The Department of Indian Affairs in the Dominion of Canada budget, 1882

This examination of how Ottawa taxed and spent in 1882 is intended to place expenditure by the Department of Indian Affairs in the overall context of government priorities.

Understanding how Canada taxed and spent in 1882 – Income dependent upon tariffs; expenditure dominated by servicing debt – The dominance of customs and excise – Canada's small budget – Placing Indian Affairs in the overall budgetary context – Servicing the debt and subsidising the provinces – Gross vs net revenue and expenditure: Public Works and Post Office – Indian Affairs compared with other basic government functions – Indian Affairs: Ontario, Quebec, the Maritimes and British Columbia – Indian Affairs: Manitoba and the North-West Territories – Indian Affairs expenditure: annuities and provisions – Indian Affairs expenditure: agriculture, education and the lack of health care – Political criticism of Indian Affairs expenditure– A $50 a year Aboriginal dividend in place of $5 annuities? – Concluding reflections.

Understanding how Canada taxed and spent, 1882. While studying modern-day charges that Sir John A. Macdonald connived in the starvation of First Nations in the Canadian West, it seemed useful, indeed important, to discover how much money was allocated to, and spent by, the Department of Indian Affairs, a portfolio which he held, from 1878 to 1888, in addition to the office of prime minister.[1] However, examining the departmental budget in isolation was obviously of limited value unless it could be placed it in the wider context of overall government spending. A recent and important book by E.A. Heaman, Tax, Order, and Good Government, has placed not simply the policies but the philosophies of taxation at the centre of any understanding of post-Confederation Canadian political history.[2] Nonetheless, few Canadian historians discuss precisely how Ottawa raised its income from various sources in any one year, and matters become even more opaque in enquiring about Dominion government expenditure.[3] This discussion, derived initially from tables in The Canada Year Book 1905, but supplemented from other sources, is offered as a contribution to filling the gap.[4] Public finance cannot and should not be understood in abstract terms: hence reconstruction of the outline figures has led me into some reflective byways, examining other possible options for taxing, and culminating in an examination of the fiscal implications of a fairer and more generous settlement to the indigenous people of the Plains.

Amounts above $100,000 are given as parts of a million, rounded to three decimal places, e.g. receipts from customs duties in 1882 were $21,581,570, but the amount is presented in the simpler form of $21.582 million. Rounding naturally causes slight distortion in totals, but hardly enough to affect the overall picture. I offer the warning that there are aspects of the statistics that seem beyond comprehension and it does not help that Ottawa bureaucrats supplied parliament with vast tables of information, not all of which are consistently presented. I can only echo the words of finance minister Sir Leonard Tilley in his 1882 budget speech: "in dealing with figures, the subject is a rather dry one, and I have not, perhaps, made myself as clear as I would desire".[5]

In relation to the Department of Indian Affairs, two general points may be suggested. First, spending on Aboriginal people, notably those in severe distress on the prairies, represented a substantial segment of overall government expenditure. Second, it would have been possible for the Dominion of Canada to have substituted for the meagre $5 annuities paid to Native people a more generous annual payment, termed here a "dividend", of $50 per capita payment. Unfortunately, given the political constraints and prejudices of the time, this was never likely to happen.

Income dependent upon tariffs; expenditure dominated by servicing debt. Two basic budgetary points have long since been established by Donald Creighton, writing of 1866, and by Peter Waite of the decades after Confederation: the Canadian government was massively dependent upon customs duties for its income, and its freedom to determine expenditure was restricted by the costs of servicing its debt.[6] In 1866, the British North American provinces had derived 64 percent of their income from customs,[7] plus a further 12 percent from excise duties; by 1873, import duties accounted for three quarters of Ottawa's income.

There is a very real sense in which political arguments over protection versus free trade were all smoke and mirrors, as was shown by the Liberal insistence that the 17.5 percent tariff of the Mackenzie years was really a free trade measure. The truth was that Canada depended upon a revenue tariff to run any form of government at all. Servicing public debt swallowed up 29 percent of colonial revenues in 1866; by 1873, 27 cents in every dollar was needed to meet interest charges. There was no scope for reducing debt payments in bad years: maintaining the public credit was the primary and inescapable duty of government. Between 1872 and 1878, revenue increased by $1.66 million – times were bad but the tariff was increased – while the cost of servicing Canada's debt rose by $2.113 million. The difference between the two figures, $0.453 million, was almost exactly equal to the Dominion's expenditure on lighthouses and coastguard services, $0.462 million in 1878. However, this was not to say that Canada's finance ministers had much scope for savings. While around ten percent might be shaved off the lighthouse budget in time of austerity, it was simply unimaginable to close down the service altogether and divert funds to the payment of interest on the debt. Worse still, not only did governments lack any flexibility in relation to the cash Canada had borrowed, but the Dominion was also bound, by the terms of Confederation, to pay subsidies to the provinces, basically (the actual formulae were more complex) at a rate of 80 cents per head of population. In 1878, at $3.473 million, this was easily the second most expensive item of Ottawa's expenditure. As Canada's population grew, so too did the payments to the provinces, in fact by almost one third between 1868 and 1882. Of course, more people meant more revenue, but it may be doubted whether finance ministers like the Liberal Cartwright or the Conservative Tilley saw matters in that light. It is more likely that their financial horizons were dominated by penitentiaries that had to be kept secure, quarantine stations that had to be operated efficiently. It was always tempting for opposition politicians to allege "extravagance and mismanagement", as Richard Cartwright did in 1882, when Macdonald's government proposed to spend $0.909 million on Indians, up from the $0.421 million of his own last year in office, 1878.[8]

Customs and excise. Government income for 1882 was divided into two general headings, "taxes" ($27.549 million) and "various sources" ($5.834 million). Of the former, as already noted, by far the largest item was the $21.582 million received from customs duties. Of these, $10.012 million was collected on imports from Britain (including Ireland), and $7.034 million on goods originating in the United States.[9] Tariffs were imposed on a very wide range of goods, including foodstuffs and raw materials: the schedule ran to around 400 pages, with descriptions of categories of goods, many of which netted only a few thousand dollars. Textiles accounted for almost a quarter of customs receipts: woollen goods yielding $2.737 million, cotton manufactures $2.439 million. Other sizeable items included spirits ($1.203), machinery ($0.549 million) and tobacco ($0.184 million).[10] In his 1882 budget speech, Tilley cheerfully described much of the customs revenue as voluntary taxation, paid by consumers of luxury items such as satin, silk and wine.[11] On average, every Canadian contributed $4.99 to the government through customs duties. For a family of five, this represented about $25 a year – a heavy enough burden where (as discussed below) the threshold for household poverty was an annual income of $250.[12]

The next largest area of income consisted of excise duties, which netted $5.885 million. Excise was levied chiefly on spirits, which paid $3.554 million, 60.4 percent of the total, and on tobacco, which produced $1.904 million, or 32.35 percent. Malt (mainly used to make beer, but including a small sum for malt liquor) yielded $0.386, a 6.56 percent share of the total.[13] With almost $4 million raised from the consumption of alcohol (plus another million and a quarter through tariffs on imported booze), the Canadian government could no more have afforded Prohibition than it could have coped with industrial self-sufficiency. John A. Macdonald's decision to reduce his alcohol consumption from the eighteen-seventies could even be viewed as unpatriotic: the $3.554 million contributed to the excise by spirit drinkers paid for the entire Dominion subsidy to the provinces. Tobacco revenues, at $1.904 million, represented around twice the amount spent on Aboriginal development and welfare.[14] Canadians contributed $1.36 per capita to excise duties, although when account is taken of non-smoking teetotallers and (one hopes) most children, a disproportionate burden obviously fell upon those who indulged in alcohol and tobacco.[15]    

The heading "Receipts from various sources", totalling $5.834 million for 1882, is in reality less impressive than it might seem: many of the items could easily be set against corresponding areas of expenditure to produce net outlay figures. (These gross figures are recalculated below.) The two largest headings were Public Works (mainly income from canals and railways) at $2.711 million, and the Post Office, yielding $1.588 million: as will be demonstrated, both were wiped out by the costs of maintaining transportation and postal services, and it seems convenient to eliminate these revenue headings and calculate net expenditure instead. (This exercise reduces the gross expenditure of $27.067 million to a net figure of $21.573 million, against which subsequent percentages of government spending items are calculated.) The only other sizeable item of income was "interest on investments", entered in the general section and recorded at $0.914 million. At first sight, it seems puzzling that a country that was so deeply indebted should be earning almost one million dollars a year in interest payments. An important element here was the Sinking Fund ("which forms a fund for the reduction of the debt", as Tilley briefly described it in 1883).[16] While Canadian politicians had unlimited confidence in the ability of posterity to pay off their indebtedness, lenders generally insisted that borrowings should be accompanied not merely by annual interest payments, but also by regular deposits of cash into a Sinking Fund that would eventually grow into the capital amount to be returned to investors at the close of the loan term – the equivalent today of a repayments-and-interest mortgage for the purchase of a house. (Insistence on this point by Britain's finance minister, W.E. Gladstone, had led to the breakdown of negotiations for imperial loan funding towards the Intercolonial Railway project in 1862.[17]) From the point of view of Canadian politicians, the one redeeming grace of this enforced adherence to the principles of financial rectitude was that they were generally permitted to invest the Sinking Fund in their own debentures. Thus Canada paid itself a seemingly impressive amount in interest, a charge that might more simply have been knocked off the total outlay for the debt to produce a convenient net calculation (as is attempted below). But the Sinking Fund, which stood at $12.191 million in 1882, could hardly have produced so much interest on its own. The Dominion government also advanced loans (a portfolio that would be considerably enlarged after parliament was forced to bail out the Pacific railway project in 1884), and managed to earn some interest from funds that might be described, in a colloquial phrase, as resting in its account – including money borrowed for specific purposes but not yet spent. As Tilley explained in his 1883 budget speech, in reference to various funds that were temporarily in Ottawa's clutches, "the Government did not allow the money so deposited to lie idle. They deposited it in the banks and obtained 4 per cent. interest on it".[18] In 1882, Canada held $11.443 million in "other investments".[19]

