QUESTIONS

[Stage Direction]
v Questions answered orally are indicated by an asterisk).

Mr. JACOBS:: 1.	What is the outstanding indebtedness to Canada by the government of Greece?
2.	When was such indebtedness incurred, and if funded, in what year?
3.	Has the government of Greece paid anything on account of principal and interest since December 31, 1931, and if not, what steps, if any, have been taken to obtain payment?


Mr. RHODES:: 1.	86,525,000 principal amount with interest since June 30, 1931.
2.	Indebtedness incurred in 1919; funded in 1923.
3.	No payment on account of principal or interest has been received since the payment due June 30, 1931. Payments due in the year 1931-32, totalling $563,250, were deferred in accordance with the international moratorium on inter-governmental debts. Subsequently Greece deferred payment on its external indebtedness, whether held by governments or the public.

Motions for Papers
Negotiations have been proceeding for a resumption of the service of such debt and the claims of Canada have been put forward as occasion required.


ILLEGAL IMPORTATION OF MOTORCYCLES
Mr. MacMIDLAN (Saskatoon):: 1. Did one Ceabern Charles Stoliker, of Asquith, smuggle two motorcycles into Canada from the United States of America on or about April 24, 1914?
2.	Did the preventive service of the Department of Customs seize two motorcycles, the property of Ceabern Charles Stoliker, of Asquith, on or about April 24. 1914?
3.	Did the said C. C. Stoliker admit that he wilfully, concealed two motorcycles in a so-called car of settler's effects coming into Canada from the United States in order to evade paying duty on same?
4.	What disposition was made of the motorcycles seized?
5.	If the seized motorcycles were sold, who was the purchaser and what was the amount paid?
6.	What was the duty paid value of the two motorcycles ?
7.	Did the said C. C. Stoliker, of Asquith, make a false declaration at the customs port of entry at Saskatoon regarding a so-called car of settler's effects in the spring of either 1913 or 1914; if so, on what day and date?
8.	Did the customs preventive service seize goods, the property of one C. C. Stoliker, of Asquith, in April, 1914?
9.	If so, give list of goods seized?
10.	What disposition was made of the goods referred to in question (9) ?
11.	How much did the department collect by way of duty on the seized goods?
12.	Did the said C. C. Stoliker, of Asquith, give a sworn statement to the effect that he, wilfully and knowingly, endeavoured to smuggle goods into Canada, thereby evading the customs laws of Canada?
13.	What was Mr. C. C. Stoliker's occupation in the United States and his address?
Mr. MATTHEWS;
1.	No, but it was charged that one, Ceabern Charles Stoliker of Asquith unlawfully imported two motorcycles without payment of duty in a car of settlers' effects in June, 1913.
2.	Yes.
3.	Yes.
4.	Motorcycles were forfeited and sold by public tender.
5.	"Indian" sold to Mr. Harry Greenway, Saskatoon, for $101, "Mitchell" sold to Mr. J. H. Boulton, Saskatoon, for $3.
6.	"Indian", S253.12, "Mitchell", $27.
7.	Yes on two occasions, April 7, 1913, and June 11, 1913.
8.	Yes.
9.	5 horses; 1 buggy; 1 seed drill; 1 mower;
1 horse rake; 2 sets of harness; 2 wagons; 1 plough; 1 cultivator; 1 cow and calf; 160 hens and chickens.
10.	Released to Ceabern Charles Stoliker.
11.	S286.50 and a like sum as penalty.
12.	No, but furnished a statutory declaration admitting misrepresentation and evading payment of customs duty.
13.	Given as school teacher, Drayton, North Dakota.


QUESTION PASSED AS ORDER FOR RETURN
Mr. MORAND:: 1.	What is the rental, length of lease, and date of expiration of lease in connection with property occupied by the Canadian National ticket office in the city of Windsor?
2.	What was the rental, time of expiration of lease of the former Canadian National ticket office on Ouellette avenue, Windsor?
3.	What other offices were rented by the government in the Border Cities, during the last five years, and what rental was paid in each case and to whom was it paid?


Mr. CAHAN:: Return tabled herewith. MOTIONS FOR PAPERS


NOVA SCOTIA COLD STORAGE COMPANY LIMITED
Mr. YENIOT (for Mr. Ralston):: For a copy of all correspondence, letters, telegrams, order in council and other documents, since January 1, 1933, whereby the Halifax harbour commissioners or the federal government undertook certain responsibilities in connection with the Nova Scotia Cold Storage Company, Limited, or its securities.


QUEBEC-NORTH SHORE AIR MAIL
Mr. VENIOT (for Mr. Casgrain):: For a copy of all documents, letters, telegrams, and correspondence, exchanged between the Post Office Department at Ottawa and Quebec, and the Canadian Airways Company Limited', respecting air-mail carriage from Quebec to the north shore, and the existing contract between the Post Office Department and such company.


SHEET HARBOUR-UPPER MUSQUODOBOIT MAIL SERVICE
Peter John Veniot: For a copy of all letters, notices, tenders, orders in council, contracts and other documents, respecting the mail service between Sheet Harbour and Upper Musquodoboit, Halifax county, since January 1, 1934.
3S32

Wheat Agreement


WHEAT AGREEMENT
[Stage Direction]
On the orders of the day:
Mr. JOHN VALLANCE (South Battle-ford) :: 
Right Hon. R. B. BENNETT (Prime Minister):: The government's policy, Mr. Speaker, has been made known to this house, and the discussions with respect to the agreement are still proceeding. The article to which reference has been made was drawn to my attention. It is perhaps a somewhat stronger statement of the situation than the facts warrant. Nevertheless the fact is that the Argentine, having had a very much larger crop than was anticipated, contends that the quota accorded to her in the agreement is not sufficiently large to meet her export requirements.


Hon. W. R. MOTHERWELL (Melville):: Mr. Speaker, arising out of the reply of the Prime Minister might I ask if he does not think that the time has come when this house should have a day set apart to discuss this international wheat agreement? I cannot debate the matter upon the orders of the day, but if I had a right to do so I would ask it as a question of privilege. If we can afford to take a day to discuss sweepstakes surely we can afford to take a day to discuss this international agreement which has not yet been concurred in by this house, and which is a very much more important matter than many sweepstakes.


Richard Bedford Bennett: Mr. Speaker, the matter
has been discussed so frequently and at great length that it is not the intention of the government to set aside a day for the purpose.



ONTARIO ELECTORAL ACT

[Stage Direction]
On the orders of the day:
Mr. J. A. BRADETTE (North Timiska-ming):: I wish to direct a question to the
hon. Secretary of State. There is a clause in the amended Ontario Electoral Act which I believe interferes with federal rights. Under that clause a woman who became a British subject through marriage or through the naturalization of a parent when she was a minor is compelled to go through various court processes before she can vote. I would ask the hon. Secretary of State if this does not conflict with the federal law.


Charles Hazlitt Cahan: Mr. Speaker, the Ontario legislature has complete jurisdiction with respect to its own electoral act. It may allow all British subjects to vote or it may preclude certain classes of British subjects from voting, and therefore I think its electoral act is probably within its legislative jurisdiction, although that is a matter upon which the Minister of Justice could give a more authoritative opinion than I.



WHEAT SALES IN THE ORIENT

[Stage Direction]
On the orders of the day:
William Richard Motherwell: Mr. Speaker, I do not like to refer again to the return that I have asked for with respect to the Hon. Mr. Marler and his report to the government on the possibilities of extending our trade with the orient in wheat and flour. If I had the right under a question of privilege to discuss it a little bit I would do so, Mr. Speaker, because the return placed in my hands is about as hollow as a drum and as informative as the dodo. An order has been passed by this house instructing the government to make a return giving the correspondence and cablegrams of the Hon. Mr. Marler and any other documents, not merely fiddle-dee-dee letters such as were tabled and which I have here in my hand.
I want the report of the Hon. Mr. Marler and I think the Minister of Trade and Commerce (Mr. Stevens) has it. If I know anything about this thing, he is the sinner. I should like to hear from him. I have tried to be very generous because of the action of his officers the other day when they came to my room and told me that there were so many documents to copy, and we agreed as to what should be returned.


Mr. SPEAKER:: If the hon. member is
not satisfied with the return, he may ask for a further return but this is not the occasion to make a speech.

Soldier Settlement Act


William Richard Motherwell: All right, but I
want the Minister of Trade and Commerce to ante up with the real return or there will be trouble around here.



EXPORT PRICE OF NICKEL

[Stage Direction]
On the orders of the day.
Mr. E. J. YOUNG (Weyfoum):: Some three weeks ago I asked the Minister of Trade and Commerce (Mr. Stevens) a question with regard to the export price of nickel. I wonder if he is able to give me an answer in that regard.


Hon. H. H. STEVENS (Minister of Trade and Commerce):: Mr. Speaker, the question
asked by the hon. gentleman is a very difficult one to discuss or answer in the way which he has in mind. The bureau of statistics, under the Statistics Act, a statute of this country which definitely and absolutely controls its activities, secures information from various sources which is strictly confidential. It is provided by that act-I think the same thing applies to other information under other statutes-that where the information is from one firm and the publication of that information would be a disclosure of the firm's private affairs, it is not competent for an official to give out the information. As far as he has been able to do so the dominion statistician has complied with the request. Personally, I think it is unfair to discuss the affairs of an industry which is in fact a single company industry under, shall I say-I do not blame my hon. friend in this respect-the guise of public statistics. I am sorry it has not been possible to give publicly the answer which the hon. gentleman desires but I think he will agree that I have done everything which could be reasonably expected to be done to meet his wishes. I should be very glad to discuss this further with him but the fact remains that there is a statute which controls the officials of the government. If the hon. gentleman would intimate to me privately any further information he desires, I will have an investigation made within the ambit of the statute and see if we cannot meet his wishes.


William Richard Motherwell: We will wait until
to-morrow.


Henry Herbert Stevens: I was speaking to the
hon. member for Weyburn (Mr. Young) on another question altogether.


William Richard Motherwell: You were looking
squarely at me.


Henry Herbert Stevens: I was looking over my
hon. friend's head.


William Richard Motherwell: I thought the hon.
gentleman must be talking Dutch if he were answering my question.


Henry Herbert Stevens: I was talking to the hon. gentleman behind you.


William Richard Motherwell: I am on the same
line of vision.



BANK ACT AMENDMENT


[Stage Direction]
Hon. E.N. RHODES (Minister of Finance) moved the third reading of Bill No. 18, respecting banks and banking.
Motion agreed to on division, and bill read the third time and passed.

[Stage Direction]
Hon. R. C. MATTHEWS (Minister of National Revenue) moved the third reading of Bill No. 89, to amend and consolidate the Excise Act.
Motion agreed to, and bill read the third time and passed.

[Stage Direction]
Hon.E.N.RHODES (Minister of Finance) moved that the house go into committee on Bill No. 33, to amend the Quebec Savings Banks Act.
Motion agreed to and the house went into committee, Mr. McDonald (Cape Breton South) in the chair.
Section I agreed to.
Bill reported, read the third time and passed.

[Stage Direction]
Hon. W. A. GORDON (Minister of Immigration and Colonization) moved the second reading of Bill No. 94, to amend the Soldier Settlement Act.
Motion agreed to and the house went into committee, Mr. MacDonald (Cape Breton South) in the chair.
On section 1-Director to be a corporation sole and agent of crown in right of Canada.
Mr. NEILL:: I wonder if the minister would give us some information in regard to this matter. There does not seem to be a section with respect to the title on which we could discuss the general principles of the bill, but perhaps he will allow me to ask him some questions under this section. In moving the
Soldier Settlement Act

first reading of the bill the minister indicated that it was to be done at the request of various municipalities-rural municipalities-and inferentially we gathered that it was going to help the settler. I would ask him however wherein this act would do the one or the other. The municipality is not going to be put in the position, as we thought it was, of getting taxes from the government, but merely the land, which it does not want. Possibly the minister will reassure us by intimating that it is the intention of the government to pay the taxes, although it does not state so 'here.
The other point on which I should like some information is this. Under the third section, on the municipality instituting proceedings, which is rather an indefinite way of expressing it, the settler's contract of sale with the soldier settlement board is automatically rescinded. Is not that going to work a serious hardship on the soldier settler? The government have the right to-day to rescind the agreement upon non-payment; but they have recognized from time to time, and quite properly, that when times are very bad and farmers who own their land, free of any debt or mortgage, cannot make a living on it, then the settler certainly cannot make annual payments, and the government have made reasonable allowance in cases of that kind. They do not rescind so long as there is any reasonable hope of the man being able eventually to make good. Under section 3 however it is automatic; there is no preference. The very minute the municipality finds that its taxes are not paid, and takes legal proceedings-advertising and so forth-then it is automatically rescinded and the government cannot help themselves even if they wish to. I submit therefore that it is certainly going to work an increased hardship on the soldier settler. I do not think that the statement made on the first reading and sent out to the settlers concerned conveyed the true impression. I do not believe that the settlers gathered the impression that the moment their taxes were not paid they would lose their whole equity in the land. The government may have an equity of a couple of thousand dollars and the soldier an equity of a thousand dollars. I do not know whether the government will drop their $2,000; it is optional. They may pay the taxes, although it is not so stated here; but will not this automatically lead to the rescinding of a lot of agreements which to-day are behind but which the department, owing to economic conditions, are not enforcing?


Mr. GORDON:: There will be no rescission of contracts upon the passing of this legislation. If one refers to section 2 of the bill it will be tMr. NeUl.]
seen that it goes into operation from and after the first day of January, 1933, and the dominion government is taking care of unpaid taxes up to the end of 1932, the 1933 taxes of course not having come in yet.
With respect to the hon. member's other point, this bill places the soldier settler in exactly the same position as other settlers throughout the country. It will be remembered that this legislation has been in force now for some fifteen years and the position to-day is that there are settlers who have not paid their taxes, the same as any other settler, and in some instances it has cast a considerable burden upon the municipalities concerned.
The soldier settler, I am informed by the municipalities throughout the country, have perhaps done as well, as a municipal tax-paying body, as any other class of settlers in the dominion. For instance, in British Columbia the soldier settler has paid 40 per cent of his taxes for last year, as of May 15, 1934; in Alberta, 38-3 per cent; in Saskatchewan, 59-5 per cent; in Manitoba, 57-3 per cent; in Ontario, 70 per cent; in Quebec, 30-4 per cent; and in the maritimes 65-5 per cent, the average for the dominion being 51-6 per cent.
The^ representations are that there are municipalities which, by reason of the purchase of these lands by the crown, in the working out of the Soldier Settlement Act, and the automatic withdrawal from municipal taxation of such lands standing in the name of the crown as to legal title, only the interest of the settler being capable of assessment, have suffered considerably owing to the fact that they have not been able to assess the lands and to have recourse to them for municipal purposes. The intention of this legislation is to render those crown lands, in so far as recourse to the same for municipal purposes is concerned, liable to ordinary municipal taxation. The following section gives the settler some protection in cases where the lands are liable to be sold for taxes, and in fact are sold; the settler has then the right to redeem those lands within the period set out in the section. That is substantially what this legislation seeks to have prevail.
In cases where the municipal authorities take proceedings to sell the lands for arrears of taxes, this does not take away from the director the right to redeem those lands and if he considers the case a proper one, to make a new agreement with the settler. Of course that discretion has always been in the board and is not being taken away from the director

Soldier Settlement Act
by this legislation; but it places those lands, so far as taxes are concerned, in the same category as lands of any other settler. That is the effect of this legislation.


Alan Webster Neill: I am grateful to the minister for allowing this discussion on the principle of the bill. He says that this puts the soldier settlers into the same position as other settlers in Canada. That is partly my argument; that it is going to do them an injury because at present they are not in the same position as any other settlers. He says that this will ease the burden upon the municipalities, which burden has been considerable. I do not see how letting them take the land is going to lessen the burden on them as they inevitably will have to take the land for the reason that the soldier settlers will not be able to pay the taxes.


George Gordon: Not all of them.


Alan Webster Neill: If the government were to announce-and I think this is what the settlers desire in such cases-that it would pay the taxes and charge them up to the settlers, then the status quo would be maintained; that is to say, the municipalities would be relieved; the government equity would be preserved, because after all the taxes have to be paid, and the settler would not have his agreement automatically rescinded. It is the automatic feature of rescindment to which I object. The minister said that the proportion of taxes paid by soldier settlers varied from thirty to forty per cent, but the general payment all over Canada was 51-6 per cent. That shows the soldier settlers are not able to pay up in the same proportion as are the other people.


George Gordon: I said that the average payment over the dominion was 51-6 per cent.


Alan Webster Neill: For the soldiers?


George Gordon: Yes.


Alan Webster Neill: The minister did not tell us that it was only for the soldiers generally; it is very small if it dropped down to 30 per cent.
He told us that in the succeeding clauses some protection was given to the soldiers, but- there is no more protection than we all have already. If we are able to pay up the back taxes, we get the land back.
The minister said that the government might redeem the lands and in that case they would make a new agreement. They cannot
do that because it would be only a reversion to the existing agreement. The government can at any time rescind and I give them credit that they have not enforced their rights unduly.
This is the situation I am trying to set forth. Let us take the average farmer-and heaven knows we have heard this time after time in the house-a man with a thoroughly equipped farm, improvements, stock and everything else, who does not owe any debt on the land, and who to-day cannot pay his debts, his taxes. There are members in the house who have said they cannot pay their taxes. The soldier settler is in a different position; he has a heavy mortgage due to the government hanging around his neck. That must be so because he would not be a soldier settler if he had paid up in full. All these soldier settlers have mortgages varying from 81,000 to 85,000 with amortization and interest charges due every year and they will be very much less able to pay their taxes than will the ordinary settler. Most of them having started more or less recently are not so well equipped as the ordinary settler. The government has recognized that fact and very properly so. I heard the minister say in the house last year that during the depression they would not unduly squeeze a man who was trying to make any kind of effort to make good. If he was not going on relief and was trying to do what he could to make good, they would not worry him about his payments in arrears, and I suppose during the depression these men have been carried along. Anyone who reads the provisions of clause 3 of this oill knows that the very moment the municipalities begin to put into force the law with regard to unpaid taxes, the agreement is automatically rescinded. The government has not any option; the agreement is rescinded forthwith, with all that it involves. It does not matter if the man has been carried along during these years; Now, either the municipality or the government takes possession and puts him out. In that way I maintain that conditions will be worse under this bill than they were before for the soldier settlers. After all, the main object is the benefit of the returned man and keeping him on the land. We have kept him on it now for five or six years of depression; another year might put him on his feet again, but under this bill the agreement will automatically be rescinded.


Mr. REID:: I think the situation is a
little more difficult than the hon. member for Comox-Alberni (Mr. Neill) has made out.
Soldier Settlement Act

Under our tax sale laws in British Columbia the ordinary settler who is notified that his property will be sold for taxes can, prior to June 1, upon paying one year's taxes keep that property off the tax sale. My information is that many of the soldier settlers are one, two, three, four, five and six years behind with their taxes. Immediately this bill goes through, they have no recourse; they cannot go to the municipality and by offering one year's taxes keep the property off the tax sale.


George Gordon: If I might interrupt the
hon. member so that he may have the correct situation; he has been misinformed. All the back taxes of the soldier settler were paid up to the end of 1931 and they will be taken care of up to the end of 1932.


Alan Webster Neill: By the government?


George Gordon: Certainly.


Thomas Reid: That alters the situation and
makes it much easier, but my information from some of the municipalities was to the effect that many of these soldier settlers were away behind with their taxes.	.


George Gordon: The municipalities were
wrong.


Thomas Reid: Last year in British Columbia only 40 per cent paid their taxes in spite of the fact that the government offered dollar for dollar, and that shows that many of the soldier settlers must be in bad shape indeed. My first point, however, is still correct, that they will not be able this year by paying the municipality one year's taxes to keep their property out of the tax sale; that is, they are two years behind. But this point has been discussed for a long time in British Columbia. Seeing that the Prime Minister is in his seat, I would like to put this question to him, because it arises out of this bill. By this legislation land which was originally looked upon as crown land is now being taken out of that status and being placed under a different category


Richard Bedford Bennett: No.


Thomas Reid: Clause 2 so states:
To have been held by the said director of soldier settlement as such corporation sole and not as an agent of the crown in the right of the Dominion of Canada.
In reading that I would be inclined to think this will make soldier settler land in future subject to tax sale and not the property of the crown. I was just wondering whether that could be done also with land under the harbour commissioners.


Richard Bedford Bennett: Well, as usual the hon.
gentleman is wrong.


Thomas Reid: Not as usual.


Richard Bedford Bennett: I have always noticed
the hon. gentleman's desire to make some political capital warps his judgment. If he had really taken the trouble to read this he would have found that the situation was entirely different. The property, all of it, has passed from the crown. It is not subject to taxation at all unless it does. Once having passed from the crown either to some third person who owned it, or to the soldier settlement board as a corporation sole, it is subject to taxation if we do not provide that it holds it as agent for the crown; if the corporation holds as agent for the crown it is believed that it is not taxable. The harbour board does not hold the Vancouver property, it belongs to the crown, and as such under the British North America Act it is not taxable and cannot be taxed by this parliament or any legislature or municipality
I think I should make a few observations with respect to this matter generally, because the hon. member for Comox-Alberni (Mr. Neill) seems also to misunderstand the situation.) There are members of this house who will recall that when the Soldier Settlement Act was originally passed it was stated by the government of that day that as a result of t'he soldier settlement board holding the land as trustee for the crown the municipalities were not to suffer. So the crown has paid taxes; the hon. member for West Edmonton (Mr. Stewart) as Minister of the Interior will recall that under his direction a bill was passed to make provision in certain directions. Valuations have -been reduced by direction of this parliament, but last year, the year before, and in fact for the last seven or eight years I was going to say, the municipalities of western Canada have been pointing out to the government that they had no recourse against the land and in some cases were bang very badly exploited under conditions to which they objected very strenuously. They said to the government, as they had said before: We ask you by appropriate legislation to place these lands in exactly the same position as the lands of other settlers in the community; so (hot while we always had the right to sell the interest of the settler in the land for his taxes, as long as you held the title in the form I have indicated there was no power of sale of the land as such. For many years it was contended that the municipality could not sell the interest of a settler for taxes if the land were owned by the crown or through the instrumentality of the crown. Finally, how-

Soldier Settlement Act
ever, in a case that went to the privy council from Saskatchewan, and a like case that went from one of the other provinces,-the Three Hills case will be remembered by some hon. members from Saskatchewan-the privy council held that the interest of a settler could be sold for taxes, that he had a property in it that enabled the taxes to be realized if possible from the sale of his interest.
We, that is the crown, have paid the taxes. Last year again the municipalities pointed out that by reason of the existing legislation the payment of their taxes was retarded; except such as Ihey got from the crown; and if the crown did not pay, the machinery for the sale for taxes of the settler's interest was very complicated and difficult. They thereupon said to us: We are entitled to have you decide one of two things; first whether your interest is sufficiently important to warrant your paying the taxes yourselves, or secondly, whether you are willing to abandon your interest and leave it between the settler and the municipality. The officers of the municipality being settlers in the same community as the soldier settler, knowing him and understanding his conditions, would be able to deal with him from local knowledge on the spot in a much better manner than the government if they abandoned their interest as I have indicated, selecting the second alternative mentioned.
The question was, what form of legislation should be enacted and when it should become effective. We have undertaken, and in the supplementary estimates propose to make provision to pay the taxes on such areas as we believe taxes should be paid upon up to the first of January, 1933. Then we leave it to the municipality and the settler.


Alan Webster Neill: They have not been paid to date?


