It is the purpose of this article to draw attention to, and to make an analysis of, a type of international movement of securities which has, especially in recent years, acquired considerable importance and significance, but concerning which there has been to date virtually no systematic or extended discussion. I refer to what has been called, in various balance-of-payments studies, the “international movement of outstanding securities.”

International movements of securities may take a variety of forms. Historically one of the most important types, and certainly the one most commonly referred to in the literature, has been the flotation of new (or refunding) security issues on foreign (or domestic) capital markets, and their purchase by foreign investors. Associated with this has been the repurchase of these issues by their issuers, either governmental or corporate, for sinking-fund or redemption purposes. A further type of securities movement, also of great historical importance, has resulted from the acquisition of a controlling interest in foreign corporations or real estate, or from the establishment abroad by a parent company of branches or subsidiaries. This category is generally known as “direct investments.” In this case, however, international transfers of securities are not always involved; whether they are or not will depend upon the particular method of financing adopted. The same is true with respect to the resale of direct investments abroad to foreigners. The reasons for the establishment or acquisition of subsidiaries abroad are well known and need not be gone into here.

To understand the effect of the war upon the Canadian economy it is first necessary to examine briefly the position of the country on the eve of the struggle. By the midsummer of 1913 Canada had come to the end of a long period of expansion and prosperity. For seventeen years the country had been engaged in the construction of the immense capital facilities which stimulated and resulted from the rapid settlement of the Prairie Provinces. The construction of transcontinental railways, the building of new cities and towns in Western Canada, the improvement of waterways and harbours, and the provision of machinery and equipment for nearly 200,000 new farms constituted an uniquely large proportion of the total economic activity of the country. In 1912-13, nearly one-fourth of all the labour and productive facilities of the economy was either directly or indirectly engaged in the production of capital goods. The employment of these resources could not, of course, be financed entirely out of the current savings of Canadians. Much of the money was borrowed abroad. About one-half of the total capital invested in Canada during the pre-war wheat boom came from foreign sources. In 1913 capital imports rose to more than $500 million, a figure equal to almost one-fourth of the national income. Such huge external borrowings could not be continued indefinitely. The money was obtained from abroad for the purpose of enlarging the export capacity of the country and it was necessary at some time to slow down expansion to enable the use of the facilities for the production of increased exports.

The purpose of this paper is to survey the trends in the history of local government in Ontario which are gradually eliminating independence or self-government from municipal councils in Ontario. We are not here as much concerned with considering the desirability or otherwise of these trends as with recording the facts of the situation. Whether for better or for worse, the municipal councils in Ontario, as local self-governing units, have been, and are continuing to be, more and more restricted and circumscribed. They are becoming merely agents for other local units of government and for the central provincial government. The various aspects of this situation will be considered under the following headings, namely: (1) the establishment of subsidiary or auxiliary boards of varying degrees of independence; (2) imposition of obligatory and uncontrollable expenditure and the elimination of sources of revenue; (3) imposition of restrictions on control of municipal officials and employees; (4) the development of the Ontario Municipal Board; (5) establishment of the Department of Municipal Affairs; (6) municipal subsidies.

In general, the activities of a modern municipal government fall into two main classes-legislative and administrative. Of these, the first is of relatively minor importance. The second is essential to the everyday life of the individual, particularly of the urban dweller. As it is not possible, in the space available, to deal with all types of municipal government in the Province, this paper will be limited to a survey of the situation as it applies to the larger urban municipalities where the problem is most acute.

In Alberta, the Municipal Districts are the centre, or at least the most important units, of rural, local government. They possess a greater diversity of function than either school or hospital districts and, for the most part, they assume the task of collecting all local and provincial taxes on real property within their borders. An attempt will be made in the following pages to analyse their present position and to determine what adjustments are necessary to enable them to survive.

Historically, the Municipal Districts mark a comparatively recent stage in the evolution of Alberta's municipal units. They are the lineal descendants of the Statute Labor and Local Improvement Districts which were created while Alberta was a part of the North West Territories. There seems to have been no long struggle for local government, comparable to that which the people of Ontario waged for similar privileges at a much earlier date. The theory and practice of popular municipal government had been well established and accepted by senior governments before Alberta was settled. Hence the territorial, and later the provincial, government took the initiative in the formation of municipal institutions, and the comparative instability and sparseness of the population made possible a fairly strong central control.

The year 1912, seven years after the formation of the Province, is a landmark in Alberta's municipal history. A Department of Municipal Affairs was created to administer the various municipal acts and to furnish guidance and supervision to the local authorities. An arbitrary unit, a square of nine townships (324 square miles), was adopted as the physical basis of rural municipal organization. Provision was made for the establishment of Rural Municipalities with corporate powers. In addition to this “permanent” form of municipal government, provision was made for the formation of “small” and “large” Local Improvement Districts. The former were to possess elected councils with more restricted powers than those of the Rural Municipalities; the latter were to be directly administered by the Provincial Department of Municipal Affairs.