It is important to underline the heavy reliance of the Dominion government upon customs duties, the point made by Peter Waite but not always emphasised in the textbooks. In 1882, income from tariffs charged on imported goods produced $21.582 million, 64.65 percent of the reported revenue. If we deduct the $5.494 million of the receipts from specific related budget items to produce a net figure, the percentage of revenue raised from customs jumps from two-thirds to three-quarters. This basic point essentially torpedoed schemes for free trade with the United States, again a point that is not always noticed: it is worth emphasising that goods imported across the border contributed over $7 million to the Ottawa treasury in 1882.[20]

Liberal leader Edward Blake tried to reconcile his free trade principles with the obvious fact that his party could never win a general election unless they squared the Ontario manufacturers. His solution was to defend the tariff as a revenue measure, while tacitly recognising that it incidentally provided protection for Canadian industry. Blake's free-trading soul could be placated by the happy fact that this level of protection apparently emerged through some combination of accident and magic. The Toronto Mail likened his position as a "revenue protectionist" to a drinking prohibitionist. In reality, the whole National Policy was based on a contradiction. "If a tariff be protectionist at all its purpose must be to handicap imports; and as revenue is derived from imports, it follows that the effect of a tariff that is protectionist is to diminish revenue, for the home industries which it fosters yield none."[21] Suppose Canada's brickworks so efficiently mass-produced building materials that it became pointless to import bricks and pay 20 percent customs duty. Imagine that the country's textile mills turned out cheap, stylish, warm clothing in such volumes that it made no sense to import woollen goods at a premium of roughly 30 percent. The ultimate outcome of the National Policy would be an industrialised Canada, hermetically self-sufficient – presided over by a Dominion government with hardly a cent to meet its obligations.

Canada's small budget. The "headline" total for 1882 expenditure in The Canada Year Book 1905 was $27.067 million, allowing for a surplus of income over outgoings of $6.316 million. As discussed in more detail below, $5.494 million of receipts can be integrated into related items of expenditure, to produce a net figure for expenditure of $21.573 million for 1882. We may first note that this was not a huge outlay. The 1881 census had reported a population of 4.325 million people: Ottawa was spending $6.26 per Canadian on the gross figure, and $4.99 on the amended net calculation. Twenty years later, the average farm labourer received $5.42 a week in wages and board, while the average factory worker took home $5.50.[22] The Dominion government was hardly a driving force behind the national economy. (Even so, a family of five subsisting on a borderline poverty income of $250 a year would have contributed around $25 a year, which would mean they were working for the government until the sixth of February each year.) It might even be argued that it is remarkable Ottawa achieved so much, by providing services – such as the Post Office and the enforcement of justice – that underpinned so many areas of daily life. Canada's restricted expenditure placed constraints upon its relations with Aboriginal people. As the historian J.R. Miller sagely observed, the United States spent more each year on frontier wars during the eighteen-seventies than the total Ottawa budget. The Dominion simply could not afford to fight its First Nations communities.

Placing Indian Affairs in the overall budgetary context. The Canada Year Book grouped gross expenditure under three general headings: charges on public debt, collection of revenue and miscellaneous expenditure. Before looking at these in more detail, and in particular eliding the collection figures into net expenditure, we should note the accounts were dominated by six "big ticket" items that exceeded one million dollars. These were debt charges ($9.227 million), subsidies to the provinces ($3.531 million), cost of revenue collection on railways, canals and public works ($2.894 million), other expenditure on railways, canals and public works ($1.423 million), Post Office ($1.91 million) and Indian Affairs ($1.107 million, a total that seems to have included central administration expenses in Ottawa). As discussed in the next section, the two largest of these six items, debt charges and provincial subsidies, were fixed charges. Two others, the operation of public works and the Post Office, can be substantially reduced by taking account of the income they raised. This left two items in the million-dollar range, one for new expenditure on railways, canals and other public works, the other for Indian Affairs.

Servicing the debt and subsidising the provinces. The largest item, servicing the debt, carried its own imperatives: to fail to meet interest charges of $7.594 million would be to default, with catastrophic consequences for Canada's financial standing. Similarly, the $1.291 million paid into the Sinking Fund was an automatic calculation based on amounts borrowed. There may have been some small scope for economies in the $0.195 million management costs, but any savings here would have been marginal. However, the net cost of the debt can be reduced by taking account of the $0.914 million from investments – proceeds of the Sinking Fund and "other investments" – thus reducing the $9.08 million to $8.166 million.

The second largest expenditure item was the sum of $3.531 million in subsidies to the provinces. Here, again, the Dominion government had no room for manoeuvre (the suspension of payments to British Columbia following the catastrophe of the Walkem government was an extreme measure that would have been unthinkable towards one of the founding provinces). Section 118 of the British North America Act had prescribed in some detail the amounts Ottawa was to transfer to the provinces to compensate them for losing their pre-Confederation powers to impose customs duties. In fact, the formula combined a fixed annual grant to each province with a payment of eighty cents per head of population based on the most recent decennial census, which for New Brunswick and Nova Scotia would cease to increase when they reached 400,000 people, a landmark passed by the latter in 1881. Although founded in legislation, provincial subsidies were not entirely set in stone. Truculent Nova Scotia, where the charge of being "sold to Canada for eighty cents a head" had sparked furious anger, secured "better terms" in 1869. In 1873 New Brunswick gained compensation for the loss of some provincial revenues under the Treaty of Washington two years earlier. When Prince Edward Island joined Confederation in 1873, subsidy arrangements were tweaked to compensate for the disadvantages of its isolation.[23] "Every province entered Confederation (or in the case of Manitoba was created) under specific financial terms that differed at least slightly from those of every other province."[24] Unfortunately from the point of view of Canada's finances, these special deals usually involved concessions by the Dominion, although never enough to satisfy provincial demands. Essentially, the amounts were dictated by the operative formulae, leaving Ottawa with no scope to adjust its payments.[25] When the overall total increased by $75,481 in 1883, Tilley pleaded: "The Government, surely, cannot be blamed for paying that."[26]

The irony was that Dominion subsidies, originally designed to reassure Canada's smaller units, worked most effectively for the two largest provinces. Ontario and Quebec had more territory to administer and larger populations for whom services had to be provided, but in receiving much more cash they were also, so it seems, able to operate administrative economies of scale.[27] Yet, even with the subsidy system, Ottawa still dominated the public expenditure landscape. In 1880, the provinces collectively had spent $7.366 million, around one quarter of the $28.785 million total outlay of levels of government. Dominion transfers amounted to $3.431 million, or 46.58 percent of total provincial expenditure. [28]

Gross vs net revenue and expenditure: Public Works and Post Office. In presenting items under the $6.098 million for "collection of revenue", the Dominion did scant justice to its own efficiency, for the figures implied that it cost a wasteful 18.27 cents to bring in every dollar. In fact, the two largest area of income were administered with commendable economy: it cost $0.724 million to collect the $21.582 million in customs duties (3.35 percent), and $0.281 million for the $5.885 million in excise (4.77 percent). There is thus a good case for reorganising most of the other collection-cost headings, and so calculate net expenditure figures.[29] For some unexplained reason, the heading for Public Works under receipts was noted to include railways and canals, but the two items were entered separately under collection of revenue costs.[30] Reunited, they may be summarised: gross expenditure $2.894 million, less receipts $2.711 million; net expenditure $0.183 million. Thus the country's vast canal and railway network, at least some of it built in response to political pressures, came close to breaking even. Unfortunately, no such balancing item could conjure away the additional $1.423 million of new money spent on public works, railways and canals under miscellaneous expenditure. This heading had only once dipped, very slightly, below one million dollars since 1873: in 1884, it would exceed three million. This, of course, mainly represented the cost of Dominion support for the Canadian Pacific Railway.

