LIBRARY OF PARLIAMENT

Right Hon. R. B. BENNETT (Prime Minister) moved:: That a message be sent to the Senate to acquaint their honours that this house has appointed the honourable the Speaker and
Messieurs: Barber, Bertrand, Bourassa, Boyes, Butcher, Campbell, Carmichael, Charters, Chevrier, Cotnam, Dubois, Dupuis, Factor, Ferland, Fontaine, Fortin, Fraser (Cariboo), Gagnon, Girouard, Guthrie, Irvine, Jones, Lafleche, Larue, LaVergne, MacMillan (Saskatoon), Macphail (Miss), Mareil, McGillis, McGregor, McIntosh, McKinnon, Mulock, Peck, Perley (Sir George), Pouliot, Quinn, Rheaume, Short, Smoke, Thauvette, Thompson (Lanark), White (London), Wright, a committee to assist His Honour the Speaker in the direction of the library of parliament, so far as the interests of the House of Commons are concerned, and to act on behalf of the House of Commons as members of a joint committee of both houses on the library.


[Stage Direction]
Motion agreed to.

Richard Bedford Bennett: That a message be sent to the Senate to acquaint their honours that this house will unite with them in the formation of a joint committee of both houses on the subject of the printing of parliament, and that the members of the select standing committee on printing, viz., Messieurs:	Anderson (Halton),
Baribeau, Belec, Boulanger, Bourgeois, Brasset, Charters, Desrochers, Dubois, Embury, Esling, Factor, Fortin, Girouard, Gott, Gray, Hay, Heaps, Howden, Lucas, MacLean, Maloney, Mareil, Matthews, McKenzie (Assiniboia), McLure, Mills, Moore (Chateauguay-Hunting-don), Munn, Murphy, Parent, Peck, Perras, Pickel, Porteous, Price, Quinn, Rheaume, Rinfret, Roberge, Robinson, Rowe, Ryerson, St-Pere, Short, Simpson (Simcoe-North), Spencer, Spotton, Taylor, Tetrcault, Verville, Wilson, Woodsworth, Wright, will act as members on the part of this house, on the said joint committee on the printing of parliament.


[Stage Direction]
Motion agreed to.

[Stage Direction]
Right Hon. R. B. BENNETT (Prime
Minister) moved:
That a message be sent to the Senate to acquaint their honours that this house has appointed the honourable the Speaker and Messieurs: Ahearn, Barrette, Beaubier, Campbell, Cantley, Carmichael, Garland (Carleton), Hanbury, Howard, Lafleche, Macphail (Miss), McKinnon. Mills, Mullins, Ryerson, Senn, Spence, Sproule, Taylor, Thauvette, a committee to assist His Honour the Speaker in the direction of the restaurant, so far as the interests of the House of Commons are concerned, and to act as members of a joint committee of both houses on the restaurant.
Motion agreed to.


[Stage Direction]
Mr. A. W. NEILL (Comox-Alberni) moved for leave to introduce Bill No. 12, to amend the Railway Act (Traffic by Water).
Geneva Conventions
Some hon. MEMBERS:: Explain.


Mr. NEILL:: The rules do not at this stage require anything but a short statement of the purport of the bill, which is to bring the coastal shipping trade of Canada as regards routes, schedules and charges under the supervision of the board of railway commissioners in exactly the same way as that body now has control over the same items in connection with railways. In the bill "coastal trade" is defined to exclude operations on the great lakes, and there is also a provision that it shall not apply to vessels under twenty tons burden, in order to prevent small ferries operated by gasoline launches and the like, from being harassed by unnecessary restrictions.
On the second reading of the bill I shall endeavour to explain the reasons why the bill should become law.
Motion agreed to and bill read the first time.



CANADIAN AND BRITISH INSURANCE COMPANIES ACT AMENDMENT

[Stage Direction]
Mr. G. G. COOTE (Macleod) moved for leave to introduce Bill No. 13, to amend the Canadian and British Insurance Companies Act, 1932.
He said: The first four subsections of this proposed bill are the same as the provisions of section 180 of the old insurance act, chapter 101, Revised Statutes of Canada, 1927. These provisions would make it necessary for life insurance companies to maintain a policy in force as long as the cash surrender value of the policy is sufficient to cover the premiums shown to be due. It would also add a new subsection to control the rate of interest charged by insurance companies to policy holders.
Motion agreed to and bill read the first time.

[Stage Direction]
Mr. G. G. COOTE (Macleod) moved for leave to introduce Bill No. 14, to amend the Foreign Insurance Companies Act, 1932.
He said: The purpose of this bill is exactly as explained for the other bill. There are two insurance companies acts, one referring to foreign insurance companies and the other to Canadian and British companies, so that to effect the desired purpose for all life insurance companies it is necessary to introduce these two bills.
Motion agreed to and bill read the first time.

[Stage Direction]
On the order for motions:
Richard Bedford Bennett: I stated yesterday that for the convenience of the members of the house the conventions referred to in the five resolutions which I submitted to the house would be printed in the orders of the day. I supplied the material from which it was to be done, but unfortunately by an error much more material was printed than is required. In fact a very large number of recommendations and matters of that sort which are unnecessary were included in the printing. Therefore I should like these resolutions to stand until to-morrow when the orders of the day will be revised and will include the printing of the conventions to which the resolutions refer.


Right Hon. W. L. MACKENZIE KING (Leader of the Opposition):: May I ask the Prime Minister if he could indicate to us, possibly not at the moment, but before the day is over, what will remain?


Richard Bedford Bennett: The ones that will remain are those referred to in the five resolutions that were on the order paper, page 12 yesterday; the rest will be stricken out. Roughly I can say, at the top of page 8 of the orders of the day, article 23, the words at the end will disappear, that is the attestation clause. On page 10 the attestation clause will disappear, because that is not any part of it. On page 19, article 24, the attestation clause will disappear, as well as the paragraph at the foot of page 19. The whole of page 20 goes out, and of pages 21 to 31 and the top of page 32. Pages 35 to 39 disappear, and half way down page 40. The top of page 46, convention concerning unemployment, disappears with the pages from there to the end of page 62.
I am very sorry about this. It was no fault of mine, the documents were handed in with the pages marked, but instead of paying attention to the notations on the top of the page they just went ahead continuously.


Mr. LAPOINTE:: Do I understand these will have precedence to-morrow?


Richard Bedford Bennett: No, I say they will be properly printed in the orders of the day tomorrow I want the house to have opportunity to study these conventions.

Privilege-Mr. Dupuis



PRINCE EDWARD ISLAND FERRY

[Stage Direction]
On the orders of the day:
Mr. W. CHESTER S. McLURE (Queens): Mr. Speaker, I desire to ask the Minister of Railways (Mr. Manion) a question. Owing to heavy ice conditions in Northumberland strait between Tormentine, N.B., and Borden, P.E.I., the car ferry S.S. Charlottetown 'has been delayed in making her regular trips. My question is, in case the present boat now operating there is delayed so as not to be able to make continuous connection with the railway trains, or in case of accident to the SjS. Charlottetown, is the old car ferry S.S. Prince Edward ready to carry on the passenger and freight traffic at these important points?
Hon. R. J. MANION (Minister of Railways and Canals):: Mr. Speaker, the hon. gentleman was good enough to tell me yesterday that he was going to ask this question and 1 made inquiry and find that the answer is in the affirmative, namely that the Prince Edward, the old ferry, is ready to 'be put into commission at once, and if any trouble occurs it will be put into commission at once.
AUSTRALIAN TRADE COMMISSIONER On the orders of the day:


Mr. J. S. WOODSWORTH (Winnipeg North Centre):: Mr. SpeakeT, the Sydney Morning Herald of Sydney, Australia, in its issue of December 29 last, carried a news item that Colonel L. M. Cosgrave, the new trade commissioner from Canada to Australia who is succeeding G. H. Ross, arrived on the SS. Niagara yesterday, and reports him as saying:
I am an imperialist, and a Canadian afterward.


Ernest Lapointe: Shame!


James Shaver Woodsworth: I should like to ask if the government agrees that the work of the trade commissioner is to promote an imperialist program, or to secure trade for Canada?


Richard Bedford Bennett: Mr. Speaker, inquiries will be made
as to the accuracy of the statement.-



PRIVILEGE-MR. DUPUIS

[Stage Direction]
On the orders of the day:
Mr. VINCENT DUPUIS (Laprairie-Napier-ville):: Mr. Speaker, on Friday last, February 1, referring to unemployment relief, I said, according to Hansard1 at page 438:
I heard the premier of Quebec about a month ago make that kind offer to the Prime Minister of Canada to contribute fifty per cent. I do not know whether I am wrong, but the Prime Minister is here to say whether I am or not.
The right hon. gentleman said:
That was not the offer.
The premier of Quebec handed a copy of the letter to the Canadian Press-


Mr. SPEAKER:: If the hon. gentleman is
rising to ask a question I would ask him kindly to do so.


Vincent Dupuis: I rise to a question of
privilege, because the Prime Minister suggested that I made a statement that was not true. I just want to rectify that statement and to ask the right hon. gentleman to rectify himself also, with all due respect to him. As I was about to say, the premier of Quebec gave a copy of his letter to the press, and in the newspaper I hold in my hand there is a copy of his letter sent to the Minister of Labour (Mr. Gordon) under date of January 7. This was the second letter to which no reply was received. I wish to read only one paragraph, which I think will be sufficient to prove the accuracy of my statement.


Richard Bedford Bennett: Surely, Mr. Speaker, the hon. member cannot read from a newspaper what purports to be a letter from someone. Surely that is not what is called privilege in this house. In England they do not permit the reading of newspapers at all.
Mr. 'SPEAKER:	If the hon. gentleman
wislies to correct something which has been said in parliament, well and good, but he should not read something contained in a newspaper.


Vincent Dupuis: That is my point, your
honour. The right hon. gentleman suggested that I was speaking an untruth. He did not say so in words, but it was the same as saying, "You are a liar."


Some hon. MEMBERS:: Order.


Pierre Édouard Blondin: I am sure the hon. gentleman did not quite mean that. I am sure he knows that in rising to a question of privilege it is not proper to quote from a newspaper. If the hon. gentleman wishes to bring up a question of privilege I would appeal to him to state his case briefly and clearly.


Vincent Dupuis: I just want to quote from
a letter written by the premier of Quebec to the Minister of Labour; if this is not an
494	COMMONS
Unemployment Reliej-Mr. Mackenzie King
accurate copy of the letter the Minister of Labour is here to say so. The paragraph is as follows-


Some hon. MEMBERS:: Order.


Pierre Édouard Blondin: The hon. gentleman should not read from a newspaper in connection with a question of privilege.


Vincent Dupuis: Then I need not read it
at the moment; a little later on I hope to obtain a copy of the original here in the house, but the letter is to the effect that the premier of Quebec offered to pay fifty per cent of the cost of unemployment relief if this government would pay the other fifty per cent, in order to relieve the municipalities. I ask the right hon. gentleman to rectify himself right here.


Richard Bedford Bennett: I think it is unnecessary to make any observations with regard to any such statement quoted from a newspaper. I am rather surprised that the hon. gentleman should attempt to quote from a newspaper, which is forbidden by the rules of the house.


Vincent Dupuis: The right hon. gentleman
has read from newspapers more than once.



INTERNATIONAL LABOUR OFFICE

[Stage Direction]
On the orders of the day:
Ernest Lapointe: May I reiterate my question to the Minister of Labour (Mr. Gordon) as to Canada'6 seat on the governing body of the international labour bureau, and as to whether the minister has any information to give the house or any correspondence to table in the matter.


Hon. W. A. GORDON (Minister of Labour):: I had hoped to have a statement
ready to give to the house with respect to this matter. I think I will be able to make that statement to-morrow.



PRECIOUS METALS MARKING ACT

[Stage Direction]
Hon. R. B. HANSON (Minister of Trade and Commerce) moved the third reading of Bill No. 2, to amend the Precious Metals Marking Act, 1928.
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 of supply.
Right Hon. \V. L. MACKENZIE KING (Leader of the Opposition):	Mr. Speaker, in
previous sessions of this parliament very little

opportunity has been given at any time for discussion of the conditions of unemployment and distress throughout the country. Almost without exception the estimates of the Department of Labour have been held until the very end of the session or until a period immediately preceding a recess, when an endeavour has been made to huriy them through as rapidly as possible. As hon. gentlemen know the best opportunity that can be given the house to discuss questions of unemployment and relief is when the estimates of the Minister of Labour are before the house. I believe the fact that we have never had a chance really to discuss the government's policies with respect to unemployment except at the last moments of a session, as I have said, is responsible for the circumstance that the government's policies have changed as much as they have, and that there has been very little consistency between what was expressed at one session and what was proposed at the next with respect to meeting conditions of unemployment and the situation as regards relief.
I would hope that at this session an early opportunity would be afforded to discuss present conditions. The government has indicated a program of social and industrial reform, but from what has been presented thus far and from what we have been told about the remainder of the program it would appear that it relates not to present conditions but to the future, that it will not come into operation until after the general election and that even then whether or not it is to come into operation will depend upon circumstances as they may then present themselves. We on this side of the house have endeavoured as far as possible to facilitate the introduction and the immediate consideration and discussion of these measures, because we think they are important, and whatever in them commends itself to us will continue to receive our support. But we feel very strongly that any program of social and industrial reform should not be permitted to sidetrack an immediate consideration of present problems in our country.
I might say that there is a further reason -which is but one of many reasons-why there should be an immediate discussion in this parliament of the measures to be taken to meet the existing situation, and it is that throughout Canada the provincial governments are much perplexed as to what the federal government is going to do in the matter. Some of them are hesitating with respect to measures of relief which they should immediately bring in, waiting to hear what

Unemployment Relief-Mr. Bennett
this government proposes doing. I am speaking now of the program to meet immediate distress. The municipalities, the provinces and the dominion must be fully informed as to what each is doing and proposes to do. Obviously if we wait until Easter to consider what is to be done by the federal government all municipalities and all provinces will be embarrassed with respect to their particular programs.
Already the house has been once moved into committee of supply, but when we were in committee it was not the labour items which were called but an item with respect to the Department of Justice. The estimates for that department may all be important, but their consideration at the moment is not as important as that of the estimates of the Department of Labour, particularly in the light of the situation existing throughout Canada to-day.
The other evening when mentioning the house would be moved into committee of supply later, the Prime Minister indicated two or three departments which would be called. He did not however mention the Department of Labour. Holding as we do the very strong opinion that the questions of unemployment and existing distress are the major problems in Canada to-day, and that during the last five years they have been the all important questions, we feel that the matters pertaining thereto ought to be the subject of discussion and consideration in this parliament at the earliest possible date. I therefore move, and I hope the Prime Minister will accept the amendment:
That all the words after the word "that" in the motion be struck out, and the following substituted therefor: "That this house is of the opinion that when it is moved' into committee of supply priority should be given consideration of the estimates of the Department of Labour in order that opportunity may be afforded for an immediate discussion and consideration of conditions of unemployment and distress at present existing in all parts of Canada, and of the measures required to cope therewith."
['I have no objection to supplying that information.\nItem stands.\nProgress reported.']
Richard Bedford Bennett: Mr. Speaker, I assume the right
hon. gentleman, like every other hon. member in the house, is aware of the fact that if the amendment carries the house will not go into supply at all. This is a vote of want of confidence in the administration. If it were to pass it would merely mean that the committee would be discharged and the Speaker would not leave the chair. Just why the right hon. gentleman should make a proposal of that kind instead of rising in his place and making a suggestion as he might have done
when I mentioned the other evening in the house that we would go into supply, I do not know. If he had suggested that he desired to take the labour item I would have been glad to have said we would take labour. If he had suggested anything of the kind I would have been glad to accede to it. If I accept his amendment and the Speaker does not leave the chair, the committee of supply is dissolved. It has to be reconstituted. He knows that as well as any hon. member in the house, and I think perhaps better.
On the next point, the one he raised first, namely that there has not been ample opportunity to proceed upon and consider certain matters, it is only necessary to refer to the journals of the house and the discussions which took place on the unemployment relief and farm relief measures of 1934, 1932 and 1930, and to the very tedious discussions, if I may use the term without offence, which took place in this house, I believe a reference of that kind would rather negative his suggestion of to-day.
So that on neither count it seems to me does the right hon. gentleman succeed, and his one suggestion is rather destroyed by the records themselves. I can only think that in moving his amendment going into supply he had in mind that possibly we might say we would accept it, in which event having done so the committee would be dissolved and we would be out of business. That may have been the object in his mind but I am bound to say we have had a few years of experience and are not caught by that kind of argument or plan. I suggest to the right hon. gentleman that if he withdraws his amendment we will agree that the next item in supply after the ones to-day shall be labour.


William Lyon Mackenzie King: Mr. Speaker, what I had in mind when I said to the right hon. gentleman that I hoped he would accept my amendment was that he would say exactly what he has said-


Some hon. MEMBERS:: Oh, oh.


William Lyon Mackenzie King: -that he would say that if I would withdraw the amendment he would then have the house moved into committee of supply to consider the Department of Labour estimates. That is the purpose of the amendment.


Some hon. MEMBERS:: Oh, oh.


William Lyon Mackenzie King: I shall read what it says:
That this house is of the opinion that when it is moved into committee of supply priority should be given consideration of the estimates
496	COMMONS
Unemployment Relief-Mr. Speaker
of the Department of Labour in order that opportunity may be afforded for an immediate discussion and consideration of conditions of unemployment and distress at present existing in all parts of Canada, and of the measures required to cope therewith.
The Prime Minister, having said that priority will be given to the Department of Labour estimates, once the house is moved into committee, the purpose of the resolution-


Richard Bedford Bennett: I did not say that. I said we would have to dispose of the items we have to-day when we get into supply. We will have to dispose of the items we have to-day, but when we move into supply to-morrow or next day or whatever day it is, we will agree that the labour estimates be considered.


William Lyon Mackenzie King: When the house is moved into committee of supply to-day, this item is to be called?


Richard Bedford Bennett: On three departments, in order that the house may have something to deal with.


William Lyon Mackenzie King: No; my amendment will have to stand if that is the case, because if that is so it would simply mean the government will seek to get three or four departments opened up in order that the time of parliament may be taken up in discussing those departments instead of discussing more immediate questions. In that event my amendment will have to stand.


Richard Bedford Bennett: I am compelled to take the point of order that it is out of order to instruct the committee of supply and that an instruction to a committee of supply cannot be moved. Nothing can be brought on in committee of supply of which notice has not been given in detail in the estimates laid before the house.


Vincent Dupuis: I would suggest that the Prime Minister put this amendment in his reform-


Some hon. MEMBERS:: Order.


Mr. ROWE:: You have been out of order already to-day.


Pierre Édouard Blondin: I am of the opinion on the authority to which reference has been made by the Prime Minister that the amending motion is out of order. I find in May, 13th edition, page 524, the following: "An instruction to the committee of supply cannot be moved." It seems to me that is the effect of the present amendment. I therefore declare the amendment out of order.
[Mir. Mackenzie King.]


Richard Bedford Bennett: Nevertheless, Mr. Speaker, when we have concluded with getting before the committee the items in question we shall give priority to the labour estimates after we have disposed of the matters now standing. In other words, when the committee is seized of supply with respect to the three departments I mentioned the other day we shall then give priority to labour estimates for detailed discussion.
Motion agreed to and the house went into committee of supply.



[Stage Direction]
The house in committee of supply, Mr. Smith (Cumberland) in the chair.
Publications, $32,197.60.
Mr. McPHEE:: Would the minister kindly explain the increase in this item?


Mr. SWANSON:: I would ask the Minister of Agriculture if the government have any plan under consideration for the rehabilitation of the farmers of the dried-out areas in the west and also for the conservation of water for the ranchers in the same area?


Hon. ROBERT WEIR (Minister of Agriculture) :: Mr. Chairman, the hon. member
gave me notice that he was bringing up this matter, and I have had prepared a short statement which I shall give to the committee.
A great deal of work has been done since 1930 by the federal Department of Agriculture in studying the drought situation in the three prairie provinces. In addition to information obtained from this study, there has also been collected and analyzed, as far as possible, information obtained from similar conditions outside of the dominion. Based on the knowledge gained from the information obtained, the federal Department of Agriculture intends to carry on an extensive program of demonstration and further research, in an endeavour to assist the great body of farmers in this area in not only meeting as far as possible the difficulties caused by the continued drought, but in planning for the future to avoid a recurrence of the conditions in which they found themselves in the last five years, and also to protect themselves if there should be a recurrence of these conditions.
It is generally conceded that this area should be divided into three regions, one suitable for ranching, one suitable almost entirely for the growing of wheat, and the intermediate region lending itself to a mixture of the two.