Richard Bedford Bennett: We have paid to January 1, 1933. Last year's arrears do not render the property liable to be sold for taxes, that is only one year back.
Now I can answer the point that the hon. member for Comox-Alberni has made in a very simple way, by pointing out to him that when the matter is left between the municipality and the settler it rests with the municipality to take the action. If the municipality takes the action suggested then of course there is no longer any contract between the crown and the settler. But the Department of Justice, in order that there may be no likelihood of anyone being misled, have added the worlds that the hon. gentleman has directed attention to, so that it is quite clear 74726-243
and beyond peradventure that the effect of action by the municipality taking proceedings to sell the property will be, as we believe the soldier settlers are anxious it should be, that we are eliminated from the transaction and the matter then is between them and the municipality.


Alan Webster Neill: Does it not also eliminate the leniency of the crown?


Richard Bedford Bennett: But it substitutes the leniency of the municipality where the man lives.


Alan Webster Neill: They have not any, they have to hold tax sales.


Richard Bedford Bennett: But in the first instance it rests with them how they shall be made, what payment shall be made on account and so on. As a matter of fact they all exercise discretion, whether rightly or not I do not know; small payments have been held to be sufficient to take it out of the compulsory phase of the law and substitute the purely discretionary phase. The effect is, I point out again, that the crown must exercise its discretion as to whether or not, having regard to the extent of its interest in the property, it will pay the taxes. This is simple and clear, is it not? In arriving at the conclusion of course the crown takes the report of its inspectors as to the value of the property, whether it is occupied or not and all those factors that usually determine the judgment of men in matters of that kind. The crown has put 838,000,000 by rebates and reductions under the statute into these properties. We still shall pay this year $654,000 for taxes to the first of January, 1933.
The second alternative is this. If the crown determines that the property, for reasons I have suggested, is not such as to warrant the payment of taxes, it abandons its interest, that is the effect of it, and the settler settles with the municipality. That is the position. The effect in law of course is that when the municipalty does take proceedngs, if owing to the paramount right of the crown there might be some question as to the validity and legality of them, the Department of Justice makes it clear that the effect is to eliminate the crown from the transaction and leave it between the settler and the municipality.


Mr. BROWN:: Do we understand that the crown will deal with individual cases on their merits, or that the same policy will apply to all lands?

Soldier Settlement Act


Richard Bedford Bennett: The general policy, as the hon. member for Lisgar (Mr. Brown) knows, has been to leave to the crown discretion with respect to the payment of taxes always. That is if the land is not worth paying taxes on, has been abandoned or anything of that sort, the crown can either let the property go or pay the taxes. There has always been a discretion exercised by the crown in connection with all these properties. Values could never be made for instance on the basis of a rule that endeavoured to deduct a certain percentage. The committee will perhaps recall that we appointed the registrar of the supreme court to act as a judge of the exchequer court for the purpose of making a final determination in respect of some of these matters.


Thomas Reid: I do not mind the Prime Minister taking me to task and telling me I am wrong, but I think his statement as to a political point of view was uncalled for. It was purely on behalf of the settler, and as one who was at one time president-


Richard Bedford Bennett: I was not talking about the settlers, I was talking about Vancouver.


Thomas Reid: Well the point that arose in my mind was not political. As one time president of the union of municipalities we had this case in hand and were told j^ear after year that crown lands could not be taxed.


Richard Bedford Bennett: That is true yet.


Thomas Reid: In reading the bill I thought crown lands were being made liable to taxation and so subject to sale. Interpreting the bill in that way I was wondering if the same thing could not be done in connection with land held by harbour commissions. I am quite aware that leaseholds can be taxed, including leaseholds of harbour property, but the fight between the municipalities and the government has been as to the right of the government to set aside harbour lands and lands under the soldier settlement board and evade the payment of taxes simply by saying that crown lands cannot be taxed under the British North America Act.


Richard Bedford Bennett: I am sorry to correct the hon. gentleman again. It is perfectly clear that it is open to the city of Vancouver, and always has been open since the determination of the privy council in the Three Hills case, to tax the leasehold interest of every person occupying harbour commission lands on the water front of Vancouver. But by their legislation they endeavoured to treat them as

fee simple lands, which was a contravention of section 125 of the British North America Act. The distinction is clear. The interest that another has in crown property is taxable. The property which is held by the crown is not taxable, and until the British North America Act is amended at Westminster neither this parliament nor the province nor the municipality can change that condition.


Thomas Reid: So that I may have it clear I wonder if the Prime Minister would tell me if I am correct in this: Will not this statute make it possible for crown lands to be sold by a municipality, and the municipality to become owner of those lands?


Richard Bedford Bennett: No, not crown lands. Lands held by the director of soldier settlement as a corporation sole, just as lands held by John Jones, would be liable.


Mr. HANBURY:: Or by the farm loan
board.


Richard Bedford Bennett: Exactly. The distinction, which I trust the hon. gentleman will have clear in his mind even though it is a legal distinction, is this: If the property is held by the director as an instrumentality of the crown, that is as an agent of the crown, it is crown property and therefore not taxable. If it is held by him as a corporation sole- and we have made him a corporation sole by our legislation-in that capacity he has no immunity from taxation.


Alan Webster Neill: Will the Prime Minister not agree with what I started to say, that possibly a soldier settler will be in an even worse condition? I do not know the laws in the east, but in British Columbia the municipal laws require that municipalities shall hold a tax sale every year, and they will sell these men out at the end of this year for taxes incurred in 1933. That is the law. Under the old system the government did have power to carry these settlers along without rescinding their agreement, and they have done that for four or five years. Now they are going automatically to rescind the agreement. Would the Prime Minister say whether that is not so?


Richard Bedford Bennett: That is covered by the third principle which I should have mentioned. My colleague was going to deal with that, but he suggests that since I have taken part in the discussion I had better deal with this point as well. The right of redemption is still in the crown as well as in the settler.

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Mr. STEWART (Edmonton):: That will be governed by the provinces?


Richard Bedford Bennett: Yes, it is entirely under provincial laws, but by this statute the right of redemption may be exercised by the crown as well as by the settler.


Mr. STITT (Nelson):: I appreciate the
sympathy that is being shown to soldier settlers by hon. gentlemen opposite, and I may say that I have always availed myself of every opportunity to assist this class of returned men. At the same time I must say that I have always been at a loss to understand why, because a man goes on the land, he should be entitled to all sorts of consideration. What about the returned solder who went into town and took a job in a sawmill or on the railway or some place else, who bought a lot and built a little home? He gets no consideration at all. To my mind this legislation has been discriminatory from the very start. I recall a case in my own home town. Two brothers came home from the war. One had some training on the land, and was able to go down south and get a loan from the soldier settlement board with which to buy a farm, stock, implements, seed and everything else. He got a fairly good start in life; he has done well, and I believe he owns his farm clear. The other fellow did not happen to have any training in agriculture; he was a fisherman. When he went to the war of course he sacrificed his outfit worth many hundreds of dollars. When he came back there was no provision for helping him to get a start. Nobody bought him any nets or provided him with gear to go to work.
The same thing applied to trappers, who required several hundred dollars to get themselves established, and to prospectors and others, and just as long as this discrimination exists I am going to be in something of a dizzy spin to appreciate just why these soldier settlers should be entitled to special consideration. If you are going to give returned soldiers consideration give it to all of them or do not give it to any. The man on the land is not entitled to any more consideration than the poor soldier in town, who is fighting just as hard as the other fellow is. I know of a good many cases of abuse by soldier settlers; I heard of returned soldier settlers who have been driving around in cars all summer and not paying their taxes; they said the government would pay them. That has been the case right along, and I think the time has arrived for a showdown; there should be a line drawn some place. The municipalities have had a very 74726-243 J
hard time to get by with the taxes they have been able to collect. The hon. member for Comox-Alberni (Mr. Neill) stated that this legislation compels the municipalities to hold tax sales. He must know as well as I know that hundreds of municipalities in Canada have not held tax sales for several years, and do not intend to hold sales this year. I could name several municipalities which have not held tax sales for the last few years. I find that the municipalities are very reasonable, and all in all I think the government have gone quite a long way in looking after this class of returned soldiers. I commend them for having done so, but I do not think any great hardship will be worked if this legislation is passed.


Mr. SPEAKMAN:: If I understand the
provisions of the bill aright there can be only one main result from it; that is that through the director of soldier settlement the state will be obliged to pay the bulk of these taxes as action is taken by the municipalities. As I understand it all lands, the title of which is vested in the director of soldier settlement, whether they be abandoned lands, wheat lands, rented lands or lands held under agreement for sale, will be in the same position as lands held by private corporations, and sold or handled by those corporations. The title of those lands, of course, is still with the director. It seems to me that the natural result will be that wherever the equity of the state is sufficient the state itself will be obliged to pay those taxes, for if a sale should result the entire equity of the crown would be wiped out, and the land would come into the hands of the municipalities who would sell it as ordinary land. Under such circumstances, of course, the contract with the soldier settler would be wiped out automatically, because it would cease to be the property of the director and would be put in the position of any other land. As I see the situation, in the majority of cases the equity of the crown in the land is still such that in the final analysis the crown will be obliged to step in and protect that equity by paying the taxes. Certainly that would benefit the municipalities but I doubt whether, in the majority of cases and under such circumstances, the settler himself would be the final sufferer.
As for making a new contract with the settler, would it amount to this? That when proceedings have been taken and the settler has been declared in default, the state owning
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the land would be in a position to renew the contract with the settler or to make any other disposition of the lands that it saw fit?


George Gordon: There is nothing to stop
that being done.


Alfred Speakman: So, as a matter of fact, the discretion would still lie with the director to practically the same degree as at present, and there would be the same power of protecting the settler and the same power of perpetuating the contract. It would simply be that the same discretion existed but under somewhat different conditions.


George Gordon: I would say so.


Albert Joseph Brown: Some of those very same
difficulties have been passing through my mind. It may be difficult for those of us who are not lawyers to grasp all these fine points. The Prime Minister has said that the right of redemption would still remain with the crown as well as with the settler. I presume that that right of redemption would only be exercised in case the crown felt that its equity in the particular piece of land was worth preserving. It would seem to follow that in some cases the equity would not be considered worth preserving, as I believe it would not be in some cases. I think it would also follow, as the hon. member for New Westminster said, that land sold for taxes might come into the hands of the municipality. These are some of the things that seem to me likely to happen.


Alfred Speakman: There is just one point in that respect that is in my mind. As the state has paid taxes up to January, 1932, and purposes paying them for another year, there would be no tax arrears to speak of, and the equity of the state would have to be balanced, not against a large amount of tax arrears, but against what practically amounts to current taxation or, at most, two years'. In most cases, so far as I know, the equity of the state is still greater than the amount of one or two years' taxes.


Mr. CARMICHAEL:: I believe the statement was made by the hon. member for Nelson that the returned soldier was getting a special preference under this legislation. I fail to see that such is the case.


Bernard Munroe Stitt: As against a returned soldier living in the village.


Archibald M. Carmichael: I believe he has been getting a preference in the past but under this legislation it seems to me that he is not

going to be in as preferred a position as he was prior to the passing of this legislation, and for this reason. If I got the explanation correctly, all taxes in arrears were paid by the federal government up to the end of 1931, and it is their intention to pay one more year's taxes, bringing the payments up to the end of 1932. Then, starting in January, 1933, the soldier settler is left to deal with the municipality. That means, so far as Saskatchewan is concerned, that the municipalities will have to collect the taxes for 1933, and if the soldier settler is unable to pay the taxes, the land will be sold by the municipality and further penalties placed against the land. That is the position the settler is in under this legislation, but prior to this legislation the dominion government would come along and pay the tax arrears.
I realize that the Union of Municipalities in Saskatchewan is very anxious to have this legislation passed, but I fail to see where it is going to help the municipalities, and to my mind it is going to put the soldier in an unpreferred position. It is going to leave him with the possibility of having his land sold and taken over for unpaid taxes. There is one other possibility. I believe the municipality will be given the right to distrain for taxes. They may come in and distrain grain or other chattels that the settler would have over and above what is exempt. So that in general as I see the legislation, it is going to put the soldier settler in a worse position than he has been in in the past.


Charles A. Stewart: One does not like to surmise what may be the intention of the government in regard to amendments but it does seem to me that this simplifies the method of cancellation of agreements. Heretofore when arrears took place the minister informs us -that the government were in the habit of paying the taxes and satisfying the municipality, but under this legislation, the moment the municipality takes action against the settler, automatically the agreement is cancelled, and then it is in the discretion of the director whether he shall redeem by payment of taxes or allow cancellation to take place. If cancellation does take place the municipality will come into possession of the land, and the government ceases to be interested. All I can see in it is that it simplifies the method of cancellation of agreement, and perhaps makes it a little easier for municipalities to clear up arrears or have current taxes paid. It is rather a novel method, may I say to the minister? I have every sympathy with the director and with the department in handling

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this situation. I know something about it-I must admit that this certainly does simplify the procedure of cleaning up with the settler, and it enables the government to get rid of the lands that they do not care to hold. Those are two things that appeal to me in the legislation.


George Gordon: There is something in
what the hon. member for West Edmonton says. The position is this: I believe that the municipalities are in a better position perhaps than anyone else to determine on the spot the man's ability to pay taxes. One hon. member has said that the result of this legislation will be to place the settler in a less preferred position. It does not in my view. It places the soldier settler very much in the same position as his neighbour who is not a soldier settler, with this qualification, that there is still the discretion in the director, in the event of the soldier himself not redeeming, to redeem the lands if the settler is a desirable man trying to make his way but has met perhaps with some misadventure. The director then has discretion to enter into a new agreement with him if he wishes. But it must be borne in mind that when these lands were withdrawn from the municipalities as they were from the passing of the original act in 1919 down until the spring of 1930, it unquestionably placed the municipality, if the taxes were not paid by the soldier settler, because of the setting up of the barrier that they were crown lands, in a difficult position. It is quite true that from year to year a certain 'amount of taxes was paid by the director of soldier settlement in individual cases. That occurred in each year up until the year 1930. In March of that year the government of the day concluded, and I have no doubt they had very good reasons for arriving at their conclusion, they wmuld pay the arrears of taxes in the prairie provinces, and the agreement that wras entered into was so worded that it might continue for an indefinite period subject to cancellation by notice. That did not refer to any taxes in Quebec, the maritime provinces, British Columbia or Ontario; it was just Manitoba, Saskatchewan and Alberta.


Mr. BOWMAN:: Was that all arrears?


George Gordon: Yes. I am not going to question the soundness of what was done at that time, but the sum total of the result was that having once cast the die with respect to taxes, up to date the government will have paid-this includes the $604,000 which will be in the supplementary estimates-just over
$5,500,000 in taxes. As I have indicated already, the director of soldier settlement in the last few years, on the advice of his officers and because of his own knowledge of the condition of each applicant who has had difficulties, has endeavoured to adopt the course which is best calculated to help the settlers stay upon the land rather than to discourage them. The substance of the present bill is to place in the hands of the municipalities the power to have recourse to the land for taxes, the same as they would have recourse to the lands of any other settler. I think hon. members can be assured that in administering this law no municipality will pick out a soldier settler and impose upon him something which is not imposed generally upon all settlers. If what some hon. members have suggested is true, that no settler can pay anything, I do not think it will make much difference to the municipality, the settler or anybody else. However, in the light of the facts which discloses that the soldier settler ag a class is probably the best taxpayer, I do not entertain those views. As I have said, there are municipalities which have had very severe burdens placed upon their treasuries because of the withdrawal of lands for tax purposes. Roads have been extended, school-houses built and services rendered by municipalities which in a large measure have been built up by reason of these municipalities. I think the municipality should have the rigjit of recourse to lands held by the director. The municipality is in a better position to determine whether or not proceedings by way of tax sale should be enforced strictly, particularly when the director still reserves to himself the right which he has always had when a settler does not redeem. Under the provincial statutes he may step in and redeem the land and, if it is a proper case, make a new agreement with the settler. The essence of this legislation is an endeavour on the part of the government to relieve the municipalities of the situation which I have indicated and to make the lands held by the director as a corporation available to be placed on the assessment rolls of the municipalities and be subject to taxation, whether or not there is a soldier settler upon them. I do not think hon. members need have much fear that a settler who is trying to pay for his land will find himself in a less favourable position than he is to-day. Under the legislation of last year a large number of soldier settlers paid their taxes and have become entitled to the bonus provided by that legislation-
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James Langstaff Bowman: What distinction has been made by the board in recent years in connection with the payment of taxes; that is, when have they paid taxes and when have they not paid taxes?


George Gordon: I am told that all taxes were paid without any distinction, except the taxes upon dominion lands in which the settler is not interested.


Alan Webster Neill: There is no doubt the minister is correct when he says that the essence of this bill is to relieve the municipality but I think the effect, so far as the settler is concerned, will be that he will be worse off than he was. Before, the crown had power to rescind the contract any time it was in default. That power was exercised with discretion and leniency but it will be now compulsory to have the contracts confiscated or rescinded automatically.
As the minister referred to the legislation of last year I suppose I am entitled to ask a question. Under that legislation the dominion paid dollar for dollar with the settler for taxes, and the minister stated that a large proportion of the taxes had been paid. I wonder if he could amplify that and tell us the amounts which have been paid. My information is that only a small portion has been paid, even though the sum involved may be considerable. It is only natural that what taxes were paid, were paid b5' those in position to pay. The struggling settler with a heavy mortgage on his shoulders could not take advantage of what on paper looked like a very favourable offer on the part of the dominion. Some of us predicted that that legislation would not help the small man who was not able to pay. While it looked like a big thing that a settler would get dollar for dollar, if he did not have the first dollar the offer of the second dollar was of no use to him. While I do not intend to introduce them into this debate, I have resolutions before me from settler bodies on the prairies and endorsed by some British Columbia societies asking that all interest be cut out from the date of the last settlement in 1930. I do not suppose this will receive the sympathetic attention of the minister, as he has already rejected the idea. I should like to know if he can give us a definite figure as to the proportion of the outstanding taxes which were paid last year under this dollar for dollar agreement?


George Gordon: I am afraid I have not all the figures which the hon. member has asked for but I can state that under the 
legislation of last year it would appear that in the Vancouver district forty-two per cent of the soldier settlers took advantage of this offer.


Alan Webster Neill: Forty-two per cent of what?


George Gordon: That is the percentage of settlers who took advantage of the legislation of last year. In the Edmonton district the percentage was 37-1; in the Calgary district, 37; in the Saskatoon district, 59; in the Winnipeg district, 53; in the Toronto district, 63; in the Sherbrooke district, 32; in the St. John district, 51. The total amount of the bonuses, in so far as returns have been received up to date-they may be and likely will be considerably larger-is $1,134,172.86.


Alan Webster Neill: Payment of taxes?


George Gordon: Yes.


Alan Webster Neill: This last year? Surely not.


George Gordon: This is payment on account of the land to which the settler would be entitled to the credit of 11.


Thomas Reid: I take it that it is the intention of this act that the municipalities shall have recourse to the land and that the settler shall also be protected.	*


George Gordon: Yes.


Thomas Reid: The question that arises in my mind is this. Is it the intention of the government to redeem all properties that go in tax sales? If a property went in tax sale and the tax sale proceedings were carried through, then in the month of October, when t'he tax sale was held, or after the proper time had elapsed the municipality would by law become the owner of that property and could deal in whatever way they liked with the settler who originally owned it. This is a very pertinent question. Is it the intention of the government to redeem all properties or only some properties?


George Gordon: The practice that has been pursued by governments in the past and up to the present time would largely prevail. Discretion would have to be exercised as to what properties would be redeemed and what would not. I think I can very fairly state that all properties would not be redeemed; they never have been. But t'he director, acting upon the best advice available to him, would have to exercise a discretion in the matter, and if mistakes are made or are about to be made, then I think, as the hon. member for West Edmonton will agree, the director will hear about it long before any damage is done.

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Mr. McINTOSH:: Have the soldier settlers requested the legislation which is before the house?


George Gordon: For many years there
have been discussions as to what course should be adopted by the dominion government to render these lands available for municipal taxation. It has been a subject of some controversy, but generally speaking the municipalities have urged throughout the years that they should not be placed in a less favourable position by reason of lands within their municipal boundaries having been purchased and the title thereto vested in the crown, thus removing them from any possibility of the municipalities turning towards those lands to collect taxes for the carrying on of their usual functions and the services of municipal government. I am not at the moment in a position to say that any recognized body of returned soldiers have taken either one side or the other in the matter. Certainly individual soldiers have expressed themselves on both sides. For instance, I have had many requests-I do not know whether there is substance in these representations or not-from returned soldiers asking the dominion government not to pay their taxes. That may strike hon. members as being rather grotesque almost, but it is nevertheless a fact. When these requests came in I was curious to ascertain the reason; I wanted to know what underlay them. On investigation I found in some instances-my memory does not serve me as to how many or - in what provinces, but I think I may fairly state that it was in some of the western provinces-the returned soldier said, "Don't pay my taxes, because if you do I won't get any road work from the municipality." That, I know, arose in quite a number of cases. In fact, my official just tells me that in part of one of the western districts there were 416 such cases. It can be seen therefore that there is a considerable degree of opinion both probably for and against this legislation. I believe, however, that in the main the municipalities are for it; and of course, many of the returned soldiers in the municipalities, having a keen interest in the upkeep of their schools and roads and other municipal services, are not that class of person who is not as anxious as any other taxpayer to bear his share of the burden of carrying on with the municipality the municipal government and services that go with it.
I can only reiterate what I have said before, that this act does not divest the director, in so far as I understand it, of any discretion
he has heretofore exercised in an effort, if it seems to be desirable, to protect any settler who in his judgment, based upon what information he can secure, is entitled to receive further protection by payment of taxes or otherwise.


Cameron Ross McIntosh: I take it for granted
then that the request for this measure did not come from the soldier settlers' union. That is a union, a soldier settlement association, organized in western Canada.


George Gordon: I tried to identify the
soldier settlers' union as such last session. I have had representations from various locals -I think they are called locals. My recollection is that they were representative of the soldier settlers, although at the time the hon. member for North Battleford rather took exception to my acknowledging that they were a representative body. I have forgotten at the moment who was at the head of it. At any rate, at this time I am not able to state, whether the body to which he makes reference known as the Soldier Settlers' Union have as such made representations one way or the other, for or against.


Cameron Ross McIntosh: I thank the minister but I think if he reads the past debates that have taken place in the house with regard to soldier settler matters, he will come to just the opposite conclusion with regard to the representative nature of that body. If I remember correctly I took the stand that they were representative; that they were endeavouring to become more representative and the minister and his department rather challenged my statement. That, however, is neither here nor there. The Soldier Settlers' Union started out to become thoroughly organized and naturally they could not become a very large body in a very short period of time, but in 1933 the body was so representative that the head of the board met representatives of the union and the Canadian Legion in Saskatoon and discussed questions of policy and of legislation with that body. Therefore that was an out and out recognition that that body was a fairly representative one.


George Gordon: I may say that the director at the time not only met the union to which the hon. member makes reference but was present at other meetings of settlers who were not in any union.


