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summer season. The roads are graded and crowned, with suitable drainage, culverts and bridges. The mileage in the nine provinces is fairly evenly distributed, in accordance with area and population. In five of them the roads have been made and maintained at the expense of the Provincial Governments; in the other four the cost has been borne by the municipalities and Provincial Governments in cooperation. During recent years there has been a very large in- crease in the number of automobiles using the roads, and for this rea- son a harder and smoother road surfacing has been necessary. All road work on main roads is done on approved high standards, with hard finished surfaces consisting of gravel and stone macadam, ce- ment concrete, asphaltic surfacing in every instance asphaltic or some bituminous surfacing or oil treatment. To assist the provinces and municipalities in this respect, the Dominion has passed legisla- tion by which it is empowered to furnish aid to the extent of 40 % of the cost of high-class improvement upon main highways. The amount devoted to this purpose is $20,000,000, to be spread over a period of five years, the aid to be given, in any case, being 40% of the amount which is the actual, necessary and reasonable cost of the construction or improvement of such highway. The conditions attached to the grant are that any construction or improvement shall be in accordance with the terms of an agreement to be made by the Minister of Railways and Canals of Canada with the Pro- vincial Government, and that the agreement shall contain such pro- visions as to location, cost, description, specifications, etc., as are necessary to protect the public interest, all expenditure being by tender and contract.

Finance. The Canadian Bank Act contains no specific provisions as to the amount of gold to be held either against note circulation or the general business of the bank. It requires, however, that 40 % of whatever reserve the bank finds expedient to carry shall be in Domin- ion notes. A second provision instructs the Minister of Finance to arrange for the delivery of Dominion notes to any banks in exchange for specie. Thus the gold reserve against Dominion notes, to the extent that the notes are held by the banks, is a reserve against banking operations, the Dominion Government being the custodian of the gold for the banks. The other gold element in bank reserves is specie in hand. The sum of the two represents the gold basis of the Canadian banking system. In addition to the reserves above men- tioned the Canadian banks carry three other kinds of assets which are regarded as reserves, being funds more or less immediately avail- able for the liquidation of liabilities. In 1906 there were 34 chartered banks with branches numbering 1,565. Since that time there has been very considerable consolidation. In 1921 the number of banks was 18, but the number of branches had more than doubled, being now in various provinces 3,44^- The banks are required by law to furnish to the Minister of Finance detailed monthly statements which are published in the official gazette. Clearing-houses have been established in the chief commercial centres and cover the opera- tions of Canada as a whole. On Dec. 31 1919 the paid-up capital of the banks was $119,199,441, with a note circulation of $232,486,734 and total deposits amounting to $1,841,478,895. The total liabilities at that time amounted to $2,495,582,568 and total assets $2,754,- 568,118. At the end of 1919 the total amount to the credit of depositors in the Post Office and Dominion Government savings banks was $53,057,018. The amount on deposit in the savings departments of the chartered banks was $1,125,202,403.

The Dominion revenue and expenditure in 191420 are shown in Table XI. Up to March 31 1920 the total outlay for the war was approximately $1,670,406,342. This amount includes all expendi- tures in Canada, Great Britain and France, and is also inclusive of the upkeep of the troops overseas.

TABLE XI. Revenue and Expenditure: March 31 1914- March 31 1920.

The net debt of Canada, which before the war stood at about $363,000,000, on March 31 1920 was $2,248,868,623. The increase was almost entirely attributable to war expenditure. Details of the domestic loans issued by the Canadian Government since the com- mencement of the war are given in Table XII. In addition War Savings Certificates to the amount of approximately $12,500,- ooo, as well as a considerable amount of debenture stock, were

Allotment

No. of Subscribers

1915-25 5% - - - 1916-31 5%.

