INQUIRY AS TO PROGRESS OP PREPARATORY COMMITTEE WHICH HAS BEEN MEETING IN LONDON

[Stage Direction]
On the orders of the day:
Mr. M. J. COLDWELL (Rosetown-Biggar):: Mr. Speaker, can the government give the house any information concerning the progress of the wheat committee which has been conferring in London with regard to the matter of calling a conference on the international wheat situation? I have been asked what progress has been made, and I should be glad if before prorogation we could get some statement from the Minister of Trade and Commerce (Mr. Euler).
Hon. CHARLES A. DUNNING (Minister of Finance): Mr. Speaker, I have not seen the latest messages. The efforts of the committee, which has been mentioned in the house before, are still continuing, but the government is not aware of the present state of its work. It is a preparatory committee and is endeavouring to iron out certain difficulties in advance. Messages pass constantly with regard to the difficulties and problems raised by the various nations, but the government has no accurate information as to the present state of the committee's work.



SHOE MANUFACTURING INDUSTRY


[Stage Direction]
On the orders of the day:
Mr. GORDON GRAYDON (Peel):: I
should like to address an inquiry to the Minister of Mines and Resources (Mr. Crerar). In view of the seriously depressed condition of the shoe manufacturing industry in many parts of Canada to-day, will the government give an assurance to the house that no relaxation of -the immigration regulations is con-

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templated for the purpose of allowing shoe workers from foreign countries to enter Canada to find employment in the proposed Bata shoe manufacturing plant, which formerly operated in Czechoslovakia?


Hon. T. A. CRERAR (Minister of Mines and Resources):: Mr. Speaker, it is rather a lengthy question but I can say that no relaxation of the immigration regulations is contemplated for the purpose mentioned.



DOMINION-PROVINCIAL RELATIONS AVAILABILITY OF REPORT OF ROYAL COMMISSION IF MADE DURING RECESS OF PARLIAMENT

[Stage Direction]
On the orders of the day:
Hon. C. H. CAHAN (St. Lawrence-St. George):: Mr. Speaker, I would like to ask the Minister of Justice (Mr. Lapointe), who is leading the house, whether if the commission investigating and reporting upon the relations between the provinces and the dominion makes its report before the next session of parliament, the report will be made available to the members for study as soon as it is received, or approximately so?


Right Hon. ERNEST LAPOINTE (Minister of Justice):: The suggestion of my hon. friend will certainly be considered. Personally I see no objection; I think his suggestion has great merit.



LIBRARY OF PARLIAMENT


[Stage Direction]
On the orders of the day:
Hon. H. A. STEWART (Leeds):: I should like to direct a question to the acting leader of the government (Mr. Lapointe) and possibly to the Minister of Public Works (Mr. Cardin). In the votes and proceedings of Wednesday last appears the report from the joint committee of both houses on the library of parliament. The report recommends extensive alterations and changes in the library, involving adjustments in the lighting, the removal of the present flooring and the laying of an altogether different kind of floor. The present flooring is, of course one of the interesting architectural features of the library. Has any decision been made with regard to the adoption of these recommendations? I do not recall any item in the estimates, except possibly a general one, under which this matter could have been considered or discussed. I do ask that in view of the peculiar structure of the building, the floor and all the settings, nothing be done to impair the architectural beauty of the library.


Hon. P. J. A. CARDIN (Minister of Public Works):: No final decision has been reached, but I can assure my hon. friend that the beauty of the floor will be preserved if any alterations are made.


Mr. POULIOT:: May I say to the hon. member for Leeds (Mr. Stewart) that in my opinion the report is excellent and that the library should be made fire-proof by all means. It is not the floor that counts, but the valuable books that are in the library.



CENTRAL MORTGAGE BANK


[Stage Direction]
Hon. CHARLES A. DUNNING (Minister of Finance) moved that the house go into committee to consider Bill No. 132, to incorporate the central mortgage bank.
Jean-François Pouliot: Mr. Speaker, I rise to a point of order. When one of your predecessors, the Hon. Mr. Black, was in the chair, on March 16, 1933, the Canadian National-Canadian Pacific bill came before the house and no French copies were available. Our lamented friend, the then hon. member for Lotbiniere, protested, and at page 3091 of Hansard of that date he is reported to have said:
... I requested a copy in French of the bill under discussion and until I have received it, may I ask that the debate be postponed.
The present leader of the opposition (Mr. Manion) who was Minister of Railways at the time, replied:
... I gladly move that the committee rise and report progress.
There is another precedent. When your immediate predecessor, the Hon. Mr. Bowman, was speaker, on January 29, 1935, I objected to the consideration of the estimates because there were no French copies. There was a lengthy discussion in which the hon. member for St. Lawrence-St. George (Mr. Cahan) and many others took part, and the Minister of Finance of the day, the Hon. Mr. Rhodes, as reported at page 277 of Hansard, moved that the committee rise and report progress and ask leave to sit again. In view of these precedents I would ask the government either to postpone consideration of this bill until we have the French copy or to drop this piece of bad legislation.


Ernest Lapointe: I yield
to no one, not even the hon. member for Temiscouata (Mr. Pouliot), in my respect for the French language in this house. In this instance, as my hon. friend knows, his
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objection if valid would have the effect of delaying the work of parliament. But there is something more. If I remember rightly, the objection in this respect must be made before the second reading of the bill. When the bill is read the second time the house has agreed to proceed with the consideration of it, and as a matter of fact the French version of the original bill was distributed. What comes to us to-day is merely a copy for the convenience of hon. members, and is not a copy brought down in the regular way. The amendments made in the committee on banking and commerce were extensive, and the bill has been reprinted embodying those amendments. I really do not think that my hon. friend should insist on his objection. As I say, it would certainly have the effect of prolonging the session unnecessarily.


Jean-François Pouliot: Not if the bill is dropped. The discussion on the second reading of the Canadian National-Canadian Pacific bill had been going on for three days when it was interrupted by the leader of the opposition.
Motion agreed to and the house went into committee, Mr. Sanderson in the chair.
On section 1-Short title.


Jean-François Pouliot: My remarks on this bill
will be brief. What I regret is that we have left the road that was followed by previous ministers of finance until 1930. I wonder if hon. members who were in the house at that time have kept the report of the banking and commerce committee which was brought down when Mr. Robb was Minister of Finance. Of course, high finance must be based upon common sense like anything else, and what I regret very deeply is that during these last years certain professors of economics and political science have been splitting hairs in their use of jargon-for instance, with regard to the flexibility of currency and things of that sort- arid now our financial legislation is in an absolute mess just because political science has been -regarded as objective when it is only subjective, and absolute when it is only relative. With the exception of the Minister of Justice, there is no man for whom, until 1930, I had a greater regard than the Minister of Finance, and for a very good reason. A mutual friend, whose friendship did me honour, and who knew him very well, told me a good deal about the hon. gentleman, and in fact I owed much to the Minister of Finance for all he did as Minister of Railways in helping me in many ways in having certain essential work done along the railway line in Temis-couata county.


Mr. STEVENS:: At Riviere du Loup.


Jean-François Pouliot: Not only Riviere du
Loup, but from Old Lake Road to Trois Pistoles including Riviere du Loup. The fences were dilapidated and in various ways it was necessary to carry out improvements. The hon. gentleman helped me in that regard and until then he always listened to the reasonable requests I made of him. His courtesy was highly appreciated and no one was more pleased than I was when he accepted the office of Minister of Finance in this government.


Mr. DUNNING:: What has that to do
with the bill before the committee? I appreciate my hon. friend's compliments, but, I submit, we are all required to obey the rules of the house, and I cannot see any connection between, the hon. gentleman's remarks and the bill under consideration.


The CHAIRMAN:: Order. The point of order raised by the Minister of Finance is, I think, well taken. We are now on Bill No. 132, section 1, short title. I would ask the hon. member who has the floor to confine his remarks to section 1 of the bill.


Jean-François Pouliot: Sir, I appreciate what you say, and you know very well-I say that in answer to the Minister of Finance-that I always stay within the rules of the house, because I have read them. And he must know that on the short title any member can discuss the whole bill. And I can do more. I can say just a few words which are far from being offensive, 'because my compliments are scarce, with regard to the one who moves the bill. The Minister of Finance is the sponsor of this bill, and what I want him to understand is that if I have some remarks to make regarding legislation that he brings to the house I have not the least ill-feeling regarding him. It is just to prevent-


Frederick George Sanderson: Order. I am sorry to interrupt the hon. member, but I have made my ruling on the point of order, and the hon. member is not obeying that ruling.


Jean-François Pouliot: Sir, you know very well that I have the deepest respect for the Chair. And I do not want freedom of speech to be curtailed in this house. It is the last privilege that is left to members of parliament, and if this room is not a Star Chamber we -must express our feelings with regard to legislation, provided we stay within the rules of the house.


Mr. THORSON:: What section are we on?


Jean-François Pouliot: We are on the short title. What I want to say is that this piece of legis-

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lation cannot be agreed with, for several reasons. The main one is that it is unsound. And why is it unsound? It is both state socialism and Toryism.