Cameron Ross McIntosh: If the minister had
noticed I mentioned that among the soldier settlers members of the Canadian Legion were also present, and that was my idea.
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What I want to open up at this time is perhaps a larger question. At that gathering in Saskatoon it would appear that a rather different and new line of policy was taken. It was worked out on the understanding that a policy of accord could be satisfactorily adhered to by both parties, that is the soldier settlers and the department, if certain legislation were brought down. That legislation was brought down last year; it was put through the house and it has been in existence during the past year. Apparently from the reports I have at hand the good effects of that legislation are somewhat in danger. Seemingly the collection policy of the department is under serious consideration by the settlers and it should receive some discussion in the house. The minister and the department will no doubt take the stand that they are doing their best to collect the money for the state and that is always a duty with regard to those who are collecting taxes from men who are in the position in which we find the soldier settlers. But some of the soldier settlers on the other hand take the stand that the policy is ruthless, harsh and that if it is persisted in they will lose their farms and will be driven off the land. To put the matter in a nutshell, may I read a letter addressed to me by H. S. Packman, general secretary of the Soldier Settlers' Union, dated at Lloydminster, February 4, 1934. This opens up practically the whole question of policy between the soldier settlers throughout the dominion and the department. The letter reads as follows:
"Whereas, we, the delegates-
It is really a resolution.
-representing the locals of the Soldier Settlers' Union, present at the convention held at Lloydminster, Saskatchewan, October 25 and 26, 1933, have decided that, we have not and are not, deviating in any way from our main objective, and that, we were quite willing to accept the temporary legislation for the period stated providing, the promise made by the director of soldier settlement at the Saskatoon conference in 1933, concerning the collection policy of the department was kept.
It is regretted that in many instances this promise lias been violated, and therefore we feel that we are not held to our promise given, to refrain from asking the government for any further concessions during the period of the temporary legislation.
That is, during the next three or four years.
Therefore, be it resolved that:-
We, the soldier settlers, in conference do not consider the recent legislation passed by parliament as being the solution to our permanent establishment, and we consider that the following will prove to be more effective.

Then follows the climax of their resolution:
That our total debt to date be as it stood at the completion of the 30 per cent reduction in 1930 and henceforth be a non-interest bearing debt.	.
That opens up, as I said, the question of the collection policy of the government and I shall cite some instances showing rather harsh collection methods. Before I put one or two of them on record and ask the minister about them, perhaps he might have something to say in reply to this resolution from the Soldier Settlers' Union, the headquarters of Which is at Lloydminster, Saskatchewan. If not, I shall give him some instances with regard to what the soldier settlers term very harsh examples of government collection policy.


George Gordon: It distresses me considerably to hear the hon. member for North Battleford say that the department has been ruthless in its collections.


Cameron Ross McIntosh: That is the information given to me in a number of cases. I am not making the indictment. I am asking the minister to make a reply.


George Gordon: Well, in order that the record may disclose what the situation is in the Saskatoon district which includes Lloydminster, I may say that the number of settlers under the soldier settler department is 4,941, and last year there was what is known as a seizure in only thirty-one cases. A seizure does not mean that a man is dispossessed of his land: it means that he has entered into an agreement or understanding that he will pay to the director of soldier settlement such proportion of his crop as it would appear he is able to pay.


Mr. BEAURIEN:: The same as any other farmer?


George Gordon: Exactly. And in no instance did the director of soldier settlement ever ask more than the province would ask from its settlers. I think I am not overstating the situation when I say that in all cases greater latitude was given to the soldier settler by the department and the director than was given by any mortgage company, loan company, provincial government or any other agency that was invoking the payment of taxes. When you see in the Saskatoon district, Which includes, I believe, the riding of North Battleford and Lloydminster, that out of all those thousands of settlers, in only thirty-one cases did the department have to insist upon the settler concerned paying to the department the proportion of his crop that

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he agreed to pay, I feel certain the hon. member for North Battleford will not judge that the department has set in motion a ruthless policy of collection.


Cameron Ross McIntosh: I will take the word of the minister that there has been no ruthless policy of collection inaugurated or followed during last year. I appreciate the fact that only thirty-one cases of seizure have taken place during the past year. Now I ask the minister, how many soldier settlers have been evicted from their lands in the western provinces during the past twelve months?


George Gordon: No soldier settler has been evicted during the past twelve months. That applies not only to the province of Saskatchewan but to all Canada.


Cameron Ross McIntosh: I am glad to have that information. Now I ask the minister to explain one or two cases that I shall bring to his attention. He has stated that the policy of the government is a fair one in regard to collection. The only way we can come to a conclusion as to whether that is the case is to examine individual instances. I have one case here from Paddockwood, Saskatchewan, that is out from Prince Albert, if I am not mistaken, in the Saskatoon collection area. It is rather a peculiar case, one that challenges public attention.


George Gordon: What is the settler's name?


Cameron Ross McIntosh: John Broderick. I shall read the synopsis of the case given to me:
Copy of resolution passed unanimously at mass meeting of residents of Forest Gate and district on May 31st.
Just a few days ago.
Whereas John Broderick of this district bought a parcel of land, the NE. i 34-53-25-2, from the land settlement board for $1,200, making an initial payment of approximately $140 and subsequent payments in 1932 and 1933 of $35, and
Whereas this quarter had but twenty acres of cultivated land and no buildings, and
Whereas the purchaser has since built a house and barn, and done various other improvements in clearing and fencing, and
Whereas the debt adjustment board, early in the year, promised to protect this man, and on that understanding he put the land in crop, and
Whereas in the opinion of this mass meeting of residents of Forest Gate and district this man Broderick has done all that any man could, under our present conditions, in making the payments he has, and in the meantime providing a living for his family through the cutting and sale of cordwood:
Be it resolved that the residents of this community protest most strongly' against the eviction of this man, and we call on the land settlement board to immediately withdraw their dispossession proceeding.
Campbell McIntyre, Secretary of Meeting, Paddockwood, Sask.
Now the minister just told me there have been no evictions in Canada. This resolution plainly states that there has been one, and a mass meeting has been called over it. That being the case I should like to have an explanation of this from the minister as representing the government of the day.


George Gordon: A perusal of the list for the Saskatoon district does not reveal that name at all. The debt adjustment board mentioned I assume is the debt adjustment board set up by the province.


Cameron Ross McIntosh: That would be what
they refer to, yes. But the land was bought from the land settlement board. It does not give the date.


George Gordon: There does not seem to be in the record any settler of that name. That is sufficient explanation of it not having come to my attention. Of course I shall immediately look into the matter, but as far as my officer knows no representations have been made to the department about it. It does seem strange that if the events happened that are detailed in the letter, those who were so concerned with Broderick-and probably rightly so-sent no representations to the department. At any rate I shall look into it at once and see to what extent if any the matter has come before the department and whether in fact they are department lands and he a soldier settler.


Cameron Ross McIntosh: I would appreciate it if the minister will do that. Of course, I would not know whether the department had any information about the case or not, I am merely acting as a representative of the people in bringing this to the attention of the government, and when that is done my duty is completed.
Here is another angle of the soldier settlement problem. This letter is from Saskatoon, it is not signed by the person writing it, but there are two points in it which I think of fair importance. This man states he is unemployed-


An hon. MEMBER:: Who is the man?


Cameron Ross McIntosh: I just said his name is not signed, but that does not destroy the effect of the letter.
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Mr. HACKETT:: Does it not destroy it entirely?


Cameron Ross McIntosh: I do not think it does.


John Thomas Hackett: How do you know it was not written in Ottawa or Kamouraska?


Cameron Ross McIntosh: No, the postmark shows it was not written in Ottawa or in your riding.


John Thomas Hackett: No, people there sign
their names.


Cameron Ross McIntosh: That statement is just about as sensible as your previous question.


George Gordon: I do not want to restrict representations that may be made by the hon. member, but I think it is pretty well accepted by men carrying on affairs of their own or public business that when a letter is unsigned, and apparently unsigned for cause-


Cameron Ross McIntosh: I shall tell you the cause in a minute.


George Gordon: I would say that as to almost one hundred per cent of the unsigned letters I get the cause is that the person is too cowardly to sign his name, and such letters are promptly consigned to the waste-paper basket. Does the hon. member intend to base an argument before this committee on statements contained in an unsigned memorandum? I do not think he will.


Cameron Ross McIntosh: The reason the letter
was unsigned, as far as I can find out, is that the man is a returned soldier, and he is afraid that if his name were known to the soldier settlement board in Saskatoon he might be prematurely crucified.


George Gordon: He does not know there has been a change in the government in the last four years.


Cameron Ross McIntosh: Yes he does. He only makes two points here; ihe is a returned soldier and is out of employment, and one of his grievances is that the men who are causing him to be out of employment are men who have soldier settlement lands and who have had money forwarded to them by the government, who have received concession after concession throughout the years and who are to-day off their lands and working for the soldier settlement board in Saskatoon. The point he makes is, that if these men were back on their lands trying to farm them he might have a chance at some of these positions which are filled by returned men in Saskatoon for the board. I think that is a legitimate point of view. Another point he makes is that some of the men in Saskatoon 
who are going around the district telling other people how to farm are men who lost their own farms, and he wonders how such men can fill such positions successfully. If they cannot farm themselves he asks how they can teach others to farm.
I will leave that matter now, but here is a case that is rather startling. I do not know whether or not the minister has any information on file with regard to Mr. H. Salter. Apparently this man was not afraid; he signed his letter, -which is dated February 6, 1934. I should like to read part of that letter:
Permit me to explain.
On the morning of Thanksgiving Day, fall 1933, careless shooters from Saskatoon destroyed my entire crop by fire (presumed to be wads from low grade shells in the stacks) then in bin, with threshing just completed. Bin stood between two stacks of straw -one oat, the other wheat, as the bin had been divided and oats threshed in one end and wheat in the other. The matter was reported to mounted police, who investigated, and also to S.S.B. and the Star, who reported upon it. However, no one was apprehended, and' the loss was most complete, so much so that I was unable to meet my threshing expenses, and the winter has been the most hard I have ever experienced.
This bin was built by me in 1922. from my own funds and to receive the crop from a 100 acre parcel of land in which T was then interested to the east, and skidded on 6" x 6" skids-its cost being around $150. Releasing this 100 acre parcel around 1926, the bin was then hauled home for general use, and has since received crops from other fields.
It carried an insurance of $75. covered by joint policy in favour of S.S.B. and self, and in signing proof of loss I was able to get the full amount on account of the good construction of the bin-signing an agreement for company to draft cheque in name of S.S.B. believing I could immediately get a reimbursement and reconstruct the bin.
Now comes the climax of his letter:
Everything was explained to the superintendent of the S.S.B.-loss of all fodder and straw, bin, and all grain that might be used for seed or other than pig feed, and that I had no cover for this grain as this was my only bin for grain storage, and the grain lay in the open. He replied he would take it up at once with headquarters, but two months elapsed before he replied to me and then by reason of pressure brought to bear by letter from myself. I enclose this final letter. -
Its contents are self explanatory. They are retaining the $75 on the grounds that because of my account they cannot reimburse me. No mention of the legal rights of the case or to whom this $75 really belongs, and I am assured that it is mine by two lawyers in Saskatoon.
How do I stand upon this matter, and can the union give me any help.
He was writing the Soldier Settlers' Union.
Personally I doubt the statement that this is a ruling of headquarters unless the new director at headquarters is oversharp.

Soldier Settlement Act
There is not much more:
Its unfairness is obvious-the treatment accorded me without reason or good judgment.
I have three children to support, and till now have managed to keep off relief in any way or form. But taxes and payments to the S.S.B. have of course been absolutely impossible, on account of droughted crops through 1932, and total loss through 1933.
This is the one question I am writing you of that I think can be improved by your handling. There is another-the matter of reinstatement, that I will write you of at later date.
I understand, however, that the department has refused to reinstate this man, and has practically told him that perhaps the wisest thing he could do would be to leave the land.
In the letter from the secretary of the Soldier Settlers' Union, Major Packman, I find the following:
It demonstrates very clearly the attitude of the department in refusing to understand the difficulties which settlers are faced with under the conditions existing to-day.
This letter is typical of many that we are receiving and it would seem that despite the recent legislation, unless the whole soldier settler situation is reviewed and a collection policy put into effect which does take into consideration the present day difficulties, a great deal of discouragement will continue leading ultimately to large numbers of settlers gradually being squeezed off their farms.
In a postscript to his letter Major Packman makes this statement:
The letter from the district superintendent dated January 19, 1934, is rather a remarkable one. I think it would be applicable to 90 per cent of the settlers and would therefore indicate that our chances of ultimate ownership are very remote.
That is the viewpoint of the secretary of the Soldier Settlers' Union, based upon the complaint with which I have dealt, as well as others.


George Gordon: I can only repeat what I
said before, that there have been no evictions in Canada during the past year or for perhaps three years past, by the soldier settlement board. I will of course inquire into the two instances to which reference has been made. These names do not appear upon the list of those in the Saskatoon area in connection with whom agreements had to be enforced with respect to sharing the crop. As I said before, only thirty-one out of 4,900 odd had to be dealt with in that way. So far as Mr. Packman is concerned, if he is the author of the statement that there is a ruthlessness about collecting from soldier settlers then certainly he is not acquainted with the facts, because I know of my own knowledge that
this is not the practice pursued. I know of my own knowledge that only a small percentage of the settlers could make that statement, because they know it is not according to the facts.


Cameron Ross McIntosh: I am pleased to hear the minister say that the collection policy of the department is not ruthless; I accept that statement, and I hope that such complaints as I have read will be fewer in another year than they have been this year.


George Gordon: That is scarcely fair. We have not received those complaints in the department; they are not before us.


Cameron Ross McIntosh: I was just going to say that the minister must have the latter complaint in the department, or if he has not he is not in touch with the branch office as he ought to be. Here is the letter from Mr. E. M. Johnston, district superintendent at Saskatoon, dated January 19, 1934, only four or five months ago. Here is what Mr. Johnston says in answer to Mr. Salter's letter:
I duly referred to head office your request for reinstatement and now have their decision. Head office ruling is that, on account of your account, they will not approve the redisbursement of the $75 collected as a result of the fire loss. Further, they do not grant your request for reinstatement, on the ground that, with your present debt and even taking into account the bonus amendments you could not succeed in paying for this property.
The director further expressed the opinion that at this time, when prices are low, you would be well advised to look about and see if you could not acquire a property that would be suitable for you at a price that you could handle. You no doubt have practically a full line of stock and equipment of your own and it is therefore in your interest that you should devote your energies to a property which you have a prospect of paying for, rather than to your present proposition.
Will you please advise your intentions in this matter.
May I ask the minister if Mr. Salter has advised the department as to his intentions? You practically told him to get off the land. Is he on the land or is he not? If he is not on it he has been evicted; if he is on it you are giving him another chance, as you should.


George Gordon: Surely there could be no complaint as to that.


The CHAIRMAN (Mr. MacDonald, Cape Breton South):: Shall the section carry?


Cameron Ross McIntosh: I want an answer; I want to know if the minister can tell me what that man is doing at the present time.


George Gordon: No, I cannot.
Farmers'-Creditors' Act


Cameron Ross McIntosh: He is in your Saskatoon area, and I would like the minister to trace up his history and let me have it.


George Gordon: Oh, yes.


[Stage Direction]
Section agreed to.
Sections 2 and 3 agreed to.
Bill reported, read the third time and
passed.

[Stage Direction]
Right Hon. R. B. BENNETT (Prime Minister) moved the second reading of Bill No. 92, to facilitate compromises and arrangements between farmers and their creditors.
Alan Webster Neill: Explain.


Richard Bedford Bennett: Mr. Speaker, I have
already indicated to this house the purpose of this legislation. I can add nothing to what I have said when the resolution was introduced upon which this bill is founded. I indicated that naturally it is a question of the details of the legislation giving effect to the principle, the principle being first of all that an opportunity should be given for the utilization of the provisions of the Bankruptcy Act without putting the farmer into bankruptcy, and secondly that a board of review should be appointed, if necessary, for the purpose of dealing with a matter upon which an agreement could not otherwise be reached, and in the last section we are exercising our powers of legislation to deal with the question of interest.
Obviously merely to state the principle does not assist the house on the second reading unless it is opposed to the principle, but I gather from what the house has said that members are very desirous of assisting in giving effect to the principle, and the question is a question of the details of the legislation and the extent to which they may be thought by the committee to effectuate the purpose for which the bill is provided.


Charles A. Stewart: Mr. Speaker, so far as I have been able to study the details of the bill I do not see anything particular to object to, although there are one or two suggestions that I should like to make in committee. The bill seems to me to meet the situation very acceptably.


[Stage Direction]
Motion agreed to, bill read the second time, and the house went into committee thereon, Mr. Smith (Cumberland) in the chair.

On section 1-short title.
Mr. COOTE:: Might I ask the Prime Minister whether any legislation is being considered to deal with the case of urban debtors?


Richard Bedford Bennett: I explained the other
day that the government had given a great deal of consideration to that matter but that it involved consideration and implications which had thus far seemed insurmountable. We may be able to meet the matter further, but at the present moment that is all I can say.


Thomas Reid: Will the Prime Miinster tell
us whether farmers who are under the soldier settlement board and who are in arrears to the board will be able to take advantage of this legislation? Under the act of last year the soldier settlers were able, if they had or could procure the money, to receive dollar for dollar, but sixty per cent in British Columbia could not. Would those soldier settlers in default come under this legislation?


Richard Bedford Bennett: I should think it would be extremely doubtful as the law now stands whether they would or not, but I should be glad to consider whether or not it might be desirable to add a special clause. Normally they should not for reasons that are purely legal. The crown's claim has priority in bankruptcy as well as in other proceedings, and therefore would not be subjected to the compromise that the act provides for. I will look into the matter.


[Stage Direction]
Section agreed to.
On section 2-Interpretation.
Richard Bedford Bennett: I propose, Mr. Chairman, if we can take this section line by line, to make some suggestions to the committee as we go along. If the committee will look at the definition of the word "farmer" in paragraph (f) of subsection 1 of section 2, they will see that it means "a person engaged solely in farming or the tillage of the soil." It has been suggested that that definition is hardly sufficient, and one of our friends has indicated that he thought a better definition would be:
"Farmer" means a person whose principal occupation consists in farming or the tillage of the soil.
Hon. gentlemen will recall that the hon. member for Gloucester the other day mentioned that substantial numbers of men should be designated as farmers although they cultivate only small areas and are en-

Farmers'-Creditors' Act
gaged also in fishing and hunting and matters of that sort. I think perhaps in view of what has been said, it would be better to use a more comprehensive definition.


Charles-Philippe Beaubien: Would that definition
cover a man who is not living on his farm but renting it on a crop-share basis?


Richard Bedford Bennett: Certainly not. He must
be in occupation. This only deals with cases of men who are in occupation, the effort being to keep men on the farm, to assist and induce those who are on the land to stay there. It does not deal with cases of the kind my hon. friend mentions at all.


Alfred Speakman: I assume that it would cover the case of those men who are on the farm but occupy a portion of their time in working elsewhere? I had in mind that the first definition might not cover them but that the second would.


Richard Bedford Bennett: It is for that reason that the change is proposed, and I submit to the committee that this is possibly a little more comprehensive, but if the committee have any better terms to suggest I shall be glad to accept them. The suggestion is that the definition should read:
"Farmer" means a person whose principal occupation consists in farming or the tillage of the soil.


Charles A. Stewart: That would not include a man with five or ten acres whose principal occupation was not that of farming.


Richard Bedford Bennett: He would not get relief.


Charles A. Stewart: I am afraid
it is going to be very difficult to define the principal occupation exactly. Has the Prime Minister explored the possibilities of putting it on an acreage basis?


Richard Bedford Bennett: No, that would seem to
be impossible having regard to the intensive cultivation carried on by some farmers near to urban centres. The definition that is now suggested is in conformity-I speak subject to correction-with the definition used by the income tax department for the purpose of differentiating between farmers and others, and I think that is about the nearest we can get.


Thomas Reid: In British Columbia wo have
poultry farms of two acres and an investment of 860,000.


Richard Bedford Bennett: Quite so. This would
cover that. I will hand this amendment to the chairman.
We propose to add a definition for "mortgage" as paragraph (g). They have a special provision in Quebec and the ordinary meaning of mortgage must be expanded so as to include a hypothec and also a deed of sale with a right of redemption under the civil law.


Alan Webster Neill: What about the case of a man who has an agreement of sale?


Richard Bedford Bennett: That is dealt with by the
statute.


Alan Webster Neill: Does the Prime Minister mean that it is dealt with by this bill?


Richard Bedford Bennett: We believe that case is covered by the provisions with respect to compromises. If it is not sufficiently clear, we will make it so.


Mr. STIRLING:: Who will decide this knotty point as to whether a man's principal occupation is farming?


Richard Bedford Bennett: If it becomes necessary, it will be done by the court of review, made up of a judge and two others. Where the benefit of the doubt must always be given to the applicant, we do not believe that there will be much difficulty about it.


George Gibson Coote: I wonder if the Prime Minister would consider an even wider provision that that which he has just proposed? I have in mind a number of elderly people who Have been living solely from the incomes from their farms which are rented. They still own those farms and have equities in them, if they have not been lost.


Richard Bedford Bennett: The hon. member for Macleod (Mr. Coote) must realize that the whole point is occupancy of the property. I am afraid we cannot meet the case he mentions., We are trying to make possible for those who are engaged in tilling the soil and who occupy their properties to continue to do so. The definition used in the Bankruptcy Act is "whose sole occupation is farming." It will be observed that the present definition was taken from that act but we are trying to make it more broad and comprehensive. This is really the definition used by the income tax department.


Thomas Reid: In British Columbia there are many people who fish but whose principal occupation is farming. Would the word "sole" take care of those people?


Richard Bedford Bennett: I am afraid the hon. member has not been following me. I have already indicated that we intend to strike out the word "sole" and substitute the word "principal."


[Stage Direction]
Amendment agreed to.
Farmers'-Creditors' Act
Mr. DUPRE:: I move that section 2 be amended by inserting the following paragraph immediately after paragraph (f) of such section:
(g) "mortgage" includes a hypothec and also a deed of sale with a right of redemption.


[Stage Direction]
Amendment agreed to.
Maurice Dupré: I move that section 2 be amended by relettering paragraphs (g), (h), and (i) as (h), (i), and (j).


[Stage Direction]
Amendment agreed to.
George Gibson Coote: Would the Prime Minister explain what a petition in bankruptcy against a farmer really means?


Richard Bedford Bennett: Without entering into a long discussion as to the circumstances which must combine to bring about the adjudication that any person is bankrupt, I can only say that an insolvent man is one who is unable to meet his debts as they mature. That is the general broad definition of the term. The Bankruptcy Act provides that under certain contingencies where a person is not able to meet his obligations as they mature, application may be made to have him adjudged a bankrupt. When he is so adjudged certain results follow which are provided for by the statute. That does not apply to a farmer exce'pt in a limited way, as will be seen in the provisions of the Bankruptcy Act itself. What is proposed now is the adoption of the general principle of the Bankruptcy Act. A farmer who is unable to meet his liabilities as they become due may make a proposal for a composition, an extension of time or a scheme or arrangement, either before or after assignment has been made. That is a	voluntary	assignment as distinct
from a compulsory assignment. If I am unable to meet my obligations and a petition is filed that I be adjudged a bankrupt, that would be one class of assignment. The second class is where I. realizing that fact, may be an assignment. There are innumerable cases such as this and we see them in the Gazette every week. A man "assigns for the benefit of his creditors" was the term used before we had the Bankruptcy Act, that was the term used in the provisions of the statute relating to assignments for the benefit of creditors. That assignment act had its origin in the legislature of Ontario and was held by the courts to be valid until such time as this parliament determined that it would exercise its jurisdiction over the whole country. Since the passing of the Bankruptcy Act it is no longer an assignment for the benefit of creditors, it is an assignment in bankruptcy.

The statute itself provides for the method by which property is to be distributed among the creditors, their order of priority and matters of that kind. This proposal is to take care of the farmer who is not in a position to meet his obligations. Instead of assigning or taking the benefits of the Bankruptcy Act, if its provisions were extended to him, he suggests to his creditors that if he is given an extension of time he may be able to work out his liabilities.


Charles A. Stewart: Or he may go through the courts.


Richard Bedford Bennett: Oh, yes.


Charles A. Stewart: Will the exemptions provided in the provincial statutes remain in existence to the man assigning in bankruptcy?


William Richard Motherwell: I did not know the second reading of this bill was coming up to-day. What would happen to the farmer who has no equity in his land and who wants to make an assignment? Who will pay the costs of the assignment? Perhaps this is too simple a question.


