George Gibson COOTE

COOTE, George Gibson

Personal Data

United Farmers of Alberta
Macleod (Alberta)
Birth Date
August 18, 1880
Deceased Date
November 24, 1959
accountant, bank manager, farmer

Parliamentary Career

December 6, 1921 - September 5, 1925
  Macleod (Alberta)
October 29, 1925 - July 2, 1926
  Macleod (Alberta)
September 14, 1926 - May 30, 1930
  Macleod (Alberta)
July 28, 1930 - August 14, 1935
  Macleod (Alberta)

Most Recent Speeches (Page 3 of 662)

June 24, 1935


Has the government discussed this matter with the companies in question? Has it reason to believe companies now in existence will enter into this scheme and make loans for the construction of houses contemplated under this measure, or does the government anticipate that some new type of company will be set up to operate under this bill?

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June 24, 1935


Would the minister explain what sort of lending institutions are contemplated under this bill?

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June 21, 1935


Mr. Chairman, this Bill

No. 11 was originally introduced early in the session and it was some time before it was reported on by the committee. Only one of the sections, which is the important one of the bill as introduced, was in the bill as finally passed by the committee and reported to the house. The bill as introduced called for a limitation on the rate of interest on all mortgages, whether now existing or to be made in the future, to four per cent, but as amended in the committee that limitation would apply only to existing mortgages, and the cut-off date has been fixed in the bill as January 1, 1935. So the bill now before the house would

Interest Act Amendment

limit the rate of interest which -might be collected on any mortgage on real estate issued prior to January, 1935, to six per cent per annum. Speaking for myself I would be quite willing to have it apply to all mortgages, but in our own province so far as I am aware there are very feiw new mortgages being made.

The interest rate on existing mortgages is the important question for us, and I would just like to take a few minutes to bring to the attention of the committee a few facts to show that undoubtedly there is need of legislation to deal with this question of interest rates. I will deal first with the interest rate on farm mortgages.

The cash income of all the farms in Canada for the years 1926, 1927, 1928 and 1929, before the depression years, was 4,012 million dollars, and for the years 1931, 1932, 1933 and 1934, that is the depression years, the cash income of all the farms in Canada was 1,744 million dollars, or only 43 per cent in those last four years of the income in the previous four years mentioned. In other words, there was a drop in the last four years of 2,268 million dollars in farm income or an average of over 550 million dollars for each one of those years. In the -face of that drop in revenue, which amounts on -the average for the four years to $3,136 per farm, I think hon. members can see the need for some legislation to relieve the farmers who are now -paying rates of interest as high as seven, eight and nine per cent. This drop in income per farm of $3,136 in the last four years would have been sufficient to pay off every farmer's debt in Canada and leave about $1,000 for every farm over and above the amount of the debt.

The drop in farm revenue is, of course, due to the drop in price levels. It is not due, as some people may think, to a drop in production. I have previously put figures on Hansard to show that it is nearly all due to the drop in price levels, a factor over which the farmer himself had no control and n-o possibility of control.

The rate at present charged in western Canada, at least in Alberta, is generally eight per cent, although there are some mortgages at nine per cent. A case recently came before the board of review operating under the Farmers' Creditors Arrangement Act in the province of Alberta of a real estate mortgage carrying a rate of interest of twenty per cent. I have that statement in a letter from one of the members of the board of review. There are also a good -many private loans at ten per cent. I do not think it is necessary for me

to say anything more for hon. members of this committee to see the need of some legislation -to limit the rate of interest which can be collected on these mortgages.

The board of review under the Farmers' Creditors Arrangement Act in Alberta have in the majority of instances been setting the rate of interest on farm mortgages by mortgage companies at seven per cent, which I think is much too high, but the chairman of the board persists in stating, I believe, that it is the duty of parliament to set a lower rate. The rate of seven per cent is mentioned in one of the sections of the Farmers' Creditors Arrangement Act. In Manitoba I believe the board in the last few weeks has been setting a maximum rate of six per cent on farm mortgages. In Quebec I am told that in some cases the rate on farm mortgages has been placed as low as four per cent by the board of review operating in that province.

The Alberta board has heard about three hundred cases to date. It has been sitting five days a week and working very hard, but it is going to take them some yea-rs to clear up all the cases that come before them unless something is done to fix by law a -maximum rate of interest. I think this bill is fixing the rate quite high enough when it sets it at six per cent. If a six per cent maximum rate were established by law I believe that the majority of farmers in the province of Alberta would not need to go to the board of review. The only way to get a lower rate of interest -than eight per cent in Alberta is to go before the board of review, and if the board of review establishes as a matter of practice a rate of seven per cent the mortgage companies naturally will not care to make a voluntary reduction to anything lower -than seven per cent.

