The Depression in Canada

The Depression in Canada

The Dirty Thirties THE DEPRESSION IN CANADA UNEMPLOYMENT Unemployment reached 27% in 1933 One in five Canadians had become dependent upon government relief for survival The unemployment rate would remain above 12% until the start of the Second World War TARIFFS

Governments may impose tariffs to raise revenue or to protect domestic industries from foreign competitionsince consumers will generally purchase foreign-produced goods when they are cheaper. While consumers are not legally prohibited from purchasing foreignproduced goods, tariffs make those goods more expensive, which gives consumers an incentive to buy domestically produced goods that seem competitively priced or less expensive by comparison. Tariffs can make domestic industries less efficient, since they arent subject to global competition. Tariffs can also lead to trade wars as exporting countries reciprocate with their own tariffs on imported goods. CAUSES OF THE GREAT DEPRESSION Dependence on Exports Canadas economy relied heavily on raw material and farm exports. A third of Canadas Gross National Income came from exports. As U.S. and European demand fell it created a significant drop in sales. Easy Credit Canadians bought too much on credit including stocks (buy now, pay later). Too many people were buying stocks on margin which meant that they borrowed money from the bank in order to

buy more stocks. Therefore when the stock market crashed, Canadians were in debt. Protective Tariffs In an effort to prop up Canadian products, the government raised tariffs. The protectionist strategy backfired when other countries imposed retaliatory tariffs on Canadian goods. Economic Ties Dependence on the United States: the US was one of Canadas largest buyers of timber and minerals. Also, US corporations were buying shares of Canadian industries, linking the stock markets of the two. Main trading partners were Britain and the US, both of which were badly affected by the worldwide depression. Over Production and Expansion Canadas industries producing way THE DUST BOWL The Prairies were hit extremely hard by several years of drought. Dust storms swept across the prairies, making it impossible for farmers to grow wheat. The Canadian drought began in

1929 and continued until midsummer of 1937. Some 7.3 million ha, one-quarter of the arable land in Canada, was affected. Crops dried up and the topsoil turned to dust; the wind then blew away the dry soil Storms of dust occurred often leading parts of Alberta and Saskatchewan to be referred to as Consequently, many farms were abandoned and farm families moved elsewhere. LOW GRAIN PRICES The price of wheat which was set at $1.65 a bushel in 1929, tumbled to 30 cents a bushel in 1931.

CANADIAN WHEAT BOARD In 1935, the Canadian Wheat Board was created to market and establish a minimum floor price for wheat. Pressure for national legislation permitting establishment of marketing boards increased as farm prices and incomes fell during the Great Depression of the 1930s. When it came to selling grain, farmers were at the mercy of grain merchants. Early farmers organizations pressed for orderly marketing as an antidote to this problem. By selling their grain collectively through a single agent they would have greater marketing discipline and more negotiating power. PLAGUES OF GRASSHOPPERS When grasshoppers descended on the Prairies, there were so many that they looked like huge black clouds. One estimate suggests that they destroyed $30 million worth of wheat.

Grasshoppers landed everywhere, sometimes even chewing through laundry that had been hung outside to dry. They made roads slippery and clogged the radiators of cars, which then overheated. Chickens and turkeys ate the insects, giving a foul taste to the meat and eggs. At the time, there was no way of controlling them. UNEVEN BURDEN The four western provinces, which depended almost exclusively on primary-product exports, were the most seriously affected. The economic problems were made worse on the Prairies by years of drought, as well plagues of grasshoppers and hail storms, which caused huge crop failures. Saskatchewan experienced the lowest price for wheat in recorded history and saw provincial income plummet by 90% within two years, forcing 66% of the rural population onto relief. Although Ontario and Quebec experienced heavy unemployment, they were less severely afflicted because of their more diversified industrial economies, which produced goods and services for the

protected domestic market. The Maritimes had already entered into severe economic decline in the 1920s and had less distance to fall. CHANGED POLITICAL LANDSCAPE As a result of the hard times people were experiencing, many came to believe that the countrys two main political parties the Liberals and the Conservatives were not doing enough to help. At this point in Canadian History, the social programs that we know of today such as Employment Insurance and Welfare did not exist. The traditional view shared by both the Bennett and King governments and most economists - that a balanced budget, a sound dollar and changes in the trade tariff would allow the private marketplace to bring about recovery- was misplaced As a result, people began to turn to new political parties that were proposing new ways of solving problems. These new movements advocated the use of the state to initiate recovery.