Richard Bedford Bennett: We have endeavoured to provide for that by section 16. We regard the question asked by the hon. gentleman as having great importance because it is no use to set up machinery which will be so expensive that it cannot be of any benefit to the larmer. Although this looks a bit cumbersome, frankly it is the only method which I think can be devised to deal with the matter in a simple manner and not put the farmer to expense. I fear some hon. gentleman may take exception to section 16, but this reads:
The Minister of Finance shall be charged with the administration of this act, and the expenses necessary for such administration shall be payable out of any unappropriated moneys in the consolidated revenue fund.
I propose that the country shall pay the expenses.


Wilfred Hanbury: I suppose the word "administration" will include up to the time when an arrangement has been concluded. I assume that after that time the creditor will have to pay certain charges.


Richard Bedford Bennett: 
Wilfred Hanbury: That was the problem I put to the Prime Minister-up to that point.


Richard Bedford Bennett: And there are no expenses afterwards.


Wilfred Hanbury: But the expenses of distribution?


Richard Bedford Bennett: That is the official receiver's job.


Wilfred Hanbury: Any expenses the official receiver has will be charged, I understand, against the [DOT] creditor's property.


Richard Bedford Bennett: No, they are paid for.


William Richard Motherwell: Under the old law the official receiver would not put himself into gear unless someone put up some money.


Richard Bedford Bennett: That is the reason it is provided, to use the language of the hon. gentleman, to put the machinery into gear without his having to pay.


Alan Webster Neill: Who initiates the proceedings?


Richard Bedford Bennett: The farmer.
Mr. SPEAIvMAN: In paragraph (h) "petition" means a petition in bankruptcy against a farmer. As I understand it, a petition in bankruptcy means the taking of action to bring a debtor into compulsory bankruptcy. I am aware that this is not provided for in the Bankruptcy Act so far as a farmer is concerned, and in view of this fact, may I ask whether the new act alters the status of the farmer in any respect. The Prime Minister will remember that I brought up the same point on the second reading and I believe he intended to explain the matter in committee.


Richard Bedford Bennett: Which section is the hon. gentleman dealing with?


Alfred Speakman: In paragraph (h) of subsection 1 of section 2 petition means a petition in bankruptcy against a farmer.


Richard Bedford Bennett: Yes. Perhaps the language might be improved upon in that respect. It means a petition under the act against the farmer, as provided for here. Default of certain action by the farmer, after the agreement has been arrived at, constitutes an act of insolvency under the act. That paragraph might stand until later in the day. I will look into it in the dinner hour, to make sure there is no difficulty.


Alfred Speakman: It is paragraph (h) in the bill as it stands, but it becomes (i) now.


Charles A. Stewart: I am not clear as to what action is to be taken by the creditor. It is quite clear what the farmer must do, but as to what action shall be taken by the creditor, that seems to be rather obscure.


Richard Bedford Bennett: We had in mind that no farmer would desire to avail himself of the provisions of this act unless his creditors were pressing him. The action of the creditor is taken usually in an endeavour to get his money, and when such action is taken this act provides for the farmer taking the steps I have indicated, commencing at section 6.


Charles A. Stewart: What was puzzling me was whether the creditor would take action under the provisions of this act.


John Thomas Hackett: If the hon. member will look at subsection 3 of section 2 he will see that part I of the Bankruptcy Act is brought into effect. The hon. member for Red Deer did point out that under Part I of the Bankruptcy Act a farmer may not be put into bankruptcy, but under the second part of the act he may make an assignment; in subsection 3 of section 2 of the bill it is stated that part I of the Bankruptcy Act, notwithstanding anything found in section 7 of the Bankruptcy Act, shall have its application. I think that means that a farmer who does not carry out a proposal, may be put into bankruptcy by his creditors.


Charles A. Stewart: I could not just see what was aimed at in view of the intervention of the Bankruptcy Act. The farmer may or may not avail himself of the opportunity of assigning and taking advantage of the act. Does the provision contained in the act force him to take that action ?


Richard Bedford Bennett: No, it does not.


Mr. BURY:: But does not the provision
of subsection 3 of section 2 only make part I of the Bankruptcy Act apply to a farmer after a proposal has been made and accepted and he has defaulted in respect of that proposal?


Richard Bedford Bennett: Quite so.
Farmers'-Creditors' Act


Ambrose Upton Gledstanes Bury: Therefore it would not be
true to say that part I of the Bankruptcy Act is made generally applicable to farmers.


Richard Bedford Bennett: I suppose this committee does not desire me to enter into a long legal discussion-


Charles A. Stewart: Not at all.


Richard Bedford Bennett: I know the hon. gentleman would like to escape it, although the history of this legislation is quite interesting. Part II of the Bankruptcy Act deals with assignments and compositions by ordinary debtors. My hon. friend from Restigouche-Madawaska (Mr. Michaud) understands the matter; he is a lawyer and has to deal with it. Let me quote the provision in the Bankruptcy Act:
Any insolvent debtor whose liabilities to creditors, provable as debts under this act, exceed five hundred dollars, may, at any time prior to the making of a receiving order against him-
That is what I mentioned a moment ago. -make an assignment of all his property for the general benefit of his creditors.
That is the general law. For that reason we have substituted this provision, which is to be made effective at the expense of the state- I will put it that way frankly.


Mr. MICHAUD:: That is the object.


Richard Bedford Bennett: Yes, that is the object. When he is being pressed by his creditors to pay his debts and cannot do so, they say, "We will issue a writ against you and get execution"; and this provides for the machinery that will enable him without expense, as provided in the Bankruptcy Act, to deal with the disposition of his property as though it were under the Bankruptcy Act, though it is not, without having the expense that has heretofore impaired the operation of the Bankruptcy Act in a country such as this.


Mr. SPENCER:: When he goes through that process he will not be forced to leave his home.


Richard Bedford Bennett: No. He can only be displaced from his home by appropriate proceedings in the court. He goes to the official receiver-and the official receiver does not mean official receiver under the Bankruptcy Act but one under this act-and then of course his property is in the custody of a custodian appointed by law to protect him.


Alfred Speakman: After this composition has been effected and the farmer has been given a fredi start under the new terms, and then fails to meet in any respect all the conditions

of these new terms, he may then be subject to part I of the Bankruptcy Act and the creditors may bring a petition against him and put him into compulsory bankruptcy?


Richard Bedford Bennett: That undoubtedly is so, because at the end of subsection 3 of section 2 you will observe these words:
And failure on the part of such farmer to carry out any of the terms of the proposal shall be deemed to be an act of bankruptcy.
I think that will have a salutary effect in preventing him from undertaking more onerous obligations than he might be able to discharge or creditors from being unduly pressing in seeking larger compositions than they might be able to expect. You have to relate this in some way to give jurisdiction to the parliament of Canada, it being a matter of property and civil rights. It must be observed that this has to be brought within the provisions of section 91 to give us jurisdiction to deal with it rather than the provinces which have only a limited jurisdiction.


George Gibson Coote: I think I see a very great
difficulty in connection with subclause 3 of section 2. A farmer might honestly attempt to carry out his acceptance of the terms of the composition but a crop failure the very next year might make it impossible for him to meet those obligations. Then any one of his creditors could place him under bankruptcy. That is the way in which I understand the subclause, and I should like to know from the Prime Minister whether my interpretation is correct.


Richard Bedford Bennett: As a matter of fact,
since I have been sitting here this afternoon listening to the discussion it has occurred to me possibly it might be well to add a few words at the end of that clause to confer jurisdiction on a judge so as to prevent the operation of the drastic results which might follow from default. I have been thinking over that since the discussion has been precipitated. I am entirely in the hands of the committee; this is not party legislation in that sense, and any suggestions that may be made that will be useful I shall be very glad to adopt.


Charles A. Stewart: The farmer has gone through the hands of the official receiver and several other persons who ought to be in a position to advise him; his action is not altogether of his own volition.


Richard Bedford Bennett: That is right.


Charles A. Stewart: I agree that perhaps some safeguard should be afforded because farming is such a hazardous occupa-

Farmers'-Creditors' Act
tion that a crop failure for two or three years will wipe out a man who has the best intentions in the world of meeting his obligations. To make a drastic provision for putting him into bankruptcy, thus cleaning him up although he may have a very considerable equity, does not seem quite fair. It must, however, be borne in mind that he is under the official receiver so long as he has any money.


Alfred Speakman: I am glad the Prime
Minister made the suggestion and intimated that he was willing to consider amending that clause to provide for certain protection, because I have in mind a good many compositions that were thought to be quite satisfactory-the amount of concessions made in soldier land settlers' affairs is, for example, a striking illustration of that. We thought, all being well, the man was placed on a sound basis, but climatic, economic conditions, conditions over which no one and certainly not the farmer had any control, made it impossible for him to meet the terms to which he had assented in the first instance. It is very well to have some protection of that sort.


Richard Bedford Bennett: After all, the occasion for anxiety is not so great as it would appear. Hon. members will realize that in the first instance this is an act of bankruptcy. An act of bankruptcy has to be followed by something else, namely, a receiving order by a court, and I think a few words added at the end would put the matter right, so that the farmer shall have all the rights to appear and oppose the granting of an order, as provided for by the act. It does not follow because I have committed an act of bankruptcy, that the court will adjudicate me bankrupt. I want to make that clear. Perhaps this covers the difficulty the hon. member for Macleod (Mr. Coote) had in mind:
The court may, if no custodian has been appointed and if it is shown to be necessary for the protection of the estate, at any time after the presentation of a bankruptcy order, and before a receiving order is made, appoint a licensed trustee as interim receiver.
That is an ordinary provision of our law with respect to an ordinary insolvent. This provision is, as will be observed, to the effect that he has by failure created an act of bankruptcy, but the court, as the statute now stands, must issue the order. I think I can add a few words that will make it quite clear that there is a discretion to the court.


Charles A. Stewart: Would that apply to the first provision where there is a mere adjustment of the indebtedness?


Richard Bedford Bennett: The hon. member for West Edmonton (Mr. Stewart) has not quite followed me. The composition, adjustment and arrangement having been arrived at, then failure on the part of the farmer to observe and perform his obligations under the adjustment or agreement constitutes an act of bankruptcy. That is, his default enables his creditors to apply to the court to have him adjudicated a bankrupt. The point that is raised by the hon. member for Macleod and the hon. member for Red Deer (Mr. Speak-man) is whether it is abundantly clear there is any discretion in anybody to prevent his being adjudicated a bankrupt. As the statute now stands, for general purposes it does not follow that an act of bankruptcy involves the adjudication of bankruptcy; that is, the mere act may be waived; it may be overcome in a hundred ways, for instance, by the payment of the debt if it had been paid prior to the adjudication. I think I can add a few words at the end of the clause that will make it quite clear the court will exercise a discretion, having regard to all the circumstances, before making such an adjudication. That, I understand, is what the hon. gentleman has in mind.


Alan Webster Neill: The farmer would do that under the Bankruptcy Act anyhow.


Richard Bedford Bennett: Quite so.


George Gibson Coote: Perhaps it is a little difficult for us, not being familiar with the terms-of part I of the act, to get the full significance of this. In the case of any person who comes under part I of the Bankruptcy Act, who fails to meet his obligation, one of his creditors can file a petition against him. Is that not correct?


Richard Bedford Bennett: Broadly, yes.


George Gibson Coote: Would any farmer who has paid his debts as arranged under the provisions of this legislation, after that arrangement had been made, be in the position that any one of his creditors at any time the farmer failed to meet an obligation, could enter a petition against him to have him adjudicated a bankrupt? For how long would that apply? Would that not apply to the farmer all the rest of the time he was engaged in farming? It might follow him for a good many years.


Richard Bedford Bennett: The hon. member for Restigouche-Madawaska (Mr. Michaud) will explain that to the hon. member.

Farmers'-Creditors' Act


George Gibson Coote: Suppose in a matter of ten years this farmer was able to discharge the liabilities under which he was labouring at the time of the composition of his debts; then a few years after that another very difficult time comes along and he gets into trouble and is unable to meet his obligations. Would he not then be in the position of any person other than a farmer so far as part I of the Bankruptcy Act was concerned?


John Thomas Hackett: If the hon. gentleman will permit me, I think he has pretty well stated the case, but surely he does not consider that an act is to be passed which will exempt for all time an element of the community from paying its debts.


George Gibson Coote: That was not the purpose of the Bankruptcy Act in exempting farmers to prevent them from paying their debts for all time.


John Thomas Hackett: If the hon. member will read section 6 and following sections he will see that provision is made for compositions and for those compositions to be entered into with the utmost care. He will see that if either party is not satisfied with the terms of the composition, finds them either too onerous or inadequate, an appeal may be had to a provincial board of review. It does seem that any composition arrived at by persons who will have the experience and will exercise the care that it is anticipated will be exercised under this statute will preclude the probability of failure on the part of the farmer. But I presume there will be some farmers who will be unable to carry out all the terms of the composition; then the provision which has been referred to merely puts them in the position of other classes of the community who do not pay their debts. The Prime Minister has stated that he may be able to add a few words to subsection 3 of section 2. I cannot anticipate what those words will be, but if he were to qualify or define the breach of the composition, so that a man might not be thrown into bankruptcy unless he owed, say, S500 or some definite amount, I cannot imagine that anyone could complain of the section as it would then stand, because it would give the farming community the chance of escape from the plight in which it now finds itself due to the low prices of the commodities which they produce.


Joseph Enoil Michaud: What would be the effect if subsection 3 of section 2 were not in this bill?
fMr. Bennett.]


John Thomas Hackett: There would be no
sanction.


Joseph Enoil Michaud: Tied up forever.


Wilfred Hanbury: Not being of the legal profession I am perhaps wrong, but it appears to me that section 6 would have some bearing on the point, because I note here that a farmer can make a composition either before or after an assignment has been made. I do not know whether that is the same thing as being adjudged a bankrupt, but if the words "after he has been adjudged a bankrupt" were added it would probably meet the situation.


Richard Bedford Bennett: 
Wilfred Hanbury: Then it will follow as a logical step that the provision you are to make would follow the first act of bankruptcy?


Richard Bedford Bennett: Exactly, and if there is default in the carrying out of the terms and conditions of the composition adjustment or agreement, which as the hon. member for Restigouche-Madawaska (Mr. Michaud) said a moment ago is the sanction for failure to comply with the arrangement he has made, I still will protect that by a further word saying that if in the opinion of the judge or court such order should be made he may have the adjudication go against him. I think that protects him to the extent that he should be protected or would wish to be.


William Richard Motherwell: I take it the judge will] have discretionary power to adjudicate on individual cases. I am wondering what are the major factors upon which he will base his adjudication as to whether a man is bankrupt or not. I am willing to sit at the feet of any legal Gamaliel to learn of these matters. I know nothing about the legal terms, but I want to understand whether this down-and-outer can get really free to start over again, go up in the north country and start over again with nothing but his health and his axe and I hope a wife and not too many children, three or four will do to start with. Then he can start farming over again provided he is eligible for some assistance or loan under the other bill 93. I am not jesting; he can start over again if he feels that he is free from these distressing incumbrances that have overwhelmed him, perhaps through no fault of his own. If he can be free he will say "God bless the government that gave me my freedom."


Richard Bedford Bennett: It is not the government that does that.
74726-244J


William Richard Motherwell: He may not vote for the government but he will say that just the same. That is the great opportunity he will have of starting over again if a little help is forthcoming as already indicated.


Henry Elvins Spencer: I take it the main object of this legislation is to keep the farmer on his farm.


Richard Bedford Bennett: Quite so.


Henry Elvins Spencer: And although some who are situated on bad farms and want to move out should be able to do so, the main object is that where the farm is good land but owing to conditions beyond his control the farmer has got into debt so heavily that he cannot liquidate his liabilities, then this legislation will enable him to get free of debt and carry on where he is now living.


Richard Bedford Bennett: I am sure the hon. members for Battle River (Mr. Spencer) and Melville (Mr. Motherwell) will understand me when I say that part of this is somewhat intricate and technical, all bankruptcy laws have been found so to be. The theory of a bankruptcy law is that the property of a person who is in debt shall be rateably distributed amongst his creditors, and thereupon he, having been ho'nest and free from any suggestion of wrongdoing, shall receive what we call technically a discharge in bankruptcy, the result being that he becomes a free man, to use the language of the hon. gentlemen. In this section we are not approaching it from that- angle at all, because the farmer has not sought the benefits of the bankruptcy laws of the country in the first instance; in fact in the province of Quebec it is provided that those laws shall not apply to farmers at all, as this committee knows.
I think I can explain it more clearly, perhaps, if I start at the beginning. Here is a farmer in southern Alberta; I will take that as an illustration though New Brunswick would do equally well. He has a mortgage against his property. He has suffered crop failures, but now he begins to see some signs of returning prosperity; there is more moisture in the ground, and so on. He says, " If I had a chance I could pay my creditors, either in full or at least in a certain proportion. I do not desire to have my property cleaned up and sold; I desire to stay here with my implements and my accumulations and work my property. I ask the law to restrain my creditors from coming in and closing me out with an execution in the courts of the province," because this overcomes that difficulty as well. "I ask that to be stopped, and I say I should be given a chance." There-
Farmers'-Creditors' Act

upon the official receiver under this act discusses his problem with him. The creditors are called together, and the farmer says, " I am not trying to get out of paying my debts; I want to pay them if you will give me time in which to do it." Thereupon, without any thought other than that in view, the farmer decides what he can do and that is embodied in an agreement.
That must be an agreement with which everyone is satisfied, because if one creditor is not satisfied he might cause difficulty and trouble, the farmer not yet having assigned but still retaining his property. We have taken steps to protect him up to that point, and that agreement is confirmed. But supposing there are some creditors who say no. Then we have set up the machinery in each province whereby, willy-nilly, whether they like it or not, they can be compelled to accept the proposals which the informal court believes to be satisfactoiy from the standpoint of the capacity, the capability and the potential strength of the farmer to retrieve his situation.


Henry Elvins Spencer: Just there I should like to ask what percentage of the creditors would have to be in agreement.


Richard Bedford Bennett: Unfortunately our law always has been framed upon the assumption that all must agree to a composition of debt.


Wilfred Hanbury: That is in the past.


Richard Bedford Bennett: Quite so, in the absence of a statute. If I might make it clear, there is what might be called the written law and the unwritten law. The unwritten law, the common law, provides that a settlement between creditors and debtors cannot be made unless all the creditors agree, for my debt cannot be disposed of by anyone else in the world but myself. That is a striking tribute to that individuality of purpose which has been referred to in this house from time to time. In the early days in Great Britain, as in other countries, it was found that it was desirable for the honest man-and I use that term very emphatically-to be able to get a fresh start by making a full disclosure o,f everything he owned and handing it over to a trustee, who was usual!}' a statutory trustee, who sold it, took out his expenses and distributed the proceeds rateably among the creditors. But that did not make him a free man; he then had to make application to the judge in bankruptcy for the purpose of receiving his discharge. In England to-day, if you are interested and will pick up the newspapers day after day. you will find that applications are 
made for discharge which are opposed on the ground that the man had not given all his property to the trustee, that he had gone on and earned money after making the assignment which had not been made available for his creditors. So there he is, faced with the certainty that he cannot sit in parliament if he is an adjudicated bankrupt, and that he may not hold manj' offices that are mentioned in statutes and that have grown up under common law. He is still branded as an undischarged bankrupt.
This act seeks to secure for the farmer the benefits of that principle, set up by machinery that will run easily and without expense to the farmer. But if he makes what I might call a too optimistic adjustment and fails to carry it out then, under this statute, he becomes liable to be adjudicated a bankrupt, because that is to constitute an act of bankruptcy. On the other hand I think I shall adopt the suggestion that has been made and add the words, "if the judge or a court so determine." In other words it does not follow automatically, which is the fear of the hon. member. There may be, and I think there is, something in that. On the other hand if the farmer makes his composition and meets it, when the composition is met his creditors are paid, either at fifty or sixty cents on the dollar or, over a long period of time, one hundred cents on the dollar or whatever it may be. That is a matter in which the voice of the creditors is not going to be final under this statute. This is the difficulty that any legal gentleman in the house will agree we have had to meet, and if I do say it myself- authors are always proud of their products-I think it has been not unfairly met by this legislation. We have provided that the farmers are to get a chance to stay on their land, utilizing the assets they have and working out their destinies, paying their debts not necessarily at one hundred cents on the dollar but to the extent which may be agreed upon between the creditors and the debtor or, failing that, by the action of the review board for the province.


William Richard Motherwell: I think I can see the reason for that. One of the factors would be whether the man or applicant was an Ananias or a Sapphira, in which case neither should get a discharge and be eligible to be free.


Richard Bedford Bennett: Presumably he would not be a Sapphira.
At six o'clock the committee took recess.

Farmers'-Creditors' Act
After Recess
The committee resumed at eight o'clock.


William Richard Motherwell: Mr. Chairman, since six o'clock I have been moralizing on this question of the adjudication of debts both on the part of the farmer who is down and out and on the part of those who are not down and out but are capable of taking care of their debts over a period of time if given an opportunity. There are those two classes, and one is quite distinct from the other.
With regard to the down-and-outer, I was appealing to the Prime Minister (Mr. Bennett) if there was not some way of letting that man feel that he was free, free without any strings whatsoever, because after all these matters are to be determined by a judge and the law can be administered in a strange way sometimes. I have great faith in the judiciary of Canada, yet nevertheless there is the humane judge who will administer the law humanly, and there is the other judge who takes the attitude:	"I want
the law carried out in its entirety." He will make the man come up to the scratch; let the chips fall where they may, he will insist upon compliance with the law. There are not many of the latter kind,. I am glad to say, but there are some. I would appeal to the Prime Minister to use his great talents to devise some scheme that will permit the applicant who is honestly eligible to complete discharge from all his present mortgage obligations, who has not played the part of either an Ananias or a Sapphira, who has not been making wrong returns-I have no use for him, but there have been at least the two before-mentioned historic examples and there have been others since-to have a chance to start over again as free men and women. I am speaking for the man who has made his returns properly, who has not been trying to humbug anybody, who has not been trying to put something over the government or anybody else, that he be given the opportunity to start over again feeling that if he complies with the conditions he can go free.
Let me illustrate. When Abraham Lincoln set the slaves of the south free, I do not know how many strings were on those slaves, but there were some strings, I recall about runaway slaves and all that sort of thing. Speaking generally, however, those slaves were set free although sometimes they had become so much attached to their masters that they did not want to leave. Now if the right hon. leader of the government could meet the situation I have spoken of in some way, and I think it could be done, he would be looked upon as the great emancipator of the white slaves of
Canada-I am speaking very seriously, Mr Chairman-just as Abraham Lincoln was the emancipator of the dark slaves of the south. Why not put in a proviso that the law shall be administered thus and so, and with the understanding that it is the government's desire to free all men who are honestly worthy of being made free? That khould not be impossible. I think I could make a stab at something like that myself in the way of rough draftsmanship, and I am confident that the Prime Minister, who I feel sure understands me, could draft something to meet that situation. Look at another incidental advantage such a policy would be, Mr. Chairman. Most of the people in this house are capitalists; that is, they believe in the capitalist system as such, even though imperfect. All farmers are capitalists. What is the use of talking nonsense about socialism or communism as long as we own land? Now if the Prime Minister would do as I suggest, look what a tribute it would be to a reformed capitalism, harnessed up, if you like, adjusted to suit the requirements of to-day. It would stop the mouths of these men who are talking socialism and nihilism and communism and all these other isms, and decrying the capitalist system because it is defective. Of course, it is defective.	All laws and all
institutions will be defective as long as we as individuals who comprise the community are defective ourselves. You cannot have anything perfect that depends upon imperfect men, but let us strive as much as possible towards perfection, and let us make the capitalist system of to-day a reformed one so that we can talk honestly and with truth of emancipating the white slaves, the down-and-out honest mortgage slaves of Canada.
I am not referring now, Mr. Chairman, to those who are capable of looking after their own affairs, and have some considerable equity in their homes, and most of such can, if they are given a long term amortized chance. I am speaking more particularly of the down-and-out men and women who have not a chance in a million of ever getting on their feet and who are without hope. What kind of a try-out are farmers going to make unless they have the consciousness that, if not themselves, their children at least are going to be able once more to make the grade?
I do not know if I have made myself plain or not, but I do urge the Prime Minister to put his great talents to working out a solution of this important question instead of merely confining such talents, as he sometimes does, to keeping the opposition from getting information about this, that or the other
3S5S
Farmers'-Creditors' Act

thing to which they think they are entitled. Anybody can do that, but it is not everybody who can emancipate the white farmer slaves of this country. The right hon. gentleman is now in harness, but he does not know any more than I do how long he will be in harness or how long I shall be in harness, and I appeal to him to do something to contribute to this great end while it is yet day.