I want to place on Hansard for the benefit of this committee a statement in regard to the payments made by one farmer at Brant, Alberta. I mentioned this case in the banking committee, where the figures were challenged by several members. They said they could not possibly be correct. I afterwards wrote to the chairman of the banking committee and asked him to have the -clerk or someone else inquire into the case. The books of the company that made the loan were examined and I have here a copy of the memorandum which was sent to the finance minister by Mr. Finlayson, the superintendent of insurance, who investigated the case. I shall not take time to put the whole of his statement on Hansard, but will simply say that the loan was made in February, 1912, for $1,500 at a rate

Interest Act Amendment

of eight per cent. By 1928, according to this statement, the farmer had paid $3,587.28, and $708 of that amount was subsequently paid out by the company for taxes, so that the net amount which the farmer paid was $2,878.32. This was all for interest and charges, including fire insurance, $61.50; inspection fee, $37.50; solicitors' fees, $57.03. In 1933 this mortgage was foreclosed. I am quoting these figures simply for the purpose of impressing on the committee just how much money it would require from the farmers' operations to meet these charges. Over a period Of twenty years he paid $2,878, and when the loan was foreclosed the amount that he still owed was approximately $1,500. If we could have had in Canada a six per cent interest rate, and the other two per cent which was charged could have been used to amortize the loan, it would have been entirely paid off and the farmer would still be in possession of his farm.

Just a word or two in regard to urban mortgages. I have had brought to my attention the case of a mortgage on a house in the city of Calgary at the rate of ten per cent, and I have a letter under my hand from a notary in one of the cities of Ontario in which he says:

I can number mortgagors among my clients, whose total indebtedness is well over $100,000, upon which they are paying from eight per cent to ten per cent interest.

As an alderman of the city I am pleased at the thought that our tax arrears will be paid up now that interest charges on properties are reduced.

That is from an alderman in an Ontario city. He is a little premature in thinking that the interest charges are already reduced. I had a visit a few days ago from some gentlemen representing the landlords' protective association of Montreal and they assured me that there are many real estate mortgages in that city which bear interest rates of seven and eight per cent and second mortgages bearing interest rates of nine and ten per cent. In some cases the mortgage may show upon its face only a rate of seven or eight per cent but a very heavy discount is sometimes made when the loan is granted. An alderman in one city in Canada told me that he believed in certain -cases the rate actually collected was as high as twenty per cent, taking into account the discounts made when the loan was granted.

I anticipate that the question of constitutionality will be raised, that it will be stated that the Dominion of Canada has not the power to lower the rate of interest on exist-

ing obligations, but if I remember correctly, a year or two ago the attorneys general of the provinces agreed that this power rested in the dominion government. In these days when the government is passing reform measures which heretofore might have been considered as unconstitutional I do not think we would be running much risk in passing this bill. The only way in which to find out whether it is constitutional is to try it.

I anticipate also that some question will be raised as to this action affecting our credit in outside countries, particularly Great Britain. I would remind the committee that Great Britain recently notified the United States that she did not intend to make certain payments which were due about this time. I think for the last two or three years Great Britain has been making token payments. The United States itself changed the terms of the contract when they stated that a promise to pay in gold need not be honoured in the term in which it was taken, that payment in legal tender or paper currency will be sufficient to discharge the debt. I shall not labour this point; it has been discussed before.

I would remind the committee that nearly every country in the world has taken some action along the lines which I suggest in this bill. Australia, South Africa, I believe New Zealand, and many other countries have taken action to limit the rates of interest which can be collected regardless of what might be stated in the mortgages. When I offered an amendment to the Farmers' Creditors Arrangement Act to limit the rates of interest charged on farm mortgages, the Minister of Finance (Mr. Rhodes) said that the proper way to deal with that matter would be through Bill No. 11. He said:

My hon. friend speaks for the farmer who is not going to come under the Farmers' Creditors Arrangement Act. That farmer will get such protection as this house may decide to accord him when it deals with Bill No. 11, which covers all mortgages.

According to that statement this will be the only occasion upon which we will have an opportunity to deal with this very important question.