Joseph Thorarinn Thorson: I rise to a point of order. The principles of the bill have been accepted by the house and we are now dealing with the short title.


Jean-François Pouliot: I always took the hon. member for a Liberal who knew that freedom of speech is the essence of Liberalism. I do not interrupt him when he speaks. I call upon your spirit of justice and fairness, Mr. Chairman, to stop everyone who interrupts me when I am in order, as I am now.
I find this bill all wrong. In the first place it is a Tory policy because it will help only the insurance and loan companies or a class of individuals who lend money. The other day I said to the house that the debtor would have no advantage under this bill, that it was only for the insurance, and loan companies; therefore I am bitterly and strongly opposed to it. That is the first point. In the old times money was lent by neighbour to neighbour in farming communities, until we had that bankruptcy legislation which was brought in shortly after the war, or during the war, containing a provision to the effect that the Bankruptcy Act, the purpose of which in the first place was to apply only to those who were in trade, should apply to farmers. Then, according to the knowledge that I have secured by living amongst farmers, by listening to their complaints and grievances, I know very well that since that legislation was enacted farmers have been handicapped in securing money on mortgages, because those who lend money were afraid that the farmer might take advantage of the legislation to go into bankruptcy and then they might lose their money. Therefore the credit of farmers for getting money on mortgage was greatly handicapped by that legislation.
In the second place there was the Farmers' Creditors Arrangement Act which was passed by the last government-a second handica-to the farmers. If we suppose that A meets B to secure some money on a loan on promissory note or mortgage, if he took advantage of the Farmers' Creditors Arrangement Act the one who lent the money was exposed to the risk of loss, therefore the credit of the farmers was handicapped again.
Furthermore, we had a dominion loan organization which was not working properly. Whatever may be said about the farm loan policy of the government of Quebec, it did a lot of good in that it provided farmers with money which they needed and which they
could not secure either on mortgage or on notes. Many hon. members have either lived all their lives in the country or spent sufficient time in the country to enable them to know that it was a tradition in the old times for farmers who had smaller families and had the advantage of securing more profits to lend to their neighbour just across the fence, or two or three lots further away, the amount of money that he needed to repair his buildings or purchase something that was necessary on his farm. But at the present time farmers are most suspicious about lending money to their neighbours, and it is a social wrong. It was from the moment that the Bankruptcy Act was made to apply to farmers that they themselves started to make wrong investments, either in city lots, in glass coffins or other enterprises of the kind, and now we see what it is we have-a piece of legislation that does not remedy that evil, does not help the farmers who have borrowed money on mortgage from their neighbours or someone in the community; it helps only the insurance and loan companies.
When the Minister of Finance was sworn in there was a letter for him in the hands of the clerk of the privy council, in order that it should be delivered to him without anyone else seeing it; it was from the member for Temiscouata, who was congratulating him and warning him against his deputy, who was called in that letter a crank. Now as a representative elected by the people of Temiscouata, who has always defended the principles of Liberalism in this house, whoever was in power, I feel greatly humiliated to think that the very same crank is more listened to by the Minister of Finance than the whole House of Commons together. When I start to say what my venerable colleague the hon. member for St. Lawrence-St. George discreetly mentioned the other day, in speaking of a brain trust


Frederick George Sanderson: Order. I desire to point out to the hon. member that in his remarks he has been definitely out of order. I quote Beauchesne's Parliamentary Rules and Forms, page 157, standing order 58, paragraph (2):
Speeches in committee of the whole house must be strictly relevant to the item or clause under consideration.
The hon. member is an old parliamentarian; he must know that his remarks have been out of order. I would ask him to confine himself to the section of the bill under consideration. We are now on section 1.


Jean-François Pouliot: Yes, sir. Now I may put everything I have to say in a nutshell, in a sentence that will take only two or three lines
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of type. In the first place I cannot understand why freedom of speech should be curtailed to any degree. In the second place I cannot understand how it is that the big boss of dominion finance should be the very one who has wrecked an old reputable concern by unsound investments. That is all I have to say.


Charles Avery Dunning: Mr. Chairman, on behalf of a civil servant who cannot speak for himself I must object to a statement which, if made outside this house, would be distinctly libellous and which to my personal knowledge and the knowledge of every member of this government is wholly untrue. I can only say that this bill is introduced by this government on its cabinet responsibility. The government is unanimously behind it, and I speak as the cabinet officer responsible for these matters and acting for the whole government. This is not my personal measure; it is the measure of the government, and with respect to the deputy minister who has just been so vilely slandered by the hon. member for Temiscouata, I can say furthermore that the deputy minister of finance, in the discharge of his important duties, has the confidence of every member of the government from the Prime Minister down. We have full knowledge of his record and complete confidence in him.


Jean-François Pouliot: In the first place, sir, I would say-


Charles Avery Dunning: I object to my hon. friend pursuing the matter any further. My right to reply to a slander was undoubted, but surely my hon. friend cannot go on now and repeat what he has said.


Jean-François Pouliot: Mr. Chairman-


Frederick George Sanderson: I would point out to the hon. member for Temiscouata that he must confine his remarks to the section under consideration, which is section 1.


Jean-François Pouliot: Yes, sir. I believe the short title of this bill is bad legislation. What I say in this committee is not at all slanderous, but is said in the spirit of a person who sees some of his friends in a car heading towards a precipice. He says, "Do not go further; there is danger in that direction." That is all I have to say, sir. There will be other opportunities to tell my constituents what I think of the whole finance policy since Mr. Bennett came to power. I will tell that to my constituents, and no one there will call me to order; rather they will ask me for more information. What I regret is that we cannot supply those concerned with the information they need, which would probably

change their course if they were in good faith, and this applies especially to the Minister of Finance.


[Stage Direction]
Section agreed to.
On section 2-Definitions.
Charles Hazlitt Cahan: Realizing that I have
expressed an opinion with regard to the whole measure and will have, if I deem it convenient, a right to express that opinion on the third reading of the bill, I refrain from discussing particular sections at the present time. But the fact that I do not now discuss them or object to them does not withdraw in any way the objections I raised both on the second reading and in the standing committee on banking and commerce, where the bill was discussed section by section.


Mr. PELLETIER:: In view of the fact that extensive changes have been made by the committee before reporting the bill back to the house I think it would 'be only fair if the minister would give the committee some explanation as to the principles that may have been changed by the committee. If he were in a position to do that it would give us a better general idea as to the present standing of the legislation, and I believe would serve quite a useful purpose. I realize, of course, that these changes can be discussed as the individual sections come up, but inasmuch as many of these sections have been altered I think a short statement by the minister as to the general changes that have been made would be quite helpful.


Charles Avery Dunning: I intended to refer to the changes which are material as we reached them. There is no change whatever in the principle of the measure. It will be more convenient if I indicate the changes to the committee as we reach the sections concerned.


Mr. ROBICHAUD:: Would it not be advisable to add another paragraph to the interpretation section in order to define the central mortgage bank? I think we might easily add this:
(j) "the bank" means the central mortgage bank.
I notice in section 6, for instance, that the words "central mortgage bank" are repeated four times, which makes cumbersome reading. I suggest that it would be very easy to insert a clause such as I have suggested and then refer to it as "the bank" all the way through, as well as in any agreements or other documents which might be executed. Then it would not be so cumbersome.


Charles Avery Dunning: In referring to this bank, and in any documents executed by it or on

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its behalf, we desire to refer to it by its full title, the central mortgage bank, because we do not want any confusion with any other bank. That is why the title is set out in full wherever it appears throughout the bill.


Ernest Lapointe: In view of what will undoubtedly be said in the press I want to say that the French version of the reprinted bill has been distributed to hon. members.


Henry Herbert Stevens: I want to make just one observation; that is, to reiterate my objection to including an agreement for sale under the term "mortgage."


Mr. WERMENLINGER:: I should like to see two other definitions included in this section. I believe the executive committee of the board and the committee of appraisal should be defined in order to clarify the extraordinary powers these two committees will eventually possess.


Charles Avery Dunning: They are defined in the relative sections.


[Stage Direction]
Section agreed to.
Sections 3 to 12 inclusive agreed to.
On section 13-Capital, $10,000,000.
Mr. MacNICOL:: Many of the brilliant financial members of the house are serving on another committee and cannot be here. They are not aware that the bill is going through the house so rapidly. If the government will take the responsibility for its followers who are on that committee and who might like to speak to the bill, well and good. But what will those hon. members think when they return to the house and find that the bill has gone through? I am not a financial man, nor do I feel qualified to discuss these matters. Many of the members serving on the public accounts committee would no doubt want to discuss different sections of the bill, but I am afraid by the time they return to the house it will have passed.


Charles Avery Dunning: I am afraid I cannot assist in that regard. As far as examination of the measure is concerned I would point out that there was a full attendance from all parties in the house, particularly of hon. members interested in this type of legislation, when the measure was before the banking and commerce committee. I am afraid it would be impracticable to hold it up now, to wait for another committee. So far as we have gone, no changes were made in the banking and commerce committee. We have not yet reached the place where those changes occur. I appreciate, of course, the fact that
a show is being put on elsewhere which would have more attraction for an audience than this somewhat dry financial subject. I can only say that hon. members interested should be here.


