liquidated, while the saving of interest would liberate £15,000 per annum. Sydenham then proposed the establishment of a provincial bank which should enjoy the exclusive right of issuing paper money payable on demand. In this manner the government would secure a loan approximately equal to the difference between the total amount of issue and the amount of reserve for resumption. From this source Sydenham expected an annual revenue of £15,000, while for the balance he looked to a revision of the tariff.

The British government refused to guarantee interest on a loan in excess of the £1,500,000 originally contemplated. Sydenham's banking scheme was forced to give way in the House of Assembly before the powerful interests on which it seemed to encroach. A provincial act was passed, however, authorizing the issue of new debentures to the extent of £1,500,000 sterling, and the redemption of those outstanding. Provision had yet to be made for the financing of the improvements necessary to complete the public works already undertaken. Authority was therefore given the governor to issue debentures to the extent of £1,659,682 sterling. The principal items in this amount were £691,682 for the improvements of the St Lawrence navigation and £450,000 for the Welland Canal. The following year, however, a provincial statute was passed appropriating the funds to be raised for the imperial loan for the purposes of the public works specified in the act of 1841. At the same time a sinking fund for the redemption of the loan was established, chargeable to the Consolidated Revenue Fund, and consisting of not more than five per cent per annum of the principal sum raised.

By 1846 the full amount of this loan had been realized by the issue of provincial debentures for £1,360,000 sterling. The guarantee of the imperial parliament still extended to the sum of £140,000 sterling, which, however, the government could not raise for lack of the authority of the provincial legislature. An act was accordingly passed authorizing the sale of debentures for this amount. During the same session authority was given for floating a loan on the credit of the Consolidated Revenue Fund, which, with the balance of the imperial loan, should amount to £520,833.

THE TARIFF UNDER THE UNION

In accordance with Sydenham's recommendation, the revision of the tariff was undertaken by the legislature in 1841. Certain of the former revenue acts were repealed, while the customs regulations were consolidated in a single statute. The following is a schedule of the duties:

Articles not mentioned in this schedule were, with certain specified exceptions, subject to an ad valorem duty of five per cent. Complaint was made by the agricultural interests that the burden of the tariff was unequally distributed, with the result that in 1843 duties were imposed on live stock and agricultural produce. In addition, the following duties were placed on provisions :

These duties remained in force until 1845, when a new and elaborate schedule of duties was drawn up, including practically all articles imported for commercial purposes. Changes were again made in the tariff in the years 1847 and 1849.

THE CIVIL LIST

The question of the civil list, which the British parliament had hoped to have set at rest, was still the occasion for contention. At this time, however, the issue was approached more with a desire to eliminate unnecessary expenditure, than for the purpose of receiving party advantage. The House of Assembly had never taken kindly to the system which, on the authority of the imperial parliament, had imposed a definite civil list. The independence of the Canadian assembly seemed to demand that the appropriations for a civil list should be made on the initiative of the colonial legislature. Accordingly, the Canadian parliament in 1846 undertook to revise the schedules of salaries forming part of the Act of Union. The appropriation of £1000 sterling for the salary of a lieutenant-governor was eliminated, while the total allowance in Schedule A was reduced from £50,000 currency to £34,638, 15s. 4d., and provision was made for a further reduction, when vacancies occurred in the offices concerned, to £33,031. Several changes were made in the salaries and allowances to the chief offices of state. An appropriation was made for the newly formed Board of Public Works. The sum of £6666 currency was allowed for Indian annuities, while the contingent account was raised to £7500 currency. The total appropriation for Schedule B was raised from £33,333 currency to £39,245, 16s. currency. On the basis of the minimum schedule prepared by the assembly, a reduction was effected in the civil list of approximately £13,000 currency.

THE REBELLION LOSSES CLAIMS

The claims for damages inflicted during the period of the Rebellion constituted another demand on the public treasury. The question of Rebellion losses had already been agitated in Upper Canada, and the legislature of that province in its last session had appropriated £40,000 in compensation for damages. No payments were made on this

account until 1845, when the Draper government set aside the revenue from tavern licences in Upper Canada for the special purpose of redeeming the pledge of the assembly of Upper Canada. The settlement in Upper Canada naturally created an agitation in the lower province, and in 1846 the sum of £10,000 was voted for the payment of claims certified before the Union. The question was settled in 1849, when authority was given the governor to raise debentures not to exceed £100,000 for the satisfaction of damages, and the payment of all expenses in connection with the determination of claims.

REVENUE AND THE PUBLIC DEBT

The variations in the net revenue and in the expenditure during the first decade of the Union, will be observed from the following table. A statement is added showing the steady increase in the interest on the public debt.

STATEMENT OF REVENUE AND EXPENDITURE, 1841-49

The debenture debt of the province was payable both in Canada and Great Britain. A return made in March 1848 showed a debt payable in Canada of £500,314, 7s. 6d. currency. Of this amount, £2637, 10s. bore two, three, four, five and six per cent, £149, 5s. Iod. was at five per cent, £5000 at five and seven-eighths per cent, and £343, 166, 17s. 6d. at six per cent. The period for redemption extended to 1875.

In July 1850 Francis Hincks reported debentures outstanding payable in London to the amount of £2,195,225

sterling. The interest on this loan was divided as follows: £1,360,000 at four per cent, £288,725 at five per cent, and £546,500 at six per cent. The principal of the various loans matured in the following years:

The tests which in the past had been made on the credit of the province were most severe, but the period on which it was entering at the middle of the century was destined to try its strength to an even greater extent. Hitherto the attention of the province had been directed to improving its natural highways. Canals and roads were being built and harbours formed, but the day of the railway and the subsidized corporation was at hand. The financial position of the province is set forth in the following statement of liabilities and assets, prepared by Francis Hincks :