Mr. LUCAS:

I was paired with the hon. member for Lincoln (Mr. Chaplin). Had I voted, I would have voted against the

Speaker's ruling.

Mr. LUCAS:

I was paired with the hon. member for Maple Creek (Mr. Swanston). Had I voted I would have voted against the motion.

Mr. LUCAS:

Paragraph (a) of section 7 of the present act states that:

mortgages taken as security for farm loans and remedies thereunder shall be in all respects subject to the law of the province in which the farm land mortgaged is situated.

Under section 5 of the bill paragraph (a) of section 7 of the act is being repealed, and as I understand the substituted paragraph, it will mean that any loans now taken out will not be subject to the law of the particular province in which the land is situated. I understand that private companies making loans come under the laws of the province in which the loans are made, and I should like to know why the farm loan board should not be placed in the same category.

Mr. LUCAS:

I think the time is coming when drastic action will have to be taken to bring about a lower rate of interest, because agriculture cannot continue to carry on at the present rate of interest or even at six per cent. I had a letter this morning pro-[Mr. Bennett.1

testing against this legislation if the interest rate is going to be on a six per cent basis. They are now paying six per cent to the farm loan board, and there is an amortization clause whereby they pay an extra two per cent, so that if a farmer is to keep up his contract he has to pay eight per cent. I think everyone is agreed that eight per cent cannot be paid, especially under the conditions that have existed for the last few years. If the farmer gets behind in one of his payments, he is charged eight per cent on the overdue account. Bill No. 92 which we have just passed will no doubt bring a great deal of relief by the composition of debts, but in my opinion, if it is to be a success, the farmer must be in a position to meet the new arrangement, and his ability to do that will depend largely on the rate of interest he has to pay.

I might add that a more sympathetic attitude on the part of the farm loan board, especially provincial boards, is very much needed. I confine my remarks in that respect entirely to the provincial boards because I have always received very courteous treatment from the commissioner and the officials in Ottawa, but I cannot say the same of the provincial boards. There is a great deal of dissatisfaction with their administration.

Twenty years ago the United States sent a commission to Europe to study rural credits. Mr. Harvie Jordan, who was one of the commissioners, after a study of the situation, said:

Every European country for the past half century had given every possible assistance to the development of agriculture.

He found that in Europe farmers secured loans at four per cent while commercial loans ran from five to six per cent. That is just the reverse of the practice in this country and the United States, where commercial loans are made at cheaper rates than agricultural loans. In 1894 France passed the first fundamental law creating machinery for agricultural credits. Two years later, when the charter of the Bank of France expired, it was renewed only on condition that the bank advance to the government forty million francs free of interest to be used in subsidizing rural credit banks. It also stipulated that the bank should pay annually a sum calculated at one-eighth of its circulation, said sum to be not less than two million francs, for the same purpose. We are extending the charters of our banks for another ten years and I was wondering whether a clause of that kind should not be inserted. It was stated also by Mr. Harvie Jordan that loans to agricultural cooperative societies in Europe were made at rates as low as two per cent. As I stated before, the

Farm Loan Act

farmer in Canada cannot continue to pay the high rates of interest which are being charged.

While I am on my feet I Bhould like to refer to the complaints being made with regard to the administration of the Canadian Farm Loan Act. We are amending this act and I think we have some right to say under what regulations or under what conditions the provincial boards shall carry on. Farmers complain that they do not even get copies of their mortgages. As the Prime Minister knows, very often payments in western Canada are made by the delivery of grain. In the last few years when a farmer got behind the board demanded that he should sign a contract to deliver one-third or some other fraction of his crop. There is a great deal of dissatisfaction in connection with this delivery of grain as to wl at authority the board has to hold or sell the grain. I know of one case in Septemiber, 1931, where the board seized three hundred acres of crop for the payment of $294. When the crop was threshed the farmer had 4,300 bushels of wheat and 3,300 bushels of oats besides his green feed, and yet the whole crop was tied up from September to November. Through his solicitor the farmer delivered 1,000 bushels to the sheriff on November 14. At the price of grain prevailing on the day the tickets were delivered, this represented sufficient to cover his payments. Instead of selling this grain, the board held it and acknowledged receipt on December 4, two weeks later, when there had been a further drop in the price of grain. In January they wrote to the farmer to find out what he wished done wtih the grain and he wrote back stating that he expected to get the price prevailing on the day the grain was delivered. The grain was held for eight and one-half months during which time the price continued to drop. It was finally sold by the board at a considerable loss to the farmers. I took up this case and after a great deal of negotiation an adjustment was recently made of approximately $100. I am doubtful whether this man is going to be satisfied as there was a period of two weeks during which a considerable drop occurred in the price of grain.

I have another case where a farmer delivered grain in April of this year on the understanding that if, when it was sold, it did not bring in enough, he would pay the difference. The board wrote back saying that they would not accept any responsibility for the sale of this grain. He wrote back and said that that was quite satisfactory, that he wished to sell it himself. However, when

the rise in prices occurred about two weeks ago the board sold the grain, but it still did not bring sufficient to pay the farmers' debt.

I believe the price to-day is higher than when it was sold, even allowing for the recent drop in prices.

When the board accepts grain I think there should be some definite understanding with the farmer as to how and when it is to be sold. This would eliminate a great deal of controversy and misunderstanding. I understood the Prime Minister to say a while ago that he had no responsibility for the provincial boards, but this act has been created by this parliament. I understand that we are going to guarantee these bonds and surely we should have some right to say how the act shall be administered by the provincial boards.

Mr. LUCAS:

My point was that the board should have some clear understanding with the farmer, when they accept the grain, whether the wheat should be held, whether they should use their judgment, or just exactly what would be done. In one case they held it and in another case they sold it.