[Stage Direction]
Section agreed to.
Sections 13 and 14 agreed to.
Qn section 15-Agreements with member companies.
René-Antoine Pelletier: Will the minister
explain what led to the change which has been made in this section?


Charles Avery Dunning: The change was recommended by the Department of Justice. It merely improves the legal verbiage. It has no legal significance.


René-Antoine Pelletier: No argument was
advanced in committee suggesting that the change be made?


Charles Avery Dunning: It is purely legal.


[Stage Direction]
Section agreed to.
On section 16-Provisions of agreement.
Charles Avery Dunning: I am not clear as to whether it is understood that purely typographical and printers' errors may be corrected without formal motion. If that is understood I need merely make the suggestion that the word "or" in line 43 should be "for." If it is understood that no motion is required for such errors, I need not make one. I believe there are three purely typographical and printers' errors.


Charles Hazlitt Cahan: They could be mentioned and corrected by the clerk, without formal motion.


Charles Avery Dunning: Then that is agreed.


Louis-Prudent-Alexandre Robichaud: In section 16 paragraph (c) I find these words:
(c) Each such mortgage held by the member company will be adjusted by deducting from the total amount owing on the mortgage account all arrears of interest in excess of an amount equal to two years' interest.
Is it clear that it is two years of the old original interest, or two years of the new '[DOT]ate?


Charles Avery Dunning: Of the old rate.


Louis-Prudent-Alexandre Robichaud: The existing rate?


Charles Avery Dunning: Yes.


Mr. BONNIER:: Mr. Chairman, paragraph (f) of section 16 providing that the rate of interest on farm mortgages shall not exceed 5 per cent grants every farmer all the assistance required. I do not wish to criticize this
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measure, yet it seems to me that we are neglecting the urban property owners who have been facing serious difficulties for many years, ever since their properties stopped yielding any income. During the last ten years, a great many of them have lost their properties because the expenditures and taxes and interest they had to bear far exceeded the income derived from these properties. However, the government have never considered the granting of assistance to urban property owners. These owners laboured and saved for twenty or thirty years in order to accumulate $1,000 or $2,000 with which to purchase a piece of mortgaged property, but the interest rates and taxes were so high that they eventually lost the fruit of their twenty or thirty years of hard work.
The setting of interest rates at such a high level will certainly not stimulate the building trades, although we have reached the point where we shall soon lack housing accommodation. Whenever a property owner asks for a loan, he is prompted by the sole desire to retain his property and to avoid losing it. The lender himself wishes to invest his capital in such a wp.y that it will yield him an income. Since the property owner wishes to retain possession of his property, and the lender has no other desire than to obtain the return of his investment, it is not to the latter's advantage to loan money at such a high rate of interest that he will be forced, sooner or later, to take over the property in payment of his mortgage. It is better for the lender to invest his money at 5 per cent, to collect the interest regularly and to recover the principal at maturity. In that way, the property owner as well as the lender will be better off.
Besides, under the National Housing Act the interest rate is set at 5 per cent. Why, then, should there be any discrimination in this bill, and why should the interest rate be made 5i per cent in the case of city mortgages? Why should not both acts be made uniform? As a matter of fact, the interest rate is generally reduced to 5 per cent on large loans. This legislation will tend further to raise the interest rate which, for the last few years, or at least during the past year, has been 5 per cent.
The government should consequently amend this bill so as to set a rate of 5 per cent for the interest on housing loans as is done in the case of land loans in this bill and as was done under the National Housing Act.
If the interest rate were reduced, property owners would be in a position to repay every year part of the amount borrowed and they could keep their properties. Urban
[Mr. Bonnier.!
property owners should now be shown some consideration and the government ought to help them.
Legislation has been passed in order to promote the building of houses, but urban property-owners are being ignored. This bill is not calculated to stimulate the building trade. The interest rate and the costs should first be reduced if property owners are to keep their houses and build others. Every form of government help has been extended to farmers; there have been bonuses and in connection with wheat alone the dominion has paid out millions of dollars. I am in favour of that but I demand similar concessions on behalf of urban property owners. It has never occurred to the government to guarantee property rentals, as they did in connection with a minimum price on wheat, a course which entailed the expenditure of considerable sums of money. When city owners lose their property they are no better off than farmers who sell their wheat at a low price. However, the government have never contemplated helping urban owners who are losing properties every year. The government could help them in reducing to 5 per cent the rate of interest, as I suggested this morning to the minister of finance.


Charles Avery Dunning: 
René-Antoine Pelletier: The minister gave an example of a person who had a mortgage on a $5,000 home and was in arrears with his interest payments for three years. He stated that according to the bill eighty per
cent of the original mortgage would be the amount which would then become the principal.


Charles Avery Dunning: No-not eighty per cent of the original mortgage, but eighty per cent of the present value of the property, would become the new mortgage principal.


René-Antoine Pelletier: That would be, of
course, one of the advantages which the man would receive, in addition to what he would receive by the foregoing of one year's interest. Two years' interest would, of course, remain payable.


Charles Avery Dunning: Well, if he owed more
than that-


René-Antoine Pelletier: Yes, it might be three or four years. But after he has received those benefits, suppose the force of circumstances prevented him from making subsequent payments, what would be the procedure then? Does it necessarily follow that the urban home owner would be likely to lose his property to the mortgage company as a result of not being able to make his payments even though he has received all these advantages? Is the way open for immediate foreclosure proceedings on the part of the company?


Charles Avery Dunning: The intention would be to have the ordinary law of contract apply with respect to the new contracts entered into. We cannot project ourselves sufficiently into the future to be able to deal with cases of individual hardship which may arise after a borrower has received all that we can convey to him under this legislation.


Mr. HEAPS:: What is the rate that a
borrower under the Dominion Housing Act has to pay to-day?


Charles Avery Dunning: Under the Dominion Housing Act, five per cent.


Abraham Albert Heaps: Under this legislation, adjustments will be made at one-half of one per cent more than under the Dominion Housing Act. except for such adjustments as may be made with regard to the reduction of amounts.


Charles Avery Dunning: 
Abraham Albert Heaps: If I understand the amendments correctly, adjustments in the rural area will be made at the rate of five per cent.


Charles Avery Dunning: Right.


Abraham Albert Heaps: And in the urban sections it is to be 5i per cent?


Charles Avery Dunning: Quite.
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Abraham Albert Heaps: As one of the representatives of urban districts, I assume that many people will come to me and say that there is discrimination against urban mortgagors as contrasted with rural borrowers, and I may find it very difficult to explain. Not being a member of the banking and commerce committee I was not at the meetings. It is hard for the ordinary person to understand why the interest rate in an urban centre should be higher than in a rural area. Obviously it costs less for a mortgage company to do business in an urban district; at any rate that is the general impression. Perhaps the minister would put on record the reasons for this change in committee in the rate of interest on urban mortgages from 5 to 51 per cent, and why there should be this discrimination against urban mortgagors.


Charles Avery Dunning: I have given at least the major reason-our desire to secure cooperation. Of course one reason is that under the monthly payment amortization plan, which applies under the National Housing Act and also under this act to urban dwellings, the cost of operation is higher than it is with respect to farm mortgages bearing annual repayment provisions. But really the committee was faced with this choice; we could see it quite plainly. Mortgage companies showed us that their amounts in default or behind in payments in urban properties represented a much less proportion of the whole than in the case of agricultural mortgages, which have been hit by ten years of adverse conditions. They said quite frankly, "You are asking us to go to all our borrowers in the cities who are in good standing, who have kept their contracts, and say to them, 'In future you will not pay us 6 per cent, or 61 per cent, or 7 per cent; just as a free gift we are cutting your interest down.' " They argued also that we must consider the situation as a whole from the standpoint of companies becoming members of this bank. For instance, company A has, say sixty per cent of its investments in urban properties and forty per cent in farm properties; company B's investments might be seventy per cent urban and thirty per cent rural, and so on down the scale. Obviously each company is going to look at the obligation it assumes with respect to the whole of its properties. It was the design of the legislation to make that possible, otherwise the legislation would have been impracticable; and we gathered the impression in the committee from the representatives of the companies that, at 51 per cent for urban loans, we should have a very good chance of getting the great bulk of the companies to join, and thus extend to all urban and rural dwellers

who are borrowers from member companies the benefits of that very considerable cut in interest.


Abraham Albert Heaps: How is the distinction made in the bill between rural and urban loans? Is it a question of the mortgage being on either a farm or a house, or is it according to areas, irrespective of what kind of property is involved?


Charles Avery Dunning: It is not according to area. It is either a farm home or a non-farm home. That is why we adopted that language,-because of the difficulty in respect of area which my hon. friend has indicated. Under section 31 there is power more closely to define these terms. But the distinction, broadly, is between a farm which is an operating entity as such and a non-farm home.


