Victory Loans
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Government also borrowed capital from Canadians through several different programs. The advantages of borrowing from the people were that the government could decide the rate of interest it would pay for the money rather than having to pay what a lending institution requested. As well, the interest it paid out would go into the pockets of Canadians rather than to banks. The first campaign to borrow from the public was launched in 1940 in the form of a war loan drive. A second campaign was held later that year. The campaigns consisted of the government issuing bonds. What's a bond you ask?

A bond issuer, either the government or a private company, makes an agreement to borrow an amount of money from an investor for a determined length of time. The bond issuer agrees to pay the investor interest, at certain times, for using their money. Once the term of the bond is up, the issuer gives back to the investor the principal amount of the original investment. If the investor wanted his principal back early he could get it but would lose any unpaid interest.

VICTORY LOANS
When it was discovered the war would not be a quick affair, the government realized the drives would have to continue and changed the name to Victory Loan Drives. In all, nine drives were held between June 1941 and October 1945. The Summerside Citizen's Committee for Victory Loans put up a victory arch on a downtown street as well as a sixteen-foot thermometer to record progress and began the race to raise money. Each community was given a goal to reach and Summerside attempted not only to surpass its own goal but that of other Canadian communities of similar size. The lowest bond issued was for fifty dollars. Communities successful in reaching their goals were given pennants to fly on the civic building. In Summerside it was a pre-war carnival atmosphere each time a campaign successfully surpassed its goal, as did each of the nine. Twice the investment of the Summerside people in the drives made the national papers. The local committee came up with all kinds of ways of selling the bonds and the people responded. As much as the support had to do with being patriotic it also stemmed from the fact people had few places to spend the money they were making. In all, the 94,000 people of Prince Edward Island invested over 25.8 million dollars in Victory loans. View Victory Loans Chart

  The war bonds were the forerunner to Canada Saving Bonds. The government now borrows from its citizens to finance the everyday business of government. How do today's interest rates compare with those paid during the war years?
WAR SAVING CERTIFICATES
If one didn't have the fifty dollars for a Victory Loan one could still participate by buying a war savings certificate. Based on the same principle as the bonds, the certificates came in denominations of $5, $10, $25, $75 and $100. People could pledge to have money deducted from their bank accounts at given times for the purchase of a certificate. The war savings certificates were directed at employees and employers willing to have an amount deducted from their pay cheques for certificate investment. By December of 1940, the government was attempting to raise ten million dollars per month through war savings certificates.

WAR STAMPS
Twenty-five cent war stamps were issued to raise money for the war. They were especially popular with children who wanted to help the war cause. A great deal of money was raised one quarter at a time. As an example, Prince Edward Island raised $12,513 or 202 % of its goal in the 1943 "March to Berlin" stamp sale. A number of stamp campaigns were held throughout the war years. A special booklet was issued to place the stamps in and once it was filled its four-dollar value could be traded for a five-dollar war savings certificate. At one point in the war the students of Summerside High School purchased more than one thousand dollars worth of stamps and certificates. By 1942 retailers could sell the stamps and often encouraged people to take part of their change from a purchase in stamps. Sales clerks were given prizes for selling the most stamps. Stamps were promoted as great Christmas gifts. Prince Edward Island lead Canada in sales for the last drive for War Savings Stamps in the late winter of 1945. The province was greatly helped by Summerside doubling its goal of selling 10,000 stamps.
  During World War II there were ten chartered banks in Canada. Chartered banking is based on a system of a central financial system that has branches throughout the country. The United States banking system is based on unit banks, where each bank is an independent unit.
Things To Do!!!
  • Your class needs to raise money for a special project. Think of some taxes that could be put in place around classroom activities to raise the money. Is there any difference between taxes and fundraising?
  • You have ten dollars to buy a war savings certificate. You keep the certificate for the term of 7.5 years. Your rate of return over that period is 25%. What interest rate are you being paid yearly?
  • What rate of return did you receive by trading four dollars of stamps in for a five- dollar war savings certificate? If you keep the certificate the 7.5 years with the rate of return being twenty-five percent what would be your final return on your four-dollar investment?
  • Visit the Bank of Canada inflation website and determine what the 10 million in 1940 dollars would be equal to in today's dollars.
  • Can a monetary value be put on a country's independence and democracy?
    •   The name Welsher was given to anyone who cashed in his bonds early cheating the government out of the long term use of their money. Welsher is a slang term meaning to cheat or swindle.