The Canadian Dominion [80]
of eight millions paid as its share in the task of freeing the world from tyranny.
The realization that in a world war not merely the men in the trenches but the whole nation could and must be counted as part of the fighting force was slow in coming in Canada as in other democratic and unwarlike lands. Slowly the industry of the country was adjusted to a war basis. When the conflict broke out, the country was pulling itself together after the sudden collapse of the speculative boom of the preceding decade. For a time men were content to hold their organization together and to avert the slackening of trade and the spread of unemployment which they feared. Then, as the industrial needs and opportunities of the war became clear, they rallied. Field and factory vied in expansion, and the Canadian contribution of food and munitions provided a very substantial share of the Allies' needs. Exports increased threefold, and the total trade was more than doubled as compared with the largest year before the war.
The financing of the war and of the industrial expansion which accompanied it was a heavy task. For years Canada had looked to Great Britain for a large share alike of public and of private borrowings. Now it became necessary not merely to find at home all the capital required for ordinary development but to meet the burden of war expenditure, and later to advance to Great Britain the funds she required for her purchase of supplies in Canada. The task was made easier by the effective working of a banking system which had many times proved its soundness and its flexibility. When the money market of Britain was no longer open to overseas borrowers, the Dominion first turned to the United States, where several federal and provincial loans were floated, and later to her own resources. Domestic loans were issued on an increasing scale and with increasing success, and the Victory Loan of 1918 enrolled one out of every eight Canadians among its subscribers. Taxation reached an adequate basis more slowly. Inertia and the influence of business interests led the Government to cling for the first two years to customs and excise duties as its main reliance. Then excess profits and income taxes of steadily increasing weight were imposed, and the burdens were distributed more fairly. The Dominion was able not only to meet the whole expenditure of its armed forces but to reverse the relations which existed before the war and to become, as far as current liabilities went, a creditor rather than a debtor of the United Kingdom.
It was not merely the financial relations of Canada with the United Kingdom which required readjustment. The service and the sacrifices which the Dominions had made in the common cause rendered it imperative that the political relations between the different parts of the Empire should be put on a more definite and equal basis. The feeling was widespread that the last remnants of the old colonial subordination must be removed and that the control exercised by the Dominions should be extended over the whole field of foreign affairs.
The Imperial Conference met in London in the spring of 1917. At special War Cabinet meetings the representatives of the Dominions discussed war plans and peace terms with the leaders of Britain. It was decided to hold a Conference immediately after the end of the war to discuss the future constitutional organization of the Empire. Premier Borden and General Smuts both came out strongly against the projects of imperial parliamentary federation which aggressive organizations in Britain and in some of the Dominions had been urging. The Conference of 1917 recorded its view that any coming readjustment must be based on a full recognition of the Dominions as autonomous nations of an imperial commonwealth; that it should recognize the right of the Dominions and of India to an adequate voice in foreign policy; and that it should provide effective arrangements for continuous consultation in all important matters of common concern and for such concerted action as the several Governments should
The realization that in a world war not merely the men in the trenches but the whole nation could and must be counted as part of the fighting force was slow in coming in Canada as in other democratic and unwarlike lands. Slowly the industry of the country was adjusted to a war basis. When the conflict broke out, the country was pulling itself together after the sudden collapse of the speculative boom of the preceding decade. For a time men were content to hold their organization together and to avert the slackening of trade and the spread of unemployment which they feared. Then, as the industrial needs and opportunities of the war became clear, they rallied. Field and factory vied in expansion, and the Canadian contribution of food and munitions provided a very substantial share of the Allies' needs. Exports increased threefold, and the total trade was more than doubled as compared with the largest year before the war.
The financing of the war and of the industrial expansion which accompanied it was a heavy task. For years Canada had looked to Great Britain for a large share alike of public and of private borrowings. Now it became necessary not merely to find at home all the capital required for ordinary development but to meet the burden of war expenditure, and later to advance to Great Britain the funds she required for her purchase of supplies in Canada. The task was made easier by the effective working of a banking system which had many times proved its soundness and its flexibility. When the money market of Britain was no longer open to overseas borrowers, the Dominion first turned to the United States, where several federal and provincial loans were floated, and later to her own resources. Domestic loans were issued on an increasing scale and with increasing success, and the Victory Loan of 1918 enrolled one out of every eight Canadians among its subscribers. Taxation reached an adequate basis more slowly. Inertia and the influence of business interests led the Government to cling for the first two years to customs and excise duties as its main reliance. Then excess profits and income taxes of steadily increasing weight were imposed, and the burdens were distributed more fairly. The Dominion was able not only to meet the whole expenditure of its armed forces but to reverse the relations which existed before the war and to become, as far as current liabilities went, a creditor rather than a debtor of the United Kingdom.
It was not merely the financial relations of Canada with the United Kingdom which required readjustment. The service and the sacrifices which the Dominions had made in the common cause rendered it imperative that the political relations between the different parts of the Empire should be put on a more definite and equal basis. The feeling was widespread that the last remnants of the old colonial subordination must be removed and that the control exercised by the Dominions should be extended over the whole field of foreign affairs.
The Imperial Conference met in London in the spring of 1917. At special War Cabinet meetings the representatives of the Dominions discussed war plans and peace terms with the leaders of Britain. It was decided to hold a Conference immediately after the end of the war to discuss the future constitutional organization of the Empire. Premier Borden and General Smuts both came out strongly against the projects of imperial parliamentary federation which aggressive organizations in Britain and in some of the Dominions had been urging. The Conference of 1917 recorded its view that any coming readjustment must be based on a full recognition of the Dominions as autonomous nations of an imperial commonwealth; that it should recognize the right of the Dominions and of India to an adequate voice in foreign policy; and that it should provide effective arrangements for continuous consultation in all important matters of common concern and for such concerted action as the several Governments should