John Ritchie MacNicol: Has the minister a record of the percentage of private homes upon which mortgages are held by companies, and the percentage upon which mortgages are held by private individuals?


Charles Avery Dunning: We had before the committee, from the census, the total dollar mortgage holdings for the dominion, but there is no means of distinguishing from the census returns between a private mortgagee and a corporate mortgagee.


John Ritchie MacNicol: Does the bill make any provision for the home owner upon whose property a mortgage is held by a private individual?


Charles Avery Dunning: We were unable to work out any method of dealing with the private mortgagee.


John Ritchie MacNicol: Then the small home owner upon whose home a mortgage is held by a private individual will not have any redress under this bill?


Charles Avery Dunning: As the bill now stands
he cannot secure any direct advantage from it, but there is no doubt that the competitive influence brought to bear by virtue of the entry into the scheme of a large number of the lending institutions will have an effect upon what private mortgagees will be able to get for their funds. But there is no means of arranging for dealing by the bank with private mortgagees. Everybody, on all sides of the house, who was interested in this great social and economic question endeavoured to find some machinery which could be made to apply; but we were quite unsuccessful, all of us. As a matter of fact this plan is made possible by the fact that a company brings in all its mortgages of the classes mentioned,

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good and bad, those in good standing and those in arrears. Of course the private mortgagee would only bring along the bad ones to the bank. We have not been able to work out any solution, but the problem is such in some parts of Canada that a year's operation may indicate a channel through which, by cooperation among private mortgagees or by some other means, they also may be dealt with. At present, however, we cannot devise such machinery.


René-Antoine Pelletier: I should like to get
clear in my mind the reason for the increase from 5 to 51 per cent. The minister has said that there are companies with two types of investment, some urban and others rural.


Charles Avery Dunning: They all have.


René-Antoine Pelletier: So that in order to
extend the benefits of the act to the rural mortgagors it was necessary to give a more satisfactory rate of interest to urban mortgagors. Is that correct?


Charles Avery Dunning: I would not put it in
that way. I do not care to alter my language. It is hardly correct to put it in that way.


Mr. REID:: Very often a first mortgage is held by a company and the second mortgage is taken out with private individuals. If the first mortgage is readjusted in the clean up, what will happen to the second?


Charles Avery Dunning: The second mortgage
does not change its status at all but remains as is.


Joseph-Arsène Bonnier: If I am here next year
and if the minister is here I shall try to have an amendment to make the rate five per cent.


Mr. McNIVEN:: A great deal has been said in this house and elsewhere with regard to debt legislation. There is a difference of opinion as to its efficacy, and much of the conflict has centred in western Canada, particularly in Saskatchewan, because of conditions that have prevailed there, where for a period of ten years we have suffered from every kind of agricultural distress known to man. Men and women who went into western Canada and into our province went to build homes, and notwithstanding the situation in the west, and I believe this is true of the whole of Canada, none of this debt adjustment legislation has been applicable to urban home owners until the introduction of this bill. The Farmers' Creditors Arrangement Act had no application to urban home owners. The provinces were powerless to introduce legislation to bring about a reduction in principal
or in a reduction of interest. In 1936 an adjustment was made of farm mortgages in our province, where all the interest in arrears at the first of January, 1935, was written off and the interest rate on farm mortgages reduced to six per cent. None of these benefits extended to urban owners. Notwithstanding that fact, notwithstanding that the depressed condition of agriculture in the west has had a direct effect upon the urban resident, I am glad to say that the urban resident in my province has lived up to every tradition that impelled him to go to western Canada. He went to build a home, to own something, ar\d the urban home owner has done his utmost in maintaining and preserving that home.
In the city of Saskatoon there is a total of 1,546 urban loans-this is the record of twenty-six mortgage companies operating in the province-and of that number there are only forty-three upon which there is interest in arrears for three or more years. In Regina there are 2,223 urban loans and only on forty-seven is interest in arrrears for three years or more. In Moose Jaw there are 240 loans, and only fourteen in arrears for three years or more. In Prince Albert there are eighty loans and only on two is interest in arrears for three years or more. In other words, there is a total of 4,089 urban loans, of which 106 are in arrears for three years or more.


Charles Hazlitt Cahan: How many for two years?


Donald Alexander McNiven: I have not the figures; the only ones supplied me were for three years. The urban resident is again asked to accept a higher rate of interest in the adjustment of his home indebtedness than the rural resident, and I am going to take the responsibility for not complaining about this differentiation- I had almost said discrimination-because I regard this legislation as highly beneficial to the home owner of Canada, and particularly to those who reside in the west. It is such a boon to those of us who have been paying interest at six and a half per cent-comparatively few-seven, seven and a half, eight, eight and a half, and nine per cent, that to come down to a rate of five and a half per cent brings us perilously close to utopia itself.


Charles Avery Dunning: Can we be " perilously " close to utopia?


Donald Alexander McNiven: I know it is a mixed metaphor, but I thought I would say it anyway. The payment of these interest rates, the effort that has been made by the urban residents to preserve their homes, has involved sacrifice on the part of individuals. It has
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involved the elimination of anything in the way of extravagance. It has involved saving in a great many ways. In that regard and on that account I think that the people of western Canada are entitled to a good deal of credit.
It has been said that mortgage companies are going to make an adjustment. That is the situation as far as twenty-six mortgage companies are concerned. I would have you note that the head offices of those twenty-six mortgage companies are in Toronto or other eastern centres, and whatever adjustment is made in the way of interest will increase the purchasing power of the urban resident, who will use that purchasing power- to buy the manufactured products of eastern Canada. Much has been said about people in the west as having lived extravagantly, bought high priced automobiles, taken holidays in California, and so on. This record of urban Saskatchewan in preservation of its homes [DOT]belies the statements so made.
One other observation for the benefit of the hon. members for Parkdale and Davenport. These twenty-six mortgage companies informed me that their percentage of collections of principal and interest is better in Regina than it is in Toronto.


Louis-Prudent-Alexandre Robichaud: In paragraph (s) the rate of interest on the debentures to be delivered to the member company by the central bank is not stated. Is it necessary that it should be?


Charles Avery Dunning: It is covered in section 18. Three per cent is stated there.
To return to the typographical errors: on page 8, line 32, the word " the " should be deleted. In line 34, following the word " advances," the word " made " has been omitted by the printer. On page 9, the first line of paragraph (s), the letter "a" is omitted from the word " performance."


Louis-Prudent-Alexandre Robichaud: In subsection 2 of
section 16, the interest rate is 3* per cent. Further on, on page 12-


Frederick George Sanderson: Order. I must remind the hon. member that he is discussing clause 20. We are on clause 17.


Louis-Prudent-Alexandre Robichaud: I am discussing clause 16, which has not been carried yet.


Frederick George Sanderson: I suggest to the hon. member that he should wait until we get to clause 20.


Louis-Prudent-Alexandre Robichaud: But there seems to be a contradiction in clause 16.


Charles Avery Dunning: No, there is no contradiction. The debentures referred to in

subsection 2 of section 16 are the debentures of the company. The debentures referred to in section 18 are the debentures of the bank.


Louis-Prudent-Alexandre Robichaud: I am not referring to section 18; I am referring to section 20, subsection 3.


Frederick George Sanderson: Order. In my opinion the hon. member is out of order in dealing with section 20.


Mr. BLACKMORE:: What basis is used for the determination of the present value of a property?


Charles Avery Dunning: There are provisions for appraisal and appraisal committees in section 16. First, there can be agreements between borrower and lender as to what is a fair appraisal, but that is subject to subsequent approval by the central mortgage bank. There is also provision for committees of appraisal, consisting of a representative of the central mortgage bank, one of the mortgage company, and one other appointed by those two.


Louis-Prudent-Alexandre Robichaud: Subsection 2 of section 16 says "bearing interest at 3i per centum per annum". Is that the maximum or the minimum? Can it not be lower than that, or must it be exactly 3J per cent?


Charles Avery Dunning: The debentures referred to in subsection 2 are debentures which may be bought by the bank from the mortgage company for the purpose of making the adjustment. The debentures referred to in section 18 are debentures which have to do with new money for future operations, and involve the laying down of that basis.


Louis-Prudent-Alexandre Robichaud: That is the explanation, but still it is not clear. It says "issued or to be issued" in both cases.


Mr. STIRLING:: In the matter of a new mortgage, would it not be a simple matter for a lending company to decide: "Yes, this is borowed money;" or, "No, this is our own funds?"


Charles Avery Dunning: Oh, yes.


Grote Stirling: It does not look easy to me.


Charles Avery Dunning: They will have to show that.


Donald Alexander McNiven: I attended the meetings of the committee but unfortunately was not there when subsection (k) of section 16 of the old bill was under discussion. Subsection (k) of the old bill dealt with provincial legislation. Did the minister have in mind what might subsequently be regarded as unduly impeding, restricting or penalizing the right of action of the mortgagee?

