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3/"^
UNIVERSITY OF TORONTO
STUDIES
Economic Series
Editor : Professor dames AA«vor
NO. I. PUBLIC DEBTS IN CANADA
BY cJ. ROY PERRY
THE UNIVERSITY LIBRARY, 1898 : PUBLISHED BY
THE LIBRARIAN
COMMITTEE OF MANAGEMENT.
Chairman . J^mm Loudon. M. A. LLD.. ft«ident of th.
Uniyenity.
P»0»soB W. AlKllfDIB. MA., Ph.D.
PwNoiPAi, J. Oalbbahh, ma.
ftwiMsoB A. H. BwHAB, MA.. LLD.
^w»«woB R Rambat Wbioht, M.A.. RSe
PaofWOB Q. M. Wbono. MJL
««^ Aiitor; H. auK<m,K.B.A..Lil«ri«ofthetJniver«ty.
3/^1
PUBLIC DEBTS IN CANADA
By J. HOY PHPRV, B.A..
liAMSAN SrlKil.AK IN PoLlTK AL S<IK.NCK IN IIU; IMvKK-IT^ OK
Toronto. 1K%.
WITH .\ PKi:i\lK RV
IAMBS MAVOR,
I'UOKKSSOK OK l*OLIlI(AL K('0.\0>n AN 1> ( 'oNSTITII loN Al. UlNTOKV
IN THK UnIVKHS!T\ oK Ti'KONTO.
ir
Pitiaruia axd Boouimdbm
[A\M\i OF CONTKNTS.
" PAItB
5
P««PAOIt
PoBUC Debts in Canaka * • ' ' " '
Purt /.-^'«<'«''"' ''*''''■
First Poii-.(l, 1H«7-I87f». j^
Iiiterc()l«)iiinl railway
Allowanco t<> provinces _
North-west territory purchase
Loaim jg
Past and future, 1875
Second Period, 1875-1885. ^^
Canadian Pacific railway ^^^
Fixpundituro on canalH
lleadjustniont of provincial di-ht«
Loans oti
Uetrospect, 1886 ' ' '
Third Period, 1885- 18»5. ^^
Character of the period "
Expenditure on canals
Railway subsidies "
Suniuiary, 181)5
Part n.—Pnninciul dM
Province of Canada, 1841 18rt7
. o*f
Province of Quebec .
Province of New Brunswick ^
Province of Nova Scotia
Province of Manitoba
Province of British (Columbia \^
Province of Prince P^lward Island '_^
«ti
Province of Ontario
I'ai-t III. —Local indeUeilnnHt.
The Municipal Loan fund
.... bo
Municipal debt in Ontario
Urban debt : .
08
Cities ^
Towns
Villages ' ' '
•'•NTHSTS.
Hiirnl ficbf, :
Coyiutiw '■*""
T<iw'r,H|ij|,„ ,'<>
Wiinicipnl .l,.|,t i„ (,>„..|„,. ""
Mont rcul 7!l
' Xli.T cities (in.l foH-ris '^
•New HruiiNw ick ^^
iVovH Scotin 83
Priiic.) K,in,ii(I FkIutkI «4
M«i,it..l,u aii.l tho T..rn>„ri.,H ■'»
HritiNh (V.luii.liiH «fi
«7
76
i 4
7U
80
«2
83
84
>5
8fi
87
IM^lil'ACl:
•Plif Uainsay Sclioliirsliip in Political Sciiiic- fci IMMi was
awardnl tu Messrs..!. R. I'.mt.v an.l K, B. Proctor, whose ]m\H'VH u.re
rc-ranliMl as .■-lual. Tlu- foUowin^r .s.say l.y Mr. I'crry is an rxpan-
Hion of til- pajH-r snl.mittv.l in tlnscnnii."titi..n, A I'orn-:' s.'H.-s of
stu.Hcs in Political Science, instituted in InM). comprised four .s.says.
and is continued by the present ))ul)lieation.
No connected account of I'ublic Finance in Canada had as yet
appeared: and it sern.cd advisablr to .mbraee the opportunity
attbrded by tb.- Ibinisay Scb<.larship to induce ^rra.luates of the
I'niversity to vork in this ti.-ld. Tin- two pajH-rs in (lU.-stion not
only serve to indicate the sources of information, but otl'er a fairly
compact mass of detad for the use of th.^ .ronomic .student. The
special feature of Mr. Perry's paper is the view he <,dves of the
investment by the various admiiustrative authorities of public
money in public works. The absence, except in the case of the
North-west rebellion in ISHfj, of ndlitary expen<littire, and the
absence of any costly perinaneni niilit iry establishment have
enable.l Canada, since Confederation in l.S(i7,to devote the resources
of the country to the further development of these resources. The
very considerable debt of the country is ther.-l'ore n.ore than otlset
by tanj^ible assets in the form of roa.ls.briiljres, canals, railways and
public buildin<,'s. It is true that in some cases due economy has
not been observed in the exju-nditure of public money, and that
the political pressure of localities has sometimes been exercised in
inducim' the irovernment to undertake unprolitable enterprises;
but this is not true of the bulk of the expenditure, which is really
[5]
rproHcntcd l»y works that arc flircctly «>r iii<liroctly nimiiu'rAtivp.
If thf'so stuilit'H on |iul)lip <l<'l)tH aro n-ad in ronricction with the
account of ihf tiirifV hy Mr. (now Professor) Maclcai'. no. 4 of the
forintr Herit'H, and with otlicr forthcoiiiinj; studies on related topioH, a
fairly accurate view of Uu; tinanceH of the Dominion will heohtainod.
Tho considerati(»nH which emerge from these stu<lies are important
rather in their liistorical or practical than in their theoretical
aspects. Yet illustraticms may he found of the edects in a hii;hly
democratic {joverrnnent of a more <>r less ileliherate employment
of the nu\chinery of the state in promotin;j^ enterpri.se.s involvinjj a
lari^je expcmdittu'e of capital for u remote or even prohletiiatical
return. It is a (|Uestion which it woiild not he pi-oper to discuss
with the (hita as yet at our disposal, whether or imt the lial'it of
appealing; for governmental aid has checked iiuh'pendent enterprise
or has made the sulserpient developiiu'nt of siudi enterprise possihle
hy, as it were.cleariii}; tlie jjround I'or it. Perliajis the most remark -
aide feature of the* Canadian polic\' of develoj)ment is the extent t.o
which the {government has ;.;ra[iple(l willi the piohlem of communi-
cations. The immense lenj^th of (.'anadu in proportion toits efiectivc
width and the sporadic character of the settlement ol' tii'' country,
especiall}' in the jtrairie re]L,nons, pre-ented entirely intvel prohh^iiH
in communications. Private enterj rise coiild hardly be expected
to he adequate to the task, exceptiiig under conditions wliicli niiirht
have resulted in the practical ahandoinnent of the country to the
capitalists who uiifjht en;.;a<je in so hazanhtus a series of adventures.
What has been done lias been to unite the forces of the state with
those of private corporations; and if the terms have sometimcfl
ajipi'ared too onerous so far as the state is concernetl, it is hard to
avoid the conclusion, that time is after all the chief consideration,
and that development speedier than would otherwise have taken
place may not, after all, have been too dearly purchased.
The success of the s^'stem plaiidy depends upon a nice balance
of local and central power on the one lian<l, and a similarly nic
balance of governmontal encourarjement .••nd r<?serve control on the
other.
I
■J
I
•| he fliiiiinution in tht- rat.' «.f int^ivHt upon public socuritioH ih
an iiiun.'i.H.' .ulvantiiK"' t«) n.w countri.s \v1...h» h..iT<.wint,'capaciti.'H
HIV n.'C'.'Hsarily lar^f. So loii^' an thr .•apitul l.oriow..l l.y Cana.lH
from Kuropr is wisely cxiM'iKk-l upon i.i(Hiuctiv.- mtcrprisos or
up.m til.- pn-liminary lu'cossitirs for thost-. an*! so loii^ as tl.o intcn-si
of Mm- -l.-l.l can l-o easily met, there doeH not seem niueh likelilioo.l
of the ;i(lopti<.M of any .Irastie syst.Mii of r ■.leiiiption of .l.-l.t Yet
the p. rio.1 of jrmit railway uii.l other ent-i rises is pn.l.al.ly forthe
present over The expenses which eiisu.'.i up..n Confederation
have Ip.ei, l.ujr.'ly ahva.ly in.MMTe.l. I he t ranscontin.-ntal railway
ha. h.M.n hiiill the Dominion find I'rovine al p a.lic h-inlinjis hnve
l„.,.„.r.Tt-,l,ftii.i althon^rh tlu' .lenian(l> upon the p.ver; nient for
expen.litur.' .In not cense, yd it i-s unlik.ly thai ih- > nsnin^' thirty
years will witness an expenditure on capital accou.,i of sinns .-(i .al
to those wi.ic . have h.eii expeiide.i since 1 .SCT.
.I.\.M1> Ma\o1!.
i
I'ARr I.
FEDERAL DIiHT.
i
I
PUBLIC DEBTS IN CANADA.
PART I.
l-'Ki'KiiA I. I)i;in'.
^^*^liK history"!' tin' public dilit of the 1 )( niiiiiun ol" Canada
€ 1 l)i"jiiis uitli 111" ('(iiiM'dt'i'cation ol" the pioviMCi'.; (>;i July
^*'^ !.vt, iSiJT. Hit'oii' tli;:t tlatt', h is true, i'jh-Ii of tliO tliive
provinc s, ( 'aii.-i'la, New I'.rtins'.vick, ami Nova Scotia, had acciiinu-
lati'd a liurdiii of debt, \vhich in tlic case o!" tlic lii\st rained
roach. 'd the considfraliK- Mini of over 5'7.'}, 000,000. Hy the tcMius of
the IJritish Xorlh America Act, howcvc', tin l)( luiiiioii as.sunied
these debts, witli tlie cxce})tioii of some i?10,5iKi,000 of tho indebtod-
nt ss of the ]in)viucc of Canada. Tt is, therefore, not incorrect to
say tli.'it in ISfiJ the Doiiiin'on iMaun-'need, and tlie pro\ineos
reconinienced, tlieir linaiicial as weil as political history.
Till' j>riiirij)lf (if ihhf ■i'l(i:r,i m'r. — 'The public debts of the
sovoral provinces had. with sonie siii'ht exceptions, been incurred
For public imjiiMveiuents, inten<led to devc'op the rc-ources of the
country, to attract iauiii^iiants. and to provide cheaper means of
conveyin;:; farm products to the markets.' In the yn.r IfSiilithe
amoiuit of debt jut head of population was .^20. S:^ in the jirovince
of Cauatla. in New Bnuiswick S22.ti2, and in Nova ^cotIa
S14.li.s.'' la order to make an e(|aiiabl(> ai'ranirement. the incidence
of debt I'll' iii[>\i'i v.as taken as the basis of adjr.stmcnt. Each
province was to be entitled to throv/ nncai the ledeial ^'ovi rnnient
a debt e(jual to .^25 00 per head of its population, and slsould the
debt of any province exceed this amount, it was to j)ay interest on
the excess to the feshial treasury. On the other hand, should the
debt be hss tlian >?2.5.00 per head, the pi-ovince was to receive
interest from the federal treasury on the ditference 1 etweeii its
actual debt and tlie amount which it wns entitled t<i charije aeaiiist
tlie federal t;overninent.^ By this plan (hitario and Quebec wwv
' S|.Kcli of Hon. A. T. (;..lt. " Confcii. rat on lub.ten," p..({t' 65.
» Speech of Hon. D'A. McGee. Ibid, page 140.
' Speech i,f Hi !i. Geori/e lirown. Ibid, \ apje 93.
1111
J
12
eimlilcfl to «'iiti'i" till' uiii'Mi with a joint iilloA i il il' lit nl" ;? .2,.'0').()(M).
Thu di'ht of the proviiifi' oF Canada asHUiiHMl \>y tin- lioinininn
was to be reduced to this aiiiouiit hy IcaviiiLj d('l)ts of a local char-
acter, such as th(! Municipal Loan Fund, to the provincial It'oisl.;-
turcs. It was fuithcr pnividfil hy the Quchi'O licsohitinnH that
Ontario and Qui-lxr, in assuniin<4 the t'xcess of dt-lit of the oM
province of Canada, hecanio entitled to witlidiaw from the i,'eneral
assets all those items of a local character for which a jiorlion of
the deht had been incurred,'
()})Jrffl()iis. -That tliis financial sclu-nie of union met with
consi(l('ral)le opposition, can lie seen liy rrfcrenee to the confedrr-
ation (lel)ates The Hon. Mr Seymour, of Ontario, did not tliink
the allotnit'iit of debt allo,vance aecordiii;,' to pop dation a fair
metlujd. '■ if." he said, " New Brunswick, with ;in ;:nnual revenue
■•of ont! million dollars, lie allowed to put a drbt of 1^7,000,000
" upon the eonfnk'ration, then, upon the same rulf, Canada should
" enter the confederation with all hei-ih-bt and nioi-e. The estimated
" re-vi'nui' ot' Ctinada is ."?! 1.00l),()00. Any <iMe can ti.iire it out and
" see tliat Canada should have no di'ht left foi- local ;,nivrrnini'nts to
" pay '- Till' Hon. Mr. Dorion, a header of the nicmbcrs from
Lower Canada, criticized tlie schi-me as unjust to his province.
"In bMl," he stated, "Lower Canada entereil the union with a
'• (h'bt of i;i:^:i()nu. .Since 18H there has l)een spent in Lower
"Canada, for the Beauluirnois canal, tlie enlari^ement of the
■ Lachine can.d, the works on Lac St. Pierre, and the Chambly
"canal, about .«4,<)00,000, about s^N,000,()0O for railways, and
"81,000,000 more for other works. This Sb'^OOO.OOO worth of
" puV)lic worl;s is all that iIhtc is to show for the increase of debt
" from XlM.S.OnO at the time of unicai, to 827,50ii,()()(), wliich is the
" Lower ( 'anada |iroportion of the .'r()2,riOO,('00 of publie ilebt Canada
•now ir.in^s into the union. "'^ A third objection was that no
deiiinte <livisi(in between Ontario and Quel)ec wa- made of the c.'^cess
of til'' del it of the province of t 'a nil da. An ami'iidiiieiit was propo.sed
hy ihe Hon, [.etellier d'" St, Just to the ellect that " the address to
" Her ,\bijesly to unite the colonies hi* postponed, until the ifi)vern-
" meiit shall have made known to this Hou-e in what manner it
■• inti'iids to divide between Cp])er and Lower Can ida the iialance
"of debt, and what will be the items assi<;ned to each province,"
' A. T Gait. Conft-dcratou Debatpp, i a^e 60,
" Ibid, page L'( 0.
r ;? ;2,."0').o()().
!:<■ 1 )oiiiiiii(.ii
a liH'iil clwir-
incinl It'oisl;;-
olutioiiH that
it of tlie olil
II tilt" if(,'iu'i-al
a {lortioii of
III iiicl with
li<! (.'oiifnlc)'-
li'l not think
liitioii a fair
iniai rcvoiiue
if i^7,ooo,ooo
uiadfi sliould
'h<Mstiiiiati'(l
re it out and
>''rnnii'iit.s to
■iiihcrs fi-Qiii
lis ju'ovinco.
iin'on witli a
lit in Lower
H'nt of the
Ih' C'liainlily
il'•^ays, and
»0 wortli of
cM.sc of delit
wliich i,s tile
ilil)t t'ana(!a
V!is that lio
of thf excess
ran proposed
ad(h-e.s.s to
the LTovern-
it manner it
thi' lialance
1 ]>rovince."
13
Th.e aint'iidiiMiit v as, however, (h't'edted on a division, I'V -'H to
'20.' The (hli';.;atrs from the niaritiine provinces to the Quebec
eonreiviici- had made the huihliiiLT "i" the Intercoh^nial railway an
imperativ mditioii of union. The ene;a^'eiiient to huihl tliis road
was anothei- eaiise of (ijiposition. (hie of tlie menihers sjioke ]>ro-
piiefie wni'ds when he said of the enterpi-ise, ''The road will
" he a dratj,-. I say, hoiiouraiMe e-eiith'inen, that we are openin>,'
"an aeeount without knowiiie- when it will he elose.l. By enj^atf-
■' ini; in the constriietion of the Intercolonial and hy the assuiiip-
• tion of the New j-rnnswick and Nova Scutia lines we are
" enterine- on iiidelinite liahilities, the wdiole heini^f a non-payin<r
• propei-ty in which we shall tind a heavy hill of expense. "-
I'l'or'nK'iiil (il III irit arcs (// eaii Irdrvdl uni. — In spite of opjiosition
the financial scheme of confederation was carried throueh m
ori,;.nnally piojected. By the terms of the Act of union tlio
Dominion assume(l deht for the jirovinces as follov.-s :-
Previii.vef Cinadii .?r,2,r)(»''.o(M
New lliuiiswi.k H.fiO '.( (M)
NnV:. So.ii,-l :.'> O.nOO
Tetai .*77.,-.oo.non
The interest on the <leht in 1N(17 aniounted to ^l.2!t ))er head oP the
}H)|iulation. The interest on the rjeht of New Zea'and at the samt>
date was i^(> 02 : in Queensland the tie-nre was 84.97. and in Vic-
toria .^2.S,s. *
Thus, in 1S()7, the fonndations of oui' natinnal deht w ere laid,
and its e-i'owth may he said to have lieeii rapid. Throuudiout
its whole history, however, it will he foiuid that apai-t from
allowances to provinces the causi> of yearly additions to the
federal debt has invariably been expemiiture on the construction
of puV)lic works. Tlie war expenses of Canada have lieen iiisijrnifi-
cant ; lior outlay on I'aihvays, canals, aii'l public buildiiies h:i> h^ en
immense, and it is this characteristic that atiiinls a basis for a con-
venient division of the liistory of our debt since ]Hi''7. 'I'he bniMitiL,'
of tliree ereat works has been chieilv instrumental in the in-owth nf
debt since confederation, and their construction marks three ])eriods
in its history, 'i'he first of these periods extends from 1807 to the t>nd
of the fiscal year }>^7.'>, duriiie; which time the Inteirolonial railway
1 C'lnfedpra'i'iti Di^bates, p. 189.
* Hon. Mr. R'es'ir. Conf. deration iVbntes, p. 165.
3 Britir-h \orth Amprick Act, ^ect 1'2-118.
< BudeiPt Hptecfi, H<.n. John Rose, 28th April, 1868, p. 7.
14
wan built at a vast pxpciise. The second cxtpmls from 1^7•'| {<,
I8S5 inclusive, and has for its iiroinini'iifc fcaturr tlif iialiilitv
incurred in tho huilditi;; of the ('ana'lian Pacitic railway. It was
at the end of this period that Canada's capital expenditure reached
its highest point. The third and la.st period, IHS-l-lHU.", is
marked by the outlay of large sums on the completion of our canal
system, and at the same time shows a steady decreast; in the ainiiial
growth of the debt.
First i>er'wd, I H67- J S76.— The eight years ending ;jOth June,
1875, might appropriately be called the " fat years " of our financial
history, for during that time the biidget, perhaps as a result of
"good times" induced by confederation, showed an annually
recurring surplus. These surpluses in Consolidated Revenue
account varied frouj S:J01,835 in 1HG8 to 83,712,47!) in 1871, and
helped materially to prevent a too rapid increase in debt during
the period.* It is worthy of note that the days of the fifteen per
cent, tariff" (18G7-1874) correspond witii this period of prosperity
in our national finance.s.
InU'.rcolonial railtva;/. — As has been noted above, the building
of this railway was the salient feature in the first period of the
history of federal debt. The construction of this work was an
express stipulation of the Act of union," made in order to induce
the maritime provinces tn enter confederation. In pursuance of
the terms of the Act, a commission wius appointed by ordei-in-
council, dated lltliof December, l8()8,to construct and undertake the
management of the railway, and by July 1st, 1876, the whole load
was opened to traffic. During these years the ca])ital expenditure
on the construction of the railway thus saddled on the country
reached a total of i?2i,48S,8+5, the largest sum for any one year
(So.l.'il ,141) being spent in 1872. =•
Additional <illoiU(ince» to 'provinces. — Next in importanci! in its
effect on the public delit was the large amount of provincial delt
assumed by the dominion during this period. The first of the.se
additional allowances was made in 18()f», when, in con.seijuence
of the protests of Nova Scotia against the finaiicial arrangement
made for that pi'ovince in the Act of union, an Act was passed
increasing her debt allowance from §8,000,000 to SD,18(),750.'' In
• PubMc Arconnts, Canada, 1895, p. Ixxi.
5 Brit'Bh North America Act, 1867.
i Repiiit, Departmeut of Railways and Canali, 1896, Appendix I., p. 20.
« 32-H3 Vict. chap. 2.
13
from l,^7.", to
the lialiility
way. It Mas
iturt' reached
S-So-lSIl.-, is
I of our canal
in t)ip animal
'fi ;JOth Juno,
our financial
s a result of
an annually
(;d Revenue
in 1871, and
debt durinjj
)e fifteen per
i prosperity
the huildiii;^'
eriod of the
ork was an
I" to induce
ursuaiicc of
»y ord<'r-in-
idertake the
whole Kmd
expenditure
ilie country
ly one year
tanoi; in its
'incial delt
st of these
onse({uenc<3
•rancrenient
rvas passed
n,750.* In
I
till' t'ollMwiu"- year the piovinct? of Manitoba was carved out
t.f the Niirlh-West territory atul .'iduntted to confederation, and for
that pr<»viiicc a debt of S!47'2,0!H) was assumed.' In 1S72 an
additional liurden of provincial debt was a.ssumeil when Hritisli
Cohnnbia was adndtted to the union. The terms- wei-c. that
r.ritish Columbia, "not havinij incurred del>ts ecpial to those of the
other provinces then composinff the union." sliould be entitled to
receive interest at the rate of five jicr rrvtfim /'t'r annum on the
did'erence between the actual amount of her indebtedness /•i r c<ipH<i
and that of the jvr citfnin debt of Nova Scotia and New Piruns-
wick (S27.77), the ])oj)ulation of British Cohnnbia beiiiL' taken at
(iO,(!00. Hy vii'tiie of this arranpMntut the Dominion a.ssumed
8 1, 'iOu, 200 of debt on behalf of the western province. The climnx
was reached in 1s7'{, when, in conse(|uence()f a<l(iitional del>t a.ssumed
bv Canada on behalf of the provinces, the federal ex])enditure
charj^eable to capital attained the hi^diest point in our history,
with the exception of that of the \'ear \'^M. .\fritation had
been "oin^' on for some years in Ontario and (Quebec against
th(; payment of interest on the ainoun! )>y which the actual
debt of the old province of Canada exceeded the allowed debt
under the Act of union. In lS7o, the matter having been pressed
at Ottawa, an Act^ was passed, the terms of which werpa.s follows:
" In the accounts between the several provinces of ( 'anada and the
Dominion, the amounts payable to, and chargeable against, the said
provinces, in so far as they depend on the amount of debt with
which each entered the union, shall be calculated and allow ed as if
the sum fixed by tho 112th section of the British North America
Act, l.Sb7, were increased from i<t;2,500.000 to the sura of .*7.S,00(),-
()^8..S4; and as if the amounts fixed as aforesaid, as respects the
provinces of New Brunswick and Nova Scotia, by the British North
America Act, 18G7, and as respc^cts the provinces of Manitoba and
British Cohunbia by the Acts by which they were admitted to the
union, were increased in the same proportions." Under this Act,
Sl-'^,No!).079 of debt was a.ssiimed by the Dominion in ]S7:i In
the next year 84, 701,050 more was assumed on the admission of the
province of Prince Edward Island, with an allowed debt of S50 per
head of population.
