Canada in the 20th century : The depression

When the Great Depression, the worldwide hard times of the 1930s, began in 1929, world trade was cut by half. Markets for Canada’s resource industries, such as mining, timbering, and wheat farming, declined rapidly. In addition, foreign investors invested less money in Canada. The collapse spread throughout the economy, and by 1933 a third of the Canadian workers were unemployed. Factories went out of business or ran far below capacity. People who were still working faced uncertain prospects and deep wage cuts, though the cost of living fell even faster.

Canada had few welfare programs, but 15 percent of all Canadians applied for the relief that was offered. Because the provinces ran the welfare programs, nationwide coordination to attack the problem was lacking. Perhaps the worst situation was on the prairies. Not only did wheat prices fall by two-thirds, ruining many farmers who were already burdened by debt, but a prolonged drought made agriculture difficult or impossible for much of the decade. Things were little better in the rest of the country, and thousands of workers drifted across the country seeking work or food. Canada closed its doors to immigrants for the first time in centuries, and even deported non-Canadians who were on relief.

King’s Liberal Party government did little to relieve the depression, and it was defeated in the election of 1930. The new prime minister, Conservative Richard B. Bennett, was a wealthy Alberta lawyer. Bennett at first expected the depression to be cured by the business cycle, a cycle in which an economic downturn is ordinarily followed in a few years by an upturn. He promised to deal harshly with social protest. He sought to create jobs by securing preferential tariffs from Britain, which gave some help to agriculture and the timber industry but not to the manufacturing sector. Bennett became deeply hated by many depression victims. Automobiles without engines, pulled by horses because their owners could not afford gasoline, were called Bennett buggies. Unemployed men, collected into work camps in British Columbia, launched the On to Ottawa Trek in 1935 to confront Bennett and inform the nation of their need for better conditions.

Bennett denounced them, and police broke up the march in Regina, Saskatchewan. Bennett then ordered the arrest of the leaders, which precipitated a riot in which a constable was killed and several dozen persons injured.

There were several political responses to the depression. Communist and other revolutionary movements, mostly banned, flourished underground. Socialist movements from earlier decades united in the Co-operative Commonwealth Federation (CCF). Led by Methodist minister J. S. Woodsworth, the CCF in 1933 issued its Regina Manifesto, in which it proposed that major industries be nationalized, or put under government control, and that a welfare state be established with unemployment insurance, health and welfare programs, and pensions for all workers. The CCF became an influential third party in federal politics; it also became a force in provincial politics, particularly in the west. Another clergyman, evangelical preacher William Aberhart of Alberta, launched Social Credit, a political movement that blamed the depression on the financial system.

Great depression In Canada.

The Social Credit Party did not reject capitalism but proposed state regulation of prices and an increase in the money supply to boost purchasing power. The federal government moved slowly into the social welfare field by starting to pay large percentages of the provinces’ costs for old-age pensions and unemployment relief. Then in 1935, with an election coming up and his popularity at a low ebb, Prime Minister Bennett launched the Bennett New Deal. This program was modeled on its American counterpart (see New Deal). It was designed to help the economy recover by investing in projects that provided work for the unemployed and by providing benefits for the jobless. It proposed minimum wages, maximum hours of work, and unemployment insurance. However, Bennett’s New Deal proposal did not prevent a crushing defeat for the Conservatives in the 1935 election.

After Bennett left office, the courts ruled that most of his New Deal was unconstitutional. While the national government had the power to raise revenue, they said, only the provinces had the authority to intervene in the economy or launch social programs. The constitutional bar to federal aid programs left many citizens deeply frustrated with the Canadian political system. In 1937 King appointed the Rowell-Sirois commission of inquiry, which recommended shifts in federal and provincial powers to address the problem. The increase in federal power was heatedly opposed by Québec premier Maurice Duplessis, a French Canadian nationalist, and Ontario premier Mitchell Hepburn, a strong provincial-rights advocate. Encarta