Before the amendment carries may I make an observation in connection with (c)? In the city of Quebec last week 2,000 people gathered to celebrate the golden anniversary of the foundation of the caisse populaire, which was started by Alphonse Desjardins at the beginning of this century. I should like to be one to pay tribute to the enormous social value of the work done toy Mr. Desjardins and by those who succeeded him.
I know thait this movement of caisse populaire, or the credit society union, has a long history, going back to the Monts-de-Piete of the middle ages, and to that of Raiffeisen banks and Schulze in Germany in the last century. We in Newfoundland have copied the credit society or the credit unions from the co-operative movement of Nova Scotia, and I can say that that movement has done an enormous amount of good in Newfoundland. It seems to me that consideration should be given to the exclusion of credit societies or caisse populaire from the operation of this section, because the money which they lend is their own; it does not create new money as a loan from a bank would. If a man goes into a bank and borrows money from the bank the banker creates the amount of the loan which the person wants; whereas if a man goes to a caisse populaire or a credit society he is using only his own or his neighbour's money for that purpose, and no new money is created. I think that is recognized. Perhaps the minister will give consideration to that when he is drawing up the rules.
During the war, and I think the same practice would be followed here, all loans made by individuals or lending institutions were subject to the rule that the borrower must make a declaration that the proceeds were not being used to purchase consumer goods in contravention of the terms stipulated in the consumer credit order as it stood at that time. Of course regulations have not been drawn under this legislation yet. With due deference to the hon. member for St. John's West I would see little difference in the anti-inflationary effect of borrowing whether it is from a bank or a private individual, a credit union or any other form of credit institution, provided that the individual is borrowing money and not using his own cash.
Well, it is really regular lending companies, lending institutions, that are contemplated. I question whether it would be feasible to attempt to enforce a measure of this kind on private arrangements between individuals. So far as I am aware no attempt was made during the war to extend it to private individuals.
This curtailment of instalment buying will tend to drive more and more people into the hands of the so-called small loan companies. I think I should draw the attention of the minister to certain practices of these people, particularly with regard to their advertising. I think there should be some restriction on the tactics that these
Consumer Credit Act
people usually use. The exact amount of interest that people are paying for accommodation is said to be so much per annum. That is to say, I think someone should insist that when loan companies advertise they should state in their advertisements, not the various amounts that must be paid back monthly, but the actual amount of interest per annum charged.
As the minister is no doubt familiar with the System, he will know that these people advertise in the press and in other ways that they are prepared to lend let us say $100 on twelve instalments of $9 each. People who use these facilities are not always those who are blessed with the ability to do arithmetic problems, and when they see reference to twelve instalments at $9 each, spreading $100 over the year, they naturally jump to the conclusion- and I think it is natural for them to do so- that they are paying 8 per cent per annum. As a matter of fact they have not used $100 for a period of twelve months, at all, but have used $50 for twelve months or $100 for six-whatever way one wishes to put it. It is my opinion that if people knew what they were up against in the matter of paying interest rates they would be more careful in the use of their credit. That is one angle the government should take into consideration.
While I am on my feet may I mention a matter I mentioned before, namely the practice of charging bonuses for loans. I shall not recount tonight the pitiful tale I told the house before, where the woman borrowed $3,500 and was then forced to sign a first mortgage for $4,000 on the house she purchased with the $3,500. In other words she will be paying for the next twenty years interest on $500 she did not borrow. I do not know whether the minister would consider that inflationary or not. Whatever it is, it is something which should be discouraged.
I have nothing to say about the amendment, but I should like to make some observations about subsection 3. As to subsection 1, my inquiry relates to the date upon which the act is intended to be operative. For instance in paragraph (a) we find reference to payment for consumer goods sold at retail. Is this legislation to be applied in the case of goods sold prior to the date on which the act comes into effect?
Then paragraph (b) refers to the repayment of loans wholly or partially secured on consumer goods purchased by the borrower at retail. Is the act to have application to loans made prior to the date upon which the act
comes into effect? Secondly, is it intended to have application in the case of goods purchased before the act comes into effect?
Paragraph (c) refers to the repayment of loans. Is it intended to have application to loans made prior to the date of coming into force of the act?
possible question of the retroactive effect, so far as loans are concerned. I might as well state frankly that I did not contemplate that there should be any retroactive effect otherwise. If it became apparent that there was a widespread anticipation of these regulations and a number of spurious contracts entered into, it might be necessary to consider some other date. But I think I can state frankly that there would be no present intention of making the new regulations operative prior to the date on which they will be adopted and announced. That is the present intention, and I have no reason to think that it will be changed.
loans. I also asked as to the purchase of goods as set out in section 3(l)(b). May we take it that the minister is saying that this act will not be applied to any goods purchased prior to its coming into effect?
I would have to inform myself on that point. I cannot give an opinion upon that offhand, as to what the Small Loans Act provides. However, I shall be glad to look into the matter and refresh my memory.
is being asked to give the governor in council power to prescribe a fine or a term of imprisonment for violation of any regulation, and also to prescribe whether a penalty shall be imposed upon summary conviction or upon conviction under indictment or upon either summary conviction or conviction under indictment. I am aware that the subsection does proceed to put a limit upon both the fine and the term of imprisonment which may be imposed for breach of a regulation; but I do urge that it is quite unsound legislation for parliament to vest in anyone the right to define penalties of that kind, whether by fine or imprisonment.
Granting that there are limits placed upon the power to be exercised with respect to fines and imprisonment, I for one wish to
record my opposition to legislation which purports to confide in some body outside parliament the right to determine penalties for breaches of a law made by parliament, or a law parliament authorizes to be made by the governor in council by way of regulation.
If it is feasible to put a limit upon a fine or imprisonment that may be attached in respect of the breach of a regulation under this act, then certainly it should not be beyond the wit of the draftsman to set out in the bill in plain terms the maximum penalties that should attach to breaches of the regulations. It seems to me that this is a form of legislation that is unsound in principle, and to which parliament should not lend itself.
As was pointed out toy the hon. member for Eglinton, limits have been put in here as to the penalties which can be imposed. They are lower limits than were included in the general penalty clauses of wartime prices and trade board orders. The reason here for giving the discretion, and for spelling it out by regulation, is to maintain the principle of flexibility and the possibility of mitigating the otherwise rigid provisions which it would be necessary to insert in the bill.
In oases where there was flagrant violation of the regulations by, let us say, a loan company, or some other vendor advertising in violation of the regulations, the governor in council might feel it proper to proceed by indictment and, as a consequence, the penalty would be more serious. On the other hand a more or less inadvertent violation would be prosecuted by way of summary conviction, and a smaller penalty asked for.
If one grants the principle that this control should be imposed, then I think there should be some discretion in the executive; and if one puts in maximum and minimum penalties it is no serious contravention of sound parliamentary principles to allow discretion to frame regulations which will determine the category within which particular classes of offences will fall. That is the reasoning which lay behind the drafting of the section in this form and that is the reason why my considered view is that it is desirable to have it in this way.