1 MunitDbn Act, 1870.
1 Or<)er-in-cou(icil, May 16th, 1871. Statutes of Canadi. l«7l', i-. Ml.
3 30 Vict. chai). 30.
♦ Order-in-co»mcil, WindBor, 26th Junf, 1873.
I
It is Hoiiu'wluit (litficnU to rfcmicilc those luhiitinnjil allowanct's
witli tlic |in>visi()iiH of section 1 \H of the British North America Act,
and they i;ave rise to iiiucli discussion in the Dominion parliament,
especially (hirinj; the session of ]S()0, on occasion of the allowance
to Nova Scotia. In s])ite of criticism and ohjection, however, tlie
Acts makin;; the allowances were passed, anil, as a result, a total of
.^21,HH"),17.'5 was a(hle<l to the federal del.t.
(Hhrr items of ex/>en<1itiir('. — The increase in the deht for the
fiscal year l.s(i9-7" was S2,;i5(),42l{.' The chief cause of this increase
wjiH the expenditure of Sl,S21,S.S7 on the ac(|uisition of th«> North-
west territory fi-om the Umlson's Hay company.^ Durinj^ tlie
next ten yeai's more tliaii a ndllion dollars was spent in its rlcvelop-
n»ent. hut expendit)ire under this head then ceased until 18S5, the
year of the rebellion.
Durin;^- the Hrst jxa'iod the cost of canal construction was small
In 1m70 and iSTl nothinj^ at all wsis sjient, while the lar^^cst ex-
penditure for anyone year otdv came to 81,71 4,.s;U).^ Out (jf a
total of ahout !?3,7')0,()00 expended (luring thesi; ei^iht years on the
huildinjf of canals, more than one-half, or !?l,!'^i•'),084, was ah.^^orbed
by the Welland canal, while the cost of the (Carillon and (Irenville
canal was SS8.S,")7<S.''
Iauivh. — In 18(10 the tinance minister' floateil an ' Intercolonial
Railway Loan" on the Ijondon market, amountini,' to .£2,000,0(10, of
which £1,')00.000 was jjuaranteed l)y the imj)erial ijovernment. It
seems that the dispositi"n of the proceeds was not wholly in accord-
ance with the oriijinid purpcse, fnr in the sessioti of lh(i9 the
finance minister was criticiseil, and asked to state what had become
of the money raise(l. In reply he pive the following' .statement ; — '^
Invested in Tntercoloriial Fliiilwny sinking fund $ 'JT'KHOO
Piiid oli" inn)eriivl loiiii H81, !!.*{.'•{
Pjiid iitr iidvance.s Haring and (l!yn !ts;i,fi«i2
Paid otr liiuik of Montreal 2,5011,0(10
Balaneu to Ontario governuu'nt 5(10. ( 00
Redeemed , % dehentin-OH H7;i,n(MI
Total redemption 5.808.5!»r)
Invested temjiorariiy in IJank of Montreal 1,500,(1(K)
Still in a-^ents' liands 2,074,408
810,28.3,00.3
1 Public Accounts, Canada, 1S95, p. Ixxi.
2 Ibid. p. Ixix.
3 Ibid, p. Ixix.
< Keport, Department of Railways and Cimalg, 1895, Appendix T, pp. 7, 8.
^ Hon. John Huge.
•> Budget epeach, Hon. John Rose, 1869, p. 14.
tiormi allowances
Tth America Act,
i'lion jiarliuniorit,
of the allowance
in, however, tlip
roHult. a total of
'k' <leht for the
' of this inerease
n of the North-
^ J)iirin^r t},p
' in its (hfvelop-
tintil ]HH5, the
'tion was .small,
the lar;,'e.st ex-
0.' Out of a
ifc yeni.s on the
. wa.s al)sorbe<l
and (irenville
" 'nteroolonial
i^-^.OOO.OOO, of
^■'■rnmeiit. It
>lly ill accord -
of lhi)9 the
it had become
atement ;— "^
$ 270. .500
fi8i.:i;tt
2,50(1.0(10
6()0,((I0
H7.'5.0OO
5.808.595
1,500,000
2,074,408
10,28.'?,00.'5
In 1H72 it was eiiiictrd, ' that any loans autlinri/.i' I Ity p.irlia-
ment, nnlesM the ninnner was specially tixetl liy th.> Act, miLrht he
raised hy the is.s\ic of >ix pir eint. dflMiitiin.s, hy the issiir of
Dominion sloeU hearini,' not more than six p<T eent. interest, hy the
yrantini,' 'if t< rminal)Ie annuitii-s, Iwised on a i-ate not exeee(lin;,' six
pur cent., or hy the is-ur ami >ali- of fxelietjUer honds or hills of
not le.ss than -S+OO.OO, at thf sanii- ivite of interest. A sinking fnnd
mi^^ht ill' ]ij'o\ idrd lor loans raised hy cithi-r of the lii'st two methods
Fnrthi-r, it was pi-ovided that thf n-overn<>r-<ieneral-in-cotnieil
mit,'ht ehaiij^fe tiie nature of any portion of the deht, w ith the consent
of the holders of the seeui-ities ati'eetrd, [irovideil that the puhlic
burden was not thendiy increased, hut the eajiital iui;iht lie in-
creaseil propertionati'ly ,liy t he -idistitution of live per ei mi I. 1 >oniinion
stock for other seetnit ics. The j^o\frnor-^eneral-in-(oiuieil was
authori/.id to raise temjiorary loans for jierinds not exeeedin;,^ six
months, hearing not mole than .seven jier cent, interest, to meet
deficiencies in th" Consolidated Revenue finid. Under this Act the
funded debt of Canada was re^ulateil from the year JST"-'.
in the next year ('ana<la nejjotiated a ^niaranteed loan of
£1,.SOO,()()0, of which i'l,. '00,0(10 was f(.r the Intercolonial railw.ay,
and the balance for the ac(|uisition of lluperts Land.-'
In IsT-i a hilieral government came into power for the lirst
time since confederation; but as debt> and obli;,mtions do not die
with 1,'overnment.s, one of the tir>t duties of the new iinanee minister
was to borrow f 4,00(1,000, of wliieh .^lO.OOO 000 was used to pay off
debt mattu-ini,'' The lare;e amiamt of this loan, and the expe(liency
of Canada l)oi rowiiie' on her own unaided credit, as was done in this
case, Were two points which cjave rise to criticism durini,^ the session
of 1S75. ileferrinj; to the former, the finance miidster declared that
the amount of debt maturiu;;, toii'ethor with incri'asine; expenditure
on capital, made it desirable to borrow largely, es])ecially as Canada
had appeared in Eni^land as a borrowi-r in Is7."^ ; i"<ir if >lie were
compelled to come ae-.-iia in 1S7-"), for the third time in three
years, it wo'dd be ]irejudicial to the interests of the e(anitry.
This objection to freipient loans was iiri^fed by the nnnister as a
Btron<,f ar<,'ument aj:ainst the attempt to build a Canadian hicific
railway, as projected by their predecessors in otlice. For, should
tht> ^(overnment decide to proceed with this },ni,'antic and in the
7,8.
1 .S.iitiitf.^ of Caniida, 1S72, c'>apter t5,
2 Public Aucountf, Canada, 1895, p. Ixv.
3 I-.udRet Speech, IIini. R. J. Cirtwrifrlit, 1S75, p. 10.
T-
l.s
eyt'H of till' tinancc iiiiniHttT iiiipnicticaMt' uiidtTtiilviiiy;, and at the
Haiiic tiim- coiitimif tlif cxin'inlitiin' mi tlic cunstnictiuii ol' other
jmlilic \V(irks, h<> .^tiinatcl that no Ir.ss than g!2()(),()00,()()() wouhl he
riM|uirc(l. In othii' wonls Canada would !)•' conipt'lit'il to ;;o to the
London niai'kt't nsa lionowi'f of !j:{(),()()tl,0()() in cacli of the scvt'ii
yt'ars, within wliich tlic railway was to he htiiit. " TIhtc may
he sonn' honourahlf nrnticnifn in tin' House, wlut think wo shall he
ahle to do this," fxclaiiiicd tlu' tinancc niinistci' "Imt if ho, 1 envy
thcni their i'aith in the future of the Doniiiiion. '
PdMfiiU'l t'lilinr. ISiT,.— In 1SG7 the net del.t of Canada had
been !?7o.7')7,l.'U, ami at the end of the fiscal year 1S74-7.') it stood
at Si H),()0S,:i7H.= This was an increase for the neriod of !?iO,-
251,244, or, to put it in another way, an average annual ;,'rowth of
S^.O;} 1,405. The total amount, however, spent on eonstruction
of pnlilic works and allowed to provinces was S">2,!)N7,!i'>n,^ or
over 810,000,0(10 more than the increase in net debt. Although
this was not unsatisfactory, the outlook for the future was not
reassurini,'. The country had undertaken work.s which would
necessitate a very great increase in the debt. The sum estimated as
necessary to complete the Intercolonial railway was Si 0,000,000 ;
S30,000,000 niori' was wanted for the Canadian Pacific railway ;
while the canal .system, planned by the government, would require
at least 820,000,000. Against this there was an imperial guarantee
for X2, 500,01)0, given in lieu of Fenian claims, another for £1 ,500,-
000 for ccmstruction of the Intercolonial railway, and another for
£:{00,OliO for the purchase of the North-west. In addition, the im-
perial government had, in 1(S7.S, assente<.l to the transfer of a
" Fortitications Guarantee," amounting to £1,100,000, to the con-
.struction account of canals ami the Canadian Pacific railway.
These sums made a total guarantee for£5,400,000,or.some82(),0()0,000,
which Canada could obtain at four per cent. On that debt there
would be an annual interest charge of 81,040,000, and on the
remaining 8'U,0()0,000 at five per cent., an interest charge of $1,700,-
000. For a sinking fund of one per cent., 8t)00,000 would be required
yearly, and for commission on interest, 827,000. Thus a total
annual debt charge of 8;i3()7,000 was to be added to the country's
expenditure, within the next few years. Such was the outlook in
1875, when Canada entered upon the second period in the history
of her debt.
1 Badfitet speech, Hon. R. J. Cartwrijfht, 1874, p. 8.
2 Public Accounts, Canada, 1895, p. xxx.
•'' Ibid, p. Ixix.
exl
n'l
w
ihll
n i|
re
aiil
th|
19
l<iiin', jukI at the
uch'uii of other
)0,()00 vvonl.l 1)0
li'il to ir<) to the
ell of the Srvi'Il
" There iiiav
ink we shall he
it if so, I envy
'I' raiia<hi hafl
'S74-7.') it stood
•eriod of §40,-
ual (growth of
I coiistrnption
.■;L',!»h7,;{:)(),' or
ht. Although
ture was Tiot
wliich would
II t'stiniated an
.?10,')()0,000;
cific railway ;
would require
■ial guarantee
rfor £],.500,-
another for
tiou, the im-
■aiisfer of a
to the con-
He railway.
?2(),0()(),000,
vt doljt there
and on the
,^eofSl,700,-
1 lie required
'hus a total
lie country's
i outlook in
the history
I
.Sf'(')/i'/ i> riixl, /s'("'-/V,v.(. — The tiiiineial history of the ili-mde,
lS7.)-lSS.'i, falls into two parts. l'"i\e yeais, |S7')-1HS(). form n
period marked ly loans and deficits, svhile tin- inxt li\e yeai-s
exhiliit a i-euewal of ])i-os]iei'ity, which lierielieially atleeted the
national liud;;et. The linaiieial ditlieiilt ii's of the yeais 1S7."-!SH0
were the result of a de|)r<'^sion world -wiile in its extent, whieli ilimin-
islied tivvde.aiid thus sap) hi i lln' source of rtneuue. At the same time
a change was made in tin' ( 'aiiadian tarill" Tin' i:«i\ n'miunt tliiit was
returned to powii- in ISTf ihcliireil for a " tariti for resenue only."
and a '^eiiei'il rate of 17'. per cent, was imposed. IVom which more
than half till' reveiuie was expected to Ix* di'fived. A great falling
otr was the result of this ari^an/emeiit. In si\ months, ending
l)ecemher .SIst, lH7ij, tliefe Was a decre ise in iuiportat ions of .'?|().-
7oO,(lOO, an<l consetpieiitly a decrease of :5I,S(;(),()()() in the r"\einie
(ihtaiiied liy the 17.1 ]»er cent, tariff. In IHTS, the normal customs
revenue had diminislieil i»y S-t.OOO.OOO, and the imports iiy one-third.
a reduction /irr cupilc of im])ortations fi-om .•?:!.") •J,') to ?2">.r)0.' The
ettect of these circumstances is seen in the succession of deficits,
occurrinjf in each of the years I87(i to IMSO inclusive, not one
of which was less than one nnllion dollars, while in lS7<i and
in 1870 almost twice that a'liount was reached. Sucha conilitionof
things not only precluded any assistance from Consolidated Revenue
p-iuid towards a reduction of the debt, but also went far towards
making u]) the gross debt of §40,000,000, which was ])laced on the
•■ountry diu'ing these years.
In lH7iS, the Natiinial Policy, which had protection to Canadian
industry as its chief feature, was brought into force. A little later,
a revival of traile succeeded the depression of the past few years,
and the " good times," thus roughly coincident with a changed tariff,
.soon placed our national finances in a satisfactory condition. In
1882, for example, the estimates providecl for a surplus of .S4,0t)0,-
000, but the real surplus excee^ied that amount liy §2,000,0(10;
and in 18.S.S. it reacheil the extraordinary figure of S7,0()4,-
492.- The financial historv of the rears l'^81 to 1SS5 is in stroni/
contrast to that of the tii-st five years of the decade, ami tl\eir eHect
upon the public debt was C(.)rrespondingly ditt'eri'iit.
'lite Canadian Pacific railway. — The second sta'^e in the history
of the national debt is marked by the building of the Canadian
Pacific railway, which wa.H begun in earnest in 1S75. and practically
1 BiulRet speech, Hon. R. J. Cartwri^ht, 1878.
2 Public Account.", Canada, 1H95, p. Ixxi.
20
c«)iiii)l('l<'il ill IHS'), Duriii;^ fc'icHc tt'ii years such vast sums wcr"
s])('tit amuially on the cii'iTprisc as to iiiaUf it \>y far tin- most im
|)ortatit I'act.or ill tlic lniil(lin;jf u|i (if our "ii'lpt. In |N7(i, llir fxpfii-
ditiiri' iridir tliis IicmiI amounti'<| to ?*.'{, ;U(i,.")7(l ; in iHSl, it was
nearly S'),()U(),()()0 ;' aii'l yi't, iil'tiT a total cost to that dutt' of ovrr
f.SO.OOl 1,000, till' roail was not half coiiii.l.'tnl. It was tli.-ivfor..
considcrnl advisalilc that the worl\ should he carried on liy privati'
cnti'rprisf, su|(|i|ciiii'iitid I'V ;L;<i\t'rniiii'iit aid. Ac('ordiiii;iy tin'
railway was placed in the hands of a C(aii|iaiiy, and a coiitraet
made, liy the terms of which tin- line was to l»e coiiipleti'd in IMH.
In aid of the work, the Doniinioii was to ;,nve ?L'."),()(i(),00() in money
and i'r),000,iiO() acres of land, to;,r,.thi'r with ahout (i4() miles of
completed road, which the jfoveinnient thin had under contract,
and of wliicli the cost, includinj; surveying,', was ahout ^.'I.'},()(i0,(l00.^
The lialiility thus incurred soon he'^iin to he felt. In IHM.i,
out of a total capital exju'iidit ure of .'<! +,147.'{<JO, the la rp) sum of
S10,03.'{,(S0n went to the new Canadian Taciiic liailway (.'oinpany-
In the following year, the amount due to the conij)aiiy was over
811 ,000,000, and in order to moot its lialiility, the j^oNfrnnient round
it neccHHury to float a loan of .t;"),()()0,()0(). In tiiis prosaic tranwac-
tioii an unusual incident occurred, which is worthy of note. It
sceiiiH that there was, in London, an nr^jani/atioii of men coinieeted
with the Northern I'acitic railway, which did fill in its power to
prevent the loan from heiiiL: successful. The \ i ry iiinniiiiff when
the tenders for the loan were heinn- deposited, a most \ ioli lit article
appeared in one of the liOiidoii |)apers a;;aiiist the w-ov.i-nmeiit of
Canada and the {^anadian Pacific railway; and from ten o'clock in
the morniii;j until three in the afternoon, while the tend 'rswere heinjf
deposited, a man stood at the door of Harinjif's |-5ank with a placard
advertisin;;,the newspaper and callini^ the nttention of everyhody
that pa.sseil to the article. In spiti' of this, the rate oiitained was
the highest ever reached up to that time for a Canadian loan, and
the amount realized was ahout !?22,r)00,000, which, to^'cther with
temporary loans of SI "2,500,000, was disposed of in IS84as follows:^
C. I*. R. under Onilerddiiks contriict !?.S..'57!>,87.{
On acpoimt of 0. 1'. K. .sulisidy H,.'{H(;.41H
C. P. R. loan account 1!>.45!»,(»(10
Redeinjition of debt ;i,'.tiH,05«5
Total 83.n,21(!,;H7
1 Public Accriunta, Canada, 1895, p. Ixix.
'Report, Department of Railways and Canal?, 189,"), p. 495.
3 Budget Bpeech, Sir S. L. Tilley, 1885, p. 39.
Ii vast sums svcp.'
'Ul' t III' IlKist ilii
l^7(i, tli«; ex pen -
: ill IHSl, it \v,is
tliiit (lute (if ovfi'
It WMS tllcl'ct'ni-,.
ii'fl on liy |)i-i\at.'
Accoi-iJinnlv tlir
iiiid a contrjici
"I'lcti'cl in IMM.
•'0,000 in nionry,
m (UO inilrs i,(
iimicr t'oiitract.
It :i!:i:j,()i)0,()Oo.-
i"<'!t. Jn IHHii.
iIk' lai-Kf) sum of
iiway Company
iipany was over
Nt'ninicnt i'ound
prosaic transac-
Iiy of note. Jt
men connected
II its power to
• iiiornin^r wlicn
t \ iol( lit article
;;'ovii'nmcnt of
II ten o'clock in
• 1 'I's Were t)ein^'
with a placard
of evei-yliody
olitainei] was
i<lian loan, and
toiretlier witii
S4as follows :^
,."i.S(;,41K
45l»,(>!j0
!li»l,05«
21(i,y47
In tlie foilowin;,' yi'i'i ■ '■'^'^•V tlie company <'ame to (lie ^^ovcrn-
menl fir permission to issue lionds to tlie extent of .S.'JJj.OnO.nOO.
askiu" till- Diihiinioii to take S'iO.Oi'O.OOO woi'tli as security for the
c'lmpanv's existing,' indelilfdness, to put .^l(),0(t(),(»()(> upon laniN
in the North-West territory. an<l to advance to them a further
loan of !?r),()()i).(»()0.' At this time, the position of the government
loan account with the company was as follows:-
J'.iyiiuiils liy j,'iiVi'Viiiiniit dmiiit,' ISS.'I M4 . .
•• '• iHsj ,sri . ,
•• ♦♦ 18<i-.S(l . .
siti,'.i,"i;{. ii;-;
it.T'il. i:.H
'.utri.Biiu
sl'1,imU.70(»
Til liilV :i 'liviilcllils nil ii!(ir>.IWM 1,(101 1 Ntcik til
.\iiLMi> , M iS'.i;! T.MHO.OIU
'I'l.tJll Ji.lVlllllllS,
;?i".i.ii;ii.7i'.'
in response to thr ri'ijuest, an aL,fre.'ment ^^as entered into
on March .'{'Hh, IMXij, liy which the company undertook to
repav the ;^ii\ ernnieiit the amount st.ited to ha\e Ihth actually
advanced to thi'in mit of the ."jiO.O'iO.OO ' secured liy tii'st morte;aj,fe
lionds, vi/., ?^l!i,ir)(\7!)0, and the '_'(ivrrniiieiit for its ,.art, ajjreod
to accept a portion of the cnmpany's lands for the liahmce of the
company's indelitednes-;, (?5!t,.ScS(),!Ul.', with interest), the value
of the land hcine; conijiuti'd at $l.nO jieraeie.^ It was the last ]>art
(if the agreement which ati'eeti'd the pulijic deht in iS'sCi. Tlie
lialance of indehtedness to he covereil hy the acceptance of lands
was *!),SM),!)l-2, which with interest to May 1st, iHstJ, madtt a total
ui ^\U,l><\},')'2\.''''.i. 'riiislare;e amount apjieai's in the piihlic accotnits
of the Dominion as a Consolidateil Fund transfer for that year, and
as an item whicli went towards increasiiiL,' the deht.^ I'.y the end
of the year, the accounts hetweeii the conipaiiy and the hominion
were practically closed.' (In .July 1st, INSO, the company had
repaid the i/overnmeiit the halance due on Loan account of S!l,l(;;}-
'.]^y.\. and on thcMstof hecemher, inthcHatne year the tinal payment
on account of the S2."),()()0,00() suhsidv was made hv the eovern-
nient.''
1 Kufieet RiiHU'h, Hon. A. W. McLenn, ISSG, p. 22.
^ Cannda Sessional PaperB, 18S8, p. 22.
3 Stalute.'i of Cana'la, 49 Vict., chap. 9.
* Public .\i-.^ount8, Canada, 1895, p. l.xx.
J I'y authi ritj- nf ordtT-incounci), Nuv. 2iul, 188(!.
•' Canada Sfssioniil Papers, 18.18, Xn 8.
22
In this narrativo of transactions with the Canadian Pacific
railway wt- have (jone one yoarVjoyond the period uniicr discussion,
in order to coinyih'te the financial history of the road. Limiting,'
our inquiry, however, to the ex])enditure on the construction of tliis
great work durini^ the years enihraceil in the second period of
Canada's debt, we find that it amounted to more than !?54,0()0,000.
The sums spent year hy year are as follows:'
1K7(J
1HT7
1H78
187!t
1880
$.S,:{4(i..0(i7 1881 §4.!M18,r>0;i
l,()!tl.l4!t 1882
L' 2L'8,;?7.'i 188;;
4,r)8!t,()7o
10,0:i;{,8()0
2,240,28ri ^ 1884 11,1!»2,722
4,044,522 I 1885
9,!KX),28|
From 1S8.) u[) to the present, the expenditure has been compara-
tively small, averaj^inj; scarcely moi'e than §500,000 a year, and
conseipiently this item has ceased to liave an influence on the increase
of the federal debt. *
Canal iwpenditure. — Next in importance to the Canadian Pacific
railway, as a factor in causing increase of debt during this decade was
the extensive constructioji of canal systems. The years 1877, 1878,
and 187!) witnessed an immense expenditure under this head,
greater than for all the other years together since confederation.