Supply-Agriculture
It is proposed to select a number of fairly large areas in each of these regions for the purpose of demonstration and research. Because these areas are under the ownership of many individuals, it will be necessary to receive the whole-hearted co-operation of the farmers within the areas selected, this cooperation, by agreement, to extend over a period of years.
The basis of this plan will be our knowledge of the soil and for what it is best suited, the availability of grasses best suited where there is a minimum of moisture, cultural practices for the preventing of soil drifting, and the conservation of moisture, the use of dams for conservation of surface moisture, and the use, where suitable, of blocks of trees as an aid to agriculture. The fundamental aim of this policy is to demonstrate as far as is known in what way farmers or ranchers can plan to provide for their subsistence on the land.
This policy will be administered by the federal Department of Agriculture. In addition, there will be set up an advisory committee, consisting of some of our most successful ranchers and farmers in these areas, together with some business men.
For the benefit of those hon. members who have not had the opportunity of obtaining first-hand knowledge of what is at stake in the drought area, the following is a short picture:
The total crop acreages, by provinces, in the Dominion of Canada in 1934, were:
Province	1934 Acreage
Prince Edward Island.. .	. 473,000
Nova Scotia		. 554,800
New Brunswick		. 906,300
Quebec		. 5,950,300
Ontario		. 8,999,900
Manitoba		. 6,000.900
Saskatchewan		. 19,771,820
Alberta		. 11,971,500
British Columbia		. 406,900
The combined acreage of field crops in the four provinces of Prince Edward Island, Nova Scotia, New Brunswick and British Columbia	
in 1934 was 2,341,000 acres.	
In the three prairie provinces the number of acres, in each of the last four years, yield-	
ing less than five bushels per	acre, were:
	Acres
1931		. 9,178,000
1932		. 7,876,000
1933		. 11,435,000
1934		. 8,642,000
92582-32	
In Manitoba, the drought area yielding less than five bushels per acre for a period of four years has been in the neighbourhood of 372,000 acres.
In Manitoba in 1934, 196,000 crop acres yielded on an average of one-half a bushel per acre, with a return value of 32 cents an acre. This area for years was one of the most prosperous areas in Manitoba, with some of the finest homes and best types of farmers.
In Saskatchewan, in No. 3 crop district, the average return value per acre, per year, from 1931 to 1934 inclusive, from three and a half million acres, was SI.60 an acre. This small area had, in the past, yielded an average of $30.42 an acre for one year or a total of over $66,000,000, when wheat was at 77 cents a bushel.
In each of the years 1933 and 1934, the acreage in Alberta, yielding less than five bushels per acre, was over 1,300,000 acres; 68-6 per cent of the total crop acreages in 1934 were in the three prairie provinces.
In 1927 the value of wheat alone, harvested in the three prairie provinces, was $445,547,000.
That is a short statement, Mr. Chairman, in reply to the question asked by the hon. member for Maple Creek.


Mr. MOTHERWELL:: Mr. Chairman, it is customary when the first item of a minister's estimates is called, for any hon. member to take the opportunity to make a general statement regarding it. There is nothing very controversial about this item that has been called, dealing with publications, but I notice that in nearly every item of these estimates for agriculture there is an increase, which would seem to indicate that the government has reached the very bottom of its reductions in the past and persistent starvation of agriculture. Ever since the estimates of 1931, this government	has systematically	reduced the
vote	for agriculture. One would think
that a government that claims to be doing such a stupendous amount for agriculture would manifest it in some other way than by starving the vote for agriculture. To such an extent have the estimates been reduced that many of the services have been largely crippled. I know what I am speaking about, and when we come to the items I have in mind I shall give my reasons for so stating. It is I suppose a matter for commendation to know that the worst is over in this respect. Of course, it is only a coincidence that we find that the worst is over and that a return for the better is just before an election. However, it is better late than never. It seems to me extraordinary that the very foundations of

Su pply-A griculture

our nation, the bulwark of the country, agriculture, should have been so crippled all these years and that there should then be a great legislative splurge made all along the line and also in the estimates for agriculture. Are we going to be asked to forget the dismal past? It will be recalled that in the last century the forties used to be and are still known as the "hungry forties." Well, in this century and under this government's administration this period will be known as the hungry thirties all over Canada, not only in agriculture but in almost everything else. And my hon. friends have contributed towards that hunger and the decimation of agriculture by persistently reducing the estimates for agriculture year after year, until those reductions aggregate the sum of over 84,000,000. I was very much disappointed in the minister in other years when he tried to defend that policy, first, by declaring that the services were not materially impaired and then, getting bolder, telling us that they were not impaired at all. I took the ground last year I think that if any minister could administer the department with 84,000,000 less than it had previously taken-from 811,000,000 to 87,000,000-he should be kept in perpetuity as Minister of Agriculture; for I have never met anyone who could perform that impossible feat. But he was stringing us; he was telling us bedtime stories when he said that the services had not been impaired. All I have to do is to refer to the health of animals branch as an indication of that impairment. I do not know that the government is open to a great deal of congratulation, because these increases would need to aggregate 84,000,000 for the great occupation of agriculture before my hon. friends could deserve an commendation; they would have to do as well as the government that preceded them did in that respect. I recall this, because I remember that when I had the honour of presiding over this department the estimates were at one time very low-about as low as they are now-and it was after a long struggle and an effort in which my right hon. leader and others assisted me very greatly that I finally arrived at the point where the estimates for agriculture received recognition relatively with those of other departments. I do not know whether my successor and his colleagues will be accorded sufficient public confidence to remain in power as long as we were in order to get the department back to where it was. At all events, he has made a start, and there is nothing controversial about this publication vote. I did not quite understand the dissertation my good friend gave with regard to the drought area, but whatever it was I presume 
it was good and will seek another time to discuss it. But how it was associated with publications I did not quite gather. I have nothing further to add at this time. I understand that the minister is merely going into committee and going out again, and therefore I leave to a later time any further observations I have to make.


Mr. VALLANCE:: I did not catch the
first remarks of the minister when he read the statement that he did, but like the previous speaker (Mr. Motherwell) I notice this item is publications. Why should the minister avail himself of the opportunity to read what he has just read to us, very interesting as it is? Is there in this item anything that would suggest to me as a member of this house that some of this money is to be taken for the purpose of publishing the findings of this research body or commission? Is it going to indicate what the minister outlined in connection with the various areas? I should like the minister, had it been possible, to have made available the information which he has just given us in order that we might have discussed it more intelligently. He gave figures that are very interesting to me. As he well knows, I represent at least a portion of what might be designated a dried out area, and the mass of figures he gave would be exceedingly interesting once we were in a position to digest it so that we could intelligently discuss it. Like the ex-Minister of Agriculture, I have also looked upon the lowering of the estimates for agriculture year by year with a great deal of apprehension. I have before me now the five years' estimates from 1930-31 to 1935-36 inclusive, and I find that every year the estimates for agriculture have been lowered until this year we do notice a few slight increases, though even at that there are a few decreases for 1935-36. We find three decreases and about eight increases. I had hoped that the minister would show greater increases in some of these items than appear in the estimates for this year, because when you go back over past years and realize the service that was rendered by the various branches of the Department of Agriculture at the then cost, no Minister of Agriculture nor any member of this house can convince those of us who are engaged in the industry that it is possible to give to agriculture the service which is being attempted with such low estimates as we find for this year.
I am sorry that in the confusion in the house we were not able to catch the minister's introductory remarks when he first got on his feet. While I believe that what I did hear is very necessary and should be done, I think

Supply-Agriculture
at the same time that a survey should be made of western Canada. I do not know a great deal about the east, and possibly there may be sections there that need a similar survey. When you consider that there are 300,000 farmers west of the lakes who have been more or less farming promiscuously, I think you will agree that one thing they need as much as anything else is some direction from the department, some lead to show them just what particular branches of agriculture they should take up. I can hear someone saying, " But you have the experimental farms." Yes, we have, and they have rendered great service to the farming communities in the west. But they are not numerous enough and I do not think that the experimental farms perform some functions which in my opinion they should. We should enlarge the functions of the experimental farms, because we have on many of these farms some of the best technical agriculturists probably on the North American continent, and we could utilize the services of these men to a greater extent than we have done in the past. I should like to see short courses established during the winter at each of the farms. I should like to see it made possible for young men living within any reasonable distance of an experimental farm to attend short courses in agriculture, because it is becoming more difficult as time passes to keep the young people on the farms. Unless therefore the government wakes up to the situation it will soon be impossible to retain on the farms even the sons of the farmers themselves. The whole trend of legislation to-day is to drive the man off the farm. We have had that manifested in some of the reforms suggested by the Prime Minister (Mr. Bennett). In spite of the great unemployment that exists at present in urban centres, it is still very difficult to get men who will be content to go on to the farm and some of the legislation that has been suggested by the Prime Minister in his reform program will I think merely intensify our problem. I hope before we get through with the agriculture estimates we shall have ample opportunity to read the statement of the minister and probably discuss it at some future date.


Robert Weir: At the outset I
would repeat what I stated during each of the past years in discussions on these estimates. I do not think anyone would consider fair the mere statement that the reduction in the estimates is wrong in itself. Each year I have challenged the members of the committee and asked for criticism to show me
how any services have suffered by the reduction in these estimates. I repeat what I have said on previous occasions: If we have been able to reduce these estimates and at the same time to give equal if not greater service, I think that is something of which we should be proud. To-day, I made a statement before the committee for the purpose, among other things suggested by the hon. member for South Battleford, of affording hon. members an opportunity to read and to bring up questions, if they so desired, with reference to the information given by me to the committee. I availed, myself of the first opportunity to make this statement.
With reference to short courses at experimental farms, I agree wholly with the hon. member for South Battleford. We have instituted such courses during the past two or three years. One that has been particularly successful is that held at Indian Head under the superintendent, Mr. Gibson. At the experimental farm at Fredericton, New Brunswick, there has been in operation for a number of years a more elaborate short course. There has been included in the public works program the erection of a dormitory to make it more convenient for the boys to come from the farm and to study at that experimental farm. The agricultural colleges with their associated courses do a great work, but I believe what the boys on the farm need more than perhaps a study of physics, chemistry and a number of the subjects that are given, is a more practical course from which they will benefit more, and as far as possible the boys attending these schools will do the actual work at the experimental farms because only in that way can they benefit most from the course.
As hon. members know, the purpose of opening these items to-day is simply to get a number of estimates before the committee and I would therefore move-


Mr. STEWART (Edmonton):: Before the
minister makes his motion, may I ask a question or two with reference to his statement this afternoon?


Robert Weir: Yes.


Charles A. Stewart: The first
one is this: Is that statement intended as a definite policy so far as the government is concerned in connection with the treatment of drouth areas?


Robert Weir: Yes.


Charles A. Stewart: Then it is
intended that the survey shall be made by officers of the department. That is what I gather from the statement of the minister.
Supply-Pensions

May I suggest to him that in that survey-and this is no reflection on any officer in the department-he associate with the staff of the department some men who have considerable experience in the treatment of similar areas. My difficulty with officialdom is that they have very definite ideas; that in my opinion they do not pay enough attention to experiments of the past, and in this report which will be presented for the consideration of the government I hope at least some of the experiments that have been tried will be given a thorough inspection by the officers who are delegated to do this work. I am speaking in the light of some difficulties I have had in former days.


The CHAIRMAN (Mr. Smith, Cumberland) :: I understood the minister to move
that the committee rise.


Some hon. MEMBERS:: No.


Charles A. Stewart: I asked for the minister's consent to my putting these questions and making a few remarks dealing only with the statement the minister read to the committee this afternoon. What I suggest first is that he will associate some outside individuals with the officers of his department and that they will make a very careful inspection-I say this in order to clarify what I mean-that in the area known as the Tilley area many years ago we adopted a similar scheme to the one suggested in the statement made by the minister this afternoon. Personally I am not familiar with the result. I take it that the low price of live stock has made it somewhat difficult to make a success of that venture, but I know from personal experience all through that territory there are areas in which farming has been carried on somewhat successfully. Even in Alberta, south of the Cypress hills, there have been very few failures, yet north of that area I am convinced from twenty-five years' experience that a great deal of that territory should revert to ranching. That briefly, is what I mean in making these observations. The situation is very serious and it is one *that must be dealt with. Let us have the 'very best advice possible in order that we may make up our minds what course we shall pursue.


Robert Weir: I appreciate what
the hon. member for West Edmonton has stated. In the statement I gave to the committee we recognize fully what the hon. member has suggested. That is why an advisory committee is to be set up consisting of the fMr. C. Stewart.]
largest as well as some of the smaller and most successful practical ranchers. The same thing applies to wheat growing areas. There will be on this advisory committee some farmers in that area who even under these difficult times have been most successful, because no one appreciates more than I do the importance of the information and the knowledge that these men through the years have gained in the practical operation of their ranches or farms. There will also be associated on this advisory committee some of the outstanding business men throughout these districts who have carried the load almost equally with the farmers and ranchers during the past four or five years and who are just as vitally interested in the rehabilitation of or in discovering to what extent we can rehabilitate these districts. The survey itself has been pretty well completed.
The hon. member in his few remarks referred also to the Tilley district in the southern part of Alberta. I believe it was in 1922 that that was abandoned. A good deal of it has since come back to pasture. An interesting thing in this connection is that the sandy lands came back first with a native grass called sand grass, but even the lighter soils have come back with a better covering of grass than the original one. The best illustration of what can be done is in a district about seventy-five miles south of Medicine Hat where an experiment was started in 1927 in an area, now occupied by the Gilchrist Brothers of Manyberries district which had been settled, homesteads proved up and then abandoned because the people could not make a livelihood. It had to a certain extent been regrassed by nature, but a development was started there to demonstrate just what could be done in the conservation of surface moisture and in using domestic grasses to regrass this area. For example, a dam was constructed not where there was any stream but just to catch the runoff of water in the spring. In 1927 when prices were much higher than they are now this cost only around S400. Yet with that expenditure there was created a five-acre pond of water irrigating forty-five acres with a volume of thirty acre feet of water. This shows what can be done at very little cost.
For the reason I stated before I move that the consideration of this item be deferred.
Item stands.	.


PENSIONS AND NATIONAL HEALTH
[Stage Direction]
Grant to Canadian Legion, B.E.S.L., S9,000.

Supply-Public Works-Harbours
Mr. CASGRALN:: Would the minister explain this item?
Hon. DONALD M. SUTHERLAND (Minister of Pensions and National Health): This item has been in the estimates for a number of years, formerly it was $10,000, and with the ten per cent cut was reduced to $9,000, at which amount it has remained for three years.


Mr. CASGRAIN:: What is it for?


Mr. SUTHERLAND:: It is in the way of assistance for investigation and helping soldiers prepare their cases for presentation to the various soldiers' courts. It is given on consideration that they raise in their own way at least an equivalent sum, and before this is put in the estimate it is found by the auditors that they have complied with that condition.


Charles Eusèbe Casgrain: Can the minister tell us who are the various lawyers in different parts of the country, by provinces, who render these services to the soldiers?


Donald Matheson Sutherland: That does not come under this item. This money is given to the legion to administer. The lawyers employed come under the commission and under the pension appeal court.


Mr. GERSHAW:: How does this grant and the use made of it dovetail into the ordinary organizations for dealing with soldiers' claims? In other words is this grant used to further the claims of those only who belong to the legion, or has a man who does not belong to the legion the same opportunity of getting advantage therefrom?


Donald Matheson Sutherland: I think it has been the policy of the legion from its inception not to ask those seeking their aid whether they are members of the legion, nor is it a requisite for their assistance that applicants be members. It is open to anyone; they are ready to help any returned soldier to proceed with his case and endeavour to get justice.


[Stage Direction]
Item agreed to.

[Stage Direction]
Public Works-harbours and rivers, under contract, Saint John-channel improvements, $90,000.
Mr. OASGRA'IN: Would the minister give some explanation as to the amount and how it is to be appropriated?
Hon. H. A. STEWART (Minister of Public Works):: This amount is required to complete the dredging at the entrance to Saint John harbour, which was provided for in a contract awarded in July, 1930. There have
been some extensions of the areas and of the time for the completion of the work. It is expected that it will be completed during the year 1935-36.


Charles A. Stewart: What is the estimated total cost?


Hugh Alexander Stewart: It is thought this will complete the work. The appropriations have been made over a number of years and the revised estimated total cost is $1,229,200.


Joseph Philippe Baby Casgrain: When was the work commenced?


Hugh Alexander Stewart: The work was authorized by order in council on July 14, 1930, and was commenced shortly after that. In 1930-31, $117,000 odd was the amount expended; in 1931-32, $293,000 odd; in 1932-33, $291,000 odd; and in 1933-34, $308,000.


Joseph Philippe Baby Casgrain: When was the contract awarded and when was the work started?


Hugh Alexander Stewart: The order in council was passed July 14, 1930, and the contract awarded immediately after, I believe.


Joseph Philippe Baby Casgrain: How much was done during the year 1930-31?


Hugh Alexander Stewart: There were 215,696 cubic yards moved. The inspection and surveys added to that made an expenditure of $117,904.92 in the year 1930-31.


Mr. MULOCK:: What was the estimated cost of that work in 1930?


Hugh Alexander Stewart: The description of the work under contract was to dredge 600,000 cubic yards class B at 59 cents, and 80,000 cubic yards of class A at $8.75 per cubic yard place measure. Then the quantities were revised on a survey, and the revised quantities were; class A, 78,061 cubic yards, and class B, 785,073 cubic yards. This includes extras authorized on March 8, 1933, 40,000 cubic yards and on November 2, 1934, 145,000 cubic yards class B.


Mr. JACOBS:: I hope that the government will use its best efforts to see that the work is completed -before 1935 expires.


Hugh Alexander Stewart: Thank you, I think it will.


Mr. ELLIOTT:: Is this being done under unit prices?


Hugh Alexander Stewart: Yes.


John Campbell Elliott: Has there been any change in the unit prices since the original contract was let in 1930?

Supply-Public Works-Harbours


Hugh Alexander Stewart: No changes in the prices, just the quantities increased.


John Campbell Elliott: I understood there was some revision of price.


Hugh Alexander Stewart: No, not of price, of quantities. A re-survey was made and quantities found greater than those estimated.
Mr. OASGRAIiN: Is all the work going to be done by the government and not under the control of the harbour commission?


Hugh Alexander Stewart: No, this work is in the channel, and the St. John Drydock and Shipbuilding Company have the contract.


Mr. WEIR (Macdonald):: Do I understand that this contract has been carried on at so much a yard since 1930?


Hugh Alexander Stewart: The contract was awarded in 1930 and has been carried on ever since at a fixed rate per cubic yard for the two classes of material.


William Gilbert Weir: It seems to me that the cost of doing work of this kind in 1930 must have been materially higher than the cost of the same work to-day, and it does seem to me that some of these contracts properly might be revised instead of being carried on at the higher rates in effect in 1930.


Hugh Alexander Stewart: The contract fixed the price for the work that was to be done, and you could not change the terms of a contract that was awarded for the whole work.


William Pate Mulock: Does that apply to extras also?


Hugh Alexander Stewart: Ye3, these contracts provide that any extra work in connection with the undertaking shall be at the same unit prices as are stipulated in the contract.


George Washington McPhee: Has the minister the substance of the contract that was entered into in 1930?


Hugh Alexander Stewart: I have not a copy of the contract, but it was for the removal of a number of yards, an estimated quantity, of course, of the two classes of material at fixed prices.


George Washington McPhee: A moment ago the minister admitted that the number of yards excavated had been increased under this government. I should not think the contract price would apply to the increased quantity.


Hugh Alexander Stewart: The contract provides that any quantity taken out in that

area shall be paid for at the prices stipulated in the contract. There was not a fixed quantity at all; the contract was for the removal of the rock in a certain area, whatever quantity might be found, and the price is provided in the contract.


George Washington McPhee: That is all the more reason, I think, why we should have the contract before us, because there seems to be some division of opinion between the minister and hon. members on this side as to what actually has transpired in the last four years.


Hugh Alexander Stewart: I have no objection whatever to producing the contract. As I have pointed out it was entered into before this government assumed office; it was an obligation that we inherited and that we have endeavoured to carry out.


Samuel William Jacobs: You have been blasting your way through ever since.


Hugh Alexander Stewart: Yes, it is blasting.


Mr. MERCIER (St. Henri):: Was the contract awarded to just one company?


Hugh Alexander Stewart: Yes, the St. John Drydock and Shipbuilding Company.


George Washington McPhee: I might say that many contracts entered into by the former government may have been mutilated by the present government.


Hugh Alexander Stewart: I would point out that there has been no mutilation in this case. I do not know whether or not there should be, but there has not been any. I have no objection whatever to producing the contract; it is not here, but I am quite prepared to let the item stand until I produce the contract for the information of the committee.


