Canada's economic development during the first two decades of the twentieth century has been examined intensively by such writers as Viner, Meier, and Ingram. Viner claimed that Canadian experience from 1900–1913 clearly demonstrated the working of the classic specie flow mechanism and the international operation of the quantity theory of money. Meier re-examined the period, and in the light of additional evidence concluded that dynamic forces of economic development (expansion of the wheat economy, and later capital inflows) dominated the Canadian record during the period. Ingram also argued that rapid expansion of the economy after 1900 created investment opportunities and attracted an inflow of foreign funds that was closely linked to the development boom. More recently, Borts has suggested an important role for export prices in inaugurating the era of expansion.

This emphasis on long-run economic performance has detracted attention from short-run variations in the Canadian economy during the pre-war period. Some work in this area was attempted by Taylor and Michell, who built a composite annual index of prosperity to define cyclical swings in a rough way, and by Mitchell and Thorp who provided an annual sketch of conditions in several countries including Canada.

The precise dating of business cycle turning points in Canada owes much to the pioneering work of Chambers. He has produced tentative reference cycle turning points for the last quarter of the nineteenth century, and for the period from 1919 to 1955. The only portion of the post-Confederation century yet to be analysed in this manner is therefore the period from 1900 to 1919.

The Registered Retirement Savings Plan, adopted in 1957, afforded Canadian taxpayers a new deduction from assessable income under the individual income tax. Qualified participants in this program may reduce current tax liabilities by their contributions to personal retirement savings accounts. This tax-inducement scheme was somewhat unusual, and “representative” taxpayer response would therefore occur only after a time lapse for individual evaluation of program advantages. Sufficient time has now expired, however, to permit a study of program performance.

Taxpayer response should be judged by reference to program objectives. Parliamentary discussions indicate that the measure had two objectives. The first was to restore an element of fairness, or uniform treatment, to the taxation of retirement funds. The second was to reinforce the social policy of fostering retirement saving in the private sector. The particular construction of the retirement saving scheme and the consequent taxpaper response seem, however, to have led to a failure to achieve either objective.

Taxpayer participation in 1962 is analysed in this article. Registered retirement savings deductions in that year were declared on only 1.49 per cent of all taxable returns filed by individuals under 65 years of age. Few taxpayers, then, utilize this deduction, and those who do are concentrated in the higher income classes.