The most costly works were the Welland, Lachine, Carillon
and Grenville canals, which were almost wholly built between 1875
and 1885. The fir-t named, between Lakes Ontario and Erie, co.st
the large sum of .';?l;i,5n(),000 during this time, the greatest expendi-
ture being in 1877, when it amounted to ^2, 199,902. '^ Next in
point of cof5t was the Lachine canal, on which over §6,000,000 was
spent. During the samt> period the outlay on the Carillon and
Grenville siystem came to mon' than S:^, 760,000, and that on the
Cornwall canal to about S(!50,000, while large .sums were also
expended on the 8t. Peter's, Culbute and other canal-.^ The total
amount char::feable to capital spent on canal construction during the
period was §24,120,81 1', divided by ^-ears as follows :*
ls7(i S2,:{88.7;«
1877 4,i;U,:{74
1878 :{,84:i3;{8
187!1 ;{,0tl4,0it8
1880 .. 2,12:!,.S(i(;
1881 $2,077,028
1882 I,tl74,758
1883 1,7<>.'5.001
1884 l,r>77.2!)5
l88o 1,504,()21
1 Rpport, Department of RaiUayf* and Canal:-, 1895, Apj). I., p. 25.
2 Ibi.l, p 7.
3 Uiid, •). 7.
4 Public Accounts, Canada, 1895, p. !.\ix.
23
Caimdian Pacific
I niuicr discussion,
■ road. Limiting
nstructjon of this
second period of
tlian 854,000,000.
.. ?4,!U;8,50.'i
4, 589, 075
. . 10,0.i:{,800
1I,I!»2,722
n,!tfH),28I
i been conipara-
000 a 3'ear, and
-0 on the increase
Canadian Pacific
,' this decade was
•ears 1877, 1878,
^der this head,
confederation,
ichine. Carillon
It between 1875
o and Erie, cost
reatest expendi-
.902.2 xext in
SG,000,000 was
e Carillon and
nd that on the
imis were also
1-^^ 'I1ie total
tion during the
.4
.■82,077,028
.. I,tl74,7rj8
• • l,7<i;{,ooi
.. i,r)77,2n5
■ 1,504,621
?5.
ReiiilJ}iKtmrnf of pritrh)ci<il dehls. — Among tlie causes of the
increa.se of debt fluring this decade anotlier very important item
was tlie aiMount of provincial debt assumed by the t'cdcral govern-
ment in the readjustments of l8iS4 and the billowing year. For
some time previous to this <late there had Imth apj)eals to tlie
Dominion government, especially fi-om the province of <^)uebc'c, for
.some i-elief from the burden of indebtedness, in 187.S, it will be
remembered,' the ])ominion had assumed certain })rovincial deljts.
According to the terms of the Act undei' which this had been done,
the Dominion jjropo.seil to allow Ojitario and (iinebce the benefit of
the additional assumption of debt from 1.^7-5 onl\', and to charge
them with interest on the difierence between SG2, 500,000 and S73,-
0(M),08S, from 1867 to 1873. The govenunents of these ])rovinceH,
however, protested that interest should be allowed them from 1807,
on a basis of the deV)t of the province of Canada having then been
373,006,088, instead of 8G2,500,000.'^ On this ground Qu.'bec made
connnon cause with Ontario and the other provinces in an appeal
for increased subsidies. She had, however, special rea.son for her
claim. The government of Quebec asked relief because her very
heavy burden f)f tlebt had been incurred through sacrifices made
to open up the country by the building of railroads, especial
reference being made to the great provincial railway, the " Que-
bec, Montreal, Ottawa and Occidental." An address,'' setting
forth these claims, was sent to the House of Commons, and in
response an Act was passed to readjust the yearly subsidies
to all the provinces.^ It enacted that the Jimounts hy which
the yearly suljsidy to each province was increased by the
former Act of 1873'' should be calculated as if the Act had
directed that such increase should be reckoned from July 1st,
1867; and that the total amounts of the half-yearly ])ayments
due on account of such increase from .h\\y 1st, 1867, to .Inly 1st,
1873, with interest on each at five per cent, uj) to .Inly 1st,
1884, should be deemed capital owing to the provinces, and payalile
to them as ])art of theii- ycai'ly subsidies, on and after .Inly 1st,
18s4. The allowan<-es to Hi-itisli Columbia, Manitoba, and Prince
1 Ante, p. 15.
2 Letter <if Hon. J. Wiirtle, Treasurer, Quebec, L'nii April, 1K82. C^liu'lirc Hen
sioiial I'apera, l.Ss4, Xn. 88, p. 7'J.
3 Report of Coininittee of Executive Council, Feb. Uth, 1n><1. 'I'uebec Sessional
Papers, ld84, No. 88, p. 80.
< 47 Vict., chap. 4.
5 .SG Vict., chap. 30.
24
Edward Island wore to bo iiicreaseil by amounts 1 tearing tlio same
proportion to tlioir respective populations as the amounts to be
added under the Act as capital owing to Ontario, Quebec, Nova
Scotia and New Brunswick, bear to the combined population of the
four last-named provinces un<ler the census of l<*s81. \iy virtue of
this Act the additional debt allowances were as follows : — ^
Ontario aiiiU^Miuliuc jdintly §;"■), r!!t7,"in3
Nova Scot^i 7!';i:568
New Briiiiswiok (;04,."il9
Manitol.a 110,825
Britisli ( 'olmiil.ia H.*?, i07
Prince Eilwanl Island 182,975
Total ?7, 172,2!>7
In the following year a fui'tlier readjustment was mad i
regards Manitoba, whereby tlie Dominion assumed an additional
S'S,1 lo,;}34 of debt on behalf of that province. Tiiis made the total
assumption of jirovineial debt during the period exceed ?10,000,i^00.
Lodiis. — On a nsview f)f the eventful tinnneial history of the
Dominion during the yeai's ISTo-lSBo, it will be seen that the predic-
tion made by the tiiianee ministei' in l.s74, tluit Canada nmst appear
as a txirrower many times in the iunnediate future, proved only too
true. In the ten years following this prediction the Dominion
floated IK) fewoi- than ei<dit loans, which in the ao^gi-egato amounted
to £20,()00,()0().'-' Tlie principal n-ason for this is fi)und in the fact
that the gdverninciU had uiiilertaken to construct enormous public
works, in all parts of Canada, during the precise years in which a large
portion of her debt fell due. For example, in 187>'^ 85,7;?1 ,000, in
187'.' S7,()24;(I00, and in 18S0 S(),Of;(),000 of public debt inatured,^
and in the same years large expenditure was entaih^l liy the con-
struction of the Canadian Pacific laihvay and the canal system.
In 187(), the Canadian government floated a loan of X2,."<00,000
It was ottered at a fixed price of £i)l, and brought the highest
price yet obtained on Canada's own unaided credit. It was our
first loan at four per cent,, luid the price that it fetched wjisab.solutely
higher tlian the highest price o1)tamed for our five per cents., payable
in U)0o. The former was e(]uivalent to a five percent, loan at 108,
1 47 Vict., chap. 4.
2 Public AccnuntB, Canada, 1895, p. Ixiv.
3 Speech of the Hon. R, J. Curtwright at Napanee, Sept. Otli, 1875.
•>r.
learing tlie sajne
} amounts to be
id, Qufboc, Nova
copulation of tlio
1. By virtue of
ows : — 1
. . ?5,.'',!»7,5()3
004, 519
110,825
83,107
182,975
. ^7,172,297
t was luai) 1
I an additional
made tlie total
ed 810,000,000.
liistnry of the
that the predic-
la must appear
iroved only too
the Dominion
■ifate amounted
luid in the fact
lonnous public
II which alai'ge
85, 7;? 1,000, in
debt luiitured,-^
■d by the con-
mal system.
of i:2,.^i00,000.
t the hitrhest
It was our
rvas absolutely
lents., payable
:. loan at 108,
whereas the current sellinij price of the actual five per cents, was 105-
106J, after deiluction of accrued interest. The expenses and disccmnt
on th.is lonn amounted to ?2, 21 i,?!)!), which of course was an addi-
tional item in the debt of ISTG.'
By the end of ]cS7() the ffovtM'iiuu'nt of the Hon. Alexander Mac-
Kenzie had bori'owed to the extent of £0,0 0,000, which had
re;dized almost 842,000,000. This lar;^e stnii was <lispt)sed of as
follows :'-
f)n Iiitiii'C(ili)iii.il r;iil\vav
New Brunswick ;uiil Nnv.a Scotia railways .
Priiict! Kdwiird Island laihvay
C. P. H. .tnrvey
LacliiiU' canal
Canadian Pacilic railway censtfuction
Wclland can.il
OtJicr canals
Inipriivcnieuts on Sr. Lawrence Iliver
On hand
Ivecleni|itiiin of debt . .
Advances to provinces
!?4,]7;{ (»<»()
922.000
1,018,000
1.052,000
1,457.000
4.;;,5(;,ooo
4.290,000
l,2:iS,000
50 1,1 00
.*20.;; ."..ono
7.00it,()00
2.000,000
Ki.OO.OOO
,«44,;!O5,00O
Between November, 187\ and .Tamiary, l.S7il, there matm-ed
some $1.") 500,000 of Cana<la's indebtediu'ss, and the new o(iveriniient-,
which came into power in l>i7i^. ne^^^otiati'd the seeond lojin of this
period. It was for Xli.OOO.OOO, in two parts of X 1,500000 each.
At first little more thaii one-half was .subscribed, and it w;is neces-
sary to extend the time for receivinj^ tenders, hut eventually the
whole was taken up at a fairly o-ood price. Tin- next loan was in
1N70. In that year €40;i,00(l worth of six per cent ilebeiitures
fell due in Mno'liUid, am! others for fOOO.OOO were ji.iy.ibje on
July 1st., iSMO. There was also 84,000,0()() worth of securities
outstaiidino', .-uid the ^ovennuent had i^dveii notice that it would
either pay these or substitute fiv(> per cent, securities for tiH.'in. A
loan of £.'{,000,000 ;it four per cent, was therefore pl.iceil in London,
and a pi'ice (^f t!05 Is. lO^d. realized, which Wiis satisfactory consider-
ino' the fre(|Uency of ("aiiadian loans durino-the previous few years. ^
1 Pul)lic AccountH, 1895, p. Ixix.
2 I'.u'I^Ht Mppech, Hon. R. J. Cnrtwripht, 1877, p 2,^.
3 lUi'Igot Rpepch, Sir S. L. Tiliey, 1880, p. 8.
26
Two mom loans were floatnl in Eni,'lanil tlurinff this period
The first, in 1 884, was for £5.0()0,0()0, the socond, in 1885, for
£4,()()(),()()(), l)oth lifinif uscfl to nu'ct tlu; liabilit}- of tin- jfovcrnment
to tlio Canadian Pacific Rail\va\' C'onipany.
Ri'trospect, ISSo. — At the end of this second sta<re in its history
the public debt of Canada stood at §2(i4,703,607, and her net debt at
SllHj,4()7,H!*2. The increase in the former since confederation had l)een
$171,757,0.50, and in the latter Sl'20,77!>,()51.' If this increase had
been caused by war or disaster there wouM indeed ha\e been
reason for alarm, but no uneasiness was justified, for every dollar
of additional debt was represented by useful and lastinj,' public
works. To realize this fact it is only necessary to iflance at a list
of these works, and of the sums spent upon them from the year
of confederation to 1885. It is a formidable array of figures :"
Iiicrciisod grants to provinces .?27,52i>,95{)
D<juiinic)n laudH 2,4;5t),O.S()
Eastern Extension railwiiy l,28(i,.").51
Intercolonial riiihvay :3(),4ti((,;Wl
Canals 31.7!)8.'.»5(i
Pul)lic buildings, ( )ttawa l,f)32,(!22
Harbour at Port Artluu- 2.!t47,72.'{
North-West territories 2,!t20,(MM) y
Canadian Pacific railway 67.681,.%7
Prince Edward Island railway 207, ')20
Short Line railway 40,.*)87 <^
■Subsidies to various railways .... (111,245
Total .91<59,.%2,()47
From this statement it will be seen that since 1807, in building
railways, canals, custom-houses, post-offices, and other public
buildini^^s throughout the countiT, Canada liad paid 848,582,996
beyond tin- iitcrease in lu'r net debt. Or, to take the figures in
another way, if we exclude from the increase in debt the allow-
ances to jirovinces of S-7,.T29,!t5!), there is a balance of debt of
S9:^, 249. 092. Now for the Canadian Pacific railway, the Interco-
lonial riiilway, and canals alone, to 80th June, 1885, the cost had
been ."^l 29,840,704,^ or over li?.S( 1, 000,000 more than the whole
increase in the net debt, exclusive of provincial debt allowances
during the period.
1 Public Accounts, Canada, 183,'), p. xxx.
2 Ibiii, p. Ixix. Wud)?"ti Speech, Sir C. Tupper, \m, p. 18.
3 Public Accounts, Canada, 1895, p. Ixix.
#
iiriiifr this period
Jcond, in ]«85, for
of the ^'ovcrnment
tn<,rc' in itshistoi-y
iiul lior net ilcbt at
cdei-iition had been
tliis incrcaHe had
indeed liiive been
for every dollar
lid la,stini,r public
to iflanoe at a list
ID from the year
' of fi.ru res r
y
827, 529, 95!)
2.4;Jti,0;«i
1.28(i,r)51
3(),4(i(),;{81
3I.7fl8,!t5«
l,fi32,«22
2,!)47,72;i
2,!t2(),(KK)y
fi7,581,,%7
207, (i20
49.587/'
(111.245
Sl()9..%2,047
867, iu building
1 other public
mid 848,582,906
e the fi^riires in
debt the allow-
ance of debt of
»y, the Interco-
5, the cost had
tan the whole
lebt allowances
27
Fin.iii ijilly. the most not •woitliy year of thr drcadc was l.Srtl-,S2.
The surj)lu.s from consolidated revenue in that year was Sfi.HKi.OOO,
to which was addeil a receipt of $l,744,4.")fi fmrn sales of lands in
the north-west, making- a total sur[.lus of ovei- .^S, 001 ),()()(). This
last iveript was, in I.SM, i^nvma ni^w ])l;Lee in tlif piililie aceotnits.
L ihcrto it had been rfckoiic 1 by the various tiuaiiee ministers
as ]i;\rt of ri'Cfijits IVom ("oiisolidated Hevemie aee.auit; but in
that year it was concluded that, as the i,n)Vcrnment, in openin;^
U|i the Xoi'th-west, hail incurred large liabilities for .surveys,
polict', Indian trratii's, etc., whatever was got from sales of these
lands should lie placed to Kevetnie acccjunt, to meet the interest on
the debt incurred by this expendittu-e, and for the .sinking fund pro-
vide.l to p.ty otfthe indebte'lness. So it happens that in 1S82 we
tin<l recei})ts from this source going to swell the surplus for that
year.' The expenditure chai-geable to capital in 1882 canieto S7,40."i,-
637,-' which, together with Consolidated Kinid tran-fers. amounting
to 8201.884. caiLsed a gross increase in the debt of S7,6i)7,,')21.
When there was placed against this, however, the surplus
from Consolidated Revenue ami the receipts from Dominion
lands, a handsome surplus was left, and when the sinking fund was
taken into account, the ni't delit of the Dominion was less by
Si, 734,129 than in the year previous. Tlii.s is the only year since
187! which has .seen a reduction in the net debt, and it 'uust be
noted that not only was nearly S7,")0(>,000 paid on capital account,
but .luring the year liabilities maturing to the amount of 84,000,000
were re.leemed without t'le necessity of borrowing one rlollar.
Truly 1882 can be called the "annus mirabilis"in tho history of
the Dominion debt.
The successive surpluses which occurred between 1880 and 1885
wer.' api'i'opriatedto r.'deem the debt, and (\ana.la's p.)sition conse-
• pieutly improved in the money market. In th.' D.imini.ai itself there
wer.' in.|uiries in every direction for the setnn-ities of the country,
while in Englaml our standing was each year becoming better. Jn
1879 Canadian securities were four or tive per cent, behind tho.se of
Xevv .'-iouth Wales, which stood at the very top of the ILst of
col.)nial funds, but by 188.5 the securiti.'s of the Dominiim sur-
passe.l thos(> of all the other colonies, an.l stood f.mr per cent..
above thos,- of \e\v South Wales, the former favourit.'.
> Bu(lK«t Spee. h, Sir L. Tilley, 18S3, p. 4.
2 Ibid.
i
C"
28
Tli'iril /hriixl, lSSt'>-l''^9-'>. — I)iiriii<;' tlu,' past ten N't'urs tht> public
debt binl niailc i-apid strides. \\\ this tbii'd am! Inst )»fi-i(i(l, how-
ever, the rciiiaj'kalilc reaturf is tbe <;rcat (Irclini! in tlie amount
spent yearly (111 ciipital aeconnt, and the eonst'(jurnl cuiiiparatively
slow rate dl" increase in Canada's indelptediiess.
Our expenditun^ reached liieh-water mark in l.SS')-80, when the
net increasi^ in the del it was no less than S^ii.T;") 1 ,4-1 4.* From that
<late it has been kept within very mixlest limits. In lSs7,and aj^ain
in ISSS, it did not reach !?4,o00,()()0, and the addition to the <lebt uas
cor''e.spondinif|y small. Hut the wish was now t'or /■'» iiirn-n^i' nf
all. In the budi^et speech of iSSi), the liiumce minister asked the
pertinent ([iiestion, " Is our debt to e'o on inereasin.; forever !" In
answer he outlined the pi-oposed expenditure for the next few years,
and showed how, if the fjovernmeiit were cautious, and no extraordi-
nary events caii.sed unforeseen expi'iiditure, Canada should be able to
meet her capital enwai^emtMits for the three years endiir^ .June .'jOth,
18!)2, pay what was re(iuisite of the running expenses of the country,
and yet a<ld not one dollar to the iiet debt.'- When it is
remembered that by this time the Dominion had practically ceased
expenditure on the Canadian Pacific and Intei'colonial railways,
it does not ajipear ditlicult for the e-(jvernment to live up to the
proifrannae outliiu'd in the budget speech of ISSII. Ditlicult
or not, however, it has been ilone. Fi'om that date to the present
time the capital expenditure has lieen ri^'idly ke))t down to
an averayv of less than S4,()()0,(H)() yearly : indeed, in !«!)(), tlie desire
of the e-overnnient to nu-et all expenditure out of revenue account
was practically realized, for in that year the net increase in the debt
was but ::?:^, 170, and this in spite of the fact that the Dominion
assumed in'that year iv delit of S2,7'2"),o04. being the amount spent
to date by the Montreal harboiii- commissiono-s on the St. Law-
rence improvements. The 'tl'ect of tliis n^gulation of expenditure
was to reduce the average annual increase in the net debt for this
period to less than .^:i,()()0,0()0, whereas for the preceding period
it had 1 n over 87,000,000.
Cdiiiilx. — 'i'he most important factor in the increase of debt
during this decade was the expenditure on the completion of the
canal system. The vast works at Sault Ste. Marie, and the Soul-
anges, Cornwall, Williamsliurg, and Lachine canals were the most
costly. The canal at Sault Ste. Marie and the Soulanges canal were
1 Public accounts, Canada, lSlt5, \i. l.xxi.
2 Budget Speech, H in. (i. E. Foster, 1881>, ]'. 12.
m
29
I ycHi'M tho public
Inst j)t'i-i(i(i, how-
i<! in tlie aiuount
•lit coiiipai-ativoly
1 883-80. wlu'Ti th.>
H4.' Fro-n tliat
II I8->7, ami a^ain
Ml t(j llic (i(.I)t was
>i' ho ivcrciisi' ni
iiiisti'i- asked tho
il; forever '. " In
e next few yearH,
nul no extraordi-
slioiild be able to
iidiii'.,' .June rjOtli,
?.s of tlie country,
" Wlieu it i.s
ractica!!}'' ceased
)ionial railways,
live M]) to the
I88i). Ditlicult
! to the present
kept down to
1 18!»'), the desire
revenue account
•ease in the debt
t the J)()niinion
le ainount spent
III the St. Law-
of expeufliture
et debt for this
•I'Ci'dino- p(>riod
icrease of debt
^pletion of the
and the Soul-
uere the ino.st
i.H'cs canal were
both beo'un in tliis peiiod, and the amounts spent upini tlieni were
SH,:ir),^,()2.') and ^■•l ,7.S!I,!I(>!) respectively.' Only once did tlie cost
of canal construction i'all below ."?! ,00(>,0()() ]ier annum (vi/., in
iSSil, when it was .^972, m>). and tin' total amount for the whole
period spent under this head was nearly ;5 10.." 00,000.
li<iUii:<>,'i suhsiiltc^. — 'riif it]i\y other item which bellied materi-
allv to increase the debt durui^- llir period was the expenditure on
rail".\a\' subsidies. !'[) m |N.s2.the ti'ux'ei-nmmt bad ;;i\fn aid oidy
to those lines which connected pro\inces. In bSNo, however, when
it was si'i 11 that jU'ovincial yovernineiits could no limuci- aid rail-
w.iv's. without u'oiniT deepiv into debt, the tinance nnuister- intro-
diiceil a bill in the House of ( "onimons, providin;^ for the ^raiuing
of subsidies to elc\en railways. This policy came fairly into force
by ISn,"), and since that dat'- a tutai of nearly S14.()00,(i00 has been
expended in this direction. The disision by years is as follows:''
188(i .'S'..'.7nl,LM'.» IS'.U !sl,-'<ir>.7nr)
ij*H7 i.i(Hi.r);;;! \hu2 i,24s.2i,")
188H J, 0-7.(141 I 18!);5 «I1,.S',I4
188!l S)t;.7-'l ' 1804 l,'J2'.>,8sr.
I8!)0 i.(i78,iiir) ' i8!tr) i,;iiu,r>4!i
/<V.9'Ai.sVy.7.— Since l,s!)0. the annual expenditure on the Inter-
colmiial railway has av('ia;^'ed oidy ??4.")(),ii()(), while that on public
lanldiim-s at Ottawa, on tin' North-\\'est territory, (ai the Prince
Ed^vard Island railway, and nn the Canadian Pacific railway- has
wholly ijisappeared from the ca])ital account of the hominion,
Tlh' increase in the net debt ill these six years has liccn ."r^ i ."),;"4-l-,hS5,
an avera^'e fnr each .-ear of !^2,5!)0,'S| 4. Ilut in llie same time
thei-c has been sjtent on ca])ital account bir canals and the
[ntercolonial railway ?l(i,-2:)li.l()0,'* which more than oti'sets the
increase in ilelit. 'i'ln' r^al standard, however, by wliich to Jud(,'e
tic increase, is the amount 111' interest reijuired each year to carry
it. In 18!l0, the net imprest was .'^1.70 per head of jiopuhitinn, and
in 1n9o it was .*rI.SO, ;ni increa'-e df only om' cent in its ineiderice
I'er I'll pita.
Iaxivs. — l)urinL;- the ten years 18S.")-1 N9."i. four Canadian loans
Wen tloati'd in London, the total of which came to over .€l.">,()n(),ri(>0.
Yet so satisfactory was the manaLiemeiit of otn' delit and the state of
our tinances, that the position and credit of the Dominion were
i Report, llepnrtiUfTit of llHilways and CrtnalH, l,S".l"i, Aiip. I., p I'J.
2 Sir CliHrleH Tiii'per.
^ Public accounts, Caiiaila, W,\'<, p. Ixx.
