May 26, 1939

ROYAL VISIT

DUTIES OF MR. GUSTAVE LANCT6T IN CONNECTION WITH THEIR MAJESTIES' TOUR


On the orders of the day: Mr. JEAN-FRANQOIS POULIOT (Temis-couata) (Translation): Mr. Speaker, I wish to ask a question of the government and particularly of the Secretary of State (Mr. Rinfret). Does he not think that the government would obtain a more complete and less costly record by purchasing copies of the newspapers of each place at which the royal train stops instead of continuing to make use of the historian or historiographer of the royal visit, who is not over regular in his attendance at the various functions? It seems to me that it would be possible to compile a very complete scrapbook from which the government could afterwards select the most interesting illustrations and articles.


LIB

Louis Édouard Fernand Rinfret (Secretary of State of Canada)

Liberal

Hon. FERNAND RINFRET (Secretary of State) (Translation):

In answer to my hon. friend, I have to say that the duties of Mr. Gustave Lanctot, the dominion archivist, do not consist in making daily reports of the tour but in writing about the tour as a whole a book which is to be published when the royal visit is over. The newspapers, which are very largely represented, publish daily reports of the tour, not only in this country but also in the United States and in Europe. The newspapermen are making the trip in a special train which is travelling ahead of the royal train. The archivist's functions, as I said, are limited

fMr. Euler.]

to the taking of notes with a view to preparing a book to be published after the termination of the royal visit.

I have never been told that Mr. Lanctot was not regular in his attendance. During the few days when I took part in the tour myself I noted that he was at his post.

Topic:   ROYAL VISIT
Subtopic:   DUTIES OF MR. GUSTAVE LANCT6T IN CONNECTION WITH THEIR MAJESTIES' TOUR
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CENTRAL MORTGAGE BANK

STATEMENT WITH RESPECT TO REFERENCE OF BILL TO BANKING AND COMMERCE COMMITTEE


On the order for resuming the adjourned debate on the motion for second reading of Bill No. 132, to incorporate the central mortgage bank: Hon. CHARLES A. DUNNING (Minister of Finance): Before this order is called, may I say I am advised that there is doubt in the minds of some hon. members as to the procedure the government propose to adopt in connection with this bill. I wish to repeat what I said the other day, that following second reading of the bill it is my intention on behalf of the government to move that the bill be referred to the committee on banking and commerce. I make that statement again to remove any doubts which may be in the minds of any hon. members.


PROVISION FOR INCORPORATION, PURCHASE OF SHARES, ETC.-CONTINUATION OF DEBATE ON MOTION FOR SECOND READING


The house resumed from Tuesday, May 23, consideration of the motion of Mr. Dunning for the second reading of Bill No. 132, to incorporate the central mortgage bank.


LIB

Malcolm McLean

Liberal

Mr. MALCOLM McLEAN (Melfort):

In rising to say a few words in support of this bill I should like first to express my appreciation of the introduction of such a measure by the Minister of Finance (Mr. Dunning) whom we are all glad to see back with us to-day with his new honours freshly upon him.

Topic:   PROVISION FOR INCORPORATION, PURCHASE OF SHARES, ETC.-CONTINUATION OF DEBATE ON MOTION FOR SECOND READING
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?

Some hon. MEMBERS:

Hear, hear.

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LIB

Malcolm McLean

Liberal

Mr. McLEAN (Melfort):

I am sure the

country will appreciate his receiving from McGill university the degree of Doctor of Laws, just as the house, by its applause, has indicated its own appreciation. It is particularly appropriate that a measure such as this should be introduced by the minister, not

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only because he is Minister of Finance but also because of his long experience with and interest in legislation of this kind, which has taught him to beware of pitfalls and to include the necessary provisions to make such legislation successful. In briefly running over the features of this bill that appeal to me and dealing with the difficulties that may exist,

I have in mind the long experience of the minister in dealing with such matters.

This bill is an outstanding contribution to the solution of the problem with which it deals. It is the most far reaching piece of legislation to be proposed in this house for a long time, in regard not only to what it is likely to accomplish immediately, but also in the long range effect it will have on this and related problems that we may have to consider in this country. In this bill we are providing public credit in terms of the needs of a great many of our people in a simpler, more practical and safer way than has ever been suggested before, and in that sense I believe this is a most practical piece of legislation. I hope, and feel confident, that hon. members will approach its study without any desire to delay or hinder the passage of this measure. I hope the attitude hinted at the other day by a few hon. members who suggested that the bill would require lengthy consideration, for reasons they suggested, will not be too manifest. After all in this country we have had a great deal of experience in such matters, and that experience should be readily available.

