Canada During the 1920’s and Great Depression

Canada After WWI The transition from a wartime to peace time

economy led to a brief burst of inflation, and then to a severe recession lasting until 1923.

Farming expanded and Canada became the world’s largest exporter of wheat.

During the 1920s about 1 million people immigrated to Canada to take part in the expanding urban industries.

Canadian population (late 1920’s) = 50% British and 28% French.

U.S. Increases its Investments in Canada Canada was one of the world’s largest producers

of pulpwood – U.S. owned more than a third of Canada’s pulp production.

U.S. capital helped to expand the Canadian mining industry.

Ford, Chrysler, and GM established auto production plants in Canada – accounted for 75% of all the cars purchased in the country.

U.S. replaces Britain as Canada’s number one trading partner.

Canada’s Resources Oil and natural gas were discovered in

Alberta in 1914 – Canada would become one of the World’s largest producers of petroleum.

Canada’s abundant water resources were harnessed by the government and hydroelectric power provided Canada with inexpensive electricity.

The Decline of Labor Unions Union membership had doubled during WWI. The economic troubles of 1918-1922 caused

many workers to go on Strike. One Big Union (OBU) organized strikes across W.

Canada (Winnipeg – “Bloody Saturday”). Failure of Winnipeg strike + government

propaganda (compared unionism to communism) = decline in union power and membership throughout the 1920’s.

Farmers in Canada Created the National Progressive Party and

adopted the New National Policy (Influenced by Populist movement – U.S.) as its platform.

Demanded: reduction of tariffs, lower taxes on land and higher taxes on income, public ownership of railroads and public utilities, referendum and initiative, social security legislation, and the abolishment of the Senate.

In the Early 1920’s the Progressives were strong; however, by the mid-twenties they splintered over policy issues and lost members to the Liberal Party. Eventually disappeared on the national level.

Increasing Independence From British Control Canada’s contribution and effort during

WWI forced Britain to take notice. After WWI, Canada controlled its armed

forces, had influence on Imperial matters that concerned its well-being, and was represented in the League of Nations.

Control of the Government 1921 – Prime Minister King was

determined to remove all vestiges of British colonial control.

Treaty of Lausanne and Halibut Treaty. 1927 – Canada and U.S. exchange

ambassadors. Britain no longer represented Canada in

foreign affairs.

Canada’s Independence Officially recognized with the 1931 Statute

of Westminster. British Parliament stated no longer could a

British law override a dominion law and the dominions could alter any imperial law still in force within their countries.

Canada during the Great Depression Both the industrial and agricultural sectors

of the economy were hit. Industry – decline in investment and

demand. Agriculture – Shrinkage of markets and

environmental factors.

Unemployment Farmers, fishermen, and women out of

work did not count as unemployed. Estimated that 27% of the non-agricultural

sector was unemployed, but total unemployment probably exceeded 50% at the height of the depression.

Many countries tried to fight the economic crisis by protecting their home markets, so exporting countries like Canada suffered severely – agricultural income shrank 75%.

Controlling Social Unrest No pension scheme / aid for the unemployed,

sick, or destitute. People forced to rely on the inadequate charity of

private and public institutions. In response to labor unrest, the government

arrested union organizers and busted strikes. Lack of strikes (1930s) was a result of too much

unemployment and too much insecurity for workers to jeopardize their jobs.

The “Hoover” of Canada Richard Bennett’s

Conservative party won control of the Canadian government in 1930.

Favored self-help over public assistance = disliked by many Canadians.

Attempted to restore prosperity with traditional economic policies.

Raised the tariff 50% causing the U.S. to retaliate – Canada’s foreign trade declined by two-thirds (1929-1933).

Canada’s New Deal In desperation, Bennett enacted a model

of Roosevelt’s New Deal – unemployment insurance, minimum wage, regulated work week, regulated wheat prices, and created the Bank of Canada.

A little too late – Bennett loses the 1935 election to the Liberal party of Mackenzie King.

The King Government Canadian Supreme Court

found most of Bennett’s “New Deal” legislation unconstitutional.

Rowell-Sirois Commission – federal responsibility for unemployment insurance and a system of federal grants to provinces.

Keynesian economics – Deliberately stimulate the economy with deficit spending.

Government financed a variety of work projects.

Like the U.S., it was the outbreak of WWII in 1939 that ended the Great Depression in Canada.