< Uud»iet speech, Hi n. U. K. Foster, 180(5, \\ 9.
i
w
no
hif^hor tluiii tliosi> of any other I'l-itisli colony. Tlic tnitli of tliis is
evidfiit from tlic way in whicti tin' latest Canadian loans have l)een
taken up. In Octolier, 18f)4, in the very midst of tho depn^sion that
Innl lieen coveriii;;' tlie world for some years, it became necesssiry for
Canada to iie;fotiute a loan (ai the London mark<'t. Colonial secni'itieH
weri' then at their lowest, ('anadas tfad(> was lll•creasin'^^ and the
Dominion revenue dimini.shinu", hut the loan of .^2. 500,000 at three
per cunt, was jjlaced on the market with a named minimum of 9").
No less tiiaii .")(i(i ditferent tendei's were sent in oti'eriiie- nearly
£I2,0()0,0()0 in all. The highest went at £9!) 12.s. ild,, oral st ]iar,
while the aAera^e was .£97 9.-!. 2d. When the discount and cost
Were reckoned in, the I'ate of intei'cst was three and a half per
cent., making;' this the best loan evei' netjotiated In- ('anaihi.'
Sii III iiiorj/, ISOo. — The ■foree(;inn- pae-es have shown tho way in
wdnch the federal debt was accumulated ilurin^^ tho throe sta;jes of its
history. Fairly rapid increase is characteristic of the first porioil ;
very i-apid increase; marks tho second : wliilo in the third period,
growth is slow. Tlie cau.ses of incre^ase in all tliroe periods may bo
summed up in the [)hrase 'Railways and caiials," and therefore, in
estimatiui>- this rapidity of growth, we nni.st consider whether or
not the benefits, accruine' to the country from the deepenint,' and
finishing of the canals, and from the building up of a grout rail-
way S3'!5tem, are a sufficient ottset. If they are, the additions to
the debt are justified.
To firing out the I'esults of this account of the growth of the
federal debt, extending over twenty-eight years, a concise summary
is necessary. On the IJOtli of June, iSi).'), the net ilebt of Canada
was S2r).S,074,927, or Sl7.S,;U().2.S(i more than it was in lSii7. It
was not, of course, wholly incni're(l by the Dominion for Dominion
purposes. There was assumed for th<' four provinces at coid"e(lera-
tion S77,ol)0.000 of debt-: and there has since l>een a further
assumption of >?81,9:',0,14.S, increasing tli<' total to Sl09,480,148.
Deducting this sum from the net debt in 1896, we have a net debt,
incurred by the Dominion for Dominion purposes since lSG7,amor.nt-
ing to SI4.S,()4'l-,779, or an average yearly increase of a little over
Sr),000,00l). Ashasbeen fre(|Uentlystated above, this increase has been
caused almost wholly by the construction of railways, can;ds, and
other pid)lic works of importance, calculated to aid in the develop-
ment of the counti'v : and it is for this reason, that the debt of
• Hii'Igi't speech, Hon. lifurgc KoHter, ISiiS, p. 10.
- British North America Act, 18(1", sect. 112 118.
I'' tnifli of tlii.H is
loans linAc Ijccii
(ii!j)i-c.^si()n tluit
inic iH'CfssMiy for
'oloninl sccuriticH
:'rcasiii<_r, .md tJic
.-'inO.OOO at throe
iniiiiiiiiiiu of 9,').
• itfrniio; iit-arly
I., or aliKost pai',
woiint and cost
fiiid a Iialf per
Canada.'
■)Wii the way in
irco sta;,ff'.s of its
111- first period :
If third jM'riod,
periods may lie
nd therefore, in
ler wliether or
deepening,' and
»f a vrvtiHt rail-
f ailditiojis to
,i,a-o\vtli of the
iici.se snnunary
"lit of Canada
in l.Sii7. It
for Dominion
at coniVdera-
'cn a furtlier
S109,430.148.
v<- a net flebt,
l'SfJ7,aiiioinit-
a little over
reasehas leen
's, canals, and
1 the develop-
t the debt of
Canada cannot fairly he conipan-rl with those of European coun-
tries, wliich Iiave been contracti'd mainly for war purposes. The
history of the public works of Canada is the history of her public
debt. (hitlie Intercolonial railway system, elrvcn hundrrd and
tliirty-si\ miles in leii^^-th, the capital expenditui-e has bei-n 1845.-
294,029.' On the canal system,'- the yreat waterway and artery
of central Canada, th • federal ^'overnnient has spent S44,l G1,.'U1 ;
and on the Canadian Pacific railway, who.se utility has been
amply ])roved, the exiieiidituic on capital account reaches the ticiire
of !?()2,()r,:3,74.")". These s\niis make a total of Sir) -J, 109,085. That is
to .say, on these threi' works alone, the commercial hiffhways of
the country, the Dominion has spent !?8,4ij4,.'i0(i more than the
whole delit created since confederation, apart from provincial
allowances. In aildition, Dominion lands have been o])ened up at a
cost of SH,()(18,!)0.'l I'ublie buildings at Ottawa and public works
elsewhere have been undertaken, on which the capital expenditure
reaches a total of S9,I.S7,'.i9i>. The Xorth-West territories have been
purchased and opened up at a cost of S'3,79«,G')6, and other rimilar
services have been performed. These undertakings represent, in
coiHiection witli lailways and canals, a grand total expenditure
chargeable to capital of S200,14;>,170* . In other word.s, the sum of
$22,7!)7,08r) has lieen expended out of revenue during the same
period on capital account for the services of the country, in addi-
tion to wdiat has been added to the debt since confederation.
If the actual interest paid on the debt be taken, it is found that,
whereas in 1S68 we paid at the rate of 4.51%. in 1S95 we paid but
2.93%'^ . The net interest paid per head of Canada's poi)ulation in
187S was 81.29; in 1873 it was S1.31 : in 1878 itwasSl.58; in
1889, 81.8(3 ; and in 1895, 81.80 or 6 cents less than in 188!»." The
reduction in the rate of interest has made the burden of the debt
smaller in proportion to its size, so that at the present time Canada,
with hei- improved credit, can carry almost twice the amount of
debt .she could in 1867, and still have a no larger burden jut rupUa.
The actual net interest paid in
l^'j^ ^^"^ §4,;?7r).148
'*^"5 " 4.812.802
J'f! ;; t!,44;i,109
\?r:~ 8,84:3.5:39
'"■'" <». 1:30,247 7
1 I'uljlic Accounts, C.inada, 181W, p. Ixix.
2 Rnixirt, department of Railways and Canals, 18y,5, p. 13.
3 Ibid, p. 25. 4 I'nblic Account-., Canada, 1895, p. 69.
5 Statistical Year Hook of Canada, 1895, p. 797.
6 Ibid. 7 Public Accounts, Cunada. 1895 p. xxx.
:}2
If, iiH a stiiiidiiril to iiit'iisiin' tlic (l('l)t, a conipariHon be
inHtitutod botwooti rovfiiuf and iirl dftit, it is fdiiinl that in 1H6H,
5.58 y(;arH of tlio rtfvciun' of that year would have been siitVu'icnt
to pay oil" tilt! federal d(d)t. In 1S7M it would havo tidten <).27
years, in IHHS H.'y'.i years, and in 1S!)5 7.45 years of the revenue of
those respective years to wipe out our net indtdjtedne.ss.' From
the applieation of this standard two facts api^ear ; tirHt, that
the debt has incrt'ased a little luoru rapidi}' than the x'evenne, ami
aecotid, that tlie debt of Canada is not, in jjroportion to the revenue
of the country, so jjjreat as the debts of man}' other countries
considered to be prosperous. While it would have taken 6f
years of the revenue of 1804 to pay oH the net debt of Canada,
7}; 3'ears of the revenue of Great Britain in that year would
have becTi needed to pay otf its debf ; 7^ years of the revenue
of 18!)2 woul 1 have been rerpiired to pay oft" the debt of Austria-
Hungary in that year ; G§ year.s tliat of Belgium : 0^ years
that of France ; and H'< years that of the Netlierlands."
These tests however, interesting as they may be, prove but
little. The average Canadian will only have to consider three
significant facts: one, that Canada now pays over ?!),000,000
yearly to carry her debt, next, that her revenue does not amount to
$34,000,000, and last, that for the past two years there have been
large deficits, and he will be convinced that the time has come for
calling a halt in the large (ixpemliture on capital account.
The phase of development through which the country is now
passing, the heavy contributions which she has made in the past
for the construction of public works, and the e(|uipment which,
by means of these contributions, she hiis provided for herself, sug-
gest that the government during the next few years, should ailopt
a policy of careful retrenchment. A vigorous attempt to make the
revenue cover current expenses, and to bring ca(iital expenditure
down to an amount not greater than the yearly sinking fund,
would meet with the approval of the country; and, after a few
years of such policy the government might well take into consider-
ation, whether it could not gradually decrease tlie amount of the
debt itself.
1 Statistical Year Hook, 1895, p. 78U
3 Ibid, p. 789.
H foiiipariHoii be
iiM'l that in 1868,
ivc Ik!(mi Hiitlicicnt
1 have taken 0.27
1 of tht' revenuo of
'htt'dnt'Hs.' From
ppear ; firHt, that
1 tho reveniio, and .
ion to the revenue
y other countricH
1 have taken GJ
et debt of CaTiada,
that year would
r.s of tlie revenue
e debt of Austria-
\^uin\: ni years
and.s."
ly be, prove but
coiKsidcr three
over 1?!),000,000
tes not amount to
1 there have been
me has come for
X'ount.
country is now
iftde in the past
juipment which,
for herself, su^f-
irH, should aijopt
nipt to make tlio
ital expenditure
y sinking fund,
md, after a few
ke into consider-
amount of the
PART II.
PROVINCIAL DEBT
[33]
PART II.
Provincial Dfbt.
Proviiico of Canaila.
rllOM 1841 to 1846 the two provinces of ITppcr Canada and
Lower Canada, or, as they are now known, Ontario and
Quebec, were united under the name of the province of
Canada. It was durinji; the twcnty-Hix years of their union, that by
far the hir^fst part of the STS.OOO.OOO constituting; thR d<'bt of the
province in 1867 was contracted. From a statement, ' made by
the finance minister, in the h'gishiture of the united provinces in
1841, we learn that the debt was then £1,670,142, nearly all of
which was brought into the union by Tipper Canada. In fact,
the liabilities of Lower Canada when she entered the \mion
amounted to but £133,000.' This debt of £1,070,142 in 1841 had
been incurred, like most Canadian debt since that date, mainly for
the construction of public works, ami in openinj; up the country.
The total expenditure on these .scrvicfs up to Feliruary 10th, 1841,
came to 89,846,183 which included the foUowini,' sums:—''
Canals, harbours, piers, etc Si>,4]8,843
Ronds, turnpike and colonization 2,10.'?,320
Public buildings 2,14'.,403
Ritp'ul Inr.rease. — In ten years the debt of tlie united prcjvinces
increased fourfold, and amounted to .S12.13 per head of the popula-
tion. In twenty years it reached the considerable figure of S58,-
1 Sir V. Hincks, Dec. 15th, 1841 (contained in second report of the Comnjittee on
Municipal InHtitutiong, Ontario, 1889, j). 44.)
S Hon. Mr. Dorion, Confederation Debates, p. 266 .
3 Return to an addrens of legislative assembly, dated July 27th, 1847, (included in
report of Department of Public Works, 1867, Appendix No. 70.)
[35]
86
326,478, a per cajiita debt of $23.21. The following is a Rtatement
of thi,s increase year by year for the decade 1852-1861.
Year. Debt, l
1852 $22,355,413
1853 29,922,752
1854 38,851,833
1855 45,855,217
1850 48,757,619
1857 52,334,911
1858 54,892,4(15
1859 54,142,044
1860 58,292,469
1861 58,326,478
Capital expenditure to 1867. — On the 30th of June, 18C7, the
debt of the province of Canada, an subsequently allowed, amounted
to $73,01 6,088.' This vast increase in the quarter of a century of
union is explained by the fact that the expenditure on public
works alone came to no less than $50,364,416.^ This sum, together
with that expended before 1841, made a grand total of over $60,-
000,000, spent V)y the two provinces in the construction of public
works previous to confederation.* Of the sum spent by the
government of the united provinces from 1841 to 1807, $12,-
739,783 went for the construction of the canals comprised in
the St. Lawrence navigation system, 81,702,724 was expended
on harbours and piers, $1,115,415 on lighthouses, beacons and
buoys ; and these amounts, when combined with expenditure on
other canals, formed a grand total of $17,106,371 for works con-
nected with navigation. On roads was spent $3,834,508, and on
public buildings, charge^ible to capital, $7 031,157. The largest ex-
penditure under any one head, however, was that on railways,
which amounted to $20,204,800.^
(Jnnfedevdtiov. — At confederation, under the provisions of the
British North America Act, all stocks, cash, bankers' balances, and
securities, belonging to each of the existing provinces, became
the property of the Dominion of Canada, and the Dominion
became responsible for the debts and liabilities of each province ;
but Ontario and Quebec jointly were made liable to the Dominion
for the amount, by which the debt of the late province of Canada
1 Budfret spsfch. Province of Canada, Hon. A. T. Gait, May 16th, 1862, App. 2.
« 86 Vict., Chap 30.
3 Report, Department of Public WorkB, 1867, p. 660.
/ Ibid, p. 660.
Ibid, appendix no. 70.
37
exceeded S62,i>00,000, and were to be charged interest at the rate of
five per cent, thereon. Certain assets, enumerated in the fourth
schedule of the Act, wore declared the property of OntR'-io and
Quebec jointly. The division of the debts, credits, liabilities, proper-
ties, and assets of Upper and Lower Canada, was to be referred to
three arbitrators, one chosen by Ontario, one by Quebec, and one
by the Dominion.'
Arhitndion. — Statements of the liabilities and assets of the late
province of Canada, as framed in a conference of members of
the three governments held at Montr(>Rl in July, 18(59, and
approved by an order-iii-council of the privy council of Canada
of the 17th of August, 1869, wei-e submitted to the three arbitrators,
who w^ere the Hon. D. L Macpherson for Ontario, the Hon. C. D.
Day for Quebec, and the Hon. J. H. Gray, M.P., appointed by the
Dominion government. The arbitrators met fir.st in August, 1869,
and, after numerous sessions and hearings of counsel, an interlocutory
judgment was rendered by the arbitrators appointed by the Dominion
and Ontario, on the •28th of May, 1870, establishing the principles on
which the .surplus debt and the joint assets .should be divided.
The arbitrator appointed by Quebec dissented from the judgment,
and on the 9th of inly, 1870, resigned his position, for the reason
that he considered the judgment erroneous and unjust. The remain-
ing two arl)itrators made their final award on September 8rd, 1870,
notwithstanding a protest against their continued action by the
government of Quebec. In this aAvard, the principle of the divi-
sion of the excess debt was that of local origin. That is to say,
the division was based on the locality of the assets mentioned in
the scliedule to the British North America Act, in the creation
of which the several items of the debt had been incurred, and the
debt was apportioned between Quebec and Ontario, according as it
was adjudged to have originated for the local beneht of either.
Where the debt had been incurred by the creation of an asset for
their common benetit, it was divided etpiallj betwetMi tlieui.
On this basis, the arbitrators found in their award that of the
debt of the province of Canada exceeding 802,000,000, Ontario
should assume and pay such a proportion as §9,808,728.02 bears
to $18,587,520.57, and Quebec such a proportion as S8,778,-
792.55 bears to the same. This was approximately 9,17 for
Ontario, and 8/17 for Quebec. The amount of the excess was not
stated, as that question had not been referred to the arbitrators,
I British North America Act, «ect. 143.
I
38
but if it was taken at ?10,oOO,000, Ontario, accordin;:,' to this award,
would bear S5,540,902 and Quebec 84,959,098.
The Quebec government protested against the award, and
nothing was done towards a settlement for some years. The
Dominion government went on making payments and collecting
moneys in connection with the affairs of the late province, and
charged or credited these items to the accnunt of the same, without
the concurrence of the provincial governments. At the bogiruiing
of the year 1873, the excess of debt of the late province of Canada,
for which Ontario and Quebec were joint)}' liable, amounted,
according to the account of the Dominion, to S10,506,80(S.S4. In
that year an Act ^ was passed hy the Dominion parliament, where-
by the $62,500,000 of the debt of the late province of Canada, which
under the British North America Act had been assumed by the
Dominion, was increased to 873,006,088.84, and the amounts of the
debts of the other provinces, assumed by the Dominion, were corres-
pondingly increased.^ This assumption of excess debt settled the
dis}iiite lu'lween Ontario and Quebec, on the question of division of
the debt of the old province, but since that date arliitration has
continued up to the present year, with a view to adjusting the
accounts of the two provinces in regard to other items. Five judg-
ments have been rendered and awards made by the arljitrators, but
the only one which has to do with the tlebt is the " interest award."
It will be remembered that the province in 18rs2 contended
that the proper efiect had n(jt b"*en given to the opei'ation of the
Act of 1873, under which it was claimed tluit the i?l 0,500,088.84
of additional debt a.s.sunied bythe Dominion sliould have been credited
at confederation, instead of at the date of the Act, 1873; and tliat
the amounts charged for interest on tlie excess of debt, and retained
from the subsidies between 1867 and 1S73, sliould be reduced
accordingly.'^ A second Act to readjust the provincial subsidies was
passed in 1884.' By its terms the totnl amount of the half-yearly
payments, which would have been made on account of the subsidy
to Ontario and Quebec jointly, if the sum above mentioned (.::?10,506,-
088.84.) had been assumed as at July 1st, 1867, together with inter-
est upon them, was capitalized at the sum of 85,31)7, "i03. 13, and tlie
yearly subsidy to Ontario and Quebec jointly was increased l)y a
sum equal to five per cent, on the latter amount.^
> 36 Vict., chap. 30
•^ Ante, Part I, p. 16.
6 Ante, Part I, p. 23.
soviet., chap. 30.
1 47 Vict., chap. 4.
The provinces now advanced the claim that interest should be
credited to them on the deductions from their subsidies between
1867 and 1873, for the periods when the payments on account of
subsidies were less than the amounts subsequently admitted to have
been due. This claim had not been allowed bv the Act of 1884
and the question was, amongst others, submitted to arbitration in
1893, and the first award made on November 2nd of that vear The
following were its terms:'
1. That from the 1st of July, 1S67, to KS73, the provinces of
Ontario and Quebec shall be credited with subsi.ly half-yearly in
advance : that the deductions for interest on the excess of debt of
the province of Canada over 62,500,000. as actually ascertained in
an^ount at each period, shall be made at the end of each half-year
down to and including January 1st, 1873; that the first of such de-
ductions shall be made on January 1st, 1868.
2. That in th." province of Canada account there shall be
credited, on May 23rd, 1878, the S10,.506,088.84 remitted by 36 Vict
chap. 30, and that there shall be nu deduction from subsidy there-
after, "^
3. That on and after July 1st, 1884, the pr.,vin.>es shall be
credited with the additional .subsidy grante.l bv 47 Vict, chap 4
The Dominion appealed to the Supreme tVmrt against this first
award, and on May 7th, 1894, judgment was given dismissing the
appeal with costs. ^ Since that date awards have been made on the
questions of Indian claims, immigration expendituiv and the
common school fund, but the debt account of the old province of
Canada has been, to all intents and purposes, closed, and the interest
que,^tiuns which it involved have l)Pen tinallv settled by this iu.l^-
ment. ' . j ^
Province of Quebec.
In LS73 Ontario and Quebec were both left {)raptically free
from debt, but the financial paths which they hnvo pursued since that
date have been widely difierent Ontario stan<ls to day with a
surplus of from S4,00().00() to .^.5,000,000 <,f assets over liabili-
ties,3 whereas the del)t of (,)uebcc amounts to upwards of i«32,000 000 '
The explanation of the growth of this <lebt is found in tlie lavish
aid given by the gover nment of Quebec to railway construction.
1 OntHiio, Budget speech of th« Hon. R. Harcourt.Toth'February, 18<)6 i. 30
- Budget speech flon. K. latcourc, 1895, )i. 31.
3 Budget speech, Hon. K. Haicourt, 19th Vebiuary, 1896, p W.
* Public AccountH, Quebec, 1,S95, p. 14.
'
40
If the disposition of the several loans which constitute the funded
debt of that province is inquired into, it is found that with scarcely
an exception the money raised by the sale of provincial debentures
has been spent in railway subsidies, or in direct aid in the construc-
tion of railway lines as public works.
First loans.— In 1872 Quebec made her first loan. It was
only S20,000, and was expended in enabling distressed farm-
ers in certain parts of the province to buy seed grain.* The follow-
ing year saw the genesis of her railway policy. By an Act
passed in 1873,'' authority was given for raising a loan of
£800,000 for railway subsidies, and twelve railways were specified
to which aid was to be given. By the same Act was formed a
" Consolidated Railway Fund " of all debentures issued, or to be
issued, for subsidies to railways, and of unexpended balances on
hand from the sale of them. From this fund all subsidies were
to he paid to railways authorized to receive them. In lcS75 the
province decided' to construct as a public work a line of railway
from Quebec to Montreal, and thence ultimately to Ottaw a. As
large sums would be necessary to build the line, and as more money
was already needed to pay railway subsidies, an Act* was passed
authorizing the sale of provincial debentures to the extent of
£860,000. This was done, and the amount realized was §4,257,196.82,
the rate paid being five per cent.^
Financial position.— M this time (1876) the province was on
a sound basis financially. Since 1867 the revenue had exceeded
the expenditure, and had enabled the province to save about
S2,000,000, of which some $850,000 had been spent in the construc-
tion of public works, and the 'balance was in the treasury. One
half of the revenue of the province was derived from the Dominion
government, and most of the other half from Crown lands, which
the province held to the extent of 100,000,000 acres, largely under
license to lumbermen. "
Railwau expenditure and dejicits. — In 1875 the debt of
Quebec was not 84,000,000, but by the end of the fiscal year 1881-82
it amounted to nearly $15,500,000. That this rapid increase was
1 8« Vict. ch»p. 2, Quebec.
I 87 Vict. ch»p. 2, Quebec.
8 39 Vict. chap. 2, Quebec.
« Ibid, chap. 4.
5 Quebec SesBional Papere, 1876, No. 19.
6 Statament of Hod. L. R. Church,
Treasurer. Quebec Sesnonal
Papers, 1876, p. 61.
Year.
Gross debt. I
s
1873-4...
lllti ••••■••■I '^'^^^.a^j
1876-7 ■'.'.'.'.".'.'.".' ..'.'■■■
Imt ••'■■.■ "'7,02O;oi3"
1879-80 .■.'.■.■;:.■ .■.■■;: | 10,83!»,226
^^^^"^ ! L\54!»,(;i;j
T..tal
payiiionts
to railways.
Deficits in
C. R. F.
Total.
8
8
i8().(»r)i
J,010.(»<)!t
07,1)09
i.r>i7.8oo
14,498
3.841, r.70
81,036
2.()10,6J»4 1
*>8r),514
2.303.74!) '
123,123
r)01,4!»0
48.3,117
2,422, 7!t4
442.139
!U 1,021
208,852
14,!»4.5,271
2,10(!.187
Thus, ,„ the e.r.ht years ending 1882, Quebec had .spent in aid
of railways an an.ouut M-hioh wa,s ahnost e,,ual to the whole ^ross
debt at the latter date. Dunng that tin.e, she had floated 'fou
arge loans. Two of these have already been noticed.^ The o her
two were contracted in 1878 and 1880 respectiveb-. The first of
these atter was for £600.000, and the Act authorizing it3 si'^ikd
the On 7" v" V^r^^ '' 'P"^' "^ *^'-^' ^'•'^' P----> -il-ay.