The features of the bill of which I most approve are few and simple. In the first place it ensures that the interest on all mortgages on farm lands, and on homes where the amount of the mortgage does hot exceed $7,000, will be reduced to five per cent per annum; for as the lending companies that come under this scheme will have to reduce their interest charges to five per cent, it will be necessary for other companies to follow suit, and as a result five per cent will be the rate in effect. At this time, when money is plentiful and good investments not so easy to find, probably five per cent is a fair return. Then, interest arrears will be reduced so that not more than two years' interest can be included in the adjusted mortgage, and finally, the mortgages are to be rewritten to not exceed eighty per cent of the present value of the property, which will benefit a great many people. One outstanding defect of past legislation has been that city and town homes have been neglected. I admit at once that the first consideration of governments past and present, and quite rightly, was to keep on the

land those engaged in agriculture in order that they might continue to produce wealth and so that the economic system of the country might not be disturbed too greatly. But the time has come when some consideration should be shown home owners in cities, towns and villages, and I believe this legislation will take care of their problem.

In connection with farm mortgages the thought has been expressed by some hon. members that it will be impossible for farmers to pay even at the reduced rates. I find from the explanation of the minister, however, and from the bill itself that crop share payments may be made on these mortgages. That is the way farm lands in many parts of Canada have been paid for. Some hon. members did not believe monthly payments on city homes would be practicable. As a matter of fact that system is being followed now in many cases. In some cities taxes are paid in that way; it is done under the home improvement plan in connection with advances from the banks; it is done under the national housing scheme, and I think it can be taken for granted that it wiil work out equally well under this plan.

The other day some hon. members expressed the belief that the lending companies were going to get advantages under this legislation. I do not know to what extent that may be so, but I would say that the lending companies, composed of life insurance policyholders and other investors of that kind, are entitled to a square deal just as much as any other class of the community. If these companies suffer, the burden is sure to be reflected immediately upon individual citizens. On the other hand the hon. member for St. Paul's (Mr. Ross) thought the lending companies would be penalized, and went so far as to say that the only people who would suffer as a result of this legislation would be the life insurance policyholders. After declaring himself in favour of the general principle of this bill, at page 4402 of Hansard; after saying there was no doubt that legislation of this kind was necessary, the hon. member went on to disagree with the bill on minor points. However, after sizing up what were the likely company gains and company losses apparently he came to the conclusion, at page 4403, that the particular company he was taking as an example could not afford to become a member of this bank, and went on to say that the policyholders of the life insurance companies were going to be stuck.

I mention this to indicate that there are two opinions on this matter, as there are on almost everything. Some hon. members thought the companies were responsible for this legislation; the hon. member for St.

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Lawrence-St. George (Mr. Cahan) asked who had demanded this bill, which of these companies had asked for it, to which the minister replied that none of them had requested it. But even if it tends, as I hope it will, to improve the position of the companies generally, that is not an unreasonable thing to do as long as it does not mean an unfair loss to the treasury of Canada. When such rigorous terms are imposed as to provide that companies operating in the lending business, after they become members of this discount bank, have to administer their business on a margin of from one and a half per cent to two per cent over and above the rate at which they can secure the money from the 'bank, and when they have to state a maximum interest rate on mortgages to be given of not more than two per cent over the current rate for longterm dominion securities, I think there is reasonable assurance that borrowers will not suffer much from too high interest rates. It will be such an improvement over present and past conditions that it will be welcomed throughout the country.

To me, one of the hopeful and signficant things with respect to the legislation is that it will remedy some conditions which have arisen from the time of the depression, and the adoption of restrictive legislation. I have heard hon. members from central Canada, and particularly from Ontario, say that it would not be of any advantage to them because in Ontario individual lending has been the custom in the past. No doubt that is true. The other day the leader of the opposition (Mr. Manion) referred to it as having been the rule in western Canada in years gone by. That was about the only investment open to the small investor in the cities, towns and villages of the west. There was a time when such mortgage loans could be made readily at eight per cent, and the security was counted to be as good as gold-and in those days that meant as good as wheat. But the situation has changed, and that change has been brought about by the depression and by restrictive legislation. I do not believe many private investors are willing to put money into mortgage loans to-day. The result is that we find idle deposits in the banks, but plenty of money available for the purchase of dominion securities, when such are offered on the market. Meantime there is a dearth of new money for investment in mortgages on homes or farms, and I can see no hope of any immediate loosening up of private money in investments of the kind in the near future.

That condition is not to be wondered at. If hon. members had money to invest would

they care to put it into securities which are liable to interference before the ink on the signature is dry. They would hesitate to put it into securities liable to interference from provincial authorities, from dominion authorities and perhaps even from local authorities. So that, so far as I can see, the outlook for the continuance and increase of loans by private parties is not very hopeful.

All right; how are we going to get over the difficulty, if not through a measure such as the one now before us? If private investors are to be able to purchase government securities only, then the next course is that government securities, or the money obtained from the sale thereof, should be available where necessary to do the business the private investors used to do. And so long as this trend of investment continues, we shall have to follow a course such as the one suggested in the measure. I am not quite sure but that even in the province of Ontario, where in the past few years private lenders have been discouraged, this legislation will be found useful.