Richard Bedford Bennett: Mr. Chairman, the invitation of the hon. member for Melville (Mr. Motherwell) to become an emancipator is very appealing, but unfortunately there is a constitution in this country that imposes even upon me limitations and restrictions. I say it very regretfully, of course, but it is a fact. The power to discharge a debtor from his debt to his creditor I am afraid does not lie with us when you deal with questions of contract. For instance it is not competent in my judgment-I have not given it any thought-for this parliament to say that a man who owes his grocer one hundred dollars shall after the passing of an act owe him nothing, and that is what the hon. gentleman suggests. But we have jurisdiction with respect to bankruptcy and with respect to interest, and the bill which is now before the committee represents a great deal of hard work-


William Richard Motherwell: I know. I can
believe that, but we referred to nothing except mortgage indebtedness.


Richard Bedford Bennett: -in an effort within our jurisdiction to secure for the unfortunate debtor who is tilling the soil an opportunity so far as we can grant it to begin again. But I do not think we have the power to do what the hon. gentleman suggests, and I think perhaps on reconsideration he would doubt the wisdom of it himself.
The discussion so far has raised several questions, and I think we have disposed of most of them except that which arises under subsection 3 of section 2. The section as it reads places upon the farmer as a punishment for default the possibility of an application being made to have him adjudicated a bankrupt, it being declared to be an act of insolvency. The hon. member for Melville asked a very proper question as to what constitutes an act of insolvency. That is covered by section 3 of the Bankruptcy Act, and without reading it at length-perhaps the hon. gentleman will excuse me from reading too much-I shall just give the purport of it as I proceed.
First of all, if in Canada or elsewhere a debtor makes an assignment of his property

to a trustee for the benefit of his creditors generally, whether it is an assignment authorized by the Bankruptcy Act or not, that constitutes an act of insolvency. Or if he makes a fraudulent conveyance, gift, delivery, or transfer of his property, the words "fraudulent conveyance" having a meaning attributed to them by the courts, that is an act of insolvency. Or if he makes a conveyance or transfer of his property which in itself would be void as a fraudulent preference if he were adjudged bankrupt-that is a technical matter -that is an act of insolvency. Or if he endeavours to defeat or delay his creditors, that also is an act of insolvency.
Next is the one which is the most common. Or if h'e permits any execution or other process issued against him under which any of his goods are seized, levied upon or taken in execution to remain unsatisfied until within four days from the time fixed by the sheriff for the sale thereof, and so on, that is the customary and ordinary case in which bankruptcy is determined, or at least I put it that way. The next paragraph reads:
If he exhibits to any meeting of his creditors any statement of his assets and liabilities which shows that lie is insolvent, or presents or causes to be presented to any such meeting a written admission of his inability to pay his debts;
The next paragraph deals with the removal of his property so that it is not available for the settlement of his debts. Then there is the Bulk Sales Act provision, that is, if he makes a bulk sale of his property. The next reads:
If he gives notice to any of his creditors that he has suspended or that he is about to suspend payment of his debts;
My attention has been directed to that since this discussion began. The next reads:
If he ceases to meet his liabilities generally as they become due.
That was the original statute. As I said this afternoon, insolvency results from a man's inability to pay his debts as they become due, but in a country such as this, where the difficulties of making a living are so great under distress circumstances and where crops and climatic conditions have so much to do with a man's ability to meet his obligations, it was thought desirable to add the word "general", so that a single specific instance of inability to pay as the obligation matures should not then in itself constitute an act of bankruptcy. Those are at least the acts which if committed by a debtor are acts of bankruptcy under our statute. As the hon. member for West Edmonton (Mr. Stewart) said

Farmers'-Creditors' Act
to-day, this subsection proposes to make the default in keeping his obligations under the compromise an act of insolvency. We have in various parts of this country such untoward conditions and circumstances with respect to crops and possibly we would be serving the ends of justice and fairness if we added the words "if so determined by a judge." That would leave it to the judge to say whether under all the circumstances it is an act of bankruptcy. I dare say the hon. member for Shelburne-Yarmouth (Mr. Ralston), who is a lawyer, would say that it would have to mean that within the terms of the section to which I have just referred, being section 3 of the act. As I said this afternoon, I would prefer to take a few minutes when the house is not sitting to look into the matter with a little more care, so I would like subsection 3 to stand.


Wilfred Hanbury: A question arises in my
mind in connection with the carrying on of the operations of the farm during the period it is under this administration. I refer particularly to purchases for living requirements and repairs to buildings or machinery. I assume the administrator would be able to authorize expenditures for those purposes?


Richard Bedford Bennett: That does not arise at
the moment because the exemptions still obtain under this bill as in the former act. So far as the rest of it is concerned, the whole question is that of an adjustment between his creditors and himself. The amendment to the Canadian Farm Loan Act, which is complementary to this bill and which it is proposed to take up next, contemplates our being able to provide him with a little means with which to start again. I quite agree with the hon. member for Melville (Mr. Motherwell) that this is highly desirable, because it is idle to arrange a compromise and it is futile to execute an extension agreement unless there is some probability that the man who receives the extension and makes the compromise is able to discharge the fresh obligation-it is the old one in fact-which he has undertaken. In the next bill we will endeavour to make it possible for him to discharge the new obligation thus created.


Wilfred Hanbury: I understand from the
Prime Minister that that is a matter that would be discussed with the creditors and the administrator.


Richard Bedford Bennett: Not administrator; he is the receiver.


Wilfred Hanbury: In order to give him
authority to do that. That would be a
matter of arrangement. There is one other matter which is not just clear to me with reference to the priority of the secured creditor. Is it the intention to maintain his priority as against an unsecured creditor?


Richard Bedford Bennett: Would the hon. gentleman let that stand? The matter is dealt with in later sections.


Wilfred Hanbury: I have looked at the
bill but I have not succeeded in finding that. Will this apply to the farmer who is operating a rented farm as well as to the farmer who owns his property?


Richard Bedford Bennett: The farmer who is living on a rented farm would not be able to offer any security by way of readjustment unless he had a very long term lease. Occupancy and occupation are the first factors, but occupancy and occupation involve something further. They involve something by way of assets to enable him to deal with a compromise or adjustment. If he had a six months' or a year's lease he would not be able to get very far.


Edward James Young: I was not in the house
this afternoon and have not been following the discussion, but do I understand the Prime Minister to say that any farmer who does any of these things which he read, who generally neglects to meet his creditors and so on, could be forced into bankruptcy?


Richard Bedford Bennett: No. I am sure the hon. gentleman would not expect me to repeat all that I have been going over for the last two hours. I regret his absence, but I think it is hardly fair to ask me to go over this matter for another hour. I would put it broadly in this way. The bill contemplates a compromise being effected and an adjustment being made for the purpose of enabling a man who is in insolvent circumstances to secure from his creditors an extension of time under an agreement which would be agreed to by all his creditors, this being purely a matter between his creditors and himself. Upon failing to reach an agreement, a court of review is set up. This is an informal court consisting of a judge and representatives of the creditors and the debtor. That court either approves or disapproves the scheme which has been projected. If they do not think it a reasonable scheme, they have the power to propound a fresh one for the purpose of meeting the situation. However, after an agreement has been drawn up and executed, if a farmer should neglect to discharge his obligations under it, that would be an act of bankruptcy. It was pointed out this afternoon that that might involve a penalty for default
3S60
Farmers'-Creditors' Act

where climatic conditions might bring about a crop failure and that there should be some discretion to determine whether or not such a consequence should follow from an act over which the debtor might possibly have no control. Therefore I was proposing to make a slight amendment to subsection 3 of section 2, and I have asked that that subsection stand in order that that might be accomplished. The other sections to section 6 deals with the setting up of the machinery, while section 6 provides for the contemplated agreement being entered into and a compromise made. I might say to the hon. member for Weyburn (Mr. Young) that that compromise might contemplate any settlement; I say to the hon. member for Melville (Mr. Motherwell) that it might mean only ten or fifteen cents on the dollar.


Wilfred Hanbury: Or one cent.


Richard Bedford Bennett: Yes, or it might mean seventy-five or eighty cents. That would be an interference with the copyright of the hon. member for Kenora-Rainy River (Mr. Heenan) which should not be interfered with. Leaving it at that it will be seen-the hon. member for Melville was speaking about this at six o'clock-that the question to be considered is the future of the farmer. That is the end dealt with in this bill, but the next bill which I propose to take up, the farm loan bill, contemplates expanding the discretion vested in the board appointed by this parliament in order to enable small additional fresh capital to be provided so that the cultivator may be able to earn the wherewithal to discharge what may be described as the new obligation which has been set up in lieu of that which was existent with his creditors when he made the settlement and compromise to which I have referred.


John Thomas Hackett: Subsection 2 of section 2 indicates that the Bankruptcy Act and the bankruptcy rules shall, except as in this act otherwise provided, apply. The hon. member for Vancouver-Burrard has asked about priorities. Section 16 of the Bankruptcy Act, subsection 5, is in the following terms:
No composition, extension or scheme shall be approved by the court which does not provide for the payment in priority to other debts of all debts directed to be so paid in the distribution of the property of a bankrupt or authorized assignor.


Wilfred Hanbury: That is the point I had in mind in asking the question. Naturally I came to the conclusion that if the reduced value of the mortgage on a property were

$4,000 and the entire composition did not amount to more than $4,000, then the unsecured creditors would have no equity in the composition. I want to know whether I am correct in that assumption.


John Thomas Hackett: The Prime Minister pointed out this afternoon that there is in this bill a provision which makes the capacity of the debtor to pay and the capacity of his land to produce, criteria of value. Taking those criteria into consideration I cannot see how the unsecured creditors can be affected.


Wilfred Hanbury: I cannot see how they can have any security according to my interpretation of the bill.


John Thomas Hackett: The secured creditors have to value their security.


Mr. LUCAS:: In my opinion this bill is one of the most important pieces of legislation we have had before us this year. There are thousands of farmers throughout the west particularly and in other parts of Canada who to-day, through no fault of their own, find themselves in the position where they have lost practically all hope, and if through the practical application of a bill of this kind that situation can be remedied and they can be given fresh hope to carry on, I think it will mean a great deal not only to the farmers but to other sections of the community. There are one or two points on which I wish to be clear. First, has the farmer to agree to an agreement that may be arrived at by the official receiver and the creditors? I understand that the official receiver is the person who will adjudicate on these debts. If the official receiver and the creditors should agree that the farmer ought to pay a certain amount is he compelled to accept that agreement?


Richard Bedford Bennett: The answer is no.


William Thomas Lucas: The other point is in regard to the creditors. Must a certain percentage of.creditors agree?


Richard Bedford Bennett: The answer is no.


William Richard Motherwell: We have been flitting about all over the subsections and these alphabetical designations here. Have we passed paragraph (f) ?


Charles A. Stewart: We are
down to subsection 3.


William Richard Motherwell: Have we passed
paragraph (f) of subsection 1?


Charles A. Stewart: Yes.

F armers'-Creditors' Act


Richard Bedford Bennett: For the hon. gentleman's information I may say that "farmer" under paragraph (f) means a person whose principal occupation consists in farming or the tillage of the soil. That is as broad as we think we can make it under the circumstances, as I explained before the hon. gentleman came into the chamber.


William Richard Motherwell: Does it cover
orchardists?


Richard Bedford Bennett: Yes, I should think so. Subsections 1 and 2 agreed to.
Subsection 3 stands.
On section 3-Official receiver.
Mr. SPEAIvMAN: I understand that any official, provincial or federal, may be appointed as receiver, and I assume that will include the present debt adjustment officers in the various provinces who are familiar with the work.


Richard Bedford Bennett: At one time it was suggested by some of the provinces that a sheriff might be a suitable person to be designated, but it was thought, in view of his office, that this might be highly undesirable. The section as drawn contemplates debt adjustment officers or other provincial officers who have had to do with these matters being appointed.


[Stage Direction]
Section agreed to.
Section 4 agreed to.
On section 5-Jurisdiction.
Richard Bedford Bennett: This is quite a departure, owing to the hope we have that the local judge, district or county, having knowledge of local conditions, will be far more conversant with general conditions surrounding the farmer's efforts than anyone else would be.


[Stage Direction]
Section agreed to.
On section 6-If farmer unable to meet his liabilities.
Wilfred Hanbury: I notice in subsection 1 the words "before or after an assignment has been made." I should like to have an explanation of that.


Richard Bedford Bennett: There are cases now outstanding in the country where assignments have been made, and if it were not for such a provision as this, this act would not thus be available, for those who had made assignments would be subject to all the cumbrous provisions of the Bankruptcy Act which was
intended originally, as the hon. gentleman knows, for traders and mercantile people. This meets that condition.


Wilfred Hanbury: The question arises as to whether a date should be set; otherwise they might go back ten years.


Richard Bedford Bennett: The Bankruptcy Act in
its present form has not been in force that long, so far as farmers are concerned. I do not think there is much difficulty about that, having regard to the statute of limitations in the various provinces and the effect which that would have. I should not be disposed to be too careful when he took advantage of it. The act contemplates that the estate will be wound up with some rapidity, and those who come from Saskatchewan will realize that there was a discussion in the legislature of that province, with respect to one particular case, which has caused a good deal of widespread publicity and some criticism of the act itself.


John Thomas Hackett: I ask the Prime Minister if section 6 may not have to be slightly modified because of section 9 of the Bankruptcy Act. I suppose this statute would have right of way over the general act.


Richard Bedford Bennett: It so declares.


John Thomas Hackett: Is there any reason to
insert here that section 6 shall be effective notwithstanding section 9 of the Bankruptcy Act?


Richard Bedford Bennett: I am not expressing any
opinion-the Minister of Justice is not here -'but I think the provisions of subsection 2 of section 2 are sufficient:
Unless it is otherwise provided or the context otherwise requires, expressions contained in this act shall have the same meaning as in the Bankruptcy Act, and this act shall be read and construed as one with the Bankruptcy Act, but shall have full force and effect notwithstanding anything contained in the Bankruptcy Act. ...
This is to enable the provisions of this act to prevail over the Bankruptcy Act. Section 9 of the Bankruptcy Act contains provisions as to what constitute acts of bankruptcy, as I indicated to the hon. member for Melville. What are acts of bankruptcy are contained in section 3 as it now reads, amended, and I do not think there is any danger. If there is we can make the matter abundantly clear.


Mr. RALSTON:: Does not section 7 of the Bankruptcy Act expressly say that it does not apply to farmers? Therefore the hon. member
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Farmers'-Creditors' Act

for Stanstead (Mr. Hackett) will not have any difficulty in connection with the Bankruptcy Act, unless by the terms of this legislation it is expressly made to apply.


John Thomas Hackett: Part II of the Bankruptcy Act applies to farmers, except those of Quebec.


James Layton Ralston: I was speaking about
part I.


James Langstaff Bowman: Clause 6 might be
amended by inserting after the word "they" where it appears in the second line the word "generally." Then it would read:
A farmer who is unable to meet his liabilities as they generally become due.
As the clause stands at the present time a farmer simply unable to meet his liabilities would under the provisions of this legislation be able to make a composition with his creditors, but if it followed the definition in the Bankruptcy Act by the insertion of the word "generally" there, it would give the idea that he was one who was generally unable to meet his liabilities. Probably that would cover the case a little better.


Richard Bedford Bennett: We gave some thought
to that and the reason the word "generally" is not inserted is this: this act is an act of the farmer under clause 6 and he will found jurisdiction to attempt a composition if he is unable to meet his liabilities as they become due. The word "generally" need not have any application. If he finds he is unable to meet a liability maturing to-day, he may say to-morrow: I am not able to meet this liability and I know others are coming; I must ask my creditors to make a composition. Under paragraph (j) of section 3 of the Bankruptcy Act, if he is unable to meet his liabilities as they generally become due, that constitutes an act of bankruptcy. But Part I has no reference to the farmer who is affected only by part II which deals with assignments. If, however, it is found that the insertion of that word makes the clause any better I shall not for a single moment oppose its being added. This section is for the farmer; it is permissive; it is to enable him, if he is unable to meet his debts as they become due, to have a scheme drawn up for the composition of his liabilities. The absence of the word "generally" is in the interest of the farmer and not against him.


Wilfred Hanbury: That is the whole principle of the bill.


Joseph Enoil Michaud: In view of the fact that the definition of the word "farmer" has been slightly amended, would it not be well to

amend clause 6 so as to cover cases of persons not solely engaged in farming against whom a petition in bankruptcy has already been filed? There are people who are carrying on other occupations than farming but who sometimes get credit on the security of their farm lands. The clause might be subject to some ambiguity and difficulty. Might it not be better to add these words after the last word of subclause 1:
Or against whom a petition has been filed.
So that it would apply to a farmer as defined by the bill. The subclause would then read:
A farmer who is unable to meet his liabilities as they become due may make a proposal for a composition, extension of time or scheme of arrangement either before or after an assignment has been made or against whom a petition has been filed.
In view of the amendment to the definition of "farmer" I am afraid there are some cases where such a change would become necessary.


Richard Bedford Bennett: I am afraid the hon. member for Restigouche-Madawaska did not quite follow what I said before. The Bankruptcy Act does not apply in part I to farmers; part II, dealing with assignments, applies to farmers but neither consideration need have any weight with us at the moment. We are indicating the condition under which the farmer may apply to use this legislation; that is all. All he has to do is to be in a position where he is unable to meet his liabilities either before or after an assignment has been made. If he has made an assignment he is not able to meet his debts as they mature. If a petition is filed against him he is in the same position. He does not come under part I of the Bankruptcy Act. Therefore, so far as we are concerned there is only one question to ask: Is he unable to meet his liabilities as they become due? If so, he may use the provisions of this measure. Have I made myself clear to my hon. friend? I am afraid I have not.


James Layton Ralston: The hon. member is referring to the case of a man who has two occupations, who is not only a farmer.


Richard Bedford Bennett: We have adopted the definition practically of the Income Tax Act rather than of the Bankruptcy Act, because the Bankruptcy Act refers to a person engaged solely in farming or the tillage of the soil. In order to meet the view that was expressed we have changed that to mean one whose principal occupation consists of farming.

Farmers'-Creditors' Act


James Layton Ralston: I am afraid my hon. friend meant a man who was not disqualified by the provisions of part I of the Bankruptcy Act. He might have a petition presented against him and he might want to take advantage of the provisions relating to farmers, but could not do so. I thought the Prime Minister's answer was quite clear, namely, that no matter what happened to put the man into bankruptcy court he was unable to meet his liabilities when they became due and therefore was qualified under this legislation.


Richard Bedford Bennett: Yes.
Section 6 agreed to.
On section 7-In case of a debt owing to a secured creditor.


Richard Bedford Bennett: This clause, owing to some slight difference in Quebec and other parts of Canada, has been amended to meet that situation and the Solicitor General will move an amendment accordingly.


Maurice Dupré: In clause 2 we have added these words:
[DOT]'mortgage" includes a hypothec and also a deed of sale with a right of redemption.
Therefore we have to amend clause 7 accordingly. I move:
That section 7 be deleted and' that the following be substituted therefor:
"7. A proposal may provide for a compromise or an extension of time or a scheme of arrangement in relation to a debt owing to a secured creditor or in relation to a debt owing to a person who has acquired movable or immovable property subject to a right of redemption, but in that event the concurrence of the secured creditor or such person shall be required, except in the case of a proposal formulated and confirmed by the board of review as hereinafter provided."


James Layton Ralston: Does the exception to clause 7 as amended refer particularly to clause 12, subclause 6, where a scheme is compulsorily put through, that is to say, made compulsory by the board of review on both the debtor and the creditor?


Richard Bedford Bennett: The hon. member for Shelburne-Yarmouth (Mr. Ralston) will appreciate the fact that we have not undertaken to confiscate securities but we have endeavoured to make it possible for the compromise to extend to the secured creditor. At the conference to which I referred the other day the attitude of those representing the security holders was that they were most anxious to assist in bringing about any arrangement that would ensure the farmer remaining on the property. That was the basis
of all their anxiety. They have already given earnest of their willingness to make arrangements of that kind, hence it is in this statute. Many of them have forgiven as much as three years' interest; they have reduced interest to seven per cent where it was higher then seven per cent, and in some cases to less. This contemplates their being a party to the general scheme of arrangement without confiscation of their security, as to which there is doubt as to our having power in the premises, and starting the scheme on the basis of the secured creditors and the unsecured creditors participating all together for the advantage of the debtor.


James Layton Ralston: The Prime Minister will understand that I am finding no fault; I am much interested in the experiment we are trying, and in connection with which we went some distance in the Companies' Creditors Arrangement Act-


Richard Bedford Bennett: That did not apply to farmers.


James Layton Ralston: -to interfere with secured creditors. As far as I am concerned I think it is a good idea to have this jurisdiction here if possible. I understand that the government are now going one step further and by this act are saying that the compromise or composition Which the debtor proposes shall not be effective unless it is concurred in by the secured creditor except in the case of a compromise which has been expressly approved or formulated by the board of review. So that this parliament does assert the right to affect the right of the secured creditor if that is considered necessary in the interest of the debtor.


Richard Bedford Bennett: The hon. gentleman is wholly right in part, and not quite, I think, in all. It will be recalled that last session we passed an act in which we endeavoured successfully to provide for compromise with unsecured creditors	and	then with	securedcreditors. Section	4 of	chapter 36	of	last
session reads:
Where a compromise or arrangement is proposed between a debtor company and its secured creditors or any class of them, the court may, on the application in a summary way of the company or of any such creditor or of the trustee in bankruptcy or liquidator of the company, order	a meeting	of	suchcreditors or class of creditors, and, if the court so determines, of	the shareholders	of	such
company, to be summoned in such manner as the court directs.
We then went further and provided that the compromise be sanctioned by the court.
Farmers'-Creditors' Act

Section 6 provided that directions might be given by the court. The limitation of the act was found in section 7, which provided that:
The provisions of this act shall be in extension and not in limitation of the provisions of any instrument now or hereafter existing governing the rights of creditors or any class of them and shall have full force and effect notwithstanding anything to the contrary contained in any such instrument.
As I intimated the other day, the supreme court last Thursday sustained the validity of this statute. Now the hon. gentleman says that under the board of review section of this bill we propose possibly to go a step further. I think when he reads it he will see that while we have jurisdiction conferred, owing to the constitution of the body, namely the representative of the secured creditors and of the debtor and of the judge who has jurisdiction in bankruptcy, it is probable-


James Layton Ralston: It is not going any
further than that.


Richard Bedford Bennett: Not very much, I think.