It is tempting to suspect that Canada's Post Office engaged in an honourable bureaucratic tradition of obfuscation through information overkill, spewing out statistics for the numbers of letters sent to Tasmania in the hope of disguising some puzzling imprecision in its basic reporting of revenue. In the main budget section of the Canada Year Book, the Post Office was returned as having receipts of $1.588 million for 1882, against expenditure of $1.981 million, which we may elide into a net shortfall of $0.393 million. But a few pages further on, the figures are given as $1.543 million, against the same expenditure of $1.981 million, a deficit of $0.438 million[31] To add to the uncertainty, the annual report of the Post Office to parliament stated revenue at $2.022 million, against expenditure of $2.459 million, which by some arithmetical necromancy, gives basically the same figure (allowing for rounding) for deficit, $0.437 million.[32] Since these figures were tabulated in detail by provinces, they carry some illusory credibility. In 1889, "almost the whole postal revenue" came from the sale of postage stamps: remarkably, they generated $2.974 million against a reported total income of $2.984 million that year. Even the bureaucrats acknowledged that the accounts for 1889 were confusing, blaming "a change in system" for inconsistencies. The Post Office also operated a highly useful national (and international) money order service, which provided financial services for people who lacked access to banks. Money orders earned $95,147 in 1889. Government telegraphs were also run by the Post Office, at a small loss in 1889 of $50,988. In 1885, they had even made a $10,023 profit. Similar figures could probably be quarried for 1882.[33] Whatever the marginal shortcomings of its accounting procedures, Canada's Post Office deserves the credit for providing a continent-wide mail delivery and money transfer service, at remarkably cheap cost. Set against 73 million letters and cards, plus 12 million newspapers and over 7 million packages, the whole lot travelling over 18 million miles (roughly 29 million kilometres), a net expenditure cost of $0.437 million seems good value. However, a separately recorded expenditure item should also be taken into account: subsidies to mail and steamship services added a further $0.211 million to expenditure, making the cost of the Post Office for 1882 (on these figures at least) $0.648 million.[34]

Indian Affairs compared with other basic government functions. The last of the million-dollar headings was Indian Affairs, at $1.183 million, of which $1.107 million was spent directly on indigenous people.[35] We may place this comparatively large expenditure in some context by looking briefly at the six-figure items that came further down the list, most of them allocated to functions basic to any organised State. These are given in rounded sums, and as percentages of the recalculated net expenditure. The major headings were civil government, $0.946 million (4.38 percent of the total); militia and defence, $0.754 million (3.5 percent);[36] legislation $0.582 million (2.7 percent); administration of justice, $0.582 million (2.7 percent);[37] lighthouses and coast service, $0.492 million (2.28 percent); Mounted Police, $0.368 million (1.71 percent); arts, agriculture, census and statistics, $0.273 million (1.27 percent); penitentiaries, $0.269 million (1.25 percent); superannuation and pensions (the latter not funded by contributions), $0.262 million (1.21 percent); immigration and quarantine, $0.253 million (1.17 percent).[38] Of course, these items could be regrouped in various ways that would draw attention to them as larger areas of spending overall: civil government might combine with legislation to come in at $1.582 million; totalling justice, penitentiaries and Mounted Police would emphasise that it cost Canada $1.219 million to uphold law and order. But the outline figures are surely enough to demonstrate the fiscal priority accorded to dealing with indigenous peoples (however we may interpret the phrase "dealing with") as against the standard functions of government. In 1882, Indian Affairs consumed 5.48 percent of the net budget. Twenty-first century Canadians may feel that the amount was inadequate. They may feel that it was ungraciously given, and sadistically manipulated. But it remains the case that relations with indigenous people represented a substantial item of expenditure. Indeed, in practical terms, the $1.183 million constituted an even larger slice of disposable government cash. As already noted, of the $21.573 million net expenditure, $11.844 million – the two largest headings – had to be paid in servicing the debt and subsidising the provinces. The cost of pensioning, training and providing emergency support to indigenous people equalled 12.16 percent of non-debt and non-subsidy spending. Not enough, we may feel, but a remarkably heavy burden at the time.

Indian Affairs: Ontario, Quebec, the Maritimes and British Columbia. In 1882, the Department's million-dollar budget was overwhelmingly spent in Manitoba and the North-West Territories. Indeed, it is a striking feature of its expenditure pattern that only a very small part of the Indian Affairs outlay, $32,300, went to Ontario and Quebec, the largest item being $13,000 in annuity payments under the Robinson Treaties of 1850. The Department's apparent neglect of the two central provinces is explained by the existence of a separate public agency, the Indian Fund, which provided funding for First Nations in Ontario and Quebec. It reported to MPs but its expenditure was not subject to parliamentary appropriation.[39] The Indian Fund had originated in the pre-Confederation province of Canada, with the transfer of payments for sale of First Nations assets, notably of course their land, even if these transactions were not welcomed by indigenous people themselves. By 1882, the Indian Fund had amassed a seemingly impressive capital sum of $3.147 million: if distributed among the 30,165 Aboriginal people of Ontario and Quebec[40] – who were surely its moral owners – the per capita allocation would have amounted to $104.34. Perhaps aggregated by family groups, the dispersal of the Indian Fund would have stimulated the instant creation of an indigenous capitalist class but, even so, it does not seem a vast endowment for the transfer of so much territory. However, this was an age of paternalism, and Native communities in Ontario and Quebec merely received annual grants based on the Fund's income. In 1882, $0.257 million was handed out in those two provinces, making a per capita allocation of $8.58.[41] As usual, when closely examined, it appears that the disbursements of the Indian Fund did not all reach its intended beneficiaries – at least, not directly. One quarter of the spending ($72,484, or 28.17 percent) went towards the costs of education and land management, with small amounts for administration and miscellaneous expenses. This left $184,794 for distribution among the 49 Ontario and Quebec communities, an average of $3,771 per band. The highest sum, $38,750, went to the Six Nations of the Grand River, a windfall that ensured that most other payments fell notably below the average. The smallest sum allocated, just $25, was listed as "Manitoulin Island (unceded)".[42] Ojibwa communities had been heavily persuaded to move to Manitoulin in 1836. If they were promised possession in the traditional phrase, for as long as the sun shall shine and the rivers shall flow, it was not explained to them that the time span would translate to 26 years. In 1862, the majority of the residents were suborned into selling their land, but one community refused. Still on Manitoulin, it now calls its territory the Wiikwemkoong Unceded Reserve. By declining to sell, the Wiikwemkoong had few assets credited to them in the Indian Fund, and no doubt made no friends among the bureaucracy.[43] The $25 was possibly a relic of the earlier system of presents. The Indian Fund payments that actually reached the reserves were the equivalent of $6.13 per capita of the indigenous populations of the two central provinces. In general terms, we can conclude that these annual allocations were similar to the weekly wage of a factory worker or farm labourer. However, per capita payments and wage rates are not strictly equivalents, since an industrial breadwinner might also support a partner and several children, but the comparison is striking nonetheless.

Whatever its shortcomings, the Indian Fund should not be overlooked: for every dollar spent by the Department of Indian Affairs, the Fund added an extra 23 cents. Its focus on Ontario and Quebec explain why the Department's $1.107 million non-administrative budget was spent across the rest of Canada. Indeed, 99 percent of it went to Manitoba and the North-West Territories: the 4,026 First Nations people of the Maritime Provinces received $10,984 ($2.73 per capita) while, remarkably, 35,052 indigenous people in British Columbia cost the government a mere $40,333 ($1.15 per capita).[44]

Indian Affairs: Manitoba and the North-West Territories. To evaluate the impact of Indian Affairs expenditure, we need to start with a per capita calculation of the money spent in Manitoba and the North-West. The collapse of buffalo stocks in the early eighteen-eighties had caused crisis in the region, exacerbated by the onslaught of disease, notably tuberculosis.[45] Ottawa was not really sure how many Aboriginal people fell under its remit: populations were mobile, often inaccessible and – until the collapse of hunting and the closure of the border by the American authorities in the early eighteen-eighties – adult males were frequently absent in the United States. Indian Affairs expenditure among the 37,044 First Nations people recorded for Manitoba and the North-West in 1882 may be calculated at $29.69 per head. Compared with $4.99 per Canadian throughout the population as a whole, this may seem initially impressive. However, it still means that a family of five (the standard sized unit assumed in the Treaty negotiations) would receive just under $150, about three-fifths the subsistence level income of an urban working class family dependent upon the earnings of one breadwinner employed in a factory.

Of course, it might be argued that indigenous people also benefited from general government expenditure on behalf of all Canadians. Unfortunately, scanning the main expenditure headings, it is hard to identify activities that directly contributed to Aboriginal welfare. The $0.368 spent on the Mounted Police was primarily intended to control First Nations, or at least observe their activities. Police doctors were responsible for carrying out vaccination programmes, and police posts sometimes supplied food, but these were incidental functions. In discussions preceding Treaty 7 in 1877, Aboriginal leaders seem to have spoken positively of the Mounted Police, hardly an element in a tough negotiating stance. Even Crowfoot was quoted (we should allow for the exaggerations of translation) as saying that the police had protected indigenous people "as the feathers of the bird protect it from the frosts of winter." When another speaker demanded compensation for timber cut by the Mounted Police, Lieutenant-Governor Laird raised a laugh by retorting that "if there should be any pay in the matter it should come from the Indians to the Queen for sending them the Police."[46] Overall, it would be unreasonable to claim that, by 1882, much of the Mounted Police budget was intended for the benefit of Aboriginal people. It would also be in poor taste to suggest that First Nations derived any benefit from the $0.294 million spent on penitentiaries. Public Works projects on the prairies were designed to open the way for commerce and settlement. Native people can have seen little of the $0.946 million allocated to civil government across the whole of Canada: an additional specific item of $19,305 paid for the administration of the North-West Territories. Communities living in the interior of Canada and largely insulated from the commercial economy had little interest in the $0.492 million spent on lighthouses and coastguard services. The $0.253 million devoted to immigration and quarantine simply brought more newcomers to Canada, and so added to the threat to traditional ways of life.[47] Perhaps above all, there were no publicly funded health services.[48]

