Mr. Speaker, when the house was called to the other place I had just been asked a question by the hon. member for Timmins and before I sit down I will answer that question, but I have one or two other points to make, and perhaps I can make those now on the chance that the hon. member may return to the house before I am through.
I am in agreement with the idea of a study being made of the interest rates that should be charged in this type of business, but I do not feel that at this time the bill proposed would be in the best interests of the country.
I see that the hon. member for Timmins is back in his place. Before we rose, he asked me what I meant by referring to the figure of 12 per cent as arbitrary. I find that figure to be arbitrary in two ways. In the first place, why is it 12 per cent and not 11 per cent or 13 per cent? The hon. member who moved the bill has not persuaded me that a great deal of study or investigation went into the setting of this figure. Why does he feel that this particular percentage would allow money to be advanced with an adequate return, without an exorbitant profit, to the people involved, allowing them sufficient profit to keep in business and to keep this credit available for those who need it?
Another, and more important, consideration is that this figure ignores the fact that before the Small Loans Act was passed a good deal of investigation was carried out with regard to a graduated figure. It is obvious that a company which is financing purchases in the fields under discussion has certain charges which are more or less fixed; an investigation has to be made of the applicant's credit, there is the administrative task of setting up the loan, the cost of stationery, stenographers and so on. In addition, some reserve has to
be made for collection if that should become difficult, and these costs, it seems to me, must be more or less fixed, without regard to the size of the loan. I imagine it would cost as much to investigate a credit situation where the amount involved is a $100 as it would when the amount was $500.
When the hon. member for Burnaby-Coquitlam mentioned the very large interest figure he did, it was not, I think, really an interest rate which was involved there. There was a charge in respect of administrative costs in setting up the loan which would normally have been spread over the entire period of the loan, but in this case, where the loan ended in one month, as I understand it did, those charges-administration, credit investment and so on-had to be carried within that period. I admit that the figures quoted by the hon. member seem to be well beyond what is reasonable in the case.
If you are going to include, by definition, as interest all those charges such as credit investigation,-and that, I understand, is what this bill proopses to do-then it must be realized that the percentage of such charges in relation to a small loan must be larger than in relation to a large one. I know from my own experience as an insurance broker that it costs us as much in office administration to set up an insurance policy on which the premium might be $7.60, say, as it does to set up one on which the premium might be $100. I think this principle is recognized in the Small Loans Act, and I think it should be recognized in any bill such as we are now discussing.
I have nothing further to say. I believe I have made my position clear. I should like to congratulate the hon. member for Assini-boia for having once again directed the attention of the house to this very important subject. As I said earlier, I appreciate the motives which moved him, but I regret I am not able to support the bill because I do not feel that it would fulfil what he is trying to accomplish. However, I would support on some future occasion, when those responsible for these things think the time is appropriate, a thorough investigation of this type of credit facility in order to determine whether it is necessary to set limits upon interest rates and, if so, what those limits should be.
I have one further word to say. The hon. member for Burnaby-Coquitlam spoke before me, and I am afraid I cannot pay him the same compliment as I paid the hon. member for Assiniboia. He represents what I call the socialist doctrine of the assumption of the monopoly of virtue, and I should like to assure him that if I oppose this bill it is not,
as he seems to assume, because I am in the interest-earning class. I make my living, and I am interested in the welfare of Canadians who make their living, and that is why I am in this house. If I am obliged to oppose this bill it is because I do not believe it is in the interest of the people of Canada at this time.
Subtopic: AMENDMENT TO PLACE CEILING ON INTEREST RATES