Mr. STITT (Selkirk):: That brings up the point that has been in my mind, and it is this. The board of review will be composed of a superior court judge, a representative of .the creditor and a representative of the debtor. That, will mean that there will not be any interference with contracts. If this parliament proposes to interfere with the rights of secured creditors, occasions will arise when those rights ought to be interfered with. The hon. member for Shelburne-Yarmouth (Mr. Ralston) has said that it is doubtful whether this parliament has the power to interfere with the rights of secured creditors. Have we not the power to interfere as far as interest rates are concerned? If we have that power, ought we not to state specifically in the powers given to the board of review that they shall exercise that power in proper cases? It seems to me that there is very little use in passing this section as it is, if the administration of the act is to rest in the hands of a superior court judge and the representative of the creditors as against one representative of the debtor. It seems to me that there will be many instances where if a secured creditor, for instance a mortgagee, is paid in accordance with the terms of his mortgage there will be no equity at all left for any other creditor, and no hope whatsoever held out to the farmer to encourage him to remain on the land. I suggest that the wording of the bill be extended to state specifically what powers the board of review will have, especially if it is going to be composed as suggested. Could 
we not have an amendment to give the board of review power to cut interest in proper cases?


Mr. BOB  MAA@: Surely that is already
provided. There cannot be any question that the boards set up under this act will have the right to cut both interest and principal.


James Herbert Stitt: That is not what
the last speaker said.


James Layton Ralston: And they have the right to do away with the security.


James Langstaff Bowman: There is no question about that, the way the bill is drawn. Moreover under subsection 8 of section 12 the board is given specific instructions as to the basis upon which its decisions are to be arrived at:
i he board shall base its proposal upon the present; and prospective capability of the debtor to perform the obligations prescribed and the productive value of the farm
Surely that covers the point. As I read the bill there is no question that the board of review have the right to cut both principal and interest to any extent that they deem advisable and to cut down the security.


James Herbert Stitt: I do not think that is an answer to my question, because if it is correct, as the hon. member for Shelburne-Yarmouth stated, that this parliament has not the power to confer upon the board the power to interfere with the rights of secured creditors, and if, as the Prime Minister indicated, boards composed of the personnel designated, will not be likely to interfere, then why not put it in black and white that we have the power; What is the use of enacting provisions that are ultra vires?


Richard Bedford Bennett: If we thought they were, we would not enact them; that is the answer!


James Layton Ralston: Did I understand my hon. friend to say that I had said this is ultra vires of this parliament?


James Herbert Stitt: I believe the hon. member stated that it was very doubtful whether this parliament could interfere with the rights of secured creditors.


James Layton Ralston: What I think I said was that it was very doubtful until the supreme court spoke last Thursday. Now the supreme court has decided, as I understand, that this parliament can interfere with secured creditors. As far as I am concerned I am happy to bow to their decision. I think there is some practical benefit in having it that way, in view of the fact that we are dealing with

Farmers'-Creditors' Act
bankruptcy and insolvency. I should be a little afraid in view of the fact that what was submitted to the supreme court was the usual hypothetical question which, as every one knows, cannot be relied on too much when you come to a practical case. But we have done the best we can and have the decision of the supreme court. I was going to ask the Prime Minister before he got through whether if he thought it would be worth while to submit a question in regard to this legislation as well.


Richard Bedford Bennett: I think that upon consideration the hon. gentleman will see that if the decision and the reasons for it are accepted as valid, in these sections we are within those reasons. The other day I intimated to the house my unwillingness to press this bill until I saw the decision of the supreme court, but if my hon. friend and the hon. member for Selkirk (Mr. Stitt) will be good enough to look at sections 7 and 8 they will see that those sections must be read together. Perhaps it is a question as to whether section 8 might not have been placed before section 7. Section 8 provides:
Whenever a proposal relates to the rights of a secured creditor, such creditor may value his security and shall be entitled to vote only in respect of the balance of his claim after deducting the amount of his valuation; provided. however, that no proposal shall be approved by the court which provides for the payment to such secured creditor on account of such security of any amount in excess of his valuation, or for granting to him any new security for an amount in excess of his valuation.
That, I think, brings it within the bankruptcy sections as interpreted by the supreme court in the case last Thursday. I think it is broad enough and at the same time narrow enough to conform to the provisions of the sections of our constitution that determine our federal jurisdiction. I say frankly to this committee that I have grave doubt as to the constitutional power of the parliament of Canada to confiscate security. I have said that quite frequently, and I say it again now.


Mr. FACTOR:: Subsection 6 of section 12 provides for that.


Richard Bedford Bennett: Yes, but I am going to mention something else before I come to that. The proposals that the supreme court declared to be within the competence of this parliament last session certainly warrant these two sections; I think the committee can go that far. It will be within the memory of some of the members of this committee that the privy council stated that the judgment or
the opinion of the supreme court, or even of the privy council itself, as to the answer to a hypothetical question respecting the constitutional validity of any statute, is no better than the opinion of the law officers of the crown. In other words, when the court gives an opinion in a case of that kind it is not settling the law as in connection with a case; it is not binding as a precedent. It is an expression of the opinion of the court, which one of the members of the privy council said is no higher than the opinion of the law officers of the crown.
Thus far we have the opinion of the Supreme Court of Canada, which unanimously declared that the sections of the companies adjustment act of last session are within the competence of this parliament. I think most hon. members who compare the two will agree that these sections are valid if the sections of last year are valid. They do propose, subject to the limitations imposed by section 12 to which reference will be made presently, that the court shall have jurisdiction to consider the position of secured creditors. But I do direct the attention of the hon. member for Selkirk to the fact that this jurisdiction is limited within itself, because subsection 8 of section 12 declares that the decision of the board shall be based upon the present and prospective capability of the debtor to perform the obligations prescribed, and the productive value of the farm. Then follows the provision that was referred to this afternoon by one hon. gentleman ; that is, there are cases where it would be unfair to the farmer himself to approve of a scheme, because it may be quite apparent that he has reached the point where there is no hope that, through such a scheme, he may emerge from the morass in which he is engulfed. That is provided for by subsection 9 which states:
The board may decline to formulate a proposal in any case where it does not consider that it can do so in fairness and justice to the debtor or the creditors.
I say frankly to the lawyers of the committee that sections 7 and 8 are drafted with the idea of affording to these tribunals power to deal in a limited way with secured and unsecured creditors. The limitation imposed by section 12 upon the exercise of that power is the capability of the debtor. I am bound to say that those responsible for the act found great difficulty in finding a word that would adequately express the meaning we had in mind. If the committee has a better word to suggest than "capability" it will be gladly accepted.
Farmers'-Creditors' Act


John Thomas Hackett: I think the fears of the hon. member for Selkirk would disappear if he would read section 8 carefully. The preferred creditor has no voice at all in a proposal for a composition unless and until he value his security at less than its face value.


James Herbert Stitt: Supposing he values it at 99 per cent?


John Thomas Hackett: Then if the liability be 8100 he has the status of an ordinary creditor to whom $1 is owing. But I think we are unduly worried by one side of the question; we are inclined to think only of the debtor. I am not sure that in many instances the creditor is not as much disturbed over the present situation as the debtor may be. This legislation gives to the creditor a chance to have his assets properly defined and protected against the intrusion of other and possibly more wolfish people than himself. I believe the creditors as a body will hail any legislation, which in its essence is fair, as a great relief from their anxieties; I am confident that most creditors will be very glad of a measure which will revive and thaw out assets which have been frozen and almost without value for some years.


Mr. McKENZIE (Assiniboia):: I notice that the words "secured creditor" are used in both sections 7 and 8. I was wondering if that includes any person except a mortgagee. Are others included in that definition, or what is the interpretation?


Richard Bedford Bennett: Whoever under the law of the province would be a secured creditor would be a secured creditor here.


James Langstaff Bowman: There is one point I should like to have cleared up, and perhaps the Prime Minister would be good enough to do it for me. Under section 8 reference is made to the valuation of securities by the secured creditors, but I take it that under the provisions of subsection 6 of section 12 there is no necessity for the secured creditor to value his security, since the board has full right to find some solution, some compromise or settlement which is deemed fair to both debtor and creditor, without the creditor being called upon to value his security at all. They can take matters into their own hands, and they need pay no attention to section 8 which calls for the valuation of securities. Perhaps the Prime Minister would be good enough to clear up that point.


Richard Bedford Bennett: Subsection 6 of section 12 contemplates that there must be a proposal. In every instance the legislation is predicated
TMr. Bennett. J
upon the assumption of a proposal. The board may confirm it as formulated or may amend it, and if the proposal is one affecting the rights of the secured creditor, under section 8 he must value his security. It is perfectly clear, and in the whole you are subject to the provisions of subsection 8 of section 12 in any event.


James Langstaff Bowman: But having valued the security, under subsection 6 of section 12 it is not necessary for the board of review to accept that valuation. They may make a settlement on the basis of an amount less than the valuation placed by the secured creditor.


Richard Bedford Bennett: Subject to approval by the court.


Mr. LUCHKOVICH:: I notice that the Prime Minister said he had grave doubts as to the constitutional right of parliament to confiscate security. I should like to know about a security that is partly confiscated. Suppose this matter is referred to the court and the court decides that the security can be partly confiscated; what then?


Richard Bedford Bennett: I do not follow the question.


Michael Luchkovich: The Prime Minister made the statement that he doubted very much whether the security could be confiscated. Suppose this matter of debt is referred to the court, and the court decides that at least in part the security can be confiscated. Would that be constitutional or legal?


Richard Bedford Bennett: The reduction of the value of a security is not confiscation. I was dealing with confiscation in whole, and not a partial reduction of the value.


George Gibson Coote: It is a little difficult for us to understand the full significance of some of these sections before w'e have gone over more of the bill. For the purpose of enlightening those who may want to get some idea of the measure from reading Hansard the Prime Minister might perhaps explain in more detail the position of the preferred creditor, in the case of a man whose debts are being arranged under a scheme such as is suggested here. There are two preferred creditors, we will say, one holding a claim upon the land through a mortgage, and the other having a claim through a chattel mortgage, and then there are some unsecured creditors. Is it contemplated that the board which arranges the

Farmers'-Creditors' Act
composition m the first place will arrange the position of all claims, or would the secured creditor get a greater share of his claim than the unsecured creditor?


Some hon. MEMBERS:: Yes.


George Gibson Coote: I did not think the bill made that clear.


Richard Bedford Bennett: The positions of a secured creditor and of an unsecured creditor are not the same. That is number one. The position of a secured creditor is defined by section 8 and in part by section 12. I repeat, the scheme of this bill is that one who is unable to pay his debts has a right conferred upon him, which in all probability is a right that he possesses as a citizen of this country, to approach his creditors for the purpose of endeavouring to arrive at a compromise of his liabilities and an extension of the time within which to meet his obligations. If his creditors are obdurate, he then has a right to present his claim to a board of review, and a plan or scheme is formulated looking towards the settlement of his obligation in accordance with that plan. If there are secured creditors either in the first instance or in the second, the security is to be valued, and when it reaches the court of review it will be observed from subsection 8 of section 12 that the primary factor in determining whether the scheme shall be adversely or favourably dealt with is the present and prospective capability of the debtor to perform the obligations prescribed and the productive value of the farm. That, I think it will be admitted, is a sound basis on which to approach a problem of that kind in a country where climatic conditions play so large a part in determining the ability of a farmer to meet his debts.
Then, as has been- pointed out, there is another clause, subsection 6 of section 12, providing that if the creditors or the debtor decline to approve the proposal so formulated, the board may nevertheless confirm the proposal, although it may not be acceptable to both the creditors and the debtor. Despite the fact that the plan has not been agreed upon between the debtor and the creditors, it may be approved by the board. That is, the proposal is confirmed either in the form in which it was formulated or as amended by the board itself, in which case it shall be approved by the court and shall be binding upon all the creditors and the debtor as in the case of a proposal duly accepted by the creditors and approved by the court. That is
a jurisdiction conferred upon the board in terms as broad possibly as we should go even in the light of the decision of the supreme court last Thursday.


James Layton Ralston: Could you really go any further?


Richard Bedford Bennett: I really think there is no method by which we could, short of confiscation.


Wilfred Hanbury: Confiscation absolutely.


John Thomas Hackett: I wonder if one is justified in saying this is confiscation. It seems to me it is not, and it seems to me it is very clear that it is not. I am putting aside for a moment the question of the unsecured creditor and am considering only the secured creditor.
I refuse to accede to the suggestion that the difference between confiscation and what is in this bill is a subtlety, because as the Prime Minister has said, the secured creditor must value his security. Now what the board of review does is to pass upon the accuracy of the valuation, and it passes upon that accuracy by a very definite criterion. That criterion is given to us in subsection 8 of section 12:
The board shall base its proposal upon the present and prospective capability of the debtor to perform the obligations prescribed and the productive value of the farm.
A has a mortgage, we will say, of $1,000 on a farm. He is asked to value his mortgage. He says, when he values it that it is worth $1,000. The board of review, comprised of a judge and of two others, one representing the debtor and the other the creditors, investigates whether, considering the earning capacity of the debtor and the productive capacity of his farm, the security is actually worth $1,000. It seems to me that is a long way from confiscation.


Samuel Factor: Suppose the board finds that according to the basis laid down in subsection 8 the mortgage is worth only S500.


John Thomas Hackett: They may, but that is
not confiscation.


Wilfred Hanbury: Revaluation.


John Thomas Hackett: A revaluation, if you
will. But it does not affect one iota the rights of the holder of that security. It merely says that the security which he holds is worth, not $1,000 but $500.


Wilfred Hanbury: It is a proper valuation.


John Thomas Hackett: It is a proper valuation.
I suggest that that is a long way from confiscation; it is merely declaratory of a reality.
3S6S
Fanners'-Creditors' Act

There is one more point to which I should like to refer and which was not raised by the last question. In the province of Quebec at least a great many of these hypothecary creditors are farmers. Money is lent by a large class of successful farmers to those who need money, to their sons, to their relations and to other farmers. In that regard I do not think this legislation is class legislation. I can only make a guess, but I would not hesitate to express the opinion that one-half of the farm mortgages in Quebec are held by farmers.


Charles A. Stewart: If you
based the value on the possibilities of the land to produce, I could understand it, but you have two classes of farmer, the good and the bad. How can you base the value of a security on the ability of an individual to make good on the land?


John Thomas Hackett: That is all the creditor
has as his security.


Richard Bedford Bennett: The productive value of the land is there.


Charles A. Stewart: But the
particular individual may not have the ability to produce the value.


John Thomas Hackett: That is the reason for
the dual criterion. I think it is rather clever; it gives to the creditor who values his security the criterion of the intrinsic value of the soil itself plus the capacity of the debtor to work it.


Alan Webster Neill: Suppose a secured creditor
is not satisfied with the assessment of S500; could he then go on and possess the land or sell it under the original mortgage?


John Thomas Hackett: You are taking us pretty far afield. As I understand the section it is not incumbent upon the board of review to pronounce judgment, although it may. If a case came before the board which they felt it was beyond their powers to adjudicate upon-I suppose that would be a very exceptional case-then the ordinary rules of law which determine the relationship between debtor and creditor would come into play and this exceptional case would be determined in the ordinary way.


Alan Webster Neill: That is hardly an answer.
I think the Prime Minister could explain.


John Thomas Hackett: Much better than I.


Richard Bedford Bennett: Answering the hon. member for West Edmonton (Mr. Stewart), when I met the representatives of the farm loan associations they made it perfectly clear that

what they feared was that the lands upon which they held mortgages would be abandoned by those who found it difficult to continue. It was not that they were endeavouring to find some way to secure their pound of flesh; on the contrary they were willing to consider any proposal which could be formulated in law and which would not have the effect of confiscation, which they greatly feared as a precedent, but would enable them to make such concessions as would ensure the property being valued, shall I say, at what it would be valued if they foreclosed. I will put this to the committee. A property is mortgaged for $1,000 and foreclosure proceedings are pending. Under the law of most provinces it becomes essential to put in an upset bid when a property is being sold under foreclosure proceedings. The appraiser says the property is worth $500 and it follows that unless a bid for more than $500 is received, the property falls back to the mortgagee. This contemplates something of that general spirit being carried into the legislation. When the plan is formulated, there will be a valuation by the security holder of his security. I say quite frankly to this committee that I think it will find that in most cases they will place a very low estimate upon their securities, where it is at all possible to secure something instead of nothing and to secure a continuance upon the property which otherwise would be abandoned to them. I think I can say that with some degree of frankness, because they seemed to be most desirous that that end should be attained. Under those circumstances wrhat we have endeavoured to do is to give effect to that general principle. The hon. member for Comox-Alberni (Mr. Neill) says: Suppose they valued the security at $500. Well, if that represents the then value of it on foreclosure, for instance, it would be a fair valuation. What will have happened is that the loan company or the secured creditor has lost $1,200 or $1,500 as the case may be. That is not confiscation; that is what has been lost by reason of the decrease in value, the difference between its value and the value put upon it.


Samuel Factor: He loses anyhow.


Richard Bedford Bennett: They would lose it anyhow, while this might save as a productive asset to the country what might otherwise be lost entirely in the long run.


Albert Joseph Brown: I think the hon. member for Stanstead (Mr. Hackett) used an expression which puts the situation quite clearly when he referred to the actuality which exists.

Farmers'-Creditors' Act


Samuel Factor: Does the Prime Minister think that provincial legislation will be necessary to give effect to this proviso so far as secured creditors are concerned?


Richard Bedford Bennett: So far as it is bankruptcy, that is solely and exclusively within our jurisdiction; so far as it is property and civil rights, that is solely within the jurisdiction of the legislatures. Most of them have passed statutes which have undertaken to deal with it, so far as they think they have power-there has been no judicial determination upon it-under property and civil rights. However, from what I know of the anxiety of the provinces to have certainty where there may be uncertainty, I think they will support rather than oppose this legislation for the purpose of rendering clear that about which they have had considerable doubt and determining the extent to which, in the light of the decision of Thursday last, parliament may exercise its powers for the purpose of dealing with secured creditors in bankruptcy proceedings.


Charles A. Stewart: I am of the opinion that unless the board has very wide powers it will find that there are a great many cases with which it will be unable to deal, particularly in connection with preferred creditors. I know of any number of cases in my locality where the mortgage is not the serious proposition, the indebtedness to the bank, to the machinery company and to the storekeepers constituting by far the major portion of the indebtedness. If the mortgage company feel that their security is safe they are going to hesitate to reduce even the interest rate of seven per cent to which they have agreed. There is no doubt that in many of these cases the property would be worth something more than the amount contained in the mortgage. Unless the board has wide powers it will be very difficult in these cases to secure an adjustment for the farmer. The company being a secured creditor, it will not be willing to give away its security to another class of creditor which is not in that happy position. I rather welcome the wide powers of the board even if it is somewhat questionable in dealing with cases of that kind.


Mr. MacLEAN:: In the event of a creditor not being satisfied and the board forcing him to consent to the arrangement or settlement that is made, I understood the Prime Minister to say that it would be better for him to' agree to accept something rather than to get nothing. Is it the intention of the government in such cases to provide, 74726-245
through the farm loan board, the money to take up those mortgages where an agreement cannot be arranged between the creditor and the debtor?


Richard Bedford Bennett: I suggest that the hon.
gentleman wait until we reach that section, because answers with respect to the question as he has put it might not be intelligible in view of the succeeding sections.


[Stage Direction]
Section agreed to.
On section 8-Valuation of security of secured creditor.
Richard Bedford Bennett: This will have to be
amended to conform to the change made, to meet the peculiar condition with respect to hypothecs in Quebec.


Maurice Dupré: I move that section 8 be
deleted and the following substituted therefor:
Whenever a proposal relates to the rights of a secured creditor or of a person who has acquired movable or immovable property subject to a right of redemption, such creditor or person may value his security and shall be entitled to vote only in respect of the balance of his claim after deducting the amount of his valuation; provided, however, that no proposal shall be approved by the court which provides for the payment to such secured creditor or person on account of such security of any amount in excess of his valuation, or for granting to him any new security for an amount in excess of his valuation.


Richard Bedford Bennett: There are no changes
except with respect to the matter dealing with the peculiar conditions in Quebec; and the changes, as will be seen in the sections, are merely adding words in accordance with the definition given to the word "mortgage."


James Layton Ralston: Does the Prime Minister think that the provisions of the Bankruptcy Act itself supplement and fill out this provision with regard to the valuing of security? The only term used is that the creditor shall value his security, whereas a number of sections of the Bankruptcy Act contain elaborate provisions as to just what valuing security means. Is it intended that these sections shall apply so as to supplement what is in this bill?


Richard Bedford Bennett: No one knows better
than the hon. gentleman, who has had experience in the courts under the Bankruptcy Act, that the interpretation of those sections has involved litigation which in one instance went to the privy council. It is to avoid any question of that kind that we say he has to value his security. It is a short and simple way of doing it.

Farmers'-Creditors' Act


James Layton Ralston: But what I am wondering is as to what it means after he has valued it.


Richard Bedford Bennett: The sections that follow make it clear just what that means. The value of the security is fixed by him and he is statutorily barred by this act from setting up any further claim.


James Layton Ralston: All it says is that he
shall not be entitled to any dividend greater than the amount of that value, and lie is only entitled to vote for the difference.


Richard Bedford Bennett: He shall not get any further sum of money than that fixed for the value.


James Layton Ralston: It seems to me that section 12 went the whole length of permitting the board of review to say to a debtor, "Your property, on which there was a mortgage, is now for division among all your creditors." He would give the secured creditor fifty per cent and the so-called common creditors ten per cent. I cannot see anything to offset that except this provision in regard to valuing security. There is nothing in the provision which indicates what will happen after the valuation has taken place; there is nothing to indicate that you still preserve the right of the secured creditor to his claim. I am not saying that it should be preserved; I am simply trying to figure out what the bill means, and I realize that there is a difficult problem when you attempt to fit this into the Bankruptcy Act. I know that the best that can be done is being done. But have you provided for maintaining the title of the secured creditor, whatever the claim may be, to the extent of what is called the valuation of security? Is it not possible that the board of review may pool the property of the debtor, whether covered by mortgage or otherwise, and may as they think best give a larger proportion of that property to the man who once was secured by it and a smaller proportion to the so-called ordinary debtor? I cannot see yet what there is in section 8 which prevents that, and I can see in section 12 that apparently carte blanche is given for the board of review to do exactly as they like with regard to the property of the debtor.


Richard Bedford Bennett: The hon. gentleman, I think, realizes as well as any member of this house does that what we are endeavouring to do is not to impinge upon the exclusive power of the provincial legislatures in dealing with property and civil rights and that, for instance, with respect to a real estate mortgage

properly registered we have no jurisdiction to make an order that the registration shall disappear. But we conceive it to be possible, under the authority of the decision of Thursday last, to declare that a tribunal set up by this parliament has power under bankruptcy to declare that for the purposes of ranking against the estate, his security shall be valued at a fixed sum and that beyond that he shall not share in the distribution of the estate. The hon. gentleman referred to the provisions as to secured creditors under the Bankruptcy Act, which provide that if he realizes his security he may prove for the balance due to him. That is, he can foreclose the mortgage, realizing 81,500, when his mortgage was $2,500, and rank against the estate for the other $1,000. That cannot happen here. Secondly, if the	secured creditor surrenders the
security to the trustee for the general benefit of the creditors he may approve for his whole debt. If he wanted to get the benefit of the whole of his security, plus his share of what he did not have security upon, what he did was to surrender the security to the trustee, the trustee realizing upon it, and then he filed a claim for the whole of his debt with interest, and took usually the major part of the estate. We are endeavouring not to raise that issue between property and civil rights and contract with respect to security, which the province has authorized the creation of within its laws, which is registered under the authority of its jurisdiction, and at the same time maintain what we conceive to be our powers with respect to bankruptcy, dealing with it in that way. If we amplified it and undertook to deal with it as 7, 8, 9 and 10 do, we believe we might find a difficulty. To the extent to which these clauses have application, we have not repealed them; but I have given the committee the reason why we have avoided any endeavour to precipitate a conflict between the legislature on the one hand and parliament on the other, one dealing exclusively with property and civil rights in contracts and the other dealing exclusively with bankruptcy and interest.