1880 authorizes the raisnig of a loan of £800,000 by sale of nro-
vmaal debenture.s, "for the payment of subsidies to railway
companies, for con.pleting the Q., M., O. and O. railway, and for
reimbursing the consolidated fund of the province f^r moneys
heretofore advanced therefrom for railway purposes."
F/«rn,cia^ poai^un,, J88J.-0n the 4th of March. 1882. the
tundeddebt of the province amounted to 8]4,971..5]3 temnorarv
oans to m9,20.^and amounts owing on account of construX^S
the Q., M.. 0. and 0. railway to Sl.442,617. These sums, together
wit h railw ay subsidies granted, but not yet earned, made the
Quebec SfHsioiial Paporg —
1881.82, No. 26, Statement No 2
1881.82, Noll.
1887, No. 8, Statement No. 7.
2 Ante, p. 40.
3 Quebec, 41 Viet., chap. 1.
* Quebec, 43-44 Vict., chap. 45.
W'\
r
42
liabilities of the province S1S,773,821.' From the .late of con-
federation to the 30th of June, 1882, the expenditure of the province
had been S38,f)68,413, and the total eceipts of Consolidated Fund
833,594,297, wliich showed an excess of expenditure over receipts
of 3374,115. It must be explained, however, that in the same
period Quebec had paid out of ordinary receipts large sums for
services, which, strictly speaking, were chargeable to capital,
namely,"
Colonization S1,408.T82
T • f- ... 387,HO()
^"""'«»-'^^'"" «ic,o..,
Cadivstres o nVi
Construction of ;.ublie buildings 823,071
Court-houses find gaols '^'^.^lll!
83,079,073
—making a total fov ihese services that exceeded the deficit by
S3 304 94^7. At the end of . S2. .,o..vithstandino- the numerous
loans which had been made to replenish it, tlie Consolidated Revenue
fund showed a total <leficit of over 83,000.000, and when to this
was added the cost of the new Parliament buildings, the sum of
S3 681,549 appeared as the amount for which the government was
Hable, in ad.liticm to the first four loans of the consolidated debt.^
This condition of things was far from reassuring and, it was
for the purpos..- of meeting these railwny liabilities that two loans,
acrgrogating 85,500,000, were placed on the London market in this
year. •
The provhicUd raiiioa//.— Up to 18S2 the cost of the Quebec,
Montreal, Ottawa and Occidental railway had been over $12,500,000,
and it was estimated that its total cost at completion would reach
$14 000 000." The road had proved a burden too heavy for the
province, and therefore, when the Canadian Pacific railway, in
1882 oll'ere.l to buv the western section, and the North Shore rail-
way the eastern one, on a total contract of S7,(5(K).000, the govern-
ment closed the bargain. By an Act of the legislature passc-d the
sauK^year the proceeds of the sale were appropriated to the payment
of the consolidated debt of the province, or, to be more specific, to
the rede mption of the loans .>f 1874, '^ ^J^^^^__
1 Ti^ec SfBeional Pa^erH, 1881-82. N... 25, Statement No. 8.
2 Budget speech, 16th Feb., 1883.
4 Quebec SesBional Papsrs, 1881-8-2, No . 25, Statement Xo . 9 .
5 Quebec, 45 Vict., chap. 21.
43
Deficits. — During' the next few years the debt continued to
increase rapidly, owing to very lar^e deficits and to the capital
expenditure on the new Pai'lianient buildinjfs, and on the new
court-houses at Quebec and Montreal. The expenditure on rail-
ways continued to be as great as ever. In the five years from 30th
of June, 1(S82, to the end of the fiscal year 1887-88, the amount spent
on the construction of the Parliament buildings was $745, 13S, that
on the new court-house at Qiiebt.'C $687,007, and that in aid to
railwa\'s !?2,0(j(),020, a total of 8;},44H,l(j(> for these three objects
alone.' This large expenditiii-e, comitined with the deficits during
the same period, caused a tloating debt to accumulati', which, at the
end of 1 >H7 amounted to $4,0.'}7,()24. At the same time there were
claims against the government for considerable amounts, which,
though contested, had necessarily to be taken into account, so that it
was decided to go into the market and place a loan of S3,o00,000.
In 1888, therefore, Quebec floated her sixth loan, and the proceeds
were applied in liipiidation of tlii' Hoating debt of the province.^
Loans. — This, however, was to prove but a temporary relief
In the session of 18S7 an Act^ was passed by which railways were
to be allowed to eliange their land subsidies into cash at the rate of
70 cents per acre, an operation which had the efiect of greatly increas-
ing the expenditure under that head. In 1 888, nearU" S.S,Oi)0,000 was
voted for railway subsidies, and in the same year a new debt of
8462,91 1 was ci'cated for the purpose of finally .settling claims upon
the question of Jesuits' estate.s. The expenditure tm the Parliament
buildino-s was still larye, and it luul beeome necessary to erect new
gaols, court-houses, and normal seho )l.s in Montreal and in the
counties of Ottawa and Pontiac and other paits of the j^i'ovince.
Further, during the session of 181)0 new railway subsidies, amount-
ing to several millions, wei-e votci] a^ lieing "necessary to crown the
railroad policy sanctioned by preceding legislatures.'"' 'I'he result
of all this was that at the end of 1800 the tloating debt of the
province reached a total of no less than 810,8(52,H.").'i, made up of the
following amounts :"
1 Outstanding wiirrjuits, .SOtli.Iune. IS'.l'i
2 Temporary deposits. . .
3 Raihva}' conii)anies' i^iiarantee deposits
4 Ruihvay subsidies under 40-50 Viot. c. 7t>. . .
5 Balance of debt-.s of Q. M. 0. & (). railway .
8 1! 2,57 1
2()l,.S(il
l,'.»l(i,t'i85
2.K08,2-i7
122.:?(]4
1 Quebec SeH-*ional Papers, 1S94, State- 3 Quebsc, 49-50, Vict., chap. "'i.
ment 2, p. 1. ■• Quebac, 64 Vict., chap. 2.
2 Quebec, 60 Vict. chap. 2. 5 Ibid.
44
6 LosH oil Exclmiige Bank to Iw ropkccd 827,000
in sinkinf^ fund (45 Vict., c. 21)
7 Amount due ['rutost.iut Ci<uuuitte,; of Instruc-
tion ()2,961
under Jj'suits estates Kettlenient
8 Estimated special exiii-nditure 1K90-<.»1 !M2,lHa
Tr)tai «i(;,:ii:j,:{74
Less cash on hand .... ■"ili5,344
Additional amounts . 8r),7K«,030
9 Su[)i)lenientary estimates specialoxpdr 18!M(-itl 115,448
10 Estimated s]>ecial oxjienditure 18!)l-;)2 rir)8,r»r)5
11 liiilway sul)sidies i)erresolution.s(2;{ l)ec 18!tO) 2,544,270
12 Railway land subsidies converted into cash
jnr same resolutions 4,40(),.'}20
Grand total 810,8(;-.',;{r);i
The govenuncnt ol)tain(.'il the noceasaiy authority to borrow
$10,000,000 ill onk'r to meet thi.s lar^e floatintj debt, as well as to
pay ofl' railway subsidies and the additional debt likely to result
from projected works. In 1891 it negotiated a l(jan of 20,000,000
francs on the Paris money market ; but the circumstances were
not favourable, and the government had to contine itself to tem-
porary arrangements, making the loan f'lr two years only. Thus
the situation in l^!)l was not proiiiising. In that year the con.soli-
dated debt of the province was $25,842,148, while the floating debt
amounted in the aggregate to over 88,000,000.' To offset this
liability of ^8,000,000, there was only an Act authorizing a loan of
810,000,000, by virtue of which S4,000,000 had already been bor-
rowed. There remained §(5,000,000 to be borrowed, to liquidate
both the floating debt and the annual deficit of 31,700,000.
In 1893 the government had to meet the loan contracted
two years before. Again it was found necessary to adopt temporary
arrangements with the capitalists of Paris, for another period of
two years. In the spring of 1894 the pi'ovince negotiated a loan^
of £600,000 under authority of the Act of 1891, but 94 was the
best price that could be obtained for four per cent, debentures. The
credit of the province was low indeed. In the same year, an Act was
passed^ for the conversion and redemption of the debt. It regulated
the application of the money received from the Canadian Pacific rail-
1 Budget speech, Quebec, Hon. L. (). Taillon, 1895, p. 22.
aibid, p. 31.
3 Quebec, 67 Vict., chap. 2.
4o
way on account of the purchase of tho Quebec MontrenI Oh
Occuenta rai]\v»iv tn f),n ,. i .■ ^ ,. ^' ^"^'^"^«J. ^'ttawaand
the i.sHUe <,f insr-nho,? uf l . " '" ''''""^''' '^'ithorize
mt.,.»t, „,!i : k *t'. p:" ■i""',. o°'i '"r- '■'■"■■ p^" '-»
mark..!. Tl,i» time a sixty rear,' l,lt "'" """"^'
francs. ,v„„ ,)„u,,| „t Hn-..^^,^,';",,',"""' """""""'K "' 27.632,000
deficit „,,,!, ,i, ant T "r"" *""" '" """"""y «™"i"«
deficit, L,ct'":«„.»o^i,:::',r.:, ;:;:„.??,"-""-■• ^■™^- ^hf
^ oar.
188f».f»0 t)eficit.
1890.91 $1,'''80,5()[)
1891-92..! l,444,23f;
1892-93 l,742,(J5l
189:5-94 -^•«28
1894-95 .■.■.■.■; 2;iO,202
ACi'i 1. '''^'^"'^ that year amount na to SI!2Q'Uf^
a.s»ets of SI„,019,6M, ieavin. a e^cl :nw„mf'""" ""■' '''
^^:rpi,r.r:^%fTzt/r;ii:^^-
189 h" .^ ^^ ^"^; "' '•'' legislature on the 26th of November
1895, the treasurer" outlined it in these words- " W. T 1
r?:":, r °?'"'"-^- -"'' --^>: ^^^J^z^^t
'^!}:^^_£j>^oj^ydn^^ryj^,y^^^ without urgent noccsity. We
» Public AccountB, Quebec. 1895, p. 14 ~ "
^Ante,p.43.
3 Budget speech, Hon. L. O. Taillon. 1895. p. 31, Statement A.
^Ibid, p. 10.
^Ibid. p. 30.
46
must not Krant new subsidies for railway enterprises. We
must not revive subsidies wbich are defunct, and we must refuse,
aB far as public interest will permit, to transfer subsidies already
voted from one enterprise to anotber. The policy which the jrovern-
ment finds itself compelled to follow does not only mean that we
must not increase the public debt, and must reduce it each time the
occasion presents itself, but it also means that it will be ne-
cessary to practise the most rigid economy." It is to be hoped that,
by adhering to this policy, the government of Quebec will be able
to restore some measure of equilibrium to her finances, and «t the
same time reduce her large indebtedness.
TABLE No. I.
Province of Quebec— Dkut and Assets.
1882-^ 1895.
Year ended 30th June.
Gross Debt.
1882..
1883..
1884..
1885..
1886..
1887..
1888.
1889.
1890.
1891.
1892.
1893.
1894.
1896.
15,649,613
16,920,460
18,895,576
18,871,693
19,068,023
19,456,379
21,799,360
23,945,663
28,626,714
25,842,148
28,731,263
28,574,213
30,216,272
33,545,194
Total Assets.
a
8,726,943
8,724,263
13,885,637
13,833,404
13,834,672
13,84.5,916
13,836,916
13,863,284
13,870,382
13,915,314
13,903,933
13,902,024
13,919,614
13,850,017
Statistical le«r Book of Canada, 1895, p. 8O4.
Budget speech, Quebec, 1895, p. 10.
1
47
TABLE No. II.
Statement of Cost or QtJEBK<,.'.s Dkbt.
1875-1895.
Abdmct, Qwbee Hessional Papers, 1894, No. 10.
48
T.\HI,K No. III.
Htatemkst r)i.' Tkmi'okahv Loans IlKiKivKi) ASP Rkpaid.
187«-lHy5.
Ywvr nu(liui?:$0tli .hiiu).
Loans
Ri'i'i'ivi'il.
Loans
Rounbursed.
1878..
1870..
1880..
1881 . .
1882..
1883..
1884..
issr. , .
188()..
1887..
1888.
1889.
1890
1891.
1892.
1893.
1894.
1895.
Totals .
»
800,000
1,918,125
1,050,000
500,(100
l,2()f.,849
400,000
450,(J00
760,000
600,OCO
40(1,000
2,223,333
1,4(10,000
1,150,000
870,000
2,400,000
16,178,307
Balance
1,950.000
500.o(Mt
1,070.000
871,813
112,429
818,129
424,101
580.383
250,000
l,i300.000
2,073.333
t,OOi\000
2,070,000
1,500,000
14,720,182
$1,468,225
Abstract, Quebec Seasimal Papers, 1894, No. 10.
Qtiehec Public Accounts, 1895, p. 22.
1
49
TABLR No, IV.
Statkm.nt or the P.-nuc Dkht ok i^ry.n.r ,r 30th Jvsb,
Ft'NUKi) Dkbt.
mnj.
Dftto of Issue.
Riite. Anmuut nf ;
per cunt. ,,^ ''"''V"- j Ciiin.'iicy.
ft'K- or Fmncs.
1874 1 6
1876 1 6
lfi78 5
1880 4^
1882 5
1882 5
1888 ; 4
1894 , 4
18W : 3
€800,000
i'H(JO,000
£000,000
£878,000 i
I
£500,000 I
£722,000
£<i00,000
Frs.27,fi32,000
8;{,8!>;i,33;i
4,iHr.,;m
.■i.ooo.ooo
4,275,853
2,433,333
l.o»Wi,5(iO
•% 500, 000
2,920,000
5,M32,!)7«
"utHtuiuling,
83.02G,(ifi»;
4,059,773
.% 0(0,000
3,407,153
2.433.333
l,(i<i(),f)0O
3,500,0011
2,920,000
5,332,976
S.W,(i07,329 j g.'9,:J45,402
Tkmpouarv Loan am. Dkposits.
At the same date those CDiwisffxl ,,f : t ^
ing a total of $2,712,151.30 *'''^'''" '"'"' "^ ^'''^"""^ ""'onnts. n.nk-
^^'t'-act from Public Accmuds,QHebec,lS!>r>, p. 14.
4
so
Province of New Brunswick.
In 1866 the debt of New Brunswick was but $5,702,991,' yet at
the time of the union, 1867, she was allowed to throw a debt of
S7,< '00,000 upon the federal government. She was, however,
under liability for certain works, which, if proceeded with, would
have brought her debt up to the mark of S25.00 per head. Since
that date New Brunswick has in the readjustments of 1873 and
1884 been allowed ?M ,807,720 of additional debt.^ On October Slst
1K95, the general statement of New B'-nnswick's debt showed total
liabilities of 5^2,912,986, of which S2,759,000 consisted of issues of
provincial debentures. Against those the province held assets of
$591,574, which left an excess of liabilities pver russets amounting to
$2,321,412.3
As in the case of Quebec, the debt is almost entirely the result
of assistance to railways. Even before confederation, New Bruns-
wick had given more to railways than any other province, in pro-
portion to her size ; and since then she has not been less liberal.
Her expenditure in this direction to June 30th, 1895, including
pre-confederation expenditure, reaches a total of $4,356,300, the
largest sums being given as follows : ■*
4 11 . 1 ... §455,000
Albert railway ^ '
Fredericton railway 230,000
Oraiul Soiitherii railway 575,000
New F.runswiclv and Canada railway 413,000
St. Jolm and ]\Inine railway 880,000
St. .John Valley and Uiviero du L<mp railway 195,000
Of the various i.ssues of provincial debentures which in 1895
formed part of the funded debt of New Brunswick, no less than
$2,003,800 worth, out of a total issue of $3,098,800, was for the pur-
pose of giving aid to railway enterprise.^ The summary* appended
(Table No. 1) fully explains the purposes for which the debt of
New Brunswick has been incurred.
1 Hon. D'A. McGee, Confederation Debates, p. 140.
2 i4H(c, part I., pp. 15 and 24.
3 Public Accounts, New BrunBwick, 1895, p. 1.
i Report Department of Railwayn and Canale, Canada, 1896, p. 477.
5 Public Accounts, New Brunswick, 1895, i). 230
6 Ibid, p. 230,
TABLE No. I.
New Brunswick.
Pi<oviN-ciAt Debenture Statemem
rs.sued ill aid of
JTotftI issue. Redoonied | Outstand-
ing.
(iihv
ray
Carleton brancli railway
Chathanj brancli railway.
&t. John suspension bridrro'
>Voodst,ock bridge 7
Petiteodiac railway . .
Andover branch railway
St. Martin's it rphani'iv
Maduxnaking bridge . .
Grand Southern railway
Kent Nortliern railway
New Brunswick it P. E.
Harvey branch railway
Funded debt . .
Cataraquet railway
Northern A Western railway' '
Black Brook bi'anch railway ' "
St. Louis ct Richil.ucto railway.'
Elgni it Petiteodiac railway
L railway
Black Brook bi'ancii railway
'• Louis it Richibuctor,
gni it Petiteodiac railv
Moncton A- Buctouche railway
Albert Southern railway.
Centra) railway _
Iniportui liorsos .....,[
Toniiscouata railway
St. John In-idge and railw)' '
Kodeni])tir)n
Public bridges
Tobique VaTley rail'way ' ." ' ■
VViiodstock bridge . .. . .
Wharves and grain eio^•a't'o'l^ 'st
ly extension
iJohn
Total.
815,000!
50,000'
65,000!
25,0001
70,000;
51,000i.
145,C00(
10,000'.
41:^,000;
135,200
105.000 .
9,000 . .
250,000 . .
180,000 . .
321,500..
20,000'.
31,000 ..
37,000 . .
05,000 . .
48,500 .
130,000 . .
•SO, 000 .
60,000 ..
5,500! ..
287.500'.
275,000' ..
70,000'...
150,(100 . .
3,000 . .
SI5,000
3<»,.'00|
59,5001
23,000|
1,000
14,600
108,000
79,200
$16,500
5,500
2,000
69.000
61,000
131,000
10,000
305,000
56.000
105,000
9,000
250,000
180,000
321,500
20,000
21,000
37,000
95,000
4^,500
139, OoO
30,000
66,000
5,500
287,000
275,000
70.000
150,000
3,000
«.098,800 .9339.800 12,759,000
Amount at (iv .
8646.000
280,000
1,833,000
Total.
.82^59,000 at average rate of 4.52%
The amount of the interest, 1895 was
Balance in favor of province in Di.niinion Deb;\
8115,447
iccount... 531,185
52
TABLE No. II.
Province of New Brunswick— Debt and Assets.
1882—1895.
Year ending Slst December.
1882
1883
l«-i4
1885
18S6
1887
1S88
18S!)
IS'.tO
18'»1
18112
18<«
18*)4, :n»t October
1895,
GroBH debt.
81,228,413
1,268,272
1,471,146
l,()f»6,!)18
1,!»11,488
1. (>!)!>, 735
2,106,200
2,159,749
2,268,494
2,484,560
2,729,517
2,752,297
2,8-21,484
2,912 987
Total assets.*
8713,449
638,449
638,449
596,449
5()5,236
5.39,449
577,429
590,468
561,228
568,733
668,654
591,574
*Not includinK public buildinsH . Value of public buildings, about $.S70,000. Crown
IruiIh, about 7,000,000 acres at $1 per acre.
Shdisficdl Yeiir Uiml; of Civtddii, p. 803.
'
Province of Nova Scotia.
The debt of Nova Scotia, at tlie time of the union, was stated
at $7,435,28.').^ By the term's of the British Nortli America Act,
18G7, slie was allowed a debt of SS,O0O,()O0, wliich left a balance
in her favour of 8564,710. In LS69 by virtue of a special
Act" she was ^-iven better terms, and her debt allowance increased
to S9,18G,75(). Since that date, in the two adjustments that have
taken place, Nova Scotia has been allowed S2,343,059 of additional
debt by the Dominion. In July, 1895, the balance of debt in her
favour in the Dominion Debt account amounted to SI ,056,274.'
Since 1882, the gross debt of the province has increased from
$98,718 to the respectable figure of $3,346,897. Her net debt
in 1895 amounted to $1 ,98s,094, which is equal to $4.37 per head o f
■ Budget Bpeech, Hon. John Rose, 1868, p. 7.
- 32-33 Vict., chap. 2.
3 Public Accounts, Nova Scotia. 1896, p. 216.
53
her population. The followincr i
year since 1882 :
Year,
1882
188:3 [][
1884 "'.
1885
1886
^^^7 1,190,245
^^^^ 1,431,575
From th
S is a .statement of the debt in each
dross debt.
S 98,718
1,362,237
1,014,744
1.137,878
1,162, l(i2
J^'"'*''- (irnm debt.
^^^^ «!1, 899,662
^^'"^ 2,642,519
1*^^^ 2,990 402
i«''2 :u33;761
^^'■^^ 3,142,922
1*^'*-* 3,167,493
^^■*'^ 3,346,899
ii.s statement it will be seen that the .rrowth of the debt
while ""t mpid, has been steady. As is the .a.se with ail public
debts m the Dominion of Canada, Nova Scotia's indebtedness has
been incurred for the purpose of aiding railways and in the con-
struction oi public works. From the general capital account of the
province • it appears that §063,023 chargeable to capital has been
spent on railways bj-the provincial government, $315,428 guin.r tc airl
ma^ZT''"" "' T: ""'"" ^'"'''^ ^''^'^''^ ^■^''-^^'- ^^"'t'.er,
»2,0S4.,1.,8 was expended on various public works, the largest sun>s
under this head being for the C(mstruction of brid<^.-s (.«] 3b'.5 849)
roads (§593,986), and the Victoria (General Hospital (.*65 40v)' 'fn
addition to these expenditures there is the sum of 8217,3(11 sprnt on
Capital account by the Department of Public Charities which
ogether with various other amounts, makes a grand total expendi-
ture on Cap.tal account of §3,338,678 up to September 30th 1895
«.^r;;i.f'^T!''rT:,.''"^'""''''^^ ''^ Nova Scotia in 1896 was
fe3,346 89J. This liability con.prises provincial debentures pnyal,le
m Halifax, §2,043,500 : .l-bentures payable in London, §958 733"
and special loans amounting to §344,(i66. On the other side were
assets ^^^^;"Hting to §l,358,80(i, the principal part of which con-
sisted of the balance of §1,056.238 in the Dominion l)el,t accou
nt
Pi'ovince of Manitoba.
