May 8, 1944

NAT

Richard Burpee Hanson

National Government

Mr. HANSON (York-Sunbury):

Well, perhaps you have, but the answer will not be given by my hon. friend but by the privy council. It is fortunate in these days of regulations and controls that we still have access to the courts.

Topic:   BANK ACT AMENDMENT
Subtopic:   CONDITIONS GOVERNING TEN-YEAR EXTENSION OF BANK CHARTERS
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PC

John George Diefenbaker

Progressive Conservative

Mr. DIEFENBAKER:

Have we?

Topic:   BANK ACT AMENDMENT
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NAT

Richard Burpee Hanson

National Government

Mr. HANSON (York-Sunbury):

That is a point; the hon. member for Lake Centre asks, "Have we?" Even that has been taken away from the citizenship of this country, in some measure at least, of course with the approval of my hon. friend the Minister of Finance.

Now I pass from that to the proposed amendment to section 91, reducing the maximum rate of interest and discount to six per cent. That is an old friend. I recall that substantial efforts were made to have this done in 1934, and I shall be perfectly honest

Bank Act-Mr. Hanson (York-Sunbury)

and say that perhaps it should have been done at that time. It is proposed also to limit the rate on instalment loans to five per cent. I doubt very much if instalment loans can be operated on a five per cent basis, but that is not my funeral, and if they cannot, it will not be my loss. The banks will be able to speak for themselves. But in this connection I should like to refer the house to the minister's statement at page 2555 of Hansard. I never before thought the minister was so egotistical; I do not know how many times he used the pronoun "I". It was reminiscent of the days of an old Nova Scotia statesman.

Topic:   BANK ACT AMENDMENT
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LIB

Ian Alistair Mackenzie (Minister of Pensions and National Health)

Liberal

Mr. MACKENZIE (Vancouver Centre):

Bennett.

Topic:   BANK ACT AMENDMENT
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NAT

Richard Burpee Hanson

National Government

Mr. HANSON (York-Sunbury):

No, older than he. I hope I may not be guilty of the same thing.

Topic:   BANK ACT AMENDMENT
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LIB

Douglas Charles Abbott (Parliamentary Assistant to the Minister of Finance)

Liberal

Mr. ABBOTT:

This is not a case of the pot calling the kettle black, is it?

Topic:   BANK ACT AMENDMENT
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NAT

Richard Burpee Hanson

National Government

Mr. HANSON (York-Sunbury):

I do not think so. I think the parliamentary assistant had better keep his seat, because if I understand the situation correctly he was responsible for a tactical error made by the minister on Tuesday last, when he made a vicious attack on my hon. friends to my left, I suppose in the hope that he would curry a little favour with St. James street. Well, let me tell him that was a vain hope, because he is sitting in this house for the last time. That ought to hold him for a while.

Topic:   BANK ACT AMENDMENT
Subtopic:   CONDITIONS GOVERNING TEN-YEAR EXTENSION OF BANK CHARTERS
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LIB

Douglas Charles Abbott (Parliamentary Assistant to the Minister of Finance)

Liberal

Mr. ABBOTT:

I am completely cowed.

Topic:   BANK ACT AMENDMENT
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NAT

Richard Burpee Hanson

National Government

Mr. HANSON (York-Sunbury):

Well, I suggest that the parliamentary assistant should not interrupt me when I am trying to make a reasoned argument; that is all.

Topic:   BANK ACT AMENDMENT
Subtopic:   CONDITIONS GOVERNING TEN-YEAR EXTENSION OF BANK CHARTERS
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?

An hon. MEMBER:

Oh.

Topic:   BANK ACT AMENDMENT
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NAT

Richard Burpee Hanson

National Government

Mr. HANSON (York-Sunbury):

Who said that? Some other man who has not an idea in the world, I suppose.

Topic:   BANK ACT AMENDMENT
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LIB

Angus Lewis Macdonald (Minister of National Defence for Naval Services)

Liberal

Mr. MACDONALD (Kingston City):

There is no greater interrupter in the house than my hon. friend.

Topic:   BANK ACT AMENDMENT
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NAT

Richard Burpee Hanson

National Government

Mr. HANSON (York-Sunbury):

I direct the minister's attention to page 2555 of Hansard, the first column, where he is reported to have said:

I would like the benefit of very special consideration by the banking and commerce committee and this house. In my desire to keep maximum charges low I may easily have gone too far and I would like the committee to hear evidence from the banks as to whether it is really possible to do this type of business under the terms which I am here suggesting.

I pause here to say that before the minister put this provision in the statute the policy should have been thoroughly examined. That language does not indicate it. Then he goes on to say:

Furthermore, while in the interests of simplicity and for the purpose of avoiding an odd or fractional rate of interest, I have expressed the ceiling in terms of a five per cent discount, it may be that the committee may prefer to express the ceiling in terms of a maximum rate of interest per month or per year. I shall be prepared to welcome the guidance of the committee in this respect also.