Samuel William Jacobs: Might I ask how many people are employed on this work at the present time?


Hugh Alexander Stewart: I could not tell you. It is dredging under contract, and we have no record of the employees of that contractor.


Paul Mercier: How much money has been paid under this contract to date?


Hugh Alexander Stewart: There had been expended to March 31, 1934, the sum of $1,011,200.14. It is estimated that when all the returns are in for 1934-35 the total amount expended in that year will be $130,000. This year it is estimated that $88,000 will be required; there are some expenses for inspection, and that is why we are providing $100,000 to complete the work.

Farm Loan Act


Joseph Philippe Baby Casgrain: Was there any period
set out in the contract within which the work should be completed?


Hugh Alexander Stewart: Yes.


Joseph Philippe Baby Casgrain: What was the period?


Hugh Alexander Stewart: I think it was
three years, but it is a difficult area in which to operate, owing to tides and storms, and the time has been extended.


Paul Mercier: Can the
minister say what wages are paid the workingmen?


Hugh Alexander Stewart: I cannot say, but I assume they were fixed at the going prices, at the time the contract was entered into. Every year the rates are fixed by the Department of Labour; I think that was done under the former government also. The schedule of wages is attached to the contract, and the contractor must pay those wages. In view of the request for further information, Mr. Chairman, I move that further consideration of the item stand.


John Campbell Elliott: I wonder if, when the
minister is getting the information that has been requested, he would also let us have the unit price estimated by the engineers and the unit price at which the contract was let and which has been paid during the time the work has been carried on. I should like to know whether there is not in that contract a clause providing for the revision of the unit prices from time to time.


Hugh Alexander Stewart: I have no objection to supplying that information.
Item stands.
Progress reported.



CANADIAN FARM LOAN ACT


[Stage Direction]
The house resumed from Friday, February 1, consideration in committee of the following proposed resolution-Mr. Rhodes-Mr. Morand in the chair:
That, it is expedient to amend the Canadian Farm Loan Act to facilitate and increase the extension of credit to farmers, to authorize the Minister of Finance to purchase additional bonds issued by the board and guaranteed by the government, and to amend the provisions relating to the constitution of the board, the purchase of capital stock, the rate of interest, the amount of outstanding bonds, and supplementary advances.
Mr. RHODES:: Mr. Chairman, when the
resolution was under discussion on the motion that the Speaker leave the chair, certain observations were made to which, under the rules of the house, I was precluded from replying. It may be that I may overlook some references which were made; if so I would be quite content to proceed by question and answer at a later stage, but I think one or two observations call for some consideration at this stage. The hon. member for Battle River (Mr. Spencer), for example, in the course of his remarks said:
We are informed in regard to the unemployment insurance measure the government proposes to carry the cost of administration. If that is to be done in order to help those in the cities who are receiving insurance relief would it be too much to ask the government to carry the cost of administration of this act in order to help out those who earn their livelihood in the country.
May I point out to the hon. member that this question was determined when the original act was passed in 1927. By reference to section 7, subsection (e), the hon. member will find the following:
The interest rate on loans under this act shall be such a rate in excess of the interest rate yielded at the time of issue by the last series of farm loan bonds issued by the board as shall be sufficient in the judgment of the board to provide for the expenses of operation and for the necessary reserves for losses or, if no such bondis have been issued, such a rate as in the judgment of the board will be yielded by the farm loan bonds when issued, increased by provision for expenses and reserves as aforesaid.
So that it would appear the policy pursued by the board is one which was laid down when the original act was passed. So far as the act as at present constituted is concerned, that disposes of the question raised by the hon. member for Battle River. I say at once quite frankly that whether the government or parliament should decide to adopt a policy of loaning money to the farmers at its actual cost, and that provision might be made that the cost of administration be borne as part of governmental expense is a fair subject for debate. I say that is a subject with respect to which further discussion might be had when the actual sections are being considered in committee of the whole, and after hon. gentlemen have had an opportunity to see the bill. However, I do not wish it to be considered that I desire to shorten the discussion. I believe it was the hon. member for Gloucester (Mr. Veniot) who raised the question as to the cost involved to the farmer in securing a loan under the Farm Loan Act. In the first instance the hon. member complained that the cost of appraisal was too high. That may be so, and it is a fair subject for discussion. I would point out however that the Canadian farm loan board has
Farm Loan Act

charged a uniform rate of $10 for appraisal, and a comparison may be made when I state that the Ontario agricultural development board charges a fee of $12 for the same service, while the United States farm loan board charges $11. It will be seen that even if the amount charged is too high it compares favourably with charges for similar services made by the boards I have mentioned.


John Campbell Elliott: Would the Minister of Finance permit a question? Are the appraisal charges the same, no matter what the amount of the loan may be? That is, would the same charge be made on a loan of $6,000 as would be made on one for S20,000?


Edgar Nelson Rhodes: I believe, it is uniform, and I can understand why it w'ould be so. It is not so much a question of the time involved in having the appraiser make the actual appraisal; the major portion of the cost is in transportation of the appraiser. In many instances he has to move long distances, and under such circumstances my hon. friend will readily see that an appraiser going to a farm in a remote section might have greater expenses than one making an appraisal in an area very close to his home.


Samuel William Jacobs: If the loan does not go through, what happens?


Edgar Nelson Rhodes: The provision is that it has to be paid, just the same. The hon. member for Gloucester complained further about the legal costs involved in perfecting security for the loan, in other words in determining the validity of title. In all the provinces except Quebec the board has arranged a flat tariff of fees, based on the size of the loan granted, such tariff covering all services exclusive of disbursements and additional conveyancing required to perfect the chain of title. The hon. member gave an illustration as to cost of perfecting a title in connection with a comparatively small loan. The sum he mentioned was very large and out of all proportion to the amount of the loan involved. I cannot speak for other provinces, but I can speak for the province of Nova Scotia when I say that the size of the loan has no connection with the cost of searching titles. I know, because at one stage I had anticipated following the legal profession and one of my earliest experiences was to spend ten solid working days in the registry office, at the end of which period I was not so sure that I had secured a title to a piece of land which was not worth as much as the cost involved in securing the information I sought.


Samuel William Jacobs: Why did you not use the
Torrens system?


John Campbell Elliott: So you decided to go into the ministry.


Edgar Nelson Rhodes: I suppose the question by the hon. member for Cartier is a fair one. At one stage in the province of Nova Scotia we endeavoured to introduce the Torrens system, and found it a long and painful process However, I do not know that we should pursue that subject any farther, except to point out to the hon member for Gloucester that he cannot jump at conclusions when there are circumstances such as I have indicated.


Mr. GRAY:: Is there a different system
in each province?


Edgar Nelson Rhodes: I am speaking only of
those fees which, as I understand it, are the same throughout Canada. There is a schedule, which does not include the province of Quebec of which I shall speak in a moment. In the matter of searching, in view of circumstances such as I have indicated, a basis of fees cannot be set up. It can be limited by a per diem rate, or something of that nature, but the amount must be elastic, depending upon the amount of work involved in searching certain records. The tariff in all provinces under the board is substantially less than the general tariff for similar services recognized in those provinces. To the extent to which the board has been able to control and reduce legal costs, that has been done.
In the province of Quebec the costs of perfecting titles and conveyancing is governed by a tariff of fees fixed and approved by the lieutenant governor in council. This type of legal wcrk in that province is entirely in the hands of the notarial profession, and for that reason the board has no control over the tariffs charged. It has been the endeavour of the board, however, to see that the tariff is adhered to and that no overcharges are made. May I point out that by virtue of provincial legislation passed last year which had for its object the lessening of costs in these cases, the provincial government appointed an official in the person of the hon. member for Bellechasse (Mr. Boulanger) whose duty it is to act in assisting borrowers to prepare their titles. The board has been and is at the moment prepared to cooperate with him having in mind the object of reducing to the lowest possible point the costs to the farmers.


Sir EUGENE FISET:: May I ask the
minister if the provincial machinery will disappear when the new act comes into force?

Farm Loan Act


Edgar Nelson Rhodes: The provincial board will disappear, yes, and there will be only one board. There will be appointed one chief representative of the board in each province, and if the practice is found desirable we may, under the terms of the bill which will be brought down, have the advice of an advisory board, which will not be a full time or a paid board as was the case previously.
I just wish to say, and I say it in all sincerity, that it was a matter of delight to me to note the tone of the debate which was held upon the motion that the Speaker do leave the chair for the house to go into committee for the purpose of considering this matter. The debate was conducted on a high and non-partisan plane. There were, however, one or two discordant notes which possibly cannot be avoided from time to time, and to one or two of those which slipped into discussion I feel in duty bound to take some slight exception.
One was the statement by an hon. member that this legislation was death-bed legislation. Another hon. member said that at last the government was making an attempt to deal with the forgotten man who, he said, was the farmer.
Well, whether the government has done its full duty by the agricultural interests of this country or not may be a fair subject of debate, but I do submit that those two remarks were not warranted by the facts of the case nor by the record because, as a matter of fact, whether hon. gentlemen agree with the full tenor of the empire agreements or not, I may say that their going into effect had very largely in mind the advantage which would accrue, and I think has accrued, to the agricultural interests of Canada, and that was one of the earlier major measures which were brought down by this administration.
I do submit this, sir, and not by way of inviting controversy, but simply as my humble belief, that no measure at any time brought down in this house has been fraught with so great possibilities for good and of assistance particularly for the farmer as has been the case with the Farmers' Creditors Arrangement Act, and that bill became law, as is well known, last year. In order to assist in the more complete and effective operation of that act there was an amendment passed last year to the Farm Loan Act, which had for its object the making available of a very much larger sum of money by way of loan to the farmer than was the case under the original act.


Mr. GARLAND (Bow River):: Can the
minister say how much of that was used last year? Was any of that increase drawn upon?


Edgar Nelson Rhodes: I have not those figures
before me but I shall be glad to give them, if not in committee on the resolution, when we are in committee of the whole on the bill, and if I may I shall come back to that point in a moment.
This legislation is no new idea. It is with a view to carrying out still further the intent and purpose of the Farmers' Creditors Arrangement Act, and bringing this into complete harmony with that act, that we have to-day this further and wider and I hope more acceptable amendment, bearing in mind the general tenor of the discussion the other day, which will materially improve the Farm Loan Act.
I might mention also in this connection the fact of our having passed a Marketing Board Act. I merely mention that as indicating that that measure also was designed largely, if not entirely, for the purpose of assisting the agricultural interests of this country.
So I submit, sir, in those circumstances it is not a fair criticism to say that this measure is a death bed measure, nor that we are attempting at this long last, at this late day in the life of this parliament, to deal with the forgotten man who is said to be the farmer.
I may say to my hon. friend from Bow River (Mr. Garland) that I did not anticipate questions in complete detail which I would expect to have put to me in committee of the whole house, but I shall have the information available when we are in committee on the bill.
There are many reasons which I shall not give now but at a later stage why there were comparatively small loans made under the amending legislation of that year. It was due to a multiplicity of reasons, many of which had reference to ancillary action which had to be taken by the several provinces, some of which deferred their action to as late as the month of December, if my memory serves me right, and some have not yet even taken action. Furthermore, having been projected into the winter that is the season above all others when it is most difficult to make farm loans because the difficulties of inspection which must precede the making of a loan are in some cases insuperable, especially in those areas where we have a very heavy fall of snow.
Farm Loan Act

I have no doubt that there will be other questions, but I thought I should touch briefly on these main points of criticism, and quite proper criticism, and as to which I find no fault whatever, which were made when the motion was under discussion that the Speaker do leave the chair.


Charles A. Stewart: Has the
minister given any consideration to the question cxf shortening the term of the loan?


Edgar Nelson Rhodes: I am very glad that my hon. friend has raised that point. He will recall, having been in the house when the original act was passed, that the whole idea of the original Farm Loan Act was to make for long term loans. The short term loan the farmer could more readily secure in the market at that day, but in order to obviate the necessity of his having to refinance himself, at cost to 'himself, at stated periods, it was his desire to have a long term loan, and the tendency certainly was under the legislation of that day that he should get the money for at least one and a half per cent less than he could1 in the open market. That was true even with the high rate of per cent that the farmer 'had to pay, because the prevailing rate throughout the country at that time was something like 8 per cent. But conditions to-day are strikingly different, and I can see that there may be certain instances where the farmer is engaged in a particular type of farming when he would not wish to obligate himself for a long term loan, and it may be to the advantage of the farmer and for the convenience of the farm loan board to make a short term loan. I do not mean short term in the ordinary accepted sense, but a short term of say five years, as contrasted' with a period of twenty-two years.
This question of the hon. member for West Edmonton reminds me of another criticism which was made in the course of the discussion the other day, namely, that there should be some provision to enable the farmer to anticipate his payments. Well, Mr. Chairman, I am afraid that the hon. gentleman who made that inquiry had not made sufficient inquiries outside because 1 can assure him that the farm loan board like most individuals is only too anxious to receive repayment or prepayment or advance payment or anticipated payments of a loan before the period when they look forward anxiously to find out whether they are going to get any money back at all or not. As a matter of fact, in practice the board has always accepted, and been glad to accept payments in advance either in whole or in part.


Edward Joseph Garland: I would suggest to the minister on the question of the attitude Of the provincial board that I am afraid he will find that one of the chief reasons why greater advantage was not taken of the provisions of the amendment of last year was because of the peculiar temperament of some of the provincial boards at least. I have no hesitation in informing the minister that they have been utterly ruthless in their method of dealing with those who have come under the operation of the act. They have been ruthless to a degree which perhaps the minister is not aware of. In my province there have been borrowers under this act who have been compelled, as a result of the attitude of the board, to seek at least temporary relief under the debt adjustment provisions of the provincial act in order to escape the predatory character of the provincial board's attitude. Furthermore, a praotice had grown up there of compelling those who had borrowed under the board to insure against crop failure. While that may be a very good method of protecting the creditor, it has .been mighty tough on the borrower in the last four years. I make particular reference to this fact because in my province all of the other mortgage companies refrain from compelling those who are under them to take out hail insurance if the borrower feels that he cannot afford to pay and is not prepared to do so. But the provincial farm loan board decided to go ahead with their characteristically cruel action. It was therefore a pleasure to me to know that the proposed amendments provided for the abolition of the provincial boards as such, and I can only sincerely hope that when the administrator or the advisory officer under the new provisions is set up in each province, there will be in my province at any rate none of the members of the present advisory board who will even be considered for that position. I have particular reference to Mr. Murray. One might as well know that there is no more unpopular, no more inconsiderate person in that province in matters of this kind.


Samuel William Jacobs: Has Mr. Murray given the hon. member permission to refer to him .this afternoon?


Edward Joseph Garland: I come now to the second point. The minister has raised the question of administration costs and I was glad that he suggested that the question was debatable. I think his attitude is one we may be glad of. The question is debatable for many reasons, including those cited the other day when the subject was up. The

Farm Loan Act
farmer to-day in the west, in the aggregate, cannot pay 6 per cent. I doubt whether he can pay anything in the way of interest, in the aggregate. There are conditions which perhaps may make exceptions possible, but 6 per cent is too high still; and if the government really wants to aid agriculture through the expansion of credits, it will undertake to absorb the 2 per cent administration cost and let the farmer have the money at 4 per cent. That will not be all that he will have to pay, because under the three system method of amortization provided for in the long term rural credits legislation, an amount will be extracted each year additional to the 4 per cent to enable the retirement of the loan in whatever time the borrower selects as his method of amortization. It is particularly important that this be done not only in the interests of agriculture, but because the government might very well set an excellent example to all other creditors in the country with respect to this question of interest rates.
I come now to a point which I do not recollect having been raised before. The minister referred to the fact that the amendments that were coming in would provide first of all for the abolition of the 5 per cent cash payment by the provinces on the amount of bonds outstanding in regard to loans made in the province, and that the government would refund that 5 per cent to the governments. Is the government going to refund the 5 per cent to the borrowers or, if it is not going to refund it in cash, will the government take into consideration the advisability of allowing a credit for that amount to go back to the borrower in connection with his loan? I think it is worth considering, and I suggest that the minister take it under advisement.
In regard to the farm creditors arrangement legislation, I am not sure that I share the rather over-eulogistic references made by the minister to the act as it has operated so far. It is true it has been of indirect advantage to the west, which is the only part I can speak of. There is no doubt it has made the creditor a little more amenable to reasonableness; but as to the farmer having been able to take very much advantage of the act itself, I happen to know that he has not done so. And he has not been able to do so for this reason. If a farm debtor goes to his chief creditor, the mortgage company say, and asks them to take into consideration a plan for a compromise of his debt, reduction of the principal or reduction of interest or both, in almost every case the minister will find that the creditor will ask, "What cash
settlement are you prepared to make?" If the farmer is able to make a cash settlement there is no question whatever about his being able to secure favourable terms under the act. But the farmers have not been able to get money even under this act. They have not been able to get it from private lending corporations nor from individuals, for the very reasons which the minister himself and, I believe, the ex-Minister of the Interior indicated in discussing the question the other day. I would therefore strongly recommend a change in this act to provide that wherever a compromise between the farmer and his creditors had been arrived at and agreed to by the board of review, certified to by the board of review, the necessary funds to make that compromise effective should be mandatory upon the farm loan board; in other words, that the farmer should be able to go, with the board of review's decision, and borrow the amount to liquidate his present commitments. If the government will make such a change in the act I can assure them that the act will be a thousand times more effective than it is now, and it will have opened up a real avenue by which the farmer could reach, possibly, a satisfactory position and through which there would be a reduction of debt something in line with his ability to pay at the present time. This proposal I have just made to the minister is in my opinion the most important amendment that could be moved, involving as it does the farm credit arrangement legislation, and I most earnestly urge the minister to take such an amendment into consideration.


Edgar Nelson Rhodes: My hon. friend from Bow River will realize, of course, that I am mot in a position to speak offhand and to commit the government in a matter of major policy. I may say to him at once however that his last suggestion does not appeal to me at all favourably. I think it would be a grave mistake for parliament to set up a board for the purpose of administering farm loans and then, by deliberate amendment to the act, parcel out to mine separate bodies throughout the dominion the right to commit Canada to untold hundreds of thousands if not millions of dollars. It will be far better if here and there a case of injustice to an individual farmer may arise rather than that we should not keep control under our own hands of the administration and trusteeship of public money. That is only how I react to the suggestion made by my hon. friend. At the same time it is a suggestion I have never heard from any other quarter at any other time. I do not find fault with it on that account; I
Faim Loan Act

mention that merely as a statement of fact. I will give the matter consideration. I have no hesitation in giving my hon. friend the immediate reaction I have to a suggestion of that character.
My reference to the Farmers' Creditors Arrangement Act a moment ago was not for the purpose of discussing that act but was merely in rebuttal as to a statement made with respect to things which had not been done designed to benefit the farmer, because it will be borne in mind that we have at the present moment standing for second reading a bill to provide certain amendments to the Farmers' Creditors Arrangement Act and when that bill is under discussion, its detailed discussion would more properly come at that time. But lest an improper impression go abroad because of the remarks made by the hon. member for Bow River, let me say this: Notwithstanding the fact that he lives in Alberta and is so to speak on the ground, we have absolute record here as to the manner in which that act is functioning, and I may say to my hon. friend that there have been not dozens but hundreds of settlements in has province under that act, yes, more; there have been under the act many settlements which have not been recorded as such, which have been effected by the farmer debtor and the creditors merely because there was this machinery which could be made available.


Edward Joseph Garland: I said that.


Edgar Nelson Rhodes: For that reason the creditor has been far more amenable in effecting settlements and we are gathering together statistics with respect to a large number of settlements of that character. Let me point this out further: while in many cases there will have to be resort to fresh borrowings and new loans and possibly resort to the farm loan board as a result of settlements arising under the Farmers' Creditors Arrangement Act, it by no means follows that that is a major factor in the successful functioning of the Farmers' Creditors Arrangement Act, because there have been prior to this date actually on record in the head office here upwards of 1,000 settlements effected under that act which have been the means of reducing the debt of farmers by tens of thousands of dollars and in not one case has there been resort to fresh borrowing from either the farm loan board or other boards, although in instances we have record of the fact that creditors themselves have not only reduced the debt obligation, the interest charges, but voluntarily given to the debtor an advance in either cash or kind to help him on his way. No act will ever do 
all that is expected of it, but with the records before us, and having in mind the limited time in which that act has been in force, I believe it has been amazingly successful, far more, I may say, than the most sanguine expectation of its sponsors. Having said this much, let me say that when the bill to amend that act is under consideration I shall expect to go into the discussion of it in detail and give facts and figures of settlements or of applications now before the board and other data in extenso.
My hon. friend raised a question as to the methods adopted by the provincial boards in their ruthless treatment of farmers who sought loans. I do not know that any good purpose can be served by discussing what is past, but I can assure the hon. member for Bow River that there are very few complaints with respect to this act which do not reach my office and I have heard numerous complaints of the character he has indicated. I make reference to that only for the purpose of saying this: We are now starting a new method which will mean centralized administration, one place where responsibility can be fixed, at Ottawa, and so far as I am concerned-'and I speak for the government in this respect-while we do not wish to throw away public money and there must be reasonable protection of the public purse, if we err at all we shall endeavour to err upon the side of generous treatment to the farmer rather than in a niggardly safeguarding of the public funds. In other words I believe within bounds, even if we lose a substantial portion of these loans, as may inevitably be the case, by and large we shall be far better off by having contented farmers on the land than we shall be if we husband our money and allow the farmers to starve. So, as far as I am concerned-and I speak for the government in this respect-it will be our endeavour to administer this act in a generous spirit, always bearing in mind the public interest, but with the sole object of endeavouring to assist the farmer to remain on the land.


