Mortgage Manners

Over the years, Saskatchewan wheat farmers had spent many a sleepless night worrying how to meet the mortgage. On an average, they had to net $12 an acre before they showed a profit. In 1927, they averaged $18.91, but in 1932 the yield skidded to $4.76, which spelled wholesale defaults and forced sales.

By 1944, when Premier Thomas C. Douglas' CCF regime came to power, the province's wheat farmers were sitting pretty, netting $20.03 an acre on wheat, and rapidly reducing their debts. But the socialist CCF figured that this was too good to last. It gave the farmers drought insurance by passing a law that no payment on the principal of a farm mortgage need be made in any year when the average yield from wheat acreage fell below $6; in addition, at least 4% must be written off the principal--at the mortgagee's expense. But interest would still be due on the original principal.

This law outraged Canada's orthodox financiers, and the Liberal Government in Ottawa asked the Supreme Court of Canada whether the legislation was constitutional. Last week, by a 4-to-1 vote, the court ruled that Saskatchewan had trespassed on the Dominion's preserve--under the British North America Act, the right to regulate interest.

Even with wheat prices still booming in a hungry world, the mortgage issue is far from academic for hundreds of submarginal wheat farmers along Saskatchewan's western border. To keep these uneconomic producers from going to the wall, the province will probably pass a cumbersome moratorium bill. On the broad issue of the province's powers, Premier Douglas promised to appeal the Ottawa court's decision to the Privy Council in London.

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