Mr. STEWART(Edmonton):

On $9,000,000?

Mr. BENNETT:

Yes.

Mr. LUCAS:

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

Mr. BENNETT:

Yes. As regards mortgages under which proceedings have been taken and which are still unsettled as at March 31, 1934, there are none in Alberta, none in British Columbia and none in Nova Scotia. The statement in connection with properties that are now vested in the board by reason of proceedings is as follows:

Real Estate Held for Sale at March 31, 1934

Number

Province: of properties Investment Book value

British Columbia

10 $ 58,977 53 $ 55,184 94Alberta

8 18,505 54 15,504 63Manitoba

3 9,118 89 6,700 00Quebec

32 113,905 98 77,491 56New Brunswick

4 13,992 51 10,500 00Nova Scotia

3 5,482 14 3,687 34Total

60 $219,982 59 $169,068 471. Actual cost includes the amount of unpaid principal on the loans involved, together with accrued interest and cash outlays to date of acquisition by the board.2. Under the regulations of the board, no parcel of real estate may be carried at a book value in excess of the actual cost thereof to the board.

Farm Loan Act

That is the position, at the present moment.

Mr. LUCAS:

Subsection (f) of section 3

says:

-accept and hold such additional and collateral security for loans as the board may deem proper.

Am I to understand from that that if a farmer has given a mortgage to the farm loan board and the value of the property has dropped, the board is to be empowered to compel the farmer to give additional security?

Mr. BENNETT:

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

Mr. LUCAS:

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

Mr. BENNETT:

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

Mr. LUCAS:

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

Mr. BENNETT:

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

provincial authority and approved by the central authority. Each one of them is approved by the central authority.

Mr. VALLANCE:

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

Mr. BENNETT:

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

Mr. LUCAS:

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

Mr. BENNETT:

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

Farm Loan Act

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

Mr. LUCAS:

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

Mr. BENNETT:

The hon. gentleman is aware that under the provisions of the statute generally the price at which money is obtained by the board is the determining factor as to the price paid by the borrower. The borrower pays one and one-half per cent more than the cost of the money to the board, one per cent being for administration and one-half of one per cent for the incidentals in connection with the maintenance of the business. If Canada borrows at four per cent it can lend at five and a half; if at three and a half per cent, it can lend at five. That is the difference between the two plans to which the hon. gentleman has referred.

On the question of obtaining money through the post office savings department I can only point out that it has not been thus far a savings depository favoured by the people of the country. The entire sum now on deposit in the post office savings bank, if my memory serves me-and I speak wholly from memory -is between $20,000,000 and $25,000,000. It has not increased in recent years, but broadly and generally has diminished, because it has not been a favoured institution for the lodging of the savings of the people. I am told the amount on deposit at the present time is $28,000,000.

Mr. COOTE:

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

Mr. BENNETT:

If the hon. gentleman

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

Mr. COOTE:

Is that in the statute or is

it the policy of the board?

Mr. BENNETT:

That is in the statute

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