In 18<0 the province of Manitoba was created, and the fe.le.al
.government allowed it a debt of S472,09(..'^ 1,, readjust.nents sinee
that time the Dominion has a.ssumed for this province §3 303 516
more of debt, making a total assumption up to 18f)5 of §3 775 606
c^ir^T^ir"': 't ^'r^^ "^ ^'""'''" '"^^^ '"^^•^^^«'^'' *'-•" ^'«^^^> to
§4,6/9^/94. In 1883 there was a decrease of about §25,000 in the
' Public AccountH, Nova ycotia, 189", p. I'Gci
2 Mariitob.a Act, Statutes of Carmda, 1870
54
gross debt, but with that exception there has been a steady increase
each year. In 188G the gross debt was $1,497,620; in 1<S8« it
amounted to $8,1():},982, and in 1894 to $4,656,920. Again
the increase in debt must bo hiid to the account of railways and
public works, for Manitoba, though a young province, has not been
backward in giving her aid to railway construction; the loans to
railways amount to $1,855,934, and bonuses to $770,677 more,
making a total of $2,626,528.»
The balance .sheet^ of this province at 31st of December, 1895,
shows a total debenture indebtedness of $4,439,859.98, but of this
$1,943,260 repi-esents railway aid debentures handed over to and
charged against the railways so aided, leaving the net debenture
debt of the province $2,49(5,599.98. This sum has been used to con-
struct public institutions, isnch as a.sylums for the insane, the Deaf
ami Dund^ lastitute, the Home for Incurables, etc., and to subsidize
railways^ with a view to opening up the country. The province has
a l)alanco in its favour in the Dominion Debt account, which, with
tlie other Hssi'tH sliown on its balance sheet, amounting in all
to $7,878,261.29, is sufficient not only to meet all debentures and
other liabilities, but also to leave a surplus of $3,198,467.48.
Province of British Columbia.
In 1871 British Columbia entered the union with an allowed
debt of $l,(iG6,200, which was equal to $27.77 per head of her
estimateil population.^ Two important conditions of union were,
that t!ie federal government should proceed to build a railway to
the Pacific coast, and that it sliould guarantee live per cent, for ten
years on £100,000. to be spent in constructing a graving dock at
Esquiiiialt. In 1874 it was enacted,^ that instead of the guarantee
$j:5(),()00 miglit lie advanced annually during the progress of the
work by the Dominion government, the subsidy ])eing reduced pro-
portionately. Since 1871 the Dominion has assumed additional
debt for British C!olumbia amounting to a capital sum of $1,363,192,
which makes a total debt allowance for the western province of
$2,0:29,392. The l)alance in favour of the province in the Dominion
Dei)t account oi 1893-'j4 was $583,021.
1 Reprnt of linparlinent of Railwava ami Canals, Canada, 1S95, p. 478.
2 I'ublio Accounts, .Manitoba, ]Sa."), Ht;»t(iint.it Sii. 7, |). ^33.
3 Statement fiiriiirtlio. . request by L>. K. McMillan, Pi-uvin<jial Treasii ei-.
* Ante, p. 1.5,
^ 37 Vict., chap. 17.
fi I'ublio Accountc, Canada, t.sD3, p. Si.
55
fro™ Sc^w'S^s!: •!, fa„t"T; "Tn""' ""■' '~^
Year ending 30th Ju„e. | o,,„, ,,,.,,,
1882
1883
1884
1885
188«
1887
1888
18-9
1890
18!tl
18!t2
1893 ,
1894
1895 .
S800,ii(i()
n<il,778
770,812
800,258
J«7(J,9I1
1,157,001
1,780,125
1,772,871
1,797,820
1.843,154
2,87(!,0.3(i
.'il87,45(J
.'^, 904, 807
<!,499,(i88
The
Total assets.
801(1, 5(i«
033,17fi
772,808
850,(121
789,829
797,105
l,282,it93
1,100,251
1.125,314
i,H42,424
1,492,734
1,500,039
«^, 075,011
re oti
ot the province, amounting to (nor Si O?:, 000 Tn .. l v ■
large stnn.s have beeti Ln, n,.,.;Z\l T: , ^" •^''''^^"^"' ^-^''y
I'lons purts
Ii'rtJ^'?' ''V'"f^/^^^ '-^ *-' y-'- in tl^
erection of .splenrlid legislative l.i,
partly responsible for the i
liiigs at Victoria, which ,
iro
increase of the <k"l,t in iHUi-U').
. . , ^" 1^'^J »" Act' of tin- BritiM, r ' i i •
legislature was passed consolidating her deu! ,,;;;;'' ^ '■'-"'-^
Ma7ia!jnnn>f of <J,ht.~ln 1891 an Act' .,f tin-
"'rt'iii It was
tenant-govcrnor-in-
""•^•"^v.ooneyhy the sale of debentures
or otherwisi
n.ay borrow either in the nu.d.. pr...rrilM.d I,v th. An ", ^ ^^;"•
e loan, or inthe foru. of insiib:; \ •' l' ^^^^^^^^^^^
•med " British Cohunbia Stock." Furtlu.r'^ .. • /", ^''
. lieuteuant-governor-in-council n.av d c L a ''^n ' / ;"
bentures. i.ssn.Ml nn-I. , :... / ' "" '" ""y f'^ tl>e
enacted that whenever power is given the liou
council to ■
he
the
term
the
debentures, i.ssued under authoritv of anv \ct of tl, "^ • ''"^
be convevtible into stock; and tha^.n.4-a::,::2^r^^^^^^^
an e.pnval.nt amount of .stock in exchange b,r d.-i^ntun-s ' Anv
mch conversion ot public securities into stock n,av- be effect d
either by arrangement with hoMers of .securities oi- l.v' , , ''^^^'*
in, .,toltl,....prov,».„.,.„ „o,|^^^^^AcMv;^.s..,| i„ ,|„.,„„„. ^-
1 Biiiitth Uiilunibia, 04 Vict,, cliiip. ];i. ' ' — 1
^ 54 Vict., ihap. 22,
56
which autliorized the government to borrow a sum not exceeding
£700,000, for the purpose of consolidating the debt of the province.
This loan was to be raised by the sale of inscribed stock, and of the
proceeds not more than X2oO,000 was to be applied otherwise than
in the redemption of the loans of 1877 and 1887.
This process of conversion of British Columbia debentures into
inscribed stock has been going on since the passing of the above
Acts, and during its progress has caused an apparent, though not
real increase in the gross delit during the past four years. When,
however, the process of conversion is completed the burden of debt
wiP be materially diminished. During the two years ending :^Oth
of June, 1893, the amount of debentures of the loans of 1877 and
1887 redeemed by C(mversion into three per cent, inscribed stock
under authority of the Loan Consolidation Act wasas follows : — '
DehenturcH of 1877.
DobenturoH of 1887.
Time fr<mi—
ii
'■a
3% Stock issued
therefor.
4i% Debentures,
Anit redeemed.
3
1st July, 1892
iHt July, 1893
Iht Jiui., 189,3 . . ..
S141,i;55
55,290
i:!,580
i?204,tl45.75
80,170.50
19,012.00 1
S472.875
21,340
27,1<)0
!?<il4,737.oO
27,742.00
33,950.00
210,005
303,828.25 j
521,375
(i7fi,429.60
STATEMENT No. 1
Province ok British Con mhia — Details of Debt, 1895.
1. Loan Act of 1874.— 820.000.
2. Loan Act of 1877. — £100,000, l)oing tlio estimated amount not converted into
inscribed stock [Original loan £150,000, less esti-
mated conversion of £50,000.]
3. Loan Act of 1887, — ,£90,000, being estimated amount not converted into
stock. [Original loan .£205,400, less estimated conver-
sion of £115,400,]
4. Loan Act of 1891. — Estimated amount of inscribed stock, £421,300.
5. Loan Act of 189.3.— £123,700.
6. Loan A.^t of 1896.— Authorizes tlie borrowing of £420,000.
XxppUi Ad, 1895, Chap. .'>1, B. G. Sessional Papevfi, p. 190.
1 Public Account?, British Columbia, 1892-3, page 9.
57
Province of Prince Edward Island.
The debt of Prince Edward Island in LS(57 was S2UG7li or
about S2.n7 per head of h...- population, the sn.alle.st d.^t of ay o
debt of S4,70I,0o0, winch was a per arpHa allowance of S50.> The
pesen bonded nulebtedneas of this province an.ounts only to
8 80 000. a an n^-rest rat. of four per cent. There is also a floating
debt, consistn.g of ten.porary loans.an.ountsfo.- which the .overnn, nf
.habl. under he Loan Act of 1894. and oth.. it.us. 'n all S
0. . . The . ebt of Pnnce Edward Island has been incurred pnnc -
p.t ly for the construct.on of wharves, brid^n.s, o,,ols .tc The
d..l^m:re debt en .h. a sinldn, fund of n^^.- Lt.'l^aJu
S2 7. 5 annually. The <Iebt account with the Dominion shows a
balance July 1st. 1895) of 8775,791 in favour of the province '
UrnhM-thetenasof union, th. Dominion govennuent allowed
i nnce Pdward Island for the purchase of estares, (which had bein
granted by the Crown to large land-owner.s, and by tl^Mn leased out
at^.imt-rents to tlu.detrim..nt of tin. colony), the .sum of ?90() 000
th,s .sun. ^800,000 was to bo paid to the province in ca.sh 'and
interest only was to be given on the other 8100,000. Up to Decern
mber Hist, 1895, the Donn-nion had pai.l 8700,82 1..5(i on this "Land
i-urchase Account," and there remained a balance due of S69 178 44
winch forms part of the assets of the Island province at this date.'
Province of Ontario.
^ An account of the debt of this province, when it was known as
L'PP^^vCr..,ada."has been given above. ^ It will be ren>embered
that m I87:i the debt of the old province of Canada in excess of
■^b>,;jOO,000, for which Ontario an.] (^leboc were jointly liabl(> wis
assumed by tlie Dominion. Again, under the ivadjustment on884
Ontario became entitled to receive interest on a capital of 82 848 -
289 which has been regularly paid by the Dominion ever shicc^
At the present time, Ontario, though probably the province best pro
— i-^^^^'^!:^LPl^j^" utility in the coiifcHleration, ha.s no
1 Order in Council, Windw.r, 2(;th June, 1873.
2 Public Accimnts, rriiice Kdward I.Hland. 189.5, p. v.
3 Public Accounts, Canada, 1895, i'art II, p. 5}'
^ Ante, p. 35.
5 Bu.ig«t speech, Uon. K. H..rcourt, Provincial Tro.isurer, 1S96, p. 39.
'
58
debt. There are indeeil railway liahilities payable in the future,
extendinf^ over thii'ty-iiine years, but even with an (.'stimate for
these there \h, and has been for many years, a luindsonie surphis of
assets over liabilities presently payable, By an Act passt.'d in 1S84,
the provincial government was empowerefl to defer payment of
accruinj^ railway liaVjilities in any one year, by the issue of new
forty-year certificates, to take the place of tlie old certificates
maturing during the year in f[uestion. No new liability was created
by this Act. It merely authorized the postponement of the railway
ol)Iigations of each year. As a matter of fact, the government has
only availed itself of this provision in seven out of the twelve
years that have elapsed since the Act was passed. In J8cS8, 1881>,
1890, 1898 and 1894 the maturing lailway certificates were met out
of funds in hand.' During these twelve years, moreover. Parlia-
ment buililings, asylums and other public works have been erected
at a capital expenditure of $5,000,000, thus sub.stnntially adding
to the provincial assets without increasing the liabilities. The
hnancial condition of Ontario is certainly sound and satisfactory.
The following is a statement forwarded to the Department of
.Vgriculturc ut Ottawa, in resptm.se to a recjuest for a statement of
the debt and a.s.seta of Ontario. -
Yeiir ondini; l3lHt Due.
IlaiUvny !i;iliilit ics
piiyalilu in fufuri% Surplus of asnots
uxtoiuliiig i!VtM- I ovor liahilitios
V.I y.'iirs. prusi'utly piiy.ihle.
1882
188;{.
1884 .
18S.-).
188(1.
1887.
1888.
18K».
I8!)0.
1801.
18; I:*
I8i»;{.
18<)4.
18'.»,-..
8'2,813,12.S
2,802,1.1.1
2,70!t,!l42
2,47T,:!2)i
•.',22".t,;U4
l,',t81,;i(>2
l,7:!:'.,;i7i>
i,48.-.,;;!>7
l,4()4,t)20
i,:{7<),:u2
i,4i>i,r)'.i8
1,. '{12, lilt
1,550,410
l.()!)'.l,22!)
$4,825,586
4..W4.241
<i,8.")!»,(lll()
t;.7<i(),(HtO
(i,(i8(),.';;ii)
(),(i))5.:r)2
(i.7;^4,tl4!)
0,427.252
'),80;i,'.)'.)5
5, 285, -i 15
5,8 8,758
0,l:;5,480
5,20!(,841
5,()78,'.t81
The assets include 84,827,040 in favour of the province in
Dominion Debt account. [Public Accounts, Canada, 1895, p. 51.]
1 Budget gpei'ch, Hon. R. Harcunrt, Provincial Treasurer, 19th Fcj,, IS%, p. 17.
Statistical Year Book of UanaUa, 1895, p. SOi).
PART III.
LOCAL INDEBTEDNESS.
^59)
PART III.
L0( AL iN'DKIiTF.DNKSS.
(^•■^HE <,'ovorniiu'nts of the provinces ol" Ontario and Quebec
/ \ |)ul)iisli returns From time to time showing,' tlie state of
^^i^ nnniic'ipal linances, hut no such statements are issued by
the othei' provinces. Flence it is dilHcult to t^ive even an
npju-oximate estimate of tlie total amount of local ijelit in the
Dominion, though tlie Department of Agriculture at Ottawa, which
collects these fliatistics, calculates it at over SIOO.OOO.OOO. It is
probable that this h'gure is rather lielow than alxne the mark.
In OnUirio and Quebec. — In the history of uiunicipal deV)t.s in
Quebec and Ontario, what is known as the " Municipal Loan Fund"
has played a prominent part ; so that any account of local indebted-
ness in these provinces would be incomplete without some reference
to it ' This fund was an inlieritance from the tinancial methods
of an earlier period. It was established for Upper Canada by a
statute passed^ in 1852. The intention of its authors was to pro-
cure money for the use of the counties, townships, towns, and cities,
at the chea}) rate at which the government could obtain it. The
borrowing powers given to the municipalities under the Act were
unlimited in extent, but loans had to be approved by the governor-
in council, and were to be used only for the purpose of effecting
pul)]ic improvements
Two years showed the evils of the system. Reckless munici-
palities plunged (lei'ply into speculative undertakings, and their
large expenditure brought down even provincial credit. Accordingly,
an Act •'' was passed in 1854, by which the fund was limited to
$7,'^00,000, and the extent to which a municipality might borrow
was defined to be 20 per cent, on the aggregate valuation of the
property on its as.sessment roll. The same Act created the Lower
I The account of the Loan Fund here given Im from a report made on it in 1864 by
Hon. John Simpson.
no Vict., chap, 22.
ns Viot., chap. 13.
(01)
(12
Canada Municipal Loan Fund, which wiis to be subject to similar
restrictions. By Act 22 Vict., chap. 15, 1859, it was provided that
further loans to Upper Canada inunicipalities should ociist', and
that only $400,000 more should be advanced to those of Lower
Canada. In both Upjicr and Lower Canada the payments to be
made by nnuiicipalitie.s for the use of moneys from thi- fund were
the .same, viz., six per cent, annually for intere.st and two per cent,
for sinkinj; fund.
At this time there was a prevailing belief in the provinces that
railways must pay handsome dividends wherever loratrd and how-
ever mana;;e(l. (!onse((UentIy, many of the Hpper Canada nuuiici-
palities and a few of those in Lower Canada hastened to secure as
much of the loan fund mont'V as po.ssilile, and to inve.st it in the
stock.s and bcmds of some rnilwa}', supposed to be of local interest.
Disappointment f(jI]owed, and those unnnci])alities which had li.^r-
rowed largely were (|uite unable to dischiir;;!' their lial>ilities. Two
Acts were therefore jias.sed to meet the dilHeulty. The tir.st (20 Vict.,
chap. 20) provided, in the ca.se of municipalities in default, thiit as
it mi|^ht be inexpedient to pve.ss the collection of the whole sum
due, the ;,'overnor mipjht issue his warrant to the sheriff' directing
what rate should be levied, but that it should not be le.ss thiiu 12J
cents per dollar of the assessed yearly value of the property within
the municipality. The second (22 Vict., chap. 15) provided that in-
stead of the payments previously made by municipalities, a sum equal
to tive cents per dollar on the asses.sed yearly value should annually
be paid to the e;ovennnent until principal and interest were paid in
full. This payment was to form a Hrst ehare;e on the municipal
funds, and no further liabiliti(»s were to be incurred bj' any nuniici-
pality indelited to the fund until such indebtedness was discharged.
It followed from these two measures that the goveriunent which was
at first indirectly liable foi' the municipal loan fund delK'ntures was
now directly liable for them ; they were therefore called in and the
holders paid oti". This arrangement was maintained with tojei'able
success until 1867.
At confederation the Municipal Loan Funds of Upper and
Lower Canada were handed over to Ontario and Quebec respectively,
as assets. The fund however, especially in Ontario, was anything
but an a8.set. In 18(38 there were twenty-one of her municipalities
that had paid interest on their shares of the loan, and had sums
at the credit of the sinking fund. Their total debt amounted to
^954,870. On the other hand twenty-six mvuiicipalities, holding
68
loan.s that n-iu-lu'd a total
uan.s r nat r.-aHu-.l a total of 8.^857,400. I.a.l fall..,, into arn-ars of
interest toti(M'.\tcMtof SM'f,7vs'< f I, „ i- i . "'" ""^* 'i'^'' '^r
^l.';-'!' "" On i,.,.„i
'-'''1111111.3 •:,,.,,
„, ,. .SI. .)«(),()<»(. .*84r.,(iOO
InwiwliMis ...
Cities. ''-'''
r)7.'),o()0
ToWIIH ,
,,.,, .'t.OSO.OoO i-i,;,;,oo<(
» lIllli'L'S .
20,000 ,;.000
§5,807,^00 .*1.43:.',(!00
Cirand Tutal
Jii^.-'JOCOOO
In .a iMay stocks Mas u.veste.l S2,(i:i,S,0(,0, au.l ..:i,-J2f» 400 more had
heen lent to aid ra Iway construction Tl„ f c T
advanced ^A-OODOn f ^'. "'^'"^t" "• H'f town of i^nuitford had
n? ^ !T ' ^"'"' ''^ l^'-*'clcville 8400.000: the town of
Cd.ouro... 00,000; and the town of Port Hope no less tha sU
;:::-,J,l::^::;o;;;;::;;;-:-z:;;;;r^;^
w„hm 1,0 county. (i,„l,,.io|, 1„„| „,„,„ j4o,000 ,m i„ t "1
hosKlos lending 860.000 to a gravel ro.„i con,,,a„y. St C ,tl ri^,'
had mve.,t.d 8S2,000 in .stock., and in loan. „S a gas con™ p"
Hope l,„, advanced »r80,000 to it, l„„.b„„,. c„,n,ni»,,io„e l^nd tie
oonntj- ot Ln,eoln S48,000 ,o a ,naca<la„, ,-„ad co.npanj
111 .S73 the Ontai-io legi.slatu.e pas.,e.l an Act to enable .1,.
G4
the fund by Dundas, Norwich, Prescott (town), Simcoe (town),
Windham, Woodhousc and Wtjodstock, and reduced the indebtedness
of the following municipf litiea to the amounts named, viz. :
Northumberland and Dur-
ham 8223,665
Perth 14 1,708
Ottawa 37,113
Barrio 2,128
St. Catherine's 105,182
Cornwall ...
Guelph
Lanark and Renfrew .
Brantford
Chatham
Eliaabethtown
252
62,221
32,269
15)4,018
103,478
98,847
Goderich $ 9 ',864
Hope 36,546
Port Hope 150,482
Peterborough
Stratford ....
Brockville . . .
Chippewa . . .
Cobourg
London
Niagara
Ops
72.430
77,797
136 375
3.380
69,.')80
486,058
14.205
47,914
All other niunicipalitie.s M'ere to receive pjrants of various
amounts from the surplus on hand, and the debentures to be issu-'d
by the indebted municipnlitie.s, or the proceeds, were to l)e ilis-
tributed in proportion to population. Further, it was provided in
the Act that the lieuLenant-governor-in-council could compel the
indebted municipalities to transfer any revenue-producino^ invest-
ments as security for the balance due, or, where such investments
were greater than the debt, nnght require absolute transfer.
Before S('pteud)er 1st, lS7i, new debentures were to be issued by
the indebted municipalities for the amounts above named, and the
sums annually payable on them were to be sufficient to pay oft' the
wliole amount in twenty years. To municipalities entitled to receive
grants interest was to be allowed on sums not paid by Februar}'
1st, liST'i. The moneys wdic . received were to be kept apart and
applied in aid to railways, in constructing drains, building gaols,
court-hou.ses, .schools, bridges, piers, etc., or to reduce obligations
incurred for such work. Tlie former obligations wer(> to be ke,)t in
existence, as security for the new debenttu'es of the indebted nn;ni-
cipalities. Finally, the debts due to the Municipal Loan Fund were
to be declared cancel.'ed, so soon as the ne^^ debentures were paid
otF.
This " Surplus Distribution Scheme," as it was called, closed the
history of the Municipal Loan Fund in Ontario. The following is
a statement of payments made under its provisions up to November
1st, 1876.'
1 Quebec Seasional Papers, 1877, Vol, IX, part II, No. 10.
65
Total amount of princiijal jiaid
interest " S2,«04,430
123,000
S2, 727. 4-0
Total an.ount appropriated under the Act Z
Less principal as above .. S3,l]5,7.1«
2,004,430
Balance ~
8511, 30G
nucli
lich
borrowers M-er. the oouui""^!' S''"^ "1 ^^^'' ^'''"''^''''- '^^^'^^ "'"'g^^'
Rive. (s..o;oo': :::, ^,: t^:i'^'o2;;"°",^i '" ^ t' " ''--
Municipalities. . i , .
Advanced ror Advanced f„r
Counties railway purpoHes, local purposes
Townships S517,44(.
Cities 2J1.000 .Sl6!,27r,
Towns .■,■.;■ 270.000 h7(U< W
Villages 170,000
Parishes ^"^^0 91.50(1
1".000 174,326
mr>oMO .'Jl.473.100
Grand total. .
„ «2.42.S.540
This l,.d lo tl],. ,,ns,i„„ ,f 1 , •"'"'■' 'I""K "-as pnkl.
that „,el, ,au„i.ipa„, ,,,„„« ,, ,. ,, .,„...: ,:"'•"■ '"■"T^.^^
mdet.tedm..s.s to tlic M„„i,.ir,.,i r '"■'»"""'» I" tlif amoniit i)t its
payment „r th.e delntu,: X .^ 'r:;,- !'" f"" 'T
66
discharge for all amounts due to the fund. The province claimed
the original amount of the loan, together with twelve years' interest
at five per cent., loss the amount of interest so far paid and the
amount of the sinking fund.
Under this Act over SoOO,000 was received by the province in
1881-82. Many of the municipalities, however, demurred. For
instance, Slierbrooke was asked for S50,740. The town council repre-
sented that they had understood that this loan would never be
collected, that under this belief they had spent large sums, and that
they were unable now to repay the amount. They offered 831,671,
which was accepted.'
Since confederation the province of Quebec has received the
following sums on account of the Municipal Loan Fund : —
Year.
Amount.
Year.
Amount.
