Mr. COOTE:

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

Mr. BENNETT:

The hon. gentleman is

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

Farm Loan Act

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

Mr. COOTE:

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

Mr. BENNETT:

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

Mr. COOTE:

I think it has been conducted more conservatively than most loan companies. I could' find thousands of quarter sections without farm buildings on which loans have been made by loan companies, but I do not find the same practice being followed by the board. I think the time has come when we might consider changing our laws with regard to the interest rates on farm mortgages, and provide that a man's house need not necessarily go with the mortgage. The position of the ordinary business man who mortgages his business is different from that of the farmer. The

business man does not have to mortgage his home; if he goes into bankruptcy he does not lose his home. The farmer is in a different category; if he wants to get an advance under mortgage he must put in his home. If he wants to take advantage of bankruptcy proceedings to get rid of debts he must throw in his home and be forced into the street. Really I think if the government is depending upon the operation of this farm loan board to bring about a reduction in the rate of interest on farm mortgages their practice in that regard ought to be changed, to that degree at least.

Mr. BENNETT:

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

Section stands.

Progress reported.