Ross Wilfred Gray: The government will still expect the farmer to pay back the loan.


Edgar Nelson Rhodes: Assuredly, and there is no good reason why he should not. I do not think any self-respecting farmer wants charity; all he wants is a reasonable opportunity to make good.
The hon. member for Bow River submitted another question and quite a proper one. He said: If you are going to return to the provincial governments five per cent contribution under the old act, because it will be

Farm Loan Act
recalled that in the new bill we have no five per cent contribution, what about the farmer? Well, it has always been a provision in the original act that the farmer shall have credit for that five per cent on his obligation. The only qualifying feature has been as to the time when he will get his five per cent. Heretofore it has been when the transaction has been closed out. There is a disadvantage there to the farmer inasmuch as he has been paying interest on five per cent of money that he did not secure and it may be the part of wisdom so far as the old contracts are concerned to give him immediate credit. That is a fair subject for discussion and we can deal with it when we are in committee on the bill, but in any event I want to make it clear to the committee that the farmer always secured a credit for that five per cent.


John Vallance: When this measure was before the house on a previous occasion I had something to say on it. The suggestion of the hon. member for Bow River, one to which I have given considerable thought, was that the farm loan board, once a farmer had asked for an adjustment, should if at all possible extend the loan in order to enable the farmer to get a better deal in the adjustment of his debt. I immediately proceeded to secure some information regarding my own province to see just to what extent the farmers on the lands of Saskatchewan had mortgages on their holdings. I find this, which I think will prove to my good friend from Bow River the utter impossibility of the federal farm loan board, with S90,000,000 at its disposal, taking care of the suggestion he made. I am going to deal briefly with the facts concerning my province. The statistics are as follows: Saskatchewan
Number of occupied farms, 136,472.
Farms occupied by owners or part owners, 115.428.	_
Percentage of farms occupied by owners or part owners, 84-6 per cent.
Average size of farm, 407-95 acres.
Total .value of farm lands, $781,124,800.
Amount of mortgage indebtedness, $177,620,800.
That is mortgage indebtedness alone. When the farmer comes for an adjustment that is not all his debt. In many instances you will find that the mortgage on the land of the Saskatchewan farmer is less than fifty per cent of his total indebtedness. So when we come to the suggestion made by the hon. member for Bow River these figures make it quite apparent that it would not be possible for the government with 890,000,000 to accept that responsibility.
The number of farms reported mortgaged in Saskatchewan is 56,587. The percentage of owners and part owners reported mortgaged is 49, and the average mortgage on the average farm of 408 acres is 83,139. So that the province of Saskatchewan is not so badly involved as many people seem to indicate. With the average Saskatchewan farm as 408 acres and the average mortgage as $3,139, the average indebtedness per acre to the mortgage companies is 87.69. With interest at eight per cent the yearly amount due on the average farm on this count would be $250.82. I should like to endorse what has been suggested by the hon. member for Bow River- I suggested it myself the other day-that if the government can see fit to make the interest rate as low as four per cent it would greatly help. The average rate in Saskatchewan to-day is eight per cent, which amounts ;to $250.82 on the average farm mortgage. If the rate were reduced to four per cent the interest would be $125.41, and that saving would just about meet the taxes on the average Saskatchewan farm. Some communities have a higher rate of taxation than others, but I think on the average the taxes could be paid out of the saving of four per cent.
At present interest works out at an average of 61 cents per acre. No Saskatchewan farm land can pay that in these times. This is one reason, although not the whole reason, why we find the farmers of Saskatchewan getting into such deep water; the interest is eating them up. If the minister could see his way to lower the interest to four per cent it would at once cut the mortgage interest from 61 cents to 301 cents per acre. By itself, this interest does not look like an overpowering burden, were it not for the necessity of making payments on the principal. With an average crop the farmer should be able to carry that interest. I think the history of Saskatchewan mortgages proves that to bf true in normal times. But it must be remembered that in some parts of Saskatchewan we have had total crop failure for five and six years, yet even to-day with all those things that we have had to combat the picture is not too bad. At the same time that 61 cents per acre is a substantial part of the cost of production.
The valuation placed on western farms by the census seems unduly small. The average farm of 408 acres was valued at 85,724. I do not think that there is any mortgage company which would advance S3.139 on a valuation of that amount. I do not know how this
Farm Loan Act

federal farm loan board would act in Saskatchewan. As I stated the other day, we have had a provincial farm loan board, and the federal board has not been operative. I was called out for a few minutes this afternoon, and when I came back I gained the impression from the discussion that the provincial farm loan boards will now be absorbed by the federal board. Am I correct in that?


Edgar Nelson Rhodes: No, they are abolished.


John Vallance: Is it the position that
the provincial farm loan boards will no longer carry on business, but the federal board will take all the new business?


Edgar Nelson Rhodes: All business, new and old.


John Vallance: It will take over the existing business of the old provincial farm loan board?


Edgar Nelson Rhodes: Not the provincial farm loan board, but the federal board which has been established in provinces other than Saskatchewan, Ontario and Prince Edward Island. I made that clear on the first occasion.


John Vallance: So now the federal
board will be operative in these provinces?


Edgar Nelson Rhodes: Yes.


John Vallance: And it is made possible by concurrent legislation through the provincial legislature?


Edgar Nelson Rhodes: No concurrent legislation is necessary.


John Vallance: The statistics I have placed before the committee, which are given to me as accurate and I suppose can be checked by the statistical bureau, show that if funds are available there can be a great measure of relief given to the farmers of Saskatchewan under the federal farm loan. I shall be quite frank, it has been a great pleasure to me to see this legislation brought in. I am not going to accuse the minister of a death-bed repentance, we are only too glad to see it, and I hope the farmers will not be disappointed when they make application for loans by finding that no funds are available.


Mr. HACKETT:: I think there is little criticism arising from foreclosures in the province of Quebec; I have not known of a single case, there may have been some. The difficulty in Quebec is from another source; it is that the board has not made loans, or when it has made loans it has applied a low standard of valuation. It has applied the

standard of the private lender. Due to difficulties largely attributable to the loss of the market, prices of farm lands have sunk to the lowest point we have known in generations. It has been very discouraging to the farmer to find that he could get a loan only of an amount which a lending company would advance. If the farm loan board is going to lend money only on a basis acceptable to a private lender then I fear it is not going to achieve very much to assist those who are in need. That seems to me a most important question, and one which will have to be determined before we can expect any substantial relief from this source. This probably is not an opportune time to discuss details. I recall to the minister that in the province of Quebec the law does not permit a lender to take a chattel mortgage. That may be a good thing; it may prevent the farmer from pledging his movables; it may be protection for him, but the fact remains that a farmer in Quebec is denied a certain amount of credit that is available to farmers in other parts of the country. I have read that it is intended to make loans available at a higher percentage of the value of the land in those provinces where movables can be pledged than in those provinces where they cannot be, and there remains a disadvantage under which the necessitous farmer in Quebec must labour.
There have been some annoying features of administration which I hope the minister will seek to remove. For instance there is the interminable delay. An application is made to the board. The farmer has not the facility for writing many letters; possibly he has not the inclination to write, or the training for it; the correspondence drags on until he is sick and weary of it and wishes he never had the misfortune to attempt to milk the farrow cow. Moreover I think there should be some decentralization with regard to inspection. It may be well to have centralization so that there will be uniformity of policy, but I think it unfortunate that there should be only one office in a province, especially when provinces are large and the borrowing areas are far apart. It happens not infrequently that the need is urgent, and the application should be disposed of within a reasonable time; delay is sometimes worse than a prompt refusal. There is also the question of cost. Frequently farmers are told, "You want only S200, $300 or $400. The cost of having the title to your land examined, of getting a mortgage, of having that mortgage registered and of putting up the necessary deposit to have it radiated, is going to bring your rate of interest, regardless of what

Farm Loan Act
the interest itself may be, up to 15 or 20 per cent." Whether or not it is feasible to devise a method of advancing small sums of money for a few months without going through all the formalities and incurring all the expense of hypothecation, is a matter for the government to decide. In Quebec hypothecation is a rite that is enacted with great ceremony, form and expense. The cost of registration in Quebec is very high. These deeds have to be prepared with the utmost care, and no professional man wishes to prepare a deed until he has examined the title to make sure that it is free not only of anterior mortgages or hypothecations but also of privileges, some of which are not registered. I need not worry the house with this series of privileges registered and unregistered, that exist in Quebec; my hon. friends opposite know that interminable litany probably better than I do, but unless these details are considered by people who are familiar with them and who can assist the government in working out this scheme we will have legislation which, so far as Quebec is concerned, will be like the last act, unworkable and incapable of giving relief to those who need it so much.
In Quebec the interest rate was not quite as high as it was elsewhere, because for a time the provincial government contributed one and a half per cent towards the interest exacted by the federal board. Whether or not it will see fit to continue that practice under the new dispensation is a matter for conjecture into which I shall not go. But delay, expense and the impossibility of getting a small loan-because if you take all the expenses into account the rate of interest becomes prohibitive

are three matters which I think should be carefully considered in framing any amendments to this legislation.


Edgar Nelson Rhodes: If I may I should like to
say just a word in reply to the hon. member for Stanstead. I do not desire to call into question any of the representations he has made; I assure him that what he has said will be given most careful thought, not only when the bill is before the house but when the question of administration comes up. But my hon. friend rather left the impression in my mind that these difficulties which he mentions have restricted the amount of lending in the province of Quebec, which would have been enlarged but for the difficulties to which he refers. I should like to point out to the hon. member that as a matter of actual fact, whether we have loaned a large or a small sum in the aggregate, of all the loans made up to the present time in all Canada,
under the old act, one-third have been made in the province of Quebec.


John Thomas Hackett: They were not made
recently.


Edgar Nelson Rhodes: I am speaking of the
existing loans in all Canada, amounting to some $9,000,000; one-third of those loans have been made in the province of Quebec. I merely wish to cite this one fact, lest the unfortunate impression might be created that our friends in that province have been unjustly dealt with.


Mr. HANBURY:: When I saw my hon.
friend from Stanstead rise to his feet I had hoped that we would get his views with regard to some of these contemplated actions of the government. I go back to the question of the Canadian National Railways; I well remember the impression made upon me by the hon. member for Stanstead when he pointed out to the members of this house the serious situation that was confronting the people of Canada by virtue of that degree of socialization, and when I saw my hon. friend rise to-day I hoped that he would draw some such inference from the legislation forecast in the resolution now before the committee.
This afternoon the minister was grieved to think that any person would suggest that this was deathbed legislation. To me this has a tinge of that. Perhaps this was not brought to light for the first time in the broadcasts by the Prime Minister; it even may be part of the reform program, as stated by the minister to-day, which was foreshadowed by the Farmers' Creditors Arrangement Act. This government is showing a tendency to go so far in socializing everything in Canada that it is doubtful whether they will listen to any suggestion such as I have in mind, but after all it should not be forgotten that we have in Canada certain vested interests. We have in Canada people and companies who have been established for generations and throughout the length and breadth of the country have the facilities necessary to investigate values of farms for purposes of loaning money. Throughout the past years these companies have not been able to loan money, and 1 think every hon. member knows the reason they have not been in a position to loan it
I suggest the primary reason is that the provincial governments have moratorium legislation. Yet this bill does not take into consideration the possibility that that moratorium legislation should be raised in the various provinces.
Farm Loan Act

As a matter of fact to-day the minister has taken considerable credit to the government for its operation of the Farmers' Creditors Arrangement Act. I am here to say frankly that I am not altogether in favour of that act because I believe it is more legislation tending towards socialism and socialization in Canada. I suggest to the minister that we have companies which have operated for years, companies having servants and officers familiar with the loaning of money, and I say there should have been some consideration given, if there has not been, to the use of those services. If the government wishes to give money at a price below that which is economically sound or at a price below that which the individual or the company would loan money, I would be quite prepared for it to subsidize loan companies. I should like to see some of the established interests used. I would like to have the government use those people who have made it their business properly to conduct the business of loaning money. Yet we have under consideration a governmental institution set up to loan money, an institution which will put every mortgage and loan company in Canada out of business, and one which must do so within a very short period.
I shall ask the minister if any consideration has been given to the use of any of the existing agencies or institutions capable of putting money out to the farmers of Canada.


Edgar Nelson Rhodes: I do not quite follow the
question.


Wilfred Hanbury: In my few remarks I suggested to the minister that in Canada we had established institutions which have been set up for the purpose of loaning money to farmers. I suggested further that those institutions could have been used for the purpose of carrying out duties such as contained in this legislation. If it is necessary, to give a farmer cheap money it could have been done by way of subsidizing the loan companies. I ask the minister whether any consideration has been given to using any of the established institutions for the purpose of loaning monej's to farmers.


Edgar Nelson Rhodes: The Farm Loan Act has been in existence since 1927. I am not aware that the proposal of the hon. member has ever been considered; certainly it has not by me. I may go a little farther and say that to the best of my recollection I have never had 3uch a suggestion made to me. I may say to him-and I speak for myself only, and on the spur of the>
moment, the question having bben
TMr. Iianbury.]
put to me only a moment ago-that the proposal he makes does not appeal to me. The Farm Loan Act as originally set up is designed to cover an area, not entirely but at least a part of which hitherto had not been covered by the loan companies. Let me say by way of interjection that I do not purpose pursuing this subject to any great length in the present instance, because I believe it should be done when the bill is under consideration, but when the Farm Loan Act was originally introduced it had the effect of making money available to farmers at one and a half per cent less than he could obtain it from the private companies.
There are many government agencies we could utilize. There are very efficient employees connected with the soldiers' settlement board whose services would be available. It does seem to me however that the general principle, namely that the government in dealing with the loaning of money should do so through the medium of machinery which it has set up, should apply. It strikes me that the policy of bonusing private companies which would have to do with administration is unsound. The mere suggestion of it does not appeal to me, and I have no doubt in the world that the hon. member would not be able to convince the loan companies to accept a system of that type, unless it involved a guarantee from the dominion for the security of the loan. Of course to my mind that proposal is unthinkable. However I just describe to the hon. member the reaction I have experienced at the moment, and I shall be happy to give careful thought to the proposal at a later stage. At present however it does not appeal to me.


Wilfred Hanbury: I suggest seriously to the minister that in connection with this legislation the government should consider the moratorium legislation in effect throughout the various provinces.


Edgar Nelson Rhodes: With respect to that phase of the matter, surely the hon. member does not suggest that this parliament can pass overriding legislation which will have the effect of repealing provincial statutes which have been passed within the orbit of the jurisdiction of a provincial legislature? If that is not what the hon. member means I am afraid I do not understand the nature of his suggestion.


Wilfred Hanbury: I appreciate the point the minister has made, but I suggest to him that

Farm Loan Act
this parliament can pass legislation forbidding the loaning of money in the way which has been set forth in the provinces where moratorium legislation exists.


Edgar Nelson Rhodes: We do not need legislation for that.


Wilfred Hanbury: That is what I am asking the government to consider. I should like to know whether they shall not provide in this legislation that in provinces where moratorium legislation exists such legislation must foe lifted before any farmer may take advantage of the loans offered by this legislation.


Edgar Nelson Rhodes: I aocept the suggestion made by the hon. member in the spirit in which it is given. While I say to him it would not be possible, through the agency of its farm loan board, for the dominion government to wield the big stick, yet I can assure my hon. friend we will endeavour so far as possible to exercise such reasonable influences as may be open to us to see that legislation of the kind to which he refers is if not removed at least reduced to the minimum, and certainly that it will not have a detrimental effect upon the policy of the dominion government in its desire to assist the farmers in the provinces to secure money by way of loan.


Mr. HOWARD:: The statement has already been made and I repeat that the Farm Loan Act and the Farmers' Creditors Arrangement Act should so far as possible work together. The Farmers' Creditors Arrangement Act has at the present time practically destroyed the credit the farmer enjoyed by reason of his being able to borrow from loaning companies. If a system could be worked out whereby the two pieces of legislation could work in harmony or cooperation, one with the other, I believe a great deal would be done towards the restoration of credit.
Further, I can understand where one body should have absolute control over the legislation, but on the other hand I believe inspectors should be segregated in certain districts and that their recommendations, as men knowing the conditions in different parts of the country, should bear a great deal of weight in the circumstances. I am thinking of it this way: I do not believe the minister wants to put on the statute books again legislation that will not be workable. I believe he is sincere in wanting this legislation to do something for the farmer, but in that case it seems to me he will have to go a whole lot further than he seems to be going in this legislation.
I am almost ready to accept the suggestion of the hon. member for Bow River. I believe that where a compromise is forced on a farmer, it is only forced on him where there is no other way. There is now a moratorium in the province of Quebec, and he cannot relieve his credit situation. He has certain assets and a great many liabilities. He goes to the referee appointed under the Farmers' Creditors Arrangement Act and they go into the whole situation in the fullest detail, figuring out what the earning power of the farm is and what the farmer's liabilities are. We will say for the sake of argument that he makes a settlement on a fifty per cent basis. The creditor is going to tell the referee the best side and the debtor the worst side, and when this arrangement is made and the referee makes his report to the court, I believe it ought to be almost compulsory that the farm loan board should advance the money necessary to clean off the debts and put the farmer on his feet. You may say that that is extreme legislation, but you are dealing with an extreme case. This legislation concerns a farmer who has to, or may have to, get off his land for good and all.
As to the neighbouring farmer who has a small mortgage on his farm but whose revenues have dropped because everything he has to sell has gone down to an exceedingly low point, it is just as vital to say to that man, who cannot now pay his taxes and other obligations on account of the high rate of interest, that you will cut his interest rate from seven to five per cent; you would thereby assist the farming communities and help to put the farmers on their feet, if that is the real object of this legislation. This money would not be coming out of the government or out of the taxpayers. It would mean a reduction in interest rates; in some cases for people who could afford to stand it, and in other cases for those who should take a reduction in interest rates. I cannot emphasize too strongly that the working of the Farmer's Creditors Arrangement Act puts the farmer who legitimately wants to borrow one or two thousand dollars and who can easily carry the load in a position where under no consideration can he borrow money from a loan company in a province where the Farmers' Creditors Arrangement legislation is in force.


Edgar Nelson Rhodes: I rise only for the purpose of avoiding any misunderstanding with regard to one or two remarks made by the hon. member for Sherbrooke. I took down his exact words. He said that he was almost

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inclined to favour the suggestion of the hon. member for Bow River that it should be compulsory that a loan be made by the farm loan board in the case, he said, where you force a compromise on a farmer. Those are the exact words of my hon. friend.


Charles Benjamin Howard: For the benefit of the farmer.


Edgar Nelson Rhodes: Let me say to my hon. friend that if force is used it cannot be a compromise, and if there is a compromise there can be no force. I am not quarreling over verbiage. I am simply analyzing a statement of my hon. friend that will not bear analysis. If what my hon. friend meant to say was something different, he certainly did not say it. I could not conceive of a set of circumstances whereby the farmer would be forced to his own disadvantage. Does my hon. friend mean to suggest that if a farmer has a mortgage of $1,000 the board could say he owes $1,500? Not at all. The very essence of the Farmers' Creditors Arrangement Act, which is not under discussion at the moment, is compromise and conciliation. But where the board of review exercises the authority which it possesses under the acv, ,n every instance the man who will have to make a contribution will be the creditor, not the farmer, unless you are going to conceive of the absurd situation that the court would say that the farmer owed more than he contracted to pay. As a matter of fact, in every instance the farmer will be the beneficiary. It will be only a question of degree.
So far as the question of interest is concerned, my hon. friend must realize that that in turn is a matter of compromise and conciliation under the terms of the Farmers' Creditors Arrangement Act. Well, if he does not realize that, he ought to read a book, because that is the fact.