Ambrose Upton Gledstanes Bury: Section 8 as it now stands says that "such creditor may value." Is there any change in that? Will that carry a compulsory valuation with it?


Richard Bedford Bennett: It says he may value his security and shall be entitled to vote only in respect of the balance of his claim after deducting the amount of his valuation, provided however that no proposal shall be approved by the court which provides for the

Farmers'-Creditors' Act
payment to such secured creditor or person on account of such security of any amount in excess of his valuation, or for granting to him any new security for an amount in excess of his valuation.


Samuel Factor: Why give him a vote on the balance of the claim?


Richard Bedford Bennett: We do not.


Ambrose Upton Gledstanes Bury: Might not the subsequent part of t'he clause be interpreted as being contingent on the value of the security? There is a first part that leaves the matter optional, and while it is true there are very great disadvantages set out in the remaining part of the clause, is it not possible that the interpretation will be put on the remainder of the clause that it was contingent on the first?


James Layton Ralston: 
Richard Bedford Bennett: I must answer the questions raised by the hon. member for Shel-burne-Yarmouth. Clause 8, if he will look at it, is a very simple statement of fact: First, whenever a proposal relates to the rights of a secured creditor, such creditor may value his security; second he shall be entitled to vote only in respect of the balance of his claim after deducting the amount of his valuation; third, no proposal shall be approved by the court which provides for the payment to such secured creditor on account of such security of any amount in excess of his valuation, and, fourth, for granting to him any new security for an amount in excess of his valuation. There is no invitation about anything in that.


James Layton Ralston: I do not see any provision there which prevents subclause 6 of clause 12 from operating and somebody cutting out the secured creditor's rights under his security.


Richard Bedford Bennett: But clause 12 must be read as a whole. When we come to that I shall deal with it, but the Bankruptcy Act, as I pointed out a moment ago, deals with the proof by secured creditors. I mentioned the two cases. One was where he realized his security and claimed for the balance; the other was where he surrendered his security and claimed for the whole debt. The act provides further:
If a secured creditor does not either realize or surrender his security he may if he wishes to rank for dividend and he shall within thirty days after demand made upon him by the trustee, or within such further time as may be allowed by the inspectors or the court, file with the trustee a statutory declaration stating therein full particulars of his security, or securities, the date when each security was given and the value at which he assesses each thereof.
Farmers'-Creditors' Act

2.	A creditor shall be entitled to receive a dividend in respect only of the balance due to him after deducting the assessed value of his security.
3.	Where a security is so valued the trustee may at any time redeem it on payment to the creditor of the assessed value.
The reason this legislation differentiates from the general provision is because we are dealing with an extraordinary case in which we know quite well that a trustee as defined by the Bankruptcy Act is not to function, where a special official is appointed to deal with the indebtedness and problems of one who lives nearby and who has the assistance of the district or county court judge in handling his problem. My view is that if we endeavoured to deal with this as has been suggested, we would then run the risk to which the hon. gentleman has referred. I do not quite follow him when he said that this bill was drawn broadly so as to invite the provinces to contest its validity.


James Layton Ralston: I did not say i,t was
drawn for that purpose.


Richard Bedford Bennett: All of the provinces are more interested in our being able to sustain this legislation than otherwise. All of the provinces with which we have been in communication are anxious that should be done because they concede the difficulty of their tying on to a debt adjustment or problems that affect, shall I say, bankruptcy as it has been construed by the courts and interest, both falling within the exclusive jurisdiction of the dominion. We believe if we undertook narrowly to analyze the problem and state it in a statute we would run the risk of the statute being invalid for infringing upon the rights of the provinces. I think I can say this to the committee generally, some of whom only are lawyers, that if the swing of judicial opinion as indicated by the judgments of the privy council during the first twenty-five years of the twentieth century were to prevail, the rights of the provinces against the dominion would certainly prevail, but if, on the other hand, the swing that is indicated by more recent decisions in favour of federal powers were to prevail perhaps the federal powers would be sustained. Lord Watson was the great exponent of what one might call provincial rights in interpretation of the statutes, and Lord Haldane followed Lord Watson whom he regarded as the greatest jurist of his time. I think the hon. member for Shelburne-Yarmouth will agree with me it would be very unsound to narrow the problem as between property and civil rights on the one hand and bankruptcy and interest on the other if we are to. run the risk of inviting 
a conflict at once upon that issue. I shall deal with clause 12 when we come to it. If it is desired that clause 8 should stand until we deal with clause 12, all well and good, but I think it will be found we have gone as far as we can to assert our jurisdiction without in any respect encroaching unduly upon the jurisdiction of the provinces, because I am bearing in mind what I fancy the hon. gentleman will remind me of, that if there is a conflict under certain circumstances our legislation would prevail. Under those circumstances I do not desire to limit this too narrowly and run the risk of its being declared invalid.


John Thomas Hackett: There is a definite statement in subsection 2 of section 2 which makes the Bankruptcy Act and bankruptcy rules apply. Section 8 reads as follows:
Whenever a proposal relates to the rights of a secured creditor, such creditor may value his security. ...
-section 112 of the Bankruptcy Act says:
If a secured creditor does not comply with sections one hundred and six to one hundred and eleven, inclusive, he shall be excluded from all share in any dividend.
May we not conclude that if a secured creditor does not value his security he shall not be entitled to share in any of the benefits of a secured creditor? If that be so, the problem disappears.


James Layton Ralston: Does my hon. friend say that he thinks section 112 applies?


John Thomas Hackett: Yes, that is the suggestion.


James Langstaff Bowman: Surely section 112 of the Bankruptcy Act cannot overrule subsection 6 of section 12? As I read it, the board of review has the right under the provisions of that subsection to cut down the amount of the principal under the mortgage, despite any of the provisions of the Bankruptcy Act.


John Thomas Hackett: But we were dealing with the case in which the creditor would not value his security.	[DOT]


James Layton Ralston: I have no desire to delay the committee by discussing the legal effect of the statute. My right hon. friend has the benefit of far greater authorities than I can ever hope to be. I only pointed that out.


Richard Bedford Bennett: I appreciate it, too.


James Layton Ralston: It seems to me it is quite possible that the secured creditor might not value his security; then what happens?


John Thomas Hackett: Section 112 of the Bankruptcy Act applies.

Farmers'-Creditors' Act


James Layton Ralston: Which means that you can confiscate the secured creditor's security, to use the word of my hon. friend, by dividing it up. I am not objecting to that, but it is not going to be the provinces that will object; it is going to be some of the secured creditors who will attack the validity of this act on the ground that it goes too far. I suggest to the Prime Minister that section 8 be left and discussed with section 12.


Richard Bedford Bennett: I was going to suggest that there is no reason why section 8 shoulld not stand. I am far from denying that there might be an arguable point, but I think the combined effect of subsection 8 of section 2 together with what I have said with respect to the general principles protect the validity of the section. But I am quite willing to let it stand for further consideration.


Alan Webster Neill: Before we pass on may I ask one question? I am not seeking to intrude into a lawyer's argument but rather to educate myself at the expense of the hon. gentlemen's knowledge. If under section 8 the secured creditor who has valued his security is not going to be allowed to rank for the balance, what inducement is there for him to value it at anything below one hundred cents on the dollar? He is not going to get anything more than the low valuation, and he might value it too low.


Richard Bedford Bennett: The inducement to value it as low as possible' is to ensure that the debtor will begin again and remain on the property, and perhaps secure under the loan act some small additional capital to enable him to do so. And I am bound to say-one wants to be perfectly fair about these things -that there was an indication on the part of some of the loan companies that under such a scheme as this they would not be averse to making some small advances themselves in the form provided by the statute to help to keep the men on the land, which is the one great consideration in their mind. We may be perfectly frank about it; all they care about is to get their money or as much of it as they can, and they are not going to get it if the farm is deserted; they cannot get tenants in these days to undertake to farm these properties. They are endeavouring to secure occupancy. I think that is the perfectly fair away to put it, from what I have observed in the discussions we have had. But the section may stand for the moment.
Section stands.
Sections 9 and 10 agreed to.
On section 11-Stay of proceedings.


James Langstaff Bowman: What is to prevent a farmer from making a second or a third application and thus keeping the proceedings indefinitely before the court or the official for the district or the board of review?


Richard Bedford Bennett: It will be found under section 12 that every effort is being made, even to the extent of giving the right to the board of review itself to formulate a plan based on the knowledge of the condition of the farmer and his creditors. If his condition is such as would indicate the possibility of a second or third application, it is probably not worth while endeavouring to do anything more. One of the subsections of section 12 deals with that. I do not think they could ever get before the board of review under the circumstances to which the hon. gentleman refers.


James Layton Ralston: I suppose subsection 2 of section 11 is germane to what we have been talking about in connection with secured creditors:
On a proposal being filed the property of the debtor shall be deemed to be under the authority of the court. ...
I suppose the Prime Minister and the draftsman had in mind that that meant the equity or whatever was not covered by the security?


Richard Bedford Bennett: No; instead of appointing a custodian and an interim trustee and a trustee we endeavoured to avoid all that expense. What we are suggesting is that this declaration that the property is in the custody of the law is some security for its preservation. The hon. gentleman, being trained as I was in the older school, will, I think, remember that in replevin actions we used to say that the property was in the custody of the court when the sheriff took possession under his warrant of replevin. This is merely to make a declaration that the property is in the custody of the court for preservation, instead of appointing a custodian. It is to save costs. We had no thought about the relation between preferred and ordinary creditors.


James Layton Ralston: My right hon. friend thinks this includes chattels against which there is a mortgage or a farm which has a mortgage on it?


Richard Bedford Bennett: As a matter of fact I do, and I know the hon. gentleman thinks there is some doubt about. I shall concede at once that any assertion by this parliament of such authority is open to question. But if it is ancillary to bankruptcy it is intra vires. If by no possible construction it can be said to
Farmers'-Creditors' Act

be either directly or indirectly connected with bankruptcy it would fail. I think it must bo said to be ancillary in this case. That is the only answer I can give as to the basis of the opinion I have formed.


[Stage Direction]
Section agreed to.
On section 12-Provincial boards of review.
Richard Bedford Bennett: Perhaps we might take it subsection by subsection.
Subsection 1 agreed to.
Subsection 2 agreed to.
On subsection 3-Chief commissioner to be a judge.


James Layton Ralston: Does the Prime Minister think that court is sufficiently elastic, if I may put it in that way, or sufficiently get-at-able? In that connection perhaps the Prime Minister would explain. One commissioner is appointed as a representative of the creditors and one is appointed as a representative of the debtors. Does that mean in connection with a particular case or is that a standing court?


Richard Bedford Bennett: That is a standing court.


James Layton Ralston: And the selection of that person is made by the governor in council, having in mind a person with a disposition property to look after the debtor as compared with one who would look after the interests of the creditors?


Richard Bedford Bennett: I admit that is not easy of realization as to the one who would adequately represent the debtors. We feel that in some of the provinces debt adjustment officers would be admirable for that purpose because of their wide knowledge. In others it might be more difficult, but I think it is always possible to find someone with a sympathetic mind and an earnest desire to d'o that measure of justice to the debtors that was illustrated by my hon .friend from Selkirk (Mr. Stitt), for instance, in what he said tonight. I think that may be possible, though of course I admit the difficulty. This whole act is difficult.


[Stage Direction]
Subsection agreed to.
Subsections 4 and 5 agreed to.
On subsection 6-Board may confirm proposal.
James Layton Ralston: I have nothing more to say, Mr. Chairman; I have expressed my opinion with regard to section 8 and this subsection.


Richard Bedford Bennett: I think this is as far as we can go. To go a less distance would be to render the act futile. The young man who gave a great deal of attention to this, who looked up the authorities very carefully, is clearly of the opinion that we are within the law. Lawyers differ; hence they live. If the debtors or the creditors decline to approve the proposal, nevertheless the board may confirm such proposal. I think surely that must be within our power under bankruptcy. If there is power to approve or disapprove there must be power to amend, and if there is power to amend the proposal as formulated we have merely made a declaration to that effect. I do not think any good result would follow my taking up too much time, because I have stated the position as clearly as I can. I do not desire to state it with the emphasis of certainty; I am not unmindful of the difficulties, but this whole statute is surrounded with difficulty. There is not a legal member of the house who does mot realize that, and the effort has been made to so steer the legislative ship that it will escape the shoals of the provinces on the one hand and the disaster of being beyond federal jurisdiction on the other.


[Stage Direction]
Subsection agreed to.
Subsections 7 to 10 inclusive agreed to.
Section agreed to.
Sections 13, 14 and 15 agreed to.
On section 16-Administration and expenses.
Mr. MACKENZIE KING:: Mr. Chairman, on this section I should like to make a familiar request of the Prime Minister. The section reads:
The Minister of Finance shall he charged with the administration of this act, and the expenses necessary for such administration shall be payable out of any unappropriated moneys in the consolidated revenue fund.
I should like to move, unless the Prime Minister would care to do so himself, that the words "any unappropriated moneys in the ' consolidated revenue fund" in lines 40 and 41 be struck out and the following substituted therefor "moneys appropriated by parliament." I think the Prime Minister will agree that we have gone pretty far in the adoption of a new practice with respect to the control of public moneys, by asserting in these acts that moneys shall be taken out of unappropriated moneys in the consolidated revenue fund. It is really desirable to have the Commons control expenditure; not only that, but to have an annual report to parliament together

Farmers'-Creditors' Act
with annual appropriations, so that the total expenditure of the country will come before the house each session. If that is not done there is no way of keeping track of the total expenditure. It is also desirable in measures of this kind, which are largely experimental, to have a report to parliament of what in other respects may be done under the measures, in order to make perfectly sure that all phases of the legislation will be discussed each session.


Richard Bedford Bennett: Well, I do hope the right hon. gentleman will not press that view. When he, in my place, had to consider the Old Age Pensions Act, in section 7 he provided that the whole sum disbursed by this dominion for old age pensions, amounting now to millions of dollars per annum, should be paid out of the unappropriated moneys in the consolidated revenue fund. Why did lie do that? He did so for the reason that it was almost impossible to arrive at any accurate estimate of the amount required; therefore he enacted in that statute the provision to which I have referred. I just thought I would send for the statute, though the words are perhaps within the memory of the bon. gentleman:
All sums payable to any province in pursuance of any agreement made under this act 6hall be payable from time to time on the certificate of the Minister of Finance out of any moneys belonging to the consolidated revenue fund of Canada not otherwise appropriated.
That was in 1927. At that time the right hon. gentleman had to assume responsibility for enacting something that would be workable, and he knew as I knew that to place in the estimates an amount which would be the result of conjecture and guess work probably would not be desirable. Hence this statute. It might be that in the second or third year, if it becomes necessary to utilize this measure for a period of years, that might be done, but obviously in the first year every argument that induced the right hon. gentleman to make that legislation effective with respect to old age pensions, involving millions of dollars, I submit is a powerful argument in favour of this section being enacted, not to authorize the payment of large sums but to provide for the expenses necessary in the administration of the measure. I trust that under those circumstances the right hon. gentleman will agree that what he found essential to make his statute practicable I find equally essential in the measure before us.


William Lyon Mackenzie King: I will agree
that the Prime Minister is quite right in directing attention to what was done when
the old age pensions measure was passed, but the fact that he does direct attention to it, and that he has done so several times this session, only emphasizes what I am now attempting to assert, namely the danger that once we adopt a course that may be a departure and which is intended for one single purpose and as an exception, in the course of time it may become a regular method of procedure. I am afraid that is the direction in which we are heading at the moment. We have adopted the practice now, with respect to nearly all relief measures, of doing away with the control of the house over annual appropriations. In the marketing legislation as brought in there was the same intention expressed in the statute; afterwards it very properly was changed. If I am not mistaken there was something similar in the excise measure.


Richard Bedford Bennett: No, that is a case of the minister and the governor in council.


William Lyon Mackenzie King: It is all a matter of the control of expenditure. I would much rather see the Prime Minister amend the Old Age Pensions Act in the direction of requiring an annual appropriation for that purpose than to see him citing that act as a precedent in introducing other measures and thereby following what I believe to be a wrong course, even if I may have been partly responsible for acquiescing in it myself. I do think there is a tremendous danger especially in these times when we are spending very large sums of money, of the public losing sight altogether of what annually these various experiments in social, industrial and economic legislation are costing the country. It is an important aspect of all legislation, the most important in some respects. I think it should be easy to form some estimate of the amount required, and if the estimate is not sufficient the Prime Minister knows that he is at liberty to introduce supplementary estimates when the time comes. That would ensure the house getting an idea at least of what this class of legislation and this particular measure is costing the country, and it would also ensure the matter coming up for discussion each year. I would like the Prime Minister to move an amendment himself, but if he does not I shall feel obliged to ask the committee to consider an amendment.


Richard Bedford Bennett: The right hon. gentleman is in error when he suggests that we are making an exception to the general rule. It has been the rule-I took the trouble to look through a number of the statutes the other day; when the determination of the
Farmers'-Creditors' Act

amount to be utilized is almost impossible and involves a rough guess, it is better to charge it up against the fund directly and positively than to cumber up the estimates with a statement of something of which when the minister is asked for particulars he can only say: I cannot tell you, but I guess it will be so much; it may be that much; it may be less or it may be more. I will admit that after an act has been running for a number of years one should be able to fix the amount approximately, but I do submit after looking through the statutes not only of this parliament but of other countries as well, that provisions for unappropriated moneys in the consolidated fund to be made available are usual and customary provisions.
It must also be remembered that there is a limitation; the revenue must be there. The expenditure cannot transcend the revenue, for then there is no unappropriated balance in the fund. That is perfectly obvious. Secondly, the sums of money that we pay under statutory authority are detailed every year in the auditor general's report, and their ultimate destination is indicated. I suggest to the right hon. gentleman, therefore, that we are not asking too much when we suggest that this should be left as it is, at least until we we see what is involved, and then if in the light of the experience and the knowledge obtained in the operation of the act for a year one is able to predicate even with any degree of certainty the amount that will be required, it should be introduced in the estimates. I quite agree with the right hon. gentleman as to the broad general principle of the control of the Commons House of Parliament over the expenditures of the country. That is true. But the fact that during all these years, nearly seventy years since confederation, we have found it necessary to make these appropriations in this way is an indication that there are exceptions to well defined rules which in themselves constitute the reason and the authority for the rule, and here, if ever, is a case in which neither the Minister of Finance nor myself can do anything more than guess at the sum that may be required.	.
Let me just put it this way. If there are extraordinarily good crops and a return by reason of bountiful rains to a measure of prosperity on the farms of Ontario, where there has been a shortage of certain crops, and in other provinces the same, I could not tell whether it would be necessary to spend five or five hundred dollars in any one province. It would be a plain guess in the dark. But when the expenditures have been made,

I repeat, and with the knowledge of another year, I shall be perfectly content, sitting on either side of the house, to agree that an appropriation might well appear in the estimates.


William Lyon Mackenzie King: Might I ask
the Prime Minister if he has any idea at all of what the expenditure is likely to be under this measure? Has he formed an estimate for example, of how much the government may be asked to pay for the salaries of the different persons whom it may be found necessary to appoint under the act? Can he give us any estimate at all of what the expenditure is likely to be?


Richard Bedford Bennett: In the discussions that have taken place, knowing as I do the economic conditions that prevail throughout the country, I did not think it would cost very much for salaries in connection with the administration of the act. The official receiver, so called, I had thought would not be a highly [DOT] expensive official, and the first review that would have to be made would be the extent to which it would be necessary to utilize the provisions of this act in the several provinces; then the length of time that it might be necessary for the officials to act during a year. For instance, I know that in the winter time it is exceedingly difficult for them to view the properties or to have inspections made that would enable them to deal authoritatively with them, and that is true of almost every part of Canada. I confess that I may have underestimated what it might cost, but I thought that men could be secured for part time effort in that direction for perhaps $150 per month in some of these matters, and in some cases retired men who have had experience in valuation and matters of that sort.
I thought it would not be a very expensive process. In the case of old age pensions, for instance, we were able to estimate from the census the number of people who would receive a pension, and in one province in particular the sum has been known for years, and was stated as one of the difficulties to be met in dealing with old age pensions. I am divulging no secret when I say that in this case the question of expense is all important, and we discussed the question how we might limit it to the smallest possible amount consistent with some measure of efficiency. I could not to-night indicate to the right hon. gentleman any sum at all that would be adequate for the purpose any more than it would be possible to indicate what sum might be required for a service that had never been given, and this is a new service in a sense.

Farmers'-Creditors' Act
We were given some information as to the sums expended under the debt adjustment acts in the three western provinces, and I think they have something similar in British Columbia, although I believe the act is not known there by that name. I am not sure if that is a correct statement of the situation or not. In Ontario there was also an endeavour to make some adjustments in that way. The salaries paid in the western provinces were small. I mentioned $150 a month for part time work. The hon. member who has just come in (Mr. Stewart, Edmonton) knows that the debt adjustment officer in Alberta received moderately small compensation, and the first one, Mr. Fream, was a particularly good man. In a province as large as Saskatchewan I think they have two. In Manitoba I think the official gets small compensation. If I could enlighten the right hon. gentleman I would do so, but I am sorry I cannot do it.


William Lyon Mackenzie King: Would it be possible to indicate in round figures about what the government imagines the total outlay for a year would be? I assume it would be nine months of this fiscal year, but figuring on a whole year would it be $50,000, or $500,000 or $1,000,000? Is it possible to give any estimate even as general as that?


Richard Bedford Bennett: I said a moment ago,
Mr. Chairman, what I think the right hon. gentleman will realize at once is sound, namely that that depends upon the extent to which farmers make applications and proposals. The hon. gentlemen who sit beside the right hon. leader, one from Alberta and the other from Manitoba, will tell you that that is something which depends as much upon psychological reasons as upon physical reasons. Anyone who has lived in the west for thirty years and over as I have knows that they are never discouraged or overwhelmed. If you tell them that there are prospects that the grasshoppers are all dead or dying, that the rains are bountiful, and that there is no chance of frost, the chances are that they will say: Well, we are not going to try to compromise; if possible we want to pay one hundred cents on the dollar. I should be glad to hear from any hon. member of the committee-the hon. gentlemen in the southeast corner perhaps have a better idea than most of us, because they are more closely connected with the administration of that matter-as to the extent to which the farmer will make application to avail himself of the provisions of this section, as I have no idea.


William Lyon Mackenzie King: I am not
anxious to occasion embarrassment to the Prime Minister in any way as I realize the difficulties there are in the way of forming estimates in relation to this particular measure, which I should like to see of some benefit to those in distress. On the other hand, the matter of control of expenditure and taxation is, in the public interests, more important than anything else. I should like to ask the Prime Minister if he would consider inserting a clause which would require reports to be made to some official of the federal government or to the Minister of Finance by those who may be acting under the provisions of this bill, so that parliament, within a reasonable time after the opening of the next session, may be given a full statement of all transactions which have taken place under the act from the time of its enactment up to the end of the present fiscal year. If something of that sort were arranged for in detail this house would be in position to fix an estimate within reasonable bounds for any subsequent year.


Richard Bedford Bennett: I anticipated the possibility of the right hon. gentleman taking the position he has now taken. I canvassed the idea of the new official in bankruptcy being asked to make a report and that all who worked under the provisions of the bill should report to him in order that he, through the Minister of Finance, could report to this house. I contemplated that inasmuch as this legislation is based upon bankruptcy and the minister concerned in both instances is the Minister of Finance. I had contemplated that the right hon. gentleman would take the view he has taken with respect to this clause and I suggest that the superintendent of bankruptcy should make a report to the Minister of Finance who would lay the same upon the table of the house within a reasonable time after the opening of the next session. I am perfectly content to do that.