1867-8
85,S57 1
5,703 :
5,917 :
16,865 ;
• 20,303
13,465
16,174
191,.370
3,480
1,167 \
1881-2
$654,146
1868-9
1882-3
34,120
5.788
42,671
102,361
1869-70
1870-1
1871-2
1883-4
1884 5
1885-6
1872-3
1886-7
5,380
1873-4
1887-8
1888-9
4,891
1874-5
85,538
1875-6
1889-90
1890 1
3,200
1876-7
1877-8
1891-2
3,000
1878-9
t
1892-3
1879-80
1893-4
1880-1
1894-5
1
Aliat met from Quebec Sessional Papers, 1894, No. 10, Statement G.
Municipal Debt in Ontario.
By section 382 of the Municipal Code of Ontario every council is
obliged to transmit, on or before, Jauuary 31st in each year, to the
Minister of Agriculture, an account of the several debts of the cor-
poration as tlu'V stood on the ;Ust of December preceding, with a
'Quebec SeRBional Papers, 1882-83, p. G5.
(i7 ■
Htateinent, giving the original amount of every debt, the date
when contracted, tlie amount redeemed, the rate of interest, and
many other particulars. This information is re(|uired both because
the statistics are generally useful, and also because the government
desires to keep a watchful eye on the ever increasing municipal
debt. Jn addition to this regulation, the two following restrictions
have been placed on the debt-incurring power of municipalities of
Ontario : — (t) Any by-law authorizing an increase of debt must
receive the sanction of those who pay taxes; and (2) the rate of
municipal taxation for all purposes (exclusive of school rates) shall
not exceed two cents per dollar of the assessed value.^ The second
safeguard has proved of little value. ^ A maximum of two cents per
dollar is very high, and the power to Ijorrow money may be increased
indefinitely, by merely increasing the assessed value of the property.
Moreover, the general inti-oduction o^' the local improvement system
enlarges the power to borrow, as debts incurred for such purposes
are not considered part of the genei'al indel)tedness. Money bor-
rowed to pay for waterworks, and for other works of the kind pur-
chased or constructed by a nnniicipality, is also in most oases not
taken into account in determining whether the limit of indebtedne.ss
has been reached. Nor has th(; lirst sab'guard proved very satis-
factory : it is often a smnll vote by wliich the ratepa^xM's consent
that very large liabilities shall be incurred, and the more Frequently
they are called upon to decide such matters the smaller does the
vote become. It would be better if at least a majority were i'e(|uired
of all those entitled to vote.
The municipalities of Ontario consist of cities, towns, villages,
counties, and townships, and the total local indebtedness of the
pro\'ince is therefore the aggregate of the ilel)ts i^f tliese live
clas.ses <if connuuuities. In LSTo, the I'arliest ilate f^r which
records are availalile, the total bonded ilebt of tlie miuiicipalities
of Ontario was Sl(),7;'>:.,'^-2."). Of this auiouiu Sll,0(i(),5G7, or aliout
59 per cent., was urban debt, )'. i\, debt of towns, cities and villages.
By LS94. thi' total local debt had trebleil, and stood at i?4!),llS,.Sl.s.
No less than S44',77'?,r)98, or about 90 per cent., consisted of urban
debt, the total for the cities alone reaching 8:^3,562,798.^ The
1 65 Vict. c. -42, BBC. 344.
2 Ibid, sec. 357, clause 1.
3 Uepott of the CommisBion on Municipal TnstitutionB, Ontario, 1881, page 56.
^ Return (No. 68) to order, passed by the Ontario legislative assembly, 25th March,
1895, p. 23.
68
following statement shows the growth of the municipal (debt year
by year :
Year.
Bonded debt.
1873
810,732,225
17,459,040
18,973,420
21,017,423
21,800,809
23,9.30,418
24,905,037
24,718,498
25,159.0;i5
25,411,280
2(1,3(10,084
27,114,08.'
28,003,771
29,924,803
3 1,94.3, .320
34,729,527
.38,988,332
40,720,985
4.3,888,853
47,1(10.902
48, 08.3. 24;'.
49,118,818
1874
1875
187()
1877
1878
1879.
1880
1881
1882
1883
1884
1885
1880
1887
1888
188!» . .
18!t0
1891
1892
1893
1894
Floating
del)t.
?1, 007,859
1,910,833
1,094,.392
2,203,150
l,.390,(i88
2,224,027
1,51.5,27<>
1,170, i 77
1,005,217
1,000,983
2,092.9.30
3,712,.50«
.3,i»20,.390
4,841.717
5,045,208
0,437,703
O,^ 9.3,5 19
8,.387,180
7,02i»,7.30
0,409,899
0,7'.!( 1.422
0, .529, 774
Absh'act from—
Report of Bureau of Industries, Ontario, 1SS4. Tabic 36.
do do do 1S8S, Part G.
Return i\'o. OS, made to Leiiislatarc, Ontari:; 1S95.
Urbfin Del)t in Ontario.
Cities. — From the foregoing statement it will be seen that the
growth of the local rlebt of Ontario has been steady for the past
two decades. As noted above, the urban debt esp^^cially has
increased very rapidly. The necessity of constructing ..ewer sys-
tems, making and paving streets, laying down sidewalks, esta-
blishing water and gas Avorks, and giving bonuses to mamifacturers
and railways, all within a few years, explains the increase. There
ai'e twelve cities in Ontario, and their total debt in 1(S95 was
not far from ;?3."),000,00(). The bulk of this sum was made ivp by
the debt of Toronto, which is over 821,000,000. Hamilton, London,
and Ottawa are the only other cities who.se debt is over §1,000,000.
The smallest debt amongst the cities is that of Stratford, which in
1895 amounted to 8323,847. The bonded indebtedness of Belleville
69
in 1894 was ^'ill.dOO lai-<(ely made up of railway bonuses (!?9I,0()0),
aid to scliools (890,000), and iiKjney expondoil on roads and bridges.
Brantt'ord's debt amounted to §820,449, of which !i<l;U,01(J was
local improvement debenture debt, and $215,(100 money spent on
construction of waterworks. Another comparatively large debt is
that of Windsor, which stood at S8G(i,M25 in J 894. tr22i,40(j of this
amount was spent on a sewer sy.stem. and over §200,000 more con-
stituted local improvement debenture debt. St. Catherine's in 1894
had a bonded debt of more than $MK),000, of which §804,940 con-
sisted of debentures issued to construct waterworks, and §80,000
represented bonuses to railways.' In 189"), the liabilities of Kings-
ton were .«9 13,725. Over §60,000 was de1)t incurred to aid j)ublic
and high schools, and §:w4,000 was the amount .spent on the munici-
pal waterworks.*
In 1^95, the four largest municipal debts in Ontario were those
of Toronto, Hamilton, London and r)ttawa, which deserve more
extended notice.
Toronto. — The progre.ss of Toronto in population <hu-ing the
past fifteen years has been very great, but the gi-ow t h of its debt
lias more than kept pace with that of its numbers. In 1871 the
general city debt was but 82,712,207, and the local imi)rovement
debt §92,.5o;5. By 1881, the general debt had more than doubled,
and the improvement debt had increased four-fold. In 1891, ten
years later, the general debt amounted to ?! 1,509,590, and the local
impi'ovement debi'Uture debt to §2,720,857. In 189-"), the general
debt stood at §12,474, '09, and the local improvement debt had
reached the large figure of §9,052,270, an increase in the latter of
no less than §0 325,41 2 in five years l'' AVe liave not far to seek for
the cause of the vast increase. Rapid yrowtli of populutidii led to
a "land boom;" streets far into the suburbs, where there was ncith-
ing but vacant land, wre laid out, paved and ligltted. The assess-
ment figures show the infiation of lainl values. h\ KSSl, the total
assessment was §.58,540,910, in 1S92 it was §151,098,32.S. In I.S95
it was reduced to §146,427,000, and it is pi-nbable that the jireseiit
year will see a decrease in the assessment of fi-om §]5,()00,0('0 to
§20,000,000.
An analysis of tlie present general debentui'e debt of the city is
interesting, as showing the causes of the increase of debt. The
1 Return No. 68, maHu to Legislutive Asmuibly, Ui-.tnrio, 1S!)!5,
2 Auditor's Report, Kinpston, 189.5, p, 41.
3 StatementK re Debenture Debt of Torouto, issued by order of Council, 3l8t
December, 1895.
■HI
■
ro
followinj^ is a statement of tho purposes for which debentures were
issued, and the several amounts :
Gonoral city purposoa 81, 084,7^)6
City's proportion, local iinprovoinouts 1()9,44!»
Exhibition park liiO.OCO
A'ihbridfio's Hny ii;ij)rnveuiont,H 140,000
Gaol and Houso of Uofiigu ](;;{,12!t
Now City and County buildings l,()4!),i){)2
Volunteor Drill Shod site. 111,580
Garrison Crook sewor 2H,!t!)7
Don River iniprovonicnts fl!»!t,!)91
Island nri'akwater !»!t,'.l<tr)
Esplanado S»21,896
Rnilwayaid 1,143,717
I'nblio schools l,2!)2,r)()7
ColUvniate institutes I8!),0.'?r.
Sejjaruto schools 50, (>!)()
Industrial .schools 54,20K
Public library 60,496
Rosedalo Ravine sewer i;i7,49(>
Kini; Street subway 2:30,204
Queen Street subway 42 012
Horticultural Gardens 50,499
Public parks 145,.S49
Waterworks .'3,722,287
Total .?12, 474,5091
From this it will be seen that one of the greatest expenditures
has been for educational purposes, aniountin>.f to $1,582,398. The
large sum of Sl,649,000 has been spent in tlie erection of the
municipal buildings, which are not yet near completion. If to the
direct railway aid we add the expenditure on the e.splanade and the
two subways, we get a total of S2,337,829 which may be called
expenditure incurred on behalf of railways in Toronto. On exami-
nation of the local improvement debt, it is found that the largest
amount under any one head is that spent on pavements, viz.,
S2,409,737 ; the next largest is that on sewers, Sl,869,826. In
addition to these two sums, 8867,793 was expended on streets, and
8442,699 on sidewalks. ^
' Toronto : Statement re Debenture Debt, 1896, p. 31.
Ibid, pp. 7-9.
71
The followiii
nincf 1871 :
i.s a .sfcatmno.it of Ton.nto.s .l.ht for .ach year
Year.
Ctoneral city
]H7.'> ' !?2,712,L'()7
1H7.'!.
IH74.
IH7rj.
I.S7<i.
I'^77.
187K.
I«7!>.
IWO.
IK«1.
I HH2 .
I8k;}. .
1884
1885.
i88ti.
1887
1888..
188!).
18!K). .
18!)1 . .
18!tL>.
18!«..
18!)4..
1895..,
2,r>84,<ir.l
2.(;74,!»84
•%!'.'f4,i.';{7
4,L'(i4,;i07
'), 158,071
i>,'M'.),(i7l
r),8!»4 f.(!5
*i,'»7r.,7!>l
r>,85;{,!)i5
r),!tOL>,l'«(J
0,04(»,;{87
«, 184,. ■538
«,47.'J.173
7,107,470
7,4(J0,8;J3
8.3;{3,27<5
«,814,!l(;7
il,f'0ii,f)!»0
n,407,r.«)o
iO,o;»2.;i73
n,o;{!»,:{ri3
11.152 ;ir.3
ll,0})!t.l;il
12,474,509
Lociil
improvuiiu'iit
il.'ht.
«!»2.5;i3
102,7.'J:t
I22,7;i3
170,L^!t3
220,884
2li0,884
32L' 'SM
44:1,705
4f;5.0!»4
Ol'l,2!)2
8.-).5,t.'51
78!t,!»5l
1,15!»,4(!4
1, 112,792
l,.'?84,i;j0
J.5fii,;i4(;
1,«2(',.10.--
2,f)8;{,!»70
2,726.857
's951,809
8.2fi7,!t28
«,95,'j.58!)
9,209,180
9, or. 2 2701
Thus the ojmss del.t on 31. st December, ISQo, was S^i 526 770
.Sinkintr tiiiK Is, however rchiP,.,! fi 1 1 , ''" ""-'"^'^o.' '»•
consfcnictini. waterworks -^l^dfA'. "" 'f^''«\<^ ''■'^^ ^^t'^'n spent in
l)onns to s.neltinir works R.,. " '"'"' ''"'^ ^^" ^^
000. On Dec 2r • t l8of " .1 ? "^^ '''' ''''''''' ^''^^'-
T 7 '^'''^^;'^' •^^'^^' l«9o, the net deht umounted to l?3 127 170 •
Zom^on.-The debenture debt of fch,. rifv .P r V
3:? 103 021 in ISO ^ Ti • . ., ^ "^ London was
~ji:'^f:!!lLl!li5?^J^ a floating debt of S>218.204.
iJiT^iia "*''"'"*'■' ^'''^"'"'' ^'^'- '^'^' ^'•^2l^ ^ '
3 Financial statement, City of Hamilton. 1895, p, 107.
72
made tho city's total liubilitios S2,H21,'2-n.' Dcbonturos for thi' sum
of !?5I5,3')1 wcri! isHUt'd to niisc iiionoy for the construction of water-
works; SlHO.OOO more was the nniount contributed by London to
aid the Canadian Pacific, tlic [jondon and South-EasLern, an<l the
London and I\)rt Stanley i-ailways. 'rhere have been two consoli-
dations of the del it, one in 1872, to the extiMit of l?21J),4S(j, and (»ne
in ISt).), aniountini; to !? 1,022,000. Ijast year the balance shet^t (jf
tlie city showed total assets of $2,742,031, which is an excess over
her liabilities of i^421, 404".^
0<<a?w.— The debt of OttaAva in 1895 was $2,082,907, and the
rate of interest paid upon it averai^ed T)^ per cent. Of this del it no
less than $1,399,084 was incurred for waterworks construction;
S450,000 more was s{)ent on the sewer s^'stem, ^175,000 on roads
and bridges, while aid to railways eanie to $100,000.'*
From an examination of the debts of these four cities, it is seen
that the heaviest part of the debt has lieen that incin-red in con-
structing municipal waterworks. Roads, bridges, and paveniei\ts
havt^ also been very costly, and together with expenditurt; on .sewer
, systems and aid to public and Iiigh scliools make up the bulk of
the debt. The iudebte(iness of the twelve cities of Ontario may
now be sununari/ed, and the purposes for which the debt was incur-
red specilied as follows :
1 Auditor'n lipport, City df London, 1WI6, p. 17.
"- Ibid, p. 18,
3 Rotmn to LeKisIativc As,seiiibly of Dntnrio, Marcli l!)th, 18!)(), p. 1.
74
TowuH. — On DectuulpLT lilst, 1H()4', tluTo were iiinoty-six towns
in Ontario, and tlieir total (lel)t amounted to 18«,}«M7,092. Though
this is tlie hitest information availabhf, it is probable that there has
been a considerable increase in the total since that date. The debt
was incurred for the following purposes: — '
RdikIh mul liridyuH 5<6S1,170
Railway Iwmwos 854, 109
HoiuisoH to iiiHiuifactiirorB 6^^^),4H8
Municipal waturworks 1,528,891
Waterworks coinpaiiiuH 153,217
Ga8 and electrioity 322,800
Hi^h and puhlio hcIiooIh 1,102,398
Sewora 497,550
Other purposos 2,449,01 1
Local iniprovoniont debenture debt 911,855
Total
88,987,092
The largest town debt was that of Toronto Junction, S779,()93,
the only one over SoOO,000. The smallest was that of Thornbury,
S007. The ninety-six towns may be grouped as follows, according
to amount of debt ; —
33 whose del)t was under S '-'5,000
19
29
14
6
1
3
1
between 25,000 and 8 50,000
f)0,(;00 " 100.000
100,000 " 200,000
200,000 •' 300,000
3(X»,OUO " 400,000
4(10,000 " 500,000
" " over 500,000
Toronto Jitndion. — The debt of the town of Toronto Junction
is worthy of special notice. At December loth, 1895, it amounted
to S95G,4()0, of wdiich ^103,200^ was secured by consolidated local
improvement debentures. This debt is almost one-fourth of the
town's assessment — S4,n08,538, and was almost wholly incurred
between 1888 and 1893, during which time the town underwent a
" boom " and enjoyed a period of apparent prosperity. By 1894 the
total amount of debentures outstanding was close upon !i51,0U( 1,000,
issued principally for the following purposes : — ^
Waterworks 8185,700
Public schools 84,074
Sewer.s 148,600
Subway 333,357
1 Ontario, Sessional Papers, 1896, No. 68, p. 23.
'^ Financial Statement, Toronto Junction, 1895, p. 42
3 Ibid.
75
In 1804, upon tbo petition of the town, an Act consnlidatinfj the
(lelit was paasoil by uho lt>t,Mslature. It was, however, found iinpos-
sililo to (lispo.se of tlie tlehonturos authorized hy tliiw Act, and, to
increase the ditlioulty, the corporation found itself unable to colk'Ct
Huflifit^nt From tlie taxpayers to meet the interest on the old deben-
tures outstandini,'. In 180"), therefore, the corporation again peti-
tioned tlu^ leffislature to consolidate the whole debt, including
debentures issued for local improvements. Accordingly, an Act was
passed' giving the town power to issue debentures for a sum not
exceeding ;?r)00,0()0 for the purpose of redeeming the general debt,
and for a sum not exceeding 1? 1 50,000 to redeem local improvement
del)entures outstanding. The issue of $000,000 was to bear interest
at 4i per cent, and a special rate was to be levied by the council
during the years l80r)-10;U to rais-e an amount sutKcient to
redeem these debentiu'es by January 2nd, lO.'io. The debentures to
be issued to redeem outstanding local improvement debentures were
divided into two classes, payable iji 1907 and 101') respectively,
both clas.ses to bear interest at 4^ per cent. The council was
authorized to compel every ratepayer to pay his quota, the penalty
for arrears of fifteen days' duration being fixed at an addition of ten
per cent, to the overdue payment. If the arrears continued for
twelve months the corporation could .seize and sell the land for taxes.
It does not appear, however, that this consolidation has been any
more successful than its predecessor. The financial difficulties of
the town have increased rather than diminished during the past
year, for, the inflation of real estate values having subsided, it has
been necessary to cut down the assessment and curtail expenses
The taxes collected have been decreasing in amount, and the town
appears to feel the full weight of its liebt. The lati'st development
in regard to the finances of the town has been an ultimatum handed
in to the council by the bondholders (September 6th, 1806) in which
the latter agree to reduce the intere.st on the debenture debt from
4| to 2{ per cent, for one year only. Should this offer be ai'Cepted,
the rate of taxation for 1807 would be struck at 30 mills, which is
equivalent to 13 mills on last year's assessment.
C'obourg. — It should be noted that in 1802 the town of Cobourg
petitioned the legislature to the effect that, inasmuch as 8216,371
of its debt matured between 1891 and 1893 and could not be n".et,
the corporation be therefore permitted to consolidate the debt.
Power was accordingly given to the town to raise by way of a loan
1 Ontario, 58 Vict., chap. 90.
H ',
76
on the crcflit of 35-yoar delKMiturca a sum suHHfioiit to rttiif tli(^
maturing (ItihoiitiirHH.' A coiiHidcriililc! ]itirt of Cohour^'s ildit, wna
incurn'tl in iimkiii'j- Iiarltonr iiiipniviincntH uiid in j^nvini^' lioniisi>8 to
manufactuierH.
Vill<i,gi'f<. — Tiiei'o arc one Inuulrt'il mid lvventy-<'i<,dit villaoi h in
Ontario, and in 1 81)4- their total indi-htcdnoas waH SI ,2'-i:V7 K<,
incurred for the followinj; purposes-: —
[{m.kIh imd hii.lKi'S S :«>.7K!t
Kailway l)nmis(;.s l.'iS.itTO
HoiumeH t(i iiiiiiiufiictnrt'VK 104 4(iri
Miinicipfil watcrwdrliK '2in>,7l»>>
\\';iti)l'woi-l<H (■i)iii|)aiiinK 14,'JHl
(inn ivrid electricity 1,'J,L'K4
High (Uid public sclinfils .'{I2,2H,S
iSowuvH r>,'.WH
Other purjJdseH 2'2\ ,!».'{;-)
IjdCdl iiiipi'iiveiiii'iit (lolioiituro (loi)t ()',*. Ddl!
In IHft-l fifty-two villa";('S in Ontario had debts of less than
S^.ODO i!ach ; twenty-eij^ht othei-s had dehts of between S.-j/lOO and
$10,000, and thirty-oiyht hud dehts of over 1? 1 0,000 each:^ The
debt of Merriton, S7'2,40!), was the largest amongst village debts,
and that of the village of Krin, SIO. I(i, tlui smallest.
Rural Indebtedness in Ontario.
OountieH. — In cities, towns and villages, no by-law to raise a
loan can have any legal elh-et until it has received the assent, by
pul)lic vote, of the rat(;}),iyer,s of the nnniicipality. In counties,
however, the county eoinicil niay rai.se l)y b}--law, without suh-
mission to the electors, any sum not exceeding in a single year
§20,000.-'
In 1894 the total county deht of Ontario was ^2,402,868. Of
this, §9()0,08I5 had been incurred in making road.s and constructing
V)ridges, !!?r)40,r)48 was the amount of railway honuses, and SSOG.O^S
M'as local improvement debenture debt.' Twelve out of the thirty-
nine counties had debts of over !i!>50,0()(). The largest deljt was that
of Middlesex (^?5l9,900), which had been almost wholly incun-ed in
constructing roads and bridges. The other county del)ts of wliieh
returns have been given were as follow.s :
1 StatutoH of ontHrid, 5.j Vict c ()7.
2 Ontsirio Sessional P.iiier^, 189(5, No. 68, p 28.
3 Ibid, pp. 5 to 8,
< Municipal Act of Ontario, 65 Vict, chap, 42, sec. 344, subaect. 1.
5 Ontario Sessional Papers, 189G, No. 68, p. 23.
77
Brant 816,440
Bruce liO.OOO
Cnrleton ri5,(»00
DiiUorin liMfiB
El«in 15,0(M)
EsHox 1H,H(I0
Froiitonac 180,774
Ontiirifi «i'JI,r>45
Oxfoi-a 14!t,7'.>4
IVrth L'lO.OOO
I'etorl)iiiiiiit;li (>.'{, or»I
T'l'i'Hciitt ninl RiiSHull .... l.'t,.'U7
Piiiico EtlwHnl ;<L',l*HO
Ruiiiy Rivor 4ti,7!t4
(Iroy '2i;,m0 Ri'iifivw 4r).2tl((
Haliburton »,141 Siincoo r.3,20<)
Huron 2fiL'.700 Str.rninnt mid DinidnH . . . 70,:«»1
Kont :'>:i,[\r>'2 Vi.'toria 8r),()00
Lennox und Addiiigton . . 12n,;iOO Wiitorlc. 2!t,:i2H
l.iiicolii ] 18,115 Wclliiiid 8,412
lliistinKH 140,130 Wolliiigtoii 10,00(1
Xnrthmnburlandand Dur- ■■ Wontwnrth .... .... .'U.oSH
Imiii 1.1,400 Y..rk ,^)8, lOfii
'J'oii'HKliips. — The IflHt cla.SH of locnl dobts in Ontario to Ix' con-
siderod i.s the " townsliip debt." Jn Ontario there are 491 town-
sliips, and according to the latest returns furnished (December Hist,
1S94), their total indebtedness anumnts to S2,94-2,;U9. S'844,!i3() of
this flcbt ha.M l)een iiicurnHl for bonn.scs to i-ail ways, and S")04,293 in
aidin<i schools. On roads and brid^^^es i^l'M JH'.i has bci-n spent and
now forms part of the general debt. The local improvement deben-
ture debt amounts to 3Hf»l,82l.' < 'f the whole nnmlier of town-
ships, 409 had a debt in 1S94 of less than ?10,000 each, and the
remainder were cla.ssed as follows:
48 witli dobtM iiotwoon 810,000 and §20,000
18 " " 20,000 and .'iO,()0O
10 '• " .'J0,000iind .'iO.OOO
(I '• ;ib')\c r)i»,()Oii
In the case of these last named townships the bulk of tiie in-
debtedness was made up of local improvement debenture debt.