Indian Affairs expenditure: annuities and provisions. Two items stand out from the main expenditure headings for Manitoba and the North-West Territories: $227,070 in annuities, which represented 20.55 percent of the total amount spent, and the largest outlay of all, $607,235, for provisions, 54.96 percent of the total.[49]

Annuities, at $5 a head, were paid under the terms of Treaties 1 to 7, signed across the southern and central prairies between 1871 and 1877. These amounts varied from year to year, partly according to the numbers of indigenous people who presented themselves at the appointed places for annual payments. In the absence of reliable census data, there was some fraud, scams which will arouse little if any moral disapproval from modern-day Canadians. There were also some back-payments for late adherents to Treaty arrangements, and in a few instances annuities for Native women were commuted, with the $5 annual payment bought out for $50. However, the fact that the total outlay on annuities was larger in 1882 than in other years stemmed from the crisis of the collapse of the buffalo, especially in Treaty 7 country, in what would later become southern Alberta. As Deputy Minister of Indian Affairs Lawrence Vankoughnet reported to the Auditor General, the unexpected return of around five thousand Blackfoot (Niitsitapi) who had been "absent for some time hunting south of the border" prompted payment of a "large sum" in overdue annuities, which this frugally precise bureaucrat could only report at "about $35,000".[50]

From 1882, expenditure on provisions was split into two accounting categories. The smaller sum, $44,083, was allocated in the form of regular expenditure for use during the payment of annuities. Money was handed out at large annual gatherings, where the government provided food for all comers. The larger outlay, $563,151, was entered under the heading, "Supplies of a general nature for destitute Indians". Although this represented emergency spending, it averages across the entire 37,044 recorded Aboriginal people in Manitoba and the North-West Territories at $15.20 for each Native person across the prairies – an amount that does not immediately appear a generous response to famine. However, this is probably an instance where overall per capita statistics do not give the full picture. Vankoughnet's need to appease the disapproving Auditor General identifies the pressure. "The unexpected return of so many Indians necessitated a large over-expenditure of [sic] provisions provided for the annuity payments; and as they were entirely destitute owing to the disappearance of the buffalo, the Department was obliged to furnish them with rations (together with all the Indians of Treaty 7) for fully nine months, at a cost of about $35,000 a month, or $315,000, for which no provision was made in the original grant, the Departmental grant having been reduced by $306,000."[51] In 1882, Ottawa believed it was responsible for 6,849 Treaty 7 Indians.[52] Thus in the localised crisis mainly in the Cypress Hills, over a nine month period the Government of Canada spent $45.99 in support of each indigenous person, a rate equal to $61.17 in a full year. By comparison, unskilled workers in (mainly) eastern Canada probably earned somewhere between $250 and $300 annually.[53] On that comparison, the Canadian government ensured that the typical Aboriginal family of five received support comparable with white working class households.[54]

Of course there were problems. Bacon was one of the easiest supplies to deliver to starving people: it was preserved, full of protein, it came in bulk, and this was the era when Toronto's bacon-packing industry gave the city its nickname "Hogtown". But Dewdney reported that it caused vomiting among indigenous people accustomed to fresh meat.[55] Even more disturbing to modern Canadians was the fact that, on occasions, food supplies were manipulated to secure Aboriginal obedience. Yet these concerns should not obscure the central point: Canada spent on a large scale, if we cannot exactly project any quality of generosity, in response to the crisis in the Treaty 7 area. The urgency of the operation may be seen in allocation figures reported to the Auditor General. The Department had begun with $102,000 earmarked for emergency relief. It soon needed a further parliamentary grant of $327,139. It says something for the humanity of Canada's MPs that Tilley could announce this large item with the simple statement: "I need scarcely enter upon any explanation of the circumstances under which this additional expenditure was made necessary for the current year."[56] When this large outlay still did not prove adequate, Ottawa resorted to the device of a Governor-General's warrant, which authorised the expenditure of $94,702, and would be subject to retrospective approval. Even with this blizzard of cash, there was an overspend of $39,310.[57]

Indian Affairs expenditure: agriculture, education and the lack of health care. The third largest area of Indian Affairs expenditure on the prairies related to agriculture, which – under various headings – accounted for $138,406, money spent to ease indigenous people into a settled way of life. Unhelpfully, this included a sizeable amount, $37,288, simply reported to the Auditor General for "farm maintenance", with no further details provided. Specific expenditure included $16,529 for farm instructors (assumed to be largely non-Native personnel), plus $30,894 in wages to labourers, who presumably were mainly Aboriginal people. Provision of seed (for grain crops) cost $22,958 and of cattle $19,033, while tools and implements were valued at $11,255. No doubt it was imaginative of the Canadian government to invest in farm training and basic start-up supplies, but spending around nine times as much on emergency support represented a clear imbalance of resources, even if one forced upon the Department by the buffalo crisis.[58] Other headings in the Indian Affairs budget are principally notable for what they do not tell: $93,214 for general and miscellaneous expenses seems high, and may help to explain why Vankoughnet toured the region himself the following year and imposed what modern bureaucrats so unhelpfully call efficiency savings.[59] $20,624 was spent on surveys, and the main budget account was completed by three small items. $2,741 was allocated to non-Treaty Sioux, and $2,567 on clothing – a small enough outlay given the obvious need to replace the lost supply of buffalo robes. Perhaps the saddest of these small items was the tiny sum of $5,592 devoted to schools.

The Department had in fact secured a larger grant for education, $23,668, intended to develop industrial schools, the residential institutions designed to separate Native children from their indigenous heritage and train them to (in white eyes) useful occupations.[60] In the event, the dislocation of 1882 made it impossible to proceed with the programme. Day schools on the reserves were also disappointingly slow to function."The reserves are for the most part remote from white settlement, and they are therefore not very desirable places of residence for white teachers, while very few competent teachers of Indian descent are to be had," explained the Department's annual report.[61] (The comment is open to the riposte that, if the Government of Canada had seriously wished to encourage teachers to move to hardship posts, it should simply have paid them more.) There was unspent cash available in 1882, and the cost of schools for indigenous people was in any case minuscule in comparison with the overall budget. However, at least there was some formal provision for education (an area in which the Dominion government had no responsibility outside the territories). Despite the famous Treaty 6 promise of a medicine chest on each reserve, government funding for health care and hospitals was notably absent.

Political criticism of Indian Affairs expenditure. In 1882, Canada's politicians were much more likely to be concerned about the overall size of the Indian Affairs budget than to object to parsimony or outright omissions within it. "Indians" had first appeared as an expenditure heading in 1870, at $6,080. In 1882, the item passed one million dollars for the first time. In February 1882, Richard Cartwright, Liberal finance minister between 1873 and 1878, claimed he was "appalled at the extravagance and mismanagement" that had seen $600,000 added to the Department's estimates in the four years since he had left office: "we may well ask whither we are drifting?... is it going to stop? ... I fear instead of stopping it will increase." Cartwright's indignation was disingenuous. He must have been aware that the cost of annuities had been bound to increase (from $149,710 in 1878 to $227,070 in 1882) with the conclusion of the Treaty process and the catch-up payments to late adherents to the agreements. More to the point, emergency provisions had risen from $48,589 in 1878 to $563,151 – an eleven-fold increase, from less than $50,000 to over half a million. Cartwright, who could hardly have been unaware of the developing crisis, was out to make a political point, implying that the torrential outflow of cash resulted from Sir John A. Macdonald's decision to combine the Indian affairs portfolio with his office of prime minister: Macdonald, a personal enemy, was "a very indifferent administrator".[62]

An extreme section of Canadian political opinion doubted whether money should be spent upon First Nations at all. "Our whole cost for the management of Indian affairs was only from $500 to $1000 a year," British Columbia MP Amor de Cosmos recalled of the halcyon days before the province had entered Confederation in 1871. The Mackenzie government had adopted "the false policy of dealing [i.e. negotiating] with the Indians", pushing this to an annual outlay of $50000. It was all part of a "mistaken policy" that had made Native people "a privileged class, in regard to the ownership of land. The Indian should have been taught to earn his living the same as the white man." "The proper way – the just way – ought to have been to ignore the so-called Indian title. The Indian should have been told that the white man had as good a right to share with them in the possession of the lands as they had. ... his so-called title to land that he had not made and never could use would be disregarded. Had such a policy obtained there would have been no deception and no heavy expenditure for Indian annuities. Such had been the policy of British Columbia and it had worked well." When opposition leader Alexander Mackenzie called the theory "inhuman", De Cosmos replied: "We knew them better than you do."[63]

Crass though his argument must sound, De Cosmos had poked a grubby finger into an opaque area of Dominion policy and attitudes. What, precisely, did Canada buy through the Treaty process? When Secretary of State Seward had persuaded Congress to pay $7.2 million to the Tsar of Russia in 1867, the United States acquired sovereignty over Alaska. But Canada's negotiators insisted that Queen Victoria already ruled over the prairies: she had inherited her rights from her ancestors, one of whom had demonstrated control by conferring a trading monopoly upon the Hudson's Bay Company back in 1670. During discussions leading to Treaty 4 in 1874, Otakaonan, an Ojibwa chief, angrily denounced the Company for stealing Aboriginal land. Asked to specify what exactly they had taken, Otakaonan gave a curtly comprehensive reply: "The earth, trees, grass, stones, all that which I see with my eyes." Canada's spokesman, Lieutenant Governor Alexander Morris, replied in terms that came close to De Cosmos. The Great Spirit had made the earth, the grass, the stones and the wood. "He made them for all his children to use, and it is not stealing to use the gift of the Great Spirit. The lands are the Queen's under the Great Spirit."[64] It may be understandable, if not entirely commendable, that many white Canadians doubted the extent of their obligation to their Aboriginal fellow citizens.[65]

An Aboriginal dividend of $50 a year in place of $5 annuities? What level of compensation – we might think of it as an Aboriginal dividend – would have been basically equitable, in place of the flat rate annual annuity of five dollars for every man, woman and child? Could the Canadian budget have borne the cost of a fair settlement?

