This is the section which was under discussion at the instance of my hon. friend from Carleton, N.B. (Mr. Carvell). It provides that a person making a transfer of bank shares must leave enough to discharge his debts to the bank. I explained to the committee on Friday when this matter was under discussion in the Banking and Commerce Committee and that, after hearing the evidence on this point, the committee came to the conclusion that .this legislation was ,in favour of the shareholders rather than of the banks themselves. Under the Bank Act, a bank is not permitted to loan upon the security of its own stock or of the stock of any other bank. But it is often found very convenient for shareholders to be able to obtain an advance from the bank which they would not otherwise be able to obtain really upon the security of their own shares under the authority of this, legislation. In times of money stringency it is of very considerable advantage to shareholders, because the only alternative would be to sell the shares or to obtain a loan elsewhere, and at such a time a loan might be difficult to obtain. The committee, after hearing the evidence from bankers and others, I think, very generally came to the conclusion that the section should be allowed to stand as in the existing Bank Act. I said on Friday that it did appear at first blush that the exceptions taken by my hon. friend from Carleton were justified and that this was an anomaly not found in legislation affecting joint-stock companies, and so was
a special privilege to the banks. But I think the burden of the evidence went to show that the legislation was in favour of the shareholders and not of the banks.
Subtopic: BANKS AND BANKING.