Prime Minister Paul Martin displayed a special treat this Canada Day -- the original Maple Leaf flag that flew on the Peace Tower in 1965.

"We have celebrated 40 years of being united under a flag we can truly call our own and I think I see a few flags out there," he told the crowd of about 25,000 gathered Friday on Parliament Hill in Ottawa to celebrate the nation's 138th birthday.

"Some, including one of my own sons, even tattooed the Maple Leaf on (himself). As a prime minister, I think it's a great act of love of country, but as a father, I wish he'd left it on his backpack," Martin joked.

Hundreds of designs were considered before the Maple Leaf emerged as the new Canadian flag.

After the original flag flew on Feb. 15, 1965, it was given to Lucien Lamoureux, deputy speaker of the House of Commons at the time.

He became a diplomat after leaving politics and was posted to Belgium, where he remained after retirement.

A pension dispute with Lamoureux's wife after his death delayed the flag's return, but she gave it to the Canadian embassy in Brussels earlier this week.

The flag has since blossomed as a symbol of Canada. In the crowd on Parliament Hill on Friday, faces, hats and foreheads sported Canadian flags.

O Canada's anniversary

Canada Day marks a milestone for "O Canada," the national anthem, which turns 25 today.

Composed by Quebecer Calixa Lavalee, the song made its debut in 1880.

The song underwent a series of changes through the decades and in 1966, Prime Minister Lester Pearson suggested it be sung as the national anthem.

Eventually, the much-revised "O Canada" was proclaimed the national anthem on July 1, 1980.

There were other anniversaries acknowledged this Canada day:

• The 60th anniversary of V-E Day in Europe (this is also the year of the veteran)
• The centennials of Alberta and Saskatchewan

Values

In his Canada Day message, Martin called on Canadians to "reflect on the values we hold dear."

"Canada is a success story and we take immense pride in that," Martin said in a statement.

"A country bound together by values of family, community, respect for one another, and a commitment to equality of opportunity. Our future is bright."

Martin joined Gov. Gen. Adrienne Clarkson for day-long celebrations in the nation's capital.

"For our diversity and inclusion, we are an inspiration and a model to other nations," Clarkson said in a statement.

"To many of the world's most disadvantaged peoples, Canada is a land of hope and promise. We should see ourselves this way."

She told the revellers: "This is what our veterans made possible for all of us."

Party-goers were treated to a lineup that includes an aerial show by the SkyHawks, Canada's premiere parachute demonstration team, to musical performances from Sam Roberts, Kalan Porter, and Kathleen Edwards. The day-long festivities were capped by fireworks.

Of course, the gigantic celebration is not limited to Ottawa.

Opposition Leader Stephen Harper, who took part in Canada Day ceremonies in Charlottetown, issued a statement extending birthday wishes to all Canadians.

"Our country is the envy of the world and people from every corner of the globe and every walk of life have come here with a common dream -- to build a great and prosperous nation," Harper said.

Starting the day off, early risers at the historic site of Signal Hill in St. John's were among the first to watch the sun rise. The crowd sang the national anthem as Mounties raised the Canadian flag.

Across the country, the birthday parties ranged from massive -- like the bash on Parliament Hill - to small, neighbourhood gatherings.

Established by statute in 1879, the Canada Day tradition began as a commemoration of Confederation, when the first colonies of British North America were united to become the Dominion of Canada.

The tradition of a single, huge national celebration in Ottawa was established in the late 1950s, with a routine involving a day of Parliament Hill ceremonies followed by a mass band concert and fireworks display.

More than two decades later, the approach was changed to encourage local celebrations in communities countrywide.

In 1982, July 1, which was known as "Dominion Day," became "Canada Day."

As a statutory holiday, banks and government offices are closed. Most businesses are also closed, as employees working on a public holiday are entitled to premium pay.

Poor history grade

While there is no doubt Canadians enjoy the holiday that marks the nation's birthday, a new study shows they fared poorly when it came to answering questions on Canadian history.

The 2005 Annual Canada Day History Quiz found the average Canadian was only able to correctly answer eight of 20 questions on the nation's past economic milestones.

In fact, out of 1,000 people surveyed, only one B.C. resident answered all 20 questions correctly.

Dominion Institute director Rudyard Griffiths said the results were the highest failure rate in seven years.

The telephone survey was co-commissioned by The Dominion Institute and T.D. Bank Financial Group and respondents were contacted between June 13 and 17.