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Tous les autres exemplaires originaux sont film^s en commenpant par la premidre page qui comporte une empreinte d'impression ou d'illustration et en terminant par la dernidre page qui comporte une telle empreinte. Un des symboles suivants apparaitra sur la dernlAre image de cheque microfiche, selon le cas: le symbols -^> signifie "A SUIVRE ", le symbols V signifie "FIN". Les cartes, planches, tableaux, etc., peuvent dtre filmis A des taux de reduction diff^rents. Lorsque le document est trop grand pour etre reproduit en un seul cliche, il est iWmi A partir de Tangle sup6rieur gauche, de gauche d droite, et de haut en bas, en prenant le nombre d'images ndcessaire. Les diagrammes suivants illustrent la mithode. 1 2 3 t 2 3 4 5 6 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. auKn 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 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 expenr iiir 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 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 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 ty 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 ''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 O.nOO Tetai .*77.,-.oo.non The interest on the 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 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 ct 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 ivisi()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(hleen<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 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' 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 pali- 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-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 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"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 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.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 lS7y 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;,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!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.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<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 un7 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'^ 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 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,()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,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 , ]'. 12. m 29 I ycHi'M tho public Inst j)t'i-i(i(i, how- i 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,'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,-'.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 /,()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 stani7.8oo 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 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 Ciecial 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 £;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,(ir>, 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 LVoodst,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. K. McMillan, Pi-uvinf of 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 fr1, 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 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 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 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 :.,'^-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!)() 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. 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,,'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, ant,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.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,'.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 ;: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 aidinr 01 m oi m >-i CO 01 © OS 01 of in a o CO in o 00 00 1-- 00 m m o 00 X 00" 05 00 X ©f CO Ol 51 CO of m c^T so S 3) « = ;« 3 -^ g > w 3 = S a- .- iz t< _ C >. w —I "^ ^o 'J *-> „— ^ 'J 'B ^ a on •tc 5 o 56 5 .J < a i', ^ t^ w M L^ Ctt 10 05 X a: i-H •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». 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,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 .... Winiitli' 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 ^>':<> 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