I am not suggesting anything. I am only saying it so happens, sometimes. I think my learned friend knows it better than anyone else. Therefore, a reference to Judge Stackhouse's judgment, without reference to the reverse judgment rendered by a higher tribunal, does not convey complete information to the committee.
A certain propaganda, carried out in committee and outside thereof, and the tone of my hon. friend's speech of to-night, tend to create the impression that the sponsors of these bills and the standing committee in recommending general legislation are attempting to raise the rate of interest which small loan companies may charge to their borrowers. The contrary is true. For a number of years the superintendent of insurance has had complaints about the exorbitant rates of interest and other charges which are being collected from borrowers by certain money-lenders who have been properly styled "loan sharks." In the committee Mr. Finlayson has spread on the record a few examples of exorbitant charges: Three, four, five, six per cent per month are not uncommon. Instances of charges of 600, 700 and 800 per cent per annum were revealed. Indeed, there was a case of
11,000 per cent per annum. These were not isolated cases.
This condition, which to-day obtains in Canada, is not unprecedented elsewhere. In the United States, some years ago, a similar situation was revealed. Russell Sage died and left a large fortune to his wife. She was snowed under by applications for loans. She began to investigate some of these cases. She discovered that thousands of people were being mulcted of large sums of money by loan sharks. For a purely philantropic purpose and a desire to help the small borrower, Mrs. Sage created what is now known as the Russell
Industrial Loan and Finance
Sage Foundation. A thorough study was made in every state of the union; experts were sent to Europe to investigate conditions there, and the effect of the remedial legislation which had been passed in various European countries. In the United States, this question comes within the jurisdiction of the various states. Legislation had to be introduced in state legislatures. We have a statement of the rates of interest which now prevail in the United States. They were arrived at as a result of exhaustive investigation. After long years of study and effort, legislation was passed, and, now, the rates in the United States vary from one, two and three per cent per month, in graduated rates, based on the amount borrowed, or, in other states, on a flat basis ranging from 2^ per cent to 3i per cent per month, in most cases.
In Great Britain, the same condition had obtained. The same study was made; remedial legislation was enacted. What is the situation in Great Britain? In Great Britain there is no maximum rate of interest fixed. The question resolves itself into a question of procedure: On whom shall the burden of
proof rest? The rate must be reasonable. If it does not exceed 4 per cent per month, the complaining borrower must prove that the rate is unreasonable. If the rate exceeds 4 per cent per month, upon a complaint being filed, the money-lender must prove that the rate is not exorbitant, In Great Britain, therefore, the law assumes a rate of 4 per cent per month to be fair and reasonable, subject to the courts reducing it or increasing it as the circumstances may warrant.
In the United States, where a flat rate has been fixed, it varies from 2 to 31 per cent per month, with very few exceptions higher or lower.
In Canada, the superintendent of insurance thought it advisable to compel these companies to come to parliament to have their charter powers clarified. These companies did not come here of their own motion. They were urged by the superintendent of insurance.
Subtopic: INDUSTRIAL LOAN AND FINANCE CORPORATION