WILLIAM BIBLE BILL ABERHART Thought that the Depression was caused by people not having enough money to buy goods and services School principal and preacher from Alberta Previously nonpolitical, in1932 he became interested in C.H. Douglass Social Credit Theory. Theory: the basic problem

of the economy was that people did not have enough money to spend on the goods that were being produced. Douglas suggested a simple solution. Every citizen should be given a social credit or cash payment. SOCIAL CREDIT The solution, Aberhart believed, was > government income subsidies to stimulate economic growth > tight regulatory control of banks to manage money supply

Aberhart proposed that each citizen be given a $25a-month basic dividend to purchase necessities Aberhart formed the Social Credit Party of Alberta and won the provincial election in 1935. (remained in power in Alberta for 35 years) Aberhart was never successful in implementing Social Credit because banking and monetary policy are controlled by the federal government in Canada. Aberharts monetary legislation was quickly CO-OPERATIVE COMMONWEALTH FEDERATION (CCF)

Founded in Calgary in 1932 as a political coalition of farmers and labour groups that wanted economic reform, to help Canadians affected by the Great Depression Met in Regina in 1933, where it chose J.S. Woodsworth as its first president Woodsworth had been arrested for his role in the

Winnipeg General Strike of 1919 Platform: > Concentration of wealth in the hands of a few threatened democracy. > New social order calling for production and distribution for the public good not private CCF

Adopted the Regina Manifesto in 1933, which outlined goals: Creating a mixed economy through the nationalization of key industries Establishing a welfare state with universal pensions, health and welfare insurance, childrens allowances, unemployment insurance, workers compensation and similar programs The CCF quickly established itself in Canadian political life In 1935, seven CCF MPs were sent to Ottawa and the party captured 8.9 per cent of the popular vote In 1961, the CCF became the New Democratic Party Although the CCF never held power nationally, the adoption of many of its ideas by ruling parties contributed greatly to the development of the

LEAGUE FOR SOCIAL RECONSTRUCTION Founded in 1931-32, largely in response to the Great Depression Demanded economic change by parliamentary means J.S. Woodsworth was honorary president

The Regina Manifesto of the CCF was largely written by LSR members Influence on CCF was great UNION NATIONALE MAURICE DUPLESSIS The Union Nationale became a single party under Maurice Duplessis and easily won in the 1936 provincial election The Union Nationale at first preached social, economic and political reform Maurice Duplessis blamed the existence of the Depression on the fact that many of Quebecs industries were owned by Americans and English speaking Canadians Wanted more power for Quebec to preserve French language, culture and tradition Ran on the promise to improve working conditions, and provide aid to farmers Duplessis dominated Quebec politics until his dead in 1959

COMMUNIST PARTY Became a legal party in Canada in 1924. Criticized as Un-Canadian because of its allegiance to Communist International (Comintern) operating out of Moscow 1919, Red Scare, Section 98 of the Criminal Code outlaws the Communist Party. Party leaders were imprisoned in 1931. Helped organize the trek to Ottawa. Arthur Slim Evans

Affiliated groups such as the Workers Unity League, the Relief Camp Workers Union and the National Unemployed Workers Association played a significant role in organizing the unskilled and the unemployed in protest marches and demonstrations WILLIAM LYON MACKENZIE KING Do Nothing response to the Depression

Prime Minister (Liberal Party) of Canada from 1921 to 1930. Prime minister when the Depression first started Was reluctant to even acknowledge that an economic crisis had struck Canada He did not believe at first that the Depression would seriously affect Canada, and refused to provide federal funding to provinces struggling with unemployment Believed it was the responsibility of the provinces to provide aid to their own citizens In contrast, the Conservatives under R.B. Bennett promised aggressive action

FIVE CENT SPEECH At the beginning of the Great Depression, King made a speech about how social welfare was the responsibility of the provinces He also declared that he would not give a five-cent piece to any province that did not have a Liberal government King was eventually openly criticized for his controversial comment that he wouldnt give a five cent piece of relief money to any province that had a Conservative government Was one of the reasons why the Liberals lost the elections R. B. BENNETT Led the Conservative Party 1927-38 Prime minister of Canada from 1930 to 1935, during the worst years of the Depression Bennett tried to combat the depression by increasing trade within the British Empire

and imposing tariffs for imports from outside the Empire. Known as the Imperial Preference Policy This brought some economic relief to Canada, but not enough Conservative pro-business policies provided little relief for the unemployed GOVERNMENT AID EFFORTS October 1932, Bennett establishes a network of relief camps for unemployed and homeless men. Run by the military. In return for bunkhouse residence, 3 meals a day, work clothes, medical care and 20 cents a day, the "Royal Twenty Centers" worked 44-hr weeks

clearing bush, building roads, planting trees and constructing public buildings. CANADIAN RELIEF CAMPS Critics attacked the federal government for choosing to establish the camps instead of creating a program of reasonable work and wages Conditions in the camps were abhorrent, not only

because of the low pay, but the lack of recreational facilities, isolation from family and friends, poor quality food, and the use of military discipline. Communist Party leaders saw a chance to organize strikes in the camps. Forming the Relief Camp ON TO OTTAWA TREK April 1935. 1500 men from various British Columbia camps went on strike, demanding improved living conditions in the camps as a temporary measure, and also new work programs for Ottawa.

