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Maps, plates, charts, etc., may be filmed at different reduction ratios. Those too large to be entirely included in one exposure are filmed beginning in the upper left hand corner, left to right end top to bottom, as many frames as required. The following diegrams illustrate the method: Les cartes, planches, tableaux, etc., peuvent dtre filmAs A des taux de r6duction diffdrents. Lorsque le document est trop grand pour dtre reproduit en un seul clich6, il est filmA A partir de Tangle sup6rieur gauche, de i^auche d droite, et de haut en bas, en prenant le nombre d'images ndcessaire. Les diagrammes suivants iilustrent la m6thode. ita lure. : 2X 1 2 3 1 2 3 4 6 6 r Sc / / CHEAP HONEY FOR FARMERS A Measure Which Will Solve the Farmers' Financial Problems. Speeches by the Premier and The Provincial Secretary in Its Support. Hon, Mr. Turner in moving the second reading of the bill for the Encourage- ment of Trade and Agriculture by the Establishment of Mutual Credit As- sociations, said: The house is familiar with the procedure that has been ad- opted in regard to the measure now be- fore it. It was refeiTed to the committee, the duty of which was to report on exist- ing systems, and the report of that eoin- raittee has been submitted, and although 1 have not had time to read it, I believe it contains a good deal of information of a useful character, but without any special recommendations as to the "ourse that should be followed or the po'ijy that should be adopted in regard to the main problem. With reg.ird to the bill now to be considered, some difference of opinion mny exist as to details, but the principle is one that will commend itself to the favor of the house and so far as we can judge by the expression of opinion in the country it is GENERALLY API'KOVED. Some of the amendments recommendi'd by the special committee and other new amendments will be introduced in com- mittee. Tn this connection I am free to state that we are not yet in a position to judge of how far it may be successful in operation. It introduces a new feature in finance on this continent, and while somewhat similar systems have worUod well in Europe, we must wait for a time to ascertain what changes may be necessary to fully adapt it to the con- ditions which obtain in this province. These things must work themselves out in practice, and therefore the measure however well considered must to some extent be experimental. The advocates of cheap mone.v in this province have had in view mainly the lending of money by the government to farmers to redeem mortgages carrying a high rate of in- terest, and the committee, I observe, has adopted the view that in the forma- tion of banks the payment of existing mortgages on farm property should be a primary consideration. The govern- nrent, however, looked at this matter from a STANDPOINT OP GENERAL UTILITY. and has endeavored to frame a measure which would extend its benefits to a much greater number of persons. The primary object is not in our opinion to relieve that portion of the community which has overburdened itself with debt so much as to assist the com)nunity gen- erally in obtiining money for purposes of development. This is, what I under- stand is the object of the credit asso- ciations wherever they have been estab- lished. Those who are in debt by mak- ing the conditions as favorable as pos- sible are enabled by industry and care to get out of it as speedily as possib'e; but, sir. if it were assumed that the ob- ject were mainly to enable the govern- ment to go into the money-lending busi- ness in order to ease mortgagors, I do not think the government would be jus- tified in entertaining it at all. Moreover, the benefits would be limited to a com- paratively few, whereas under the pres- 2 ent system proposed every member of the community, provided he is honest and industrious and intelhgent, mny be benefited to some extent. It is a policy of development calculated to assist THE STItUGGLING SETTLER as well as every other clnss of the com- munity, in reproductive efforts — in ad- ding new wealth to the province. The working of this system is better explain- ed in the model rules accompanying the bill, and I might state that these are based on the recommendations of Wolff, the great authority of Europe, on the subject, and who has made a practical and deep study of its operations. Mr. Wolff is a great friend of Mr. Chamber- lain and an adviser on financial and economic (juestions. Those rules have been before the house for some time and it will be scarcely necessary to explain them. The system is one of co-operative ciedit. Farmers and others — and the membership is not necessarily limited to farmers, but may include small traders and artizans — combine their credit and pool their assets and then lend to eacn other according to the wants and security each can afford, taking into consideration as well the general character for hon- esty, industry, sobriety, etc., of each ap- plicant. The system PLACES A PREMIUM on the virtues without which no coninin- nity can be permanently succetsful. The key to the system is the local board of directors, who being personally ac- tjuaiiited with the oironmstances, condi- tions and character of each applicant, can best determine the extent of credit to be given. As these directors, who naturally will be the most prominent and repuatble men in the community become personally liable for the loans they advance thi!y will exercise the greatest possible care. Practically