It was the Canadian government that dictated the $5 annuity payments in Treaties 1 to 7. Although they probably knew their pleas were hopeless, First Nations people did sometimes press for a better deal. During the 1874 negotiations (such as they were) for Treaty 4, Salteaux indicated annoyance at reports that the Hudson's Bay Company had sold its claims for £300,000 ($1.44 million). One chief, Pis-Qua (Pasqua), bluntly demanded: "We want that money."[66] Another speaker, Kamooses – apparently of lesser status – asked for a $15 annuity. Morris mobilised moral outrage to dismiss the claim. Kamooses was asking for three times as much as had been granted to those who had signed previous treaties. "That would not be right; and it is well that you should know that we have not power to do so; we can give you no more than we gave them. We hope you are satisfied."[67] It is unlikely that his optimism was justified. In 1877, Button Chief of the Niitsitapi briefly enlivened discussions on the terms of Treaty 7 by proposing $30 as the annual annuity. "I fear Button Chief is asking too much," David Laird brusquely replied on behalf of the Canadian government.[68] This hypothetical exercise of retrospectively exploring the option of a decent national dividend ventures to overrule Lieutenant Governor Laird, concluding rather that a $50 annuity would have represented an appropriate minimum payment, and looking at the implications of such an arrangement.

The $50 sum is chosen partly for convenience (the maths is straightforward), but also in the light of previously presented information indicating that Treaty negotiations assumed a standard Aboriginal family unit of five persons, and that the annual income of unskilled factory workers or farmhands was around $250. It should be stressed that this represents a very basic standard of living, close to the poverty line estimated by the sociologist Herbert Ames in his 1897 study of working-class Montreal in 1897.[69] First Nations across western Canada had some comparative advantages. Accommodation costs, which could consume one quarter of a poor Montreal family's income, were unlikely to have been so burdensome to indigenous communities. Even after the collapse of hunting, many communities still had access to a free food source through fishing. Nonetheless, the notional $50 annual Aboriginal dividend should be regarded as, at best, an income supplement or minimal safety net.

As Canadians are well aware, injections of public money can complicate as well as resolve difficulties in First Nations communities. Paying Aboriginal people a basic income in recognition of their assets transferred to Canada would have made sense as an enhancement of individual dignity.[70] Yet ensuring that the sudden influx of cash did not cause disruption would have required disempowering controls. For instance, to encourage indigenous people to become self-supporting through farming or wage-earning, it might have been advantageous to have offered a bonus on dividends deposited in savings banks for some minimum term of years, until they constituted useful sums for capital investment.[71] The biggest threat would have been the menace of alcohol, which had caused such destruction across the prairies in recent times. Although reserves were officially dry, the provision of $50 dividend income would almost certainly have boosted the demand for booze. The obvious technical solution to this challenge would be to issue the Aboriginal dividend in the form of non-transferrable vouchers which could not be redeemed for intoxicating liquor. Unfortunately, such a scheme would have been cumbersome to administer, requiring the licensing of authorised retail outlets, with accompanying risks of extortion and fraud. Fundamentally, all food-coupon schemes are demeaning to their recipients, thereby negating the intention behind the dividend of demonstrating respect for Canada's First Nations.

Estimating the cost of a $50 annual dividend is relatively simple. For the 37,044 people of Manitoba and the North-West Territories, this would cost $1.852 million each year. However, since we are fantasising about an ideal solution, why should we make an invidious distinction by excluding Native people in other parts of Canada? It was hardly the fault of Maliseet and Mi'kmaq that the New Brunswick hunting grounds from which they were shouldered aside proved to be of little or no agricultural value. The estimated Aboriginal population of Canada was 110,505.[72] Distributed to them all, the annual cost of the dividend would be $5.525 million. The cost of collecting excise duty consumed 4.77 percent of the proceeds, so let us add five percent ($0.276 million) for administration and distribution, making a grand total of $5.8 million.[73]

However, the net cost would be less. Savings would include the $0.220 million allocated to annuities, which would be superseded by the dividend, while the $0.257 million spent in Ontario and Quebec from the Indian Fund would presumably have been assimilated into the new arrangement. If the dividend was distributed twice a year through the Post Office network (a handy way to encourage use of the Savings Bank), the $44,083 spent on provisions for use at payment gatherings would no longer be required. Much of the $83,617 spent by the Department in British Columbia, central and eastern Canada might also cease to apply. Above all, it could be hoped that the provision of a basic income would render unnecessary a large part of the $563,151 cost of emergency provisions. If the annuities, distribution and Indian Fund expenditure (totalling $0.521 million) could be eliminated, and the regional expenditure elsewhere in Canada and the cost of emergency provisions on the prairies reduced by half (to $0.323 million), the result would have been to shave $0.844 million off the $5.8 million expenditure.

Other reductions would have been possible but less easy to quantify. Government expenditure encouraging indigenous people to adapt to agriculture was always intended to be transitional. Submitting the Indian Affairs budget to parliament in 1883, the finance minister, Sir Leonard Tilley, made clear that it was an investment. "We hope by-and-bye ... with the instructions that are being given to our Indians in agricultural pursuits, they may be induced to settle down and cultivate the lands, and cease to be, to a great extent, a charge upon the Dominion of Canada."[74] The dividend would have assisted Ottawa in more quickly reducing the $138,406 spent in 1882 on farms and farming. At $50 per head, the Aboriginal dividend was hardly likely to make First Nations people wealthy, but – especially if it functioned as a supplement to earned income – it might have been expected to generate some indigenous consumer spending, and with it a contribution to customs and excise. On average, Canadians each paid $6.35 in consumption taxes. Aboriginal people would probably have contributed less. Farm implements were available from Canadian manufacturers. Native people were discouraged from consuming tax-raising liquor. But more modest spending by indigenous people might have injected, say, $2 per capita into government revenue, equal to $0.221 million added to receipts. Thus the net cost paying a $50 dividend to every Aboriginal man, woman and child across Canada would probably have been in the region of $4.7 to $5 million each year.

We should also estimate the cost of the annuity rates demanded by Button Chief and by Kamooses. Button Chief's $30 per capita annual payment would have cost $1.11 million applied to Manitoba and the North-West Territories, $3.315 million for the whole country. The $15 payment proposed by Kamooses would have cost $0.556 million on the prairies, $1.658 million across the Dominion. Both figures would have made possible the elimination of existing annuity payments plus associated costs of provisions, and would also have subsumed Indian Fund expenditure in central Canada, reducing the national cost to $2.77 million (Button Chief) and $1.11 million (Kamooses).

Thus we have three headline figures (all of them, of course, imaginary): a $50 dividend costing $4.7 to $5 million net each year, Button Chief's demand for a $30 annual payment, amounting to $2.77 million, and the $15 requested by Kamooses, costing $1.11 million. Could Canada have afforded such outlays? Considered alongside unavoidable expenditure headings such as the $8.166 million (net) earmarked for servicing the debt, or the obligatory outlay of $3.531 million in subsidies to the provinces, these sums do not appear impossibly intimidating. Indeed, in 1882, the Dominion government ran a $6.316 million surplus: for that year, a dividend based on basic justice to Aboriginal people would not have cost the taxpayer a single cent.

Of course, it would have been irresponsible to have planned expenditure on the basis of what proved to be a bonanza year. The Canadian economy was vulnerable to global cycles: the 1882 surplus and its successor, over $7 million in 1883, were unusual. Between 1876 and 1880, the government had run deficits of between $1.128 million and $1.938 million. The Manitoba Conservative MP Joseph Royal had served on the North-West Territories advisory council during those years, "the period of deficits" as he called it looking back in 1885. "I remember that, when ... we had to deal with the extinction of the buffalo, with the small-pox, then raging among certain tribes, with the administration of justice in these Territories, we were uniformly, at every turn, met with this answer from Governor Morris...: 'No funds'."[75] Unfortunately, deficits returned in 1885, with the revenue of the Dominion government falling $5.835 million short of expenditure in 1886. Not until 1899 would Ottawa have been capable of disbursing our notional Aboriginal dividend out of current income, although it has to be said that in the years that followed – the heady days of Canada's Century – a $4 million-plus net payment to First Nations would have placed little pressure on the public accounts.[76] In the eighteen-eighties, a responsible finance minister (and Tilley was a deeply worthy functionary) would have sought to use taxation to cover the cost of payments to First Nations. Those revenue sources were constrained by the narrowness of the tax base. $4.7 million to pay Native people could have been obtained by a 17 percent increase in customs and excise rates. Doubling excise duties on alcohol and tobacco would have generated an extra $4.26 million alone.