Some hon. members are inclined to complain about the country absorbing part of the written down losses of the lending companies. My view is that it is time we were getting away from the emergency measures of the last few years and getting down to something that will be more equitable, more evenly distributed and more fruitful of results. This bill promises to do that very thing by providing that the people who insist on writing down losses-that is, the country as a whole- shall absorb part of them. The effect will be more beneficial than has any legislation of the past few years under which the creditor alone absorbed the loss, and neither the state that imposed that loss upon him, nor any other authority, shared any part of it- although in many cases the creditor was perfectly willing to take over the property or the security on which he had lent his money. It is only fair that the state which imposes restrictive legislation should absorb part of the loss thereby entailed.

Topic:   PROVISION FOR INCORPORATION, PURCHASE OF SHARES, ETC.-CONTINUATION OF DEBATE ON MOTION FOR SECOND READING
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LIB

James Joseph McCann

Liberal

Mr. McCANN:

In the final analysis, is it not all done by the same people?

Topic:   PROVISION FOR INCORPORATION, PURCHASE OF SHARES, ETC.-CONTINUATION OF DEBATE ON MOTION FOR SECOND READING
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LIB

Malcolm McLean

Liberal

Mr. McLEAN (Melfort):

No, it is not all the same people. Let us suppose that we levy a contribution on the whole of the membership of the House of Commons to buy a new mace. That might be a fair and equitable distribution, but if we were to place the responsibility on nine or ten hon. members only, it would be most unfair. On individual holders of securities who made investments in good faith and who were willing to take the security promised them was placed the

Central Mortgage Bank

whole burden of the losses provided for under recent legislation. That condition cannot continue indefinitely. If it does, no one would have confidence to lend money, although probably at the present time some private individuals continue to do business.

I hope this legislation may go through quickly. There is an old proverb which says in effect that a thing quickly done is doubly well done. I was pleased to hear the leader of the opposition, the hon. member for St. Lawrence-St. George and the hon. member for St. Paul's support the principle of the bill, but there seemed to be a little doubt in the mind of the leader of the opposition. While supporting the principle of the bill and the necessity for it, and while reminding the house that four or five years ago his associates had promised, if returned to office, to redress the burden of home owners, I caught in his words a desire to delay.

Topic:   PROVISION FOR INCORPORATION, PURCHASE OF SHARES, ETC.-CONTINUATION OF DEBATE ON MOTION FOR SECOND READING
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CON

Robert James Manion (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MANION:

No desire to delay, at all; but there was a desire to make the legislation better. If it is to go through, then it should be put through in good form, and I think it requires a good many amendments to put it in that good form. That is the attitude I take.

Topic:   PROVISION FOR INCORPORATION, PURCHASE OF SHARES, ETC.-CONTINUATION OF DEBATE ON MOTION FOR SECOND READING
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LIB

Jean-François Pouliot

Liberal

Mr. POULIOT:

It is all wrong.

Topic:   PROVISION FOR INCORPORATION, PURCHASE OF SHARES, ETC.-CONTINUATION OF DEBATE ON MOTION FOR SECOND READING
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CON

Robert James Manion (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MANION:

Who?

Topic:   PROVISION FOR INCORPORATION, PURCHASE OF SHARES, ETC.-CONTINUATION OF DEBATE ON MOTION FOR SECOND READING
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LIB

Jean-François Pouliot

Liberal

Mr. POULIOT:

The legislation.

Topic:   PROVISION FOR INCORPORATION, PURCHASE OF SHARES, ETC.-CONTINUATION OF DEBATE ON MOTION FOR SECOND READING
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CON

Hugh Alexander Stewart

Conservative (1867-1942)

Mr. STEWART:

Well, I suggest that the hon. member should speak to his friend over there.

Topic:   PROVISION FOR INCORPORATION, PURCHASE OF SHARES, ETC.-CONTINUATION OF DEBATE ON MOTION FOR SECOND READING
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LIB

Malcolm McLean

Liberal

Mr. McLEAN (Melfort):

I agree with the leader of the opposition that it ought to be put through in the best possible form, but I also say that during the time the bill has been before the house hon. members have had an opportunity to study it. In the past ten years thinking men in public life everywhere have been studying these problems, and they have had every opportunity to come to wise conclusions. There is no necessity of putting off this bill until another session.

The suggestion of the leader of the opposition reminds me very much of one made about a dozen years ago by a predecessor of his, at a time when we were discussing the old age pensions bill. He pointed out how strongly he approved of principal of the legislation, but added, "I appeal to my hon. friends opposite not to force this measure through at the present session, not to ask that we vote for it just now." Of course if we were to put off measures of that kind from year to year we would never get anywhere. I believe there 71492-289

has never been a time when the passage of a measui'e of this kind has been more necessary.

Topic:   PROVISION FOR INCORPORATION, PURCHASE OF SHARES, ETC.-CONTINUATION OF DEBATE ON MOTION FOR SECOND READING
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May 26, 1939