1917-37 5% I 9 I 737 (Victory Loan)

51% 1918 (2nd Victory Loan)

5l% !9 r 9 (3 r d Victory Loan)

5l%

$100,000,000

106,705,000 172,926,800

546,148,750 682,256,500 594,725,200

24,862 34-526 41,263

809,000 1,100,000 800,000

Revenue

Expenditure Consolidated Fund

I9H-5 1915-6 . 1916-7 . . : 1917-8 . 1918-9 . 1919-20

$133,073481 172,147,838 232,701,294 260,778,952 312,946,747 349,746,334

$135,523,206 130,350,726

148,599,343 178,284,313 232,731,282 303,843,929

Expenditure Capital Account

Expenditure War Accounts

1914-5 . 1915-6 . 1916-7 . 1917-8 . 1918-9 . 1919-20

$41,447,320 38,566,950 26,880,031

43,i",904 25,031,266 69,301,877

$ 60,750,476 166,197,755 306,488,814 343.836,802 446,519,439 346,616,954

sold. Loans were also floated in New York for: (1915) $874,000, (1916) 575,000,000, (1919) $15,000,000, (1919) $60,000,000. From the outbreak of war to Nov. 30 1918 Canada established huge credits on behalf of the Imperial Government. Through these advances Great Britain and her Allies were able to finance the purchase of food-stuffs, hay and other commodities and to carry on the opera- tions of the Imperial Munitions Board in Canada. In addition to the above, Canadian chartered banks advanced to the Imperial Government through the medium of the Minister of Finance the sum of $200,000,000 for the purchase of munitions and wheat. This was made possible by the large savings deposits in Canadian banks, which from Aug. 1914 to Oct. 31 1918, despite the withdrawals for subscription to war loans, increased by $417,115,476.

TABLE XII. Internal Loans.

Soon after the outbreak of war taxes were placed on luxuries and gradually increased. Higher customs duties and rates of excise on certain commodities, including liquors and tobacco, imposed soon after the commencement of the war, were followed in 1915 by a war tax on transportation tickets, telegrams, money orders, cheques, letters, patent medicine, etc. In 1915 an increase of 7i% ad valorem to the general tariff and 5% ad valorem to the British preferential tariff was made on all commodities with the exception of certain food-stuffs, coal, harvesting machinery, fisheries, equipment, etc. In 1918 a special customs duty was imposed on tea and coffee and the excise on tobacco was increased. In addition, various other taxes were imposed or increased, and a special war excise tax was imposed on various articles, including automobiles, jewelry, etc. Under the Business Profits War-Tax Act the Government at one time, in the case of all businesses having a capital of $50,000 and over, took 25 % of the net profits over 7% and not exceeding 15%, 50% of the profits over 15% and not exceeding 20%, and 75% of the profits beyond 20%. In the case of businesses having a capital of $25,000 and under $50,000 the Government took 25 % of all profits in excess of 10% on the capital employed. Companies employing capital of less than $25,000 were exempted, with the exception of those dealing in munitions or war supplies.

The Canadian income-tax, which came into effect in the year 1918-9, is in some respects higher than that in force in the United States. The scale provides for the exemption of incomes in the case of unmarried persons with an income of $1,000 and under, and in the case of married persons with an income of $2,000 and under. There is also provision for the exemption of $200 for each child.

Defence. Under the Militia Act of 1904 the command in chief of the militia is vested in the king, by whom, or by the governor- general as his representative, it is exercised and administered. The Act further provides for the appointment of a Minister of Militia and Defence, charged with the administration of militia affairs, and of a deputy minister; also for the appointment of a militia council. This includes, besides the minister and deputy minister, four military members the chief of the general staff, the adjutant-general, the quartermaster-general, and the master-general of the ordnance. There is also an inspector-general, whose duty it is to inspect the forces and report to the minister on their readiness for war, but he has no seat in council. The Canadian land forces are divided into the active militia and the reserve militia. The active militia consists of a permanent and a non-permanent force, the latter divided into city and rural corps. Service in the active militia is voluntary and for three years, but the Government has the power to apply com- pulsion should the necessity arise. The permanent force comprises all arms of the service and is composed of a number of permanently embodied units. It provides personnel for the various schools of military instruction and garrisons for the fortresses, where a perma- nent element is necessary for defence, for the maintenance of works and for the preservation of armaments. The non-permanent active militia undergoes an annual period of training, which varies from 12 to 1 6 days according to the arms of the service and the location of the corps, i.e. whether they are city or rural. The reserve militia has not been organized. The authorized Limited Establishment for the permanent force was approximately 4,000 in 1921. The non- permanent active militia is comprised of such corps as from time to time are authorized by the governor-general in council. In pre-war days its strength was approximately 68,000.

The above organizations are supplemented by numerous cadet corps and rifle associations. The Royal Military College at Kingston provides both a military and a general education. It trains officers both for the permanent force and for the remainder of the active