Float a Loan

The ironies of history bite, and sometimes they puncture hard. Thomas White was a Liberal who had faithfully supported Sir Wilfrid Laurier and his policies, but in 1911 the prime minister went a bit too far for this Toronto banker, when he signed a free trade agreement with the United States (more accurately, a reciprocity agreement to lower some, not all, tariffs). Laurier was pro-British if necessary, but not necessarily pro-British. The same went for his policies on trade with the Americans.

In protesting against the new agreement, White and several other businessmen soon became known as the “Toronto Eighteen.” Most of them were former Liberals who wanted to maintain tariff walls (and all they symbolized) and could no longer support their own chief. White was happy to write cheques and stay on the sidelines, but when Robert Borden and the Conservative Party formed a government in the fall of 1911, he was asked to put his neck on the line. Even though White would not hold a seat in the House of Commons until a subsequent by‑election, he became Borden’s minister of finance. Here’s the irony: When White left cabinet in 1919, Canada had resolved to distance itself from the United Kingdom, and the lion’s share of its exports and imports now passed through American hands. That is not how White wanted to be remembered.

White hoped that his prowess in steering Canadian finances during the First World War would earn him a place in the history books, and David Roberts’s Boosters and Barkers sheds light on how he and his colleagues went about their work. There has been an explosion of material on Canada and the war over the past decade, but the subject of finance, critical as it is, seems to either bore or intimidate most writers and scholars. Roberts, a long-time editor at the Dictionary of Canadian Biography, decided to take on this knotty problem as a retirement project, and we’re all the winners for it.

We know relatively little about William Thomas White. He was born in November 1866 in the Canada West village of Bronte, the son of Irish immigrants. After a stint reporting for the Toronto Evening Telegram, he studied at the University of Toronto alongside Ralph Connor and Stephen Leacock. He then attended Osgoode Hall, but instead of practising law, he got a job with the new National Trust Company, becoming its managing director within a decade. In 1911, just before switching political teams, he was named the firm’s vice-president. He went on to serve almost exactly eight years in cabinet, resigning nine months after the armistice was signed. On at least three occasions, he acted as prime minister because Borden was in Europe.

Eight years is a long tenure for a finance minister, but White did not set a record for longevity. That distinction belongs to his immediate predecessor, William Fielding, who served in the role for almost the entirety of Laurier’s fifteen years as prime minister and then returned in 1921, serving for another four years under William Lyon Mackenzie King. Paul Martin, who headed Finance for Jean Chrétien, is practically tied with White, as is Jim Flaherty, from Stephen Harper’s time in office. Douglas Abbott, who held the portfolio for seven and a half years under King and Louis St‑Laurent, rounds out the top five. Most ministers of finance serve for about three years, mostly without much distinction.

Although Boosters and Barkers is not a biography, Roberts offers many glimpses of White in action. The book is well structured, but it is not an easy read. For my taste, Roberts too often dwells on topics that don’t deserve generous treatment, but at the same time I have no doubt that if there are details worth seeking on this topic, they are likely to be found in these pages.

Months before the first Canadian saw military action in the spring of 1915, the Borden government was looking for money to finance the war. It had already committed $100 million, and there simply was no more cash in the coffers. The demand for money outgrew the state’s capacity to generate revenue, and new methods had to be explored. With each successive chapter, Roberts casts a wider net to show how Ottawa raised funds, as well as the ways in which it promoted its mission.

There were not many options for the government. Of course, it could garner its revenues through taxation. But since Confederation, the government of Canada had raised most of its funds at the border, by imposing a tax on the majority of imports. That usually covered most of its expenditures, though this country, since its first days under Sir John A. Macdonald, liked to spend more than it collected and constantly ran a deficit. To service the debt, it issued bonds and borrowed from capitalists, primarily in London but also in some continental capitals. Initially White followed the traditional practice, though his expenses would soon balloon. Canada, it must be remembered, was a relatively poor country in those days. The state was small and generally uninvolved in funding social or economic programs of any sort. Bond efforts had never raised more than $5 million at any given time.