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Charles Avery Dunning: I could not undertake to answer that. The variety of legislation across this dominion is so great that any statement by myself might be taken to have authority with respect to provincial legislation which I have not in mind at all. What we shall have to do is to sit down with each province and examine their legislation and endeavour to work out what is reasonable. I think there is every indication that this will be possible.


John Ritchie MacNicol: It may be wrong, but I have heard the statement made that the Farmers' Creditors Arrangement Act dried up the sources of supply of money for farm mortgages. Will this bill have the effect of drying up the sources of supply for private loans in urban communities?


Charles Avery Dunning: My own view is that it will tend in exactly the opposite direction.


Charles Hazlitt Cahan: There is great difference of opinion in regard to that.


John Ritchie MacNicol: Did the Farmers' Creditors Arrangement Act dry up the sources of supply for farm loans?


Charles Avery Dunning: I must refuse to be drawn into a debate on the Farmers' Creditors Arrangement Act. It has no bearing on this. I am sure my hon. friend will not press the question.


Donald Alexander McNiven: Is it essential, even though it may be desirable, that there should be in all the provinces uniform legislation applicable to these mortgages with respect to provincial debt adjustment? We have in Saskatchewan some types of debt adjustment legislation that do not exist in other provinces, and some other provinces may have provisions that we have not. I am thinking particularly of the elimination in our province of the personal covenant, in which regard I think we are alone. I was present when the minister referred to his personal experience and hazarded the opinion that the personal covenant was only a detail in the granting of the mortgage.


Charles Avery Dunning: That was not I, was it? When you say "the minister" you do not mean me?


Donald Alexander McNiven: I was there when the minister did so; I was present when he made reference to the fact that some thirty years ago he had placed a mortgage on his homestead


Charles Avery Dunning: Oh, yes; giving my personal experience.


Donald Alexander McNiven: -and said he was quite certain that the appraisers valued the property in accordance with the locality and without much reference to the personal covenant.


Charles Avery Dunning: No, I said without much reference to my character. If my hon. friend will permit me, when that discussion took place in committee we were discussing not the personal covenant as such but the character element in respect to raising money by way of mortgage, as I am sure my hon. friend from Kootenay East (Mr. Stevens) will remember. I related my own experience in the early days in the west simply as typical of the methods by which business was conducted in those days; and I stressed the view that my personal character did not have nearly so much to do with their desire to lend me money as their belief in the constantly expanding economy of western Canada. That really was the point; I do not want to be taken as expressing opinions with regard to the legislation of any province.


Donald Alexander McNiven: Those who have charge of the central mortgage bank, by a very rigid interpretation and application of what is involved in this subsection, might wreck the whole enterprise as far as we in western Canada are concerned.


Gordon Graydon: Is my understanding
correct that before this act can operate in Ontario, provincial legislation will be necessary?


Charles Avery Dunning: I am not prepared to say that; no.


Mr. SPENCE:: I feel diffident about rising to criticize or even make a suggestion in connection with a bill as important as this. But I have listened to other hon. members discuss it, and even the members of the legal profession do not seem to know all about it and do not seem to know whether or not they are in order or whether or not they should discuss some particular point. I should be the last person to oppose any measure that would lower the interest people must pay on mortgages, because for many years I have advocated that interest should be brought down to five per cent. It should have been done long ago; it is overdue, and I am sorry this legislation does not apply to the individual mortgage just as it does to company mortgages.
What I had in mind, however, was that this is a gamble. I am not knocking the proposition, but the government are entering into a gamble here which may cost one or two hundred million dollars. I wonder whether people will have the same confidence in the bonds of Canada if we go into a few more of these gambles, and if they will continue to
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buy the bonds of this country as willingly as they buy them to-day. I hope this sort of thing will not have any effect on the sale of government bonds, which we have been able to dispose of quite easily. If we go into very many of these propositions, however, where we gamble millions of dollars and take all kinds of chances, I do not know what the result will be. I should like the minister to tell me whether this may impair or endanger the selling of the bonds of Canada.


Charles Avery Dunning: I should be out of order in answering that question, as my hon. friend has been in asking it.


David Spence: We are all out of order, anyway.


Charles Avery Dunning: That question might be better discussed on third reading. I can say, however, that if I believed a measure of this kind would impair the national credit I would not recommend it to my colleagues or to this house.


David Spence: I should not think so, but
people do make mistakes.


Charles Avery Dunning: Surely; and I may make mistakes, but I am sincere in my belief that anything which improves the general credit standing of hundreds of thousands of individuals cannot help but have a long-run beneficial effect on the credit of the nation.


David Spence: I hope that is true.


Mr. McDONALD (Souris):: Would it not be fairer for this government to pass legislation making five per cent the limit on mortgages of any kind, rather than to pass such a bill as the Farmers' Creditors Arrangement Act? I could never understand where was the British justice in the Farmers' Creditors Arrangement Act.


Frederick George Sanderson: Order.


Charles Avery Dunning: It is a question not of fairness but of practicability. If to-day this parliament passed legislation making five per cent the maximum rate of interest on mortgages everywhere in Canada, it would result in the people of a great many areas being quite unable to borrow on mortgage. It is purely a question of practicability.


[Stage Direction]
Section agreed to.
Sections 17 and 18 agreed to.
On section 19-Mortgages not subject to Farmers' Creditors Arrangement Act or Interest Act.
Mr. CLARK (York-Sunbury):: Does this mean that a mortgage already adjusted under the Farmers' Creditors Arrangement Act may be adjusted again under this act?


Charles Avery Dunning: Certainly, but this section provides that the Farmers' Creditors Arrangement Act will not apply to mortgages which have been adjusted in accordance with this act.


William George Clark: Is it fair that a mortgage which has been adjusted already should be adjusted again?


Charles Avery Dunning: Oh, quite.


[Stage Direction]
Section agreed to.
Sections 20 to 30 inclusive agreed to.
On section 31-Governor in council regulations.
Louis-Prudent-Alexandre Robichaud: Is it the purpose or intention to have the regulations published in the Canada Gazette?


Charles Avery Dunning: It says so.


Louis-Prudent-Alexandre Robichaud: That is just my point; it does not say so. It says:
Regulations made under the authority of this act shall, when published in the Canada Gazette, have the same force and effect as if they had been included in this act.
If you want to publish them I think you should say "shall be published."


Charles Avery Dunning: They are not in force unless they are published.


Louis-Prudent-Alexandre Robichaud: But the section does not say so.


[Stage Direction]
Section agreed to.
Section 32 agreed to.
Schedule agreed to.
On the preamble.
Mr. McIVOR:: I think I am in order now, and I should like to say that while I know little about mortgages, my only experience having been with a chattel mortgage-


Some hon. MEMBERS:: Order.


Daniel (Dan) McIvor: I should like to congratulate the minister-


Some hon. MEMBERS:: Order.


[Stage Direction]
Preamble agreed to.
Bill reported.
Mr. DUNNING moved the third reading of the bill.
Charles Hazlitt Cahan: Mr. Speaker, this house, without very much consideration in committee of the whole, has run through these sections one by one, as they came from the standing committee on banking and commerce.
In the committee on banking and commerce and on second reading of the bill I stated

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briefly the objections I had, objections which are entertained by a great number of people in Canada from the Ottawa river to the Atlantic ocean. I cannot speak for the western provinces. I stated on second reading and in tne committee on banking and commerce that, in so far as there are grave economic disabilities in the provinces of the middle west, I would have supported a measure along these lines, which would have relieved them of liabilities they were unable to meet and to pay. But at least from the Ottawa river to the Atlantic ocean-and I do not make any unpleasant comment about Ontario, because I do not know Ontario as well-I believe this measure is regarded as the worst racket ever perpetrated upon honest men who meet their obligations and pay their debts as they come due. It will there be regarded as a racket, that the man who has a mortgage either upon his farm or upon his urban residence, who has the ability to pay, the means to pay, and the credit to obtain money to pay, should be relieved of his mortgage debt to the extent to which he will be relieved under this bill, which makes the maximum of the mortgage debt only eighty per cent of the newly appraised value of the property.


Mr. HOWARD:: One question-


Charles Hazlitt Cahan: My hon. friend will have ample time to speak. He had time in committee and he will have ample time here.


Mr. SPEAKER:: The hon. member may not interrupt without permission.


Charles Hazlitt Cahan: The hon. member understands the bill as well as I do, and all that it involves.


Charles Benjamin Howard: But when the hon. member covers all the territory from the Ottawa river to the Atlantic ocean I would prefer that he leave out Sherbrooke.


Charles Hazlitt Cahan: Perhaps so, but even in
Sherbrooke the hon. member will find a great deal of dissent from the so-called principle of the bill, and from the effect it will have upon business credit and confidence in that district. I have been simply overwhelmed with suggestions from eastern Canada as to the prejudicial effect this bill will have upon ordinary business credit.
If the bill merely applied to the farmers of the middle west who are in distress, who in recent years have been living under grave disabilities and who are entitled to some relief in respect of liabilities which they are unable to meet or to pay, I would take an entirely different attitude with respect to it; and I 71492-308
suggest the bill should have been divided in that way. It should have excluded all creditors who have the ability to pay debts which they have voluntarily undertaken and which they are morally and legally bound to pay. That is my suggestion. But, as was pointed out by an hon. member representing an eastern district, in committee, when a man has a mortgage debt of $6,000 upon a property which may now be valued at $4,000, and when he is allowed to reduce his mortgage debt to eighty per cent of the $4,000, or to $3,200, and thereby avoid paying $2,800 of the debt, so far as he is personally concerned, and when the parliament of Canada is asked to place one-half of that discount upon that mortgage as an additional burden upon his fellow citizens who are taxpayers, and who pay their debts [DOT]-then, I say, that is an entirely immoral proceeding which cannot possibly be justified.