Among the pioneer generations of Canadian scholars, I can think of no historian who explicitly said that because the Dominion could not have afforded to acquire the West in a genuine real estate deal, its indigenous inhabitants had to make way and lose out. Indeed, the colony-to-nation histories barely took account of First Nations at all. Yet a stroll around Ottawa's budget of 1882 surely demonstrates that even the limited State structure of the Dominion of Canada could have provided a measure of fiscal justice in recognition of pre-existing indigenous rights to the land. In good years, Canadian taxpayers would hardly have noticed the cost of their restitution to their Native fellow citizens. When the economy turned down, governments could have resorted to the traditional stand-by tactic of hitting drinkers and smokers to discharge the country's debt of honour.

Of course, it was never going to happen. After outlining Canada's non-negotiable terms for Treaty 6 in 1876, Alexander Morris sounded a cautionary note: "I cannot promise, however, that the Government will feed and support all the Indians; you are many, and if we were to try to do it, it would take a great deal of money, and some of you would never do anything for yourselves."[77] With remarkable insensitivity, in April 1882 the prominent Liberal David Mills, condemned rising expenditure on Indian affairs, alleging that it was "pretty evident that the Indians have become pensioners upon the Public Treasury, that we are called upon to feed them, to clothe them, and that they are doing little or nothing for themselves."[78] When a paltry hand-out of $5 a year, plus emergency famine relief not over-generously bestowed can be construed as the reckless encouragement of a dependency culture, little purpose is served a century and a half later in deploring the failure to grant a basic and honourable measure of compensation to displaced First Nations. White Canadians of the eighteen-seventies and -eighties were never likely even to contemplate paying indigenous people $50 per capita. But we can state that their government finances could have supported such a programme of remuneration, and no excuse of necessity can even begin to justify the ungenerous terms that the Dominion imposed.

Concluding reflections. For an ocean-to-ocean operation, the Dominion government ran on a very small budget. Per head of population, it taxed and spent in a year roughly as much as an unskilled labourer or farmhand could earn in a week. Garth Stevenson estimates that, around 1880, Ottawa and the provinces jointly occupied around 5 percent of gross domestic product, seven-eighths of it controlled centrally.[79] In 2017, the federal government expenditure alone equalled 21 percent of GDP. There were also notable constraints upon both the sources and destinations of cash. Revenue was overwhelmingly raised from customs and excise: if Canada had ever achieved either industrial self-sufficiency or widespread sobriety, the financial consequences for the Dominion government would have been severe. More than half of government expenditure was dictated by two inescapable obligations, debt servicing and provincial subsidies. Despite the predictable complaints of wastefulness from opposition politicians, the government machine seems to have been generally efficient. Despite serving vast areas often with sparse populations, railways, canals and the postal service recouped an impressively large fraction of their running costs. Strict item-by-item control within departmental allocations may not warm the hearts of modern readers, but it does point to the fiscal discipline that underlay the administrative machine. Yet the restricted size and bureaucratic efficiency that characterised Dominion expenditure also points to the difficulty faced by the Ottawa machine in responding to the famine crises of the eighteen-eighties on the prairies. Ethically and compassionately, twenty-first century Canadians will wish that their government had delivered more for indigenous people, and given support graciously and as a matter of right. Yet looking at the scope and range of government activity in that era, it is also important to acknowledge that Ottawa's 1882 half-million dollar response in emergency famine aid was – in its own way – impressive and humane.[80]

I close with a wider and more personal reflection. Writing about Confederation in the eighteen-sixties, I did indeed examine the public funding of the British North American provinces to understand their dependence upon revenue from tariffs. Yet as a student and, in times past, a teacher of Canadian history, I have noted and commented upon such developments as the founding of the Canadian Navy in 1910-11 and the introduction of child endowment payments (the "baby bonus") in 1944 without having the faintest notion of how much these initiatives costs, what proportion of the budget they would consume, let alone how they were to be paid for. Indeed, I am charmed that this should be my first attempt to disentangle an Ottawa budget when I have claimed an interest in Canadian history for fifty years. Perhaps every graduate student in Canadian history should select a year relevant to their research and undertake the same exercise, if only to acquire a little humility when passing retrospective judgement on the priorities of the time. This is an area, too, where non-specialists with an interest in history can make a contribution, especially if they have experience in business or accountancy: where the understanding of government revenue and expenditure is concerned, historians from outside the academic world can hardly be more amateur than most professionals have proved themselves to be. A great deal of information is available on line (sometimes during this endeavour I have felt, too much), in detail that calls rather more for business brains than the skills acquired in archival research.[81]

ENDNOTES    My thanks to Andrew Jones and Richard Tompkins for help with the presentation of this text.

[1] "John A. Macdonald and the Moral Universe: Alcohol, Corruption and Racism" will be published in martinalia ( The Department of Indian Affairs has passed through various name changes. In 2019, it became Crown-Indigenous Relations and Northern Affairs Canada.

[2] E.A. Heaman, Tax, Order, and Good Government: A New Political History of Canada, 1867-1917, Montreal and Kingston, McGill-Queen's University Press, 2017.

[3] For a recent and welcome attempt to set Indian Affairs expenditure on context, P. Dutil, Prime Ministerial Power in Canada..., Vancouver: UBC Press, 2017, 73-4.

[4] I use The Canada Year Book 1905 as it happens to be on my shelves, $10 well spent in a used bookstore, I suspect in Vancouver in 1989. I have quoted from 190-206, and do not supply specific references to this section below. Other references are given as CYB05, with page number. This basic source has been supplemented from online sources, e.g. Canada: Statistical Abstract and Record 1886, Ottawa: Maclean, Roger & Co., 1886, 182-4; The Statistical Year-Book of Canada for 1889, Ottawa: Brown Chamberlin, 1890, 245-58; The Statistical Year-Book of Canada for 1904, Ottawa: S.E. Dawson, 1905, 365. Information from parliamentary debates and Sessional Papers has also been incorporated, not always with the happy effect of clarification, since statistics were presented in different forms at the time. Detailed figures for federal government financing are available in M.C. Urquhart and K.A.H. Buckley, eds, Historical Statistics of Canada, Cambridge; Cambridge University Press / Toronto: The Macmillan Company of Canada, 1965, but only from 1933.

[5] Debates of the House of Commons, 24 February 1882, 86: I passed my last examination in Mathematics in 1961 (with a top grade). I can operate a pocket calculator, and also draw reassurance from the strong likelihood that there were aspects of the figures that officials of the Government of Canada did not understand either. One point to be kept in mind is that, because Canada was born on 1 July 1867, its financial year runs to 30 June, not 31 December. Hence there is a risk of inconsistencies in assessing problems that historians associate with calendar years: the crisis that we think of as the 1885 rebellion did indeed occur almost entirely within the 1884-5 financial year, but the bills – and they were huge – mostly came in for 1885-6, and were tabulated for the latter year. Mounted Police cost $0.564 million in 1885 [i.e. July 1884-June 1885], which almost doubled to $1.029 million in 1886. The item for Northwest Territories government, almost invisible at $48,584 in 1885, shot up to $3.235 million in 1886.

[6] D.G. Creighton, British North America at Confederation: A Study Prepared for the Royal Commission on Dominion-Provincial Relations, Ottawa: J.O. Patenaude, 1939, 66-7, 72; Peter B. Waite, Canada 1874-1896: Arduous Destiny, Toronto: McClelland and Stewart, 1971, 74-79.

[7] The Maritime provinces were particularly dependent upon customs revenue, which accounted for 81 percent of Nova Scotia's income. However, Maritimers paid about half as much per capita as inhabitants of the province of Canada, which meant that assimilation of their import duties would lead to an increase in the cost of living. Ged Martin, "The Case Against Canadian Confederation, 1864-1867", in Ged Martin, ed., The Causes of Canadian Confederation, Fredericton: Acadiensis Press, 1990, 19-49, esp. 33n.

[8] Debates of the House of Commons, 24 February 1882, 104:

[9] CYB05, 156. Limitations on the sources of revenue are discussed in "Income tax in Canada before 1917",

[10] The schedule was printed in Sessional Papers of the Dominion of Canada: volume 2, first session of the fifth Parliament, session 1883: These are of necessity outline figures: for instance, some part of the $86,636 paid in duty on imported gloves could probably be added to the category of woollens.

[11] Debates of the House of Commons, 24 February 1882, 80:

[12] See endnote 53 for a discussion of urban wage rates and living costs.

[13] Sessional Papers of the Dominion of Canada: volume 1, first session of the fifth Parliament, session 1883, 12-13: These, with some smaller amounts, in fact add up to $5.915 million. Refunds, plus delayed transmission of cash to Ottawa, seem to explain this discrepancy.

[14] The options available to finance ministers were restricted in various ways. Smuggling was a major problem in relation to tobacco duty. When Congress decided in 1883 to reduce tobacco taxes in the United States, Tilley felt obliged to cut Canada's excise duty "for the purpose of preventing illicit trade, protecting the honest trader and protecting our own manufacturing industries". Debates of the House of Commons, 30 March 1883, 332-3:

[15] Tax income also included a small sum in stamp duties ($82,616). This did not refer to postage stamps, which were subsumed within Post Office accounts, but to charges for the registration of formal documents. It was a source that was being phased out, and did not appear in the public accounts from 1883 onwards.