Ernest Lapointe: Apparently it is no good.


Edgar Nelson Rhodes: I said, read a book, not
put it in a book. As I say, that is the fact unless the board of review decides to hand down a decision, which it is competent for it to do, to the effect that the interest ^iall be reduced as well as the principal.


Charles Benjamin Howard: I think it is only right
that I should answer the minister. I did not intend to get into a controversy. Let me give him a concrete case. Suppose a farmer who owes $5,000 cannot meet his obligations, and because of his financial situation he cannot go any further. Surely the minister knows what working capital means to the farmer or in any other business. Well, finally the farmer has to avail himself of the facilities under

the Farmers' Creditors Arrangement Act. The referee goes over his assets and liabilities, estimates his future earning power, and decides that he has a right to avail himself of this legislation and settle with his creditors on a fifty per cent basis. After that is done I say to the minister that the farmer still wants liquid working capital. Where can he get any credit to carry on his business of farming? He must have working capital to start again.
I still maintain that the suggestion of the hon. member for Bow River is not a bad one. Suppose the amount in question is $5,000, and the settlement is on a fifty per cent basis, which would make it $2,500. Then if the farm loan board-if the loan was not in the hands of a mortgage company-had to advance the necessary money to clean off that balance of $2,500, and say $500 working capital, you would reestablish that farmer and make him a real asset not only to the province but to the whole of Canada.


Edward Joseph Garland: I think I
shall have to come to the defence of my own proDosal. because I am afraid in some quarters it may be misinterpreted.
In the first place may I say to the minister that my only object in referring to what I regarded and referred to as over eulogizing of the effect of the scheme was not to minimize in any degree the possibilities of the Farmers' Creditors Arrangement Act, but rather simply to state what was the fact, and the minister himself has not disabused my mind in that regard.


Edgar Nelson Rhodes: I would not expect to.


Edward Joseph Garland: When he
tells me that there were a thousand cases I have no doffbt that there were. But one thousand out of 782,000 farms most of which owe money is after all not something to talk about very loudly. Let us be fair. I am satisfied that if the act has not made greater progress it has been due to two factors. First it has not been operating long enough, and the provincial boards of review did not go into operation quickly enough. There may be no blame to be placed on this administration in that regard. Of have no doubt they did their beet to expedite business, but they did not start until quite late. Secondly, compromise under this legislation can be best effected if the farmer is able to say to his creditor that he is prepared to meet him in cash. There is no douibt about it. I went to one of the mortgage companies in Calgary and put my own case to them this fall. I said, "I should like to arrive at a compromise with you. I

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do not want to come under the Farmers' Creditors Arrangement Act unless it is absolutely necessary; I want to reach an agreement with you outside the act." The answer of the man I interviewed came at once, "Mr. Garland, what are you prepared to put up? How much cash can you give?" I told him I was not in a position to make any cash payment and he replied, "That's all right, old man, Will you drop in some time when you have cash and we will talk it over." The effective compromise that will benefit the farmer to the greatest possible degree can be obtained only if the farmer is reasonably certain of being able to secure cash with which to meet the claim. I therefore suggest to the minister that, in dealing with this farm loan act, he might take into favourable consideration the possibility of an amendment which would be so framed-


Edgar Nelson Rhodes: I heard it before. I heard the hon. member the first time.


Edward Joseph Garland: I hope the minister understood it, though. The proposal was that an amendment might be introduced to provide that, in the event of the board of review having come to a decision as to the maximum capacity of the farmer to meet his obligation, every factor being taken into consideration, that settlement should entitle the farmer to borrow from the farm loan board the amount necessary to make the compromise effective. That is my suggestion.


Edgar Nelson Rhodes: I heard the hon. member the first time. It did not require a great deal of mental application to understand what he said when he first said it, and I think I understood it on that occasion. I cannot say more now than I did on the first occasion; my feelings are precisely the same. But I did conclude by saying that his suggestion would be carefully considered, and that is all I can say. So far as the operation of the Farmers' Creditors Arrangement Act is concerned, I think the committee will endorse the suggestion that I should await the bill which is now before the house dealing with that measure before I give any details. When the proper time comes I shall be glad to traverse in detail the ground which my hon. friend has covered.


Mr. POULIOT:: May I make two suggestions. First of all, why does the government intend to lend such a large amount of money to farmers? Is it not because the farmers have no money? And why have they no money? Is it because they have no farm products? No; it is because they cannot sell their products. And why can they not sell 92582-33$
their products? Is it not because they have no market? Therefore would it not be a good thing for the government to consider a reduction of the tariff so that the farmers might eventually be able to sell their products, instead of being obliged to borrow money from the government? That is my first suggestion and I make it in all earnestness.
The second suggestion is this. The farmers have lost a good deal of money not only in consequence of a decrease in external trade but also because of a decrease in the home consumption of farm products, so much so that the amount which is mentioned for the loan is but a small fraction of the losses sustained by the farmers. These losses are very considerable, and I would refer the committee to Hansard of June 6 of last year. I will not repeat the facts set out there, but the decrease in value of fourteen farm products in the year 1932 compared with 1930 has been $440,000,000. The humblest farmer has lost at least $50 a month as a result of the decrease in trade and the decrease in the sale of farm products. Would it not be possible and desirable for the Prime Minister and the member for Argenteuil, who are two of the richest men in this country, to give of their wealth for the benefit of the farmers who have suffered so much on account of their policy? I make this suggestion in good faith, and if they will accept it they will prove their good faith. Mr. Baldwin did something of this kind in England and he was praised by everyone as a good citizen. I suggest to the Prime Minister and the member for Argenteuil, two of the richest men in the country, that they follow Mr. Baldwin's example.
At six o'clock the Speaker resumed the chair and the house took recess.
After Recess
The house resumed at eight o'clock.
The house resumed consideration in committee of resolution to amend the Canadian Farm Loan Act-Mr. Rhodes-Mr. Ross in the chair.


Mr. BERTRAND (Translation):: Mr. Speaker, I listened this afternoon with a great deal of attention to the debate on the amendments to the Farm Loan Act. Let me point out that there are some factors which we must not lose sight of while examining the necessity of farm loans. In dealing with this question, perhaps it would be well to consider somewhat the conditions of agriculture and the reasons which prompt us to amend the Farm Loan Act, as well as all the laws tending
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toward the protection of agriculture in Canada. There is no doubt that the difficulties of later years prevented the farmers from meeting their obligations and that the amount of their debts generally increased, in spite of a reduction in the cost of living. However, operation costs have not been reduced in the same proportion as the price of farm products. That is the cause of the farmers' embarrassment. Although there were Dominion farm loan acts in operation in all the Canadian provinces, except in Saskatchewan, Prince Edward Island, and Ontario, provinces who have their own farm loan laws, they could not meet the precarious condition in which the farmers found themselves during these years of depression. The various provinces, besides the Farm Loan Act, have had to consider moratorium measures in order to keep the farmers from losing their lands, and save the farming industry which we like to consider and which has been considered throughout the whole history of Canada as the basis of our economic structure.
Through the farm moratorium acts either the payments of the farmer's debts were deferred or the exigencies of the mortgage deeds made ineffective. This did not improve the precarious condition of the farmer to which I referred a moment ago. Last year, this parliament passed a bill called the Farmers' Creditors Arrangement Act to facilitate arrangements between the farmers and their creditors. We were aknowledging thereby the fact that the farming industry was perhaps in a worse condition than it had been in for a long time and that something had to be done, something very urgent in the form of legislative measures.
At the present time the farmer is unable to pay and that is why the Arrangement Act that was passed last winter and that is now in force, is beginning to operate throughout the country and the requests will be far more numerous in the near future. At present, the farmer wonders what will become of the cases now under consideration by the receiver, and which, failing an agreement before the receiver, are finally referred to a judge and two representatives of the parties, who have to decide how much the creditor must lose on his loans to the farmers, to what extent the debts must be reduced and how much the farmer will have to pay or try to pay pursuant to such compromise.
I was pleased, Mr. Speaker, to hear the minister himself say this afternoon that the Farmers' Creditors' Arrangement Act and the Farm Loan Act should be considered jointly in order to secure legislation which would be easy to operate and effective in its results

for the welfare of the farming industry, as a whole, and specially to keep the farmer from losing the land on which he lives.
This Farmers' Creditors' Arrangement Act ought to be fair to the farmer as well as to the creditor. Allow me to review the effects of the various applications for a compromise which have been made in that part of Ontario where I live, and which are about to be decided upon. In the county of Prescott, which I have the honour to represent, a few of these applications will be examined at Ottawa by Judge Hope, on Thursday and Friday of this week. We are awaiting these decisions with some anxiety. Some decisions have nevertheless been already rendered upon which an intelligent study of the legislation might be based, and which permit us to offer our best suggestions to the hon. Minister of Finance (Mr. Rhodes). The Farmers' Creditors Arrangement Act, in order to help the farmers, must be easy to operate and bear results.
There is no doubt that the farmers who are applying now for a compromise with their creditors are those who have trouble in meeting their obligations, or are unable to meet them at all, in many cases because of the accumulation of these obligations. For instance, we see some farmers who not only have been unable to pay any interests for one or two years, but who also owe tax arrears, bills at the stores, the blacksmith, the baker, and even promissory notes on implements, because the moratorium allowed them an extension of time to pay them, when they applied for it to the county judge. The latter granted them a delay of six months to help them out, and then another extension of time at the expiration of those six months, thus accumulating the debt which compels them to-day to ask for a compromise.
I cannot help making two particular suggestions to the minister, because the farmers are not all in the same position. It is absolutely necessary to amend the Farm Loan Act, so that when a farmer makes a reasonable offer to the receiver, the latter may have the power to instruct the Dominion Board to lend the necessary amount to facilitate the arrangement. I heard the minister of Finance say this afternoon in reply to the hon. member for Bow River (Mr. Garland), that you could not instruct the Farm Loan Board to make a loan. But if you want to keep the farmer on his land, that is what you should do and the case would be settled. There is another suggestion I wish to make. The Dominion Board should be empowered to lower the rate of interest as much as it may

Farm Loan Act
be necessary in order to reduce the payments to be made by the farmers and thus allow them to remain on their land without causing too great a loss to the creditors.
I shall revert to my first suggestion that the receiver or those who have to deal with the case should find the necessary funds. And here is the reason why I am making this suggestion: There is no doubt, in some cases at least, that the farmers owe more than their land is worth, and their revenue is too low for them to make a living, to pay their debts and their interests and to provide for the up-keeping of their farms. Therefore, they ask for a reduction of their whole debt, they propose not only to reduce their mortgages, but all their other debts, offering to pay a certain percentage in five, ten or fifteen years. Here is what happens, Mr. Speaker. As soon as a farmer applies for a reduction of his debt and a certain delay within which to pay it, nobody will sell to him on credit any more. Now in several parts of the country, and specially in the Ottawa valley, the difficulties of which I have more specifically studied, the farmers can obtain money only once a year from their crop. Let me explain. During the summer, the sale of milk in later years did not yield enough to provide for the upkeep of a family, and also to pay taxes and interests. Therefore, they must wait until the crop is sold, whether it be clover or timothy seed, hay or grain. It is quite logical, for you cannot draw practically any other revenue out of these lands. As soon as the farmer makes his application, he cannot get anything on credit at the store, he cannot buy on credit any more, neither feed for his cattle, nor the commodities which he does not grow himself. He cannot secure any credit anywhere, and therefore his operations are stopped. Being unable to get credit anywhere, the farmers are compelled to sacrifice what is left, either their live stock or their implements, to provide for their families. Therefore, being deprived of the necessary means of production in the future, how will they be able to pay the amount required by the compromise? If the farmers had the opportunity to effect the settlement in cash, they would protect their credit, the people would rely on their being able to operate their farms, and they would not be in the precarious position in which they are now.
It must be realized that farmers who compromise with their creditors, being unable to make any further purchases on credit, will find it difficult to carry on their farming operations and will therefore be doomed to a second failure. The hon. Minister of Finance
may tell the house that this act has given good results, and he may produce figures to that effect, but the facts contradict his assertion, for if the farmer is unable to borrow from the Canadian Farm Loan Board to meet the amount of his arrangement with his creditors, he will be unable to find money anywhere, and, without money, he will be unable to operate his farm in a normal manner and his returns will suffer. That is why I say that [DOT]he will be doomed to a second failure.
Should the present situation continue, lenders will find themselves forced to take back farms in bad condition, poorly fenced, with neglected buildings and with soil impoverished by lack of fertilizers, and not only will the farmer find himself in a bad state, but the farming class will have lost its credit. May I say by the way that this arrangement act, as it stands at present, will make it impossible for young farmers to buy land, because they will find it impossible to borrow. In my district, loans to farmers are made not by companies, but usually by retired farmers who lend their life-time savings to the younger generation. Their savings are not large and they need them for their subsistence. If, in order to protect the farming class, we make them lose part of their savings, these old people who thought they had laid aside sufficient money for their declining years, will find themselves forced to apply for old-age pensions and will thus become public charges.
When an arrangement is effected between farmer and creditor, what could be more just than to pay in cash the amount involved? Having paid his debts, the farmer would retain his credit and would be able to continue operating his farm. The creditor, on the other hand, having received his money, would be able to invest it elsewhere to the best advantage.
But the Farmer's Creditors Arrangement Act does not cure the farmer's ills. It entails loss to the lender and deprives him of his income.
It will be said that the farmer agrees to pay interest on the amount compromised for. How will he be able to pay more next year than this year if his income has not increased? Even if you reduce to S4,000 a debt of $8,000, if the real value of the farm is at present $2,000, the farmer will be unable to meet his interest, with taxes as they are to-day in Ontario. I mention Ontario because, living there, it is the province I know best. With the high cost of living and the heavy cost of operating a farm, the farmer will still bf
Farm Loan Act

unable to meet his obligations if he has to continue paying interest rates as high as those he pays to-day.
In such cases it would be much fairer, it seems to me, for the receiver to effect a compromise by which the rate of interest would be reduced, but the principal of the debt left at its original figure. The rate of interest should be brought down to the level of the paying capacity of the farmer, even if it meant lowering it to 1 per cent, but the principal of the debt should be left intact. We all hope to see the return of normal years, and when they come, these farms will be back to their normal value.
Take, for example, the case that I mentioned just now, of a farm that had cost $8,000 and on which the debt had been reduced to $2,000 by means of a compromise effected for a period of ten years. When the borrower repays the lender at the expiration of the ten years, should the farm have regained its normal value of $8,000, he will have recovered possession of his property for the sum of $2,000, and if he can sell it for $8,000, he will make a profit of $6,000. Now, the farmer is not in the habit of making money in this way; he is used to earning his money honestly and by hard work. It would be most unfair to the lender, who would lose $2,000 by the fact that the working of the Farmers' Creditors Arrangement Act reduced his loan of $4,000 to $2,000. This act therefore works to the detriment of the retired farmer who lends out his savings to make it possible for the younger generation to acquire land.
If this act is to be worth anything, it will be necessary, in urgent cases, to make use of the Farm Loan Act, in order that the amount compromised for may be settled in cash, that all debts may be paid and that the farmer may be placed in a position to continue operating his farm.
And in the particular cases where that is not possible, it would be better for the receiver or the judge to have the power to reduce the rate of interest, in order that farmer and lender may each contribute his share of sacrifice. It would be better to have the rate of interest made low enough to enable the farmer to keep his land and, when better times come, he would continue to pay interest at the current price of money in Canada. In that way, the lender would not lose his claim and, especially, people will not be told' that we, in this country, do not pay our debts.
Our farmers still wish to pay their debts. It is considered in certain quarters that this

Arrangement Act allows farmers to go bankrupt in the same way as other classes who have in the past caused losses to the people by selling them worthless securities and have then escaped their obligations by resorting to bankruptcy.
If we allow our people to get the idea that the farmer also may have recourse to bankruptcy, I say quite frankly that we will never again have settlers like those of old, who cleared the land in this country so as to make it possible to draw therefrom the agricultural products that have so greatly contributed* to the wealth of our export trade.
The government should give serious consideration to these suggestions before definitely introducing a bill relating to farm loans and to arrangements between farmers and creditors, in order that these measures may be of real advantage to agriculture and that they may not, like this Arrangement Act, threaten to destroy the farmers' credit and to bring about a second failure. We should seek to protect agriculture instead of taking the risk of making farming almost impossible. Especially if farm products remain at their present price level, it is absolutely impossible to earn a livelihood on the farm. It is not so much the present generation that we are thus detaching from the land, as it is the younger generation that we are preventing from taking up farming. For it is generally recognized to-day that the younger generation cannot establish itself on the land with any hope of making a living.


Mr. E. E. PERLEY (Qu'AppeMe):: I should like to express my approval of the proposed amendment to the Canadian Farm Loan Act. From the general agreement expressed in all quarters I think there is no doubt that these amendments will carry. First it is provided that there be an increase from $40,000,000 to $90,000,000 in the amount placed at the disposal of the board for loans. That 'will widen its field of operations. The amendment to the act last year increased the amount available from $15,000,000 to $40,000,000 and required the provincial governments to subscribe five per cent and the borrower five per oent. This legislation was more or less complementary to the Farmers' Creditors Arrangement Act. I was pleased with and I endorse the statement made this afternoon by the Minister of Finance in respect of that act; I think it is one of the finest pieces of legislation, the most far-reaching and important, that has passed this house. It has been the means of putting new heart into the

Farm Loan Act
farmers in western Canada, giving them new hope and encouragement to rehabilitate themselves and make a fresh start.
During the discussions last year the Prime Minister and the Minister of Finance made it very plain that the amendments to the Canadian Farm Loan Aot were complementary to the Farmers' Creditors Arrangement Act. But it was clear that when a farmer had taken advantage of the debt compromise arrangements with his creditors, unless he had some capital with which to carry on his position was not much better than before. So it was provided that the farm loan board should come to his help and could lend to the farmer fifty per cent of the appraised value of his land, twenty per cent of the appraised value of his buildings and fifty per cent of the appraised value of his chattels, in order to give him some ready money to make a new start. It would enable him to consolidate his liabilities.
One of the first and most important things to be considered is the interest rate. It must be as low as possible. The Minister of Finance stated that he thinks a spread of one and one half per cent will be necessary between the amount charged the board by the government and the rate the board charges the farmer. If one and a half per cent is necessary that is all right. But this government within recent months borrowed money at three .per cent and three and a half per cent, and I think we are all of the opinion that it is desirable that the rate to the farmer should not exceed five per cent, and should be lower if possible.
I am very much in favour of a dominion board, one board to handle farm loans throughout the dominion. This does away with provincial boards, so that there will no longeT be the passing of the buck to some other organization or "an alibi" as mentioned by the hon. member for Souris (Mr. Willis).
The method of operation of the loan companies in the years prior to say, 1925, was this -and I know whereof I speak: they were out seeking loans in the west. They had an agent in every town. He would go to the farmers; he would pick his men, and endeavour to place the money for the companies. Where a farmer might talk of a loan of $2,000 or $3,000 to make some improvements on his farm or pay an instalment on the .purchase price of another quarter section of land, the agent would say to him, "Your property will stand a loan of $5,000 or $6,000," In other words, they encouraged farmers to borrow more than they required. A great deal of the present debt in western Canada is due to
operations of that kind; farmers have loans of $5,000 or $6,000 that they never would have had had they been left to their own discretion. To-day the situation is that no loans are to be had. The loan companies have practically withdrawn from a large part of the western provinces. I can cite cases in my own constituency of farmers who after three or four years of adverse climatic conditions are in need of a loan. But owing to that condition the loan companies refuse to make loans. This amendment will make money available for such farmers.
Then .there is another class to which I think reference was made by the hon. member for Moose Jaw (Mr. Beynon) and the hon. member for East Edmonton (Mr. Bury); that is those in the west who have retired from their farms, some on account of age, some on account of physical disability, and who are living in the towns. They may be operating .their farms by hired labour, or may have their farms rented. These are as fine a class of citizens as there is in any part of Canada; they are the pioneers who came west in the early days, and who put all they had into the development of the country. But I do not think they come under this act. I think the Minister of Finance would be well advised to give consideration to the suggestions already made by the previous speakers concerning them.
The farmers need this relief immediately to assist them to carry on. It should be based on their ability to pay over a long period of years. I have no doubt at all that the west will come back, and if there is a system such as this to help them over their present difficulties it will go a long way to rehabilitate the west and restore its capacity of producing new wealth, if climatic conditions are favourable.
In closing I wish to refer briefly to one or two statements made this afternoon. There was a question concerning the cost to the farmer of getting a loan. I have no particular objection to the cost as outlined by the Minister of Finance this afternoon, but what I have heard many farmers complain of is the annual or biennial inspection by the loan companies and by the inspectors of the provincial farm loan board. For this there is generally a fee of $10. This is all it amounts to: the agent of the company drives out and asks the farmer how many acres he has in crop, how many acres in summer fallow and so on. In about fifteen minutes he drives away again, but in the annual interest notice the farmer finds an item of $10 for inspection. I trust that will not be the case under this board.
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The hon. member for Bow River (Mr. Garland) stated that now the loan companies were prepared to compromise, that if a farmer would go to a loan company and offer a reasonable amount of cash the company would be prepared to compromise and accept that money. I should like to ask when the loan companies began doing that sort of thing. That has been the case only since legislation similar to that now under consideration has been on the statute books; I refer to the adjustment act of last year. Three or four years ago you never heard of the loan companies doing anything of the kind. They are doing it now only in order to keep the farmers from taking advantage of the Farmers' Creditors Arrangement Act.
The west will come back. This afternoon I was interested in the statement made by the Minister of Agriculture (Mr. Weir) with respect to what the government propose to do in rehabilitating that part of the western provinces commonly spoken of as the drought areas. I think the government is on the right track in pursuing a policy that will re-grass that portion of the country and conserve the moisture. I have no fear of the future if matters are handled in the proper way. Again I wish to express my very great approval of this measure, and I know the farmers of western Canada in particular will approve of it also, because many of them are waiting to take advantage of the provisions of this measure when the bill is passed.