under the system as it is in- tended to carry it out every individual will be liable for about 2t^ times the amount of his shares. In Germany, where the system has had the most suc- cessful exemplification there is unlimited liability attached to momborsbip, but it is thought in this country it would be a bar to many farmers joining and it is not necessary for safety. In addition, how- ever, to the general committee there is an independent committee of audit and for still greater security the government will exercise supervision by means of its auditor over every transaction of the associatieu. Before the government agrees to guarantee the debentures of an association it will fully satisfy itself thnt the margin of real and personal SECI'RITY IS AMPLE and that in every case the money will be properly applied. The whole 8U> cesB of the system will depend upon economy and rigor of ad- ministration, just as in the case of a regular bank and it will be the duty of the government to see that the administration is jood or otherwise to stop further credit. The idea of the gov- ernment is that the system, which is .m- doubtedly a good one and which com- bines all the best fe&tures of existing sybtems of co-operative credit, should be tiltempted in a small way, and to en- large the sphere of operations as its suo- cess is demonstrated. The public gen- erally and farmers especially must be educated to the requirements of the sys- tem. It would be a fatal mistake to at- tempt to introduce a measure of this character on too large a scale at first. 'J'here are many directions in which, how- ever, the government through the me- dium of such associations may be able to benefit farming communities, and par- ticularly in the undertaking of their land which is really one of the most import- ant of farming operations, and in THE CLEARING OF LAND. Farmeis, by a system like thisj could join together and purchase stumping ma- chines, borrowing money for the pnipose through the association by furnishing of course sufficient security for tlie purpose. Such methods as this would be of tre- mendous advantage in British Columbia, where clearing land and drainage are so important. To do work of this kind is of much greater b(>neHt to the province th m to lend individuals money to redeem mortgages. There may be some difference of opinion as to the character of the security which should be accepted. This is a matter in which the board of manage- ment can exercise a wide range of dis- cretion. They may accept first mort- gages on land, liens on personal property, notes of hand, or collateral security of any kind such as is accepted by the regu- lar chartered banks. Their main con- sideration, however, will be that the se- curit.^ is in every \v:iy iimple for the loan. A man may only require .50 or 100 dol- lars for a temporary purpose. For this his personal credit may ho considered ample, or a note of hand endorsed by one or two of his friends would necessarily form a part of the security. In any event the committee of audit and THE GOVERNMENT AUDITOR \\ill exercise supervision on the subject of security, and demand an increased se- curity where considered necessary for safety. In connection with this matter I may say that thv> rules which will be promulgated under the act will cover a 3 multitude of detnils which it hns not been considered necessary to place in the net itself, and when these are published it will be seen that the -^ ^vernment has taken every necessarj' precaution in the premises, and as the cre- fiftha of the farmers in British Columbia to-day may be fairly described as fol- lows: When the i rodurtion of inte'-- iiational gold mon .netallism brought down the level of prices and produced the wave of commercial depression which flooded the civilized world during the past decade, the farmers of British Columbia were forced to mortgage their farms at about half their mean value and at a high rate of interest. But. sir. the level of prices continued to fall and with it the value of real estate, which rivopped to fifty per cent, of its value at the times the mortgages were contractod. so that the position of most of the farm- ers in British Columbia to-day is this- their properties are mortgaged to the full e>.tent of their value at a high rate of in- terest while the prices of the proe fouml to relieve the fanner from the bur- den which is crushing him and to place him in a healthy financial position so that his natural energies nniy expand for the benefit of himself as well as thj com- munity at large. In order to fully under- stand the position and the remedy to be applied to it we must fall ba:'k upon ex- perience and the legislation which has been enacted in other countries for the amelioration of agricultural distress in ppst times and to do this we must go back to what may be called the grand- father of agricultural loans — the institu- tion of THE BANK OF SCOTLAND in the year IG95— a time when banking was in its infancy in Great Britain, for it was unknown in that country prior to 1040. It was a period when the commer- cial interests of tJie British race were e\- ppnding and vivifying into activ<» opera- tion and the institution of the Bank of Scotland brought about a novel and im- portant change in the system r f banking because whereas genenally speaking a customer lends money to a bank and re- ceives interest upon it, the Bank of Scot- land inverted this and lent money to the customers and charged him interest up- on it and it did this with accommoda- tion paper of its own