large munition orders which kept every metal-working plant in the country busy, it seemed almost as if Canada were making money out of the war instead of sacrificing herself for it. This of course was not the case, for present money-making was more than offset by a stupendous future obligation, to say nothing of the sacrifice of the nation's best manhood; but the fact remained that for present purposes there were developing in Canada, as in the United States, unsuspected resources of cash and credit. For a long time bankers were unwilling to believe that it was good policy for Canada, even in view of these accumulations of liquid funds, to attempt to finance her own Government; and at first the argument from foreign exchange rates was in their favour. Owing to her large interest indebtedness, Canada was called upon, even with her reduced importations, to pay larger sums abroad than were due to her from foreign countries, and throughout the early summer of 1915 exchange on New York (which controls to a very considerable extent the rates and operations of the Canadian Exchange Market) was at a heavy premium. As much to rectify this adverse exchange 'situation as to secure funds, the Minister of Finance sounded the New York financiers as to the possibility of placing a Canadian Government loan in that city to advantage, with the result that in July there was offered, with conspicuous success, the first Dominion loan ever placed in the United States, a short-term note issue of $45,000,000, due in one and two years. This rectified the exchange rates until the crop of 1915 and the munition business combined to give Canada a pronounced surplus of exports over imports, which caused millions of dollars of cash to pour into the country, and thus made possible the famous First Domestic Loan of November, 1915.
There being no precedents to guide him, and seeing that the results accruing from failure would be of a most disastrous character as concerned the public credit, the Minister of Finance set about this operation with the