June 5, 1958 (24th Parliament, 1st Session)

CCF

Murdo William Martin

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

Mr. Martin (Timmins):

Possibly the hon. gentleman did not hear me, but I said it was a poem by Mr. J. D. Ketchum.
I was also interested in other remarks of the hon. member for Winnipeg South (Mr. Chown) who said that interest rates are high and in some instances they were justified because of the fact that the companies have to build up reserves against losses. He mentioned that those corporations take great risks. Further on in his remarks he quoted from a publication which warned the public about the perils of getting too deeply into debt. He said that these very matters were used by those business companies to warn people who came in for loans. Certainly, if the high standards that he outlined were set in all cases there would not be any risks because of the fact that a great many people could not meet those standards and consequently would not be able to obtain the loans.
1 was also interested in a remark of the hon. member for St. Lawrence-St. George (Mr. Chambers). It appeared to me that his main argument seemed to be that we could

Interest Act
not hope to maintain high sales of automobiles and other products if we interfered in any way with high rates of interest. In my opinion this is a very strange argument indeed. When one realizes that the figures placed on the record today show that there is roughly $2 billion credit in this field at the present time and that at six per cent the interest on $2 billion is $120 million a year, one can see that every one per cent we can shave off the interest rates will save the people of this country $20 million and thus add that amount to their purchasing power. At today's costs this is enough money to build 2,000 houses; enough, in fact, to buy the groceries for 1 million families for the period of one week. It was also pointed out that these companies have over 500 branch offices throughout the country and the point was made that they provide employment. I admit frankly that they may provide employment for some but in the case of a good many other people they provide "destroyment" rather than employment.
Some facts have been put on the record today about credit unions. I had the privilege of serving as treasurer-manager of a credit union from the time it started until it reached its first quarter million dollars in loans. In that length of time the loss to the credit union from uncollected debts was less than $100. I have had discussions with employees of various finance companies and I understand from them that their losses are very little higher in proportion. I have had no opportunity to verify their statements but that is what I was told.
The figure of 12 per cent mentioned in the bill as a maximum is in fact the maximum that credit unions are permited to charge their members under the law. It is not an arbitrary figure or a minimum figure; it is the maximum. They can charge less but they cannot charge more. May I say that even on that basis the credit union I was privileged to serve, in addition to providing life insurance not only on the loans but on the savings, paid in every year of the four years I was with the organization an average dividend of 5 per cent on savings and a 15 per cent rebate on interest. Therefore hon. members can very easily see that the interest rate paid by the members of the union was considerably less than 12 per cent a year.
As I understand it, the bill is intended to try to correct not only high interest charges but various other costs and charges that are made. Two or three years ago I had to do with a case where a man had purchased a car. After making allowance for his trade-in and the cash he had there was a balance of $700. He was told he would be able to finance
[Mr. Martin (Timmins) .1
the balance with monthly payments of approximately $35. Unfortunately, the man did not have too good an education and he was quite a trusting soul. He did not ask for any details. When his contract came back one week later he found that the $700 had increased to approximately $1,035.
His wife came to me with the contract asking for an explanation but I could not give one. I went to the local office of the company and after three hours of very hard work I was able to extract a breakdown of the various costs involved. Strange to say, the interest rate in this particular case was only 8 per cent but insurance charges had been added and such insurance as I had never seen before. I think the best example of all was an insurance policy they had sold him, without, of course, telling him so, which provided that if at any time he was on a trip and ran short of funds he could drop into any branch office of the company and obtain $100 for one month without interest. They sold him this insurance policy under which they would lend him money and charged him interest on the premium for that money in a way that he would not know anything about.
There was also a $10,000 life insurance policy in case he was killed driving the car before it was fully paid for. Again he knew nothing about it and there was not much danger of there being a claim against the policy. There was a happy ending to this case. When I had all the facts and figures gathered together I informed the company that I was going over to the local newspaper to purchase a half-page advertisement in order to inform the public about what was going on. I may say their public relations department took over immediately. We were able to settle the matter through a loan at the bank with no charge whatsoever.
I had another case very recently, just about two months ago, involving a man with four children a Korean veteran who had been out of work for four months. He came to me with a letter from a finance company saying that if payment was not made by four o'clock the next afternoon his furniture would be seized. I got in touch with the manager of the finance company and told him of the letter I had. I also informed him that I was delighted to have it because I was a little short of material for my television broadcast the next night. Again the public relations department took over. The man was told that as soon as he had any money he could come in any time and pay any amount he wanted to and he was assured there would be no further trouble caused by them.
The party with which I am associated has for years made its stand very clear on these

matters. We have been accused of wanting to control this and to control that. I would say that certain controls are not only sensible but very necessary. No one in this country seems to object to speed controls on our highways; why should there be no speed controls on our financial highways? The only reason I can see for imposing speed controls on . the highway is to control those who would endanger the lives and well-being of our citizens. I would say that the same principle applies with regard to finance and this control is needed to preserve the credit of the citizens of this country.
In closing I would like to mention a subject which has been referred to before and that is advertising by these various finance companies. I would say that the aim of advertising by these finance companies and general business combine to entice people to buy what they do not need with money they do not have. I should like to add my voice to those who have advocated that this particular bill be referred to a committee where it could be given the proper study and the necessary action taken.

Topic:   INTEREST ACT
Subtopic:   AMENDMENT TO PLACE CEILING ON INTEREST RATES
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