bank nt'tes which it was allowed to issue to in unlimited exttnt. Tho bank lent out money in this way at a vcrv low rate of Interest and repayable by easv Instalments to almost any one who could find two well known as sureties— or "cautioners"' as iliev were called -as ti the iiitc'grlty, Ind.iatry .ind thriftlness of the borrower. Why. Mr. Speaker, such v/as the temerity of this bank that It actually had the hardihood to lend out m^ney on the personal secnrltv of lawyers! but mark yon, onlv to voun'g lawyers, before they had become ease-hard- ened. So after some years It came about that there were tens of tlnmsands of these sureties or cautioners scattered over Scot- land whose duty and interest it was to watch over the honesty and thriftlness of thousands of borrowers ar.d tliis produced a most beneficial eflfeet tipon the natlonat ehararter. Now, sir. some Idea inav be formed of the MAONITTTDE OF THRSE LOANS. 'in personal security when I state that one branch of the bank alone In the eonrse of twenty-one .vears lent out nlaetv millions sterling in Its own bank notes and the onlv loss it sustained through these extendeit transnetioiis— and by losses I do not mean on preflt and loss accotint. btit the onlv amount which was not faithfully repaid out of this enormous sum of ninety mil- lions sterling was tweive hundred pounds, and I tbink this Bpenks volumes for the character of the Scottish people, and, in- deed, were I not an Englisbuiau, I would be a Scotchman. Now, sir, the uuestion may very pertinently be nskt>d: what was the security for the enormous amount of these loans in paper money? Well, sir, the Bank of Scotland looked upon a healthy, active, honest and thrifty young man as a human machine, whose energies, when pro- perly applied either directly or indirectly to the soil— the mother of us all— could pro- duce annual profits far in excess of the Interest and sinking fund attaching to the loans— and the experience of the Bank of Scotland proved that it was right. But when the enL>rgies of the human machines were applied directly to the 80II then the security " becime greatly enhanced and therefore the bank lent largely and freely to the farmers of Scotland, and this has been the piimary cause of the success of the agriculttirnl industry throughout the length and brpadth of that country for the last two hundred years. I feel convinced that this action on the part of the Bank of Scotland wis THE SUGGESTIVE GERM which afterwards gave birth to the Land Bank of Europe and it may be profitable to glance at the history of these land banks and the mode of their administration. In the year 1756 during the Seven Years' War there was terrible distress in the agricul- tural industry throuphout the greater part of Europe, and especially so in Prussia and Austria. The farmers in those countries had their farms mortgaged up to the full extent of their value and were paying as much as thirteen per cent interest— in fact their position was very similar to that of most of the farmers in British Columbm in the present day. Such w»s the prospect- ive ruin that various schemes were devised to remedy It, but they were all of them failures through faulty organization and mal-administration. At last one Buring, a Prussian merchant, conceived the Idea of a land bank. By nis system the farmers were to associate themselves together and pool all their properties Into the land bank, which on its part issued accommodation pa- per in the form of land bank bonds bearing three and a half per cent. Interest with a small sinking fund added. With these land bank bonds the bank bought up the mort- gages on the farms and not only so but lent them out to the extent of half the amount of the improvements effected upon the farms after the mortgages were paid off THE FIRST OF THE LAND BANKS. was started In Silesia in the year 1770 and it proved such an unqnalifled success that the system spread over the whole of Ger- many and eventually made its wav into France, and these hanks are In existence during the present day. It has been found that the value of these land bank bonds as a security has been maintained In Eu- rope in a remarkable degree notwithstand- ing the numerous crises which have occured whether monetary or through revolutions or through war. For example, during the re- vohitlonary period of 1848 when tlie Prus- sian funds fell to fi.H the land bank bonds in the same country only fell to 96— thus showing the confidence which was felt by the money market In this jmper money backed as it was by land under cultivation. But, Mr. Speaker, we must not lose sight of the fact that the case of the farmers of British Columbia is hardly a parallel one with that of the farmers of Europe. lu the latter case the farmers are wedded to the soil on which they live— tueir fathers and forefathers have lived there before them; all their traditions, habits and assoclutiona are anti-migratory, while the farmers in British Columbia are, comparatively speak- ing, NEW COMERS IN A NEW COUNTRY. They have no traditions binding them to the soil; th3y have numerous temptatlous to invest their labors, and what little cap- ital they can scrape together in specula- tive undertakings; they are, in fact, plung- ed into the stream of a floating population and are carried away by it and they can- )iot therefore offer the same security which can be given by a more stable community. Hence the care and caution which will be necessary in taking up mortgages on farms in British Columbia and in lending money on improvements either