Snnnnaiy.
The results of this cxaniination into the local indebtedness of
Ontario are summarized on the following page hy a statement
showiu'' the total amounts 1)V cities, towns, villages, counties and
townships of the municipal indebtedness detailed above. It may
be added that the ratio of debenture debt to assessed values has
inci'eased for all municipalities from 4 . 8 per cent, in 1 880'' to a
little over 6 per cent, in 1894. For the cities, the ratio was 11.9
per cent, in 1886, and nearly 14 per cent, in 1894.
1 Ontario .Sessional Paperct, 1890, No. 08, pp. 9 ai.d 10,
2 1bid, p. 23.
3 Report, Bureau of Industries, Ontario, 1892, Part VII., p. xiv.
78
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79
Municipal Debt in Qnebrc.
In tlie province of Qnobco the powers of borrowing ace ^ed
to municipiilitics are limited, under the Consolidated Municipal
Loan Act, to twenty per cent, of the ajf<j[repate valuation of the
property in the municipality at the time of the last by-law authoriz-
ing a loan. By-laws to raise loans are only of effect when approved
by a numerical majority of the pro])rii'tor3 who are nnniicipal
electors.' Further, the assent of the lii'utenant-^overnor-in-council
is necessary to the by-law, and proof is then i-cfj'nrefl that the
demands of tilt' law have been fully met. When the iiiteri'st and
sinking fund of the sums borrowed b}' a town absorb one-half of
its revenues, tlie council cannot contract a new loan without having
been specially authorized by the lieutenant-governor-in-council.^
Finally, it is made a condition precedent to the legality of any
by-law authorizing the issue of debentures, that a sinking fund of
at least one i^rr ceiitiim />er nnnavi for each loan be provided.^
This pi'o\ ince, like Ontario, attempts to collect statistics refer-
rini; to municipal tinanccs. The latest returns are i'or the year
ending .'}lst December, liS9-4-, and they give the total municipal
liabilities of Quel)ec, at that date, as S6,179,!>02.31.* These tigures,
of course, do not include Un' debt of the city of Montreal, ami indeed
so many nnmicipalities have failed to make their returns that the
total can only be regarded as approximate Two-thirds of the
amount here given as the municipal liability is made up of the
liabilities of only eleven towns, viz., Sorel, Valleyfield, Lnngneil,
Maisonncuve, Ste. Cunegonde, St. llcin-i, Levis, Hull, Sherbrooke,
St. Hyaciiitlic and Thri>e Rivej's Wlicn this fact is known it
will be apparent that the deljts "f the hundi-eds of other
municipalities in Quebec iire insignilicant. Wherever they do
amount to any consideralile sum, they are largely the re-ailt of aid
given to railways; for example, the largest county delit stateil is
that of Pontiac, :>214,r)."iO, and of this amount .'i?! 00,(100 is liability
incurred in aiding the Pontiae and Pacific .luiietion railway.' The
total amount of aid gi\ eu to railways by the nnmicipalities of
Quebec texcepting Montreal) is i?3,300,074, or over fifty per cent, of
their total liability as stated in 189-1'. '■ Besides the nnniicipalitieH
1 R .S. Q.. 18Sa, e.2'.t, ^nu. 354.
2 Ihkl, ace. .Soj.
3 Ibitl, sec. 349.
* Rappirti Miinici|mu\ pdur I'amirB 1894, Quobec.
Report, Depaitu.cDt of Raihvaya anil Cniialf, Caiiaila, l>'.il. p. 4!>t),
•1 Ibid, p, 487.
80
above named, sixteen municipjilitieH had liabilities exceeding 825,000
eacb in 1894. '
Urban Debt in Quebec.
By nn Act' pa.s.so(l Uy the legislature of Quebec in 18S9, Mont-
real was f,nven permission to issue permanent debenture stock to
an amount not exceedint; \f> per cent, of the citj's total realty
asse.ssment. KnonLjh of the proceeds of such issue was to be set
aside and used exclusiv dy to redeem the existiu*^ debt, and the
remai'ider was to be vised for waterworks, drainage, street im-
provement, public markets and hospitals. ^ In 1894 an Act in amend-
ment was passed^ limiting thi; borrowing power of the city for the
next four years to I.') percent, of an a8ses.sed value not exceeding
Sl()0,O()0,00O, and thereafter to 1 ") ]h'1' cent, of the assessed value of
the taxable property. It was understood that 1 ,000,000 of the new
loan was to be nseil to meet the present engagements, and that the
balance in aiuiual payments of S'57."),000, extending over the four
years to come, was for cai'rying out permanent impro\ements dur-
ing that time.
The debt of Montreal de.serves notice as the largest municipal
liabilitj' in Canadi;. On the Hist of December, ISO-t, the funded debt
hail reached a total of !?28,4.59,09-l', made up as follows :
7 per emit. Pennnueut. registered stock S ."iRfJ.oO )
7 " 'iVrniiiril)l(^ reijiHtereil stuel< .M.OOO
« " Rejjiisteroa stock t578,4()0
5 " Rogistere(l slock 240,000
5 " Sterling iioiuls ;?,580,727
4 " Stock ;m.l i.oiuls 2,!t31,8(X)
;{ " Sterling loan, ]8HH-,!tO 7.008. eOO
4 '• Tfriiiiii.'ihK' .stock of l.S'.l-J 4,8()(J,t)(J7
4 " •• " Ir-m 200,t(IO
4 " •■ " 18iM 2,000.000
3i " Har))oin' improvcnient loiiii l,Oi'0.000
7 '■ iiochckig;i ix.nils 00,000
7 " St. .K'liii l),i]itistc lionds ;J5.000
7 ■• Cote Nt. Louis lion.ls £0,000
7 -' '• •■ lOu.OOO
'■ St. Cihiicl l.oliils C5,0.Mi
823,4r)0.0!»4
; A'.' /)'»»•/ of the Treamrer of Mantrccd, ISO If., p. i'7].
1 K.T>i)i>its Miuiiciijaux, l^uebrc, 1894.
;")".! V'if'., cli!i|i. Vii.
Ibid, sec. 130.
57 Vict,., cliiiji. ri(i.
81
Dnrinff 1895 thcro was no addition to tlio funded il^bt. Asa
matter of fact tht; law of 1889, which liniiti.'d tlit; city's Ijorrowincj
power to !?24,0()O,0O0, prevented any large increase of the debt.
But tlie expenditure in excess of revenue arising from the engage-
ments contracted Ijy committees over and above th.cir annual appro-
priations, which liad been carried forward from year to year,
amounted to 8800,000, and the legislature authori/,e(l the transfer of
this sum to the cons(_)lidated debt. This addition, with another
transfer made at the previous session has so reduced the available
borrowing power of the city as to interfere seriously witli its ability
to carry out its obligations.^ On December 31st, 189.5, Montreal
had a floating debt of S5,9()8,319, which, added to the funded debt,
made a total liability of 829,427,413.^ It has been incurred by
expenditure on waterworks, parks, markets, opening and paviug
streets, harljour improvements, etc. The following ar'i some of the
l;rr -^est item.s^ :
Waterworks 88,618,806
Mount Royal Park 1,033,337
Market properties 849,!t72
City hall 524,338
Streets — opening and widening 3,2!tO,801
sewerH ] ,403,379
pavement 3,868,784
Grant to railways 769,012
Harbour improvements 603,129
The lavish expenditure of Montreal during the past few years
has finally resulted in financial embarrassment, and means of extri-
cating the corporation from its difficulties are now under discussion.
The borrowing power of the city is limited to 826,838,000, but that
figure has been exceeded by 8407,164. It is alisolutely necessary
(1896) not only to pay ott' the excess, but to meet further engage-
ments amounting to 8522,606. Moreover, there are works estimated
to cost about S500,000 which must be carried out, but which cannot
be paid for out of current revenue. It was decitlen .some time ago
to ask the legislature to increase the borrowing power l)y 82,000,-
000, but a refusal was anticipated, as the present limit, established
in 1893, was fixed on the di.sti?ict understanding tliat it should
last for four years. The council, therefore, have decided that in
case of refusal the legislature should be asked to authorize the
1 Report of the TreaHurer, City of Montreal, 1895, p. 2.
•i Ibid, p. 5.
i Report of the TreaBurer, Montreal, 1894, p. 76 .
6
82
city to make a temporary loan of SI ,500,000 for a period not
exceeding two years, to be issued only as requiri'd for certain
specified purposes. By this means another year will he tided over
and then the bon'owing power can be extended. In the meantime,
there is a possibility that the assessment may be largely increased
by bringing the vacant property of religious institutions into the
classification of taxable property.
The total debt of the municipality of Quebec is ?6,4.')8,016, over
two-thirds of which is held in England. The part payable in
Canada amounts to S2,036,750, including $572,900 of permanent or
non-redeemable debentures.* This indebtedness is made up of loans
contracted in building an aqueiluct, in developing a sanitary system,
in providing electric light, public halls, civic liospitals, etc. A con-
siderable part oi the debt will shortly mature, and for some time
past various projects of conversion have been discussed. In 189G
the city tried to raise money by the sale of new debentin-es, to
redeem its outstanding liabilities, but the attempt lias not so far
been successful.
Montreal and Quebec are the only municipalities in the province
of Quebec whose net debt exceeds S 1 ,000,000. It will, thei'efore, be
sufficient to give a bare statement of the amount of the respective
debts of the other important towns of the province. It should be
remembered that no small part of the debt of these towns, as well
as of that of other numicipalities in the pi-ovince, consists of deben-
tures, issued under the law of 1880,- to cancel their indebtedness to
the Lower Canada Municipal Loan Fur.d.^
Town or city.
Hull §417,400
Sherlm.oko L'82,814
Jolietto 131,450
St. Hyacinthe ' 4'2H,()!^;!
Luchiiie I . l-r.-^OO
Net diibt.
Liuizou
L(5vis ...
Stu. Cunej^oiulo.
V\ estiiiouiit
Viilk^yfu'ia
Thrtiii Rivurs . . .
ir ion
'iC.l»,(iOO
506,()00
700,000
198,705
536,124
Total
assossiuonfc.
S2,,W4,705
y,!t4(;,(i
70(),405
2,024,<>75
1,807,300
1,7<'.'.».014
a,5lL',(i4!
:i,2i;i,.")70
7,428,4:«)
2.;i07,r.80
2,577,(175
1 Report 01 th" Tr»<aHurer, fity of t^utlii'c, ISllfi i ., p
a 43-44 Vict., clmp 13, (gtiebnc).
3 A:te, \>. fin
8S
Local Debts in Otlier Provinces.
As lias l)con before stntpfl. no reliable statistics of tbe indebted-
ness and assessment of the counties and townships of (>ither the
western or the niai'itiiiie provinces are at present available. It is
not likely that the lunounts are veiy great, and therefore a
statement of the ch'bts of the more important towns will be sufficient
to <,nve an n[)pr(>.\iniate idea of the total municipal indebtedness iu
these ])rovinces.
licii' liruvsurick. — The larwost municipal debt in New Bruns-
wick is that of St. John. In LSGS the net debt of this city was
S(i54;}n7: in LSSO it was 81,258,30.3. Ten years later it amounted
to 82,7;>:^,702, and in 1895 stood at 83,020,748. It sliould be
(wplaiueil tiiiit in 1S88 St. John annexed the town of Portland, and
tliat the various lialnlities then assumed for that municipality
caused an increase of 81,(505,555 in the deVjt.^ On December 31st,
189.;, the funded debt of St. John was 83,02(),748, which, totretlier
with a lloatinu- debt of 8431,748, ma<le her total liabilities 83,457,-
020.- Of the fundi'd debt, 81,327,421 was incurred in construction
of wabH'works, 8238 150 was for sewera2[e, and the Vialance for
wharfs, pier.;, bridn-es and street improvements.^ St. John's cj-edit
in. the money market is M'rv <,'ood, lier bonds selling freely at 104-
105. In 1894 the city disposed of 4 per cent, sterling bonds for an
amount e(|ual to 8528,000 at £99 Kis.-*
The balance sheet of the city of Monet on on the 31st of Decem-
ber, 1895, showed liabilities amounting in the aggregate to 8201 ,858»
of whidi 8141,500 was general debenture debt, and 815,500 school
debenttu-e debt.'' In addition, however, the city has assumed
8<i0,00l) worth of lionds issued by the Moncton Gas, Light and
Water Com])aiiy, and has also issued bonds amounting to 8350,400
for the pureha.se of the property of the company, thus creating
a total bonded indelitedness for gas and wnter alone of 8410,400. '"'
The capital of New Brunswick is Fretlericion, a town with a
po]iulation of some 8,000 persons. At the end of 1895 its total
liabilities were 8251,089, of which 8244,000 was debenture debt_
divided as follows : — ''
1 Report (if the Special Comtnittpe of the Council of St. John, 1895,"p. 116.
2 Accounts of City of St. John, 180.5, p. 27.
3 Ibid, ;..9.
4 RepMit of the Special Committee, 1805, p. llfi.
r< Reports on the city government of Moncton, 1895, p. 3.
« Il)id, p. 13.
7 Accounts of the City of Frederictoo, 1895, p, 56.
84
.ConHolid.ited debb dchonturos $ 41,000
Sewerage fnid water " 106,000
Almshoiiso " 4,000
City of Fredoricton " 33,000
School " 60,000
The only other town of importance in New Brunswick is St.
Stephen, whose net debt in 1895 amounted to but S84,500, and whose
total assessment in the same year was SI, 124,655. This town has
had its waterworks built by an incorporated company to which it
pays an annual rental of Si, 800.
Nova Scofia.—ln 1868 the net debt of Halifax was S937,800 ;
in 1885 it was Sl,699,4()l, while in 1895 it reached a total of
S2,91 5,916.1 Of this debt S2,37l,100 consisted of consolidated stock
at 4 and 5 per cent., and the balance was made up of $70,000 sewer-
age and S50,000 City Hall debentiires, of $254,600 in debentures
issued for public school buildings, and of S181,666 old water-works
deljentures. The avei-age rate of interest paid was 4| percent. The
total of the debentvn'e debt just stated includes the cost of water-
works up to that date, viz. S976,906.
In 1880 the debt of the town of Dartmouth was SI 6,700,
while on the Sist of Deceml)er, 1895, it amounted to 8826,800;
SI 88, 500 of this was incurred in the construction of waterworks,
and .SI 50,000 more con.sists of a loan made for the purpose of pur-
chasing a ferry, which is now self-sustaining. In 1895 the sinking
fund attached to the issue of .sewerage debentures amounted to
S9,540, thus leaving the town's net debt at S31 7,260. »
The financial position of the^ other towns of any importance in
Nova Scotia in 1895 may be briefly stated as follows: —
1 Treasurer's Report, Halifax, 1894-5, p. 29.3.
- Anuuai Report of the Mayor of Dartmouth, 1895, p. 5,
85
Town.
Not debt.
Average
rnto of
interest
paid.
Total
afsossnient.
Amherst
Stelliirton
New (jlliisi^ow
127,r)(H)
r.,(K)<)
2ir>,ooo
8,000
.-!!t,500
2.5,510
/>
4A
4S
4|
4
5
s
1,8(10,200
221.000
1,150,000
Parrsl)orouj,'li
Kentvillo .
412,158
487, ;m
North Svdnoy
811.20(1
TiUiK'iil)urL(
82,000 5
15, COO 4'?
1,109,175
S|)rii)i'liin
792,75(i
Sydney Minos
None.
(15,000
58,000
!»2,5()0
413,000
........
4
4^
271,103
Sydney, Caim Breton ....
Win<lHor
787,000
l,ri02,510
Tfuro
1,824,(100
Y<innf>iitli'
Privcc Edi> !)•(} Idanil. — Tlie only twi) niuiiieipalitiea of im-
portcaneo in tlii.s province aro ( Jliarlottctown and iSunnneraiili'. The
debt of tlio fornii'i- in IH-SS avdr only 81 1 1,800, the increase in the
ten years procedinjo; that date litinj,' hut 8'22,2r).5. The cost of tlui
municipal waterworks of Charlottctown was SI 0') ,000.
The town of Suiniui-rsid;' has a ]>opulation of about 3,000, and a
total assessment of 8l,'?-42,(j20. In IM)5 its oeneral debt was §4,500,
but added to this was an issue of sehoftl debentureH amountincr
to SI 1,500, niakin«,' the town's total boiidrd liability Slfi.OOO.^
Manitohd and the Terriluries. — Accordintj to the Mnnicipal
Act of Manitoba every by-law for raisinj^ money, except it be
for a work payal)l(^ wholly by local ansesament, must receive
the assent of at li>ast three-fifths of all resident, legally (juali-
fied electors, as well as at least three-fifths of all the electors
actually votinfj, before it is considercnl as jia.ssed.^ In cities, how-
ever, a majority of all legally qualified electors, as well as three-
fifths of those voting, is enough. Except in the case of cities,
the whole of the debt must be made pa3'able within twenty years at
furthest from the date of the by-law. In cities the debentures may
be made payable at any time not exceeding thirty years, except in
the case of Winnipeg, which may issue debentures payaV>le at any
time within fifty years.^ A sinking fnnd must be provided for in
1 Report of H. L. Gaudey, Treasurt^r of Yarmouth.
2 Financial Statomcnt of the town of Smnmeraide, 18!t5, p. 6.
3 R. S. Mar. , 1891, chap. 100, Ht'c. 397.
4 Ibid, sec. 398.
8f)
the by-law, excopt in tlio case of Wimiipog, where it is not rorn-
pulsory. No dobentureH may l)e issued by nny rnnil nuniioipahty
so as to make the a^jfrej^ate debt exceed an amount e(jual to ti'n cttnts
per acre of tlie binds aHenated fusni tlie Crown within tlie nuniici-
paHty,' and no debt may be contracted wliicii niit;lit increase its
total indebtedness to such an extent that the amount to be raised
annually for all municipal purposes exceeds a rate of 1 h per cent,
upon all the taxable property within the municipality.^
The Municipal Act of Manitoba provides that the borrowinff
powers of the city of Winiiipef,^ shall be restricted to SH.OOO.OOO, until
the value of the real estate Mccordin^' to the last revised assessment
roll amounts to ^25,000, 000, but that the amount of sinking fund
for the time being at the credit of the city shall be considered as a
reduction of the debt.^ By the same Act it is directed that
the management of the city's sinking funds shall be in the hands of
three commissioners, two of whom shall be appohited by the Court
of Queen's Bench, and the third by the council from among its
members.'* On April 80th, 1895, the enil of the civic tiscal year, the
total amount of general debentures outstamling 'vas S2,4G4,()SM.
There were also local improvement debentm-es of S+TH.cSlO.'
The bulk of the general debenture debt has been incurred for the
following purposes i*"'
Sewci'H, firohall, etc 81 ,0.57,836
Bridgos 322,.'-)00
V,. P. R. bonus 2()0,onO
Streets — widening and paving 7()2 600
In 1895 the total assessment was S22,1G8,990, and the rate of
taxation 20 mills. The average rate of interest paid on the debt
was 5.62 per cent.^
In 1895 the net debt of Brandon was $528,053, and its total
assessment 83,098,1:^8. The del)t had l)een only S73,98fi in 1882,
by 1890 it had increased to .$263,055, and in the, hist live years it
has doubled. In 1893 the town built waterworks at a cost of
115,000.
1 R. S. Man., 1891, chap. 100,, sec. 103.
2 Ibid, 860. 404.
3 Ibid, Bee. 566.
♦ Ibid, see. 656.
•"> Comptroller'a Report, City of Winnipeg, 1895, p. 177.
K Ibid, p. 189.
7 Ibid, p. 194.
!
87
In tl>o Xorth-wes S>,-nf •
'P"p..lati.,n 4,000, „„;, Pn,,c', III, ^rt"''""' '°™^ »™ Calvary
a«se.sH,nont S80,;.528. ^""^^' ^^'^^^^ ^^ »2«,200, and itTtLa
^>':</,vA Columbia ^j,, r •,• ,
P'-o.l upon tl... hon-owinlow ;;tf '^'''"'"''^ ^^^ -strfcHon.s aro
gate of the d.i.t.s of -mv , '""nicipalities: Hi-«t tl.o n
cent, of the realty at: 1 'T'''''''''' "^"'^^ -^^ «xcee ' ^ i ,'''""
--""-pah-ty ..equi/e the a.s n ? '"'"^^ ^" ^^o credit of 11
-tepnyers hein, allowed to Vot;' " ""•'"''^^^ «^ "- elector, o2
-t'lo capita! of Jiritiuli rvi , •
V0"..« =i.y.l.a., „,.„„, "t,.''^^'"'- ■•-Victoria, „„ie,,, H,„„„h,
been the £„„„,.;„„ , '^'-'' '-» he^'d to roll up t,,,-,*';^:';;^"^'
Wfttern-orks
SoHorsamI drains'".
Lighting
Streets and f. ridges' '.' .' ..'."."
8545,000
560,000
71,000
170,000
u 8.,0 tl,e net debt of Newv'Tt „ r""""*? '° »W25,692..
1«95 ,t amounted to $10,0 262 r ! ™ ™ *^'''-*20, and in
be"' T f f '■"*'■■'= "*."" -iohenture 't' "1^*^5.000. .„,
'"I'r" "™"-"='e<l in n„ki,4 3tr e , i '"''■"" °' "><> debt
ms bond. ,>-ere is,,,,.,, f„,, „ ,t','"''"''>™S parka, etc' I„
a P«nn-„n, „, io.,„, .bo, , ^ 'T °' ^^O.OOO, ,„d tb;^ .,„M ^
'••■""'■ed.t.' ' ">"' tl>e corporation p„,,e4, fi„t
Sn.ce 18S7 tbe net debt „f V
00>H„,,n.ooo. „„ri , ,:! ,:::7.™'- >>- .-n-e^ed fron, »,,„ .
IB o p ,., _, '^'J^,ot± The average
«• t^. ConaoIidatPd Acts 7««fl i. °
8K
rato of luUirest. paiil on tho IpoikIciI licot <liirin;4 the past five years
has lictm f) por ciiit.
We have now nuchcil the conchision of tho account of local
flebts in Canada. From the statements ji^iven above it must be
apparent that nnuiicipal indebtedness in the Dominion has increased
rapidly. It may be noted that, should a municipality allow
its securities to ^o to default, the remedy which the bond-
holders have under Canadian law is clear. In every municipality
the ratepayers and their property are liable to assessment to meet
the indc'btednesH under the bonds, and on a judf^ment obtained and
a writ issued the sheriff may make such assessment and levy the
taxes under it.