[16] Debates of the House of Commons, 30 March 1883, 333:

[17] W.L. Morton, The Critical Years: The Union of British North America, 1857-1873, Toronto: McClelland and Stewart, 1964, 123-4. Finance minister Tilley explained in 1883 that Canada's financial agents in London insisted that a sinking fund was necessary to market Dominion securities. Debates of the House of Commons, 20 February 1883, 54:

[18] Debates of the House of Commons, 30 March 1883, 333:

[19] CYB05, 189. The reported figure for "aggregated" Sinking Fund receipts in 1882, $1.226 million, is beyond my poor powers of explanation. CYB05, 190.

[20] CYB05, 156.

[21] Waite, Canada 1874-1896: Arduous Destiny, 191, 205; Toronto Mail, 26 January 1887. Tilley's counter-argument appears to have been that in its protectionist character, the tariff created jobs, which made people prosperous enough to afford imports, thereby generating revenue. Debates of the House of Commons, 30 March 1883, 339:

[22] CYB05, 97, 140; J.R. Miller, Skyscrapers Hide the Heavens: A History of Indian-White Relations in Canada, Toronto: University of Toronto Press, 1989, 162.

[23] E.R. Forbes and D.A. Muise, eds., The Atlantic Provinces in Confederation, Toronto: University of Toronto Press, 1993, 56-7; F.W.P. Bolger, Prince Edward Island and Confederation 1863-1878, Charlottetown, PEI: St Dunstan's University Press, 1964, 248-9.

[24] G. Stevenson, Ex Uno Plures: Federal-Provincial Relations in Canada, 1867-1896, Montreal & Kingston, McGill-Queen's University Press, 1993, 46-7.

[25] Section 118 gave Ottawa the power to make deductions from subsidy payments if provinces exceeded their agreed debt allowance. I do not know whether this ever happened.

[26] Debates of the House of Commons, 30 March 1883, 333:

[27] For a positive picture of Ontario finances in the 1880s, R. Bothwell, A Short History of Ontario, Edmonton: Hurtig Publishers Limited, 1986, 90-1. In 1873, Premier Oliver Mowat had been able to "solve" (by throwing money at it) the problem of the Municipal Loan Fund. Municipalities had borrowed around $12 million through the fund, but few had bothered to honour their repayment commitments. Charged with sorting out the mess, Mowat's private secretary had become so desperate that he had a nightmare in which he found himself in a graveyard looking at his own headstone, on which had been carved the initials "M.L.F." C.R.W. Biggar, Sir Oliver Mowat ... a Biographical Sketch, Toronto: Warwick Bro's & Rutter, Limited, 1905, i, 205n. Noting that the Dominion subsidy represented 47.84 percent of the Quebec provincial budget in 1870-1, Hamelin concluded: "La subvention fédérale représente donc le revenu le plus important de la province. Fixe et assurée, elle constitue une garantie que le trésorier peut offrir aux financiers lors de les négotiations des empruntes." Hamelin, Les premières années du parlementarisme quebécois (1867-1878), 345.

[28] Table in Stevenson, Ex Uno Plures, 46. I have been unable to consult J.A. Maxwell, Federal Subsidies to the Provincial Governments in Canada (1937).

[29] These two major revenue areas have not been recalculated to produce net figures. My argument is that whereas Public Works, the Post Office and the Sinking Fund were intended to generate revenue on a trading or investment basis, there were genuine administrative costs in collecting income from customs and excise.

[30] The figures for 1882 were railways and canals $2,755,833 and public works $137,680. The latter sum presumably related to publicly owned wharfs and docks. I have rounded them to $2.894 million.

[31] CYB05, 229.

[32] Sessional papers of the Dominion of Canada: volume 3, first session of the fifth Parliament, session 1883, esp. 3-xv. These figures appear in subsequent editions of The Statistical Year-Book of Canada.

[33] The1889 figures come from The Statistical Year-Book of Canada for 1889. The profit on money orders in 1882 appears to have been $44,579 (Sessional Papers, 3-xx).

[34] I suggest that a further quarter of a million in receipts ($254,409) may be deducted by calculating net expenditure for a series of two large and several much smaller items. The $18,580 receipts for Militia and Defence reduce the gross outlay from $772,813 to $754,313. Perhaps these were fees for militia commissions, which were always sought-after distinctions? Penitentiaries earned $24,225, reducing their gross cost from $293,617 to $269,382. It was always difficult to put convict labour to profitable use, as honest workingmen (i.e. voters) objected to the unfair competition. The third largest of these lesser headings, ocean and river services (presumably pilotage) cost $187,809 gross. I venture to set against this two entries for tonnage dues, one for river police and the other noted as "mariners' fund". These combine at $71,155, reducing ocean and river services to a net cost of $116,654. The Dominion government operated a funded superannuation scheme, which was already falling short of breaking even: contributions at $46,426 made little dent in payments of $160,320, giving a net cost of $113,894. (At least superannuants made some contribution: the Dominion also ran a sizeable ill for entirely unfunded pensions.) Receipts for fisheries amounted to $23,687, which may be used to reduce the gross expenditure under that heading of $92,071 to $68,384. The culling of timber cost $51,361, but recouped fees of $45,753, reducing the actual cost to $5,608. Insurance inspection showed a net profit of $232, fees of $9,305 cancelling out expenses of $9,073. Steamboat inspection was even more successful, with $15,278 in receipts coming in $442 ahead of the $14,836 in expenses. The larger items are referred to later in the main text, but this survey may incidentally convey some idea of the relative importance (or, at least, cost) of various government activities.

[35] The precise budget for Indian Affairs varies according to the source: John A. Macdonald's report as Superintendent-General accounted for the report of $1.111 million in expenditure. It was a crisis year.

[36] Given the general assumption of historians that Canada relied on Britain for its defence, this outlay perhaps seems surprisingly large.

[37] Legislation cost $582,200, justice $581,696.

[38] A few important areas came in below $100,000. $81,900 was budgeted for collection of revenue from Dominion lands, but no receipts were entered for 1882. The geological survey cost $64,554. There was a net expenditure of $63,384 on fisheries.

[39] Information in Sessional Papers of the Dominion of Canada: volume 4, first session of the fifth Parliament, session 1883, e.g. table 5-11:

[40] Estimates of Aboriginal populations varied from year to year, even in central Canada. In 1883, First Nations populations were returned at 28,215 (Ontario, 17,126; Quebec, 11,089). Sessional Papers of the Dominion of Canada: volume 4, first session of the fifth Parliament, session 1883, 5-260:

[41] Sessional Papers of the Dominion of Canada: volume 4, first session of the fifth Parliament, session 1883, 5-xli:

[42] It will be by now no surprise that slightly different figures were given in Sessional Papers of the Dominion of Canada : volume 4, first session of the fifth Parliament, session 1883:

[43] O.P. Dickason, Canada's First Nations: A History of Founding Peoples from Earliest Times, Toronto: McClelland & Stewart Inc., 1992, 237-8, 255-6. The unceded Manitoulin Island community had somehow accumulated a capital balance of $330.14. Sessional Papers of the Dominion of Canada: volume 1, first session of the fifth Parliament, session 1883, 1-131:

[44] Detailed expenditure submitted by Indian Affairs to the Auditor-General presents a notably less impressive picture of Dominion support to First Nations in British Columbia. Of the $40,333 total, salaries, administration and travel costs consumed $34,158. Specific items for the direct benefit of Aboriginal people were medical expenses, $2285; tools and seeds, $1110; education, $826 and "destitute Indians", $820. Sessional Papers of the Dominion of Canada: volume 4, first session of the fifth Parliament, session 1883. 6-332-6-340: In 1884, Cartwright made a similar point about Indian Affairs expenditure in the Maritimes: "most of this small grant appears to go as salaries to white-men, rather than as food or grain given to the Indians." "I am afraid that is so," Macdonald ruefully agreed. "These officers have been there for a long time". Some were clergy, who were "excellent moral police." Debates of the House of Commons, 1 April 1884, 1266:         

[45] James Daschuk, Clearing the Plains: Disease, the Politics of Starvation, and the Loss of Aboriginal Life, Regina, University of Regina Press, 2013, esp. 85-90.

[46] Alexander Morris, The Treaties of Canada with the Indians of Manitoba and the North-West Territories ..., Toronto: Prospero Canadian edition, 2000 (cf. first ed., 1880), 272, 258.

[47] Nor was it likely that the "headline" figure for Indian Affairs expenditure was greatly counterbalanced by tax income from Aboriginal people. Edward Blake once described First Nations as "only tax consumers". Living largely outside the consumer economy, indigenous people on the prairies can have contributed little to customs duties or railway revenues. It is unlikely that they made much use of the Post Office, while they were officially discouraged from consuming liquor. Even if they purchased dutiable tobacco, constituting less than one percent of the population of Canada, they could hardly have generated $20,000. It is likely that Aboriginal communities across the prairies experienced near-total exemption from taxation. This was in sharp contrast with British colonies in Africa, where Black majority populations were charged for their own colonisation through hut taxes and poll taxes. Heaman, , Tax, Order, and Good Government: A New Political History of Canada, 1867-1917, 156.

[48] The Dominion government spent $53,101 on marine hospitals.