through private as- sociations or by state guarantees. It is evident that these loans cannot be placed upon a business basis except upon the good character of the farmers and also ou tlie farms upon which the loans are made. There must be a fair ratio between the land under cultivation and the amount of the loan. The land bank system Interposes between the lender and the borrower the credit of either an association o:- a state and it is our duty as a state to take every precaution that we have ample security for the credit we offer. But when I say this I wish it to be understood that we do not feel any cause of anxiety about overcoming the difficulties which undoubtedly exist— difficulties were only created in order to be overcome, and the seriousness of the case demands our earnest endeavors to master it. All that Is required Is care and caution in making the loans. We must not rush the procpss, but look closely Into every case and judge It upon its own merits. The 1)111 which is now before the house will at all events give the government a tentative power to m.ike a commencemeiir. 1 be- lieve that under this bill or Its amplifica- tion and with intelligput .idminlstrntion we can bring to bear upon the farmers of Brit- ish Columbia the incentives to thrlftlness and the stimulus of hope which through the medium of the Bank of Scotland has work- ed such splendid results upon the agricul- tural interests of that nation. And. sir. If we can do this. If we can relieve the farmer from the demoralizing burden of an Irreducible debt. If we can place him on a fair field for fighting his battles in the struggle for existence, if we can observe the reflection cast upon our enterprise by the fact that notwithstanding the posses- sion of a splendid climate and a bountiful soil we still Import three-fourths of our an- nual food supply and foolishly drain away our wealth by thi» annual payment of hun- dreds of thousands of dollars In the form of duty to a foreign state— if, I say, we can accomplish all these reforms by this bill then the house will be entitled to great credit and we can rest assured that we deserve the good will of our country. I therefore wish every suc- cess to the second reading of the bill. (Applause.) I I -'-mmmi I 1 A MOST IMPORTANT MEASURE. (ColonlBt. April 1«, 1808.) The meaHure submitted to the legishi- ture providiug for chenp money for fai-mers and other members of the com- munity is one of the most important pie- sented by this or any other leRishitive body in Canada — in fact it is the only legislation of the kind which has as yet been attempted in Canada. As a proposed solution of the prob- lem of cheap money it is an ambitious and we must say a well considered one. The principle involved is not a new one by any means, although new to this con- tinent. The system of agricultural credit banks or associations, for which it makes provision, have been developed with a very great degree of success in Germany, Italy, France and other Euro- pean countries, and aren now taking root in Great Britain and Ireland. They have also been established under govern- ment auspices in the presidency of Ma- dras, India. The measure now before the legislative assembly of British Col- umbia, while an adaption of the best features of these agricultural credit as- sociations as worked in various coun- tries under various systems, is largely original, being conceived with special re- ference to the conditions which exist in this province. The fundamental principle of the bill CO-OPERATIVE EFFORT of the farmers and trades themselves. The government does not lend to the far- mers as individuals but to the commim- ity as a whole. The whole credit of the members of the association being the security of the government, thus dointr away with the very obnoxious feature of government assistance direct to individu- als. The government deals only with the associations, the entire management and control of the affairs of the asso- ciation being in the hands of >i com- mittee of management and an auditing •■ommittee. Stringent conditions are enforced for the proi)er currying out of the objects of the bill, and every possible precaution h. • been Ken to piovidf against loss to the province. Along with the bill a set of model rules and regulations have been sumbit- ted to the house, not for enactment, but in order to indicate on general liiie>5 the regulations which will be put in effect by the Lieutenant-Governor in Council, to whom this duty belongs. BRIEFLY OUTLINED the system is this: any number of far- mers or traders of a community of 25 or more members, may form themselves in- to an association, paying an entrance of live dollars each, and subscribing to a certain number of shares, the number of shares to be proportionate to the am- ount which a member may reasonably be supposed to become good for iii case he is calle8.) The bill is the culmination in this province of the agitation for wh.it^ is popularly known as "cheap money." The committee referred to having reported on the several systems in vogue in New Zealand. India and on the Continent, the government will make good its inten- tions in this matter. Practically speak- ing the finding of the committee is in favor of the bill, although its reconnnen- dations are of a negative rather than a positive character. The body of the rer»ort contains a large amount f>f infor- -^gi;j8^i3«m««!SBa6gS?SiB*Wi*««*^^ mation to \vhich the conimitteo has htnl access regarditiK the uiouoy ay.itomM of other countries, yet it would h»» ilifflMit to