Newfoundland became the first self-governing dominion of the empire in 1855, twelve years before Canada, forty-five years before Australia, and fifty years before South Africa. In the late 19th century, Newfoundland negotiated trade agreements with the United States over the protests of Canada and enjoyed all the other traditional trappings of sovereignty.

Newfoundland’s history took a unique turn during the early 1930s compared to all other dominions of the British Empire because of its public debt. The government had borrowed heavily to finance military expenditures during the First World War, to finance the construction of a railway, and to cover operating deficits incurred on the fiscal account throughout the 1920s. By 1933, there was a public debt of over $100 million compared to a nominal national income of about $30 million.