[49] Carl Beal, "Money, markets and economic development in Saskatchewan Indian reserve communities, 1870 to 1930s", PhD thesis, University of Manitoba, 1994, esp. 140. Beal's figures, distilled from Departmental reports, give a total expenditure of $1,104,795 in Manitoba and the North-West for 1882¸ compared with $1,099,706 ($1.1 million) in the main text of the report. Percentages are calculated against totals supplied by Beal.

[50] Beal, "Money, markets and economic development in Saskatchewan Indian reserve communities, 1870 to 1930s", 148, 155-6; Sessional Papers of the Dominion of Canada: volume 4, first session of the fifth Parliament, session 1883, 6-332-6-340: Strictly speaking, annuities for 37,044 indigenous people in 1882 should have cost $185,220.

[51] Sessional Papers of the Dominion of Canada: volume 4, first session of the fifth Parliament, session 1883. 6-339-6-340:

[52] Sessional Papers of the Dominion of Canada: volume 4, first session of the fifth Parliament, session 1883, 5--202:

[53] The figure of $250 to $300 for an unskilled worker is based on the weekly wages cited above in the discussion of the possibility of income tax. But these rounded amounts assume year-round employment, which was unlikely. Paul-André Linteau reported that a labourer in Montreal in the 1880s could earn between $6 and $9 a week ($313 to $468), but that seasonal unemployment was common. In 1887, Liberal leader Edward Blake reckoned that a typical skilled worker in Ontario earned $445.60 a year, but a family of 6.5 persons paid $415.75 for food, clothing, rent and fuel. Mathematically, this would adjust to $319.50 for a family of five, but most working families suffered overcrowding, while children presumably cost less to feed and clothe than adults, and Blake's calculations made no allowance for medical costs or, for skilled workers, such costs as maintenance of tools and travel to work. Anything like precise comparisons of family incomes with Aboriginal lifestyles on the Plains is complicated by many factors. In urban areas, many women also worked, although for lower wage rates: when pioneer sociologist Herbert Ames studied working-class Montreal in 1897, he reckoned that in working-class households, 1.41 family members contributed earnings. Linteau estimated that in the 1880s the average Montreal worker spent 55 to 65 percent of his income on food, and a further 15 to 25 percent on accommodation. It is unlikely that many First Nations women worked for cash, but indigenous people had few accommodation costs. Ames concluded that $6 a week ($312 per annum) was "the point below which comfort ends and poverty commences." Below $5 a week ($260 per annum), "proper provision" for a family was "hardly possible". P-A. Linteau, Histoire de Montreal depuis la Confedération, Montreal: Boréal, 1992, 95-6; Herbert Ames, The City below the Hill: a Sociological Study of a Portion of the City of Montreal, Canada, Montreal: Bishop Engraving and Printing Company, 1897, 16, 49.

[54] Rebalanced averages have an awkward habit of breaking out elsewhere. Allocating $315,000 of the provisions funding of $563,152 to the 6849 mainly Niitsitapi (Blackfoot and their allies) leaves $248,152 of emergency supplies among the remaining 30,195 Native people of Manitoba and the North-West Territories, a per capita average of $8.22. An assessment of the adequacy of this expenditure would require detailed evaluation of local circumstances. Daschuk argues that Niitsitapi continued to receive a disproportionate amount of relief expenditure until 1887 to prevent them from interfering with the construction of the railway. Daschuk, Clearing the Plains, 147.

[55] E.g. Daschuk, Clearing the Plains, 109; Library and Archives Canada, Fonds Macdonald, vol. 211, Dewdney to Macdonald, private, 9 August 1882. Unfortunately, this did not mean that Dewdney ceased supplying bacon: Daschuk, Clearing the Plains, 143, 147.

[56] Debates of the House of Commons, 24 Feb 1882, 83:

[57] Sessional Papers of the Dominion of Canada: volume 4, first session of the fifth Parliament, session 1883. 6-339-6-340:

[58] One curious minor item under farm expenditure was $210 spent on interpreters. By the 1880s, agriculture was a highly technical occupation: one wonders how detailed information was conveyed about machinery and crop cycles to people who probably spoke little English.

[59] Daschuk, Clearing the Plains, 134-8, 143.

[60] J.S. Milloy, A National Crime: the Canadian Government and the Residential School System, 1879 to 1986, Winnipeg: The University of Manitoba Press, 1999; Sessional Papers of the Dominion of Canada: volume 4, first session of the fifth Parliament, session 1883. 6-339-6-340:

[61] Sessional papers of the Dominion of Canada: volume 4, first session of the fifth Parliament, session 1883, 5-xviii:

[62] Debates of the House of Commons, 24 February 1882: Perhaps Cartwright was opposing for the sake of opposition. Another Ontario Liberal MP, William Paterson, declined to criticise. "If this money is required to be expended on the Indians, fault cannot be fairly found with the Government for adopting the plan of conciliating the Indians." There were remarkably few allusions to Indian Affairs expenditure in budget debates. Debates of the House of Commons, 30 March 1883, 344:

[63] Debates of the House of Commons, 21 April 1880, 1635-6: Born William A. Smith, De Cosmos was openly racist. His belief that ignoring Native title "had worked well" for British Columbia stored up problems for the province in the later twentieth century. Robert A. J. McDonald and H. Keith Ralston, "De Cosmos, Amor," in Dictionary of Canadian Biography, vol. 12, University of Toronto/Université Laval, 2003–, accessed September 9, 2019,

[64] Morris, The Treaties of Canada with the Indians of Manitoba and the North-West, 102; R.J. Talbot, Negotiating the Numbered Treaties: an Intellectual and Political Biography of Alexander Morris, Vancouver: University of British Columbia Press, 2019, 82-3.

[65] These questions are further examined in "How much did Canada 'pay' First Nations for the prairies?", to be published on martinalia (

[66] Morris, The Treaties of Canada with the Indians of Manitoba and the North-West Territories, 82, 106. Lieutenant-Governor Morris helpfully explained that "many years ago the Queen's father's father gave the Company the right to trade", thereby conferring upon it marketable rights. How the Queen's ancestors acquired sovereignty was not made clear.

[67] Morris, The Treaties of Canada with the Indians of Manitoba and the North-West Territories, 121-2.

[68] Morris, The Treaties of Canada with the Indians of Manitoba and the North-West Territories, 270-1. A note on Button Chief by J. Ernest Nix in Alberta History, xxix (1981), 11-14, is not available for consultation via the Internet.

[69] Ames, The City below the Hill: a Sociological Study of a Portion of the City of Montreal, Canada, 49. See endnote 68 for discussion of wage rates and living standards in urban Canada.

[70] Morris was aware of this consideration. "By being paid in money you cannot be cheated, as with it you can buy what you think proper," he told the Blackfoot in 1877. Morris, The Treaties of Canada with the Indians of Manitoba and the North-West Territories, 268.

[71] Such an arrangement would have come into conflict with contemporary laissez faire principles that objected to special treatment for any group. In addition, Tilley in 1882 cut deposit rates in the savings bank and reduced the deposit limit from $10,000 to $3,000. Debates of the House of Commons, 24 February 1882, 86: At the conclusion of Treaty 3 negotiations, some Ojibwa entrusted their gratuities to "white men and Half-breeds on whose honor they could depend" to give them a credit balance for future purchases at Fort Garry. Morris, The Treaties of Canada with the Indians of Manitoba and the North-West Territories, 73-4.

[72] Sessional Papers of the Dominion of Canada: volume 4, first session of the fifth Parliament, session 1883, 5-260: The figures were: Manitoba and the North-West Territories, 37,044; British Columbia, 35,052; Ontario, 17,126; Quebec, 11,089; Maritimes, 4,026; Rupert's Land [sic], 3,770; Athabasca, 2,398. Total: 110,505. Returns for Athabasca, British Columbia and Rupertsland were a year out of date. Although Canada had assumed formal control over the high Arctic in 1880, it does not appear that Ottawa was in contact with Inuit, or with Athapaskan and Tlingit language peoples in the Yukon.

[73] The exact figure would be $5,801,512.50, but this is (of course) wholly imaginary. In 1884, Louis Riel floated a proposal for increased annuities. His estimates of the land involved (over 4 million square kilometres) and the Native/Metis population (200,000) were exaggerated, and he assumed a 5% return on capital value. His claim that Metis had a higher ownership stake in the land was also problematic. He calculated a Metis annuity at $137.50 per person, with a lower rate of $68.75 for Aboriginal people. It seems that he envisaged an annual cost of over $20 million. Riel admitted that his calculations were "only approximate", and intended to illustrate the injustice of "taking possession of our lands" without "adequate compensation". T. Flanagan, Riel and the Rebellion: 1885 Reconsidered, Saskatoon: Western Producer Books, 1983, 91-2.

[74] Debates of the House of Commons, 30 March 1883, 334-5:

[75] Debates of the House of Commons, 8 July 1885, 3211:; A. I. Silver, "Royal, Joseph",” in Dictionary of Canadian Biography, vol. 13, University of Toronto/Université Laval, 2003–, accessed October 22, 2019,

[76] The surplus in 1904 was $15.057 million.

[77] Morris, The Treaties of Canada with the Indians of Manitoba and the North-West Territories, 210-11.

[78] Debates of the House of Commons, 27 April 1882:

[79] Stevenson, Ex Uno Plures, 46.

[80] As noted by Dutil, Prime Ministerial Power in Canada, 75.

[81] Parliamentary debates and sessional returns are easily searched via For a matrix of statistical yearbooks, see