That is the first time I ever heard the minister asking for an honest-to-God suggestion from anybody in the house, because his mind is so inflexible that he never accepts a suggestion.

I do say that a start was made in this direction in 1934, and it is the natural result and evolution of the easy money policy that was established in 1934, when we got the banks either voluntarily or involuntarily to reduce the rate of interest on savings deposits, which was a sine qua non to the policy of easy money and the downward revision of bank rates and bank discounts in Canada. A very good start was made then, which might have possibly gone further at that time.

Then, the minister has referred to the provisions of section 88, which, to every lawyer in the house, is of course an old friend. He says that the amendments are designed to make it possible for additional types of borrowers to obtain bank credit under this section, and to provide what is said to be a simplification of the procedure now necessary to take security for loans under this section. Well, that, is merely an extension of an already existing principle-and a great privilege to the banks; make no mistake about that. In no other jurisdiction in the world that I know of is there anything comparable to section 88. How long it will live I know not. I am not asking for its repeal to-day, because I know is is a valuable adjunct to our financial machinery. But it is not a new principle. The changes are designed to clarify the position, and perhaps to make it simpler. That ought to be welcomed by everybody. On the whole, while it is a special privilege-and have no doubt about that-let us admit that it has served a useful purpose.

But in days gone by these liens were secret. They were statutory liens created and authorized by the Bank Act. They were secret liens, and in principle that was bad and unjust to many parts of the commercial communtiy. It gave the banks preferred positions over ordinary creditors, and often, being secret and taken without notice, caused hardship and loss

2712 COMMONS

Bank Act-Mr. Hanson (York-Sunbury)

to the commercial public. I know something about that. I have been through this mill in days gone by. Let me illustrate. Up to 1923 the banks could take a lien as security for a loan on standing timber on freehold land, and nobody knew anything about it. They had a preferred first, secret mortgage, by the execution of section 88 hypothecation forms. No doubt that was a great advantage to the banks, because it placed them in a preferred position, and it may have been of some immediate advantage to the borrower. But once it was known it absolutely destroyed the credit of the borrower with all the rest of the commercial community It was inequitable, unjust and an abomination to the business community. It was the supplier of materials who usually got pinched. Standing timber might have been growing on granted land, a man might be operating that granted land, and might go to the bank and get an advance under a lien. At the same time he might buy from me, a wholesale grocer, his goods and supplies. As a result the grocer, the man who supplied food to feed the men, would wake up one day and find that there was a lien ahead of him. That is not a pleasant situation, but it has actually happened.

In 1923 I had the privilege of bringing this position before the banking committee. I must say I got a great deal of support from the then Minister of Finance, Mr. Fielding, and there was very little opposition from the banks, the position having been stated to them clearly. I succeeded in having a reform made. It was not all I could have wished, but at least there was some amelioration of what I considered a difficult and unjust situation. What was done then was that a form of notice had to be given-inadequate, I think, but still a form of notice. I ask the minister if the government has considered, in revising the Bank Act, whether any further action should be taken in connection with this matter of secret liens, because, per se, secret liens should not be tolerated in the commercial world. As I recall the act of 1923, and the slight amendment in 1934, notice of intention to borrow has to be given. But the notice in respect of granted lands-and in law it is described as a constructive notice, not an actual notice-does not have to be registered in a registry office, where the ordinary business man would naturally expect to find it.

Has consideration been given to strengthening that principle of constructive notice? I have no further observations to make on that point. When we come to the sections themselves in the banking committee, and after I have had an opportunity to study them, I

may be able to evolve some further suggestions in respect of reform in that regard. At that time I may ask that such changes be given consideration.

Then we are informed that sections 88 and 89 are to be amended, on the theory that more credit will be extended to farmers and fishermen. This is known as intermediate credit. I hope that the thought behind this gesture will mature into action. But I believe I may be pardoned if I express some degree of scepticism as to the results which would flow from these new proposed revisions. I do not see any long line of farmers and fishermen leaving the offices of the chartered banks with their pockets filled with money borrowed from those banks on a ten per cent guarantee. I should like to add that I do not think there will be any easy loans on that basis. However, I desire to make this observation, that a charitable and judicial view to take is to await clarification of the whole position before the committee. I do not condemn it at all; I am open to conviction, and I hope it will be successful-but I am just not at all sure about it. We would all like to see more credit extended to farmers and fishermen in times of stress. That has not been their position in the past. The position of farmers and fishermen in the maritimes has not been a very happy one. I happen to have been born among them on the bay of Fundy. I know that they have had periods of great prosperity, but they have also had periods of dire distress. I think that is true of any fishing community on the Atlantic coast. In my view these proposals might be strengthened. However, let us see what we shall see in the committee.