say what really it is Hpeelfleully in favor of. Several amendments of a minor character are referred to as de- sirable. We think, however, I ho com- mittee has Homvwhat misappreliended the object of the bill, when it re 'om- mends for the consideration of the gov- ernment that in the formation o!' banl^s the payment of existing mort«!i«es on farm property should be the prinniry consideration. So far as our reading goes and as we understand the several systems of land banks, credit associations and govern- ment aid, in only one place has the recommendation of the conunlttiH> had efifect. In New Zealand the fc'overn- ment borrowed a large sum uf money which it lends directly to fanners lor the purpose of paying off niortj,'ag«M < ar- lying a high rate of interest and substi- tuting others at a low rate. The syst^Mus generally have in view A DIFFEllENT OBJECT. namely, the develoi)mcnt of ih.? agri- cultural industry on tho lines of co-oper- ative action, in which the paying off of debts of the farmers is but a small fac- tor, and one only incidentally consider- ed, and we think that the govorn!nent of British Columbia should carry out such a policy instead of lending its credit in the way indicated by the com- mittee as desirable. Wo do not hny that it is not a laudable object in itself to provide money at a cheaper rate for farmers who may wish to redeem tLeir present mortgages, but »we do contend that it is not one of the legitimnte func- tions of government. The formation of banks as contemplted by the hill is for the purpose of a bringing between the government and tlie pinjple an indepiMiJ- ent association by which it will be only possible for the government to lend to communities as a whole. The associa- tion being made up of members whose personal liability is always at stake, the local board of directors will naturally exercise the greatest amount of care as to the loan effected, and will scrutinize very carefully the credit of <.>very rer- son making application, thus protejtiig the government credit fully. TT IS NOT CONTEMPLATliJD chat the associations should lend large sums of money, at lirst at least, liut 'e. It is therefore a policy of development ra- ther than one of state aid that has l>een enterehat would not be possible by individual ef- forts. The government would not be justified in lending money to individuals, because any sutdi system must lead to favoritism and almse and would be liable to land the government in l)ank- ruptcy l)efore many years. It is a system which cannot be defended iind ia contrary to sound political economy, but when a community approaches the gov» erument IN A CORPORATE CAPAOITi', and pledges the whole of its oredit in a way which indicates in the niisr prac- tical manner confidence in fh" honesty and integrity of each of its meuil)ers the government can with good i^ruce and very properly lend its credit to such a community. Under such a system of co-operation, one cannot readily ini.igine what can ')e accomplished in the de- velopment o our resources, in fact, by the successful operation of credit associations all the problems whince of an odlcial report on agricul- ture In Germany. True co-op»'ration is followed extensively in that country in l)uying needed supplies; in the disposi- tion of agricultural produce; in disposi- ing retiuisite credit and in making loans. It has greatly aided the (ieruuin farmer in his tight against agricultural depres- sion at home and strong comp(>tition from abroad. With each succeeding year co-operative effort among our own farmers should attain higher ground, so that with earlier mistakes eliminated greater mutual good will come with this' shoulder to shoulder harmony of pro- gress. The above refers to the Agricultural Credit Associations upon the principle of which more or less the bill now before the provincial legislature is based. Co-operation to be practical must not be merely a sentiment. It must for co- hesion have the nuiterial basis of DOLLARS AND CENTS. Money is the recognized ruling force of the world. We cannot get away from that fact, whether we think it right or wrong. We must face the truth as it 'b. The force of large capital in few hands must be met by the union of smaller capital in many hands. That is the solu- tion of the social problem. That is the principle of what is known as the "Cheap Mon»«y Bill." To lend money at u low rate to individual farm- ers for the redemption of mortgages* car- rying a high rate, if it were perfectly safe and practicable would be good un- doubtedly. It would confer individual benefits and would tend to lower ihe general rate of interest, but it would not be economically sound. In the older countries, the experience of which counts as years to days in this province, co- operation has been found to '>e the remedy which best meets the require- ments of all classes, and in tho-^e coun- tries, too, paternalism and government control in other respects liave been carried beyond anything that has been dreamed of in America. The principle of deemed of in America. The principle of individual assistance to farmers is OPPOSED TO CO-OPERATIVE EP- FORT. and would place insuperable obstruc- tions in the way of its development. Let farmers understand that it is only by sinking their differences and dropping their jealousies, in other words, that to unite means dollars and cents to them, and placing confidence in each other they can succeed, and the difHculty thai: many foresee in the operation of the Ag- ricultural Credit Associations will van- ish quickly.