William Richard Motherwell: Mr. Chairman, it
is rather surprising to me, as I am sure it must be to the minister, to find so much unanimity in regard to this matter and yet we linger over it for so long. It has occurred to me, however, that possibly there is a side to the question that has not been dealt with as yet, and that all will not be plain sailing unless we go about this in the right way.
It was an entirely new doctrine to many of us that the way to get out of a hole of indebtedness was to climb into a deeper hole, that the way to get out from under mortgaging was to get into more mortgaging, especially when that is associated with the restriction of exports as in the case of our wheat last year. We wonder what order we have entered; are we in the C.C.F. or what? Do not mistake me; it is because everyone else has fled from the field of lending to agriculture that the government is left alone, the only source from which farmers can borrow. As one who never has been enthusiastic about either provincial or federal governments going into the lending business, I fear the

ultimate results of this legislation if we do not handle it right.
May I, as an elderly farmer, give some reminiscences of my youth when old Ontario, especially east from Kingston to the Ottawa river, was relatively nearly as heavily mortgaged as it is to-day, and there semed to be almost as much difficulty in getting out. The difficulty was not so great then, of course, because we had not acquired our expensive habits at that time; there were no motor car and radio obligations to eat us all up. I remember that day quite well, and the way out that was invoked was very different from what we are proposing now. Perhaps it is not altogether fair to make a comparison, but it will do no harm to mention the methods that were employed away back in the seventies, part of the eighties and the early nineties, by which we did succeed in getting out of debt to a large extent. How was that done? Well, we turned to dairying for one thing. The cheese factory business began in earnest about sixty years ago, providing some cash revenue for the farmers. Then the bacon and poultry industries were speeded up also as well as other lines. The farmers at that time were not looking for more leisure or for shorter hours; they were devoting themselves to hard, persistent and intelligent work, and they were practising thrift. How old fashioned these terms sound, but some old fashioned things must become new fashioned, and this is the time for it. I hear people talking about how much leisure they should have on the farm. Believe me, I have never seen much leisure on the farm except an occasional day that is simply taken off, If one is forehanded enough of course he can have some leisure, but you must not sit by and coimt your hours of work as compared with your leisure days and object because there is not more leisure. That was not the way we won the war, I am sure, and it is not the way we will get agri-cutural conditions on a better footing, although, like the last speaker, I believe the industry will eventually come back, but it will be a severe grind.
In what respects do conditions to-day differ from those of these old days? Should we disregard all those old methods of getting back on our feet? The Minister of Finance is a maritimer; he was brought up, as I was, to abhor debt and mortgages, though I fell into it slightly, together with nearly everyone else in the west. Let him that is without sin in this respect cast the first stone; I am not going to. But we are here, and the government is the only medium through which money can be borrowed on farm property.

Farm Loan Act
As I look at it this bill must be tied up with the debt arrangement act of last year; that is to say, if our credit is down enough we can have our debts adjusted at possibly fifty cents on the dollar or less. A man who is in fairly good standing, however, will be expected to pay his creditors in full, and in time no doubt he will do so. As I understand it, however, this measure, together with the Farmers' Creditors Arrangement Act, is to be a sort of refunding of the debtor's indebtedness. Perhaps the term "refunding" should be applied to the creditors rather than to the debtors; I think it should be. At any rate, the indebtedness is written down as low as possible and then, to use an illustration, instead of owing a private corporation say one dollar the farmer will owe the government fifty cents. If I am wrong in that illustration of what it amounts to I hope the minister will put me right, because it is hard for a layman to understand all the intricacies, not of this resolution but of the creditors rearrangement act.
I think if we could just look upon the government as a private lender there would not be so many dangers in legislation of this kind. But mark what I have said; the government is now the sole medium through which money can be borrowed on farm property. When times get a little better and you expect ordinary private lenders to reenter the field, the question naturally will arise whether or not they will enter the field and compete against the government. When we consider the history of mortgages in the last quarter of a century in Canada we find we first exhausted all we could get from the private lender, then all we could get from mortgage company or insurance company, then all we could get from the banks, then all we could get from the provincial governments and, after we had milked them dry, all we could get from the federal government. I wonder if there is any higher authority? Yes, we know that in company with the federal government the imperial government have given loans to N ewf oundland.
I cogitate on these facts because I think the government is responsible for not being more candid as to the limitations of this measure. They know perfectly well the dangers involved in lending money and how horribly poor the average government is as a collector. There is no doubt about that. I hate to think of it. Speaking of the west, because I am not as familiar with conditions in the east as I was when a youngster, I would say that unless we associate this increased borrowing or rather rearrangement, with better farming practices, more seeding down of both grass and clover
and keeping our soil at home, which we are not doing at the present time, no amount of borrowing will help us very much. On the other hand if the government will admit frankly that this is not a panacea, if they will just get out of the ether waves and admit that this measure is only a makeshift or stand-over, and that it is only a means to tide over the situation until we get our footing and our breath, we may get somewhere. I believe in the aggregate mortgaging has done agriculture more harm than good, because moneys frequently have been unwisely loaned and pressed upon an inexperienced borrower.
May I refresh the memory of the committee concerning the very limited supervision which in the past lenders have had over money loaned on farm mortgages. This applies not only to private corporations and individuals but to governments. Theoretically every loan made by way of a mortgage indebtedness should be in a position to pay itself back by way of a sinking fund provision plus interest. The purpose is eventually to wipe off the debt in a given number of years. Can any hon. member tell me of any time in our history when farm mortgages were given on that basis? A great deal of the mortgaging in the west was done without the farmers realizing it. They slipped here and slipped there, buying horses, buying more land and buying greater equipment, but starting with nothing. After a while the mortgage company would make this proposition to the farmer: "Would it not be better to have a loan on your indebtedness which would be due to one corporation rather than to eight or nine individuals and thereby liquidate all these smaller debts?" But that kind of mortgaging meant that the money was gone before it was borrowed; it was used in paying for dead horses. Very little of it was spent in productive enterprises which would have had any likelihood of paying back at least part of the debt.
I would urge the minister-and I am sure he must entertain some slight misgiving such as I have described-to invoke some stricter regulation to supervise the expenditure of these moneys. Of course, I do not know whether or not there will be any overages to spend. I know that ten or twenty years ago one could not tell the average borrower how to spend the money he borrowed; he would not stand for that. He would simply go to another company that would not impose conditions. The time has come however when even the borrower is glad to have the advice of an experienced lender as to how he may best administer the proceeds of a loan.
Farm Loan Act

As a result of a general laxity in the supervision of loaned money we have to-day a vast array of insurance company and mortgage company representatives supervising farms. Those men are trying to establish the farms along better lines of farming and, I believe, are doing good work. But with this experience before us I wonder if we are asking too much when we ask this parliament-not the government alone, but all of us-to cultivate more of the old fashioned anti-mortgage attitude, more of the anti-mortgage mind, in place of the attitude which has obtained in former times. I suppose no hon. member of the government- or the house is any more conscious of the dangers in this measure than the Minister of Finance, if we may judge from his remarks regarding the nationalization of our commercial banks. So far as bis observations applied to the commercial banks I felt he was not far wrong. When the government once enters the field of lending on farm mortgages they will for a certain length of time keep other people out. There can be no doubt about that. We will then be adopting a system of borrowing and lending by federal government alone, which we have never had before in Canada. I am so averse to state socialism that I fear unless great wisdom is exercised a great deal of farm land will go back to the government and it will then be in the position of having to administer it socially. .Is that the thin end of the wedge of C.C.F'ism? I am quite sure it is not the intention of the government to play that part. If we are not to play that part I say it is the government's duty, a duty resting upon all of us, to do our best to point out that this business of beating down the lender on loans in poor standing and then getting from the government enough money to pay the revaluation is only a tide-over policy for some and does not in any way resemble a permanent remedy for agriculture.
I believe I have nothing further to say, unless it be that I am sure I will be misunderstood. However, sometimes at three soore and ten and five on top of that, one may say things he could not say if he were younger. At least if I have spoken unwisely, I will not have as long to be exposed to the harpoons of others. If I have so spoken at least I have spoken just as earnestly and as full of belief as any hon. member about the danger I have described. I believe I heard the hon. member for Stanstead (Mr. Hackett) make some wise observations. I could not hear him very well, but those parts I did hear I liked. Outside of that I have not heard many notes of warning. I have lived through
I'Mr. Motherwell.]
a period in the seventies when people in spite of their mortgage troubles got on their feet by the methods I have referred to, not by shorter hours but by hard work, intelligently applied, although some have been worked to death. It does look now as if the only way to get a breathing spell is to go a little further into a rearranged debt. That is a horrible admission to make, and the government of all places to borrow from. I do not know what government first started this policy of lending money, but there is a responsibility on their shoulders. I have had the misfortune of being in two governments that adopted the policy of lending money, and I am prepared to take my share of the responsibility therefor, but I hope that this government will learn from the mistakes of the past. They are now amending an old bill of ours of 1927, and I hope they will take their courage in their hands and say what I am saying, only say it better if they believe it.


Ernest Lapointe: But they cannot say it any better.


William Richard Motherwell: They can, I feel
sure, say it better. The Prime Minister can. and so can the Minister of Finance, and I would like to hear them say it. Then they will get all the good out of this measure, that there is in it, and as little as possible of the bad.


Edgar Nelson Rhodes: Mr. Chairman, with much
if not all that the hon. member for Melville has said I am in entire agreement. May I say at once to him that I appreciate the sincerity and frankness with which he has spoken. I rather marvel at his raising the question whether this is the thin end of the wedge of a new policy, and 1 rather wonder at his query: who is responsible for this new incursion of the government into the lending field. I do not say this with the slightest intention of making the tu quoque argument or of evading the full responsibility of this government for the legislation with which we are now dealing; but may I point out to my hon. friend that he was a member of the government which-


William Richard Motherwell: I admitted that.


Edgar Nelson Rhodes: -which introduced the thin end of the wedge, and the responsibility for its initiation must be shared by the government of which he was a member.


William Richard Motherwell: Sure.


Edgar Nelson Rhodes: I do not find any fault
with that. I believe it was brought about by reason of a set of circumstances The govern-

Farm Loan Act
ment was confronted with a set of facts, not of theories, and the real reason for the introduction of that policy in the first place I believe was that there wa3 a dearth of mortgage money for the farmer, coupled with the circumstance that such money as was available to him was available only at an exorbitant or unduly high rate of interest, or at all events a rate of interest which was higher than the farmer could properly afford to pay at the time. I find no fault with that.
The occasion for the bill in question is an extension of that thin end of the wedge brought about by reason of the fact that there is not merely a dearth of money for the farmer but an almost entire absence of money from private sources, coupled with the fact that if we are to make of the Farmers' Creditors Arrangement Act, the complete success that we hope to be abre to make of it, there must be available some source from which loans can be made.
Let me say at once to my hon. friend that I share with him the misgivings he feels with respect to the government entering into the lending field. I believe that the government in the nature of things is an inefficient instrument for that purpose, and must of very necessity be so. It is rather a case of what is everybody's business is nobody's business, and the difficulty is to get the type of man to deal with the business of the government as he would deal with his own if he was a prudent man. But even if in the last analysis there is lost a certain amount of the principal sum, which I have no doubt will be the case, though we exercise, as we will, the utmost care, it would be far better on balance that that circumstance should arise than that thousands of deserving farmers throughout the country should be denied the opportunity of being rehabilitated and of getting back their courage and their opportunity to succeed and to thrive and to remain as satisfied citizens upon the land.
My hon. friend put forward the suggestion that the farm loan board acting on behalf of the government should be cautious as to the manner in which the money which the farmer secures on loan shall be expended. I agree with him entirely, and as a matter of fact in practice the farm loan board did lay down in the past and at the present time is laying down conditions as to the manner in which the money loaned shall be expended. They require from the farmer a statement as to what he requires the money for and so far as possible they see that the money reaches the destination intended in the first instance.
My hon. friend from Melville put the direct question to me whether a farmer who had been able, under the Farmers' Creditors Arrangement Act, to make a compromise with all his creditors at fifty cents on the dollar would in that event be able to go to the farm loan board and secure a loan which would consolidate his position. The answer is yes, but with this qualification: it does not necessarily follow that because a settlement of that character is effected, ipso facto he can come as a matter of right to the farm loan board for a loan. In other words, it is the purpose that each loan shall be considered upon its merits and that there shall be taken into account not only the question of security but what I think is one of the most important considerations of all, the one which I would have in my own mind if I were lending money either on my own behalf or on behalf of the government, and that is the character of the man to whom the loan is made. Is his integrity, his industry and his ability such that he is likely to succeed in the business of farming? I have seen farmers who under the most favourable circumstances would starve to death on fertile land contiguous to one of the finest markets of the country; and on the other hand I have seen farmers on poor soil, badly located, handicapped with debt, who by their courage and determination, their energy and ability, have succeeded in thriving, prospering and bettering their condition under adverse circumstances. Such are the considerations which must always be taken into account, and subject to those conditions and having regard to the facts in each individual case, the farmer under the circumstances outlined by my hon. friend from Melville will be able to go to the board and secure a loan. But I want to enter this caution. I have a fear, and I state this with the utmost frankness, that we shall find this situation arising, that lenders, whether they be individuals or companies, anxious to secure 60me if not the whole of their money that is locked up in what might be termed a frozen mortgage, will spur the individual farmer on in an effort to secure government money. Now if that type of lender has the idea that this farm loan act is intended to bail him out of his position he is very greatly mistaken, and I hope the good sense of the farming community in the country will not lend itself to such purposes. If this money could be made available to meet individual cases where, if money were loaned, it would have the effect of rehabilitating the farmer and placing him on his
Farm Loan Act

feet, it would go a very long way. But if any mistaken policy were adopted of handing it out in the way that has been suggested the act would prove largely abortive. I hope that such a condition will not come about.


William Richard Motherwell: I am pleased to learn that my conjecture was right, that the minister and I were two old fashioned individuals so far as borrowing and mortgaging are concerned, and I am proud to be associated with those of that type. But with reference to the fact, already admitted, that I had been associated with a government at a time when governments loaned money not because they were the only medium of loaning, but because they were trying to lower and control interest rates by corporations, everyone recognized that eight and nine per cent could not be paid on farm mortgages, and yet that was being charged and in some instances a higher rate. Provincial governments were induced by demands on all sides, both provincial and federal, to be a competitor in the loaning business at a lower rate, thus having a tendency to bring down rates generally. But even with that possibly laudable purpose in mind, it was fundamentally a mistake, in my opinion, for Canada to go into the loaning business through its government. However, we are in; that is the point, and the question is-How are we to get out? There is a theory to-day that if your interest is low enough you will be able to pay your mortgage back. Possibly you should be. But I recall quite well that many years ago I bought a quarter section of school land from the government. The interest was then only three per cent, and it was the government that I owed; that fact was always in my subconscious mind. If I had greater pressure from creditors whose money was carrying eight per cent I paid them first and let the government whistle for a little while for their money. Was I wrong? Will you not pay for the loan carrying the higher interest first? I remember also one occasion-I do not care to say how far back it is-when we were using what we called a sweep horse power. A number of us clubbed together and bought a threshing machine. It was a secondhand machine and after we had got it partly paid for we had to get repairs costing $72-I shall never forget the amount. How were we to get the repairs? We could not thresh until we got the repairs and we could not get the repairs until we threshed. I was the only one in the company that was not doing much that particular day. We had to have a joint note and we went to the
[Mr. Rhodes.}
private bank, because there were no chartered banks there then, and a neighbouring farm woman and myself went down in our buck-board to the bank and borrowed money that figured out at 36 per cent, and we were glad to get it. We stuck the repairs on the machine and got it going, and believe me we did not let that loan run overdue. This convinces me therefore that sometimes a rate of interest that is quite low has an effect the opposite of what we anticipate and so with the 36 per cent previously referred to. Therefore, no kind of farm mortgage is good unless one adopts the principle of taking as little as one can get along with and getting rid of it as quickly as possible.


John Vallance: The Minister of Finance made a statement that brings me to my feet, because there are many farmers, especially in the west, who feel that they will use the farm loan board for the very thing which the minister says it cannot be used for. Mortgage companies are carrying them to-day at eight per cent, which is the average, and they take the view that if they can get it from the board at six per cent, or as low as four per cent, as we suggest to the minister, they will be able to get from under the load they are now carrying. The minister says that is not the purpose of the bill. If that is so I will tell him frankly that eighty per cent of the mortgages in the west will have to stay as they are now; and if the farmers cannot get an adjustment, not being able to come under the provisions of this act, if that is to be the policy of the board, then I am bound to say that the act will not perform the function I think it should. Let me paint a picture, taking the minister back twenty-five or twenty-eight years ago to western Canada, a wilderness-and some of those people are still in that country. They went there without anything. They had no accommodation of any sort, neither highways, railways, towms nor villages, and they built the country up. They have all these conveniences to-day, but in the creation of them they find themselves saddled with a heavy mortgage indebtedness. They are faced with this indebtedness in spite of the fact that they have built up the country, and notwithstanding all the wealth they have created, which has been of real advantage to the dominion, billions of dollars. I have listened to the Prime Minister as he has spoken of the new wealth created there each year, and yet these people are sitting to-night with little equity in their land. Unless this act brings some measure of relief to these people, then eighty per cent of it will be futile so far as the west is concerned.

Farm Loan Act


Edgar Nelson Rhodes: My hon. friend has not interpreted my remarks as they should have been, but if I have not made my position clear the fault is possibly mine. My hon. friend from Melville put a specific case and I said that the aot would be available in the case he mentioned, but not of necessity. What I had in mind was this. It would be a misfortune if the farmer weTe used as a catspaw by loan companies and individuals who have mortgages to enable them, to use the vulgar expression, to get out from under and saddle the government with mortgages, because it must be borne in mind that the maximum that can be loaned under this measure is $90,000,000, and the loans on farms in this country run into hundreds of millions. This act would not serve the purpose for which it was intended if it were used immediately to absorb existing mortgages to that extent; it would soon be gone, and the individual farmer in difficulties would not be able to avail himself of its provisions. But if there is a settlement, either by way of compromise or by way of a decision by the board of review under the Farmers' Creditors Arrangement Act, and if it is in the interests of the farmer to have a loan to consolidate his position, the farm loan board, dealing with that specific case on its merits, and considering the surrounding conditions of which I have spoken, would be justified in giving the loan to consolidate his position.


John Vallance: Is this $90,000,000 to be available only for new loans? If it is available only for new loans, I would point this out. The individual who to-day is availing himself of the provisions of the Farmers' Creditors Arrangement Aot is the very one, at least as I gather from the minister, who cannot avail himself of the Canadian Farm Loan Act. It is the man who to-day is indebted to the mortgage companies, the banks and the machinery companies who needs the full protection of the provisions of the Farmers' Creditors Arrangement Act and if it is not applicable to him, the whole thing is futile so far as that type off farmer is concerned.


Edgar Nelson Rhodes: If my hon. friend in the calm of to-morrow will read in Hansard what I have said, I submit to him in all fairness that he cannot place upon my words any such interpretation as he is endeavouring to make. I will repeat the statement I have made twice in the last twenty minutes, namely, that each individual loan will be considered upon its merits, and the decision of the farm loan
board will be made with respect to the merits of each individual case. There are no limitations imposed upon that statement.