It seems to take a war to bring us to a realization of the plight of these two classes of our citizenship. To-day the position is reversed; there is no doubt about that. To-day the fisherman is getting a worth-while return, especially the man in the fresh fish trade in the maritime provinces. I am glad he is getting it. In a measure the same is true of the farmers of this country. At last they are getting something approaching parity in connection with their production. They are carrying on that production under the most adverse conditions. All praise to the farmers of Canada, who after all are thg backbone of this country. I have always believed that. Their position to-day. is due to the war and the war alone. We must see to it that they are not allowed to lapse into a position after the war which would be in any degree comparable with what they went through during the dark days of the depression. My view is that to-day the farmer does not want credit

Bank Act-Mr. Hanson (York-Sunbury)

so much as he wants to be left alone to work out his own salvation. That is what my farmers tell me. They want to be free from regimentation and controls. Above everything else the farmer is an individualist, although he is beginning to learn the value of cooperation in certain of his activities. But on the whole I think it is axiomatic that he desires to manage his own affairs and plan his own economy.

I was greatly struck the other day with an item in the Ottawa Journal which had been quoted from the Hamilton Spectator. It contained the utterances of a farmer of the province of Quebec. I am sorry I have lost it, but he gave expression to views somewhat like these. He said: I do not want to be told what I shall plant or sow, where I shall plant or sow and when I shall sell it; I want to be allowed to manage my own farm. I do not want subsidies or bonuses, but I do want a fair price for my products. Above all-I think this is in the mind of every farmer-I do not want some white-collared young man sitting behind a mahogany desk in Ottawa, a man who never worked on a farm or who perhaps never saw a farm, telling me how I shall reap and sow, how I shall manage my farm, and what I shall do with it.

That is the attitude to-day of the farmer of Canada. He resents a little group of white collared men in Ottawa sitting down with blue-prints and statistics and figures before them and telling him what he shall or shall not do. Those people do not know anything about his problems except what they can glean from statistics and charts and blueprints and figures.

Topic:   BANK ACT AMENDMENT
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LIB

Robert William Gladstone

Liberal

Mr. GLADSTONE:

The farmer wants

markets and wider markets.

Topic:   BANK ACT AMENDMENT
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NAT

Richard Burpee Hanson

National Government

Mr. HANSON (York-Sunbury):

I agree with that; he wants to know where he is going to get them after the war. Shall he be able to find them in an improverished Europe which cannot even feed itself? He certainly wants outlets for his products because he has demonstrated that he can produce. I agree most heartily with that expression of opinion of the farmer in the province of Quebec, notwithstanding the fact that I personally recognize that some controls are necessary. But we should not have the huge system of controls and regimentation which has had such a mushroom growth in Canada during the immediate past years-founded not so much on reason as on expediency or on a hit-or-miss or trial and error system.

I now desire to turn briefly to the long and laborious statement which the minister read into the record on Tuesday last-and which he read very badly, may I say, or so it seemed 100-1714

to me. I cannot characterize that statement as a speech, because it was not a speech. To my mind it was an essay prepared by the group of economists and brain-trusters who surround the minister. I listened to it carefully and thoughtfully, and I later read it in Hansard, but I had a feeling of amazement- of course not at the whole speech.

I have listened to two ministers of finance introduce bills relating to the decennial revision of the Bank Act. I recall the judicial and unprejudiced speech of Mr. Fielding in 1923, and I recall the speech of Mr. Rhodes in 1934, which was characterized by dignity and fairness. As I recall them, both were models for such an occasion, and I recommend a rereading of those speches to the Minister of Finance and the membership of this house. Then hon, members can contrast those two judicial utterances with the platitudes uttered by my hon. friend on Tuesday last. On the one hand you have fair, impartial, judicial and dignified utterances, and on the other you have an almost passionate defence of the banks and the Canadian banking system by our present minister in this year of our Lord, nineteen hundred and forty-four.

My immediate reaction was that the bankers upon reflection will say: Deliver us from our self-constituted defender. My hon. friend is a king's counsel; he is a member of parliament; he is a privy councillor, and I now suggest that he add to his name some more initials, F.D., fidei dejensor, defender of the faith. Hon. members will remember that our old friend, Henry VIII, had a medal struck in his honour with those words on it.

For some reason best known to themselves, my hon. friend and his advisers went a long step out of their way to defend the banks and the banking system of Canada before they were under attack. Let me say to him that he wet his powder before the battle was even on. Portions of that speech were almost provocative and in my view were better left unsaid at this stage. They are bound, and it would appear to me that they were calculated, to bring reprisals from the two groups to my left. The minister expressed anxiety to get this bill to the committee with the least possible delay, but I suggest to him that his ill-timed observations will have just the opposite effect and will call for and produce a long debate in this chamber. Contrast that with what took place in 1934. The present Minister of National Defence (Mr. Ralston) was financial critic of the opposition in those days and as I recall it he made a speech just fifteen minutes long, in which he did not challenge the principle of the bill, but reserved the right to question many of its proposals.

