Government Response to the Great Depression. Downward Economic Cycle The prosperity of the 1920s was...

Government Response to the Great Depression

Downward Economic CycleThe prosperity of the 1920s was based on false optimism • the global economy was very weak• Easy access to credit made the economy appear stronger than it was

From “Recession” to “Depression”

The Psychological Effect• A weakening economy can

have a powerful psychological effect on consumers

• Fear of job losses and decrease in value of goods and stocks consumers save decrease demand

Government Response

The Failure of Ideology• Most governments believed in laissez-

faire economics “leave it alone”

• The economy will regulate itself – government regulations will make things worse

• Prime Minister Mackenzie King did nothing to correct the situation – economy would eventually correct itself

• King, and other world leaders, failed to grasp that the sharp decline in prices and rising #s of unemployed were not part of normal business cycle

From Bad to Worse…

R. B. Bennett• Mackenzie King lost the

election of 1930 to Richard Bennett (conservative)

• Bennett promised to take action to solve economic crisis:

Rise tariffs against countries that riased tariffs against Canadian products (USA)

Millions of $ for building projects

Relief for unemployed

And Worse…

• Bennett also promised to decrease tariffs on countries that would decrease tariffs on Canadian products (USA)

• USA not interested in Free Trade

• Canada had little economic influence and were deeply dependent on global trade

• Canadian economy continues to worsen

And Worse…

• British economist John Maynard Keynes suggested government should go into debt and spend $$$ - build infrastructure - to put people back to work and stimulate the economy

And Worse…

• Bennett’s ideas were good but he rejected the idea of government debt – therefore his government did not take any direct action to solve the problem

• Result: families evicted to streets, unemployment @ 30% of work force!

Unemployment• 1933 1.5 million

Canadians depended on government relief

• Government gave unemployed relief vouchers – must prove you had no $ to qualify

• Store owners did not like to take vouchers – government would take a long time to pay

• The unemployed “drifters” travelled around looking for work - they were viewed with suspicion

Living Condiditons• Top Picture: “Bennett

buggies” – people could not afford gas reverted to hooking a horse or ox to their car

• Middle: “Riding the rails” – unemployed men would hitch rides on open freight cars to travel around looking for work

• Bottom: “Hobo jungles” or “shanty towns”

Relief Camps

• 1932 – Bennett establishes work camps to offer “relief” to the unemployed

• Really, government feared communism would spread amongst unemployed

• Camps were established in isolated locations under the control of the army

• Workers worked for 20¢ per day

Protest: “On to Ottawa”• 1935 – relief camp workers

went on strike• 1000 strikers boarded freight

trains and headed for Ottawa – take their demands to Bennettt

• Eventually over 2000 “Trekkers” joined the movement

• Government feared a Communist revolution

• RCMP stops the strikers in Regina – riots break out, the strike leaders are arrested

The Dust Bowls…• The economic collapse

coincided with a natural disaster in the prairies

• A severe drought would begin in 1929 and last 10 years

• The rich fertile land – bread basket of Canada – turned into a virtual desert

And Locusts

• If the drought wasn’t bad enough, the 1930s also saw a plagues of locusts (large grasshoppers) that would destroy what little crops farmers did manage to harvest!

And worst of all…the bankers!

• Due to these natural disasters many farmers were not able to make their mortgage payments – bankers would seize their farms and sell them

• 250,000 farmers abandoned their farms between 1931-1941!

The Great Depression:

Alternative SolutionsNew Political Parties

Alternate Solutions

• Although Bennett had some good ideas about solving the Great Depression he was not prepared to go into debt to spend his way out of the recession

• He would occasionally send his own money to people who asked for assistance – but this was not solution

• Many people began to look for radical solutions to the problem

The Communist Party of Canada

• Most radical political party• Committed to a workers

revolution to overthrow democratic government

• Eliminate private property and business and banks

• Leader, Tim Buck, was arrested and convicted of plotting to overthrow government of Canada – sent of Kingston Penitentiary

The Co-operative Commonwealth Federation (CCF)

• Leader: James S. Woodsworth• Democratic Socialism• Believed in democracy and

supported private private property• Big business, utilities and banks

should be owned by the government

• 1944 Tommy Douglas elected as Premier of Saskatchewan – introduced health care, human rights laws and government run hydro electricity

• In 1961 CCF joined with the the Canadian Labour Congress to form the New Democratic Party

James S. Woodsworth

The Social Credit Party

• Began in Alberta• Leader: William Aberhart• Solution to GD – give

people money sitting in banks

• Government would use its credit to print money & give $25 to every adult per month

• Federal government vetoed this idea

Union Nationale• Quebec based party• Leader: Maurice Duplessis• Promised higher minimum wage,

workers’ compensation & government owned hydro-electricity

• Duplessis won election of 1936 but failed to bring in reforms

• Allowed Roman Catholic Church to influence social policy & English protestants to dominate business

• Government plagued by corruption