March 12, 1937

REC

Henry Herbert Stevens

Reconstruction

Mr. STEVENS:

In my opinion it is time

we withdrew the sanction. As far as the hon. gentleman's interruption is concerned, for the twenty-six years I have been in parliament this thing has been going on to a greater or less extent, varying from time to time, and it is all wrong. It is time parliament took into consideration the erection of a loaning body that would take care of this class of loans. As a matter of fact, in the great majority of cases they ought not to get the loan. That may be misinterpreted, it may be misunderstood; but those who know the business know perfectly well that in the majority of cases, at any rate in nearly half of them, they should not get the loan at all. Some of the most pitiful stories may be told of the way in which corporations of this kind are exploiting not

Industrial Loan and Finance

only the needs but the bad habits and difficulties some people get into by having this resource available to them.

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CON

John Alexander (1874-1948) Macdonald

Conservative (1867-1942)

Mr. MACDONALD (Brantford):

Why

should not the poor man have an opportunity to borrow money when the rich man has?

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REC

Henry Herbert Stevens

Reconstruction

Mr. STEVENS:

Here is an illustration of what I warned the house against ten seconds ago. If a highly intelligent gentleman like the hon. member who interrupts me misunderstands what I said, it demonstrates how careful one has to be. If he will do me the courtesy to read what I said about ten seconds ago. he will get the answer to his question. Certainly poor people have a right to borrow money; but poor people have a right to borrow at a rate of interest that they can bear, and not at two per cent a month. I am trying to point out that by passing this type of legislation we are surrounding institutions of this kind with an air of sanctity that does not belong to them. That is my objection to this class of legislation, and personally I should like to see parliament turn thumbs down on all bills of this kind. I am as well aware as any member of the house of all the arguments that can be made in support of the bill- the difficulty of controlling small loans, the cost, and all that sort of thing-but I still believe that it is within the common sense of members to devise a law that would give protection to the poorer borrower, much better than is given either in the general interest act or in these special bills. Personally I will vote against this bill, just as I have always voted against divorce bills, on general principles. I am against the thing, absolutely.

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CCF

James Shaver Woodsworth

Co-operative Commonwealth Federation (C.C.F.)

Mr. J. S. WOODSWORTH (Winnipeg North Centre):

The minister has suggested that if these bills passed the second reading they could then go to the committee without prejudice. Personally I object to that way of doing business. We are here deciding on a principle, and we should not allow these bills to be proceeded with if the principle on which they are founded is unsound. Last year, with reference to certain bills very similar to these-

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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

No, different.

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CCF

James Shaver Woodsworth

Co-operative Commonwealth Federation (C.C.F.)

Mr. WOODSWORTH:

-the minister said:

We can only look forward to dealing with the situation effectively at another session, in the meantime preventing the further spread of the evil by refusing to pass bills incorporating more companies to do business along these lines. Certainly the house, having been unwilling to pass Bill No. 86, cannot consistently vote for the one now under consideration.

That will be found at page 3552 of Hansard, 1936. Now if that was true last year, when there had been a very general discussion and the house had refused to pass the bills then before it, if is just as true to-day when another set of bills are before us, very similar to the ones we dealt with then.

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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

On a point of order, Mr. Speaker, I am sure my hon. friend does not intentionally misrepresent me. I was dealing last year with bills to incorporate new companies. The bills now before us are amending bills with respect to companies that are doing business at this moment and will continue to do business unless this house repeal their charters. I mentioned a moment ago that the only reason I suggested that they should go to the committee was that they purport to reduce the amount of interest which these existing companies are now charging and may charge under their charters. That is quite a different thing.

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CCF

James Shaver Woodsworth

Co-operative Commonwealth Federation (C.C.F.)

Mr. WOODSWORTH:

It is somewhat different but the principle is the same.

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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

No, it is different.

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CCF

James Shaver Woodsworth

Co-operative Commonwealth Federation (C.C.F.)

Mr. WOODSWORTH:

I think it is the same. In the explanatory note to one of these bills it is stated that:

the reason for this amendment is that the company, though originally incorporated in 1928 and still locally managed and staffed by Canadians, was acquired in January, 1933, by and is now virtually a wholly owned subsidiary of Household Finance Corporation, incorporated under the laws of the state of Delaware.

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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

Whose charter is also before us.

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CCF

James Shaver Woodsworth

Co-operative Commonwealth Federation (C.C.F.)

Mr. WOODSWORTH:

Yes; but why should we seek to give some vested interest to what is virtually a new corporation?

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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

Oh no.

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CCF

James Shaver Woodsworth

Co-operative Commonwealth Federation (C.C.F.)

Mr. WOODSWORTH:

It is the old corporation but now, although managed and staffed by Canadians, it is virtually a wholly owned subsidiary of Household Finance Corporation, incorporated under the laws of the state of Delaware. If we in this house have made 'mistakes in the past-and I think we have-in giving charters to corporations of this kind, we should do nothing further to give any sort of vested interest to any of those now operating or allow any of them to have what may become more or less of a monopoly of this kind of business.

I believe it was brought out last year, and again before the committee in another place, that there were large fees charged and' two per cent a month, which means nothing but extortion on the part of these companies and

Industrial Loan and Finance

a very great hardship for poor people. I cannot see where the pressure comes from that induces any member to advocate the perpetuation of this kind of thing, and I hope that right now on the second reading the house will refuse to allow these measures to go any further.