2714 COMMONS

Bank Act-Mr. Hanson (York-Sunbury)

Personally I have a high opinion of our commercial banking institutions, but I do not imagine anyone will assert that they are immaculate or wholly free from fault and abuse. The bankers themselves, I am sure, will hardly lay claim to all the things that were said about them by my hon. friend. After all, the affairs of our commercial banks are being run by human beings. To err is human, and these gentlemen are neither perfect nor omniscient. They will admit that.

My memory of the political life of this country goes back for nearly fifty years. I recall as a boy in the year 1896 standing on the lawn of the courthouse at St. Andrews, New Brunswick, and listening to a political debate on nomination day and an indictment delivered against the Conservative party of that day by an ancient member of the Liberal party who a long time ago went to his heavenly reward. He was a friend of my family, the Hon. Arthur Hill Giilmor, whose name is still held in respect. The gravamen of his charge was that the Conservative party were the tools and servants of the big interests of Canada. How many times have we heard that from every platform in this country, on the hustings and in the party press of the Liberal party! It is a charge that has been always levelled against the Conservative party.

Topic:   BANK ACT AMENDMENT
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CCF

Joseph William Noseworthy

Co-operative Commonwealth Federation (C.C.F.)

Mr. NOSEWORTHY:

And now you are

being supplanted.

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NAT

Richard Burpee Hanson

National Government

Mr. HANSON (York-Sunbury):

We have never been supplanted, because we never were the tools of the big interests of this country-I can tell you that. But all down through the years I have heard that charge iterated and reiterated by our political opponents. As I sat and listened to the Minister of Finance on Tuesday last I asked myself this question, and I ask this question of the house and of the country: Who are to-day the self-constituted champions of the big interests in Canada? The Minister of Finance ami his followers; and he is just following out the line of his illustrious predecessors. I well remember when the Hon. Charles Dunning came down here from Saskatchewan, the Napoleon from the west, the gentleman who was to take charge of things and become the heir apparent of the present Prime Minister (Mr. Mackenzie King). He was a vigorous personality-make no mistake about that-and a very able man; but where is he to-day? He has ingratiated himself into the seats of the mighty. To-day he is the

president of the Ogilvie Milling company, a director of the Canadian Pacific Railway company, a director of the bank of Montreal, and God knows what he is not a

director of. Where are the principles that he brought with him down from Saskatchewan in the early nineteen-twenties? I look across the floor and I see my good friend- the Minister of National Defence. He, too, in the days that are gone by has smelt the fleshpots of Egypt

that is all he did, I think, just smell them. He went to Montreal under the aegis of his friend Mr. Dunning, but it was not very long before we found him in the employ of the federal government. I want to say this to the minister, that from the thousands of dollars that he put into his jeans as a result of his efforts on the wheat report, very little eventuated to the people of Canada. I am going to forgive him all that, because when duty and his leader called him he came back to give national service to the people of Canada. You may not approve everything he has done, but there is no doubt in my mind that he is a much poorer man to-day than he would have -been had he stayed in Montreal. I am just wondering if the hon-. Minister of Finance has it in his mind, after that gush that he dished out to us the other day, that he too, with the reputation he is seeking to establish, will some day ingratiate himself into the hearts and the pocket books of the so-called big interests.

Topic:   BANK ACT AMENDMENT
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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

I had not thought of it.

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NAT

Richard Burpee Hanson

National Government

Mr. HANSON (York-Sunbury):

Then it is a new thought for the minister. I know he has an inflexible mind, but he may be receptive to that idea.

We of the Progressive Conservative -party believe in rational and orderly progress. I do not think that the Liberal party, represented by the Minister of Finance, should rush into the arena and passionately defend our financial institutions before -they have been actually attacked. I think we should take a judicial attitude towards this question, to do justice, -to do that which is in the national interest, rather than rush to the support of people who have not asked us to rush to their support. I cannot believe that the bank executives ever asked for the passionate recital of the virtues of the banking system that was given -to us by the minister, or even contemplated such a position.

The banks of this country for seventy years or more have had a position tried by experience which has proven reasonably useful and as good at least as systems in other capitalistic countries, and better than is to be found in some countries. I do not for a minute agree that, it is an ideal system. We should seek to attain the ideal.

Topic:   BANK ACT AMENDMENT
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?

An hon. MEMBER:

Currying favour now.

Bank Act-Mr. Hanson (York-Sunbury)

Topic:   BANK ACT AMENDMENT
Subtopic:   CONDITIONS GOVERNING TEN-YEAR EXTENSION OF BANK CHARTERS
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May 8, 1944