There is a crying need for this bill; I would not have introduced it had I not felt there was such a need. The fall in price levels which I mentioned earlier in my remarks is something over which the farmer had no control. He had no reason to anticipate such a fall and he entered into his obligations in good faith. In the great majority of cases the farmers are doing their best to discharge their

Franchise Act Amendment

obligations. The company or individual collecting eight or nine per cent in interest charges is receiving a purchasing power far in excess of what was anticipated. It would be nothing less than justice to reduce the rate of interest to six per cent; even at that rate the majority of mortgages would secure in purchasing power just as much as they did ten years ago when the mortgages were made. For this and many other reasons I hope that the committee will see fit to accept this bill. I know it is near the end of the session but I introduced the bill early in the session but for some weeks I could not. get the banking committee to meet.

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June 21, 1935

Mr. G. G. COOTE (Macleod):

Might I

ask the Prime Minister whether the government woulld consider introducing legislation dealing with the jurisdiction of the Farmers' Creditors Arrangement Act in respect to indebtedness for school lands? If the Prime Minister is not in a position to give an answer at the moment, perhaps he might consider the question and give an answer on Monday.

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June 17, 1935


I believe it quite proper for the government to take steps to protect the external value of the Canadian monetary unit, but the important point for us to consider at this time is the policy to be followed by the minister in administering this fund. That is, at what level is it considered desirable to hold the value of Canadian currency as expressed in terms of other currencies? I speak particularly of the American dollar and the British pound. It seems to me that during the past few years our currency has been at too high a level in other countries, so far as our exporters are concerned, and Canada's basic industries are to a great extent dependent, so far as their price levels are concerned, upon the price which they receive for their sales in foreign countries, and the value at which they can translate foreign funds into Canadian currency. Undoubtedly we have suffered in our attempt to compete with many other exporting nations of the world. To-night we heard considerable discussion as to why it was so difficult for Canadian and even English textile companies to compete with those of Japan. I noticed that no person mentioned that which I believe to be the most important factor, namely that Japanese currency to-day 925S2-237J

is depreciated in terms of Canadian currency by approximately seventy per cent. I think that is the greatest factor in favour of Japanese exporters.

Then, to come to the industry in which I am most interested, agriculture, our chief competitors might be said to be the Argentine, Australia, New Zealand and Denmark. In each of these countries we find that, compared with that of Canada, their currencies are depreciated to very marked degrees. In Denmark the currency has depreciated 22 per cent as compared with the value of our money; in New Zealand the figure is 23 per cent, and in Australia 24 per cent. The official rate for the Argentine is given as 24 per cent, but the unofficial rate is approximately 60 per cent. What is needed in Canada to-day is higher commodify price levels, and the easiest way to do it would be deliberately to depreciate our currency. We must do it frankly and honestly, as has been done by the other countries I have named. In Denmark, Australia, New Zealand and the Argentine the step was taken as a matter of governmental policy, and now that the Canadian government is setting up an exchange fund to be administered by the minister it seems to me we are taking a very positive step towards making the level at which our currency is held in foreign countries a matter of government policy. I am not suggesting that we engage witih any other countries in a race for currency depreciation, but we do require this depreciation to restore our price level's. There is a great deal of opinion expressed in financial papers in favour of stabilizing exchange rates of various countries. So far as I am personally concerned I do not believe that we can afford to stabilize our price structure at present levels. That would mean disaster for those engaged in most of our primary industries. It would mean that for many years to come they must carry an almost intolerable burden of debt. But with a currency depreciated to 'the level of most of our competitors our price level would be placed nearer where it really ought to be. I am sure even that would hardly restore the price levels of 1926. Some of the outstanding if not some of the best economists have said repeatedly in the last few years that a rise in the price levels to the point at which they stood in 1926 is absolutely necessary if we are to be able to continue to carry the present debt structure. We all realize the devastating effect of attempting to deal with debts in any other way. I think myself that that is the proper way to deal with them.

Exchange Fund

I should like to make it clear again that I am not opposing this bill, nor am I even criticizing it. I think the important point to be considered at this time is the policy of the minister who will be in charge of this fund. I hope it will not be used to stabilize price levels at where they are to-day and I hope it will not be used to keep our currency at its present high level if there are other factors which would operate to bring it down. I realize that this is a matter for debate and I have debated it in this house and have put my point of view before hon. members. I shall not repeat my views to-night at any length but I think it is realized by the majority of hon. members that there shouild be a rise in commodity price levels if we are going to compete with other exporting countries. Take the case of Brazil; their currency is depreciated forty-four per cent as compared with ours. Not long ago I was talking to a bank manager who had just returned from Brazil and he gave as one of his personal reasons why there had been no unemployment or distress in Brazil the fact that depreciation had taken place in their currency and they had maintained much higher price levels than otherwise would have been possible.

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