Why should a matter as important and delicate as this be left to a group that could be vulnerable to extreme lobby pressure? By this one, unnecessary unilateral act the cabinet are leaving themselves open to charges that they have set the rate too high. When this happens, and happen it will, there will be those in this country who will suggest even that someone is getting a kickback. If, on the other hand, the rate is too low, what will happen? We shall see taking place what took place this year and last year. There just will not be any farm improvement loan money available.
I deplore the wording in the resolution because it is all so unnecessary. I suspect that in this resolution we are seeing more of the ideas of those who want the cabinet to be supreme, and the house filled with little rubberstamps.
I am also in agreement with item No. 6 on the order paper, the resolution preceding the bill to amend the Farm Credit Act. I agree particularly with the concept of broadening the classes of persons eligible. Yet, here again, we are running smack into another intrusion by the governor in council, the cabinet, which also in this instance wishes to set interest rates. Probably there is more justification here for the cabinet to set interest rates than there is in the case of farm improvement loans. Under the Farm Credit Act government money goes out; under the Farm Improvement Loans Act, bank money is lent under a minimal government guarantee. I say there is no need to change the interest rate under which moneys will be lent under the Farm Credit Act. The present high interest rates will not always stay in effect.
Some in this youthful cabinet are old enough to remember that we did not always have these high interest rates. Less than 30 years ago people with money to invest were happy to buy government bonds yielding 3 per cent. Who is to say that with farm credit loans running for upwards of 30 years interest rates will not come down drastically long before those loans are paid off. Over the past 100 years the money market has shown a remarkable history of ups and downs. Some economists go so far as to predict when these cycles will take place. For my purpose this evening it is sufficient to mention what has happened in the past 50 years.
From 1919 to 1929 long term Canadian dollar bonds gave an annual average yield of 5.07 per cent. From 1929 to 1939 the average yield was 3.88 per cent. From 1939 to 1949 the average yield was 2.93 per cent, and from 1949 to 1959 that average yield was 3.67 per cent. What the average for this decade will be is anyone's guess. Most decidely the average yield will be up. Certainly the rate will be as high as or higher than any we have seen in this century. Nevertheless, Mr. Chairman, these trends were evident a century ago, and before that. There is nothing new about them.
I therefore urge the government to keep at 5 per cent the lending rate on moneys lent under the Farm Credit Act. If necessary, the government ought to put government money into the corporation administering the act. If it does that it will have a credit mark opposite its record, a mark which will show that the government, in one instance, tried to keep our agricultural industry alive.
[DOT] (9:50 p.m.)
I say again that these high interest rates will not last forever, and the burden on the treasury would be small in relation to the long term good which could be accomplished. Probably before many years have passed, before many of these liabilities are paid off, interest rates will once again be down. The inflationary effect of subsidized interest rates which the minister mentioned will not, in practice, have much of an impact. In my view the cabinet would do well to spend more of its time maintaining a climate in which our farmers could sell their products at a reasonable price. I suggest it would be far more profitable for them to spend their time on this, rather than sit around setting interest rates.
Topic: FARM CREDIT ACT
Subtopic: AMENDMENT RESPECTING ELIGIBLE CLASSES, AMOUNT OF CAPITAL, INTEREST RATES, ETC.