Mr. BEAUBIEN:: May I ask the minister a question? Last year parliament put upon the statute books the Farmers' Creditors Arrangement Act, thereby creating machinery whereby the farmer who is indebted may go before a receiver, put in a statement of his affairs and make a proposition as to what percentage of his indebtedness he thinks he will be able to pay. This naturally would be based upon the whole production of his land. 'If the creditors and the debtor cannot agree to readjust the indebtedness, then the farmer makes application to the board of review, which is another piece of machinery created by parliament in order to readjust the debt of the farmer. The board of review is composed of responsible men, one a judge, one representing the farmers and the third representing the creditors. After the creditors and the debtor fail to agree, suppose the board of review arrive at a composition of the farmer's debt and say it is to be reduced forty or fifty per cent-and as I understand the matter, when that composition is registered or accepted by the court, it becomes binding- does the minister not think, after the board of review has readjusted the debt of the farmer and this composition has become binding on all concerned, the farmer, under the provisions of the bill which will be founded on the resolution we are discussing here tonight, which is another piece of machinery created by this parliament to effect a readjustment of farmers' debts, should be able to come to this farm loan board and say: This is my debt that has been adjusted by the parliament of Canada; am I not entitled to get a loan to cover this indebtedness as it has been adjusted by the board of review? That impression was created by the acts passed last summer. The Farmers' Creditors Arrangement Aot created the impression in western Canada that a farmer could get his indebtedness readjusted provided that he put his cards on the table and was honest about the matter. The impression prevailed also that by the amendments of last year to the farm loan act, after an adjustment of the farmer's debts had been made either voluntarily by the creditors and debtor before the 'receiver or by the board of review, he could go to the farm loan board and get this money. That impression prevails in western Canada to-day. I am not criticizing what the minister said to-night. Probably he is sound in what he said, but what he said to-night is
Farm Loan Act

certainly going to disappoint many people who were expecting a great deal. Whether they were expecting too much or not, I do not know. That impression however exists in western Canada and after these amendments are made to the Farm Loan Act increasing the amount available to $90,000,000, the impression will be even stronger than it has been in the past.


Edgar Nelson Rhodes: The hon. member for
Proveneher is no doubt cognizant of conditions in his constituency and its immediate neighbourhood. He may be accurate when he states that the farmers with whom he has had contact were of opinion that there was a sort of pool of credit or of money into which they could dip freely. But let me point out to him this fact, which has been very widely overlooked, namely, that under the Farmers' Creditors Arrangement Act actual settlements have been made not in dozens but in hundreds, including some in the constituency of my hon. friend, which did not call for a dollar of new money and which were made with the full concurrence of the debtor and of the creditors.


Charles-Philippe Beaubien: Will my hon. friend say-


Edgar Nelson Rhodes: Will my hon. friend be good enough to retain his seat and allow me to answer one question at a time? Apparently I find it difficult to make myself clear, although I had hoped my knowledge of the English language was sufficiently good to enable me to do so. My hon. friend is in error in assuming that of necessity a settlement by the board of review under the Farmers' Creditor Arrangement Act involves fresh borrowing. In the great majority of cases fresh borrowing will not be required at all; this settlement means that after the board of review has adjusted a debt upon a basis which it feels is fair to the debtor and creditors, that farmer is in a far better position than he was in before. If, by virtue of that settlement, new money is required which is not available from the debtor himself, in that event he can resort to the farm loan board and as I said before, whether he secures the money or not will be dependent upon the merits of the individual case. I am inclined to believe that in such circumstances the board will sympathetically consider applications of that character. But may I point out to my hon. friend that I have known cases where settlements to the satisfaction of all parties, have been effected before the official reeciver, which have resulted not only in a compression and a consolidation of the farmer's debt position but [Mr- Beaubien.J
in a situation where the creditor himself has advanced either in cash or in kind a sufficient amount to place the farmer on his feet. It is my hope that this legislation will be resorted to only in those cases which cannot be met along the lines I have indicated. I trust in these observations I have left my position abundantly clear, having stated for the fourth time that the question whether a loan will or will not be advanced will be dependent upon the merits and the needs of the case according to the judgment of the farm loan board.


Charles-Philippe Beaubien: I am sorry the minister when he replied to my remarks did not smile as he did in answering every other hon. member. I certainly do not want him to think any remarks of mine were intended in any way as criticism. I was trying to point out to him the impression which was created and which probably will be strengthened after the amendments are made to the act increasing the amount available. I agree with him that many adjustments were made before the receiver without recourse to the board of review and without any need for loan. Indeed, I know of some of them myself. Nobody has been more interested in the Farmers' Creditors Arrangement Act than I have since last session. But that impression, as I intimated to the minister to-night, certainly prevails in western Canada. I was and still am of the opinion that the machinery created by this parliament to do certain things must work in conjunction with machinery created to do other things, and the money to be provided by this bill should be available to take care of cases where money is needed whether the farm loan board or its advisory committee thinks so or not, after these readjustments have been made. The readjustments surely are going to be based on the present prices of commodities and the conditions under which we are living to-day. Where loans are needed in western Canada to consolidate the debts of the farmer at a lower rate of interest I still believe that this Canadian Farm Loan Act should take care of such cases.


Mr. MILLS:: I wish to refer to a situation that exists in my immediate neighbourhood. About twelve years ago a neighbour of mine bought a farm at $13,000. A good down payment was made, and $7,000 has now been paid on the principal. In principal and interest the total paid to that landlord is nearly $11,000. There is owing on the farm $6,000 principal and about $1,100 arrears of interest. Taxes have been paid up for 1934. For some reason the purchaser was not keeping up his interest payments; therefore the landlord had

Farm Loan Act
to take proceedings to get an adjustment. The farmer has applied to the referee under the Farmers' Creditors Arrangement Act and the referee has stepped in. That neighbour came to me a week ago last Sunday and was talking the matter over. He thought he should get settlement by paying $5,000 on the principal, the interest to be foregone. I said to him, "suppose you could get such an adjustment, could you get the $5,000 to clear up the mortgage." He said, "No, I don't know where I can at the present time." The following Monday the meeting of creditors was held, and I understand the man who holds the mortgage was the only creditor. The point I want to make is that if the government does not come forward and keep such men as that on the land, a good energetic farmer, where is there any chance for him to get the money? He cannot get it from private sources. Surely a farm that was worth $13,000 twelve years ago is a good risk to-day for $5,000; for I think all will agree that farm values now are at the lowest point in history.
That is only one of several cases I could give of farmers in my immediate neighbourhood who will have to leave their farms if they do not get some assistance. I appreciated very much the statement of the Minister of Finance that each case would be dealt with upon its merits. I agree that there are some farmers who would starve on the best farms and others who would do well on any kind of farm, and I think every application should be judged upon its merits. But I strongly recommend that farmers who are deserving be enabled to get a loan, and I hope some arrangement is made between the dominion and provincial governments that the rate of interest will not be over four per cent.


Edgar Nelson Rhodes: As to the case cited by the hon. member for West Elgin, it must be borne in mind that the Canadian Farm Loan Act is not and never has been operative in Ontario. It will become operative there only when the present bill, if it is permitted to be introduced, is introduced and passed by this house. In the meantime inquiry must be addressed to the Ontario farm loan board, which operates under the laws of the province of Ontario. That is the only recourse he can have in that province so far as government borrowing is concerned until the Canadian Farm Loan Act is in operation there.


Mr. RHEAUME (Translation):: Mr. Chairman, I wish to add a few words to the remarks of the hon. members who have addressed the house this afternoon on this measure. The hon. Minister of Finance (Mr. Rhodes) has explained the resolution he moved last Friday, and the press of the oountiy has published his explanations. A representative in each province, a reduction of interest to four per cent, the elimination of the five per cent that the borrower had to invest. Yesterday morning, a farmer said he had read in the press about the advantages the amendments to the Farm Loan Act of 1927, would bring to the farmers. With those amendments, the provincial boards are to disappear and1 the whole business will be centralized in Ottawa. One could not find anything better to increase delays, and our friends will, I think, have plenty of time to expound on the hustings, during the election, the advantages those amendments to the law will bring to the farmers.
I have often endeavoured to obtain loans under this act. In one case, where I thought I had made good progress, it took a little over eight months. I know of a case where they came across after fifteen months. And, no doubt, with the proposed amendments, the number of applications will increase. The inspection of the farm cannot take place before the first days in May and, as applications will be numerous, delays will result. In the meantime, our good friends will travel through the country, before the election, and say: See what we have done for the farmers!
Last fall at a meeting of farmers at Con-trecceur, the hon. Minister of Marine (Mr. Duranteau), told those present of the advantages this government had brought to the rural people; the famous Farmers' Creditors Arrangement Act, the amendments to the Farm Loan Act. But those wrho tried to get a loan under the terms of the amendments of 1934, did not get a cent.
Last summer I received a dozen applications for money. I see my good friend from Compton (Mr. Gobeil), who said in his remarks on Friday last, that many farmers were complaining of their requests being refused because politics had something to do with it. I must say that in St. Jean-Iberville, Conservatives are scarce. Out of the twelve who made applications for loans, I think eleven were Liberals, and not one got a cent. In one case, one farmer wanted a loan of $5,000 on a 240-acre farm, one of the richest in the province of Quebec, and he was turned down immediately. In another case, on a 120-acre farm, with a good brick house, good outbuildings and situated at a quarter of a mile from the village, without church or road fees, $3,000 were asked. Refused; the man was a Liberal. In another case, half a mile from the village, $2,500 were asked. Refused.
Farm Loan Act


Mr. GOBEIL (Translation):: Who was to blame?


Pierre Auguste Martial Rhéaume: I don't know. However, a moment ago I heard the Minister of Finance (Mr. Rhodes) say, in answer to the hon. member for Provencher (Mr. Beaubien), that a farmer must be very highly rated to obtain money with which to settle his debts under the Farmers' Creditors Arrangement Act. When you wish to find fault with somebody, nothing is easier. I understand that the Minister of Finance is a good lawyer; he is in that respect about the equal of the Prime Minister (Mr. Bennett): he never commits himself. His answer, to my mind, is very wise; if the farmer's standing is very good, if he is a first class man, the board will probably consider his case. But he did not commit himself.
I read in the newspaper La Presse that, in the province of Quebec, one can get but 60 per cent of the assessed value of his farm while in the other provinces, one can obtain two-thirds. When the bill is before the house for consideration, I hope the Minister of Finance will tell us why the farmers of the province of Quebec can obtain but 60 per cent of the valuation of their farms.
On what will the hon. minister base his valuation? On the municipal valuation or on that of the board's inspector? I know personally that, in a few cases, the inspector for the St. Jean-Iberville district, a man of high standing, had fixed the valuation of a farm, a valuation that met with the approval of the Quebec government, but which was refused by Ottawa. An inspector of the central board was sent to fix the valuation; the loan however was refused.
When you talk of lending 60 per cent, I ask you: On what valuation? If you take the inspector's appraisal, and if, in a number of cases, he values the land at $15 or $20 an acre, 60 per cent on that will not amount to much: from $9 to $12 an acre. It would mean that, on a 100 acre farm, a farmer could borrow under this great piece of legislation from $900 to $1,200. When the bill is introduced, I hope the Minister of Finance will give us some explanation. If you take the inspector's appraisal1, I can predict that the act will be a failure, as in 1934. I do not think there are five members from Quebec in this house who can say that two thirds or 50 per cent of the applications have been granted. In the electoral district of St. Jean-Iberville, eighteen applications have been made but not one has been granted. And we were told the new arrangement would give farmers a chance to borrow money! If there is nothing in the

act by which the lending of a fixed amount of money is authorized, and if you leave that to the inspector's discretion, I think there is no sense in that. Inspectors appointed may not be any better than their predecessors.
The Canadian Farm Loan Act passed in 1927 proved to be very advantageous in 1928, 1929, 1930 and 1931; it was of some use in 1032; but since that time, it has rendered no service at all. A few Joans have been made in the electoral district of St. Jean-Iberville at $40 or $45 an acre, which was a reasonable amount. But, when you come to lending 60 per cent on the basis of a valuation made by an appraiser who values the land at $20 or $25 an acre, I say the thing is perfect nonsense and you waste the time of this house by discussing a piece of legislation under which the decision is left to the discretion of inspectors who are, in a great many cases, political appointees.
Now I would like to touch upon that great Farmers' Creditors Arrangement Act. Much has been said about it. The Minister of Finance has just given notice that the period will be extended from 60 to 90 days. A lawyer practising in St. Johns, who has quite a number of cases before that tribunal, was telling me yesterday: "That is not of much importance; I have a case pending since last November; no tribunal has yet been organized; I asked for a postponement of 60 days and it was granted."
With this precious arrangement act, the government has absolutely killed the farmer's credit. No farmer is able to get $100 from a bank, but, before that act, two farmers could go to a bank and borrow money on a promissory note endorsed by one of them. What I am telling you now, I learned from three managers of our banks in St. Johns, where we have branches of the Banque Canadienne Nationale, the Royal Bank of Canada and the Canadian Bank of Commerce. The managers have received instructions not to lend a single cent to farmers. The farmers' credit has been completely ruined.
I know the proposed amendments may have their good points; but, if you want practical legislation, you necessarily must fix a minimum valuation per acre. Otherwise, your legislation will be worthless, because, if you leave the valuation to the discretion of inspectors, it will certainly be a failure, like all the rest.
Mr. OIROLTARiD (Translation):	Mr. Speaker, the fact that the suggestion made by the hon. member for Provencher (Mr. Beaubien) has not appealed to the honourable minister of Finance (Mr. Rhodes), is very unfortunate. If the government is really

Farm Loan Act
anxious to help the farmers, I think that the Canadian Farm Loan Act and the Farmer's Creditors Arrangement Act should necessarily supplement each other.
As it is now, the Farmer's Creditors Arrangement Act operates as follows: a farmer appears before the receiver appointed by the government and files his statement of affairs. A meeting of the creditors is called for a certain date. If the creditors cannot come to an agreement, a compromise is out of question and then the fanner has the right to ask that his terms be submitted to the board of review. That board of review, as far as I know, has not yet operated in the rural districts of the province of Quebec, although the law is in force since the 1st of October, 1934.
The board of review has the power, under the provisions of the act, to compel the creditor or the debtor to accept the compromise that the board sees fit to determine. The board is composed of three members appointed by the government. The point raised by my hon. friend, the member for Proven-cher, is as follows: supposing that a compromise is arrived at and that it is approved by the board, where will the debtor find the necessary amount of money if it is agreed that a certain amount should be raised in cash? The only people a farmer can apply to in order to raise the money is obviously the Farm Loan Board. Without a Farm Loan Board, the only compromise a debtor could offer would be by way of instalments. The farmer having come to terms, and being compelled to make some payments at a more or less distant date, I am afraid he will not be in a position to do so and, under the act, i'f he does not comply with the terms of the arrangement, that failure is tantamount to bankruptcy and his property is sold by the receiver. Consequently, the necessity of giving the farmer the means of raising money by way of loans and to come to terms on a basis of a cash payment, which is of course a much better arrangement than an instalment plan, is apparent. As I have already said, the Farm Loan Board, and nobody else, can supply him with the necessary amount of money. I respectfully submit that, if the government wishes to see those two acts fairly and efficiently applied, the honourable Minister of Finance should amend the Canadian Farm Loan Act so as to compel the Farm Loan Board to advance to the farmers the amount required under the arrangement approved by the board of review.


Charles Benjamin Howard: Hear, hear.


Mr. GIROUARD:: However, it is my own
opinion. And, judging by the oases that came to my notice, in my district, such is the only practical way to be fair both to the creditor and the debtor.
If you will allow me, Mr. Chairman, I will mention a case to the minister of Finance. I think it was the only case, in Druimmond-Arthabaska, which was settled by the receiver.
I am ready to admit, however, that there might have been arrangements which did not come to my notice. A farmer went to the receiver's office; he had debts to the amount of $1,500. His creditors accepted a 50 per cent arrangement, payable in December 1935. At that time, that man will have to pay $750 to his various creditors. If he does not pay, that will be a case of bankruptcy under the act and his property will be sold by the receiver. If this farmer is to avoid ruin, Mr. Chairman, there must be an organization which will lend him the amount needed to keep him on his farm.
Cases similar to this one are quite numerous, and I was glad to hear the suggestion made by the hon. member for Provenoher. I wish I could be satisfied that these two acts are not on our statute book purely to remain there inoperative. Our farmers are actually in need of money, they must have credit, and if the government is willing to give them that credit, it is absolutely necessary to amend the Canadian Farm Loan Act, as I was saying, so that the Farm Loan Board would be obliged to make necessary advances when an arrangement is made and approved by the board of review.


Mr. LUCHKOVICH:: The minister mentioned three factors which would have to be considered before loans could be made, namely the character of the applicant, the productivity of his land and the value of his assets. I believe he mentioned the further factor regarding the applicant's ability to pay. I understand the purposes for which money would be loaned would be to pay off existing liability, to fence, to drain, to improve and to buy new lands and other purposes to which the board may agree.
In trying to explain the act a member of parliament is placed in a difficult position, because while hon. members may think they know all the sections, when they are asked by their constituents to make explanations they find themselves unable to do so. The minister said each case would be dealt with on its own merits. A statement such as that may be comparable to some of the replies we receive from the departments in the form of

530
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stereotyped phrases such as, "We will take the matter into our serious consideration." I once wrote a letter to a department and received that reply. I have waited three years, and I suppose they are still taking the matter into their very serious consideration.
I know about a farmer who has two sections of land, and owes only about $300 on it. I believe he owes about $130 arrears in taxes. The man told me that when he went to the farm loan board in Edmonton he was told that unless his debts were $1,000 or over he would not be given a loan, under the act. I notice a section in the act which states that loans may be made to farmers in good standing. The question is: Which farmers are going to get the loans? The act is so enshrouded with mystery that people like myself have found it very difficult to gain any information which might be of benefit to our constituents. I should like to know what loan the man I have mentioned could get under the farm loan act. I find myself in very much the same position as other hon. members have described, namely, that I have not sufficient information to advise my constituents who ask for loans.


Edgar Nelson Rhodes: May I say in all kindliness and without any desire to offend that we have discussed this resolution two days and we have not had an opportunity to introduce the bill so that hon. members might consider it. I submit in all fairness that questions might be asked to greater advantage when the bill is before the house and hon. members have had an opportunity to peruse it. It will be better to have the bill introduced than for hon. members to be putting hypothetical cases to me before its introduction. I am not finding fault with the hon. member, but I cannot answer the hypothetical question he has answered. He has said he was told a certain man went to get a mortgage and received the reply that he would have to borrow $1,000. I cannot be responsible for what a man is told, by whom, I do not know. All I can say to the hon. member and to the committee is that there are loans of $500. In the past the farm loan board has not desired to make loans smaller than that amount, although I do not know there is any prohibition or any actual fixation of amounts. The hon. member will understand that in the very nature of things the costs of inspection, costs in matters of title, costs for bookkeeping entries and so on, are as high in connection with a small loan as they are on larger loans. A loan of $500 is not so attractive, from the standpoint of administration; nevertheless there are those smaller

loans. The hon. member will realize we are now amending the farm loan act and he must not draw conclusions with respect to the manner in which the act should be administered, when the dominion board is solely responsible, from circumstances which arose at a time when there was divided authority through the operation of provincial boards.


Mr. REID:: The other day when the
matter was under discussion I made some general remarks regarding the application of the act in British Columbia and at that time made some suggestion as to changes which I believed should be made to the act as it affected the farmers in the lower Fraser valley. I rise at this time for two reasons. This afternoon when the minister made reply he omitted replying to one or two of the suggestions I had made, and which I feel are vital to the people in that part of the country. Of course, I am not finding fault.
First of all I should like to deal with some of the statements made by the minister this evening. I do not wish to misquote him, but I gathered from his remarks that he was endeavouring to tell the committee it was the man himself who was viewed as to his ability to pay and as to whether or not he would be a good risk. I cited two cases in my previous speech and I am going to mention another now in an endeavour to show the minister that the man in this case did not enter into it at all.
A man with a $9,000 mortgage on his farm from a loan company was told that if he could put up $4,500 cash they would call it square. He applied to the official in charge at New Westminster, but owing to the regulations of the board he could not come under the farm loan act. I am going to repeat what I said on a previous occasion, because it is very important. In British Columbia it takes between $250 and $400 to clear one acre of stump land. It is probably not worth that much after it is cleared. But is the government going to take the position through the board that after a man by his own labour and capital has cleared it, the total valuation of that acre shall be only $100, and on that total valuation a loan of fifty per cent shall be made? That occurred in the case of the $9,000 loan. The man did not enter into the picture. I am endeavouring to bring to the attention of the minister this fact, that unless some change is made whereby the valuation is raised, the present amendments to the act will be of no material benefit so far as the lower Fraser valley is concerned.
The minister also spoke of the numerous applications that had been made for loans.