I should have been glad if the minister could, have introduced at this session legislation which would lead to the repeal of all charters of this kind. As I said last year, I should hope that before any further bills of this kind are allowed to become law we should do something definite, as the hon. member for Kootenay East (Mr. Stevens) has suggested, to provide some means by which the poorer people might obtain credit. I call attention to the wonderful growth of the credit unions in certain sections of Quebec and the maritime provinces. The department might do something to encourage that kind of organization.

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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

The caisse populaire?

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CCF

James Shaver Woodsworth

Co-operative Commonwealth Federation (C.C.F.)

Mr. WOODSWORTH:

Yes. I do hope that the house will refuse to give second reading to these bills.

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LIB

Paul Joseph James Martin

Liberal

Mr. PAUL MARTIN (Essex East):

I am glad that the hon. member for Winnipeg North Centre (Mr. Woodsworth) has referred to the credit unions. I have given this whole problem a good deal of study, particularly from the point of view of the credit unions, and especially those in the maritime provinces operating under the auspices of St. Francis Xavier university. The credit union as it is known in the maritime provinces, as it is known under Mr. Desjardins' auspices in the province of Quebec, should be studied. These credit unions effectually operate where there is a certain amount of homogeneity, which is not possible in the case of companies operating as I believe these companies contemplate operating and are operating in localities where there are all sorts of people and all sorts of occupations.

I know nothing about these two bills, but I do know something about the problem of borrowing from the loan companies. I have particularly in mind those companies which advertise in the Toronto and Montreal papers. I cannot say I have seen any advertising in the Windsor Daily Star, but I know there are companies operating in that city charging as high as 200, 300 and in one case I know as high as 600 per cent. The way companies of that sort can be eliminated' is not by an emotional appeal, but by a clear examination of this whole problem.

I would like to have seen general legislation, but the Minister of Finance (Mr.

Dunning) has given the reasons why that is not possible this year. I am glad to know he still hopes it will be possible before long. In the meantime the whole problem requires consideration, and this house cannot escape its responsibility. We at least should set in motion the banking and commerce committee to make an exhaustive survey of this whole problem. It is true it was dealt with :by a committee of the Senate, but I suggest, with great deference to that body, that possibly our point of view may not be theirs. I for one am anxious to eliminate loan companies operating without restriction and imposing an excessive burden of interest. It seems to me that one very effective way of eliminating them is by giving the kind of regulation which we can give.

I inquired the other day from the department of the superintendent, of insurance about the character of outstanding obligations in these respects. If this matter is allowed to drop without a thorough examination there will be a number of people in the province of Ontario who will suffer. I understand there are some 30,000 outstanding loans in respect of one of these companies alone. I do not know whether the company is charging a high rate or a low rate, but having in mind that there is a market for this kind of loan, and as a considerable number of people have been affected, I should like as a member of this house an opportunity to examine in the committee the superintendent of insurance, whose job it is to supervise these things, and to get from him his point of view, and information which it is not possible to get in this house. I want to see a complete and thorough examination of this whole matter, and at once.

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LIB

Robert John Deachman

Liberal

Mr. R. J. DEACHMAN (Huron North):

A young man came to me a few days ago wanting to borrow $41. I thanked him for the compliment. He had purchased a bill of goods in this city amounting to $120, and he owed $41 and was behind in his payments and they were pressing him. But they offered to carry on, letting him pay it off at the rate of $5 a month, providing he would renew the contract for $61. That is, he owed them $41, and they wanted him to promise to pay $61 at $5 a month. I do not know how much of that sort of thing there is going on in this city, but that instance suggests that there ought to be some provision for loans to these people on fair terms. So I rise to support the suggestion of the previous speaker that this be referred to the committee on banking and commerce, so that some examination may be made of it. It would have been much better for that young man to pay 2 per cent a month, because as I figure it the proposed rate which

Industrial Loan and Finance

these gentlemen were offering was 75 per cent a year. If this bill went to the banking and commerce committee it would give members a chance to examine it. They need not decide in favour of this company; they might decide upon some broader course of action based upon future legislation. Something ought to be done because whatever evils there may be in the present system there are perhaps greater evils in the charges which are made in connection with instalment sales and transactions of that kind.

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LIB

Daniel (Dan) McIvor

Liberal

Mr. DANIEL McIVOR (Fort William):

Would it not be possible to have before the committee to give evidence one of those who have had to pay 24 or 30 per cent or have lost their goods? If I were asked now to vote on this bill I would vote it sky-high because of experiences of which I have knowledge. I have read the speeches in the Senate, and the Senate are not whole-heartedly in favour of the bill, and hope that the commons will defeat it. I think the whole thing should be thoroughly examined. There is no risk in bringing it back into this house. Sharks of this type should not be tolerated and allowed to take advantage of men who are cornered, as some are who have to avail themselves of small loans.

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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Right Hon. R. B. BENNETT (Leader of the Opposition):

I quite appreciate and

sympathize with the position of the Minister of Finance (Mr. Dunning). It was my unpleasant lot to occupy somewhat the same position with respect to somewhat similar measures. These measures were submitted to the house between 1930 and 1935, and we endeavoured to do something towards providing a general code to govern the operations of these loan companies.

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March 12, 1937