Henry Herbert Stevens: When he is able to pay.


Charles Hazlitt Cahan: Yes, when he is able to
pay, has the means and the income to pay, and in many cases can obtain credit easily from the banking institutions of the country wherewith to pay. The whole economic safety and the future prosperity of this country depends upon men being sufficiently honest to meet their debts and monetary obligations, when they have the means wherewith to do so-


Charles Avery Dunning: Hear, hear.


Charles Hazlitt Cahan: -and not to enter into any sort of arrangement or not to use political pressure in order to have the public treasury assume a part of their obligations which they are able to pay. And when the treasury assumes such obligations it necessarily assumes them on behalf of every taxpayer within dominion jurisdiction. That is the main objection I have to the bill.
The other objection I have pointed out in committee, and the records of the committee will stand as a statement of my position. I do not wish to enter into details before the house, nor is it necessary to do so. If the bill is intended as a means of political propaganda in the approaching election, although I cannot speak for the west, I am confident that in the east it will not be a vote getter to any considerable extent. Some of the leading members in the committee, representing eastern constituencies, were as strong as I am in opposition to certain phases of the bill which I have mentioned. I regret they are not in their seats to-day to re-express before the house the objections they made at that time.

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Apart from this, my main objection, I regret very much that the minister, as the representative of the government, has decided to make the central mortgage bank a branch of the Bank of Canada, and to function under the officers of the Bank of Canada. That, I assure the minister from personal knowledge, goes beyond the intention of those who framed the original Bank of Canada Act, and it was not then contemplated that its function would be so extended. If it is so extended as to mean that a branch of the bank, or practically the Bank of Canada, may undertake the liabilities which mortgagees throughout Canada, from the Atlantic to the Pacific, are able to assume and pay, then there will be political pressure-and political pressure that a weak government never can withstand-to make the Bank of Canada assume and pay other liabilities of other citizens of Canada, and other liabilities of other companies which are engaged in the multifarious classes of business throughout Canada. If political pressure is so great as to compel the government to assume the mortgage indebtedness of those who are able to pay, then we are fast approaching that political state in which pressure will compel the government to take over the liabilities of other large classes of our people who are able to pay.
I still contend that a debtor should pay his honest debts to the extent of his ability to pay, and the assumption of any part of a debtor's debts by the dominion treasury, when he is able to pay, is a gross injustice to other honest debtors who are paying their way. I suppose one might go on and speak for the half hour with regard to this bill, but I have stated the special objections which I have to this legislation. These objections will be found in the statement which I made on the second reading and in the various statements I have made at the hearings before the committee on banking and commerce, of which I was a member.


Daniel (Dan) McIvor: Mr. Speaker, it is rather reluctantly that I follow the hon. member who has just spoken (Mr. Cahan). I admire him for his wisdom and courage and the beautiful language which he uses, but I disagree with him in this matter. I represent a constituency in which there are a number of farmers who have had to assume mortgages, and I have been instructed to commend the government for this legislation. My experience has been that eight and nine per cent is more than any farmer should have to pay, and again I commend the government for bringing down this legislation, which is long overdue. The bankers cannot collect

eight per cent, and these interest rates should have been reduced long ago. I congratulate the minister upon this progressive legislation.
At one o'clock the house took recess.
The house resumed at three o'clock.


Henry Herbert Stevens: Mr. Speaker, we are considering the third reading of an act to incorporate the central mortgage bank. Let me at the outset lay down one or two general principles. It is common knowledge, of course, that there are periods when conditions favour the debtor class; again, there are other periods which are considered favourable to the creditor class and detrimental to the debtor class. Broadly speaking, one might say that the period from the opening of the century down to 1929 in the main benefited the debtor class. Then followed the decade down to the present time, when economic conditions, not only in Canada but generally at least throughout western civilization, have seemed unduly to favour the creditor class.
To the extent that the alleged object of this bill is to bring some measure of justifiable relief to the debtor class, there is and can be but little room for difference of opinion. But let me say to the minister at this point that the ideas incorporated in this bill are not original, nor is it the first time that they have been submitted or suggested to parliament. In passing I would refer to some suggestions which were made to a special committee of the house, of which Mr. Ganong was chairman, in 1935.


Charles Avery Dunning: Was that the housing
committee?


Henry Herbert Stevens: The housing committee. At that time certain suggestions were made which were not adopted, but I wish to refer to them. There was a suggestion for the establishment of a mortgage bank along lines which in general were quite different from the principle of this bill. It was associated with a general housing program. I shall not go into the details, because perhaps this is not the place to do so; but that proposal, together with the measures which were before that committee, has been in the Department of Finance since that time. I am of the opinion that had the proposal of that day been given consideration much earlier in the period of this parliament, say three or four sessions ago, valuable results might have been secured. Unfortunately, this bill comes before us at the end of the fourth session of this parliament; and members of the banking and

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commerce committee will recall that when we were going through the bill many things cropped up which indicated clearly that if we had been considering the matter in the session of 1936 we could have handled it with distinct advantage to the country as a whole. I suggest, therefore, that we as a parliament missed an opportunity in that respect.
As to the matter of affording relief to deserving and distressed debtors, there is probably no difference of opinion among hon. members; it is generally conceded that this is desirable, and in respect of the portion of the bill which refers to the farm mortgage there has been pretty general agreement that, while there was not need for the same measure of relief throughout the whole of Canada, there was such a widespread area of distinct distress that it constituted a national problem and warranted unusual and even drastic action. Therefore I say that, in so far as bringing relief to deserving and distressed debtors is concerned, there is not very much difference of opinion.
But I submit that this bill, when it becomes law. will not inspire thrift, will not be conducive to the continuance of that degree of respect for law and order which is characteristic of Canadian people; nor will it preserve the sanctity of contract. In its results and effects it will tend in my opinion to lessen these qualities and rather to promote dependence than inspire independence. We as Canadians are rather proud of our individual independence. In that more than in any other characteristic lies the strength of our national character. Anything which tends to lessen the desire for independence should receive careful scrutiny.
Turning more directly to the bill, I would ask, is this bank-and incidentally at this point I question, as we did in the committee, the wisdom of using the word "bank"-to be a stimulating factor in the solution of our financial difficulties, or is it not to become really a glorified receiver? There are in this measure two distinct functions which in my opinion should have been kept separate. One is the liquidation of debts which are owed by those whose degree or condition of distress is such that there is little or no hope of their salvaging their position without definite assistance. That is a condition of liquidation; it is the business of a receivership, and to the extent that the proposed legislation may be applied to that sort of thing it. should have been kept distinct and separate from its other functions.


Mr. WOODSWORTH:: May I ask the hon. member if there is any practicable way by which those two purposes could have been kept distinct?


Henry Herbert Stevens: Personally I think so. It was a suggestion which I and others made to the banking and commerce committee. Had this bill come before the committee earlier in the session, as it should have, we would have had time to explore these things and probably reconstruct the bill much more effectively than was possible in the limited time at our disposal. The other function, that of inspiring the extension of credit facilities for new lending is, I submit, an entirely different matter. The two are not compatible; on the contrary they are conflicting.
The next point to which I wish to refer is that the governor and the deputy governor of the Bank of Canada are made the governor and the deputy governor of the central mortgage bank. Not only that, but the governor of the Bank of Canada is made its chief executive. As I stated in the banking and commerce committee, I have nothing but admiration and respect for the governor of the Bank of Canada as a great banker. Indeed I go much further and say that I have met or listened to few men who had a deeper and more profound grasp of politic-economic problems than has the governor of the Bank of Canada. I have no hesitancy in paying the highest tribute to him in his capacity as governor and in a broader and more general capacity. But the function of a banker is distinct and separate from the function of the manager of a mortage corporation or the chief executive of an insurance corporation. There is a marked distinction between the functions of the two; there is indeed an absolute difference in the psychology which they involve.
I am indeed pleased, Mr. Speaker, to pause and to give vocal expression to the applause that has just greeted the hon. member for Prince (Mr. MacLean), who has just come in.
I am sure we are all glad that he has recovered from illness and is able to be in the house . again.
I was about to say that it does not follow that because a man may be an exceptionally capable banker he will necessarily be the best type of person to fill the chief executive position in a mortgage bank. In fact, I do not care to limit myself to that term; I would say an institution, a large part of the duty of which will be to liquidate existing mortgages and to put into operation a new and extended scheme. I submit, therefore, that the measure is weak in that respect as well.
There are two main desiderata which the bill is supposed to satisfy. In the first place there is the need for debt adjustment, and that again is divided into sections, as the hon. member for St. Lawrence-St. George (Mr. Central Mortgage Bank

Cahan) has already so ably pointed out. A large number of members of the committee on banking and commerce and other hon. members share this view. On the one hand there is the class who might be described, in my opening words, as deserving and distressed debtors. There is no question about the desirability of assisting these. On the other hand, among the beneficiaries under this bill, there will be a very large number of debtors who are quite competent to carry out the contracts entered into by them under various mortgages; and not only, perhaps, are the majority of those in the urban class capable of carrying out their contracts, but those contracts are not unreasonable at rates varying from five and a half to six and a half per cent, or, if we take the average given by a witness we had before us, from 5-9 to 6-2 per cent. There is no need, therefore, to make provision out of the funds of the taxpayers of Canada to benefit that large class. There again, in my opinion and in the opinion of many other members of the committee, there is a definite weakness in the bill.
The hon. member for Fort William (Mr. Mclvor) in his characteristic manner, before the noon recess, congratulated the minister. My hon. friend has a habit, during the passage of various measures, of rising in his place in the house and congratulating the minister. I also congratulate the minister upon having such a devoted and abject supporter as he has in the hon. member for Fort William.


