in seconding the bill presented by the hon. member for Macleod, which recommends that the interest rates be reduced in the manner he has indicated.

Topic:   CANADIAN AND BRITISH INSURANCE COMPANIES ACT AMENDMENT
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Motion agreed to, bill read the second time and referred to the select standing committee on banking and commerce.


FOREIGN INSURANCE COMPANIES

February 15, 1935