Farm Loan Act
I took it upon myself to visit the official a few times to find out how the act was working. I might say I was very much in accord with the Farmers' Creditors Arrangement Act at the time, and told many farmers who had asked me for my opinion of it that I believed it would bring them relief. Well, Mr. Chairman, the official in charge informed me that ninety-eight per cent of the applications made to him before I left for Ottawa should have gone direct to the farm loan board. That is his statement, and when the minister says that he has thousands of cases that have been settled-


Edgar Nelson Rhodes: No, I said hundreds.


Thomas Reid: Well, let us take it at that, hundreds of cases; it will be interesting when we consider the bill to hear how many cases in the lower Fraser valley have been settled. I know the act has been in operation only a short while, and I am not over-critical on that account, but I would urge upon the minister that the peculiar circumstances in the lower Fraser valley should receive some consideration, and amendments should be made to the act to care for the farmers there.
I well remember when such a measure as this was being discussed in the various farmers' institutes in 1927. It was thought desirable at that time to advocate such a measure, and pressure was brought to bear upon the then government to have such a measure introduced in the hope that it would take care of many of the small men, the five or ten acre men. Now it is hopeless for men in that class to obtain a loan from the board. They are told that they are not farmers. I think that situation should be looked into. I discussed this very question at the last session when the Farmers' Creditors Arrangement Act was being put through and the word "farmer" was being defined. But there is not the same definition in the farm loan act, and speaking on behalf of those farmers in the lower Fraser valley I think the minister shoidd consider an amendment so that small holders may be brought under the farm loan act and be able to take advantage of its provisions. I do not think that is an unfair thing to ask, because, as I have pointed out, the conditions there are peculiar to that province. Again I would urge that the valuation be raised, especially in British Columbia. A valuation of $100 is far too low and excludes many farmers.
I dispute the minister's statement that the man himself is considered, and not his assets. In conclusion, I would again ask the minister 92582-341
to consider seriously these aspects of the question which I have raised as affecting the part of the country from which I come.
I was pleased to hear the minister speak about the five per cent stock, and to hear him say they were going to consider giving that back. In a meeting in which this question was discussed prior to my leaving home, when some twenty-five farmers who had loans met together, it seemed to be a very sore point with them that they should have to pay interest on capital which they had never received, and I do hope that some credit will be given to the farmers on that account. I would point out in passing that these men felt it was unjust that they should be asked to pay interest on money on which the board itself had not paid interest; because it will be remembered that for the first few years after the act was introduced, the board received loans of money from the dominion government on which it was not called upon to pay interest. I do hope that before the bill comes down the minister will give his careful consideration to these questions I have raised.


Edgar Nelson Rhodes: My hon. friend from New
Wetstminster was good enough to say that he disputed my statement. Of course, he is at liberty to do so, but he is not at liberty, I submit, to attempt to prove he is right by a set of facts that have no bearing whatsoever on the minister's statement. He is dealing with past conditions; I was dealing with the administration of the new farm loan act under the new set-up, and therefore I say that my hon. friend is on ground that is untenable. It will be time enough to dispute my statement after the act has been in operation and it is seen whether it works out in conformity with the statement of the minister.
My hon. friend's first complaint was with respect to valuation. That does not require an amendment to the act at all. It is purely a question of administration,
I told him of the attitude that one should assume with respect to the character of a risk, and I repeat that the moral character of the applicant is of far greater importance than the physical value of his assets in land, buildings and machinery. What I said was that if I were lending money, that was the attribute to which I would attach most importance, and I believe any well regulated farm loan board and any official operating under it would have that in mind. My hon. friend has also complained that the definition of farmer is not wide enough. It is an old maxim that hard cases make bad law, and you cannot make-amendments to this act sufficient to allow
Farm Loan Act

every man who poses as a farmer of sorts to crawl within its four corners. That would do far more harm than good. There will always be borderline cases even if you embroider the description of farmer. Having said so much, I am not averse to considering a different definition of farmer, if that should be thought desirable. As a matter of fact I am inclined to think that the definition of farmer in the Farmers' Creditors Arrangement Act is a better definition, and as at present advised I would not be averse to considering an amendment to the definition when we introduce the bill, if we are permitted to do so during the present session. When we get into committee on the bill I shall be very happy to consider a revision of the definition. The term "farmer" is defined in the Farmers' Creditors Arrangement Act as follows:
"Farmer" means a person whose principal occupation consists in farming or the tillage of the soil.
I think that is a very fair definition and one which on the whole is calculated to do far greater justice to the farmer than if an attempt were made to refine language to the point of including this, that and the other person, and by so doing exclude, under the well known rules of construction this, that and the other person, who might not be specifically designated but who under a general description would be more apt to be designated as a farmer than not.


Jean-François Pouliot: Reading the paper to-night, I saw an article signed by Mr. Albert Rioux. I understand he is one of the commissioners appointed under the Farmers' Creditors Arrangement Act, and the Minister of Finance should remember his appointment. Now, if I am not mistaken the commissioners are acting rather in a judicial capacity.


Edgar Nelson Rhodes: We are not discussing the Farmers' Creditors Arrangement Act.


Jean-François Pouliot: No, but my hon. friend was speaking about it, and these matters are all connected, so much so that this commissioner under the Farmers' Creditors Arrangement Act writes articles in regard to farm loans. He is a very fine fellow and I wrote him a letter congratulating him on his competence, though it was as to his theoretical competence; I did not go further than that. It seems to me that there is a want of dignity in a man who holds an appointment from this government to act in a judicial capacity to be writing articles in several papers for propaganda in regard to the farm loan business, and I do not know whether he does so under the instructions

of the Minister of Finance. Did the hon. gentleman give him authority, after his appointment, to take advantage of his high function to write some propaganda favourable to the government? This I should like to know. I have no objection to his appointment, but I have the greatest objection to his writing articles with political tendencies when he receives a salary from the crown to act in a judicial capacity. The Minister of Finance, who is a lawyer of very high standing, having appeared very often before the bench, will surely admit the soundness of that proposition-I mean mine, not his. As Minister of Finance, as guardian of the exchequer of the country, he will not tolerate for a moment, I am sure, that a man whom he has appointed to act in a judicial capacity should canvass anyone through the press or otherwise on behalf of this government. It is exactly the same as if a judge appeared on the hustings making political speeches. Everyone would object to that, and I object to the practice of this gentleman. I repeat, I do not object to the appointment of Mr. Rioux, though he has very strange views upon certain matters; but I do object strongly to the kind of articles he writes in the press, and there is no reason why that should continue. If he wishes to write articles in the press, let him resign, as my hon. friend from Charlevoix-Saguenay rightly says. He is free to do so, but so long as he holds an appointment with a salary from this government he has no right to use his high function to canvass the people of his province on behalf of this or that party.
May I say to the minister also that even if this gentleman, Mr. Rioux, were writing on behalf of the Liberal party, notwithstanding the fact that he holds his appointment from this government, I would strongly object because it would derogate from the dignity which we expect in a magistrate who has to settle the difficulties that exist between farmers and their creditors.
There is something else. The amount which was supposed to be loaned to the farmers was previously $15,000,000 and now it is $90,000,000, six times as great. Is it because the farmers' position is now six times worse than it was a few years ago? Is it because the farmers have six times less money that we have to lend them six times more than we lent them before? I said a word or two just before adjournment in this connection.
Let me quote again some figures for the information of the Minister of Finance. He is not making a gift to the farmers and he knows it very well, because he said that they would have to refund the money advanced to

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them. It will not be a gift; it is just a lifebuoy that he is throwing out to them until better times come. Last year some figures were submitted to the house-official figures- with regard to the decrease in exports of farm products. Those figures are astounding. The external market has been lost to the farmers of the country. The Prime Minister has said very often, "We have retained our local market; the farmers can trade within the high walls of the tariff which I have erected around this country". Very well; what was the decrease? In home consumption of farm products in one year as compared with another, in the year 1932 compared to the year 1930, we find that it amounts to a loss of over $440,000,000 to the farmers. They have lost money on all their sales, and more than that, they have no market. No one can buy their products, and in my constituency I know some farmers who have hundreds of bushels of good potatoes which they have to sell at fourteen cents a bushel because there is no market. Why have they no market? Because the people have no money. They have not money to pay even fourteen cents a bushel, and if the farmers sell potatoes at that price they get no benefit from it. One farmer told me that if he raised calves in accordance with the instructions given by the departments of agriculture both federal and provincial it would cost him $15 a calf, and he would receive only $5 from the butcher, or a net loss of $10. Is it surprising that the farmers asked for protection? They were promised protection in 1930, when the then leader of the opposition said, "We will protect you, working men and everyone else". What sort of protection did he give them? He gave them an umbrella with bare wires, but that is no protection against rain. And now that the farmers' trade has been destroyed by the insane policy of the government, my hon. friends are giving them a raft on which it is impossible for all the farmers to find a place. That is all there is to it, but in the election I am sure the Tory candidates will say to the people, "Look how generous this government have been: they are lending you money to help you through this awful crisis which is international, and which came upon us in spite of the efforts of the Prime Minister and his wonderful government to save you from despair. Cheers." They know and they judge more fairly than the government can do. They know their own business and they know very well the government cannot do enough for the farmer. What the government should do is to put the farmers on their feet not only by lending them money now but-and this is an obligation on the government-by giving
them a chance to trade, by giving them an opportunity to sell their products at a. reasonable price. The Minister of Finance knows this very well. Everyone on the other side as well as everyone on this side knows it; everyone in the country knows it. This should have been done, yet it is not done. Why? On account of a lack of courage because Canada has been following a policy which is silly, which has destroyed the free flow of trade, and the government will not change its policy. I know very well if the Minister of Finance were left to himself he would decide differently. He comes from a broad-minded province, a beautiful province on the Atlantic, dear old Nova Scotia, and he knows very well in that dear old province free trade is very popular-free trade with Boston. He knows very well there are lines of steamships between Yarmouth and Boston, Halifax and Boston, Nova Scotia and the United States. Those people want to trade; they are ready to buy from others provided those others buy from them. I am sorry that the Minister of Finance, for whom I have great regard and respect, as he knows, has not the courage to do what he should. Why does he not throw this policy overboard and give an opportunity to the Canadian people, to the farmers, to sell their products, to trade not only within Canada but with the outside world?


Mr. MULLINS:: It is not my intention to speak at length on this matter because the farm loan act is quite satisfactory to those of us in western Canada who are not sitting in the opposition. I have had a farm in the west for more than fifty years, and I know something about farming conditions. From where I am standing here I saw, until a few minutes ago, a farmer who sold his crop last year for over $20,000. He was a farmer. I am glad the minister has defined as a farmer a man who lives on the land and works on the land-not an agriculturist. I do not know whether the previous speaker is an agriculturist or a farmer. An agriculturist is one who lives in the city and spends his money out on the farm. I served on three boards in the city of Winnipeg and when we passed on a loan we passed on the ability of the man to pay and on the ability of the farmer to farm. A man who left his threshing machine out all winter with the result that it was in such shape that in the spring he had to pay $72 for repairs would not get a loan. I would like the ex-Minister of Agriculture to listen to this. He made the statement that before he could thresh he had to pay $72 for repairs to his threshing machine. If he left that threshing machine out all winter and it was in such a dilapidated condition as he describes,
Farm Loan Act

that is like the situation on some of the farms that I have seen in western Canada; people who will do that sort of thing are not farmers at all.


William Richard Motherwell: The machine was in a sod shed.


Henry Alfred Mullins: Half of such people are not farmers at all. If I were to serve in an advisory capacity to the minister, unless a man had an implement shed I certainly would not make a loan to him.


William Richard Motherwell: This machine was in an implement shed.


Henry Alfred Mullins: I shall not say what I was going to say in regard to Melville and the hon. member's farm. I shall keep that back; at my age, I do not think it is policy for me to say anything personal, because we are both getting along in years and I would not like to say anything derogatory. But there are poorly kept farms in western Canada. If you drive up to the doors of some of the farms you will find the hog pen in the front of the house; they believe in sociability. If you look around you will see the machinery scattered all over the farm. I would say to the minister: No, I would not make a loan to that man under any consideration. One has to be an expert to study and judge a man and to look over his farm as to the weeds and his ability to farm before granting a loan, and I was glad to hear the minister make the statement he did.
We want some relief from the high rate of interest that we have been suffering under in the west. I say this emphatically; I left three boards in the city of Winnipeg for the simple reason that they were extracting eight and nine per cent from the farmers. I told them that their loan was of very little use; that some day they would pay the price, and today they have quite a number of those frozen assets on their hands. A moderate rate of interest, five and a half or six per cent, will help the farmers of western Canada, and any true westerner who is not sitting over there merely for the sake of opposing will agree with what I say in that regard. I am sure that there is an honest endeavour on this side of the house to do what is right by the farmer. I will stay with a man when he is right and I will quit him in a minute when he is wrong; so I am in agreement with the purpose of the legislation now before us in regard to the farm loan board.


Mr. PARENT (Translation):: Mr. Chairman, at this stage of the discussion on the amendments to the Farm Loan Act, I think it is my duty to add a few remarks. The government, by this resolution, wishes to ini'Mr. Mullins.j	_	j
crease the amount loaned to farmers and to reduce the interest rate. In principle, I certainly do not oppose those amendments, but I think it is a premature step. Has the government taken into consideration the opportunity to answer incessant requests, not only from members of the opposition, but from our financiers, economists, bank managers and, shall I say, from the Minister of Finance (Mr. Rhodes) himself, who to-day moved this resolution to amend the Farm Loan Act? It is proposed to decrease the rate of interest to 5 per cent, if I am not mistaken. The former rate of interest was 6 or 01 per cent, but has the reduction in the rate of interest 'been proportioned to the decrease in the price of agricultural products? To-day, when the farmer is lucky enough to sell his products, he gets 50 per cent of what he was receiving 5 or 6 years ago. The rate of interest should be proportioned to the prices he obtains for the sale of his products. If the government wanted to be really obliging to the farmers, he should offer them money at 3 or 3| per cent, and that would be more in proportion to the profit which the farmer gets from the sale of his products.
On the other hand, the amount made available to the farmers is raised from 70 to 90 millions of dollars. But have you considered that the sum thus made available will have to be paid back? How is the farmer going to pay this money back? He will have to raise this money on his property and pay back capital and interest sooner or later. If, in the meantime, the government follows the policies to which it adhered these last few years, in what condition will the farming community be in five years,-assuming that the present government is still in power, though I hope they will not be. The farmer will neither be in a position to refund the capital, nor to pay the interest. And, on this point, Mr. Chairman, I will direct my remarks.
I read with a great deal of attention the speech of the hon. Minister of Finance before the Young Men's Canadian Club, on December 29 last. According to the French report, here is what the minister said:
. .. although international trade was still stagnant, Canada's foreign trade for the year just ended had amounted to $1,150,090,000.
I infer from the minister's statement that he considers there is enough trade to sell our products in Canada. The hon. minister did not see fit, on that occasion, to draw the attention of his hearers upon the fact that a loan to the farmers would help them greatly and would enable them to face the depression and to overcome the difficult'**-

Farm Loan Act
in which they are now. The hon. minister says that international trade is stagnant. Yes, trade is stagnant. And why? Because foreign markets are not open and do not allow us to sell our products.
The hon. Minister of Finance is not the only one to hold that opinion. I am going to quote the statement made by the general manager of the Bank of Montreal, at the 117th annual meeting of that financial institution, the most important in Canada:
The bank deposits could easily finance a much larger amount of business. Until the tendency toward restrictive legislation on business is more clearly defined, and until the uncertainties in connection with international relations have disappeared, business will improve somewhat slowly.
It would seem as if the hon. Minister of Finance and the general manager of the Bank of Montreal had consulted each other to fix a very short delay and that they both have the same idea about the present condition of the country, namely, that "international trade is stagnant and that business will improve somewhat slowly," so long as there will be no markets.
That leads me to say, Mr. Speaker, that before proposing to lend money to the farmers at a low rate of interest and making them believe that they are waiting for them with open arms and that they are ready to help them, the government ought to increase the purchasing power of the people. In the second place, the government, through the medium always expressed in this hoi*se and elsewhere, ought to give some work to the people, that is to the industrial workers, in order that they may earn, and thereby have a purchasing power that would facilitate the sale of farm products at more remunerative prices than at present.
Furthermore, we must increase the purchasing power of the farmers themselves, by providing them with the means of selling their products at higher prices.
How, I repeat, will the farmer be able to meet his obligations and pay his interest charges so long as he remains in the situation where he finds himself to-day? Before offering loans to the farmers, we should seek to restore his income.
Figures are not always pleasant to listen to, but it is absolutely necessary to place figures before the people of this country in order to show that we are to-day in an abnormal situation by reason of the policies heretofore followed by this government in bringing down measures unsuited to the present state of affairs and neglecting more suitable ones which should be introduced immediately. As I have just said, in order to bring back a
normal situation, it will be necessary to increase the purchasing power of the people employed in our factories. In 1929, the working class of Canada drew $813,000,000 in salaries and wages; to-day they draw only $500,000,000. If this difference of $313,000,000 returned to circulation, retail trade would benefit, the farmer would sell more of his products and there would be less privation in the homes.
How is this working class to find revenue and how is the purchasing power of the people to be increased?
We must find markets abroad. It has often been said, and it is still often said, that the Ottawa agreements have been a great improvement. I am not prepared to say they have not improved the situation, but have they brought it back to normal? If we look at the situation with respect to our trade with foreign countries, that is to say with countries outside the British Empire, we readily see that, in spite of the improvement due to the Ottawa agreements, our world trade is not fifty per cent of what it was in 1929, when conditions were normal and world markets were open to us. At that time, the sale of farm products was more profitable; farmers were in a poistion to meet their obligations and the government of that day would not have thought for one moment of offering them loans.
Now, I want to say, Mr. Chairman, that, even supposing that these loans will be very useful to a number of our farmers, only those farmers who own land of a certain value will be in a position to benefit thereby. Half of our population are farmers. Has the minister made a survey of those who might be able to take advantage of that act? I think not half of our farmers will. Then the act will be of any assistance to only fifty per cent of the people who are supposed to be benefited under the act. Farmers having lands of exceptional value will benefit, but the government will say to the less fortunate that their application will not be considered and those farmers will derive no benefit from this act. But we ought to be able to assist the great majority of them.
We must accept the principle of this bill, but I think the Minister of Finance might have suggested to the Prime Minister and members of the cabinet the necessity of bringing down a bill which would have changed the present situation by opening markets abroad, so that our farmers could sell their products at better prices, and be in a position to meet their obligations, and repay principal as well as interest on the loans they are now offered by the government.
Farm Loan Act


John Campbell Elliott: There is just a word that I should like to leave with the minister for his consideration. First let me refer to the point that was touched upon by the hon. member for New Westminster, namely the question of small farms. The part of the country which I represent contains a number of these. I think there should be provision, either in the regulations or by a change in the bill, by which an applicant making application for a small loan on a small farm should have to pay less for appraisal and expenses than would be charged on a larger loan.
As to the question of anticipated payment, I take it that that is practically covered by the act is it stands. If it is not, I ask the minister to leave no doubt with regard to the right of the mortgagor to pay off the principal without notice and without bonus at any time.
Then as a final word at this stage-because f expect to have an opportunity of saying something on the second reading-I suggest that the act be amended where it now provides for long term loans. I believe that better rates can be obtained for short term loans. If I read the act correctly the only power given as it now stands is to lend for long terms. I suggest that serious consideration be given to revising that clause so that short term loans may be provided for. I might say that in the mortgages I have drawn, and I have drawn a good many in my time, five years was the usual term, and they all contained the proviso that any amount of principal could be paid off on interest dates. That is a wise provision and I hope the minister will see that such a provision is contained in this bill.
There is no doubt about the fact that you cannot lend money to everyone who wants it, or in the amounts that may be requested. I quite agree that the character of the applicant is many times more important than the security on which the mortgage is placed. But I again urge the minister to have some provision in the mortgage that whatever interest is charged above four per cent, if any, shall be forgiven provided payment is made promptly. I do not think you can insert a provision for penalty for not paying promptly, but if payments are made as they fall due there will be little if any loss to the country by lending to reliable parties at four per cent.


Edgar Nelson Rhodes: My hon. friend will appreciate that I would not wish to assume the responsibility of stopping the passage of this resolution now; therefore I shall reply to what he has said in committee of the whole.
Resolution reported, read the first and second times and concurred in. Mr. Rhodes thereupon moved for leave to introduce Bill No. 15, to amend the Canadian Farm Loan Act.
Motion agreed to and bill read the first time.
On motion of Mr. Rhodes the house adjourned at 10.55 p.m.
Wednesday, February 6, 1935