Daniel (Dan) McIvor: If the hon. gentleman would allow me to make a suggestion, I would say " intelligent."


Henry Herbert Stevens: 
Jean-François Pouliot: On a question of privilege, the Minister of Finance is quoted as having said this morning that the member for Temis-couata had vilely slandered one of his officials. According to Funk & Wagnall's dictionary "vilely" is the adverb for "vile," which means "morally base, or abominable, bad, base, brutish, common, criminal, foul, immoral, infamous, sinful."
In the first place, Mr. Speaker, I have slandered nobody. In the second place, far
be it from me ever "vilely" to slander anybody. And it is superfluous to refer you to Bourinot, Beauchesne or any other parliamentary authority to find that such language is highly unparliamentary. Therefore, sir, I ask you kindly to notify the Minister of Finance to withdraw at once what he said about me.


Mr. ROWE (Athabaska):: Mr. Speaker-


Jean-François Pouliot: If he does not withdraw I apply to him all that is in the dictionary, and to his deputy minister. He is just a coward.


Walter Edward Foster: Order.


Charles Avery Dunning: There is no doubt about the word "coward" being unparliamentary.


Walter Edward Foster: It is not parliamentary. The hon. member will withdraw that.


Jean-François Pouliot: Well, we should both withdraw, because the language the minister used is highly insolent to any member of the house. I am ready to withdraw if he will, and he should set a good example if he wants the rules of the house to be observed.


Charles Avery Dunning: I do not know what
your ruling will be, Mr. Speaker. I have not my words before me. I do not desire to cause any embarrassment to the chair. I am not expert in conveying my thoughts, which may be unparliamentary in themselves, in language which is parliamentary. My hon. friend is capable of doing that. What I said this morning I really meant, honestly meant. I believe the hon. member was this morning slandering a civil servant who by virtue of his position is unable to reply, and I stated I knew of my own knowledge that the slander had no foundation. That I cannot qualify.


Percy John Rowe: Mr. Speaker-


Some hon. MEMBERS:: Withdraw.


Some hon. MEMBERS:: Question.


Percy John Rowe: Mr. Speaker,
I have one or two observations to make-


Mr. COLD WELL:: On the point of order,
do I understand that the epithet used in regard to the Minister of Finance has been withdrawn?


Walter Edward Foster: I understood the hon.
member for Temiseouata to say that he would withdraw it provided the minister would say something. The minister has explained his point regarding the question of privilege of the hon. member for Temiseouata; I think the incident can be regarded as closed.

Central Mortgage Bank


Percy John Rowe: I want to
thank the two speakers who have preceded me, the hon. member for St. Lawrence-St. George (Mr. Cahan) and the hon. member for Kootenay East (Mr. Stevens) for the comprehensive analysis which they made of this bill, of some of its defects and some provisions which might lead to abuse. I do not propose to deal with that aspect of the matter, but I should like to confine myself to an examination of some of the fundamental causes of the situation which this bill seeks to remedy. Before doing so, however, I want to thank the Minister of Finance (Mr. Dunning) for placing upon Hansard on May 6 a clear and concise analysis of the implications of the bill so far as it affects relationships existing between debtors and creditors. In that statement we have an admirable summing up of a relationship which is too seldom recognized. He said, as reported in Hansard at page 3665:
There is a secondary aspect of the problem which is sometimes given, I think, too little consideration, and that is the fact that while the mortgage debtor is in difficulties, particularly when he is a debtor who cannot fully meet his obligations under present conditions, it is also true that the creditor to whom the mortgage debtor owes the debt is himself a debtor.
I can illustrate that by taking two very common examples. If the creditor of the mortgage debtor is a life insurance company, the life insurance company is in turn debtor to its policy holders. Most mortgage companies are debtors to two classes of people, their debenture holders and their savings depositors. A trust company is in the same position; so when in our figuring we stop at the primary debtor and fail to follow through and remember that the creditor of the primary debtor in the great majority of eases is also a debtor to a great group of creditors, very often a large proportion of the people, we are not taking a realistic view of the mortgage problem. I think all too frequently people in approaching this problem indulge in denunciation and condemnation without enough examination, and I want to commend the minister for making a clear and concise statement showing just what our problem is.
Having said that, I want to state that the difficulty which this bill seeks to rectify is the result of world factors over which we have little control. At the present stage of our system one of the great causes of our trouble is fluctuations in the price level of primary commodities, which is one of the factors contributing to booms and depressions. To show graphically just how this affects the position of the farmers of the west, I want to quote just one sentence from the brief submitted

to the Rowell commission by the government of Saskatchewan:
Obligations which often proved difficult to support with good yields when wheat sold at $1.25 per bushel, quickly became impossible to meet in terms of 40 cent wheat at lower yields.
Of course that is the cause of our trouble. In 1937 the Manitoba cooperative societies submitted to the royal grain inquiry commission a brief in which they made some startling statements. In this brief they outlined the comparative gross income of the three prairie provinces from the sale of primary products for the periods 1926 to 1930 inclusive and 1931 to 1935 inclusive, as follows:
1926-1930	1931-1935
Manitoba	$ 622,565,000 $ 285,047,000
Saskatchewan.	..	1,661,413,000	631,012,000Alberta	
1,243,335,000	674,666,000

In other words, there was a decline of more than fifty per cent.


Charles Hazlitt Cahan: That is, comparing the two five-year periods?


Percy John Rowe: Yes. This decline in the gross revenue of the farmers of the prairie provinces would be sufficient to pay off the total bonded indebtedness of the three prairie provinces, the total bonded indebtedness of all municipalities and the total mortgage indebtedness of all the farmers in the prairie provinces, with eifough left over to finance the three provincial governments for the next twenty years with the suspension of all existing taxation. There you have the real cause of the trouble facing the debtors of western Canada.
Just what are we doing about that by this legislation? It might be illuminating to take a glance at the incomes of the people of Canada, to show what type of investor will take up the bonds of the mortgage bank. These bonds will be taken up by people whose incomes are large, derived from the ownership of factories, mines and other assets which produce profits, rent and interest. A glance at the chartered bank returns to the Department of Finance for October 31 last will illustrate what I mean. In these returns I find that there are 4,122,963 savings deposits in the chartered banks of Canada, and of that number 3,797,481 accounts have an average balance of $119. In other words, over seventy-five per cent of all the savings deposits of Canada have an average balance of only $119. Obviously that group of depositors will not subscribe to the debentures of the mortgage bank. Coming down to the other end of the scale, or perhaps I should say "coming up," I find 2,541 accounts having an average balance of $44,030, or a holding of $111,880,230.

Central Mortgage Bank


Charles Hazlitt Cahan: But those are not personal accounts; those are the current accounts of large corporations.


Percy John Rowe: 
Charles Avery Dunning: Not the big accounts.


Percy John Rowe: It would be
slightly less than that.


Charles Avery Dunning: If my memory serves me correctly, our banks do not pay interest on deposits exceeding $50,000.


Percy John Rowe: That is quite
right, so their earnings would be very small. Therefore it would be the natural thing for these people to seek a more remunerative investment for their otherwise uninvestable surpluses.


Charles Avery Dunning: They could get that now


Percy John Rowe: According to
the Manitoba brief submitted to the Rowell commission the income of Canada for 1934 was $3,600,000,000, to which should be added $100,000,000 received in that year by way of interest and dividends paid to Canadian capitalists by other countries. That gives us a total of $3,700,000,000. One-half or $1,840,000,000 is paid out in wages and salaries. The farmers got $440,000,000 of it, or 12 per cent. Then $300,000,000, or 8 per cent, went to the groups classified in the census as employers and workers on their own account-small merchants, home workers, fishermen, professional people with incomes from fees, and the like. The remainder of that income would go to the class of persons I have just been describing as having $297,000,000 in their savings accounts. I have pointed out several times in the house that those incomes do not come from services rendered in the production of food and clothing. They come from investments and ownership of property. So that what we are now doing is handing over the debtor class and the farmers to a group of people who are not workers or producers.
In that connection another point I should like to make is that the farmers are being given a reduction in interest rates on their mortgages. I quite approve that. But the farmers are operating at a loss. No business can operate on a basis of being unable to 71492-3091
obtain for its products the cost of operation and production. That is a state of bankruptcy, and the state in which the producers of western Canada now find themselves.