Organized by the radical Workers Unity League and led by Arthur Slim Evans After two months of protest in Vancouver, camp strikers decided to head east to Ottawa to bring their demands to the federal government. The strikers commandeered freight trains and made stops in Calgary, Medicine Hat, Swift There the railways, supported by an edict by the prime minister, refused further access to their trains ON TO OTTAWA

Bennett invited 8 Trekkers including trek leader Slim Evans to talks in Ottawa, on the condition that the strikers remain in Regina. (Where a encampment of RCMP waited) The talks in Ottawa quickly broke down The Trekkers returned to Regina Bennett decided to arrest the Treks leaders

REGINA RIOTS Regina constables and RCMP squads moved into the crowd to arrest Evans and other speakers, provoking the Regina Riot The conflict raged back and forth on Regina streets, as Trekkers assaulted police with rocks and clubs. One city constable was killed,

several dozen rioters, constables and citizens had been injured, and 130 rioters had been arrested Four days later, the provincial government assisted the marchers on their way, most returning on passenger trains to Vancouver AFTERMATH OF REGINA The repression of the Trek and Bennetts antagonism towards Evans contributed to the

prime ministers political decline Discredited the Bennett government, 1935 elections Conservatives went from 134 seats in Parliament to 39. The military camps were dismantled and replaced with smaller camps managed by provincial governments with slightly better pay using federal funds HOW CANADIANS FELT ABOUT BENNETT Though R. B. Bennett was born in New Brunswick to a family of modest means, he moved to Alberta to practise law in a firm that attracted wealthy clients. Shrewd investments, combined with an inheritance from a rich widow, made him wealthy by the time he became prime minister. Though he contributed substantial amounts to charity, his wealth affected the way people viewed him during the Depression. Many people believed that his personal wealth prevented his understanding the hardships endured by the poor.

By 1933, Bennett seemed indecisive and ineffective DEPRESSION HUMOUR Bennett became the butt of endless jokes Bennett Buggies Cars pulled by horses Bennettburghs homeless communities Bennett blankets - newspapers Cars towed by horses because owners could not afford gasoline BENNETTS NEW DEAL

Bennett became increasingly isolated and faced major dissent both in the party and the country In January1935, Bennett began a series of live radio speeches outlining a New Deal for Canada which supported government control and regulation The plan called for federal government intervention: > minimum wage, maximum work week laws, > unemployment insurance > retirement pensions, health insurance > mortgage assistance for farmers Most of the New Deal was seen by the Judicial Committee of the Privy Council (at the time Canadas court of final appeal) as unconstitutional and outside of federal jurisdiction

Bennetts reform effort was seen as too little, too late by voters who elected McKenzie King in October 1935 BANK OF CANADA In 1934, Bennetts government created legislation to establish the Bank of Canada, which was charged with regulating monetary policy. The Bank of Canada was established in 1935 after the passing of the Bank of Canada Act. MACKENZIE KING RETURNS Running under the slogan King or Chaos, King won the 1935 election

Prime Minister (Liberal Party) of Canada from 1935 to 1948. Introduces relief programs: > National Housing Act > National Employment Commission Nationalizes: > Canadian Broadcast Corporation 1936 > Trans-Canada Airlines (Air-Canada) 1937 > Bank of Canada 1938 MACKENZIE KING Despite his King or Chaos election slogan, King offered very little in the way of alternatives to Bennett. Once returned to power, King reduced trade barriers and negotiated trade agreements with the U.S. and Britain but offered no new relief to out-of-work Canadians or struggling industry. His attention was also drawn to global concerns as it became increasingly clear that the policy of appeasement being applied to Germany's socialist leader were not going to be successful.

Overall, King continued with traditional political methods to resolve the countrys economic problems. His main goal was to reduce spending and balance the budget. The Prime Minister was waiting out the Depression. THE END OF THE DEPRESSION From 1939, an increased demand in Europe for materials, and increased spending by the Canadian government on public works created a boost to the economy. Unemployment declined as men enlisted in the military. By 1939, Canada was experiencing

economic prosperity for the first time in a decade.

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