White decided to borrow money to pay for the war effort. Some of it would come from the usual market in London, but that source became increasingly constrained. So Ottawa turned to New York City for the first time. Wall Street was ready to provide $45 million, but its commissions and collateral requirements were onerous. On top of that, the American demand for short-date maturities was a burden.

White had been reluctant to try to raise funds domestically. He thought it would hurt Canadians, who were already starting to face inflation and the constant news of horrible casualties at the front. A prolonged war now seemed certain, and calculations were circulating in the department that he would need at least $250 million to sustain the military. Supported by Borden and his fellow cabinet ministers, White appealed to Canadians directly to support a Dominion War Loan. The response surprised everyone.

The first fundraising campaign started in November 1915. The initial bonds, which were readily available at any bank, provided an annual interest payment of 5 percent (which would not be taxed) and could be had for as little as $100, with maturity at ten years, after which the principal would be returned. Within a few weeks, the government of Canada had commitments of nearly $104 million from about 25,000 subscribers (Borden himself subscribed for $25,000). It cost the government just $3.4 million to raise the sum.

The second Dominion War Loan was issued in September 1916 and brought in approximately $201 million from roughly 34,000 subscribers. The third Dominion War Loan was issued six months later, in March 1917, raising over $260 million from over 41,000 Canadians.

The war effort continued unabated, sustaining a stagnant front and suffering endless casualties. The year 1917 was particularly bloody, with terrible losses at Vimy Ridge, Hill 70, and Passchendaele, among others. In the middle of a long-delayed election campaign, the government again made a plea for funding through what were now known as Victory Loans, and an astounding 869,300 subscribers pledged over $560 million (Mackenzie King, for one, committed $40,000). Before the end of the war, another appeal raised some $707 million from over a million Canadians (the country’s population at the time was approximately eight million). A year after the fighting ended, the government received another $653 million from over 795,000 subscribers. All in all, Ottawa raised just under $2.5 billion.

Roberts chronicles the successful drives and publicity campaigns, including tens of thousands of posters. These linked buying bonds to the direct support and welfare of soldiers overseas and encouraged contributions through various types of messaging, including poems and emotional imagery.

White oversaw the campaign and deserved much of the credit for its success, because he also managed the bureaucracy dedicated to the task. It employed 221 temporary clerks in registering and transferring the bonds, issuing over a million interest cheques yearly, and redeeming and adjusting over six million coupons with the various banks. And there was the problem of persistent allegations about how the rich were getting richer with every month of the war effort while the working class struggled with the rising cost of living.

In 1917, a year after he was knighted, White introduced a supposedly temporary income tax for both wealthy individuals and corporations. Roberts calls the minister “nervy but masterful,” though the old Torontonian may have been concerned that his reputation would forever be tarnished when he left his cabinet seat, totally exhausted, in the fall of 1919 (even though the overwhelming majority of Canadians still paid no tax). White remained a member of Parliament for another two years, during which time his likeness was carved into the new House of Commons foyer (the finance minister had survived the devastating 1916 Parliament Hill fire by escaping through the Senate). Once he returned to Toronto, he built a large home on Teddington Avenue with his wife, after first publishing The Story of Canada’s War Finance. It proved to be an enduring work. Not for another century would anyone tell the story of his war bonds better.

Canada in 1919 was very different than what it was in 1911. The war effort generated a huge demand for American goods and services, and by 1918 the United States constituted by far Canada’s largest trading partner. Canada’s wartime support of the United Kingdom had the unforeseen impact of connecting it as never before to the growing economic behemoth on its southern border. The advent of radio just a few years later would thicken that cultural link immeasurably. White’s beloved “English” country had been transformed despite his wishes: it was now irreparably part American.

Sir Thomas White lived with that reality as it intensified with each passing year — long enough to see the success of his Victory Bonds campaign repeated during the Second World War. Like an old general, he died at home in 1955, aged eighty-eight.