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Learning from the past can help the future

Law Professor receives SSHRC Insight Development Grant for pioneering research on Depression-era farm debt

March 14, 2019 — 

Dr. Virginia Torrie’s research into the financial troubles faced by Canadian farmers in the ‘Dirty Thirties’ could yield better ways for legal practitioners to help modern-day farmers and small businesses stay in business. With support from a 2018 Insight Development Grant from the Social Sciences and Humanities Research Council (SSHRC), Torrie, an Assistant Professor at the Faculty of Law, University of Manitoba, will be able to hire research assistants to delve into virtually un-touched historical documents at the Archives of Manitoba and the Archives of Ontario. Dr. Torrie has received $43,765 for her project titled, “Farm Insolvency Law During the 1930s and 1940s: An Empirical Study of the Farmers’ Creditors Arrangement Act in Manitoba and Ontario.”

The goal of this project, Torrie explained, is to assess to what extent the Farmers’ Creditors Arrangement Act (FCAA) adopted the socially progressive debtor/creditor policies advocated for by farmers and prairie politicians in the early part of the 20thCentury. “It will provide an empirical basis for evaluating the political influence of farmers as a debtor group in the 1930s and 1940s,” said Torrie, “and lay the foundation for further research, which will evaluate subsequent developments in Canadian farm insolvency law. This project will be among the first to study and report on Depression-era farm insolvency files.”

Torrie plans to look at the extent to which the FCAA reflected the interests of farmers by conducting an empirical analysis of three counties in Manitoba and eight counties in Ontario in order to determine how this statute impacted the enforceability of debts owed by farmers to creditors. Further, she said she intends to “analyze the impact of the unique contractual terms of the debt compromises formulated under the FCAA in order to evaluate whether these enhanced the protection afforded to farmers by the Act by further limiting the legal rights of creditors.”

The documents which Torrie and her team will examine consist of insolvency applications made by farmers during the early 20th Century’s Great Depression. “We are the first researchers to consult these files,” said Torrie, “and in many instances the files have been poorly sorted, or are not organized at all!”

Torrie explained that “excavating” the data she needs from these documents is very time consuming, but that “archival research of this kind is essential to an empirical project which seeks to understand the continuities and disconnects between the letter of the law and its operation in practice.”

Torrie hopes that researching this area will shed light on the influence that farmers have as an interest group, on the laws and legal mechanisms used to enforce debts that farmers owe to creditors. She explained, “The synthesis of how contractual terms can be used to enhance the debt relief offered by insolvency law will be useful for practitioners (which include lawyers, judges, and insolvency trustees) who craft and review the terms of contemporary debt compromises. The strategies used by farmers to shape a progressive insolvency regime that promoted debt compromises to keep viable businesses in operation will be of interest to associations representing small businesses.”

Understanding Canada’s past experiences with farm insolvency can help modern-day policy-making in very important ways, Torrie said, describing the FCAA as “an outlier among Canada’s bankruptcy and insolvency statutes,” in that it was “a unique statute designed to tackle a specific problem.”

This very difference is what makes the FCAA valuable to policy making today. “Considering the FCAA expands the spectrum of approaches and options that might be used to address problems of overindebtedness,” said Torrie, adding, “The FCAA is an historical example of a socially-progressive approach, and aspects of this approach could potentially be incorporated into contemporary laws and policies.”

Victoria Truong is a second-year law student currently assisting Torrie with her research. From her perspective, she has learned that “it’s important for students to take legal history into account when studying current matters of law.”

“At this point, there is not a large amount of literature on farmer insolvency law and the Farmers Creditors Arrangement Act (FCAA),” said Truong. “Dr. Torrie is really a pioneer in delving into this area of law that has demonstrated very progressive laws in favour of loans. Specifically, farmers had taken out loans but were forgiven or discounted under the FCAA due to the circumstances during the Dust Bowl era. It’s an important topic to research because it provides a better picture as to how debtors and creditors were treated in the past, and can be used as a tool to help us today with respect to bankruptcy and insolvency law.”

As Truong approaches her third and final year of law school, she is thankful to have had this research experience. “It’s an amazing opportunity to work with Dr. Torrie and has been a very valuable experience to me as a law student,” she said. “She’s been an incredible person to work for and has provided important and insightful perspectives on bankruptcy and insolvency law.”

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