William Lyon Mackenzie King: In view of
what the Prime Minister has said I shall not press the amendment which I have here. However, I might say that the period of the war was perhaps as uncertain from the point of view of the expenditures involved as anything could possibly be, but the Prime Minister of the day found it possible to give parliament complete estimates of the moneys necessary for war purposes. Those moneys were appropriated by this House of Commons and definite amounts were named. I hope we shall not be asked to countenance any action which may take us away from that
Farmers'-Creditors' Act

first and most important of all rules, under which annual specific appropriations are to be made for definite objects and purposes and as little as possible expended except in accordance therewith.


Richard Bedford Bennett: I happen to have been in the House of Commons when those estimates were submitted and I am thoroughly familiar with them. The right hon. gentleman says they were complete or detailed estimates, but he knows perfectly well that they were only guesses as to how much would be spent for artillery, how much for infantry, and so on. The guesses were predicated upon the experience of the past year and increased according to the percentage of increase of the activities of the country in that regard. The first expenditures were made by orders in council. When the house met immediately .after the commencement of the war it was necessary to grant credits and the granting of the credits involved an estimate as to how much would be required. But the estimates were quite general and quite vague when it came down to a question of detail, such as is involved here. There was nothing about salaries in those estimates. There was something about the payment of the troops, but there was nothing as to how much John Smith or somebody else would get for a particular purpose. There were general headings under which the expenditures were classified. I need hardly say that I think that is highly proper and desirable. I appreciate the attitude of the right hon. gentleman and I will draft an amendment to provide that a proper report Should be made.


William Lyon Mackenzie King: I should like to add one word arising out of what the Prime Minister has just said. I would not expect a statement to be made to the house at the moment in any detail, but I would have thought it would have been possible to fix an amount for the Farmers' Creditors' Arrangement Act, 1934, to be put in the supplementary estimates. This could have been just a round sum, and I would have liked to see it done. I hope if the act is continued another year this will be done.


Richard Bedford Bennett: I should think it will be.
Section stands.
On section 17-Rate of interest.


George Gibson Coote: As this is the only provision in the two proposals for the reduction of interest rates on existing mortgages I should like to know if it is intended to apply only to mortgages where the date of payment of the principal has not yet arrived?


Richard Bedford Bennett: This applies only to the cases mentioned in the section itself. The . provisions of section 12, to which reference has been made this evening, and of section 6 and the other sections are indicative of the power which we believe may be exercised by the boards and the official receivers. They are the only provisions in the bill which deals specifically with the question of interest.


Archibald M. Carmichael: Will this section be limited to the interpretation of "farmer" in section 2? In paragraph (f) of that section a farmer is designated as a certain person, but I understand that this section is made applicable to any person. Are we to infer that this section will be applicable to persons other than those designated as farmers?


Richard Bedford Bennett: It will be observed that this section refers only to farm mortgages. It reads:
Notwithstanding the provisions of any other statute or law, whenever any rate of interest exceeding seven per centum is stipulated for in any mortgage of farm real estate, if any person liable to pay the mortgage tenders or pays to the person entitled to receive the money, the amount owing on such mortgage and interest to the time of payment,-
And so on. This is a farm bill and it deals with interest as such.


Archibald M. Carmichael: There is a certain
class of person who would not come under paragraph (f) of section 2. A person in that class may have a farm loan and be living from the proceeds of that loan. He may not be living on and working the land, but he may have a mortgage on the land. Would such person be eligible under section 17?


Richard Bedford Bennett: Yes.


George Gibson Coote: I am satisfied that there are thousands of farm mortgages bearing interest rates in excess of seven per cent where the principal is past due but where the interest has been kept up to date. I should like to know whether there is any proposal of any kind to deal with those cases. I cannot see the possibility of very many farmers being able to get the principal sum to tender to the mortgage company; that is where I see the difficulty.


Richard Bedford Bennett: We trust that the farm loan act will help in that regard.


George Gibson Coote: I suppose it would be fair to say, then, that the government expect, at least in a large number of cases, that the farm loan board will be in a position to advance money to take up some of these mortgages, and in that event the mortgage

Farmers'-Creditors' Act
companies would be more inclined to reduce the rate of interest. It does seem to me that there will be a great many mortgages in connection with which the mortgagor will be still solvent and would not come under the terms of this act, but would still be compelled to pay eight per cent. Again I appeal to the Prime Minister if necessary to deal with the interest act in order to meet that situation, if it is not possible to do it under this act.


Richard Bedford Bennett: This act deals only with problems arising out of farm lands and the insolvent condition of those who at present occupy the farms. This section is intended to permit them, under a scheme of reorganization and readjustment, if new capital is received, notwithstanding anything in the mortgage contained, to pay off the mortgage if it carries a rate higher than seven per cent. That is all that is sought by this amendment. The other problems are dealt with in sections 12, 6 and 8 of the act, and it is believed these will have a very desirable effect. I had originally intended to deal with the problem in some such way as the hon. gentleman suggests, but after satisfying myself-and I was satisfied beyond peradventure-that five per cent was being paid for the money that was lent, I did not desire to risk the validity of the measure by attempting any confiscation on a large scale.


[Stage Direction]
Section agreed to.
On section 18-Act to come into force upon proclamation.
James Layton Ralston: The Prime Minister I understand is going to put in a section with regard to reports.


Richard Bedford Bennett: Yes.


James Layton Ralston: This act contains provisions for quite a number of officials and a large amount of machinery. Section 3 provides for one official receiver in each county or district; section 12 provides for the board of review, which shall consist of the chief commissioner and two other commissioners; and section 13 provides for the appointment of a registrar and other necessary officers to assist the board, and they shall hold office during pleasure. Then it speaks of the official receiver, custodian or trustee. I merely want to say, what the Prime Minister knows as well as anyone else, though he will not mind my pressing it, that throughout the dominion there is now a complete set of machinery for bankruptcy purposes, and it would seem to me that the government can get along very
well by utilizing most of that machinery instead of putting in a number of amateurs to handle what is after all a pretty technical matter which requires not only business training but a considerable amount of executive ability and accommodation as well.


Richard Bedford Bennett: Especially the latter.


James Layton Ralston: Especially the latter. I commend to him the fact that there is being built up in Canada now a set of officials who are quite efficient in respect of this matter. Some of the difficulties which were necessarily attendant upon the advent of bankruptcy legislation have been done away with, and I believe that efficiency prevails. I trust therefore that he will take advantage of the machinery that exists in connection with this act rather than attempt to break new ground by appointing new officials. He will find, if he does that, that the amount to which he has referred will be very small indeed, because I cannot conceive of any case, except in respect of the boards of review, where there will be any large expenditure of public money required. There seems to me to be a tendency, not only here but everywhere, to increase machinery and I think we have pretty nearly all the machinery necessary in connection with this act.


Richard Bedford Bennett: With anything that the hon. gentleman has said I am not at the moment quarrelling. One of the difficulties that gave me the gravest concern about the legislation is the very circumstance to which attention has now been directed. There has grown up such resentment against some of the corporate trustees, on the part of those who have had to deal with them, that I say to the committee frankly I was amazed at the vigor of the protest that came to me from time to time, and during the last few months, in connection with matters of this kind. One of them has been discussed in a legislature and one of them was discussed the other day in one of the courts of the country, and in the most vigorous terms the judge said that he intended to report the matter to the superintendent in bankruptcy. My experience has been, in connection with the farming population-that is, in respect of voluntary assignment; and it does not apply to the province of Quebec at all-that they have complained, first, of expense, and secondly, that corporate trustees are without a soul, without any S3rmpathetic attitude towards them at all.


An hon. MEMBER:: What about the official receivers?
Farmers'-Creditors' Act


Richard Bedford Bennett: I am speaking of corporate official receivers. In the mercantile community you have a different set of considerations. My inquiries led me to believe that those who had been dealing with debt adjustments in some of the provinces at least were so fully seized of the situation, so keenly interested in bringing about some successful issue to their efforts, and so sympathetic with the struggles of their neighbours that we might look to them. In fact, one of the western premiers suggested that we might be able to get along with the aid of the sheriffs, but finally it was pointed out that there was a difficulty in that the sheriff usually has the execution in his pocket.


James Layton Ralston: He is generally a decent fellow.


Richard Bedford Bennett: Very; and, though it may sound strange, he is most sympathetic by reason of the contact he has with the poverty and hardships of those against whom he has executions. The view finally prevailed however that this would be dangerous. I will try to bring to the chamber, and to the hon. gentleman's attention, one or two recent letters in connection with the matter to show him how the idea of the corporation acting in the capacity that used to be solely that of the individual has come to prevail during recent years in this country.


James Layton Ralston: I do not think there are any corporate official receivers.


Richard Bedford Bennett: Official trustee and official receiver have no differentiation so far as we are concerned. We call them official receivers here, but in one case there is a provision saying official receiver or official trustee.


[Stage Direction]
Section agreed to.
Richard Bedford Bennett: As a section is to be amended, and section 8 stands, and as new sections are to be added to deal with matters raised by the leader of the opposition, I move that the committee rise and report progress and ask leave to sit again.


Alan Webster Neill: Might I suggest that there ire some capable men as field supervisors of soldier settlement who might act in the capacity. There are some very capable men who are thoroughly familiar with the troubles of the farmer, and who are acquainted with the situation from the other point of view as well.
Progress reported.
(Mr. Bennett.]



CANADIAN FARM LOAN ACT


[Stage Direction]
Right Hon. R. B. BENNETT (Prime Minister) moved the second reading of Bill No. 93, to amend the Canadian Farm Loan Act.
Motion agreed to, bill read the second time and the house went into committee thereon, Mr. MacDonald (Cape Breton South) i,n the chair.
Section 1 agreed to.
Section 2 agreed to.
On section 3-Additional powers of board.
George Gibson Coote: I understand that loans contemplated under clause 3 are to persons who already have loans from the board. Is that correct?


Richard Bedford Bennett: As the hon. gentleman will see, the purpose is to extend the powers of the board to enable them to take collateral security for loans that are outstanding and then to make compositions as though they were private lenders rather than a public board and to do what the loan companies have been doing, make advances in connection with seed grain and matters of that sort to protect their security. It does contemplate dealing with existing loans.


Archibald M. Carmichael: I believe the Prime Minister is aware that two provinces do not come under the operations of the Canadian Farm Loan Act. I wonder whether he has given any thought to that, or has any suggestion to make as to how the farm loan act will be complementary to the bill we have just passed in such a province as Saskatchewan where the farm loan act does not operate.


Richard Bedford Bennett: The fact is that we have given considerable thought to that matter. Just how it may be dealt with, we do not see at the moment. The provinces had their own methods of dealing with farm loans; some of them dealt with the question in one way and others in another. The legislation with which we have just been dealing would have application to the provinces whether they had farm loan boards or not, only this measure would not be available for the purpose of finding new capital in cases where compositions had been made and their own board rather than the federal, would have to be responsible for that.

Farm Loan Act


James Layton Ralston: Has the board at the
present time any power to make compromises?


Richard Bedford Bennett: We think not. My
present information is no.


James Layton Ralston: Have compromises been
submitted to the governor in council and made in that way?


Richard Bedford Bennett: I will tell the hon.
gentleman what the position is, because the other day we were asked to provide further information with respect to the situation where the farm loan board is operating. If I give the present position of the loans it might make the matter clearer. The following is a summary of mortgage loans classified by provinces as of March 31, 1934:
Principal
outstanding
Province:	current
British Columbia	$1,166,741	20Alberta	
3,217,265	84Manitoba	
857,069	28Quebec	
2,791,292	14New Brunswick	
553,903	74Nova Scotia	
271,254	26


James Layton Ralston: Ontario?


Richard Bedford Bennett: Ontario has no loan. The following is the statement of arrears:
Principal Outstanding Arrears
Under six Over six Province:	months	monthsBritish Columbia.	.	.$20,456	57	$26,816	01Alberta	
40,590	72	57,495	52Manitoba	
8,829	25	6,465	59Quebec	
28,032	51	24,446	21New Brunswick. .	.	.	10,136	68	13,659	29Nova Scotia	
3,875 48	4,134 60
The whole amount outstanding for charges in all the provinces is $43,845.84; the amount of interest that is unpaid in all the provinces under six months is $247,328.52 and over six months, $180,201.86. The amount of interest accrued is $209,863.79. The total amount now outstanding is $9,784,064.90.
There are a number of mortgages under which proceedings have been taken and which
are still unsettled as at March 31, 1934. The necessity for being able later to make compromises arises out of that circumstance. The statement is as follows:
Mortgages under which proceedings have been taken, which are still unsettled as of March 31, 1934
Province:
British Columbia	
Alberta	
Nova Scotia	
Quebec, Manitoba, and New Brunswick	$21,685 89
That is the amount which is unsettled. The amount in arrears under six months is $400.85 and over six months, $600.93. The charges outstanding amount to $622.70. We have made some advances, but I understand there is doubt as to their exact legality and hence the amendment to the section.


James Layton Ralston: Did the Prime Minister
say that over $200,000 was overdue for interest?


Richard Bedford Bennett: I will give the figures slowly. The amount of interest due and unpaid under six months in arrears is $247,328.52; over six months in arrears, $180,201.86, and the amount of interest accrued, $209,863.79.


Charles A. Stewart: More than
$400,000 overdue interest.


Richard Bedford Bennett: Yes.


Charles A. Stewart: On $9,000,000?


Richard Bedford Bennett: Yes.


William Thomas Lucas: Did the Prime Minister give any figures in regard to the number of foreclosures, if any, that have been made under this act?


Richard Bedford Bennett: Yes. As regards mortgages under which proceedings have been taken and which are still unsettled as at March 31, 1934, there are none in Alberta, none in British Columbia and none in Nova Scotia. The statement in connection with properties that are now vested in the board by reason of proceedings is as follows:
Real Estate Held for Sale at March 31, 1934
Number
Province:	of properties Investment Book value
British Columbia	
10	$ 58,977 53	$ 55,184 94Alberta	
8	18,505	54	15,504	63Manitoba	
3	9,118	89	6,700	00Quebec	
32	113,905	98	77,491	56New Brunswick	
4	13,992	51	10,500	00Nova Scotia	
3	5,482	14	3,687	34Total	
60	$219,982 59	$169,068 471.	Actual cost includes the amount of unpaid principal on the loans involved, together with accrued interest and cash outlays to date of acquisition by the board.2.	Under the regulations of the board, no parcel of real estate may be carried at a book value in excess of the actual cost thereof to the board.
Farm Loan Act

That is the position, at the present moment.


William Thomas Lucas: Subsection (f) of section 3
says:
-accept and hold such additional and collateral security for loans as the board may deem proper.
Am I to understand from that that if a farmer has given a mortgage to the farm loan board and the value of the property has dropped, the board is to be empowered to compel the farmer to give additional security?


Richard Bedford Bennett: I know of no machinery by which they can compel him to do it, any more than any loan company can compel a farmer to do it. This authorizes the board to take the security; previously it had not the power to do so. The printed note opposite the section explains the conditions with respect to that.


William Thomas Lucas: Would the Prime Minister explain as to the regulations? I know there are regulations under the dominion act; what about the regulations in regard to the provincial authorities?


Richard Bedford Bennett: These are matters within the powers of the province, with respect to which happily we are not in control, although they are approved by the board before they come into effect.


William Thomas Lucas: When we were discussing this bill there was considerable said about difficulties experienced in trying to make arrangements with the provincial board. We were told that that was dealt with by the dominion. When we come to the dominion we are told it comes under the province. In other words there is more or less passing the buck. I should like to know if there are any provisions as to the regulations, so that we may know how to deal with those questions.


Richard Bedford Bennett: I confess I find it a little difficult to see why there should be any trouble in understanding it. The board is a corporation created by this parliament; its powers and functions are those conferred upon it by parliament. The provinces have their relation to the sdheme which is involved in the legislation itself. They appoint certain officials; the central authority approves. The valuations are made in accordance with the regulations which have been issued by the central board, and when made they come to the central board for ultimate approval, and if that is given the loan issues. But the primary responsibility as to the inspection of the property and the valuation placed upon it rests with the officials who are appointed by the 
provincial authority and approved by the central authority. Each one of them is approved by the central authority.


John Vallance: There is a question which rather puzzles some of us from Saskatchewan. We have there the provincial farm loan board. Would it be possible for any farmer in Saskatchewan to take advantage of this legislation?


Richard Bedford Bennett: The answer is no, unless the province becomes a party to this legislation. But having their own board, as Ontario has, they may make their own arrangements. As a matter of fact I think they have much of the legislation now in Saskatchewan to enable them to avail themselves of it; they certainly have in Ontario. But the truth, I suppose, is that there is difficulty in obtaining money for farm loans in Saskatchewan under any circumstances at the present time. The province of Saskatchewan created its own loan organization many years ago; in fact one who was at one time minister of finance here had the direction of the board. The present condition of the loans, as far as my memory goes, is that the board is not active; therefore they are not in a position to find new capital. But I believe they have taken collateral security to ensure the province against loss as far as possible. If my memory serves me, the losses have been very substantial.


William Thomas Lucas: Will the Prime Minister say by what method Ontario raises money for its farm loans? I understand loans were made at five and a half per cent and the rate has been recently reduced to five per cent. That is a lower rate than we have been paying under the Canadian Farm Loan Act. I am wondering by what method they were able to get money cheaper than the dominion.


Richard Bedford Bennett: They have not been able to get money cheaper than the dominion. What they have done is hold themselves out as the recipient and custodian of the savings of the people, for which they paid a rate of interest in excess of that paid by the chartered banks. The moneys thus received were loaned on mortgages and the rate was slightly in excess of that paid for the deposits. In Manitoba the same plan was tried and there were 40,000 depositors. Their money had been lent on mortgages and when the people wanted their money the savings department had the promises to pay of the province of Manitoba which had taken the money for their farm loan board and loaned it to the farmers. Inasmuch as there is a

Farm Loan Act
vast difference between bank notes and cash on the one hand and farm mortgages on the other in the safety deposit boxes, they found themselves compelled to secure a loan for the purpose of enabling them to meet their obligations. There is a great difference of opinion in the minds of those who are charged with financial responsibility as to whether or not the scheme which for years has been in practice in Ontario is of the soundest. But that is how it is done; my business is to answer the question,' and that is the answer.


William Thomas Lucas: I notice in this bill that the dominion is to guarantee the bonds that are to be sold. I was wondering how they are going to accept that responsibility, and whether the post office saving department might not be a great source of cheap money to supply these loans.


Richard Bedford Bennett: The hon. gentleman is aware that under the provisions of the statute generally the price at which money is obtained by the board is the determining factor as to the price paid by the borrower. The borrower pays one and one-half per cent more than the cost of the money to the board, one per cent being for administration and one-half of one per cent for the incidentals in connection with the maintenance of the business. If Canada borrows at four per cent it can lend at five and a half; if at three and a half per cent, it can lend at five. That is the difference between the two plans to which the hon. gentleman has referred.
On the question of obtaining money through the post office savings department I can only point out that it has not been thus far a savings depository favoured by the people of the country. The entire sum now on deposit in the post office savings bank, if my memory serves me-and I speak wholly from memory -is between $20,000,000 and $25,000,000. It has not increased in recent years, but broadly and generally has diminished, because it has not been a favoured institution for the lodging of the savings of the people. I am told the amount on deposit at the present time is $28,000,000.


George Gibson Coote: The ability of the farmer to repay his loans is determined in large part by the rate of interest which he must pay, and it seems to me that the rate of interest might very well be reduced by the farm loan board now. I believe the dominion government can borrow money at the present time at less than four per cent. If that is true would it not be possible for the farm loan board to reduce the interest rate?


Richard Bedford Bennett: If the hon. gentleman
had followed what I said a moment ago he would have realized that there is an addition of one and a half per cent as the statute now stands, one per cent for administration charges and one-half of one per cent in connection with the charges of the transaction.


George Gibson Coote: Is that in the statute or is
it the policy of the board?


Richard Bedford Bennett: That is in the statute
itself. The result is that borrowings at four per cent have to be lent at five and a half per cent, and borrowings at three and a half per cent would be lent at five per cent. That differentiates the organization from the farm loan board of Ontario, which lends the moneys it collects from the savings deposited in the savings offices, upon which at one time they paid four per cent interest.


[Stage Direction]
Section agreed to.
Section 4 agreed to.
On section 5-Conditions for loans.
George Gibson Coote: If it is intended or hoped that the farm loan board will be able to make loans to people who would like to pay off mortgages now bearing interest at eight per cent there will be a great many cases in which the existing loan is on a piece of land separate from the quarter section on which the buildings of the farmer are located. In the past it has been a practice of the board-I do not know that it is a regulation-to refuse to give loans to farmers unless they put the quarter section on which their buildings were located in with the piece of property to be mortgaged to the board. This makes it very unfortunate in many cases. It simply means that a farmer cannot get a mortgage unless he mortgages his home. The primary purpose of this legislation is to save the farmers' homes for the farmers even though they might have to let go other pieces of land. Under this section I should like to ask the Prime Minister whether the farm loan board are compelled in any way to follow that rule. It seems to me it is just a rule they have laid down themselves. Sometimes it is attended with unfortunate results, in that the farmer is perhaps compelled to mortgage his home, which otherwise he would not want to do.


Richard Bedford Bennett: The hon. gentleman is
perhaps fully aware that the policy has been adopted by the board and not by the government. The board has endeavoured to function as free from governmental interference as possible, and in the light of the experience of the past that is the conclusion at which they
Farm Loan Act

arrived in promulgating their regulations. They decided that they were not warranted in treating the moneys entrusted to them for lending on any basis that would not, so far as that might be done, ensure their repayment, and they have taken securities on that basis. Frankly that is the policy as indicated by the board when it came into being.


George Gibson Coote: The board was empowered to lend money to enable the farmer to purchase lands, and certainly in some cases it is poor policy on the part of the board to insist that the farmer place his home under mortgage before he can borrow anything. It may be that they would then be compelled to lend a smaller percentage of the appraised value of the land, but so far as I know they have followed that rule. I think in some cases it is a poor rule for the board to fallow, and perhaps this is the only opportunity I will have of raising that question while the representative of the board is here with the Prime Minister.


Richard Bedford Bennett: There is nothing that can be added, except that as a matter of policy that is the rule that has been adopted, and that is all that can be said about it. It might be said, however, that it has been a universal rule in making loans that the property on which the house is built should be included in the mortgage. I know of no case in which that is not the rule of all the companies in the country, in order that there might be a direct incentive on the part of the man who borrowed the .money not to abandon the piece of property and let it go but rather, feeling that his home was involved, that he should make an extra effort to pay the loan. Frankly I must say that the policy of the board as far as I could ascertain.-and I came as a stranger and inquirer-has been exactly what it would be if it were a loan company, and it has been conducted as such. I think that is a fair way to put it.


George Gibson Coote: I think it has been conducted more conservatively than most loan companies. I could' find thousands of quarter sections without farm buildings on which loans have been made by loan companies, but I do not find the same practice being followed by the board. I think the time has come when we might consider changing our laws with regard to the interest rates on farm mortgages, and provide that a man's house need not necessarily go with the mortgage. The position of the ordinary business man who mortgages his business is different from that of the farmer. The 
business man does not have to mortgage his home; if he goes into bankruptcy he does not lose his home. The farmer is in a different category; if he wants to get an advance under mortgage he must put in his home. If he wants to take advantage of bankruptcy proceedings to get rid of debts he must throw in his home and be forced into the street. Really I think if the government is depending upon the operation of this farm loan board to bring about a reduction in the rate of interest on farm mortgages their practice in that regard ought to be changed, to that degree at least.


Richard Bedford Bennett: It being eleven o'clock I will not ask that the section pass for the time being; my hon. friend may reserve any further comments that he has to make. I will move that the committee rise and report progress and ask leave to sit again.
Section stands.
Progress reported.


[Stage Direction]
At eleven o'clock the house adjourned without question put, pursuant to standing order.
Tuesday, June 12, 1934