Charles Hazlitt Cahan: The wheat producers.


Percy John Rowe: Yes, and that applies to coarse grains and dairy products, because those commodities fluctuate in sympathy with the price of wheat. The farmers are operating at a loss. We are asking and expecting them to pay five per cent fixed charges on their fixed obligations, so to speak, when they are unable to meet their operating expenses. The fluctuation in the dollar value is illustrated by the fact that in 1928 it took the same number of bushels of wheat to buy three binders as it required in 1938 to buy one binder. That disastrous fall in price levels is really at the bottom of our troubles in western Canada, and I believe in eastern Canada, too.
Much as I appreciate the efforts of the minister and the government to meet the situation confronting us, this looks to me like an attempt to rearrange the consequences of something, without examining the cause. That applies, of course, to all the palliatives and all the hand-to-mouth methods now being employed to meet a situation that is deep and fundamental. Unless we can succeed in raising the price levels of our exports of wheat, coarse grains, live stock and dairy products, palliatives of this kind will not prove to be a solution of the problems of the primary producers in western Canada.
Hon. CHARLES A. DUNNING (Minister of Finance):	Mr. Speaker, I shall say but
little in closing the discussion. Listening to the last speaker's thoughtful address I gathered that his principal complaint was that the bill does not bring about the millennium. It does not seek to.


Percy John Rowe: And it does not
attempt to.


Charles Avery Dunning: It seeks to deal with a specific part of the economic problem and not to bring about a new heaven and a new earth. Neither does it purport in any particular to attempt to deal with the export values of our commodities which, as the hon. member has properly said, is largely responsible for the inability of some classes of producers to meet their fixed charges. I take it that while the hon. member damns the measure with faint praise, he takes the view that it is better to accept it than to refuse to support it.
With regard to the observations of the hon. member for Kootenay East (Mr. Stevens), here again we find an instructive, analytical
Central Mortgage Bank

and critical address but, may I say, one which does not propose any alternative, and one which, generally speaking, was more favourable to the bill as a whole than one might have expected. The criticism that this new organization will be tied up to the Bank of Canada was made by the hon. member for Kootenay East in the banking and commerce committee. There is a difference of opinion between us as to the advisability of adopting the course here proposed. I believe it to be most practicable to have.tMs governmental institution handled in the way prescribed by the bill, and placed under the control of the governor of the Bank of Canada. I disagree with the idea that this is a mortgage institution. It will not itself take mortgages; it will not itself value lands; it will not itself be dealing with mortgage debtors. It will be engaged in the business of providing refinancing facilities for those who are engaged in that business. And hence, as I said in the committee, the term "mortgage bank" most accurately describes, in my judgment, the functions which this institution will perform. I believe it to be desirable to concentrate control, rather than to create an entirely separate institution, partly because of the experience in other countries with respect to various financial measures. For instance, in the United States there are entirely separate governmental financial agencies set up to deal with different aspects of the same general financial and economic problems. In Australia the mortgage aspect of finance is combined with the ordinary banking aspect of finance, in the governmental banking institution of that country. There is a definite mortgage branch of the central governmental banking institution of Australia. Looking over the experience in other countries in that regard, the government reached the decision indicated in the bill regarding the connection between the two institutions in this country.
The hon. member for Kootenay East left the wrong impression in one particular when he said he did not agree that the state or the treasury should pay anything in order to secure a reduction in interest for people who could pay interest in terms of their existing contracts. That statement is likely to lead to a misconception. There is nothing in this bill to provide for any payment from the treasury with respect to reductions in interest in the future which may be brought about by the bill. That is to say, if a farm mortgage is adjusted within the terms of this statute and the future rate of interest is reduced in accordance with the terms of the bill to 5 per cent, the state does not make any contribution toward that reduction in interest rate for the future.


Charles Hazlitt Cahan: I do not think the hon. member for Kootenay East (Mr. Stevens) said otherwise.	-


Charles Avery Dunning: That is what I gathered from his remarks. I may have misunderstood him, but that is the impression I got and I wanted to make it clear to the house that this is not the case. The mortgage corporation bears the loss with respect to the reduction in interest rate for the future.
The hon. member for Kootenay East also expressed the fear that as a result of this legislation lending institutions would tend to concentrate their activities in those parts of the country where conditions were more settled and where the security was best, and that this might have the effect of depriving other areas of facilities for borrowing on mortgage. The lending institutions of this country are now and have been for some time looking for places to invest their money. There is a steady flow of money into our life insurance companies in the form of premiums, and if the actuarial obligations of those companies with respect to their policy holders are to be met there must foe a constant investment of the funds received in the form of premiums. The investment pressure is constant on that class of institution particularly.
I think all of us know that these institutions are looking for investment for their funds. There will always be certain localities and some classes of risks which will be regarded more favourably by lenders than others, but experience will indicate what is the course of wisdom in that regard. May I point out that in these localities the pressure of competition as between lenders is greatest. May I point out further and in conclusion that I have two hopes with respect to the legislation now before the house. One is that it will be possible for lending institutions to be created in parts of the country which heretofore have been considered at a disadvantage and that these companies will take advantage of the refinancing provisions of the bill with respect to new money required for mortgage lending purposes. While I do not believe that this bill will bring about the millennium, I believe it is a comprehensive attack in a sane and reasonable manner upon what is acknowledged to be one of our greatest Canadian economic problems.


Walter Edward Foster: Shall the motion carry?


Charles Hazlitt Cahan: On division.
Motion (Mr. Dunning) agreed to on division and bill read the third time and passed.

Questions



ORGANIZATION AND ESTABLISHMENT OF PERMANENT STAFF POSITIONS-TEMPORARY EMPLOYEES PERFORMING CONTINUOUS DUTIES

[Stage Direction]
The house having reverted to the order for motions.
Ernest Lapointe: The hon. member for Comox-Alberni (Mr. Neill) referred yesterday to the staff of the House of Commons. I find that a resolution of the house is necessary before the civil service commission and the governor in council can act in that respect, and I therefore move accordingly:
That the reorganization of the permanent staff of the House of Commons laid on the table on the 28th April, 1939, be now approved, subject to such further action as the commission of internal economy may deem advisable to take in order to implement the same.
I must say that the senate has passed a similar resolution with regard to its staff.


[Stage Direction]
Motion agreed to.


[Stage Direction]
The house resumed from Thursday, June 1, consideration in committee of Bill No. 146. for granting to his majesty certain sums of money for the public service for the financial year ending the 31st March, 1940-Mr. Dunning-Mr. Sanderson in the chair.
On section 1-Short title.
Charles Hazlitt Cahan: This simply covers the estimates which have already passed the house?


Charles Avery Dunning: Yes, entirely.


[Stage Direction]
Section agreed to.
Sections 2 to 6 inclusive agreed to.
Schedule A agreed to.
Bill reported, read the third time and passed.
1,	2 and 3. Date
June 30, 1896. March 31, 1911 March 31, 1921 March 31, 1930 March 31, 1935 March 31, 1938
The house having reverted to the order for questions:

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

Mr. ROBERGE:: 1.	How many members were elected to the House of Commons in the federal elections of 1911?
2.	How many Liberal members were elected in each province at the said elections?
3.	How many Conservative members were elected in each province?
4.	How many Independent members were elected in each province?
5.	How many Nationalist members were elected in each province?


Ernest Lapointe: May I answer this question verbally? It would be pretty hard to give an answer to the various questions. Under the economy of our election law, parties are not recognized and candidates are mentioned by merely their own names. So far as the election of 1911 is concerned, it would be still more difficult to give an answer, because some candidates who had run on a special ticket sat as members on another ticket when they reached parliament.


PUBLIC DEBT OF CANADA
Mr. ROBERGE:: 1.	What was the debt of Canada in 1896, 1911, 1921, 1930, 1935 and 1938?
2.	What was the per capita debt in the same years?
3.	What interest was paid on the debt of Canada in each of the said years?


Charles Avery Dunning: Net debt of the Dominion of Canada, total liabilities less active assets Amount Per capita $ 258,497,432 77	S 50	95340,042,052 03	47	182,340,878,983 69	266	372.177.763.958	71	213	342.846.110.958	22	259	943,101,667,570 25	276	71
Interest paid on funded debt and treasury bills $ 8,416,990 32 9,950,026 46 135,551,438 34 116,941,550 36 132,378,893 43 123,236,035 59
On motion of Mr. Lapointe (Quebec East) the house adjourned at 4.05 ,p.m.
Questions

Saturday, June 3, 1939