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
record