I shall come to that in a moment, but their losses were slightly over one-tenth of one per cent per annum. Does anyone seriously suggest that if these companies were so careful as to whom they would lend money as to keep their losses down so low, we are going to stop the loan shark evil by setting up such companies? Obviously these companies are lending money only to credit-worthy people. Even though you set up these companies you will still have people who are not good risks going to the loan sharks to borrow money. I was asked how much these companies made. I did not intend to give these figures at this stage, but I might as well. Mr. Finlayson had this to say in his evidence:
The experience of the dominion companies shows that for the four years 1934 to 1937 inclusive the companies earned after interest 11T per cent on their mean net assets. The rate for the largest company was 16'66 per cent.
Treating the "supervising" fee as equivalent to a return on capital and assuming a reduction of fifty per cent in advertising costs an addition of six per cent is made to the return of 11 1 above mentioned.
That would give them a profit of 17-1 per cent on their capital. I might be asked what I would suggest to eliminate the loan shark evil. I think this matter could be properly considered at this time. We are being asked to approve this bill as an alternative to a general policy of controlling the loan shark evil. This is an alleged attempt to minimize that evil.
I should like to suggest what I think is the proper way to deal with this problem. I am sorry the Minister of Finance (Mr. Dunning) is not in his seat. I hope he will soon be able to be back. First of all let me say that usury is one of the oldest crimes known to civilization. We should make exorbitant charges a crime. Those private individuals who take advantage of the need of people to obtain credit would not be the ones to register under the Money-Lenders Act. They make individual deals here and individual deals there. How in the world are
you going to stop that sort of thing unless you make it a crime? The man who thinks he is pressed for credit goes and gets it from one of these individuals and pays a rate of probably 200 per cent per annum. These individuals take advantage of the needs of people, and once a transaction is completed the latter are worse off than they were before. I suggest that you write into the criminal code a provision that anyone who charges more than a certain set rate-it has been suggested that two per cent per month would be proper; personally I think that is too high -shall be deemed to have committed a criminal offence. It seems to me that this is the way to deal most effectively with these loan sharks.
Shortly after the attorney general of Ontario came into office he found the loan sharks were giving considerable trouble in the city of Toronto. He laid several charges under the Money-Lenders Act, but what happened? The judge found that he could not definitely distinguish between what was charged as interest and what was charged to cover investigation fees and so on. So he could not convict. Here is what His Honour Judge O'Connell, who presided at the county court judges' criminal court of the county of York had to say:
These harsh and inequitable transactions might be effectively dealt with, if not actually stopped, by legislation making it a criminal offence, witli appropriate penalties, to charge, impose or collect in respect to a loan for less than $500, interest, and for services of any kind, nature or description whatsoever in connection therewith, a sum of money amounting in the aggregate, in respect to both interest and charges, to more than two and one-half per centum per month on the monthly balance owing by the borrower. This, of course, is merely a suggestion prompted by the evidence coming before me during the present trial.
There we have a judge having to find that he could not convict because of the loose manner in which our laws have been drawn. His honour suggested that some provision should be made in the criminal code to deal with those people who take advantage of the needs of their neighbours. That is the first thing I would suggest. A definite limit should be placed upon the cost of a loan, and it should be made a criminal offence to charge more than that limit.
There is a further useful step that can be taken. Giving evidence before the banking and commerce committee, the attorney general of Ontario had this to say:
I understand that this proposal has been made on the ground that prima facie these matters of service charges are matters of
Industrial Loan and Finance
Subtopic: INDUSTRIAL LOAN AND FINANCE CORPORATION